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Rachna Sukhija v. Unitech Limited
Factual and Procedural Background
Multiple complainants booked residential flats in the Unitech South Park project in Sector 70, Gurgaon, developed by the opposite party. Each complainant executed a Buyers Agreement with the opposite party for different flats, with total consideration amounts ranging from approximately Rs. 88 lakhs to Rs. 1.25 crores. The complainants paid substantial sums, some nearly the entire consideration, but the possession of the flats was not offered as the construction had not commenced or progressed. The Buyers Agreement stipulated that possession should be offered within 36 months from the agreement date, failing which, if the developer could not offer the allotted apartment, they were obliged either to provide an alternative property or refund the amount paid with 10% interest per annum.
The complainants sought refund of the amounts paid along with compensation for the delay and non-delivery of possession. The opposite party resisted the complaints, citing delays due to environmental clearance procedures, economic conditions, labor and material shortages, and complaints filed with the Delhi Police.
Legal Issues Presented
- Whether the opposite party was justified in delaying possession of the flats due to delayed environmental clearance and other alleged external factors.
- Whether the opposite party was contractually obligated to refund the amounts paid by the complainants with interest due to non-delivery of possession.
- Whether the opposite party’s failure to offer alternative accommodation or refund constituted deficiency in service under the Buyers Agreement.
Arguments of the Parties
Opposite Party's Arguments
- Delay in obtaining environmental clearance from the Ministry of Environment and Forests, which was applied for on 10.9.2011 but granted only on 10.1.2014, caused construction delays.
- Economic slowdown and recession in the real estate market affected availability of labor and raw materials.
- Shortage of labor due to events such as the Commonwealth Games 2010 and implementation of social schemes like NREGS and JNNURM.
- Restrictions on use of groundwater for construction imposed by Punjab & Haryana High Court and Ministry of Environment and Forests notifications.
- Complaints filed with the Economic Offences Wing (EOW) of Delhi Police under IPC sections 406, 420, and 120B, which are under investigation.
- Shortage of bricks and sand due to regulatory restrictions and mining bans.
Complainants' Position
- Payment made as per Buyers Agreement but possession not offered and construction not commenced.
- Seeking refund of paid amounts with compensation and interest as per clause 4.e of the Buyers Agreement.
- Ready to accept principal amount with 10% simple interest to avoid further litigation.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ravikant Bhatt Vs. M/s Unitech Ltd. (Decided on 22.9.2016) | Requirement for builders to obtain environmental clearance prior to booking flats or disclose pending clearance to buyers. | Court held that the opposite party failed to obtain or disclose the status of environmental clearance before booking, thus responsible for delay. |
| Cap. Gurtaj Singh Sahni Vs. Unitech Limited (Decided on 2.5.2016) | Impact of prohibition on use of underground water for construction and builder's responsibility to arrange alternative sources. | Court held that the builder knew about the groundwater ban before agreement and could not justify delay on this ground without evidence of attempts to procure alternative water sources. |
Court's Reasoning and Analysis
The court analyzed the delay in possession and construction in light of the Buyers Agreement terms and the grounds advanced by the opposite party. It noted that the environmental clearance was not obtained before booking nor was its pending status disclosed to buyers, contrary to principles established in the Ravikant Bhatt case. The delay caused by the environmental clearance process was thus attributable to the opposite party's failure to inform and prepare the buyers.
Even after obtaining clearance, the opposite party failed to make reasonable progress, with construction not reaching the superstructure stage despite more than two and a half years passing. The court rejected the opposite party’s claims of labor and material shortages linked to events like the Commonwealth Games, economic slowdown, and government schemes, finding no evidence that these factors prevented the construction or that the opposite party made adequate efforts to mitigate them.
The court also dismissed the argument that complaints filed with the police justified delay, considering that such complaints should have encouraged timely completion. The shortage of bricks and sand was not substantiated with evidence of attempts to procure these materials.
Consequently, the court found the opposite party deficient in service for failing to deliver possession timely and not offering alternative accommodation as required under clause 4.e of the Buyers Agreement. The contractual obligation to refund the amounts paid with interest was thus triggered.
Holding and Implications
The complaints are disposed of with directions that the opposite party must refund the entire principal amount received from the complainants along with simple interest at 10% per annum from the date of payment until refund.
Additionally, the opposite party is directed to pay Rs. 10,000 as litigation costs in each complaint. The payments are to be made within three months from the date of the order.
The decision directly affects the parties by mandating refund and compensation but does not establish new precedent beyond reaffirming existing principles related to environmental clearance disclosure and contractual obligations in real estate transactions.
JUSTICE V.K. JAIN (ORAL) CC/182/2015 The complainants, namely, Smt. Ranjana Nagpal and Shri Kunal Nagpal booked a residential flat with the opposite party in a project, namely, Unitech South Park, which the said opposite party was to develop in Sector 70 of Gurgaon. A residential flat in the aforesaid project was allotted to them, for a total consideration of Rs.1,25,33,416/- followed by execution of a Buyers Agreement on 24.12.2012. The complainants claim to have already made payment of Rs.53,74,917/- to the opposite party but the possession of the flat has not been offered to them. In fact, even the construction of the flat allotted to the complainants has not commenced. As per clause 4.a(i) of the Buyers Agreement, subject to the allottee complying with the terms and conditions of the said agreement, the OP was to offer possession of the flat within a period of 36 months from the date of execution of the said agreement. Thus, the possession ought to have been offered to the complainants on or before 24.12.2015. As per clause 4.e of the Buyers Agreement if for any reason, the developer was not in a position to offer the allotted apartment, it was to offer an alternative property in any complex developed, underdevelopment or proposed to be developed in the surrounding area/projects and in case no alternative property was available, it was to refund the amount paid by the buyer in full with interest @ 10% per annum from the date of payment by the allottee, without any further liability to pay damages, charges or compensation. CC/580/2015 The complainants, namely, Ms. Shalini Pandey and Ms. Sharda Pandey Nagpal booked a residential flat with the opposite party in the same project, namely, Unitech South Park, which the said opposite party was to develop in Sector 70 of Gurgaon. A residential flat in the aforesaid project was allotted to them, for a total consideration of Rs.99,52,471/- followed by execution of a Buyers Agreement on 7.7.2011. The complainants claim to have already made payment of Rs.30,79,508/- to the opposite party but the possession of the flat has not been offered to them. In fact, the construction of the flat allotted to the complainants has not even commenced. CC/1233/2015 Gera Estate Pvt. Ltd., a company in which the complainant claims to be director booked a residential apartment in the aforesaid project and entered into a Buyers Agreement with the OP on 23.5.2011 in Block A-2 on the 11 floor was allotted to the said company for a total saleth consideration of Rs.95,95,360/-. Later on the allotment was transferred in the individual name of the complainant vide endorsement dated 1.9.2011 made by the opposite party. A total sum of Rs.30,79,061/- claim to have already been paid to the opposite party towards sale consideration but the possession of the flat has not been offered to them. The construction of the flat allotted to the complainants has not even commenced. CC/155/2016 The complainants, namely, Ms. Madhavi Sachwani and Mr. Chander Bhan booked a residential flat with the opposite party in the same project. A residential flat in the aforesaid project was allotted to them, for a total consideration of Rs.88,53,290/- followed by execution of a Buyers Agreement on 19.8.2011. The complainants claim to have already made the entire payment of Rs.88,53,290/- to the opposite party but the possession of the flat has not been offered to them. In fact, the construction of the flat allotted to the complainants has not even commenced. CC/905/2015 The complainants, namely, Ms. Aparna Shukla and Mr. Akshay Nagde booked a residential flat with the opposite party in the aforesaid project. A residential flat in the aforesaid project was allotted to them, for a total consideration of Rs.1,10,34,552/- followed by execution of a Buyers Agreement on 10.7.2012. The complainants claim to have already made the payment of Rs.1,09,59,897/- to the opposite party but the possession of the flat has not been offered to them. In fact, the construction of the flat allotted to the complainants has not even commenced. As per clause 4.a(i) of the Buyers Agreement, subject to the allottee complying with the terms and conditions of the said agreement, the OP was to offer possession of the flat within a period of 36 months from the date of execution of the said agreement. Thus the possession ought to have been offered to the complainant on or before 10.7.2015. CC/1166/2015 The complainants, namely, Mr. Chinmay Bhatt and Ms. Ruchi Saran booked a residential flat with the opposite party in the said project, i.e., Unitech South Park. A residential flat in the aforesaid project was allotted to them, for a total consideration of Rs.1,07,76,520/- followed by execution of a Buyers Agreement on 16.7.2012. The complainants claim to have already made the payment of Rs.48,23,233/- to the opposite party but the possession of the flat has not been offered to them. The construction of the flat allotted to the complainants has not even commenced. CC/667/2016 The complainants, namely, Ms. Rachna Sukhija and Ms. Sarita booked a residential flat with the opposite party in the same project. A residential flat in the aforesaid project was allotted to them, for a total consideration of Rs.97,01,600/- followed by execution of a Buyers Agreement on 29.4.2011. The complainants claim to have already made the payment of Rs.93,19,500/- to the opposite party but the possession of the flat has not been offered to them. The construction of the flat allotted to the complainants has not commenced. CC/1025/2015 The complainants, namely, Mr. Anand Dev Pandey and Ms. Bindumati Pandey booked a residential flat with the opposite party in the project, Unitech South Park. A residential flat in the aforesaid project was allotted to them, for a total consideration of Rs.87,89,332/- followed by execution of a Buyers Agreement on 14.9.2011. The complainants claim to have already made the payment of Rs.87,09,920/- to the opposite party but the possession of the flat has not been offered to them, and the construction of the flat allotted to the complainants has not commenced.
2. The terms and conditions of the Buyers Agreement are identical in all the cases and all the complainants are seeking refund of the amount paid by them to the opposite party, with compensation.
3. The complaints have been resisted by the opposite party on identical grounds. The grounds taken in the written version of the opposite party have repeatedly been considered and rejected by this Commission in a number of cases. The following primarily are the grounds on which the complaints have been resisted:- The opposite party submitted application dated 10.9.2011 to the Ministry of Environment and Forests for obtaining environmental clearance for this project but the said environmental clearance came to be accorded only on 10.1.2014, the intervening time having been taken by the State Expert Appraisal Committee (SEAC) and State Environment Impact Assessment Authority (SEIAA). Some of the buyers in this project filed a complaint with EOW Cell, of Delhi Police under section 406/420/120 B of IPC and the matter is under investigation of Delhi Police. There was slump in the real estate market, because of overall economic conditions, as a resultof which the supply of labour and raw-material became scarce. There was shortage of labour and the building materialdue to Common Wealth Games held in October 2010. There was shortage of labour due to implementation of social schemes such as National Rural Employment Guarantee Scheme (NREGS) and Jawahar Lal Nehru National Urban Renewal Mission (JNNURM) The use of ground water for building purposes was stayed by Punjab & Haryana High Court vide its order dated 16.7.2012. Restrictions were placed by Ministry of Environment and Forests vide Notification dated 14.9.1999 which resulted in the reduction in availability of bricks in the market since manufacture of clay bricks was stopped within a radius of 50 km from Coal and Ignite based Thermal Power Plants without mixing at least 25% of ash with soil. There was shortage of sand on account of mining in the Aravali Region having been stopped by the Honble Supreme Court.
4. As far as the delay in grant of the environmental clearance is concerned, admittedly it was not disclosed to the flat buyers, either in the Buyers Agreement or in the allotment letters that the requisite environmental clearance had not been granted by the concerned authorities. Ideally the environmental clearance ought to have been obtained before accepting the booking of the flats. In any case, if the opposite party had applied for the grant of the requisite environmental clearance before booking of the flats allotted to the complainants, it ought to have disclosed to them that though the said environmental clearance had been applied, the same had not been granted. In case the environmental clearance was applied after the booking, the opposite party ought to have disclosed to the buyers at the time of booking itself that they were yet to apply for the grant of the requisite environmental clearance. Thus neither the opposite party obtained the requisite environmental clearance before booking of the flats nor did it disclose to the flat buyers that the requisite environmental clearance was yet to be granted. This issue came to be considered by this Commission in Ravikant Bhatt Vs. M/s Unitech Ltd. decided on 22.9.2016 and the following view was taken:- CC No.1232 of 2015
6. As regards the delay in obtaining the environmental clearance, the opposite party knew before accepting booking from the complainants and allotting a flat to them that since the size of the project was more than 20,000 sq.ft. of built up area, environmental clearance in terms of the Notification dated 14.9.2006 would be necessary and the said clearance would be given only after the project was approved by State Environment Impact Assessment Committee and then by State Level Environment Impact Assessment Authority. It was, therefore, necessary for the opposite party to either obtain the requisite environmental clearance before accepting the booking or at least inform the buyers that the construction would commence only after obtaining the requisite environmental clearance which they were yet to receive. This is particularly necessary in a case where the builder is promising delivery of the apartment in a time-bound manner linked with the date of the Buyers Agreement and not with the date on which the construction actually commences after obtaining all the requisite clearances. If such a disclosure is made to the buyer and still he chooses to make a booking knowing fully well that the builder may not be held responsible for the delay to this extent it is attributable solely to the concerned environmental authority, it will not be possible to hold the builder responsible for the delay in the aforesaid extent.
5. More importantly even after obtaining the requisite environmental clearance, the opposite party has not been able to complete the construction and in fact the construction admittedly has not even reached the level of completing the superstructure. The time of more than rather 2 years and 8 months which was available to the opposite party after grant of the requisite environmental clearance was sufficient if the said opposite party was keen to complete the project, to either complete the construction or at least reach an advanced stage of the construction. Therefore, it would be difficult to accept the plea that the delay in offering possession of the flats to the complainants has happened on account of the time taken in obtaining the environmental clearance.
6. As regards the alleged non-availability of ground water on account of the use of ground water in building activities, having been stayed by the Punjab and Haryana High Court, the following view taken by this Commission in Cap. Gurtaj Singh Sahni Vs. Unitech Limited, decided on 2.5.2016 is and connected matters, Consumer Complaint No.603 of 2014 pertinent:-
6. The next question which arises for consideration is the quantum of compensation which should be paid to the complainants for the delay in completion of the villas. As far as the prohibition on use of underground water in construction is concerned, the learned counsel for the complainant has drawn my attention to the order dated 21.08.2012 passed by a Divisional Bench of Punjab & Haryana High Court in Civil Writ Petition No. 20032 of 2008 wherein the High Court noted that the public notice issued under Section-5(3) of the Environment Protection Act, 1986 was published in the newspaper on 26.12.2000. It further shows that the said notice had imposed a complete ban upon the use of underground water in the construction without prior approval of the competent authority. It was noted by the High Court that despite publication of the aforesaid notice, the builders continued to use underground water for construction purposes. If there was a complete ban on use of underground water for construction and the said prohibition was notified on 26.12.2000, the opposite party must have taken into account, the impact of the said prohibition while entering into Buyers Agreements with the complainants. Therefore, it is not open to the opposite party to rely upon the said prohibition in order to justify the delay in construction of the villas sold to the complainants. The opposite party knew at the time of entering into agreements with the complainants that it will not be able to use underground water for construction of the villas and therefore, will have to make alternative arrangements from authorized sources for making the water available for the said construction. Therefore, the aforesaid prohibition on use of the underground water for construction purpose does not justify the delay in completion of the construction. In any case, no material has been placed by the opposite party on record to show that efforts were made by it during the relevant period to procure water from alternative sources but it was unable to obtain the water from the said sources. More importantly, in the Buyers Agreement executed between the parties, it was not disclosed to the buyers that since no underground water can be used for construction purpose, the developer will have to arrange water from alternative sources and in case it is not able to arrange water, the construction would be delayed and in that case, it will not be held responsible for the delay in completion of the construction.
7. As regards the alleged shortage of labour and building material on account of Commonwealth Games, the plea taken by the opposite party is wholly misplaced since the said games were over in October 2010 much before the allotment in this project was made to the complainants.
8. As regards the alleged economic slowdown and consequent recession in the real estate market, the same cannot be a valid ground for delaying the possession of the flats to the complainants since some of the buyers made advance payment of almost 95% of the sale consideration whereas the other buyers were to make payment linked with the progress of construction and this is not the case of the opposite party that they had defaulted in performing their contractual obligations as regards the payment of the sale consideration. Therefore, it cannot be said, as far as this project is concerned, that the construction was delayed on account of funds not being available with the opposite party.
9. As regards the alleged shortage of labour due to NREGS and Jawahar Lal Nehru National Urban Renewal Mission, there is no evidence of the opposite party having attempted to recruit labour and having not found the requisite labour available in the market. Ordinarily such big builders operate by giving contracts/sub-contracts to third parties. There is no evidence of the opposite party having not been able to get any contractor/sub-contractor on account of non-availability of labour and/or building material in the market. Moreover, this is not the case of the opposite party that no construction activity took place in Gurgaon in the last 5 years or so. Had the labour and/or building material not been available in the market, the problem would have been faced not only by the opposite party but by all other builders as well as the individuals who were seeking to construct houses in this area. Therefore, I find no merit in the aforesaid plea taken by the opposite party.
10. As far as filing of a complaint with EOW Cell of Delhi Police, I fail to appreciate how filing such a complaint could have justified the delay in completing the construction. Such a complaint rather should have put pressure on the opposite party to expedite the completion of the construction in order to ventilate the grievance of the flat buyers.
11. As regards the alleged shortage of bricks and sand, there is no evidence of the opposite party having invited tenders for supply of bricks and sand and the said material having not been available in the market. Moreover, there is no evidence of any sub-contractor/contractor of the opposite party having stopped the work awarded to him on account of non-availability of labour and/or building material in the market. It is possible that the wages of the laour and the cost of the building material may have gone up with the passage of time but it would be difficult to accept that neither the required labor nor the building material in sufficient quantity was available in the open market.
12. For the reasons stated hereinabove, I am satisfied that the delay in construction of the flats allotted to the complainants did not happen on account of reasons beyond the control of the opposite party. Therefore, the said opposite party was deficient in rendering services to the complainants by not delivering timely possession of the flats allotted to them.
13. It is also an admitted position that no alternative allotment was offered to the complainants at any point of time. Even during the pendency of this complaint, the opposite party has not come out with any offer to provide alternative flats to the complainants. Therefore, in view of clause 4.e of the Buyers Agreement, the opposite party is under a contractual obligation to refund the entire amount received from the complainants along with interest on that amount @ 10% per annum from the date the said amount was deposited with it.
14. The learned counsel for the complainants states on instructions that in order to avoid any further litigation and bring the matter to a closure, the complainants are ready and willing to accept the principal amount paid by them along with compensation in the form of simple interest @ 10% per annum in terms of clause 4.e of the Buyers Agreement.
15. For the reasons stated hereinabove, the complaints are disposed of with the following directions:-
(i) The OP shall refund the entire principal amount received from the complainants/allottees in respect of the flats allotted to them along with compensation in the form of simple interest @ 10% per annum from the date of receipt of each payment till the date on which the entire amount payable to the complainants/allottees along with compensation in the form of interest in terms of this order is refunded.
(ii) The OP shall also pay Rs.10,000/- as the cost of litigation in each complaint.
(iii) The payment in terms of this order shall be made within three months from today. ......................J
V.K. JAIN PRESIDING MEMBER
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