Ashok Khanna v. Ghaziabad Development Authority .

Ashok Bhan J., President:— Petitioner, who was the complainant before the District Consumer Disputes Redressal Forum, Ghaziabad, Uttar Pradesh (herein referred to as ‘the District Forum’ for short), has filed the present Revision Petition.

Briefly stated, the facts of the case are:—

Petitioner/complainant applied for a flat on 27.02.1988 under Kaushambi Apartment Scheme 1988 of the respondent-Ghaziabad Development Authority (hereinafter referred to as ‘GDA’ for short) and deposited Registration Fee of Rs. 60,000/-. GDA sent Reservation Letter in favour of the petitioner along with payment schedule. Petitioner paid the balance amount of Rs. 5,40,000/- as per the payment schedule sent by the GDA. It was alleged in the Complaint that as per the Brochure, GDA had to deliver possession of the flat upto 31.07.1990 On 06.11.1993, GDA informed the petitioner that the cost of the flat has been increased by Rs. 57,000/- and asked the petitioner to deposit additional amount of Rs. 57,000/- along with Rs. 6,470/- towards lease rent and Rs. 3,600/- as service charges on or before 30.11.1993 The possession was to be given upto 15.12.1993 Petitioner, after depositing the sum of Rs. 57,000/-, took delivery of possession on 20.12.1993 Alleging deficiency on the part of the GDA in not delivering the possession within the stipulated time, the Complaint was filed seeking interest @ 18% p.a on the deposited amount for the delayed period. Rs. 5,000/- were demanded by way of rent in addition to compensation and litigation expenses, etc.

GDA, in its Written Statement, admitted that the petitioner had applied for a flat in Kaushambi Appartment Scheme 1988. The deposit of sum of Rs. 6,00,000/- was also admitted. Stand taken by the GDA was that the period of 2 years promised for the delivery of possession was on estimate basis. Similarly, cost of Rs. 6,00,000/- was also fixed on estimate basis. Due to escalation of cost of construction, the petitioner was asked to deposit an additional sum of Rs. 57,000/-. It was stated that the petitioner was not entitled to any relief as he had taken the possession of the flat after being satisfied.

District Forum came to the conclusion that possession was to be handed over to the petitioner within 2 years and, since, the possession of the flat was handed over after a delay of more than 3 years, there was deficiency in providing the service and, accordingly, directed the GDA to pay interest @ 18% p.a for the period from 01.08.1990 to 20.12.1993 on the deposited amount within two months. GDA was also directed to pay a sum of Rs. 2,000/- towards compensation for mental agony and expenses of case.

Being aggrieved, GDA filed an Appeal before the State Consumer Disputes Redressal Commission, Lucknow, Uttar Pradesh (hereinafter referred to as ‘the State Commission’ for short). State Commission, by the impugned Order, set aside the Order passed by the District Forum and held that since the petitioner had taken possession of the flat without raising any objection, he is not entitled to any relief. Accordingly, the Appeal was allowed and complaint was ordered to be dismissed.

Being aggrieved by the Order passed by the State Commission, petitioner has filed the present Revision Petition.

Counsel for the parties have been heard at length.

Learned Counsel for the petitioner contends that the State Commission has erred in reversing the well-considered Order passed by the District Forum. According to him, GDA was deficient in service in not delivering the possession within the stipulated period of 2 years. That the petitioner was entitled to get interest on the deposited amount for delayed delivery of possession of the flat. As against this, learned Counsel appearing for the respondent/GDA contends that as per the Brochure, time was not the essence of the contract. Clause 16 of the Brochure stated that the construction shall be completed within 2 years from the date of reservation of the flat. No definite period was prescribed for delivery of possession. That the petitioner was not entitled to any relief on account of the delayed delivery. She has relied upon a Judgment of Hon'ble the Supreme Court of India in Bangalore Development Authority v. Syndicate Bank reported in 2007 CTJ 689 (Supreme Court) (CP) to contend that the petitioner was not entitled to any interest as he has taken the possession of the flat without taking any objection.

Hon'ble Supreme Court in Bangalore Development Authority case (supra), after considering the entire Case Law on the subject, laid down certain principles/guidelines for the Consumer Fora while awarding relief to a consumer under the Consumer Protection Act, 1986 who complains of delayed delivery of possession or non-delivery of possession. The same reads as under:—

(a) Where the development authority having received the full price, does not deliver possession of the allotted plot/flat/house within the time stipulated or within a reasonable time, or where the allotment is cancelled or possession is refused without any justifiable cause, the allottee is entitled for refund of the amount paid, with reasonable interest thereon from the date of payment to date of refund. In addition, the allottee may also be entitled to compensation, as may be decided with reference to the facts of each case.

(b) Where no time is stipulated for performance of the contract (that is for delivery), or where time is not the essence of the contract and the buyer does not issue a notice making time the essence by fixing a reasonable time for performance, if the buyer, instead of rescinding the contract on the ground of non-performance, accepts the belated performance in terms of the contract, there is no question of any breach or payment of damages under the general law governing contracts. However, if some statute steps in and creates any statutory obligations on the part of the development authority in the contractual field, the matter will be governed by the provisions of that statute.

(c) Where an alternative site is offered or delivered (at the agreed price) in view of its inability to deliver the earlier allotted plot/flat/house, or where the delay in delivering possession of the allotted plot/flat/house is for justifiable reasons, ordinarily the allottee will not be entitled to any interest or compensation. This is because the buyer has the benefit of appreciation in value.

(d) Though the relationship between Development Authority and an applicant for allotment is that of a seller and buyer, and therefore governed by law of contracts, (which does not recognise mental agony and suffering as a head of damages for breach), compensation can be awarded to the consumer under the head of mental agony and suffering, by applying the principle of Administrative Law, where the seller being a statutory authority acts negligently, arbitrarily or capriciously.

(e) Where an alternative plot/flat/house is allotted and delivered, not at the original agreed price, but by charging current market rate which is much higher, the allottee will be entitled to interest at a reasonable rate on the amount paid towards the earlier allotment, from the date of deposit to date of delivery of the alternative plot/flat/house. In addition, he may be entitled to compensation also, determined with reference to the facts of the case, if there are no justifiable reasons for non-delivery of the first allotted plot/flat/house.

(f) Where the plot/flat/house has been allotted at a tentative or provisional price, subject to final determination of price on completion of the project (that is acquisition proceedings and development activities), the Development Authority will be entitled to revise or increase the price. But where the allotment is at a fixed price, and a higher price or extra payments are illegally or unjustifiably demanded and collected, the allottee will be entitled to refund of such excess with such interest, as may be determined with reference to the facts of the case.

(g) Where full payment is made and possession is delivered, but title deed is not executed without any justifiable cause, the allottee may be awarded compensation, for harassment and mental agony, in addition to appropriate direction for execution and delivery of title deed.

(h) Where the allotment relates to a flat/house and construction is incomplete or not in accordance with the agreed specifications, when it is delivered, the allottee will be entitled to compensation equivalent to the cost of completing the building or rectifying the defects.

(i) The quantum of compensation to be awarded, if it is to be awarded, will depend on the facts of each case, nature of harassment, the period of harassment and the nature of arbitrary or capricious or negligent action of the authority which led to such harassment.

(j) While deciding whether the allottee is entitled to any relief and in moulding the relief, the following among other relevant factors should be considered: (i) whether the layout is developed on ‘no profit no loss’ basis, or with commercial or profit motive; (ii) whether there is any assurance or commitment in regard to date of delivery of possession; (iii) whether there were any justifiable reasons for the delay or failure to deliver possession; (iv) whether the complainant has alleged and proved that there has been any negligence, shortcoming or inadequacy on the part of the developing authority or its officials in the performance of the functions or obligations in regard to delivery; and (v) whether the allottee has been subjected to avoidable harassment and mental agony.”

(Emphasis Supplied)

It was further observed in paragraph 13 of the Judgment as under:—

“As already noticed, where the grievance is one of delay in delivery of possession, and the Development Authority delivers the house during the pendency of the complaint at the agreed price, and such delivery is accepted by the allottee-complainant, the question of awarding any interest on the price paid by him from the date of deposit to date of delivery of possession, does not arise. The allottee who had the benefit of appreciation of price of the house, is not entitled to interest on the price paid. In this case, the 11 houses were delivered in 1997 at the agreed prices (Rs. 5.5 lacs per corner HIG House and Rs. 4.75 lacs per other HIG Houses). In view of it, the order of the Commission awarding interest at 18% per annum on the price of the houses is unsustainable and liable to be set aside.”

(Emphasis Supplied)

In paragraph 17 of the Judgment, Hon'ble Judges have held that in a contract involving construction, time is not the essence of the contract unless specified.

A combined reading of principles (b), (c) and paragraph 13 and 17, clearly shows that where time is not the essence of the contract, then, if the buyer instead of rescinding the contract on the ground of non-performance, accepts the belated performance in terms of the delayed contract, then, question of any breach of agreement does not arise requiring the builder to pay damages under the general law governing the contracts. In guideline (c), it has been held that ordinarily the allottee will not be entitled to any interest or compensation because the buyer has the benefit of appreciation in value. In paragraph 13, it has been held that even if the developing authority delivers the house even during the pendency of the complaint at an agreed price and such delivery is accepted by the allottee, then, the question of awarding of the interest on the price paid by him from the date of deposit to the date of delivery of possession does not arise. The allottee, who had the benefit of appreciation of the value of the house, is not entitled to interest on the price paid.

Coming to the facts of this case, Clause 16 of the Brochure which prescribes the time within which the construction was to be completed reads as thus:—

“16.00 Time of Completion of Apartments:

Land is available for the construction of these apartments. The apartments are expected to be completed within two years from the date of reservation. With speedy execution of work, GDA will make best efforts to arrest the burden of escalation in the cost notified. The work is in progress on the site which can be visited by the applicant.”

A bare reading of this Clause shows that time was not the essence of the contract. The period of 2 years for completion of construction was given on estimate basis. The words “expected to be completed” denotes that the time was not the essence of the contract. Had the time been the essence of the contract, then, the word “expected” would have been used and, instead, definite period would have been given for delivery of possession.

Time is not the essence of contract involving construction unless specified as held by the Hon'ble Supreme Court in paragraph 17 of its Judgment in Bangalore Development Authority case (supra).

The point before us is - as to whether the facts and circumstances of this case warrant a finding of negligence in delivery of possession on the part of GDA necessitating award of compensation by way of interest? The Brochure relating to GDA Scheme did not mention any specific date for delivery of possession of the flats. No agreement was entered into between the parties stipulating any time for performance or delivery of flats. The only document on which reliance is being placed by both the parties is the Brochure in which the expected date of completion of construction is mentioned to be 2 years. In the absence of any agreement making time to be the essence of the contract or agreement or promise held, the GDA cannot be held negligent in providing the service requiring the GDA to either pay compensation or interest on the deposited amount to the petitioner.

The petitioner did not rescind the contract on the ground of non-performance. He accepted the delayed performance in terms of the contract. Under the circumstances, the question of any breach of contract or agreement did not arise which could lead to the payment of damages under the general law governing the contract. Petitioner is also not entitled to any interest because he has the benefit of appreciation in value.

In a recent Judgment in Ghaziabad Development Authority v. Shakuntala Rohatgi in Civil Appeal No. 6051 of 2002 decided on 04.03.2009, Hon'ble Supreme Court has reiterated the view taken by it in Bangalore Development Authority case (supra). Paragraph 7 of the same reads as under:—

“7. In all these appeals, the National Commission dismissed the Revision Petitions filed by the Ghaziabad Development Authority merely on the ground that it had upheld the award of interest @ 18% in its decision in Darsh Kumar (supra). The decision in Darsh Kumar (supra) was reversed by this Court in Haryana Development Authority v. Darsh Kumar (2005) 9 SCC 449. This Court has laid down principles regarding the award of interest in ‘Ghaziabad Development Authority v. Balbir Singh. (2004) 5 SCC 65, Municipal Corporation, Chandigarh v. Shantikunj Investment (P) Ltd. (2006) 4 SCC 109 and Bangalore Development Authority v. Syndicate Bank (2007) 6 SCC 711’. This Court has held that where the plot/flat, which is allotted, is not delivered in time but is delivered after some delay at the original rate (without charging a revised higher rate which was prevailing at a later date) the allottees will not be entitled to claim interest. Where the allotment is at a tentative date.”

At the time of delivery of possession, respondent did not charge any additional price. Rs. 57,000/-, which were taken later, were paid by the petitioner without any protest. Another fact which requires mention is that the possession was taken on 15.12.1993 whereas the Complaint was filed in the later months of 1995, i.e, after a lapse of about 2 years which shows that at the time of delivery of possession, the petitioner was satisfied but later on he changed his mind and filed the Complaint seeking interest on the deposited amount.

For the reasons stated above, we do not find any merit in this Revision Petition and dismiss the same leaving the parties to bear their own costs.