Col. Rajyavardhan Singh Rathore v. Parsvnath Developers Ltd.

JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL) The opposite party allotted a flat bearing no. D4-701 in a project namely Parsvnath Exotica, which it was developing in Sector-53 of Gurgaon to Ridco Logistics Pvt. Ltd. The complainant purchased the aforesaid apartment from Ridco Logistics Pvt. Ltd. and the transfer was approved by the opposite party vide endorsement dated 04.11.2006. The total sale consideration for the flat was agreed at Rs. 74,95,675/-. Clause 10(a) of the Flat Buyers Agreement reads as under:-

10 (a) Construction of the flat is likely to be completed within a period of thirty six (36) months of commencement of construction of the particular block in which the flat is located, with a grace period of six (6) months, on receipt of sanction of building plans/revised building plans and approvals of all concerned authorities including the Fire Service Deptt., Civil Aviation Deptt., Traffic Deptt., Pollution Control Deptt., as may be required for commencing and carrying on construction subject to force majeure, restrains or restrictions from any courts/authorities, non-availability of building materials, disputes with contractors/work force etc. and circumstances beyond the control of the Developers and subject to timely payment by the flat buyers in the Scheme. No claim by way of damages/compensation shall lie against the Developers in case of delay in handing over possession on account of said reasons. The date of submitting application to the concerned authorities for issue of completion/part completion/occupancy certificate of the complex shall be treated as the date of completion of the flat for the purpose of this clause/agreement. It would thus be seen that the construction of the flat was required to be completed within

36 months from the commencement of construction in Block-D, where the flat booked by the complainant was located but the opposite party had a grace period of six months thereafter. The case of the opposite party is that construction in the aforesaid block commenced on 14.04.2006. The construction, if computed from that date, therefore, ought to have been completed by 14.04.2009 and even the grace period of six months expired on 14.10.2009. Since the opposite party failed to deliver the possession of the flat to him within the time stipulated in the Flat Buyers Agreement, the complainant approached this Commission, seeking the following reliefs:- (a) allow the present Original Petition/Complaint; (b) pass an order awarding reliefs under section 22 r/w 14 of the Consumer Protection Act, 1986 for a total sum of Rs.77,88,220.00 (Seventy Seven Lacs Eighty Eight Thousand Two Hundred & Twenty) in terms of Para 21 above along with interest @ 18% per annum w.e.f. October, 2007 i.e. from the date of computation of the amounts towards relief sought till the date of realization; and

2. The complaint has been resisted by the opposite party on several grounds. It is denied that the opposite party deliberately delayed the construction of the apartment and it is claimed that the recession has hit the Indian economy over past two years and real estate sector is one of the worst hit sector as a result of the said slow down. It is further alleged that in terms of clause 10(c) of the Flat Buyers Agreement, in case of delay, the flat buyer is entitled only to the payment of holding charges calculated @ Rs. 10 per sq. ft. of the super area of the flat per month, for the delay.

3. A perusal of the clause 10(a) of the Flat Buyers Agreement would show that slow-down in the economy is not one of the grounds which would justify the delay in completion of the construction. The agreement between the parties refers only to restrictions/restraints from any Court/Authority, non-availability of building material, dispute with contractors/ work force etc. and circumstances beyond the control of the developers as the grounds which could justify the delay in completion of the construction. However, in the present case there is no evidence or even allegation of the opposite party having been constrained, on account of such a reason, in carrying out or completing the construction of the flat sold to the complainant. There is no evidence of non-availability of the building material or the opposite party having dispute with any contractor/work force deployed at the site of construction. Therefore, there is no escape from the conclusion that the delay in completion of the project in which flat was purchased by the complainant was wholly unjustified. Consequently, the opposite party must necessarily compensate the complainant on account of the aforesaid unjustified delay in completion of the apartment.

4. The next question which comes up for consideration is as to the quantum of compensation to which the complainant is entitled on account of the delay in completion of the project in which apartment was purchased by the complainant. As noted earlier, the opposite party had 3 years time from the commencement of the work, for completion of the project. 3 years, by no means, can be said to be a short period for completion of such a project. In fact, the opposite party itself felt that the project could be completed within 3 years from the date of commencement of construction and that is why such a period was stipulated in the agreement for its completion. Unfortunately, the opposite party had not completed the construction even within the grace period of six months after the stipulated period of three years from the date of commencement of the work.

5. A clause similar to clause 10(c) of the Flat Buyers Agreement in this case came up for consideration before this Commission in C. C. No. 427/2014, Satish Kumar Pandey & Anr. vs. , decided on 08.06.2015. In that case, theM/s. Unitech Ltd. and other connected matters agreement between the flat buyers and the developers, M/s. Unitech Ltd. for payment of compensation on account of delay in completion of the construction of the apartment was fixed at the rate of Rs. 5 per sq. ft. per month of the Super Area. It was contended on behalf of the developers that the complainants were entitled only to the agreed quantum of compensation for the period the project was delayed. Rejecting his contention, this Commission, inter-alia, held and observed as under:- However, a term of a contract, in my view will not be final and binding if it is shown that the consent to the said term was not really voluntary but was given under a sort of compulsion on account of the person giving consent being left with no other choice or if the said term amounts to an unfair trade practice. It was submitted by the learned counsel for the complainants that the term providing for payment of a nominal compensation such as Rs.5/- per square foot of the super area having become the order of the day in the contracts designed by big builders, a person seeking to buy an apartment is left with no option but to sign on the dotted lines since the rejection of such term by him would mean cancellation of the allotment. He further submitted that a person seeking to acquire a built up flat instead of purchasing a plot and then raising construction on it, therefore, is not in a position to protest resist the inclusion of such a term in the Buyers Agreement, and has to rely upon the reputation of the builder, particularly if he is a big builder such as Unitech Ltd. He also submitted that the format of the Buyers Agreement is never shown to the purchasers at the time of booking the apartment and if he refuses to sign the Buyers Agreement on the format provided by the builder, not only will he lose the booking, even the booking amount/earnest money paid by him will be forfeited by the builder. I find merit in the above referred submissions of the learned counsel. A person who, for one reason or the other, either cannot or does not want to buy a plot and raise construction of his own, has to necessarily go in for purchase of the built up flat. It is only natural and logical for him to look for an apartment in a project being developed by a big builder such as the opposite party in these complaints. Since the contracts of all the big builders contain a term for payment of a specified sum as compensation in the event of default on the part of the builder in handing over possession of the flat to the buyer and the flat compensation offered by all big builders is almost a nominal compensation being less than .25% of the estimated cost of construction per month, the flat buyer is left with no option but to sign the Buyers Agreement in the format provided by the builder. No sensible person will volunteer to accept compensation constituting about 2-3% of his investment in case of delay on the part of the contractor, when he is made to pay 18% compound interest if there is delay on his part in making payment.

12. It can hardly be disputed that a term of this nature is wholly one sided, unfair and unreasonable. The builder charges compound interest @ 18% per annum in the event of the delay on the part of the buyer in making payment to him but seeks to pay less than 3% per annum of the capital investment, in case he does not honour his part of the contract by defaulting in giving timely possession of the flat to the buyer. Such a term in the Buyers Agreement also encourages the builder to divert the funds collected by him for one project, to another project being undertaken by him. He thus, is able to finance a new project at the cost of the buyers of the existing project and that too at a very low cost of finance. If the builder is to take loan from Banks or Financial Institutions, it will have to pay the interest which the Banks and Financial Institutions charge on term loan or cash credit facilities etc. The interest being charged by the Banks and Financial Institutions for financing projects of the builders is many times more than the nominal compensation which the builder would pay to the flat buyers in the form of flat compensation. In fact, the opposite party has not even claimed that the entire amount recovered by it from the flat buyers was spent on this very project. This gives credence to the allegation of the complainants that their money has been used elsewhere. Such a practice, in my view, constitutes unfair trade practice within the meaning of Section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the product of the builder. Though, such a practice does not specifically fall under any of the Clauses of Section 2(r) (1) of the Act that would be immaterial considering that the unfair trades, methods and practices enumerated in Section 2(r) (1) of the Act are inclusive and not exhaustive, as would be evident from the use of word including before the words any of the following practices.

14. As noted earlier, the cost of the borrowing for individual home buyers is about 10% per annum though it had gone upto 11.5% in last few years. In my view, if the opposite party, pays simple interest @ 12% per annum to the complainants, that would not only take care of the additional financial burden on them but also give some monetary compensation to them for their sufferings on account of the delay in handing over possession of the flat purchased by them.

6. The next question which arises for consideration is as to on which date construction commenced in this case. As per the payment plan opted by the predecessor in interest, 15% of the sale price was payable at the time of booking 10% of the sale price plus car parking was payable within 45 days of allotment/booking and 7% of the said price was payable on start of the foundation. The complainant has specifically alleged in his rejoinder that his predecessor in interest made payment of the first instalment on start of the foundation on 25.04.2005. A perusal of the statement of account issued by the opposite party in respect of the flat of the complainant confirms that the complainant made payment of instalment no. 1 on 27.04.2005 when it had become due. Obviously the aforesaid amount would have been paid on receipt of demand from the opposite party, meaning thereby that the foundation work, in the block in which flat was p u r c h a s e d b y t h e complainant, had started by 27.04.2005. The stipulated period for completing the construction therefore expired on 27.04.2008 and the grace period expired on 27.10.2008.

7. The learned for the opposite party states that since in para 21 of the complaint, the complainant has also expressed his willingness to take refund, they are ready to refund the entire money received from him alongwith interest @ 18% per annum from the date of receipt of payment from him till the date the said amount will be refunded to him. The complainant, however, insists on receiving the possession of the flat and his counsel submits that the complainant may not be able to get possession of a similar flat even if he adds the quantum of interest to the sale consideration paid by him. Therefore, we are not inclined to direct refund with interest as is sought by the learned counsel for the opposite party.

8. For the reasons stated hereinabove, we are of the view that the opposite party cannot be allowed to restrict its liability to pay compensation of Rs. 10/- per sq. ft. of Super Area per month for the period of delay and it must pay compensation in the form of interest @ 12% per annum for the period the delivery of the possession to the complainant is delayed. We therefore dispose of this complaint with the following directions:-

1) The opposite party shall complete the construction of the apartment in all respect, obtain all the requisite approvals/sanctions including occupancy certificates and deliver possession of the said apartment, complete in all respects, to the complainant, within eight months from today.

2) The opposite party shall pay compensation in the form of simple interest @ 12% per annum w.e.f. 27.10.2008 till the date on which this order is compiled, to the complainant, at the time of delivering possession of the apartment.

3) The opposite party shall pay a sum of Rs. 10,000/- as cost of litigation to the complainant.

4) If this order is not complied within eight months from today, the opposite party shall pay a higher compensation in the form of simple interest @ 18% per annum w.e.f. eight months from the date of this order till the date on which the order is complied. We, however, hope that the aforesaid situation will not arise, since the learned counsel for the opposite party has informed us that the possession after obtaining all the necessary statutory approvals is likely to be delivered within eight months from today. ......................J

V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER