BEFORE

HON'BLE MR SUBHASH CHANDRA, PRESIDING MEMBER

For the Appellant                 Mr Sanjeev Nirwani, Advocate

For the Respondents            Ex parte on 09.08.2019

ORDER

1.     This First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (in short, ‘the Act’) against the judgment dated 06.06.2018 passed by the Punjab State Consumer Disputes Redressal Commission, Chandigarh (in short, ‘the State Commission’) in Complaint Case no. 677 of 2017, directing the respondents to hand over the flat booked by them within 3 months subject to payment of the balance amount with 18% interest failing which the complaint shall stand dismissed.

2.     The brief facts of the case are that the appellants/ complainants had booked a 3 BHK flat, no. 601 (Tower T – 01) 6^th Floor having an approximate area of 1630 sq ft (super area) with the respondent/ opposite party for a total consideration of Rs.41,00,000/-. Appellants entered into an Agreement with the respondent on 25.05.2016 and were required to pay Rs.10 lakh as booking amount and Rs.10 lakh after 30 days and the balance amount at the time of possession, i.e., in September 2016. The appellants paid Rs.2.00 lakh to the respondent on 17.04.2016 and Rs.8.00 lakh on 15.05.2016. Thereafter, the appellants made further payment of Rs.10 lakh on 25.05.2016.  The respondent was required to deliver the possession of the flat to the appellants as per the agreement and, in case of any delay in the project, the respondent would refund the amount to the allottees with interest. In September 2016, the appellants went to the project site to see the development work and it was found that the work at the site of the project had stopped. Hence, the appellants approached the respondent stating that since possession had not been delivered within the prescribed period and the project was not completed, the amount deposited be refunded with interest. Thereafter, appellants visited the office of the respondent on numerous occasions but to no avail. Appellants stated that the respondents were habitual offenders and had committed fraud in numerous cases. Appellants alleged deficiency in service and unfair trade practice on the part of the respondents and prayed before the State Commission that:

1. OP be directed to pay Rs.20,00,000/- to the appellant along with interest @ 18% per annum;
2. OP be directed to pay Rs.8,00,000/- as compensation for mental harassment and Rs.25,000/- as cost of litigation.

3.     Upon notice, the respondent filed their written reply and contested the complaint by raising preliminary objections that the appellants had filed false and totally misconceived facts and the State Commission had no jurisdiction to entertain and adjudicate the dispute involved in the complaint. The respondent contended that the appellants were investors, who invested in the said flat for resale purpose and hence they were not ‘consumers’ of the respondent.  The respondent alleged that while the complainants initially deposited the booking amount at the time of Agreement to Sell, later they failed to comply with the terms and conditions of the Agreement. The respondent denied that the appellants had paid Rs.20 lakh, and stated that only Rs.10 lakh was paid till date.

4.     The State Commission vide its order dated 06.06.2018 held as under:

“So, in view of above facts and circumstances of the case, we dispose of the complaint of the complainants by directing the complainants to pay the remaining balance amount of sale consideration to opposite party with interest @ 18% per annum as agreed upon, vide clause 2 of buyers agreement between the parties within a period of three months from the date of receipt of certified copy of this order and OP shall deliver the complete possession of the flat/ unit after receipt of above balance amount of sale consideration from complainant within a period of one month therefrom to complainant. In case, complainants do not comply with this order, then in that eventuality this order will not enure and complaint shall stand dismissed.  

5.     The appellants have impugned this order by way of the present appeal before us.

6.     We have heard the learned counsel for the appellant and have carefully considered the material on record.  Respondent was placed ex parte on 09.08.2019. None also appeared on behalf of the respondent on 28.02.2024 when the matter was heard and orders were reserved.

7.     Learned counsel for the appellant in their written arguments stated that he booked Flat no. 601, 6^th floor, Tower – 01 a 3 BHK flat in respondent’s project ‘KSB Greens” and paid Rs.20,00,000/- on 17.04.2016, 15.05.2016 and 25.05.2016 amounting to Rs.2,00,000/-, Rs.8,00,000/- and Rs.10,00,000/- respectively.  As per Clause 10 of the agreement, the respondent was to hand over possession of the flat by September 2016. Learned counsel for the appellant submits that due to delay and non-delivery of the possession of the said flat, appellants filed a complaint case no.677 of 2017 before the State Commission, Punjab against the respondent on 31.07.2017.  According to the appellant, the State Commission’s order dated 06.06.2018 directing the appellants to pay the remaining amount with interest @ 18% per annum to the respondent was based upon an incorrect appreciation of the facts. It was submitted that the State Commission, conditionally dismissed the complaint on 04.07.2018. Appellant further submitted that they had paid Rs.50,000/- in cash and Rs.1,50,000/- by way of cheque on 17.04.2016 and Rs.8,00,000/- paid on 15.05.2016 had been duly acknowledged by the respondent. Appellant contended that after entering into an agreement, additional payment of Rs.10,00,000/- to the respondent had been made by way of cheque on 25.05.2016. Appellant submitted that respondent had specifically admitted that payment of Rs.10,00,000/- had been received. Therefore, the appellant had paid, in total, a sum of Rs.20,00,000/-.  Learned counsel for the appellant therefore contends  that the State Commission had passed an erroneous and illegal order and relied upon the judgments of the Hon’ble Supreme Court in Arifur Rahman Khan vs DLF Southern Homes (P) Ltd., (2020) 16 SCC 512 and in Indian Oil Corporation Ltd., vs Shree Ganesh Petroleum (2022) 4 SCC 463. It was prayed that the appeal be allowed and the impugned order be set aside and respondent be directed to refund Rs.20,00,000/- with interest @ 18% to the appellants; Rs.2,00,000/- as compensation for tension, harassment and agony caused to the appellant; and Rs.2,00,000/- as cost of litigation.

8.     The respondent’s case, based upon his submission before the State Commission, is that the State Commission lacked jurisdiction to entertain and adjudicate the case. It was submitted that the appellants were investors who had invested in the subject flat for the purpose of resale and hence, were not consumers of the respondent. It was also submitted that the Agreement to Sell (in short, the ‘Agreement’) dated 25.05.2016 was executed between the parties with regard to sale of flat no. 601, Tower T 01, 6^th Floor for a total sale price of Rs.41 lakh. As per the Agreement the super area of the flat was 1630 sq ft including common areas. The respondent had received Rs.10 lakh vide cheque dated 25.05.2016, as noted in the Agreement. The respondent denied the receipt of Rs.20 lakh out of the total sale consideration of Rs.41 lakh paid by the appellants.  However, the respondent did not deny that appellants deposited the booking amount at the time of the Agreement. His c ase is that the appellants failed to comply with the terms and conditions of the Agreement. Respondent further stated that as per Clause 10 of the Agreement, the respondent were to hand over possession of the flat to the allottee on or before September 2016. As the appellant failed to deposit the instalments as per the payment schedule provided in the Agreement the respondent had no obligation to deliver the possession. It was also stated that the respondents were ready to hand over possession of the flat subject to payment of the balance due along with 18% interest. These contentions are taken as his final submissions in view of the fact that despite opportunities he has chosen not to file written submissions.

9.     As per the Agreement dated 25.05.2016 executed between the parties, the respondent had undertaken to hand over possession of the flat booked by the appellants as per Clause 10 as under:

10.     The firm shall offer to hand over the possession of the above said flat to the allottee on or before September 2016, Nor Shall the allottee have any right to claim possession of the flat without having made complete payments payable under this agreement and any other agreement between the allottee and the firm in this regard and in the manner stipulate therein. As soon as building is notified on by the firm as complete and ready for occupation, the allottee shall pay all arrears demanded by the firm within 30 days of the intimation by the firm.

10.    Appellants had also undertaken to make necessary payments as per clause 17 (a) according to which it was agreed that:

1. Failure to make payments with in a time as stipulated, in the schedule of payments and failure to pay the stamp duty, service tax, legal, registration, any incidental charges as demanded by the Firm any other charges deposit for bulk supply of electrician energy, taxes as may be notified by the firm to the allottee under the terms of this allotment, and all other defaults of the similar nature.

11.   As per the appellant’s own submissions, against the total sale consideration of Rs.41,00,000/- only Rs.20,00,000/- had been paid as on 25.05.2016. Before the State Commission, the prayer of the appellants was for refund of the amount of Rs.20,00,000/- deposited by them with interest @ 18% per annum, the rate at which the respondent was penalising delay in payment of instalments by an allottee, with other compensations for harassment and litigation costs. This relief was sought on the grounds of delay in execution of the project and failure to adhere to the time lines.

12.     The Hon’ble Supreme Court in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, (2020) 18 Supreme Court Cases 613 has laid down that “…it would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession…A buyer can be expected to wait for a reasonable period. A period of seven years is beyond what is reasonable”. It has also laid down in Pioneer Urban Land and Infrastructure Ltd. Vs. Govindan Raghavan, in CA No. 12238 of 2018 decided 02.04.2019, (2019) 5 SCC 725 that a flat purchaser would be justified in terminating the Apartment Buyer’s Agreement and cannot be compelled to accept possession even if it was offered after 2 years of expiry of the grace period and was legally entitled to seek refund. In the instant case, however, the Appellant was also at fault for not making timely payments.

13.    In Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, C.A. No. 6044 of 2019 decided on 07.04.2022, the Hon’ble Supreme Court has held that compensation by way of interest should be both compensatory and restitutionary. In the case on hand, while delay in execution of the project and consequently in the offer of possession is evident, in view of the default in making payments, the Appellant cannot claim relief for mental harassment. The Apex Court has also held in DLF Homes Panchkula Pvt. Ltd., vs D S Dhanda (2020) 16 SCC 318, decided on 10.05.2019 that the award of compensation under multiple heads for a singular act of deficiency is not justified.

14.   As per the respondent’s submission, the appellants failed to pay the instalments due towards the consideration agreed upon. In their submissions, Appellants while arguing that the project was delayed by the respondent, have not denied that they failed to make the required payments. However, the respondent also did not bring on record details of any action it took to cancel the allotment, for default or steps to put the appellants on notice regarding penal interest. Appellant’s prayer before the State Commission was for refund of Rs.20,00,000/- with interest @ 18% and other compensation for mental agony etc.,

15.   In view of the discussion above, while the respondent is held liable for delay in offering possession of the flat to the appellants in view of the law laid down in Govindan Raghavan (supra), in view of the Apex Court’s finding in Sushma Ashok Shiroor (supra), the rate of interest claimed (18%) by the appellant cannot be considered justifiable. As the prayer of the appellant was for refund, the direction of the State Commission to hand over possession after the appellant’s deposit the balance sale consideration with 18% cannot be sustained. The State Commission has not returned a finding on whether the appellants qualify as ‘consumers’ under section 2 (1) (d ) of the Act. However, from the facts on record, respondent has not established that the appellants were engaged in the business of real estate or the purchase and sale of flats as required per the judgment of this Commission in Kavita Ahuja Vs. Shipra Estate Ltd. & Jai Krishna Estate Developers Pvt. Ltd. in CC 137 of 2010 dated 12.02.2015.

16.   For the foregoing reasons, the First Appeal is allowed. The impugned order of the State Commission dated 06.06.2018 is set aside with the following directions:

1. Respondent will refund Rs.20,00,000/- with interest @ 9% per annum as compensation from the respective dates of deposit within 8 weeks of this order failing which the applicable rate of interest will be 12% per annum till realisation; and
2. Respondent will also pay the appellant litigation cost of Rs.25,000/-.

17.   Pending IAs, if any, also stand disposed of with this order.