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Abdul Rasheed Khan A... v. Mantri Developers Pv...
Factual and Procedural Background
The Complaint was filed under Section 21(a)(1) of the Consumer Protection Act, 1986 by Abdul Rasheed Khan and another against Mantri Developers Pvt. Ltd. and its Chairman and Managing Director, Sushil Mantri. The Complainants purchased a residential apartment (Flat No. E-003) in the "Mantri Webcity" project in Bangalore, paying a total consideration of Rs. 63,98,064.18 upfront under a Pre-EMI payment scheme. The possession of the flat was promised by 31.01.2015 but was repeatedly delayed, with revised completion dates extending beyond 2015. Despite obtaining the Occupancy Certificate on 29.05.2017, the Opposite Parties refused possession and registration, citing the pendency of a Consumer Complaint filed by the Complainants in the District Forum, which was returned on 08.08.2017 for lack of pecuniary jurisdiction. The Complainants filed the present Complaint seeking refund of the deposited amount with interest and compensation for delay and mental agony.
Legal Issues Presented
- Whether the Opposite Parties are liable to refund the amount paid by the Complainants along with interest due to delay in possession of the flat.
- Whether the delay in delivery of possession amounts to deficiency in service under the Consumer Protection Act, 1986.
- Whether the Complaint is barred by the principle of res judicata due to the earlier Consumer Complaint filed by the Complainants before the District Forum.
- Whether the Complainants qualify as "Consumers" under Section 2(1)(d) of the Consumer Protection Act, 1986, given the alleged commercial purpose of their investment.
- Whether the dispute is arbitrable under the arbitration clause in the agreement or maintainable before the Consumer Commission.
Arguments of the Parties
Complainants' Arguments
- The Opposite Parties delayed possession beyond the promised date despite the plea of force majeure applying only for 2014.
- The Complainants relied on judgments of this Commission in CC No. 838 of 2017 and CC No. 2878 of 2017, which held that delay in possession amounts to deficiency in service and entitles the buyer to refund with interest.
- The Hon'ble Supreme Court modified the interest rate in a related matter from 12% to 9%, which is applicable here.
Opposite Parties' Arguments
- The Complaint is barred by res judicata as a prior Consumer Complaint on the same cause of action was filed before the District Forum.
- The Complainants inflated the claim to meet pecuniary jurisdiction and invested for commercial purposes, thus not qualifying as consumers.
- The dispute falls under the arbitration clause in the agreement and involves complicated factual and legal questions unsuitable for summary proceedings before the Consumer Commission.
- The delay was due to force majeure conditions as stipulated in the agreement.
- The flat was ready and possession was offered after the Occupancy Certificate was obtained; the Complainants chose not to take possession.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Lucknow Development Authority v. M.K. Gupta, (1994) 1 SCC 243 | Delay in handing over possession of flat amounts to deficiency of service under the Consumer Protection Act. | The court relied on this precedent to hold that delay in possession constitutes deficiency of service. |
| Fortune Infrastructure & Anr. v. Trevor D'Lima & Ors., (2018) 5 SCC 442 | A person cannot be made to wait indefinitely for possession and is entitled to refund with compensation. | The court applied this principle to affirm the Complainants' entitlement to refund and compensation. |
| Bangalore Development Authority v. Syndicate Bank, (2007) 6 SCC 711 | Entitlement to refund with interest when possession is not delivered within stipulated time. | The court followed this principle to direct refund with interest to the Complainants. |
| Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghuvan, II (2019) CPJ 34 (SC) | Buyer cannot be compelled to take possession after expiry of stipulated possession period if builder fails contractual obligations. | The court cited this to reject the Opposite Parties' argument that Complainants should have taken possession despite delay. |
Court's Reasoning and Analysis
The Court analyzed the facts and legal submissions, noting the repeated delays in possession beyond the originally promised date of 31.01.2015. The Court rejected the Opposite Parties' plea of force majeure due to lack of specific evidence identifying the force majeure events preventing timely completion. The Court found that the prior Consumer Complaint before the District Forum was not adjudicated on merits but returned for pecuniary jurisdiction reasons, thus not barring the present Complaint by res judicata. The Court held that the Complainants qualify as consumers under the Act, rejecting the commercial purpose argument due to lack of evidence. The arbitration clause did not preclude the Consumer Commission's jurisdiction, as consumer protection remedies are additional and not curtailed by other laws. The Court found no complicated questions warranting summary dismissal and determined the issue was suitable for adjudication by the Commission. Applying binding Supreme Court precedents, the Court concluded that delay in possession constitutes deficiency of service entitling the Complainants to refund with interest and compensation.
Holding and Implications
The Consumer Complaint is partly allowed. The Opposite Parties are directed to refund the entire amount of Rs. 62,70,710/- paid by the Complainants with interest at 9% per annum from the respective dates of deposit until payment, within two months. Failure to comply will attract an increased interest rate of 12% per annum. No order as to costs was made, and all pending applications are disposed of.
The decision directly affects the parties by mandating refund with interest due to delay in possession, reinforcing the principle that builders are liable for deficiency of service in such cases. The ruling does not establish new precedent but applies established Supreme Court principles to the facts.
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
CONSUMER CASE NO. 3855 OF 2017
1. ABDUL RASHEED KHAN & ANR. ...........Complainant(s) Versus
1. MANTRI DEVELOPERS PVT. LTD. & ANR. Represented by its Chariman and managing Director, Mr, Sushil Mantri mantra House, NO.41, Vittal mallya Raod, Bangalore-560001
2. SUSHIL MANTRI
CHAIRMAN AND MANAGING DIRECTOR, MANTRI
DEVELOPERS PVT. LTD. MANTRI HOUSE, NO.41,
VITTAL MALLYA ROAD,
BANGALORE-560001 ...........Opp.Party(s)
BEFORE:
HON'BLE MR. C. VISWANATH,PRESIDING MEMBER
HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,MEMBER
For the Complainant : Mr. Shankar Divate, Advocate
For the Opp.Party : Mr. Manish Tiwari, Advocate Mr. Sattvisa Pattnayak, Advocate
Dated : 01 Jul 2022
ORDER
1. The present Complaint is filed under Section 21(a)(1) of the Consumer Protection Act, 1986 against Opposite Parties seeking refund of the deposited amount alongwith compensation for delay in completing the housing project. Opposite Party No.1 is a private company engaged in the construction of Commercial and Residential Buildings and Opposite Party No.2 is the Chairman and Managing Director of Opposite Party No.1.
2. Opposite Party No.1 formulated a scheme for construction of the residential apartment building complex together with common amenities and facilities under the name 'Mantri Webcity'
. Opposite Parties published an advertisement offering luxurious integrated township at Nagareshwara Nagenahalliand Kothanur Villages, K.R. Puram Hobli, Bangalore South Taluk known as "MANTRI WEBCITY". After seeing the advertisements, brochures and on the basis of the promises made by the Opposite Parties, Complainants entered into two separate agreements, one for purchase of undivided share in the land and the other for construction of the flat. It was promised by Opposite Parties that possession of the flat would be delivered on 31.01.2015. Complainants were allotted flat No.E-003 for a total consideration of Rs.63,98,064.18. Opposite
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Parties came out with a payment schedule known as Pre-EMI, whereby Complainants were to pay entire sale consideration for the flat upfront, before commencement of the Project. Complainants paid Rs.62,70,710/- as per following schedule:-
a) Rs.6,33,409/- on 30.06.2013
b) Rs.6,33,409/- on 22.07.2013
c) Rs.50,03,892/- on 26.07.2013 On January 2015, the Opposite Parties revised date of completion of the Project to March, 2015, then to September 2015 and thereafter to 31.12.2015, and other subsequent dates on one ground or the other. As per the Pre EMI Scheme, the EMI was to be paid to the Bank by the Opposite Parties till the date of possession and it was only after the possession, the Complainants were to bear the same. Opposite Parties, however, without any reason stopped paying installments altogether after January 2015.
4. Opposite Parties, vide mail dated 30.06.2016, asked the Complainants to take possession on 01.07.2016. The Opposite Parties offered possession without completing the project and completion certificate. The Complainants filed Consumer Complaint No.1032 of 2016 in the District Forum seeking completion of Project and damages for various deficiencies. The District Forum, on 08.08.2017 returned the Complaint on the ground of pecuniary jurisdiction. The Opposite Party received the Occupancy Certificate on 29.05.2017. However, the Possession of the flat and its registration was refused by Opposite Parties, in May, 2017, in lieu of the pending Complaint in the Consumer Commission. Alleging deficiency in service on the part of the Opposite Parties, Complainants filed the present Complaint with the following prayer:-
"A. Direct the respondent to refund the amount of Rs. 99,44,475/- as per his claim in para 25 above,
B. Award interest at the rate of 18% pa pendent lite and till the refund of the amount. C. Award compensation of Rs. 5,00,000/- towards mental agony, D. Award the cost of the litigation,
E. And pass such other order or orders as are deemed fit and necessary in the interest of justice."
5. Opposite Parties resisted the Complaint by filing the written statement. They raised preliminary objections that the Complainants had initially filed a Complaint before the District Forum, Bangalore. District Forum, vide order dated 08.08.2017, returned the Complaint to file it before the appropriate Forum. Complainants had claimed Rs.17,03,393/- under different heads before the District Forum along with possession of the flat. Now the Complainants have claimed a sum of Rs.99,44.475/- with pendente lite interest @ 18% p.a. and compensation of Rs.5,00,000/- with costs. The Complaint is, therefore, barred by the principle of res judicata for presenting two complaints on same cause of action. It was stated that the present Complaint is also not
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maintainable because the principal amount does not exceed the value of Rs.1 crore. Complainants have merely inflated the claim to maintain the present Complaint before this Commission. The Complaint is liable to be dismissed on pecuniary as well as due to presenting misleading facts before this Commission. Complainants have invested their money for profit making and commercial purpose under Section 2 (d) (ii) of the Act. The Complaint, therefore, are not
"Consumers". Further, the present dispute is covered under the under Clause'Arbitration clause' 21 of the Agreement. There are disputed facts in the Complaint, purely civil in nature which can only be proved or disproved by a full-fledged trial in the competent Court of jurisdiction and not by way of summary proceedings.
6. On merit, it was stated that the Complainants should have taken possession of their flat after the return of the Consumer Complaint by the District Forum on 08.08.2017 as the flat in question was fully ready and the Occupancy Certificate was also obtained by Opposite Parties on 29.05.2017. Complainants, however, chose to file this Complaint inter alia seeking refund of the amount paid by them. Opposite Parties stated that there is no deficiency in service or unfair trade practice on their part. On the basis of settled principle of law, the delay in delivery of possession of flat does not amount to deficiency in service and unfair trade practice. It was also stated that the delay occurred due to force majeure conditions. It was submitted that in para 6.4 of the agreement it was mentioned that the condition stipulated for handing over of possession is subject to force majeure or acts of God or non-availability of steel, cement, other vital building material water or electricity supply and labour problem etc.
7. Heard the Learned Counsel for the Parties and carefully perused the record. Learned Counsel for Complainants submitted that this Commission has passed judgements against the Opposite Parties for the same housing project in CC No. 838 of 2017 and CC No. 2878 of 2017. This Commission held that there was delay in completing the project. The plea of force majeure was only for the year 2014, still Opposite Parties failed to hand over possession. This Commission also held that Complainants were entitled to refund with interest @ 12% per annum. Judgement passed by this Commission in CC No. 2837 of 2017 was challenged in the Hon'ble Supreme Court. The Hon'ble Supreme Court in C.A.2837 of 2020 modified the judgement and reduced the interest from 12% to 9%. It was submitted that the case of the Complainants is squarely covered by the judgements of this Commission in CC No.838 of 2017 and CC No.2878 of 2017.
8. Learned Counsel for the Opposite Parties submitted that the Complaint is barred by the principle of as the Complainants had already filed a Consumer Complaint before theres judicata District Forum on the same cause of action. He also submitted that before the District Forum, the Complainants had claimed Rs.17,03,393/-. Now, before this Commission, they inflated the claim in order to bring the Complaint within pecuniary jurisdiction of this Commission. The Complainants had also invested the money in the project for commercial purpose. It was further submitted that is covered under the under Clause 21 of the Agreement. The'Arbitration clause' Complaint involves complicated question of facts and law which cannot be adjudicated in summary trial and can be adjudicated by the Civil Court.
9. On merit, Learned Counsel for the Opposite Parties submitted that when the District Forum returned the Complaint, vide order dated 08.08.2017, the Occupancy Certificate was obtained by the Opposite Parties. The Complainants, however, instead of taking possession of the flat, chose to move to this Commission. He further submitted that the delay in delivery of possession was due to force majeure conditions, which cannot be attributed to the Opposite Parties. He submitted that it is incorrect that Complainants were not allowed possession during pendency of the case, as on the date of filing of this present Complaint, the Occupancy Certificate was obtained and
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possession was offered much before the filing the Complaint. After withdrawal of Complaint from District Forum, the Complainants were to take possession of their flat in Tower-E Parcel I. Out of 68 flat as many as 38 residents had taken possession.
10. The Opposite Party took the ground that the Complaint is barred by the principle of res as the Complainant had earlier filed the Consumer Complaint before the District Forum.judicata It is relevant to mention that the Consumer Complaint filed before the District Forum was not dealt on merit. The District Forum returned the Complaint to the Complainant on the ground of pecuniary jurisdiction with liberty to the Complainant to file the Complaint before the appropriate Forum. Since the dispute involved in the Complaint was not dealt by the District Forum, the Consumer Complaint filed before this Commission is not barred by the principle of res judicata and is maintainable.
11. The Opposite Party also resisted the Complaint on the ground of pecuniary jurisdiction. The Complainant has sought refund of Rs.99,44,475/- alongwith interest @ 18% and compensation of Rs.5 lakhs towards mental agony. The Complaint pertains to the year 2017 and is covered by the old Act of 1986. From the prayer clause, we find that the Complaint falls well within the pecuniary jurisdiction of this Commission.
12. The Opposite Party also took the objection that the Complainants were not "Consumers"
under Section 2 (1) (d) of the Consumer Protection Act, 1986 as they had booked the flat for commercial purpose. There is a bald allegation as it is not supported by any evidence whatsoever.
13. The Opposite Party also took the objection that the dispute is covered under arbitration clause and the Consumer Complaint is not maintainable. It is settled law that the remedy under the Consumer Protection Act is an additional remedy and is not curtailed due to any specific law.
14. The Opposite Party also resisted the Complaint stating that the issue involved is complicated in nature and requires elaborate evidence and cannot be decided by summary proceedings. We find that there is no complicated question of law or fact involved in this case and no elaborate evidence is required for deciding this Complaint as alleged by the Opposite Party. The issue involved can very well be adjudicated by this Commission.
15. It is admitted that the Complainants and Opposite Parties entered into two separate agreements, one for purchase of undivided share in the land and another for construction of one Unit E-003 in the project for consideration of Rs.63,98,064/-. The possession of'Mantri Webcity' the said unit was to be delivered to Complainants on 31.01.2015. The Opposite Parties paid the Pre EMI to the Bank till January 2015. The Occupancy Certificate for the flat was obtained by Opposite Parties on 29.05.2017 and the same was informed to Complainants.
16. Hon'ble Supreme Court in Lucknow Development Authority v. M.K Gupta .. Gupta, (1994) 1 SCC
, Hon'ble Supreme Court held as follows:- 243
"when a person hires the services of a builder, or a contractor, for the construction of a house or a flat, and the same is for a consideration, it is a "service" as defined by Section 2 (o) of the Consumer Protection Act, 1986. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service."
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Further, in , it was Fortune Infrastructure & Anr. v. Trevor D'Lima & Ors., (2018) 5 SCC 442
held by the Hon'ble Supreme Court held that a person cannot be made to wait indefinitely for possession of the flat allotted to him, and is entitled to seek refund of the amount paid by him, along with compensation.
17. The Opposite Party took the ground that the flat in question could not be completed in stipulated time due to force majeure conditions. It is relevant to mention that in the written statement the Opposite Party had simply quoted para 6.4 of the development agreement. The Opposite Party had not specified as to what force majeure prevented them to complete the flat in stipulated time. The plea of force majeure is, therefore, not acceptable.
18. Possession was to be given in January, 2015. The Occupancy Certificate of the flat was received on 29.05.2017. There was, thus, a delay of more than 2 years in offer of possession by Opposite Parties. Hon'ble Supreme Court has time and again upheld the principle laid down in , whereby it was held Bangalore Development Authority v. Syndicate Bank ., (2007) 6 SCC 711
that when possession of the allotted plot/flat/house is not delivered within the specified time, the allottee is entitled to a refund of the amount paid, with reasonable Interest thereon from the date of payment till the date of refund. It was also held in a landmark judgement by the Hon'ble Supreme Court, titled Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghuvan, II (2019) CPJ
, decided on 02.04.2019, that if the Builder fails to fulfill his contractual obligation of 34 (SC)
obtaining the Occupancy Certificate and offering possession of the flat to the Purchaser within the time stipulated in the Agreement, the Flat Purchaser cannot be compelled to take possession of the flat after the term provided under the agreement had expired.
19. In view of the aforesaid discussion, the Consumer Complaint is partly allowed. Opposite Parties are directed to refund the entire amount of Rs.62,70,710/- with interest @ 9% p.a. from the respective date of deposit of each amount till payment within a period of two month, failing which Opposite Parties would be liable to pay an interest rate of 12% p.a. on the same amount. No order as to costs. All Pending applications are disposed of with this order.
......................
C. VISWANATH
PRESIDING MEMBER
......................J
RAM SURAT RAM MAURYA
MEMBER
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