JUSTICE V.K.JAIN (ORAL)

Heard for about two hours.

In all these matters the consumer complaints instituted against Parsvnath Developers Ltd., hereinafter referred to as the ‘Developer’ and Chandigarh Housing Board were allowed by the State Commission with direction to them to refund the principal amount paid by the complainants alongwith interest, compensation in terms of Clause 9(c) of the Flat Buyers Agreement and the cost of litigation. Being aggrieved from the order passed by the State Commission, the Developer preferred appeals before this Commission. The appeals are stated to have been disposed of in view of the order dated 21.4.2015 passed by the Hon’ble Supreme Court in SLP(C) No.17133-17134 of 2013. The Developer sought some clarification on certain findings of the Arbitrator in the award made by him in the arbitration proceedings between the Chandigarh Housing Board and the Developer. This Commission refrained from making any observations on the applicability of the award.

2.      Execution applications were filed by the complainants seeking execution of the orders which the State Commission had passed in the consumer complaints. The State Commission held that the complainants were entitled to compensation in terms of Clause 9(c) of the Flat Buyers Agreement from the Developer but if the Developer had any claim in terms of the arbitration award against Chandigarh Housing Board, it could take recourse to other legal proceedings. Being aggrieved from the order passed by the State Commission, the Developer is before this Commission by way of these appeals.

3.      Admittedly, the principal amount as well as the interest in terms of the order of the State Commission has been paid to the complainants/allottees. The only issue involved in these appeals is as to whether the compensation awarded by the State Commission in terms of the Clause 9(c) of the Flat Buyers Agreement is payable solely by the Developer or it is to be shared between the Developer and the Chandigarh Housing Board  in the ratio of 70:30. The learned counsel for the Developer has drawn my attention to the following decision of the Arbitrator appointed to adjudicate upon the disputes between the Developer and Chandigarh Housing Board:-

“Decision : The claimant and respondent are directed to bear the liability towards residential unit buyers, for refund of advances (payment of sale price or part thereof), interest and compensation as awarded by any consumer fora or any court, in the ratio of 70:30 respectively. For this purpose, the parties may take note of the payments, if any, already made by them and pay the balance so that the ratio of liability is maintained at 70:30.”

4.      Relying upon the above-referred decision of the Arbitrator, the learned counsel for the Developer submits that any amount including any compensation whatsoever awarded by a Consumer Forum is to be shared between the Developer and Chandigarh Housing Board in the ratio of 70:30. The learned counsel for the Chandigarh Housing Board, on the other hand, submits that Clause 9(c) of the Flat Buyers Agreement obligates payment of compensation in terms of the said Clause solely by the Developer and, therefore, there is no reason why Chandigarh Housing Board should share the compensation awarded by the State Commission in terms of Clause 9(c) of the Flat Buyers Agreement.

5.      Clause 9(c) of the Flat Buyers Agreement reads as under:-

“9.(c) In case possession of the built up area is not offered to the buyer within a period of 36 months or extended period as stipulated in sub-clause (a) above, the buyer shall be entitled to receive from the developer compensation @ Rs.107.60 per Sq. Mtrs. (Rs. 10/- per Sq. Ft.) of the super area of the unit per month and to no other compensation of any kind. In case the buyer fails to clear his account and take possession of the unit within 30 days of offer, the buyer shall be liable to pay to the developer holding charges @ Rs.107.60 per Sq Mtrs. (Rs.10/- per Sq. Ft.) of the super area of the unit per month in addition to the liability to pay interest to the sellers and other consequences of default in payment.”

It is evident from a bare perusal of the Clause that the compensate  @ 107.60 per Sq.mtr., if otherwise made out was payable solely by the Developer.

6.      In Civil Appeal No.10748 of 2016 - Chandigarh Housing Board  Vs. Parsvnath Developers Ltd. & Anr. decided on 17.12.2019,  the Hon’ble Supreme Court dealing with several appeals filed by the Chandigarh Housing Board   against the order of this Commission in respect of the allotments made in this very project interalia observed and held as under:-

From the above, it is evident that the Developer and CHB agreed to complete the construction of the residential units within a period of 36 months from the date of signing of the Development Agreement on 06.10.2006. In the event that such construction was not done, Clause 9(c) would come into operation and the Developer would become liable to compensate the buyer at Rs.107.60 per sq metre of the super area of the unit, per month.

10. A close reading of Clause 9(c) of the Tripartite Agreement indicates two salient features– first, the liability to pay compensation under this Clause can only be affixed on the Developer if it fails to fulfill the condition under Clause 9(a) and perform its obligations under the Development Agreement, i.e. if it does not hand over the possession of the flat to the buyer within a period of 36 months from the date of signing of the Development Agreement. The second feature of Clause 9(c) is that it envisages a fixed compensation of Rs.107.60 per sq metre per month to be paid to the flat buyer.

10.1 When the facts of the instant case are examined in light of these observations, it becomes clear that Clause 9(c) is not attracted in the present case at all. First, there has been no fulfilment of the condition under Clause 9(a) for Clause 9(c) to come into operation. This is because the Developer never even began construction at the project site due to the dispute with CHB about the encumbrances on the allotted land. Thus, the question of finishing such construction within the period mentioned under Clause 9(a) does not even arise. Consequently, Clause 9(c), which is concerned with the non-fulfilment of this obligation, is also not attracted. It is notable that the arbitrator has also arrived at a finding to this effect in his award dated 09.01.2015 as follows:

“296. Consequently, if any amount is payable on account of refund of price, interest, or compensation (if and when finally determined), respondent is liable to bear and pay 30% thereof, the balance of 70% being payable by the claimant (PDL). Article 14.2.5 no doubt makes the developer solely and exclusively responsible to residential unit buyers, but that is only in regard to non-performance of its obligations. The said provision does not make claimant responsible for the breaches committed by the respondent, nor absolve the respondent from liability for the consequences of its defaults/breaches, which contributed to the non-performance of the obligations by the developer towards the residential unit buyers.”

(emphasis supplied)

Thus, given that the breach of the Development Agreement is attributable to both, CHB and the Developer, the failure to hand over possession of the flat to the buyer cannot be said to be on account of the non-performance of the obligation of the Developer alone. Consequently, Clause 9(c) is not applicable to the present case. This reading of Clause 9(c) has also been affirmed by this Court in its order dated 21.04.2015, and for the reasons mentioned supra, we do not

deem it fit to interfere with the same.

7.      It would thus be seen that even the Hon’ble Supreme Court took the view that the compensation in terms of Clause 9(c) of the Flat Buyers Agreement if otherwise payable has to be paid only by the Developer, though the Hon’ble Supreme Court was of the view that the compensation in terms of Clause 9(c) was not payable at all,  because the Developer did not begin construction at the project site, due to dispute with Chandigarh Housing Board  about encumbrances on the allotted land and, therefore, the question of finishing the construction within the period mentioned in Clause 9(a) did not even arise.

8.      The Hon’ble Supreme Court  felt that (i) the liability to pay compensation, if any,  in terms of Clause 9(c) of the Agreement would be only of the Developer and (ii) no compensation in terms of Clause 9(c) was payable, the Developer having not even commenced construction.

9.      In the cases before this Commission, the order passed by the State Commission awarding compensation in terms of Clause 9(c) of the Flat Buyers Agreement in addition to interest at the rate specified in the order of the State Commission has become final, the appeal filed by the Developer having been dismissed.  Therefore, even if such a compensation was not payable, it is  not permissible for this Commission to revise or modify the order awarding compensation in terms of Clause 9(c) of the Agreement, in the execution proceedings. The State Commission in its wisdom having awarded compensation under  Clause 9(c) of the Flat Buyers Agreement and the said order having become final, the complainants are entitled to the said compensation even if the order passed by the State Commission is found to be contrary to the view later on taken by the Hon’ble Supreme Court in Civil Appeal No. 10748 of 2016, decided on 17.12.2019.

10.    As far as the award given by the Arbitrator is concerned, the said award, in my opinion, has to be read in the light of the obligation of the Developer contained in Clause 9(c) of the Agreement and the view taken by the Hon’ble Supreme Court in Civil Appeal No. 10748 of 2016. Thus, the award has to be read to mean that any compensation payable to an allottee except the compensation in terms of Clause 9(c) of the Agreement has to be shared by the Developer and the Chandigarh Housing Board in the ratio of 70:30, but this would not apply to the compensation awarded under Section 9(c) of the Flat Buyers Agreement. There is nothing on record to show that while passing the award, the Arbitrator had even gone into the question as to who would be liable to pay compensation in terms of Clause 9(c) of the Flat Buyers Agreement in case the compensation under that Clause is awarded by a Consumer Forum. Therefore, it would be difficult to say that in view of the said award, the Developer is required to pay only 70% of the compensation awarded by the State Commission under Clause 9(c) of the Flat Buyers Agreement and the balance 30% of such compensation is payable by Chandigarh Housing Board .

11.    It is submitted by the learned counsel for the Developer that since the Hon’ble Supreme Court has clearly held that compensation under Clause 9(c) of the Flat Buyers Agreement is not payable because the development work in this project did not at all commence, the said direction should be set aside by this Commission. I am afraid such an order cannot be passed by this Commission in execution proceedings. An Executing Court cannot go behind the order passed in the civil suit. Similarly, even a Consumer Forum cannot go behind the order passed in a consumer complaint in the proceedings seeking execution / enforcement of the said order.

12.    For the reasons stated hereinabove, I find no merit in the appeals filed by the Developer, which are accordingly dismissed with no order as to costs.