Pradeep Narula v. Granite Gate Properties Pvt. Ltd.

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

1. The complainants booked a residential apartment in a Group Housing Project namely Lotus Panache, which the opposite party was to develop on Plot No. GH-05 in Sector-110 of Noida and an allotment letter dated 28.06.2010, allotting flat no. 501, admeasuring 2587 sq. ft., for a total consideration of Rs.9105278/- was issued to them. The parties then entered into an Apartment Buyers Agreement on 29.06.2010. As per clause 5.1 of the Buyers Agreement, the opposite party was to endeavor to complete the construction within 39 months from the date of allotment, meaning thereby that the possession was to be delivered to them by 27.09.2013. The possession however, was not offered to the complainants by that date and they were informed that the possession will not be given before July 2014. The aforesaid deadline was later extended till 31.12.2014. Being aggrieved from the failure of the opposite party to honour its contractual obligation and alleging deficiency on its part in rendering services to them, the complainants are before this Commission seeking the following reliefs:

a) Hold the opposite parties guilty of following unfair trade practices and restrain them from following such activities; and

b) Direct the opposite parties to immediately hand over possession of the apartment worth Rs.91,05,278/- to the complainants on payment of the final installment amount; and

c) Direct the opposite parties to pay interest @ 18% per annum on the account of delay, calculated on the amount already paid by the complainants (i.e. Rs.88,52,757/-), till the time the possession of the apartment is handed over to the complainants; and

d) Direct the opposite parties to pay delay charges of approximately Rs.3,00,000/- to the complainants in accordance with the Apartment Buyer Agreement for the delay caused in completing the construction and handing over peaceful and vacant possession of the apartment; and

e) Direct the opposite parties to pay damages to the tune of Rs.10,00,000/- as compensation for mental harassment, torture and victimization of the complainants; and

f) Direct the opposite parties to pay damages to the tune of Rs.6,00,000/- as compensation for the rental accommodation of the complainants paid till the date of filing of the complaint and also commutation costs incurred by the complainants till the date of filing of the complaint;

g) Direct the opposite parties to compensate the complainants for the rent and also the commutation cost which the complainants shall have to pay in future, till the time peaceful and vacant possession of the apartment is handed over to the complainants;

h) Direct the opposite parties to pay the cost of litigation to the tune of Rs. 1,00,000/- to the complainants;

2. The complaint has been resisted by the opposite party which has inter-alia claimed that it was only to make endeavor to complete the construction but did not make any firm commitment to deliver possession within 39 months from the date of the allotment. It was further alleged that the delay in handing over possession of the flat happened for the reasons that (a) there was shortage of manpower and construction material due to Commonwealth Games, (b) National Green Tribunal, vide its order dated 11.01.2013, injuncted the builders from extracting ground water for the purpose of construction, resulting in acute shortage of water for construction work, (c) there was an agitation by the farmers whose land was acquired and the said agitation which lasted about two months, impeded the construction work. It is also alleged that the complainants had defaulted in timely payment of the sale consideration on five occasions though the opposite party had waived the charges of Rs.15549/- which was payable on account of the said delay.

3. It is not in dispute that the construction of the flat allotted to the complainants was not complete when this complaint was filed. Vide e-mail dated 13.05.2016, the opposite party itself has sent a revised deadline of January 2017 for delivery of possession of the flats in Tower-29 of this project. Since the complainants are ready to wait even till January 2017, and are not seeking refund of the amount paid by them, the only question which arises for consideration in this case is as to whether the complainants are entitled to any compensation for the delay on the part of the opposite party in offering possession to them and if so, what should be the quantum of compensation which the opposite party needs to pay to them.

4. Clause 5.1, 5.2 and 5.5 of the Buyers Agreement on which reliance is placed by the opposite party, reads as under: 5.1 Subject to Clause 5.2, the sanction of the building plans for the Housing Project (including revisions thereof), and to all the buyers of the apartments in the Housing Project making timely payment the company shall endeavor to complete the construction of the apartment within 39 months from the date of the allotment of the apartment as per the allotment letter. 5.2 The parties agree and acknowledge that where the completion of the construction of the apartment and/or the handing over of the possession of the apartment is delayed by any reasons, beyond the control of the company, including without limitation force majeure, then no claim whatsoever by way of any damages/compensation shall lie against the company, and the buyer hereby waives all rights and aims in this regard. Further, where there occurs any delay in possession being handed over to the buyer on account of any of the reasons specified under this Clause 5.2, the company shall be entitled to a reasonable extension of time for handing over possession of the said apartment to the buyer. 5.5 Subject to the buyer having complied with its obligations under this Agreement, as well as the allotment letter, including but not limited to timely payment of the consideration and other charges as per the payment plan opted by the buyer, in the event of any willful delay in construction of the apartment for reasons attributable solely to the company, delay charges would be payable to the buyer, in the manner and to the extent specified herein below: Period of Delay (Months) Penalty per Month (Rs. Per Sq. Ft.) 1-3 5.00 4-6 7.50

7 onwards 10.00

5. Despite use of the words the company shall endeavor to complete the construction, I am of the view that unless prevented by reasons beyond its control, the opposite party was under a contractual obligation to complete the construction and hand over possession of the apartments to the complainants within 39 months from the date of allotment. Therefore, the first question which arises for consideration in this complaint is as to whether the completion of the construction of the flats and offer of possession has been delayed for the reasons beyond the control of the opposite party or not. As regards shortage of labour and material on account of the projects related to the Commonwealth Games, no material has been placed on record by the opposite party to show that it could not get adequate work force or sufficient building material to complete the construction of the project within the time stipulated in the Buyers Agreement. There is no evidence of the opposite party having invited tender for engagement of Contractors/Sub-Contractors with adequate manpower and building material for executing the work at the site of this project and no such Contractor/Sub-Contractor having come forward to execute the work on account of non-availability of the manpower and/or the building material. There is no evidence of the building material not being available in the market. Therefore, it cannot be accepted that due to Commonwealth Games the opposite party could not arrange adequate labour or building material required for the timely completion of the project. In any case, the said games concluded in the year 2010 itself.

6. As regards delay of about two months on account of agitation by farmers, there is no evidence of the work at this particular site having been halted by the farmers. No affidavit of the contractor engaged by the opposite party for the construction of Tower-29 of the project has been filed to prove that he had to halt the work for about two months on account of agitation by farmers. No affidavit by any construction labourer has been filed to prove that the labourers were provided by farmers from carrying out construction on the site of Tower-29, for about two months. Therefore, the delay in completion of the construction on account of the alleged agitation by the farmers could not be substantiated by the opposite party.

7. Vide interim order dated 11.01.2013, the National Green Tribunal restrained all the builders of Noida and Greater Noida from extracting any quantity of ground water for the purpose of construction, till the next date of hearing before it. The next date of hearing before the National Green Tribunal fixed was 24.01.2013. The aforesaid order shows that the builders raising construction of 20,000 sq. mtrs. and above were required to take environmental clearance under the relevant rules by the competent authority in the State Government but said permission had not been taken. If the requisite EC was taken by the opposite party, the order passed by the National Green Tribunal did not apply to it. If the opposite party was required to take permission from the competent authority in the State Government but had not taken such a permission before selling flats in the aforesaid project, it is only itself to blame for creating a situation in which the order passed by the National Green Tribunal on 11.01.2013 came to be applied to this project. Moreover, there is no evidence of the opposite party having tried to obtain water for construction purpose from alternative source. If the National Green Tribunal had restrained the builders from extracting the underground water in Noida/Greater Noida, they were expected to arrange water from the alternative source so as to fulfill their contractual obligation to the flat buyers. It is not as if no construction took place in Noida and Greater Noida during the period the interim order passed by the National Green Tribunal remained in force. Therefore, if the opposite party so wanted, it could have arranged water for construction purpose from the alternative source. There is no evidence of the aforesaid interim order dated 11.01.2013 having been continued by the National Green Tribunal after 24.01.2013 which was the next date of hearing in the aforesaid matter. In any case, it cannot be said that the delay in completion of the project was justified on account of the above referred interim order of the National Green Tribunal.

8. The opposite party has filed, alongwith its affidavit by way of evidence, a copy of an order dated 28.10.2013 passed by the National Green Tribunal in M.A. No. 890 of 2013 and connected matters. The said order contains reference to an earlier order dated 14.08.2013, whereby NOIDA was directed to stop the construction work going on within a radius of 10 kms from Okhla Bird Sanctuary, without prior environmental clearance or in contravention of the same. The order dated 28.10.2013 shows that the aforesaid order applied to 49 projects out of which, 15 had already been completed and 7 had not begun. The Tribunal made it clear that its intention on 17.09.2013 was to extend the interim order dated 14.09.2013 to the persons or builders carrying on construction activity without environmental clearance or against the provisions of the environmental clearance. This is not the case of the opposite party that no environmental clearance was required or that it had not obtained such a clearance before it started the construction in this project. In such a case, the order passed by the National Green Tribunal would not apply to this project since the scope of the said order was limited to the construction activity being carried out without requisite environmental clearance or in contravention of the environmental clearance. If the opposite party had commenced construction of the project in question without obtaining the requisite environmental clearance or the said construction was in contravention of the environmental clearance, it has only itself to blame for the said construction being stopped by the National Green Tribunal.

9. Vide above referred order dated 28.10.2013, National Green Tribunal directed that all the projects within an area of 10 kms radius of the Okhla Bird Sanctuary be examined by National Board for Wild Life. The Ministry of Environment & Forests was directed to refer all the aforesaid projects to National Board for Wild Life, within four weeks. The Government of U.P. was directed to send the particulars relating to the environmental clearance given to the aforesaid projects to the Ministry of Environment & Forests within four weeks from the order. Within four weeks thereafter, Ministry of Environment & Forests was to refer the same to the standing Committee of National Board for Wild Life, which was to verify the correctness of the statement made by the project proponent. The order passed by the aforesaid Board was to indicate whether the project should be permitted or not. It was made clear that the building construction within 10 kms radius of Okhla Bird Sanctuary or within distance of Eco-Sensitive Zone to be prescribed by Ministry of Environment & Forests shall be subject to decision of National Board for Wild Life and till clearance from the said Board, the Authority shall not issue completion certificate to the project. Thus, in the aforesaid order dated 28.10.2013, the National Green Tribunal did not stay further construction of the projects where requisite environmental clearance had been obtained, and only completion certificate was withheld till clearance from the National Board for Wild Life. The order of the Tribunal to the extent the issue of completion certificate was withheld till the clearance from NBWL could not have contributed to the delay in offering possession to the complainants since the construction not being complete, the stage to obtain the requisite completion certificate had not reached, by the time the aforesaid order dated 28.10.2013 came to be passed by the National Green Tribunal. In fact, even in the cases where the construction was complete and the completion certificate had been applied, the builder could obtain the completion certificate on the project being cleared by NBWL. If there was a delay on the part of the Government of U.P. in sending the particulars relating to the environmental clearance given to the project, to the Ministry of Environment & Forests, there was delay on the part of Ministry of Environment & Forests in forwarding the matter to National Board for Wild Life or there was delay on the part of the National Board for Wild Life in completing its enquiry in terms of the order of the National Green Tribunal, the builder could always approach the said Tribunal for giving appropriate directions to the Government of U.P. or Ministry of Environment & Forests or National Board for Wild Life as the case might be. In its affidavit dated 20.07.2016, the opposite party has inter-alia stated that they had applied for completion certificate in respect of Tower-29 on 09.12.2014. However, there is no material or even an allegation that the completion certificate applied by the opposite party was delayed or withheld on account of the order of the National Green Tribunal dated 28.10.2013 or 03.04.2014. Therefore, the orders passed by the National Green Tribunal from time to time do not justify the delay in handing over possession to the complainants.

10. Relying upon the decision of the Honble Supreme Court in Smt. Chand Rani Vs. Smt. , it was contended by the learned counsel for theKamal Rani, Civil Appeal No. 3377 of 1979 opposite party that time is not the essence of the contract in a transaction for the sale of an immovable property. In Chand Rani (supra), the Honble Supreme Court inter-alia observed as under: It is a well-accepted principle that in the case of sale of immovable property, time is never regarded as the essence of the contract. In fact, there is presumption against time being the essence of the contract. This principle is not in any way different from that obtainable in England. Under the law of equity which governs the rights of the parties in the case of specific performance of contract to sell real estate, law looks not at the letter but at the substance of the agreement. It is not merely because of specification of time at or before which the thing to be done under the contract is promised to be done and default in compliance therewith, that the other party may avoid the contract. Such an option arises only if it is intended by the parties that time is of the essence of the contract. Intention to make time of the essence, if expressed in writing, must be in language which is unmistakable: it may also be inferred from the nature of the property agreed to be sold, conduct of the parties and the surrounding circumstances at or before the contract. Specific performance of a contract will ordinarily be granted, notwithstanding default in carrying out the contract within the specified period, if having regard to the express stipulations of the parties, nature of the property and the surrounding circumstances, it is not inequitable to grant the relief. If the contract relates to sale of immovable property, it would normally be presumed that time was not of the essence of the contract. Mere incorporation in the written agreement of a clause imposing penalty in case of default does not by itself evidence an intention to make time of the essence. In , theHind Construction Contractors Vs. State of Maharashtra (1979) 2 SCR 1147 Honble Supreme Court quoted the following extract from Halsburys Laws of England (para 1179, Vol-IV): Other provisions of the contract may, on the construction of the contract, exclude an inference that the completion of the works by a particular date is fundamental, time is not of the essence where a sum is payable for each week that the work remains incomplete after the date fixed, nor where the parties contemplate a postponement of completion. The aforesaid contention, in my view, does not really rise for consideration in a case where the flat buyer is seeking possession of the flat booked by him and does not insist upon refund of the sale consideration paid by him, with or without compensation. Moreover, the decision in Chand Rani (supra) was rendered in the context of a suit for specific performance of an agreement to sell the first floor of an existing house, whereas the decision in the Hind Construction (supra) was rendered in the context of a Government contract. In neither of these cases, the Honble Supreme Court was called upon to decide as to whether an unjustified and explained delay on the part of the builder/service provider in construction of a residential flat booked by a person seeking to have a shelter over his head amount to a deficiency in the service rendered by him to the consumer, or not. The primary purpose of a consumer in booking a residential flat which the builder is to construct for him, is to start living in that house on or about the date committed to him by the builder for delivering possession of the flat booked by him. If the builder does not deliver upon his contractual obligation and at the same time, is unable to show that the delay in completion of the flat and offering its possession to the consumer was on account on circumstances beyond his control, this would constitute deficiency on the part of the builder/service provider in rendering services to the consumer. If I accept the contention that the builder can indefinitely postpone and delay the construction of the flat and the flat buyer has no option but to wait till the builder decides to complete the construction and offer possession to the buyer, that would be nothing but a travesty of justice and result in a situation where the flat buyer is left at the mercy of the builder, without recourse to an appropriate legal remedy. Such an interpretation, if taken, is bound to defeat the very objective behind the enactment of the Consumer Protection Act, as far as housing construction is concerned. Therefore, I am unable to accept the contention advanced by the learned counsel for the opposite party. In my view, wherever the builder commits a particular date or time frame for completion of the construction and offering possession to the buyer, he must necessarily honour the commitment made by him, though a minor delay may not constitute deficiency in the service rendered by him to the buyer. Of course, if the builder is able to how that the delay in completion of the construction and offering possession to the buyer is attributable wholly to the circumstances beyond his control, that may not be a case of deficiency in the services rendered to the consumer.

11. As regards the delay on the part of the complainants in making certain payments to the opposite party, admittedly, the late payment has already been accepted by the opposite party. Having accepted the said payment, the opposite party is now estopped from denying possession of the flat to the complainants on account of the said delay. Interest as per the Buyers Agreement, unless already paid by the complainants or waived by the opposite party, can be adjusted by the opposite party out of the compensation payable to the complainants in terms of this order.

12. The last contention of the learned counsel for the opposite party was that in view of clause 5.5 of the agreement, the opposite party is required to pay only the agreed compensation to the complainants and the demand for a higher compensation is contrary to the terms of the Buyers Agreement, to which the complainants had voluntarily agreed. A similar contention came to be considered by this Commission in CC No. 427 of 2014, Satish and connected matters decided on 08.06.2015 and theKumar Pandey & Anr. Vs. Unitech Ltd. following view was taken :

10. Since the delay in construction of the apartments could not be justified by the OP, it is required to pay compensation to the flat buyers. The contention of the learned counsel for the OP is that such compensation has to be calculated @ 5/- per sq. ft. of the super area of the apartment for the period of delay in offering the possession beyond the period indicated in clause 4.a.i of the Buyers Agreement, the complainants having agreed to the aforesaid term while agreeing to purchase the apartments. This was also the contention of the learned counsel for the OP that the terms of the contract are binding on the parties and cannot be altered by a consumer forum. The learned counsel for the complainant on the other hand, submitted that since they are required to pay interest to the OP @18% p.a. compounding quarterly, in the event of delay in making payment as stipulated in clause 2.c of the Buyers Agreement, there is no reason why the opposite party should not pay interest at the same rate to them, as compensation. The learned counsel for the parties, however, admitted that the current interest of taking housing loans from the banks is about 10% p.a. though it had shot up to 11.5% per annum in last few years. It is also an admitted position that had the complainants deposited their money with a bank in a FDR instead of investing in the project of the OP, they would have earned interest @ about10% p.a.

11. It is an undisputed proposition of law that ordinarily the parties are bound by the terms and conditions of the contract voluntarily agreed by them and it is not for a Consumer Forum or even a Court to revise the said terms. The following view taken by the Honble Supreme Court in this regard in Bharathi Knitting Company Vs. DHL is pertinent:Worldwide Express JT 1996 (6) SC 254 It is seen that when a person signs a document which contains certain contractual terms, as rightly pointed out by Mr. R.F. Nariman, learned senior counsel, that normally parties are bound by such contract; it is for the party to establish exception in a suit. When a party to the contract disputes the binding nature of the signed document, it is for him to prove the terms in the contract or circumstances in which he came to sign the documents need to be established. It is true, as contended by Mr. M.N. Krishnamani, that in an appropriate case the Tribunal without trenching upon acute disputed question of facts may decide the validity of the terms of the contract based upon the fact situation and may grant remedy. But each case depends upon its own facts. In , it was stated in an advertisementPUDA Vs. Mrs. Shabnam Virk II (2006) CPJ 1(SC) issued by PUDA that the price quoted therein was purely tentative based on the then cost of construction and was likely to be revised on the higher side by the time houses were completed. The respondent before the Honble Supreme Court challenged the demand of the additional cost raised by PUDA. The demand however, was upheld noticing the aforesaid clause in the advertisement. 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. 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.

13. Though in Satish Kumar Pandey (supra), this Commission had awarded compensation in the form of interest @ 12% per annum, considering the recent decline in the cost of borrowing and return on the investments made with the banks, I am of the considered view that payment of an all inclusive compensation in the form of interest @ 10% per annum will meet the interest of justice.

14. For the reasons stated hereinabove, the complaint is disposed of with the following directions: The opposite party shall complete the construction in all respects unless already complete, obtain all the requisite approvals including the occupancy certificate, at its own cost and responsibility and offer possession of the flat booked by the complainants, to them on or before 31.01.2017. The opposite party shall pay, to the complainants, compensation in the form of simple interest @ 10% per annum w.e.f. from the committed date of possession as per the Buyers Agreement till the date possession is offered to them in terms of this order. The balance amount, if any, payable by the complainants, shall be adjusted while paying compensation in terms of this order. The compensation shall be paid on or before the date on which the possession in terms of this order is offered to the complainants. If the opposite party fails to deliver possession and pay compensation in terms of this order, the complainants shall be entitled to seek execution of this order under section 25 & 27 of the consumer protection act. The opposite party shall pay Rs.10,000/- as cost of litigation to the complainants. ......................J

V.K. JAIN PRESIDING MEMBER -10-