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Pankaj Kothari v. Unitech Limited

National Consumer Disputes Redressal Commission

Apr 13, 2016

Judgment

Subsequent
References

CaseIQ

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Analytical Summary of Opinion — National Consumer Disputes Redressal Commission (New Delhi)

Factual and Procedural Background

The complainants (husband and wife) booked Apartment No.1001 in Tower No.23 of the Unitech Horizon project (plot No.6, Sector PI-2, Alistonia Estate, Greater Noida) on 07.06.2006 for a total consideration of Rs.48,57,505/-. Possession was contractually to be delivered by 15.11.2008. The complainants paid Rs.46,44,806/- but possession was not offered. They sought refund of the amounts paid, compound interest @ 18% p.a., rent of Rs.25,000/- per month from 15.11.2008 until possession, and Rs.15,00,000/- for mental agony and harassment.

A separate but factually similar complainant (Consumer Complaint No. 309 of 2014) made analogous payments and raised identical prayers; possession for that booking was also to be delivered by 15.11.2008.

The opposite party (Unitech Limited) resisted the complaints, stating possession was being delivered in phases beginning in 2009, that many families already lived in the complex, that the structure was complete and plastering was ongoing, and that possession was expected by mid‑2015. The opposite party did not dispute receipt of payments or the agreement terms.

The Commission earlier dealt with related litigation: in Swarn Talwar & Ors. vs. Unitech Ltd. (C.C. No.347 of 2014 and connected matters decided on 14.08.2015) the Commission directed refunds with interest at 18% p.a.; the opposite party's appeal to the Supreme Court (Civil Appeal Diary No. 35562 of 2015) was dismissed by a signed order dated 11.12.2015.

Legal Issues Presented

Whether the complainants are entitled to refund of the amounts paid by them because the opposite party failed to deliver possession by the committed date.
What rate and form of compensation (interest) is appropriate for delayed delivery of possession — specifically whether interest at 12% or 18% per annum should be awarded.
Whether this Commission possesses the requisite pecuniary jurisdiction to entertain the complaints (i.e., whether the aggregate claim exceeds Rs. 1 crore, and whether claimed interest qualifies as compensation for jurisdictional purposes).

Arguments of the Parties

Complainants' Arguments

The complainants claimed refund of the amounts paid (Rs.46,44,806/- in one case and Rs.46,44,914/- in the other) because possession was not delivered by the contractual date of 15.11.2008.
They initially sought compound interest @ 18% p.a., rent from 15.11.2008 at Rs.25,000/- per month, and Rs.15,00,000/- for mental agony and harassment.
At a later stage during the hearing the complainants, stating a need to avoid further litigation and that they required money, restricted their claim to refund with compensation in the form of interest at the rate of 12% p.a.

Opposite Party's Arguments

The opposite party contended possession was being delivered in a phased manner since 2009; many families were already living in the complex; the structure was complete, plastering was ongoing, and possession was expected by mid‑2015.
The opposite party did not dispute the payments received or the contractual terms of allotment.
It argued that the Commission lacks pecuniary jurisdiction because the cost of the flats was less than Rs.1 crore each, and contended that interest claimed by the complainants should not be treated as compensation for jurisdictional purposes.
Counsel for the opposite party stated on instruction that there was one ready built-up flat on the 20th floor in Tower‑20 that could be offered at the same booking price; and an offer was made to provide possession of that flat with interest @ 12% p.a. from the committed date of delivery.
The opposite party relied upon several judgments (Charu Chhabra & Ors.; Seven Islands Shipping Ltd.; Shahbad Cooperative Sugar Mills Ltd.) to support its position on jurisdiction and related legal points.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Swarn Talwar & Ors. vs. Unitech Ltd. (C.C. No.347 of 2014 and connected matters decided on 14.08.2015)	Commission's prior decision directing refund with interest (18% p.a.) where opposite party failed to deliver possession; relied upon for approach to relief.	The Court relied on the approach taken in Swarn Talwar to assess remedies in similar delayed‑possession cases and to consider the quantum and form of compensation appropriate to flat buyers.
K.A. Nagmani vs. Housing Commissioner, Karnataka Housing Board (C.A. No.6730-6731, decided 19.09.2012)	Authority cited in Swarn Talwar and relied upon for the proposition supporting refund and compensation for delayed possession.	The Court noted that Swarn Talwar had inter alia relied upon this Supreme Court decision; it formed part of the jurisprudential background supporting refund/compensation in delayed‑possession cases.
Ghaziabad Development Authority vs. Balbir Singh (2004) 5 SCC 65	Principle that compensation must be based on a finding of loss or injury, correlate with the loss, and cannot be uniform; interest may be paid as compensation but rate must reflect actual loss/injury.	The Court quoted and applied this principle to justify awarding compensation by way of interest and to explain that a market‑based rate (here 12% p.a.) is not excessive, since compensation must correlate with loss and market borrowing costs.
Puneet Malhotra vs. Parsvnath Developers Ltd. (CC No.232 of 2014, decided 29-01-2015)	Referenced as establishing steep appreciation in market value of land and construction costs in Greater Noida over the prior 7–10 years.	The Court relied on the observation about appreciation in market value to explain why interest paid to flat buyers serves as compensation (loss of opportunity to buy similar accommodation at the agreed price).
Charu Chhabra & Ors. vs. Jai Maa Infrastructure Pvt. Ltd. (Consumer Complaint No.353 of 2015 decided 26.05.2015)	Found that even if interest were calculated at 18% p.a., the Commission would not have pecuniary jurisdiction in those facts (used by opposite party to challenge jurisdiction here).	The Court noted this precedent as relied upon by the opposite party but distinguished it because, in the present cases, the complainants' aggregate claims (including interest claimed) exceeded Rs.1 crore.
Seven Islands Shipping Ltd. vs. Reliance General Insurance Co. Ltd. & Ors. (Consumer Complaint No.153 of 2009 decided 06.11.2015)	One of the decisions relied upon by the opposite party in support of its position on jurisdiction/relevant legal propositions.	The Court observed that the decisions in Seven Islands (supra) and Shahbad Cooperative (supra) were not relevant to the issue involved in these complaints.
Shahbad Cooperative Sugar Mills Ltd. vs. National Insurance Co. Ltd. & Ors. (First Appeal No.417 of 2002 decided 02.04.2003)	Relied upon by the opposite party in argument (context provided by the parties' pleadings).	The Court held this precedent was not relevant to the present issue as advanced by the opposite party.

Court's Reasoning and Analysis

The Court undertook a factual and legal analysis that can be summarized in sequential steps as follows:

Admitted Failure of Performance: The Court accepted that the opposite party was contractually obligated to deliver possession by 15.11.2008 and that it "miserably failed to perform its contractual obligation." This failure rendered the complainants not bound to accept possession offered more than seven years after the committed date.
Entitlement to Refund and Compensation: Given the opposite party's default, the Court held the complainants were entitled to a refund of amounts paid together with appropriate compensation.
Assessment of Compensation Rate: The Court considered appropriate compensation in light of market conditions. While earlier orders in some related matters awarded interest at 18% p.a., the complainants in these cases restricted their claim to interest at 12% p.a. The Court observed that considering the prevailing market cost of borrowing (about 12% p.a. during the relevant period), simple interest at 12% p.a. would not be "exaggerated or inflated" and would be "eminently justified" even if no separate compensation for mental agony were awarded.
Pecuniary Jurisdiction Analysis: The opposite party's contention that the Commission lacked jurisdiction because the flat price was less than Rs.1 crore was addressed. The Court relied on prior reasoning (as set out in Swarn Talwar and supported by Ghaziabad Development Authority v. Balbir Singh) that interest awarded to flat buyers operates as compensation — covering loss of income and loss of opportunity due to appreciation of land and construction costs — and thus can be included when determining the pecuniary value of the complaint. On this basis the Court found that the aggregate claim in each complaint exceeded Rs.1 crore, so the Commission had requisite pecuniary jurisdiction.
Treatment of Opposite Party's Offers and Precedents: The Court recorded that the opposite party had offered an alternate ready flat in Tower‑20 at the original price with interest @ 12% p.a., but the complainants did not accept that offer. The Court also considered the precedents relied on by the parties, distinguishing those it found inapplicable (e.g., Seven Islands and Shahbad Cooperative) and applying the principles from Ghaziabad Development Authority and related consumer‑forum jurisprudence concerning compensation for delayed possession.
Relief Tailored to the Parties' Position: Given the complainants' expressed desire to avoid further litigation and their restriction of the claim to 12% p.a., and given the Court's conclusion that 12% was a justified compensatory rate, the Court directed refund of the amounts paid with simple interest at 12% p.a. from the date of each payment until the date of actual payment pursuant to the order.

Holding and Implications

Holding: The Court directed the opposite party to refund the entire amount paid by the complainants together with compensation computed at the rate of simple interest of 12% per annum on the principal payments from the date of each payment until the date on which the entire payment (including compensation) is made. The payment was ordered to be made within six weeks from the date of the order. The complaints were disposed of.

Implications:

Direct effect: The opposite party (Unitech Limited) must refund the amounts paid by the complainants and pay simple interest at 12% p.a. from the date of each payment until payment, within six weeks; the consumer complaints are disposed of pursuant to that order.
On pecuniary jurisdiction: The Court reaffirmed that interest awarded as compensation may be taken into account when assessing the pecuniary value of a complaint under the Consumer Protection Act; accordingly, where the aggregate (principal plus compensatory interest) exceeds Rs.1 crore the Commission has jurisdiction.
No new legal principle was announced: The decision applies and relies upon existing judicial principles and earlier Commission and Supreme Court decisions (as discussed in the body of the opinion). The opinion does not state that it creates a new precedent beyond applying the established approach to the facts before it.

This summary is strictly confined to the material and statements contained in the provided opinion and does not add or infer information beyond that text.

Show all summary ...

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

CONSUMER CASE NO. 308 OF 2014

1. PANKAJ KOTHARI & ANR. R/o. D6/26, First Floor, Exclusive Floors, DLF City, Gurgaon

Haryana

2. Sanjana Kothari, W/o. Shri. Pankaj Kothari, R/o. D6/26, First Floor, Exclusive Floors, DLF City,

Gurgaon

Haryana ...........Complainant(s)

Versus

1. UNITECH LIMITED

6, Community Centre, Saket, New Delhi - 17 ...........Opp.Party(s)

BEFORE:

HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER

For the Complainant : Mr. Anuj Bhandari, Advocate For the Opp.Party : Mr. Sukumar Pattjoshi, Sr. Advocate Mr. Somesh Kumar Dubey, Advocate

Mr. Haider Abbas, Advocate

Dated : 13 Apr 2016

ORDER

The complainants in Consumer Complaint No.308 of 2014, who are husband and wife, booked a residential apartment with the opposite party in a project namely Unitech Horizon, which the said party was developing on plot No.6 in Sector Pi-2, Alistonia Estate, Greater Noida, Gautam Budh Nagar. On 07.6.2006, Apartment No.1001 in Tower No.23 of the said project was allotted to the complainants for a total consideration of Rs.48,57,505/-. The possession of the said flat was to be delivered to them by 15.11.2008. The complainants made a total payment of Rs.46,44,806/- but the possession was not offered to them. The complainants are before this Commission, seeking refund of the aforesaid amount, along with compound interest @ 18% per annum. They are also seeking payment of Rs.25,000/- per month towards rent from 15.11.2008 till the date of possession and Rs.15.00 lacs towards compensation for the mental agony and harassment suffered by them.

2. The complainants in Consumer Complaint No. 309 of 2014 also booked a similar flat in the aforesaid project of the opposite party and made payment of Rs.46,44,914/- as against the agreed sale consideration of Rs.48,57,505/-. In their case also the possession was to be delivered by the same date i.e. November 15, 2008. Since the possession was not offered to them, they are also before this Commission with identical prayers.

3. The complaints have been resisted by the opposite party on identical grounds. It is stated in the reply filed by the opposite party that they are delivering possession of the flats in a phased manner, commencing the year 2009 and a number of families are already living in the said complex. It is further stated that the structure is complete, plaster work is going on and the possession is expected to be delivered by middle of 2015. The opposite party however, has not disputed the payment received from the complainants nor has it disputed the terms of the agreement agreed between the parties.

4. In Swarn Talwar & Ors. vs. Unitech Ltd., C.C. No.347 of 2014 and connected matters decided on 14.08.2015, the complainants had booked residential apartment in project known as Unitech Habitat, which the opposite party was to develop on plot no.9, Sector PI-II (Alistonia Estate) in Greater Noida. The opposite party however failed to deliver possession of the flats to the complainants within the time agreed between the parties and consequently the complainant sought refund along with interest @ 18% p.a. besides damages and cost of litigation. Rejecting all the grounds taken by the opposite party and inter alia relying upon the decision of the Hon'ble Supreme Court in K.A. Nagmani Vs. Housing Commissioner, Karnataka Housing Board, C.A. No.6730-6731, decided on 19.09.2012 and considering the extent of appreciation in the land value and increase in the cost of construction since 2006, this Commission directed the opposite party to refund the amount paid to it by the complainants, along with compensation in the form of simple interest on that amount @ 18% per annum from the date of deposit till the date the said amount was paid to the flat buyers. The payment was directed to be made within six weeks.

Being aggrieved from the order passed by this Commission, the opposite party preferred an appeal before the Hon'ble Supreme Court being Civil Appeal (Diary No. 35562 of 2015). Vide signed order dated 11.12.2015, the Hon'ble Supreme Court dismissed the said appeal. The order passed by the Hon'ble Supreme Court reads as under:-

"We have heard learned counsel for the appellant and perused the record. We do not see any cogent reason to entertain the appeal. The judgment does not warrant any interference. The Civil Appeal is dismissed."

5. When this matter came up for hearing on 15.10.2015, the learned Senior counsel for the opposite party stated on instruction that they have one ready built up flat on the 20^thfloor in Tower -20 of the same project and they were offering the same, on the same price on which the booking was made. On the said statement being made, the learned counsel for the complainants was asked to take instructions as to whether either of them was ready to accept the aforesaid flat, along with interest @ 12% per annum form the committed date of delivery of possession till the date of possession is offered. On the next dated i.e. 18.11.2015, the learned counsel stated, on instructions, that the said offer made by the opposite party was not acceptable to them. However, today in the course of hearing, the learned counsel for the complainants stated that since the complainants are in need of money and want to avoid further litigation in the matter, they are restricting their claim to refund along with compensation in the form of interest at the rate of 12% per annum.

6. It is an admitted position that the opposite party was required to deliver possession of the

flats to the complainants y 15.11.2008. Since the opposite party miserably failed to perform its contractual obligation, the complainants are not bound to accept possession when offered after more than seven years from the committed date of possession. On account of the aforesaid default on the part of the opposite party, the complainants are entitled to get refund of the amount which they had paid to the opposite party along with appropriate compensation.

7. In my view, considering the cost of borrowing in the market alone, compensation in the form of simple interest @ 12% per annum can in no case be said to be exaggerated or inflated. The cost of borrowing in the market from the banks/financial institutions during the relevant period was about 12% per annum. Even if no compensation is awarded to the complainant for the mental agony and harassment suffered by the complainant on account of the failure of the opposite party to deliver on its promise, the compensation in the form of simple interest @ 12% per annum would be eminently justified.

8. During the course of arguments, it was contended by the learned counsel for the opposite party that since the cost of the flats was less than Rs. One crore each, this Commission lacks pecuniary jurisdiction to entertain the complaint. I however find no merit in the contention. A similar plea was rejected by this Commission in Swarn Talwar (supra) and the said order, to the extent it is relevant in this regard reads as under:

"5. The first question which arises for our consideration in these cases is as to whether this Commission possesses the requisite pecuniary jurisdiction to entertain these complaints. Section 11(1) of the Consumer Protection Act read with Section 21 of the Consumer Protection Act to the extent it is relevant provides that this Commission shall have jurisdiction to entertain complaints where the value of the goods or services and compensation if any claimed exceeds Rs.1,00,00,000/-. The contention of the learned counsel for the opposite party is that interest claimed by the complainants cannot be termed as compensation and if the interest component is excluded, the pecuniary value of the complaint does not exceed Rs.1,00,00,000/- except in one case. The learned counsel for the complainants on the other hand contended that the interest which they have claimed along with refund of the principal sum even if not so described specifically, is by way of compensation only, since the opposite party has been deficient in rendering services to the complainants by not delivering possession of the flats on or before the time agreed in this regard.

6. In our view, the interest claimed by the flat buyers in such a case does not represent only the interest on the capital borrowed or contributed by them but also includes compensation on account of appreciation in the land value and increase in the cost of construction in the meanwhile. As noted by us in CC No.232 of 2014, Puneet Malhotra Vs. Parsvnath Developers Ltd. decided on 29-01-2015, there has been steep appreciation in the market value of the land and cost of construction of the residential flats in Greater Noida in last about 7-10 years and consequently the complainants cannot hope to get a comparable flat at the same price which the opposite party had agreed to charge from them. In fact it would be difficult to get a similar accommodation, even at the agreed price plus simple interest thereon at the rate of 18% per annum. Therefore, the payment of interest to the flat buyers in such a case is not only on account

of loss of income by way of interest but also on account of loss of the opportunity which the complainants had to acquire a residential flat at a particular price.

7. In Ghaziabad Development Authority Vs. Balbir Singh (2004) 5 SCC 65, the Hon'ble Supreme Court inter alia observed and held as under:

"However, the power to and duty to award compensation does not mean that irrespective of facts of the case compensation can be awarded in all matters at a uniform rate of 18% per annum. As seen above what is being awarded is compensation i.e. a recompense for the loss or injury. It therefore necessarily has to be based on a finding of loss or injury and has to correlate with the amount of loss or injury. Thus the Forum or the Commission must determine that there has been deficiency in service and/or misfeasance in public office which has resulted in loss or injury. No hard and fast rule can be laid down, however a few examples would be where an allotment is made, price is received/paid but possession is not given within the period set out in the brochure...

…Along with recompensing the loss the Commission/Forum may also compensate for harassment/injury both mental and physical. Similarly, compensation can be given if after allotment is made there has been cancellation of scheme without any justifiable cause.

That compensation cannot be uniform and can best of illustrated by considering cases where possession is being directed to be delivered and cases where only monies are directed to be returned. In cases where possession is being directed to be delivered the compensation for harassment will necessarily have to be less because in a way that party is being compensated by increase in the value of the property he is getting. But in cases where monies are being simply returned then the party is suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. He is being deprived of that flat/plot. He has been deprived of the benefit of escalation of the price of that flat/plot. Therefore the compensation in such cases would necessarily have to be higher.

It would, thus, be seen that the Hon'ble Supreme Court recognized that the interest to the flat buyers in such cases is paid by way of compensation. Therefore, there is no reason why the interest claimed by the complainants or at least part of it should not be taken into consideration for the purpose of deciding the pecuniary jurisdiction of this Commission. If this is done, the aggregate amount claimed in each of the complaints exceeds Rs.1,00,00,000/- and, therefore, this Commission does possess the requisite

pecuniary jurisdiction. In the cases where the complainant does not want refund and is seeking possession, alongwith compensation for the delayed possession, this Commission would have jurisdiction to entertain the complaint, if the aggregate of the value of the flat, on the date of filing of the complaint and the compensation claimed for the delay in delivering possession, exceeds Rs. 1 Crore. In terms of Section 21(a) of the Consumer Protection Act, this Commission can entertain complaints where the value of the goods or services and compensation exceeds Rs. 1 Crore. Since the buyer is seeking possession of the flat booked by him, the value of the service, in such a case in our opinion, in terms of Section 21(a) of the Consumer Protection Act means the value of the flat as on the date of filing of the complaint and not the value on the date the flats were booked". In the present case, the total amount claimed by the complainant is more than Rs.1 crore. Therefore, considering the extent of the claim made in the complaint, this Commission does possess the requisite pecuniary jurisdiction to entertain and decide this complaint.

9. The learned counsel for the opposite party relied upon the judgments in Consumer Complaint No.353 of 2015 Charu Chhabra and Ors. Vs. Jai Maa Infrastructure Pv.t Ltd. decided on 26.5.2015, Consumer Complaint No. 153 of 2009 Seven Islands Shipping Ltd. Vs. Reliance General Insurance Co. Ltd. & Ors. Decided on 06.11.2015 and First Appeal No. 417 of 2002 Shahbad Cooperative Sugar Mills Ltd. Vs. National Insurance Co. Ltd. & Ors. Decided on 02.4.2003, the decisions in Seven Islands Shipping Ltd. (supra) and Shahbad Cooperative Sugar Mills Ltd. (supra) are not relevant to the issue involved herein, whereas in Charu Chhabra & Ors. (supra), this Commission had found that even if the interest was calculated @ 18% per annum, this Commission would not have pecuniary jurisdiction to entertain the complaint.

On the other hand in the present complaints, the complainants have claimed interest @ 18% per annum and computed accordingly, the principal amount when added to the amount of compensation comes to more than Rupees one crore each in both the cases, even if the amount claimed by way of rent is excluded from purchases.

10. For the reasons stated hereinabove, I direct the opposite party to refund the entire amount paid to it by the complainants alongwith compensation computed @ 12% per annum on the principal payment from the date of each payment till the date on which the entire payment including compensation in terms of this order is made. The payment shall be made within six weeks from today.

The complaints stand disposed of.

......................J

V.K. JAIN

PRESIDING MEMBER