Capt. Dr. Biren Suri v. Sushma Buildtech Private Limited

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

1. Capt. Dr Biren Suri S/o Sh. C.G. Suri, resident of House No.232, Sector 35-A, Chandigarh.

2. Dr Sunalini Suri W/o Dr Biren Suri, resident of House No.232, Sector 35-A, Chandigarh. .……Complainants

V e r s u s

Sushma Buildtech Ltd., having its registered office at SCO 172-173, First Floor, Sector 9C, Madhya Marg, Chandigarh, through its Managing Director

Second Address:- M/s Sushma Buildtech Ltd., First Floor, Office Complex, Elante Mall, Industrial Area, Phase-I, Chandigarh through its Managing Director.

…..Opposite party

Present:- Sh.Ranjan Lohan, Advocate for the complainant. Sh.Sanjeev Sharma, Advocate for the opposite party. ===============================================================

1

1. Mrs. Rakhi Malhotra, wife of Shri Sandeep Sukhija

2. Sandeep Sukhija son of Shri Uttam Chand Both residents of 1053 Aggarsain Nagar, Sriganga Nagar (Rajasthan). .……Complainants

V e r s u s

1. M/s Sushma Buildtech Ltd., Corporate Office: Unit No.B-107, Business Complex Elante Mall, 1^st Floor, Industrial Area Phase-1, Chandigarh-160002, through its Authorized Signatory/Manager.

2. M/s DNA Realtors, SCO-21 MS Enclave, Dhakoli, Zirakpur, Distt. SAS Nagar, Mohali (PB). …..Opposite parties

Present:- Sh.D.C. Kumar, Advocate for the complainants. Sh.Sanjeev Sharma, Advocate for opposite party no.1 Opposite party no.2 exparte vide order dated 02.09.2019 ===============================================================

1. Suhkwinder Singh s/o Sh.Surat Singh, R/o House No.981, Ashirwad Enclave, Sector 49-A, Chandigarh.

2. Manjeet Kaur w/o Sh.Sukhwinder Singh, R/o House No.981, Ashirwad Enclave, Sector 49-A, Chandigarh.

3. Varinder Kaur w/o Sh.Paramjit Singh, R/o House No.981, Ashirwad Enclave, Sector 49-A, Chandigarh.

.……Complainant

V e r s u s

1. Sushma Buildtech Ltd., having its office at Unit No.B-107, Business Complex Elante Mall, 1^stFloor, Industrial Area Phase-1, Chandigarh-160002, through its Whole time Director Sh.Bharat Mittal.

2

2. Sh.Bharat Mittal Whole time Director of M/s Sushma Buildtech Ltd., having its office at Unit No.B- 107, Business Complex Elante Mall, 1^stFloor, Industrial Area Phase-1, Chandigarh-160002.

3. Sh.Binder Pal Mittal, Managing Director of M/s Sushma Buildtech Ltd., having its office at Unit No.B-107, Business Complex Elante Mall, 1^stFloor, Industrial Area Phase-1, Chandigarh-160002.

4. Sh.Pardeep Kumar, Director of M/s Sushma Buildtech Ltd., having its office at Unit No.B-107, Business Complex Elante Mall, 1^stFloor, Industrial Area Phase-1, Chandigarh-160002 …..Opposite parties

Present:- Sh.Savinder Singh Gill, Advocate for the complainants. Sh.Sanjeev Sharma, Advocate for the opposite parties. ===============================================================

Complaints under Section 17 of the Consumer Protection Act, 1986

BEFORE: JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT.

MRS.PADMA PANDEY, MEMBER.

MR.RAJESH K. ARYA, MEMBER.

JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT

As common questions of facts and law have been emerged in above captioned three complaints and the facts thereof are analogous to each other to a great extent-therefore, this Commission would like to take them together and decide with a common order - which shall be delivered in consumer complaint bearing no.54 of 2019 titled as Capt. Dr Biren Suri and another Vs. Sushma Buildtech Limited.

2. All the three complaints have been filed by different persons asserting themselves to be the consumers under the provisions of Section 2 (1) (d) of the Act. It has been specifically pleaded therein that the complainants are aggrieved of unfair trade practice, negligence and deficiency in rendering service at the hands of the opposite parties, as there has been an inordinate delay on their part in offering possession of their respective units, agreed to be purchased by them, in the project named

"Sushma Chandigarh Grand", Zirakpur, Mohali, Punjab, despite the fact that substantial amount stood paid by them.

3. The details pertaining to the respective units of all the three complaints with regard to the date of booking; execution of agreements; payments made; etc. are given below:-

3

G-904, Tower-G, 9^thB-504, Tower B, 5^thI-903, Tower I, 9^th2. Details of Unit Floor, 1885 Sq. Ft. Floor, 1885 sq.ft. Floor, 2250 sq.ft. Allotment/Booking 3. 15.01.2013 09.09.2013 07.01.2013date

4. Agreement date 09.02.2013 21.10.2013 19.02.2014

5. Basic Cost Rs.61,08,813/- Rs.65,00,000/- Rs.80,56,125/-

6. Amount paid Rs.60,83,820/- Rs.68,63,572/- Rs.40,70,000/- Due date of 08.02.2017 20.10.2017 18.02.20187. possession (42 +6 months) (42 +6 months) (42 +6 months)

8. Possession offered on Not offered Not offered Not offered Possession taken over 9. Not offered Not offered Not offeredor not Delay in offering 2 years and 1 month 2 years and 4 months allotment cancelled possession till (delay continuing one (delay continuing one as 10. for nonpayment of arguments heard in as possession not possession not offered installmentsthe complaints offered yet) yet) Refund, interest, Relief sought by the Refund, interest, Refund, interest, 11. compensation and complainants compensation and cost compensation and cost cost

4. By stating that the aforesaid act and conduct of the opposite parties, in not offering possession of the respective units by the promised date or even thereafter, despite the fact that substantial amount had been received by them, amount to deficiency in providing service and adoption of unfair trade practice, these complaints have been filed by the complainants seeking directions to the opposite parties to refund the respective amounts paid alongwith interest, compensation for mental agony and physical harassment; litigation expenses etc.

5. Their claim has been contested by the opposite parties, in consumer complaints bearing no.54 of 2019 and 78 of 2019, on almost similar grounds, inter alia, that in the face of existence of provision to settle disputes between the parties through Arbitration, this Commission has no jurisdiction to entertain these consumer complaints; that none of the complainants fall within the definition of

"consumer" as defined under Section 2(1)(d) of the Act; that this Commission did not vest with pecuniary and territorial jurisdiction: that because it was mentioned in the agreements that the Company proposes to hand over possession by the period mentioned therein and also the fact that the

4

units fall under the category of immovable property as such, time was not to be considered as essence of the contract; that complaint no.78 of 2019 is bad for non-joinder of party i.e. the bank from which the complainants therein have availed loan, has not been impleaded therein; that no proper court fees has been paid by the complainants; that demand raised by the company toward GST, service tax etc. has been legally raised from the complainants and if any rebate/credit is received from the Government in respect thereof, the same will be transferred in the favour of the complainants.

6. On merits, booking of the units; execution of agreements between the parties; payments made by the complainants against their respective units etc. as shown in the table extracted above are not disputed. It has been stated that over and above the sale consideration mentioned in the agreements, the complainants are also liable to pay other charges such as GST etc. However, it has been commonly pleaded in the replies filed that delay in construction took place on account of force majeure circumstances having been faced by the company such as ban on mining by the competent Authorities resulting into shortage of building material like sand etc.; shortage of labour; freezing of bank accounts on account of RERA compliances as well as demonetization etc. It has been pleaded that even otherwise, the project in question has been got registered under RERA, under which, possession of the units has to be delivered by July 2022; that still the opposite parties are trying to complete construction and development works so that possession of the units could be delivered by March 2020; that the company is in possession of all the approvals/sanctions and it has already applied for issuance of partial completion certificate in April 2019; that the opposite parties are committed to pay delayed compensation to the complainants as per terms and conditions of the agreements; that in some cases they have already paid delayed compensation to the complainants which has been received by them without any protest. It has been further pleaded that still if the complainants want refund of the amount paid, forfeiture clause contained in the agreements will be made applicable. Common prayer in the reply to each complaint has been made to dismiss the same.

7. However, in consumer complaint bearing no.130 of 2019, over and above similar objections raised and submissions made in the replies filed in consumer complaints bearing no.54 of 2019 and 78 of 2019, it has been additionally stated that the complainants were chronic defaulters in making payment of installments towards price of the unit purchased; that this complaint filed is beyond limitation; that number of letters, followed by reminders/show cause notices were sent to them for the period from 19.02.2014 to 19.11.2014 (Annexures OP-7 to OP-16) and when they failed to pay the remaining amount, allotment of the unit was cancelled vide letter dated 10.06.2016 (Annexure OP-17) and the complainants were requested to submit the original documents alongwith NOC from the bank from which they allegedly took housing loan and take back the amount of Rs.6,96,978/- out of the deposited amount of Rs.40,70,000/-; that out of the deposited amount, Rs.33,73,022/- was forfeited towards pending delayed interest on account of delay in making payment and also penalty charges as per agreement, as it was candidly admitted by the complainants that they were unable to make the payment on account of financial difficulty. It has been pleaded that directors of the Company have been wrongly impleaded in their personal capacity.

8. Despite deemed service, none put in appearance on behalf of M/s DNA Realtors, in consumer complaint bearing no.78 of 2019, as such, it was proceeded against exparte vide order dated

02.09.2019.

9. This Commission has afforded adequate opportunities to the parties to adduce evidence in support of their respective contentions, by way of filing affidavit. In pursuance thereof, they have adduced evidence and also produced numerous documents.

10. We have heard the contesting parties and have carefully gone through record of the cases, very carefully.

11. From the pleadings of parties and other material available on the record, following points have emerged for consideration in these cases: -

1. Whether in the face of existence of arbitration clause in the agreements, jurisdiction of this Commission is barred?

2. Whether this Commission has pecuniary and territorial jurisdiction to entertain the complaints?

3. Whether the complainants fall under the definition of consumer?

4. Whether the complaints filed are barred by time?

5. Whether time was essence of the contract?

5

6. Whether the complainants are entitled to refund of amount paid, if yes, at what rate of interest?

12. In the first instance, this Commission will deal with the objections which have been commonly raised by the opposite parties in all the three consumer complaints referred to above, and, thereafter, we will deal the additional objections raised in consumer complaint bearing no.130 of 2019 separately in this order only.

13. First of all, coming to the objection raised with regard to jurisdiction of this Commission in the face of existence of Arbitration clause in the agreements, it may be stated here that this issue has already been dealt with by the larger Bench of the Hon'ble National Commission in a case titled as Aftab Singh Vs. Emaar MGF Land Limited & Anr., Consumer Case No. 701 of 2015, wherein, vide order dated 13.07.2017, it has been held that an Arbitration Clause in the Agreements between the complainant and the Builder cannot circumscribe the jurisdiction of a Consumer Fora notwithstanding the amendments made to Section 8 of the Arbitration Act. Feeling aggrieved against the said findings, the builder filed Civil Appeal bearing No.23512-23513 of 2017 before the Hon'ble Supreme Court of India, which was dismissed vide order dated 13.02.2018. Even the Review Petition (C) Nos. 2629- 2630 of 2018 filed by the builder in Civil Appeal Nos.23512-23513 of 2017 against order dated 13.02.2018, was dismissed by the Hon'ble Supreme Court of India, vide order dated 10.12.2018. As such, objection raised by the opposite parties in this regard stands rejected.

14. The next question which needs consideration is with regard to pecuniary jurisdiction, it may be stated here that if the total value of the respective units as mentioned in the respective agreements; plus other reliefs claimed in each complaint are clubbed together, the same exceeds Rs.20 lacs and fell below Rs.1 crore. Thus, this Commission has got pecuniary Jurisdiction to entertain and decide these complaints. Objection taken in this regard stands rejected.

15. Now coming to the objection raised with regard to territorial jurisdiction, it may be stated here that Sub-section 2 of Section 17 of the Act envisages that person aggrieved have remedy to file a complaint before a State Commission within the limits of whose jurisdiction:-

"(a) the opposite party or each of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides or carries on business or has a branch office or personally works for gain; or

(b) any of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides, or carries on business or has a branch office or personally works for gain, provided that in such case either the permission of the State Commission is given or the opposite parties who do not reside or carry on business or have a branch office or personally works for gain, as the case may be, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises". In the instant cases, perusal of almost all the documents placed on record, pertaining to the respective units in question, such as payment receipts, allotment letters etc. reveal that the same have been issued by the opposite parties from their Chandigarh Office. Even the Agreements in respect of the respective units in question, containing detailed terms and conditions, have been executed at Chandigarh Office of the Company i.e. SCO 172-173, 1^stFloor, Sector 9-C, Madhya Marg, Chandigarh, meaning thereby that the opposite parties were actually and voluntarily residing and carrying on their business, from their branch office at Chandigarh and personally work for gain here at. As such, objection taken in this regard is

6

rejected.

16. As far as objection taken to the effect that the complainants did not fall within the definition of 'consumer', it may be stated here that the objection raised is not supported by any documentary evidence and as such the onus shifts to the opposite parties to establish that the complainants have purchased the respective units to indulge in 'purchase and sale of flats' as was held by the Hon'ble National Commission in Kavit Ahuja vs. Shipra Estates I (2016) CPJ 31 but since they failed to discharge their onus, hence we hold that the complainants are consumers as defined under Section 2(1)(d) of the Act.

17. There is no dispute that the complainants booked their respective units in the aforesaid project of the opposite parties, as per details given in the above-extracted chart. In consumer complaint bearing no.54 of 2019 possession was to be offered by 08.02.2017; in consumer complaint bearing no.78 of 2019 on 20.10.2017 and in consumer complaint bearing no.130 of 2019 by 18.02.2018. It is also an admitted fact that possession of the units has not been offered to the complainants in all the three complaints, within the committed period as mentioned in Clause 14 of the respective agreements i.e. within a period of 48 months (42 months plus 6 months grace period) from the dates of execution thereof. However, to strengthen the case of the Company, in consumer complaints bearing no.54 of 2019 and 78 of 2019, it has been contended by Counsel for the opposite parties that delay in construction work took place on account of force majeure circumstances having been faced by the company like ban on mining by the competent Authorities resulting into shortage of building material like sand etc.; shortage of labour; freezing of bank accounts on account of RERA compliances as well as demonetization; that some of the allottees did not make time payments etc., as a result whereof possession could not be delivered in time or thereafter. He further contended that now the work is going on in full swing and that possession of the units will be delivered to the allottees including the complainants in the said consumer complaints latest by March 2020. However, in the same breath it was also contended that since the project in question has been got registered under the RERA, possession of the units will be delivered by July 2022. We do not agree with the contentions raised. First coming to the contention raised in consumer complaints bearing no.54 of 2019 and 78 of 2019, to the effect that delay in delivery of possession of the unit took place on account of ban on mining, as such, building material such as sand etc., remained short to an extent, meaning thereby that it had encountered force majeure circumstances, it may be stated here that nothing has been placed on record by the opposite parties to prove that they were unable to procure the said construction material in adequate quantity. There is no evidence of the opposite parties having invited tenders for supply of construction material and there being no response to such tenders. A similar plea for delay in delivery of possession of the units, was taken by a builder, before the Hon`ble National Commission, in consumer case no.347 of 2014, titled as Swaran Talwar & 2 others v. M/s Unitech Limited (along three connected complaints), decided on 14 Aug 2015, which was rejected and the complaint was allowed in favour of the complainant. Now coming to the plea taken, to the effect that delay occurred because of delay in making payments by some of the allottees, it may be stated here that such a plea has no legs to stand, in view of decision rendered by the Hon'ble National Commission, in a case titled as Puneet Malhotra Vs Parsvnath Developers Ltd., consumer complaint No. 232 of 2014, Decided on 29.01.2015, wherein under similar circumstances, it was observed as under:-

"If some of the allottees had not made timely payment, it was for the opposite party to arrange the requisite finance either by taking loan or from its own resources or by liquidating Inventory at a lower price".

As far as plea taken, to the effect that delay occurred because of shortage of labour; freezing of bank accounts on account of RERA compliances as well as demonetization, it may be stated here that such a plea also has no legs to stand, in view of decision rendered by the Hon'ble National Commission, in Puneet

7

Malhotra's case (supra) 2015, wherein under similar circumstances, it was observed as under:-

"As regards the default of the Contractor, impact of demonetization and implementation of GST, to cause delay on account of shortage of cash for payment to the labour, shortage of labour and material, no documents have 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 Allotment Letter. There is no evidence that the building material or the manpower not being available in the market. There may be a cash crunch for few days, but payments can always be made by direct transfer to the labour or to the materials supplier, through their Bank accounts. It cannot be accepted that the Contractor was unable to make payment to the labour or to the materials supplier since option was available to the Contractor to transfer the payments in the Bank accounts of the labour and materials supplier. Therefore, it cannot be accepted that due to default on the part of the Contractor, demonetization or implementation of GST, the Opposite Party could not arrange adequate labour or building material required for timely completion of the Project".

In the present case also, the opposite parties failed to convince this Commission, by placing on record any cogent documentary evidence that they actually encountered force majeure circumstances, as a result whereof, delay in completing the construction took place and as such till date they did not offer possession of the units to the allottees including the complainants. No help therefore can be drawn by the opposite parties from the aforesaid clause of the agreements, to claim immunity under force majeure circumstances. As such, plea taken by the opposite parties, in this regard, is rejected.

18. At the time of arguments also, we specifically asked Counsel for the opposite parties, as to by which date/period, construction of the units at the project site would be completed and possession thereof could be delivered to the complainants; he gave stereotype reply that progress at the project site is going on in full swing and that possession is expected to be delivered in the near future. When we further asked him to show any letter having been written to the competent Authorities for issuance of completion certificate, he failed to do so and orally said that the company has applied for the same. It is settled law that onus to prove the stage and status of construction and development work at the project, and that all the permissions/approvals have been obtained in respect of the project in question, is on the builder/developer. It was so said by the National Commission, in Emaar MGF Land Limited and another Vs. Krishan Chander Chandna, First Appeal No.873 of 2013 decided on 29.09.2014. It is very strange that in the present case, not even an iota of evidence has been placed on record by the opposite parties to prove as to at what stage, construction and development work has reached at the project site. In case, the development/construction activities are being undertaken and are about to complete, then it was for the opposite parties, which could be said to be in possession of the best evidence, to produce cogent and convincing documentary evidence, in the shape of the reports and affidavits of the Engineers/Architects, as they could be said to be the best persons, to testify, as to whether, all these development/construction activities, had been undertaken and completed at the site or not, but they failed to do so.

19. From the peculiar circumstances of these cases, it has been proved that the opposite parties made false representations, which were materially incorrect and were made in such a way that the complainants, to whom it was made, were entitled to rely upon it and they may act in reliance on it. The complainants are thereby involved in a disadvantageous contract with the opposite parties and suffered financial loss, mental agony and physical harassment. Representations/statements made at that time were believed to be true. All the facts established that from the very inception there was intent to induce the complainants to enter into a contract by way of signing agreements and also intent to deceive them, which act amounts to grave deficiency in providing service, negligence and adoption of unfair trade practice on their part. At the same time, it is also held that because a specific period of 42 months plus 6 months grace period was mentioned in clause 14 of the agreements for handing over possession of the units in question, as such, time was unequivocally made essence of the contract. The complainants in consumer complaints bearing no.54 of 2019 and 78 of 2019, were thus caused mental

8

agony, harassment and financial loss at the hands of the opposite parties, as they were deprived of their house and also the amount paid by them were utilized by the opposite parties without providing them anything for a long period.

20. We are of the considered opinion that the complainants cannot be made to wait for an indefinite period, at the whims and fancies of the opposite parties i.e. on the ground that they are ready to compensate the complainants for the period of delay in delivering possession of the units in question. It is well settled law that non-delivery of possession of plots/units in a developed project by the promised date is a material violation on the part of a builder and in those circumstances, the allottee is well within his/her right to seek refund of the amount paid. Our view is supported by the principle of law laid down by the Hon'ble Supreme Court of India in the case titled as Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, Civil Appeal No.12238 of 2018, decided on 02.04.2019 and also in Fortune Infrastructure Versus Trevor D' Lima & Ors. (2018) 5 SCC 442. In consumer complaints bearing no.54 of 2019 and 78 of 2019, since there has been an inordinate delay in offering possession of the units, in question, and the same is still continuing, as the opposite parties are not sure as to by which period possession of the unit could be delivered to the complainants as such, we are of the considered opinion that if we order refund of the entire amount paid by the complainants alongwith suitable interest, in consumer complaints bearing no.54 of 2019 and 78 of 2019, that will meet the ends of justice.

21. Now coming to consumer complaint bearing no.130 of 2019, it has been vehemently contended by Counsel for the opposite parties that since the complainants, after making payment of Rs.40,70,000/- failed to make remaining payment towards price of the unit in question, despite giving them number of opportunities, as such, allotment of the unit therein was cancelled, whereafter they were asked to collect the amount of Rs.6,96,978/- which figure arrived after deducting the outstanding delayed payment interest of Rs.20,48,093/- and also deduction of earnest money, totaling Rs.33,73,022/- i.e. (Rs.40,70,000/- minus (-) Rs.33,73,022/-) but they failed to come forward for the same. To justify their stand, the opposite parties have relied upon clauses 7.4 (a) and (b) of the Agreements, which are reproduced hereunder:-

"7.4 Other Charges and Miscellaneous terms:

(a) The Buyer agrees that out of the amount(s) paid/payable by him towards the Sale Consideration, 10% of the Basic Sales Price shall form as Earnest Money to ensure fulfillment by the Buyer of the terms and conditions, as contained herein. Time is the essence of the terms and conditions mentioned herein and with respect to the Buyer obligations to pay the Sale Consideration as provided in the Payment Plan along with other payments such as, applicable stamp duty, registration fee and other charges on or before the due date or as and when demanded by the Developer, as the case may be and also to perform or observe all the other obligations of the Buyer under this Agreement. It is clearly agreed and understood by the Buyer that it shall not be obligatory on the part of the Developer to send demand notices/reminders regarding the payments to be made by the Buyer as per the Payment Plan or obligations to be performed by the Buyer under this Agreement or any further document signed by the Buyer with the Developer. The Buyer hereby also covenant to observe and perform all the terms and conditions of the booking, and/or allotment and/or this Agreement and/or Conveyance Deed, to keep the Developer and its agents and representatives, estates and effects indemnified and harmless against the said payments and observance and performance of the said terms and conditions and also against any loss or damages that the Developer may suffer as a result of non-payment, non-observance, or non-performance of the terms and conditions mentioned herein and/or the Conveyance Deed (when executed) by the Buyer.

(b) If there is delay or default in making payment of the installments by the Buyer, then the

9

Buyer shall pay to the Developer interest which shall be charged @ 24%per annum from the due date of payment of installment on monthly compounded basis. In addition to the Buyer liability to pay interest as mentioned hereinabove, the Buyer shall also be liable to pay and reimburse to the Developer, all the costs, charges and expenses whatsoever, which are borne, paid and/or incurred by the Developer for the purpose of enforcing payment of and recovering from the Buyer any amounts or dues whatsoever payable by the Buyer under this Agreement However, if the installments/payments are not received within ninety (90) days from the due date or in the event of breach of any of the terms and conditions of this Agreement and/or Conveyance Deed by the Buyer (s), the booking will be cancelled at the sole discretion of the Developer and Earnest Money paid to the Developer by the Buyer shall stand forfeited and the Buyer shall be left with no right or lien on the said Unit. The balance amount (after deducting the earnest money and outstanding interest for delayed payments, if any, and other charges as mentioned herein) shall be refunded to the Buyer on resale of the apartment. The dispatch of said cheque by registered post/speed-post to the last available address with the Developer as filled up in the application form (as applicable) shall be full and final discharge of all the obligation on the part of the Developer or its employees and the Buyer will not be entitled to raise any objection or claim on the Developer in this regard."

On the other hand, at the time of arguments, Counsel for the complainants very fairly accepted the fact that there was fault on the part of the complainants in making payments, yet, he has strongly contended that, in any case, forfeiture of amount exceeding 10% of the basic cost of the property, which constitutes Earnest Money, is an unfair trade practice. He has submitted that the complainants have no objection in case only 10% of the basic sale price is forfeited out of the basic sale price of the unit.

22. Perusal of afore-extracted clauses clearly goes to show that out of the amount(s) paid/payable by the allottee towards the Sale Consideration, 10% of the Basic Sales Price was to form as Earnest Money to ensure fulfillment by the Buyer of the terms and conditions and in case the installments/payments were not received within ninety (90) days from the due date or in the event of breach of any of said terms and conditions, the said earnest money paid to the company was to be forfeited. However, it was further in a very draconian manner mentioned that after forfeiture of the said earnest money, the balance amount (after deducting the earnest money and outstanding interest for delayed payments, if any, and other charges as mentioned herein) shall be refunded to the Buyer on resale of the apartment.

23. Under above circumstances, following questions arise for consideration in this complaint (CC No.130 of 2019):-

i. whether, this Commission is bound to rely upon any condition contained in the agreement which is harsh, oppressive and unconscionable to one of the parties and can strike the same, based upon the factual situation and may grant relief to the party opposite?

ii. whether, the opposite parties, under the garb of clauses 7.4 (a) and (b) of the Agreement, were justified in deducting such a huge amount of Rs.33,73,022/- out of the deposited amount of Rs.40,70,000/- i.e. twin deductions; first one the earnest money to the extent of 10% of the basic sale price and second one the delayed payment interest of Rs.20,48,093/-?

24. First coming to the question as to whether, this Commission is bound to rely on a harsh, oppressive and unconscionable clause contained in the agreements or not, it may be stated here that it is well settled law that a court can strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between the parties who are not equal in bargaining power. Our this view is supported by the judgment passed by the Hon'ble Supreme court in the case of Central Inland Water Transport Corporation Ltd. & Anr. Vs. Brojo Nath Ganguly & Ors. (1986) 3

10

SCC 156 wherein it has been clearly held that the courts can strike down the terms of a contract. The Hon'ble Court has held that "......this principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between the parties who are not equal in bargaining power...." The draft legislation provided by the Law Commission of India in its 199th Report which addresses the issue of 'Unfair (Procedural & Substantive) Terms in Contract' has stated that "A contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties."

The above view has been reiterated by the Hon'ble Supreme Court in Pioneer Urban Land and Infrastructure Ltd. vs. Gouvindan Raghavan Civil Appeal No.12238/2018 wherein in paragraph nos. 3.8, 6.3, 6.6 & 6.7, it has been clearly held that if the terms of contract are harsh, oppressive and unconscionable to one of the parties, such a contract cannot be relied upon and Courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It was contended by the Counsel for the opposite parties that since the complainants had specifically agreed to the contents of clause 7.4 (a) and (b) above, the same cannot be said to be unreasonable, being inconsonance with the terms agreed between the parties. This was also his contention that so long as the Company was acting as per the terms and conditions agreed between the parties, it cannot be said to be deficient in rendering services to the complainants. We, however, find ourselves unable to accept the aforesaid contention, since, as stated above, forfeiture of the amount which cannot be shown to be a reasonable amount would be contrary to the very concept of forfeiture of such a huge amount. If we accept the aforesaid contention, an unreasonable person, in a given case may insert a clause in Buyers Agreement whereby say 50% or even 75% of the sale price is to be treated as earnest money and in the event of default on the part of the Buyer; he may seek to forfeit 50% of the sale price as earnest money. An Agreement for forfeiting more than 10% of the sale price, in our view, would be invalid since it would be contrary to the established legal principle that only a reasonable amount can be forfeited in the event of default on the part of the Buyer. In Bharathi Knitting Company Vs.DHL Worldwide Express Courier Division of Airfreight Ltd.- (1996) 4 SCC 704, the Hon'ble Supreme Court accepted the contention that in an appropriate case, the Consumer Forum 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 relief, though, each case depends upon its own facts". The answer to point no.(i) above is in the affirmative.

25. Now we will deal with the question, as to whether, the opposite parties, under the garb of clauses 7.4 (a) and (b) of the Agreement, were justified in deducting such a huge amount of Rs.33,73,022/- out of the deposited amount of Rs.40,70,000/- i.e. twin deductions; first one the earnest money to the extent of 10% of the basic sale price and second one the delayed payment interest of Rs.20,48,093/-, it may be stated here that it is well settled law that in case of admitted/proven default on the part of the buyer in making payment towards price of the unit/plot, an amount exceeding 10% of the total price of the property cannot be forfeited as earnest money unless the builder/developer can show that it has suffered loss to the extent of the amount actually forfeited by it. It is not the proven case of the opposite parties that they have been caused any loss, as the unit in question could not be sold in the open market. In the present case, the opposite parties have forfeited more than 40% of the basic sale price i.e. (Rs.33,73,022/- being 40% of basic sale price of Rs.80,56,125/-), without placing on record any cogent and convincing evidence to show that they suffered any loss to that extent. Once, the opposite parties have cancelled the allotment on account of nonpayment of remaining installments, for whatever reasons may be, they were entitled to forfeiture of earnest money equal to 10% referred to above and not the delayed payment interest. Our this view of not forfeiting more than 10% of the earnest money, is supported by the findings given by the Hon'ble National Commission in Commission in DLF Ltd., Vs. Bhagwanti Narula, Revision Petition No.3860 of 2014, decided on 06.1.2015, wherein it was held that an amount exceeding 10% of the total price of the property cannot be forfeited as Earnest Money unless the opposite party can show that it has suffered loss to the extent of the amount actually forfeited by it. Our this view is further fortified by the principle of law laid

11

down in the case titled as Maula Bux Vs. Union of India - 1969 (2) SCC 554, wherein the Hon'ble Supreme Court quoted the following observations made by the Judicial Committee in Kunwar Chiranjit Singh Vs. Har Swarup - AIR 1926 PC 1, to the effect that "Earnest money is part of the purchase price when the transaction goes forward; it is forfeited when the transaction falls through, by reason of the fault or failure of the vendee" meaning thereby that only the earnest money could be forfeited if the transaction falls. Thus, this Commission is not bound to place reliance upon clause 7 (b) of the agreement which says that on cancellation of booking amount on account of nonpayment of remaining installments, the opposite parties were entitled to forfeit the outstanding delayed payment interest over and above the earnest money, as the same is substantively unfair, harsh, oppressive and unconscionable to the complainants. This act of the opposite parties amounts to unfair trade practice. The answer to point no.(ii) above is in the negative.

26. It is significant to mention here that in the present case (CC No.130 of 2019), though the opposite parties have failed to place on record any document to convince this Commission, as to at what stage, construction level and development work at the project had reached, by the time when they had received an amount of Rs.40,70,000/- from the complainants in this case, because in connected cases it reveals that the project has not been completed and possession of units therein has not been delivered by the promised date or even thereafter, yet, we are not going into this question, in view of fair admission made by Counsel for the complainants, that since there was default on the part of the complainants, as such, they have no objection in case only the amount to the extent of 10% of the basic sale price is ordered to be forfeited by the opposite parties. Under these circumstances, it is held that in consumer complaint bearing no.130 of 2019, by applying the findings given by the Hon'ble National Commission in DLF Ltd., Vs. Bhagwanti Narula's and principle of law laid down by the Hon'ble Supreme Court in Maula Bux cases (supra), the opposite parties are entitled to forfeit only a sum of Rs.8,05,612/- (10% of Rs. 80,56,125/-) from the amount paid to them by the complainants. The balance amount of Rs.32,64,388/- (Rs.40,70,000/- minus Rs.8,05,612/- being 10% of basic sale price) was required to be refunded to the complainants, which the opposite parties are still utilizing.

It is made clear that the findings given above with regard to forfeiture of 10% of the basic sale price is not to be treated as precedent in each and every case where there is a cancellation of allotment of units/plots by the builder because in the present case, the complainants have given their consent for the said deduction by way of filing rejoinder and their counsel has also agreed for the same on behalf of the complainants, at the time of arguments in this complaint. Otherwise, it will depend upon facts and circumstances of the case

27. As far as objection taken to the effect that opposite parties no.2 to 4 have been wrongly impleaded as parties to consumer complaint bearing no.130 of 2019, it may be stated here that the complainants by way of placing on record signatory details (Annexure C-4) of the Company (wherein the CIN/LLPIN has been mentioned), has proved that opposite party no.1 is the active Whole time Director of the Company and his expiry date of DSC is 09.03.2021; opposite party no.3 is the Managing Director of the company and his expiry date of DSC is 05.10.2020 and opposite party no.4 remained active in the capacity of Director of the Company for the period from 12.02.2011 to 17.11.2019. Document-Annexure C-4 has gone un-rebutted by the opposite parties, as nothing contrary to it has been placed on record. These persons are holding such important positions in the Company, where they are directly involved with the decision-making process in the Company and will be jointly and severally liable alongwith the Company, for all the acts done. Similar view was taken by the Hon'ble National Commission, in a case titled as M/s. India Bulls Real Estate & Wholesale Services Ltd. & Ors, Vs. Vemparala Srikant & Anr., First Appeal No. 797 of 2017, decided on 16 Aug 2017. In this view of the matter, objection taken stands rejected.

28. At the same time, because neither actual physical possession of the units in question had been delivered to the complainants in consumer complaints bearing no.54 of 2019 and 78 of 2019, by the date when these complaints were filed and on the other hand, the complainant(s) has/have paid huge amounts as mentioned above, which have not been refunded by the opposite parties till date, as such, there is a continuing cause of action in their favour in view of principle of law laid down in Lata

12

Construction & Ors. Vs. Dr. Rameshchandra Ramniklal Shah and Anr., II 2000 (1) CPC 269=AIR 1999 SC 380 and Meerut Development Authority Vs. Mukesh Kumar Gupta, IV (2012) CPJ 12 (SC), wherein it was held that when possession of the residential units is not offered, there is a continuing cause of action, in favour of the allottee/buyer and also in Ansal Housing And Construction Ltd. Vs. Tulika Gupta & Anr., First Appeal No. 545 Of 2017, decided on 24 Aug 2017, where in it was observed by the Hon'ble National Commission that "…ordinarily if the possession is not given to the allottees, they would have a recurrent cause of action to file the complaint till the time either the possession was given to them or the amount paid by them was refunded….". Furthermore, in consumer complaint bearing no.130 of 2019 if two years of period is counted from the issuance of letter dated 23.08.2018 (Annexure-8) then also the consumer complaint bearing no.130 of 2019 filed before this Commission on 24.05.2019 is well within the period of limitation. Objection taken in this regard is rejected.

29. As far as objection taken in consumer complaint no.78 of 2019 to the effect that the complaint is bad for non-joinder of bank/financial institution from which the complainants have obtained housing loan, as necessary party, it may be stated here that the opposite parties have failed to clarify, as to what prejudice has been caused to them in such a situation. However, irrespective of the fact that the bank/financial institution has been made party to the complaint or not, this Commission in each and every complaint filed before it, wherein refund is ordered, gives direction to the effect that the bank/financial institution, if any, from which the complainants have raised housing loan for payment of installments, shall have the first charge of the amount payable. In all these complaint also, this Commission is going to pass such directions. As such, objection taken in this regard stands rejected.

30. Now, we will deal with question, as to what rate of interest should be awarded to the complainants, while ordering refund of amount paid. It may be stated here that a similar question, as to what rate of interest should be granted while ordering refund of the deposited amount, in case, the builder fails to deliver possession of residential units/plots, by the stipulated date, fell for determination before the Hon`ble Supreme Court of India in H.U.D.A. Vs. Neelam Sharma, Civil Appeal no.3417 of 2003 decided on 18.08.2004, wherein, the Hon`ble Supreme Court held that in case of refund of amount, the Interest Act would apply and 12% interest is to be granted from the date of amounts deposited till repayment. Recently also, under similar circumstances, the Hon'ble National Commission in Alok Kumar Vs. M/s. Golden Peacock Residency Private Limited & Anr., Consumer Case No. 1315 of 2018, decided on 06 Sep 2019 while ordering refund of the amount paid, awarded interest @12% p.a.

Not only as above, even under Section 12 of the Punjab Apartment and Property Regulation Act, 1995 (PAPR Act, 1995) read with Rule 17 of the Rules thereunder, if the amount is to be refunded, it is to be refunded alongwith interest @12% p.a. Though, in view of principle of law laid down by the Hon`ble Supreme Court of India; the National Commission and also under Rules 17 of the PAPR Rules, 1995, this Commission could have granted interest @12% p.a. to the complainants, yet, we cannot go beyond the interest sought for by them, in their respective complaints.

31. It may be stated here that since these complaints pertains to refund of the amount paid by the complainants, as such, this Commission has not given any opinion/finding, as to whether, the builder/opposite parties could charge GST or not; as to whether the total sale consideration constitutes the taxes etc. and as to whether this Commission could go into such issues or not, however, the same have been left open.

32. As far as objection taken regarding court fee is concerned, it may be stated here that we have perused the record and found that in all the three consumer complaints, correct court fee has been paid by the complainants. As such, objection taken in this regard stands rejected.

33. For the reasons recorded above, all the three complaints are partly accepted with costs, as under:-

Consumer Complaint No.54 of 2019, the opposite party is directed:-

13

i. To refund the amount of Rs.60,83,820/- to the complainants, alongwith interest @9% p.a., (as prayed) from the respective dates of deposits onwards, within a period of 30 days, from the date of receipt of a certified copy of this order, failing which, thereafter, the said amount of Rs.60,83,820/- shall carry 3% penal interest i.e. 12% p.a. (9% p.a. plus (+) 3% p.a.), from the date of passing of this order, till realization.

ii. To pay compensation for causing mental agony and physical harassment; deficiency in providing service and adoption of unfair trade practice and also cost of litigation, in lumpsum, to the tune of Rs.50,000/-, to the complainants, within a period of 30 days, from the date of receipt of a certified copy of this order, failing which, the said amount of Rs.50,000/-, shall carry interest @9% p.a. from the date of passing of this order, till realization.

Consumer Complaint No.78 of 2019, the opposite parties jointly and severally are directed:-

i. To refund the amount of Rs.68,63,572/- to the complainants, alongwith interest @12% p.a., from the respective dates of deposits onwards, within a period of 30 days, from the date of receipt of a certified copy of this order, failing which, thereafter, the said amount of Rs. 68,63,572/- shall carry 3% penal interest i.e. 15% p.a. (12% p.a. plus (+) 3% p.a.), from the date of passing of this order, till realization.

ii. To pay compensation for causing mental agony and physical harassment; deficiency in providing service and adoption of unfair trade practice and also cost of litigation, in lumpsum, to the tune of Rs.50,000/-, to the complainants, within a period of 30 days, from the date of receipt of a certified copy of this order, failing which, the said amount of Rs.50,000/-, shall carry interest @9% p.a. from the date of passing of this order, till realization.

Consumer Complaint No.130 of 2019, the opposite parties jointly and severally are directed:-

i. To refund the amount of Rs.32,64,388/- (Rs.40,70,000/- minus Rs.8,05,612/- being 10% of basic sale price) to the complainants, alongwith interest @8% p.a. (as prayed), from the respective dates of deposits onwards, within a period of 30 days, from the date of receipt of a certified copy of this order, failing which, thereafter, the said amount of Rs.32,64,388/- shall carry 3% penal interest i.e. 11% p.a. (8% p.a. plus (+) 3% p.a.), from the date of passing of this order, till realization.

ii. To pay compensation for causing mental agony and physical harassment; deficiency in providing service and adoption of unfair trade practice and also cost of litigation, in lumpsum, to the tune of Rs.50,000/-, to the complainants, within a period of 30 days, from the date of receipt of a certified copy of this order, failing which, the said amount of Rs.50,000/-, shall carry interest @9% p.a. from the date of passing of this order, till realization.

34. However, it is made clear that the opposite parties are at liberty to deduct the amount, if any, paid by them to the complainants, in any of the complaints above, towards delay compensation for the period of delay in offering possession of respective units, out of the awarded amount.

35. It is also ordered that in case, in any of the consumer complaints, referred to above, the complainants have raised housing loan from any bank/financial institution for making payments towards their respective units, first charge shall rest with it, against the amounts due/payable by the complainants.

14

36. Certified Copies of this order be sent to the parties, free of charge and one copy thereof be placed in connected case files.

37. The files be consigned to Record Room after completion. Pronounced.

12.03.2020

Sd/-

[RAJ SHEKHAR ATTRI]

PRESIDENT

Sd/-

(PADMA PANDEY)

MEMBER

Sd/-

(RAJESH K. ARYA)

MEMBER

Rg.

15