Niru Kaushal v. Unitech Ltd.

Block

1137/2016 Ravi Nirula HBTN, ₹71,16,302

14.03.2007 14.03.2010

₹64,31,479/ Tower 17,

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5. The complaints have been resisted by the opposite party mainly on following grounds :

(i) The delay is attributable to a recession in the economy, affecting the availability of the resources such as labour and raw materials;

(ii) There was major disruption in the construction activity of the opposite party due to massive agitation and strikes by farmers whose lands were acquired by NOIDA, which resulted in slackening and availability of supply of raw material;

(iii)) There was acute shortage of labour, underground water and raw material besides delayed approval from Greater Noida Authority;

(iv) In terms of clause 4(e) of the allotment letter the opposite party is entitled either to offer an alternative property or refund the amount paid by the complainant with simple interest at the rate of 10% per annum without damages or other compensation.

(v) It is also alleged that notification dated 14-09-2006 issued by Government of India imposed restrictions and prohibitions on new projects or activities or on the extension or modernization of the

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existing projects without prior environmental clearances and the procedure for obtaining such clearances led to delay in construction schedule. It is also claimed that the Dharna by farmers who were agitated on account of acquisition of their land, in front of the projects of various builders also halted the construction work and there was default in payment of instalments by several flat buyers, dues against whom amounted to nearly Rs.57,00,00,000/-.

6. In the rejoinder, respective complainants have denied averments in the written statement.

7. Parties have filed affidavit evidence in support of their respective submissions. We have heard learned counsel for the parties and perused the record.

8. It is pertinent to mention that so far as complainants Amaan Abdul Ghani Khan and Yasmeen Khan of complaint no. 1139 of 2016 are concerned, they are subsequent purchasers who purchased the rights of original allottee on 29.08.2008 which transaction was recognized by the opposite party. As regards complainants Vishal Ranjan and Rachna Kumar in complaint no. 1131 of 2016 and complainants Avinash Chander Khandpur and Parakram Khandpur in complaint no. 1134/2016, they were originally allotted different apartments but later on pursuant to the agreement with the opposite party, the allotment was switched to apartment no.304, 3^rdFloor in Tower HBTN-3 and apartment no.103, Ist Floor in Tower 19 respectively.

9. The first question which needs determination is as to whether this Commission has pecuniary jurisdiction to entertain the above noted complaints?

10. Section 11 (1), 17 (1) (a) (i) and 21 (a) (i) of the Consumer Protection Act, 1986 (in short, "the Act") provides for the pecuniary jurisdiction of the respective Foras and hierarchy to deal with the original consumer complaints. Section 21 (a) (i) of the Act provides that National Commission shall have jurisdiction to entertain the complaints where the value of goods or services and compensation, if any, exceeds Rs.1.00 crore.

11. Contention of learned counsel for the opposite party is that for the purpose of pecuniary jurisdiction, only the value of services plus compensation is to be taken into account and the interest claimed not being the compensation cannot be added to the consideration amount for the respective apartments to inflate the pecuniary value of the relief.

12. We do not find merit in the above contention. In our considered view, the interest claimed by the apartment buyers is in the nature of compensation because had the complainants kept the amount paid to the opposite party in their bank, they obviously would have earned interest. Hon'ble Supreme Court in the matter of Ghaziabad Development Authority Vs. Balbir Singh (2004) 5 State Commission 65 has interalia 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

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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."

13. From the above, it would be seen that Hon'ble Supreme Court has also recognized that the interest on the consideration amount or the part thereof paid by the apartment buyer is in the nature of compensation. If we add the amount paid by the respective complainants against the consideration of the booked apartment and the interest claimed thereon in each and every case, the value of the relief sought is more than a crore. Therefore, we hold that the complaints are within the pecuniary jurisdiction of this Commission.

14. Coming to the plea of Force Majeure taken by the opposite party. It may be noted that issue raised by the opposite party is no more resintegra. Similar pleas to explain the delay in construction were taken by the opposite party in Consumer Complaint No.347 of 2914 Swarn Talwar and 2 Ors. Vs. Unitech Ltd. and other connected consumer complaints which pertain to the alleged deficiency i.e. failure of the opposite party to deliver possession of the booked apartments in the same project. In the aforesaid matters, Coordinate Bench of this Commission vide order dated 14.08.2015 declined to accept the plea of Force Majeure taken by the opposite party. The relevant reasoning of the Coordinate Bench rejecting the plea of Force Majeure is reproduced as under :

"Coming to the pleas that there was recession in the economy and a disruption due to agitation by farmers and acute shortage of labour, etc., the following view taken by us In Satish Kumar Pandey (Supra) is relevant.

"Neither any new legislation was enacted nor an existing rule, regulation or order was amended stopping suspending or delaying the construction of the complex in which apartments were agreed to be sold to the complainants. There is no allegation of any lock- out or strike by the labour at the site of the project. There is no allegation of any slow- down having been resorted to by the labourers of the opposite party or the contractors engaged by it at the site of the project. There was no civil commotion, war, enemy action, terrorist action, earthquake or any act of God which could have delayed the completion of the project within the time stipulated in the Buyers Agreement. It was contended by the counsel for the OP that the expression 'slow down' would include economic slow-down or recession in the Real Estate sector. I, however, find no merit in this contention. The word 'slow down' having been used alongwith the words lock-out and strike, I has to be read ejusdem generis with the words lock-out and strike and therefore, can mean only a slow

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down if resorted by the labourers engaged in construction of the project. As regards, alleged shortage of labour, I find that no material has been placed on record by the OP that despite trying, it could not be get labourers to complete the construction of the project within the time stipulated in the Buyers Agreement. It was submitted by the learned counsel for the complainants that ordinarily big builders such as the OP in these cases, are contracting/sub-contracting the construction work to the contractors engaged by them, instead of employing their own labourers on a regular basis, the purpose being to ensure that they are not saddled with the wage bill of those regular labourers, in case the opposite party does not have adequate work for them. There is no evidence of the OP having been invited tenders for appointment of contractors / sub- contractors for executing the work at the site of those projects and no contractor/ sub- contractor having come forward to execute the project on the ground that adequate labour was not available in the market. Therefore, it cannot be accepted that the opposite party could not have arranged adequate labour, either directly or through contractors/sub- contractors, for timely completion of the project. As regards the alleged shortage of water, bricks and sand in the market, I find that there is no evidence filed by the OP, to prove that it was unable to procure water, sand and brick in adequate quantity. This is also their case that the notification of the Government, being relied upon by the opposite party, is an old notification, which was in force even at the time the opposite party promised possession in 36 months. There is no evidence of the opposite party having invited tenders for supply of bricks and water and there being no response to such tenders. In fact, if the work is to be executed through contractors/sub-contractors, the material such as bricks, sand and even water will be arranged by the contractor/sub-contractor and not by the opposite party. As noted earlier, there is no evidence of the opposite party having invited tenders after awarding the work of project in question to the contractors/sub-contractors and there being no response to such tenders. Therefore, I find no merit in the plea that the completion of the project was delayed due to non-availability of water, sand and bricks in adequate quantity.

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.

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 Buyer's 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 Buyer's Agreement is never shown to the purchasers at the time of booking the apartment and if he refuses to sign the Buyer's

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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 Buyer's 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 Buyer's 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". It would also be pertinent to note here that as pointed out by the complainants the agitation of the farmers was on account of acquisition of land in Noida Extension and not on account of acquisition of land on which the project in which the flats were to be constructed for the complainants. As regards the alleged delay in obtaining environmental clearances there is no material on record to show when the opposite party applied for such clearances, where they submitted all the requisite documents etc. while applying for such clearances and how much was the time taken by the concerned authorities in granting the

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said clearances. In the absence of such particulars, it would be difficult for us to accept that development of the project was delayed on account of any notification imposing restrictions on new projects. In any case, the opposite party has failed to produce before us any notification imposing restriction or prohibition on development of the project in which the flats were to be constructed for the complainants."

15. We do not find any reason to disagree with the aforesaid reasoning of the Coordinate Bench. Accordingly, taking note that the facts of the complaints under consideration are similar to the facts of the above noted cases decided by the Coordinate Bench, we do not find force in the plea of Force Majeure taken by the opposite party. As the opposite party has failed to complete the construction and deliver the possession of the respective apartments to the complainants despite of expiry of agreed date of delivery of possession by almost seven years, we find the opposite party guilty of deficiency in service.

16. Counsel for the opposite party has raised a half-hearted plea of limitation. It is contended that it is admitted case of the complainants that possession of subject apartments were to be delivered somewhere in the year 2009-2010. As the complainants have filed the above noted consumer complaints more than seven years after the date on which the possession was agreed to be delivered, in view of Section 24-A of the Consumer Protection Act, the complaints are time barred and liable to be dismissed.

17. We do not find merit in the above noted plea. As per the builder buyer agreement the opposite party had promised to construct and deliver possession of the subject apartments to the respective complainants in consideration of their paying the agreed consideration amount. The opposite party till date has not offered possession of the subject apartments to the complainants and as also not refused to deliver possession. Thus, this is a clear case of continuing cause of action. We therefore are of the view that the complaints filed by the respective complainants are within limitation. Reliance in this regard may be placed upon the decision of Hon'ble Supreme Court in the matter of Meerut Development Authority Vs. M K Gupta IV (2012) CPJ 12, wherein Hon'ble Supreme Court held that in such a case buyer has a recurrent cause for filing a complaint for non delivery of possession of the plot.

18. Now the question is, what should be the amount of compensation to be paid to the complainants?

19. Learned counsel for the complainants has contended that as the opposite party has utilized the money paid by the complainants as part payment against the consideration amount, the interest of justice demands that opposite party should refund the said amount with interest @ 18% from the date of respective dates of deposits.

20. Learned counsel for the opposite party on the contrary has contended that admittedly the parties had entered into a Builder Buyer Agreement and, therefore, they are bound by the terms and conditions of their respective agreements. Learned counsel has argued that clause 4 c (ii) deals with the compensation payable by the developer in the event of delay in offering possession and as per said clause, the developer is liable to pay compensation @ Rs.5/- per sq. ft. per month of the super area for the period of delay in offering the delivery of the apartment beyond the period indicated in clause 4.a (i).

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21. Clause 4 c (ii) of the Builder-Buyer Agreement is reproduced as under:

"That the Developer would pay charges @ Rs.5/- per s q. ft. per month of Super Area for the period of delay in offering the delivery of the said apartment beyond the period indicated in clause 4 (a) (i), save and except as for reasons beyond the reasonable control of the Developer and Force Majeure events. These charges would be adjusted at the time of Final Notice for possession."

22 On reading of the above, it is clear that this clause provides for payment of compensation if the developer delays the offer of possession beyond the period indicated in clause 4 a. (i).

23. Clause 4(e) is the another clause in the agreement deals with the compensation to be paid by the developer when he is not in a position to offer the allotted apartment. Clause 4 (e) is reproduced as under:

"Default:

If for any reason the Developer is not in a position to offer the Apartment altogether, the Developer shall offer the allottee (s) an alternative property or refund the amount in full with Simple Interest @ 10% per annum without any further liability to pay damages or any other compensation on this account."

24. On reading of the above, it is clear that if for any reason the developer is not in a position to offer the allotted apartment, developer would offer an alternative property or to refund the amount paid by the allottee in full with 10% interest per annum.

25. In the instant case, the opposite party was supposed to deliver possession of respective apartments to the complainants during the period 2009-2010. More than seven years from the respective stipulated dates of delivery of possession have gone by but admittedly the construction of apartments is not complete. Thus, in our view, this is a case of inability of opposite party to offer possession of booked apartments to the respective complainants. Thus, in our view, clause 4.(e) is applicable to assess the liability of opposite party. Thus, applying the aforesaid clause of the agreement, we are of the view that as per the agreements, developer is liable to refund the respective payments received from the respective complainants with 10% interest thereon from the date on which the payments were received.

26. In view of the discussion above, we allow the above noted complaints with following directions:

1. The opposite party shall refund to each of the complainants the respective amounts paid to it by the complainants within six weeks from today alongwith compensation of simple interest @ 10% p.a. from the date of each payment till the realisation of the amount.

2. The opposite party shall pay a sum of Rs.10,000/- each as litigation cost to the respective complainants.

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AJIT BHARIHOKE

PRESIDING MEMBER

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ANUP K THAKUR

MEMBER

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