Chandigarh

StateCommission

CC/349/2016

Mrs. Anjali Sharma - Complainant(s)

Versus

M/s Emaar MGF Land Limited - Opp.Party(s)

Ram Krishan Sharma Adv, & M.K. Malhotra Adv.

03 Oct 2016

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

Complaint case No.	:	349 of 2016
Date of Institution	:	12.07.2016
Date of Decision	:	03.10.2016

 

1. Mrs.Anjali Sharma wife of Sh.Ravinder Nath Sharma, resident of House No.1116, Sector 21-B, Chandigarh.
2. Anubhav Sharma son of Sh.Ravinder Nath Sharma, resident of House No.1116, Sector 21-B, Chandigarh, presently at 255 COGGINS DR APT G2 PLEASANT HILL, CA 94523, USA, through his Special Power of Attorney Mrs.Anjali Sharma (Mother).

……Complainants

V e r s u s

1. M/s Emaar MGF Land Ltd., ECE House, 28 Kasturba Gandhi  Marg, New Delhi-110001, through its Managing Director
2. The Branch Manager, M/s Emaar MGF Land Ltd., SCO 120-122, First Floor, Sector 17-C, Chandigarh-160017.

              .... Opposite Parties

Complaint under Section 17 of the Consumer Protection Act, 1986.

 

BEFORE: JUSTICE JASBIR SINGH (RETD.), PRESIDENT.

                MR. DEV RAJ, MEMBER.

                MRS. PADMA PANDEY, MEMBER

 

Argued by: Sh.Ram Krishan Sharma, Advocate for the complainants.

                Sh.Sanjeev Sharma, Advocate for the opposite parties.

 

PER JUSTICE JASBIR SINGH (RETD.), PRESIDENT’

                Complainant no.1 is the mother of complainant no.2.  They have filed this complaint, seeking refund of amount of Rs.46,63,840/- with interest, compensation and litigation expenses. As per facts on record, to earn their livelihood, the complainants had purchased one shop, measuring 1477 square feet, in a shopping complex, namely ‘Central Plaza’, Sector 105, Mohali Hills, Mohali, Punjab, launched by the opposite parties. On 07.02.2008, they paid an amount of Rs.6,91,000/- towards booking amount, through two cheques, receipts whereof, Annexures C-2 and C-3 were issued by the opposite parties. They were allotted a shop/unit bearing no.14, Top Floor, in the said project, vide allotment letter dated 14.02.2008 Annexure C-4. Buyer’s Agreement Annexure C-5 was signed between the parties on 31.03.2008. Clause 22.1 of the Agreement envisages delivery of possession within the stipulated period of 36 months from the date of execution of that Agreement with grace period of 90 days for obtaining necessary certificates. The said Clause reads thus:-

“22 POSSESSION, PROCEDURE FOR TAKING POSSESSION AND FAILURE TO TAKE POSSESSION

22.1 Subject to Force Majeure conditions and reasons beyond the control of the Developer and subject to the Allottee not being in default of any of the provisions of this Agreement and having complied with all provisions, formalities, documentation etc. and the terms and conditions of this Agreement, the Developer proposes to hand over the possession of the premises within a period of thirty six (36) months from the date of signing of this Agreement. The Allottee agrees and understands that the Developer shall be entitled to a grace period of ninety (90) days, after the expiry of thirty-six (36) months for applying and obtaining the occupation certificate in respect of the CENTRAL PLAZA”.

2.         It is provided that subject to force majeure conditions, the opposite parties proposes to hand over possession of a constructed unit, within a period of 36 months, from the date of signing of Agreement i.e. by 31.03.2008, with further grace period of 90 days to obtain necessary certificates i.e. within a maximum period of 39 months. As per schedule of payment given, the complainants continued to make payment and by the time, this complaint was filed, they had paid an amount of Rs.46,63,840/- against total sale consideration of the unit i.e. Rs.49,21,459/-, which included external development charges, preferential location charges etc. It is also necessary to mention here that initially payment plan was time linked, however, vide letter dated 24.11.2009 Annexure C-6, it was converted to construction linked plan. It is stated that as and when payment was demanded, it was deposited by the complainants. When the complainants visited the site of project, it was noticed that construction was running behind schedule. Their request to hand over possession of the unit went deaf ears of the opposite parties.  Request made for refund of the amount alongwith interest was also not looked into.
3.         It is further case of the complainants that by the end of June 2011, possession of the unit was neither offered, nor the amount deposited by them was returned. Rather, in a very strange manner, vide letter dated 30.05.2016 Annexure C-10, the opposite parties demanded an amount of Rs.16,94,731/- towards various heads, including increase in area of the unit under purchase. It is further stated that as per Clause no.24.1 of the Agreement, for delay in delivery of possession of the unit, the opposite parties were liable to pay compensation @Rs.50/- per square feet per month of the super area of the unit, to the allottees. However, that compensation was also not paid. When demand was raised for payment of further amount, even by that date i.e. 30.05.2016, delivery of possession of constructed unit was not in sight. Legal notice was sent on 20.06.2016, seeking refund of the amount paid with interest. When no action was taken by the opposite parties, the present complaint was filed before this Commission.
4.         Upon notice, joint written reply was filed by the opposite parties, wherein, it was pleaded that in the face of existence of an arbitration Clause in the Agreement, to settle disputes between the parties through Arbitration, in terms of provisions of Section 8 (amended) of 1996 Act, this Commission has no jurisdiction to entertain the consumer complaint. It was averred in the joint written reply that the complainants did not fall within the definition of “consumer” as defined under Section 2(1)(d) of the Act, as they had purchased the unit, in question, for commercial purpose i.e. for selling the same, as and when there was escalation in the prices of real estate, to gain huge profits. They had purchased the shop/commercial unit but have not clarified as to for what use, the unit was to be put for, to earn their livelihood by way of self-employment. To support their contention, it was stated that complainant no.2 is settled in USA, as such, his plea of self-employment to earn livelihood if taken, cannot be accepted. Pecuniary jurisdiction of this Commission was also disputed. It was also stated in para no.13 of the written reply that the plea taken by the complainants regarding limitation is wrong.
5.         Purchase of unit by the complainants, in the manner, referred to above, is not disputed. Execution of the Agreement; payments made from time to time; change of payment plan also stands admitted. It was stated that, as per Clause 21.1 of the Agreement,  it was agreed between the parties, that the Company only proposes to deliver possession of the unit, in question, within a period of 36 months, from the date of signing of the Agreement, with further grace period of three months, as such, time was not the essence of contract. It was averred that since it was a contract concerning the immovable property and no services were to be provided by the opposite parties, as such, consumer complaint was not maintainable. In other words, it is being tried to say that only the Civil Court has jurisdiction to entertain this complaint. It was further stated that it was well within the knowledge of the complainants that for any delays, stipulated penalty has been provided in the Agreement, which safeguarded their interest. It was further stated that penalty amount was not payable to the complainants because they had made default in making the payments and they were in arrears of Rs.76,127/- as on 05.09.2016. It was further stated that possession of the unit, in question was infact offered to the complainants on 30.05.2016, as such, request made for refund of amount paid, cannot be entertained. It was further stated that, in case, the complainants still wanted refund of the amount deposited; the same would amounts to surrender of the unit, and would attract forfeiture charges. It was further stated that neither there was any deficiency, in rendering service, on the part of the opposite parties, nor they had indulged into unfair trade practice as alleged. The remaining averments, were denied, being wrong. It was prayed that let the complaint be dismissed.
6.         To the reply filed by the opposite parties, rejoinder was filed by the complainants reiterating all the averments contained in the complaint. In reply to para no.2 (preliminary objection) of the written statement filed by the opposite parties, it was stated that the shop was not purchased for commercial purpose, but for the purpose of earning their livelihood by means of self employment. It was stated that complainant no.1 had been running boutique from her residence in Chandigarh and she was facing hardship to run the same because of objections raised by the Chandigarh Administration. It was further stated that mere offer of possession with a delay of about five years from the stipulated date, will not debar the complainants to claim refund of amount paid with interest, compensation and litigation expenses.
7.         The parties led evidence in support of their case.
8.         We have heard Counsel for the parties and have gone through the evidence and record of the case, very carefully.
9.         After hearing Counsel for the parties and on going through the evidence and record of the case, we are of the considered opinion that the complaint deserves to be partly allowed. It is on record that the unit/shop in dispute was sold by the opposite parties to the complainants on 07.02.2008, by accepting booking amount of Rs.6,91,000/-. Formal allotment letter was issued on 14.02.2008. Buyer’s Agreement was signed between the parties on 31.03.2008. Initially, the payment plan was time linked plan. However, subsequent thereto, vide letter dated 24.11.2009, it was converted to construction linked plan. As per Clause 22.1 of the Agreement, possession of the constructed unit was to be delivered within 36 months from the date of signing of the Agreement, with grace period of 90 days, to get necessary certificates. Thus, as per admitted facts on record, possession of the unit was to be delivered by the end of June 2011. However, it was not so done and ultimately, it was offered on 30.05.2016, vide letter Annexure C-10, intimating the complainants to get possession of the unit by depositing an amount of Rs.16,94,731/-. It may be stated that that non-delivery of possession of the unit, in question, by the stipulated date, is a material violation of the terms and conditions of the Agreement, on the part of the opposite parties. Under similar circumstances, this Commission, in the case of Brig Ajay Raina (Retd.) and another Vs. M/s Unitech Limited, Consumer Complaint No.59 of 2016, decided on 24.05.2016, while relying upon the judgments rendered by the Hon'ble National Commission, held as under:-

“Further, even if, it is assumed for the sake of arguments, that offer of possession, was made to the complainants, in July 2015 i.e. after a delay of about three years, from the stipulated date, even then, it is not obligatory upon the complainants to accept the same. It was so held by the National Commission in Emaar   MGF   Land   Limited   and   another   Vs. Dilshad Gill, III (2015) CPJ 329 (NC). Recently also, under similar circumstances, in the case of M/s. Emaar MGF Land Ltd. & Anr. Vs. Dr.Manuj Chhabra, First Appeal No.1028 of 2015, decided on 19.04.2016, the National Commission, held as under:-

“I am of the prima facie view that even if the said offer was genuine, yet, the Complainant was not obliged to accept such an offer, made after a lapse of more than two years of committed date of delivery”.

 

10.         In view of the above, it is held that since there was a material violation on the part of the opposite parties, in not handing over possession of the unit by the stipulated date, as mentioned in the Agreement, the complainants were at liberty, not to accept the offer made after a long delay of about five years, on 30.05.2016, and on the other hand, were right in seeking refund of the amount deposited, alongwith interest and compensation, by way of filing the instant complaint.

                At the same time, it is also submitted that the opposite parties cannot evade their liability, merely by saying that since the word proposed/tentative was mentioned in the Agreement, for delivery of possession of the unit, as such, time is not to be considered as essence of the contract. Non-mentioning of exact date of delivery of possession of the unit(s) in the Buyer’s Agreement, is an unfair trade practice on the part of the Builder. The builder is bound to mention the exact/specific date of delivery of possession of the unit(s) to the allottees/purchasers thereof.  The Hon'ble National Commission, in Rajeev Nohwar & Anr. V/S Sahajanand Hi Tech Construction Pvt Ltd, 2016 (2) CPR 769,  has said that merely making possession by a particular date will also not meet the requirement of law and the promotor is under a legal mandate to stipulate a specific date for delivery of possession of a unit. In view of above, the plea of the opposite parties in this regard also stands rejected.

11.         As stated above, possession of the unit was to be delivered by the end of June 2011. However, it has only been intimated on 30.05.2016, that on making further payment of Rs.16,94,731/-, the complainants can get possession of the unit, in question. Delayed penalty amount was also not paid, by raising frivolous objection of making payment, not as per schedule. Be that as it may, in the present case, there is no question of granting above penal compensation because the complainants are seeking refund of amount paid with interest, compensation etc.
12.         It has vehemently been contended by Counsel for the opposite parties that the dispute is qua a shop, purchased by the complainants in a commercial complex, launched by the opposite parties and there is nothing on record to prove that the shop was purchased by the complainants to earn their livelihood, through self-employment, as such, they would not fall within the definition of consumer, in terms of Section 2 (1) (d) of the Act.

                We are not going to agree with the contention raised. There is nothing on record to show that the shop was purchased by the complainants to earn profits, in future, by selling it at a higher premium. The complainants are not the property dealers and deal in the sale and purchase of property, on regular basis, and as such, there is no evidence to show that the unit, in question, was purchased by them, by way of investment, with a view to resell the same, as and when, there was escalation in the prices thereof. Similar controversy, as to whether the complainant(s) on purchase of a shop/unit would fall within the definition of consumer complaint, came up for consideration, before this Commission, in a case titled as M/s Chandigarh Overseas Private Limited Vs. Easow Mathew, First Appeal No.284 of 2015, decided on 25.01.2016. Taking note of similar contentions, this Commission, gave findings as under:-

6. On interpreting provisions of application form for allotment/agreements, and other documents on record, the Forum came to the conclusion that construction at the project, was to be completed by 18.01.2010, however, it was not done and possession of the unit, was not delivered, as per promise made by the opposite parties. Defence taken by the appellant that the respondent was not a consumer was righty rejected, by observing as under:-

“As we have already observed, the complainant has specifically pleaded in his complaint that he wanted to settle a business for himself for earning his livelihood and to become an independent business owner, he agreed to purchase the said unit of 100 sq. ft. in Design Studio No.12.  The complainant has also pleaded that he is a consumer as per the provisions of the Consumer Protection Act as the said unit was purchased by him for earning his livelihood.  The allegations of the complainant are supported by his own affidavit.  The OPs have not produced any such evidence that the complainant is a property dealer dealing in the sale and purchase of real estate. The total area of the unit purchased by the complainant from the OPs is only 100 sq. ft. which is for small investors.  Since the complainant wanted to settle a business for himself for earning his livelihood, it cannot be inferred that the said unit was purchased by him with the sole motive of earning profits.  As far as the contention of the learned counsel for the OPs that the complainant is not qualified to run his unit in the project is concerned, it was the duty of the OPs to verify the same before accepting the application for allotment of the unit whether he was eligible under “Small Investor Scheme” or not.  At this stage, such an objection is not tenable.  In Arun Mandhana Vs. Chandigarh Overseas Pvt. Ltd. & Anr., Consumer Complaint No.19 of 2012 decided on 12.10.2012 and Ruchira V. Arora Vs. M/s Chandigarh Overseas Private Limited, First Appeal No.8 of 2013 decided on 1.3.2013, our own Hon’ble State Commission in somewhat similar circumstances in the complaints against the same very OPs held that the size of the studio was small and the sale price of the said studio was also not too high, therefore, it was established that the complainant never intended to run commercial activity in the studio on a large scale with a view to earn huge profits and he fell within the definition of consumer.”

7.         Contention of Counsel for the appellant that the respondent was not a consumer also needs to be rejected, taking note of ratio of the judgement of the National Commission, titled as Kavit Ahuja Vs. Shipra Estate Limited and Jai Krishna Estate Developers Private Limited, Consumer Complaint No.137 of 2010, decided on 12.02.2015. Similar objection was raised, in that case. The National Commission while interpreting the provisions of Section 2 (1) (d) of the Act, held as under:-

“Going by the Dictionary meaning of the expression ‘Commerce’ as far as hiring or availing services are concerned, a person can be said to have hired or availed services only if they are connected or related to the business or commerce in which he is engaged.  In other words, the services in order to exclude the hirer from the ambit of Section 2(1)(d) of the Act should be availed for the purpose of promoting, advancing or augmenting an activity, the primary aim of which is to earn profit with use of the said services.  It would ordinarily include activities such as manufacturing, trading or rendering services.  In the case of the purchase of houses which the service provider undertakes to construct for the purchaser, the purchase can be said to be for a commercial purpose only where it is shown that the purchaser is engaged in the business of purchasing and selling houses and / or plots on a regular basis, solely with a view to make profit by sale of such houses.  If however, a house to be constructed by the service provider is purchased by him purely as an investment and he is not undertaking the trading of houses on a regular basis and in the normal course of the business profession or services in which he is engaged, it would be difficult to say that he had purchased houses for a commercial purpose.  A person having surplus funds available with him would not like to keep such funds idle and would seek to invest them in such a manner that he gets maximum returns on his investment.  He may invest such funds in a Bank Deposits, Shares, Mutual Funds and Bonds or Debentures etc.  Likewise, he may also invest his surplus funds in purchase of one or more houses, which is/are proposed to be constructed by the service provider, in the hope that he would get better return on his investment by selling the said house(s) on a future date when the market value of such house (s) is higher than the price paid or agreed to be paid by him.  That by itself would not mean that he was engaged in the commerce or business of purchasing and selling the house (s).

Generating profit by way of trading, in my view is altogether different from earning capital gains on account of appreciation in the market value of the property unless it is shown that the person acquiring the property was engaged in such acquisition on a regular basis and it was by way of a business activity.

8.         By noting ratio of the judgment of the Hon'ble Supreme Court of India, titled as Laxmi Engineering Works Vs. P.S.G. Industrial Institute (1995) 3 SCC 583, it was stated by the National Commission in that case that the word commercial purpose is a question of fact to be decided in the facts of each case. It is not value of the goods, which matters, but the purpose, for which the goods bought are put to, needs to be noted. Same would be clearly applicable to, for hiring or availing services. In the present case,  application to purchase a unit, was moved in the year 2006. Out of Rs.5 lacs, an amount of Rs.4,75,000/- stood paid, for purchase of the built-up unit. Rest of the amount was to be paid, at the time of possession of the unit. In the year 2009, when completion of the project was not visible, under above circumstances, when buyback offer was made by the appellant on 22.06.2009, may be on account of frustration in not getting possession of the unit, in time, it was accepted by the respondent, on 04.08.2009 vide letter Annexure C-7. On account of that act, the respondent cannot be excluded from the definition of a consumer. Even otherwise, as has been observed by the National Commission, in the case of Kavit Ahuja's case (supra), that surplus funds can be invested, in such a manner, in purchasing property/unit(s), to earn better returns, in future and unless there is evidence on record that the purchaser thereof, was indulging into sale and purchase of unit(s), on regular basis, he would fall within the definition of a consumer.”

 

13.         In the instant case, in para no.2 of the complaint, it is specifically stated that the shop was purchased by the complainants, to earn their livelihood. When objections, as referred to above, were raised by the opposite parties in their written version; by filing rejoinder, in reply to para no.2 of the preliminary objections, it was specifically stated by complainant no.1 that the shop in dispute was needed exclusively for the purpose of earning livelihood through means of self-employment. It was further stated by complainant no.1 that she had been running a boutique from her residence, however, on account of objections raised by the Chandigarh Administration, it is becoming difficult for her to continue to run business. It appears that to engage her son, for earning livelihood by running her business of boutique, the shop in question was purchased by the complainants.

 

The  complainants, thus, fall within the definition of a ‘consumer’, as defined under Section 2(1)(d) of the Act. Such an objection, taken by  the opposite parties, in their written reply, therefore, being devoid of merit, is rejected.  

14.         Another objection was taken by the opposite parties, in their written version, that since the complainants sought enforcement of the Agreement, in respect of the unit, in question, i.e. immoveable property and no service was to be provided by them (opposite parties), the consumer complaint was not maintainable.

                The complainants hired the services of the opposite parties, for purchasing the unit, in question, and they were allotted the same for consideration. According to clause 22.1 of the Agreement, the opposite parties were required to hand over possession of the unit, in question, to the complainants, within a maximum period of 39 months from the date of signing the Agreement, after completing all the basic amenities. It was not that the complainants purchased the unit, in an open auction, on “as is where is basis”.  As such, the opposite parties are bound to provide basic services to the complainants. Section 2 (1) (o) of the Act, defines service as under:-

“service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service”

15.         In Narne Construction P. Ltd., etc. etc. Vs.  Union Of India and  Ors. Etc., II (2012) CPJ 4 (SC),  it was held that when a person applies for the allotment of a building or site or for a flat constructed by the Development Authority and enters into an agreement with the Developer, or the Contractor, the nature of transaction is covered by the expression ‘service’ of any description. Housing construction or building activity carried on by a private or statutory body constitutes ‘service’ within the ambit of Section 2 (1) (o) of the Act. Similar principle of law, was laid down, in Haryana Agricultural Marketing Board Vs. Bishambar Dayal Goyal & Ors. (AIR 2014 S.C. 1766). Under these circumstances, the complaint involves the consumer dispute, and the same is maintainable. Not only this, Section 3 of the Act, provides an alternative remedy. Even if, it is assumed that the complainants had a remedy to file a suit, in the Civil Court, the alternative remedy provided under Section 3 of the Act, could be availed of by them, as they fall within the definition of a consumer.

                Besides this, in Haryana State Agricultural Marketing Board vs. Bishamber Dayal Goyal and Ors., Civil Appeal No.3122 of 2006, decided on 26.03.2014, the Hon’ble Supreme Court, while placing reliance on Municipal Corporation, Chandigarh &Ors. vs. Shantikunj Investment (P) Ltd. & Ors., (2006) 4 SCC 109, held that though it was not a condition precedent but there is an obligation on the part of the Administration to provide necessary facilities such as roads, drainage, drinking water, sewerage, street lighting etc. etc., for full enjoyment of the same by allottees. In this view of the matter, the objection  taken by the opposite parties, in their written version, being devoid of merit, must fail, and the same stands rejected.

16.         The next question, that falls for consideration, is, as to whether, in the face of existence of arbitration Clause in the Agreement, to settle disputes between the parties through Arbitration, in terms of provisions of Section 8 (amended) of  1996 Act, this Commission has no jurisdiction to entertain the consumer complaint.

                To decide above said question, it is necessary to reproduce the provisions of  Section 3 of the Consumer Protection Act 1986 (in short the Act), which reads as under;

“3. Act not in derogation of any other law.—

The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.”

                It is also desirable to reproduce unamended provisions of Section 8 of 1996 Act, which reads thus:- 

“8. Power to refer parties to arbitration where there is an  arbitration agreement.—

(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.”

17.         Many a times, by making reference to the provisions of Section 8 of 1996 Act, in the past also, such objections were raised and the Hon'ble Supreme Court of India, when interpreting the provisions of Section 3 of 1986 Act, in the cases of Fair Air Engg. Pvt. Ltd. & another Vs. N. K. Modi (1996) 6  SCC 385, C.C.I Chambers Coop. Housing Society Ltd. Vs Development Credit Bank Ltd. (2003) 7 SCC 233, Rosedale Developers Private Limited Vs. Aghore Bhattacharya and others, (Civil Appeal No.20923 of 2013) etc., came to a conclusion that the remedy provided under Section 3 of 1986 Act, is an independent and additional remedy and existence of an arbitration clause in the agreement, to settle disputes, will not debar the Consumer Foras, to entertain the complaints, filed by the consumers.
18.         In the year 2015, many amendments were effected in the provisions of 1996 Act. After amendment, Section 8 of 1996 Act, reads as under:-

 “8. Power to refer parties to arbitration where there is an arbitration agreement.—

(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.”

19.         Now it is to be seen, whether, after amendment in Section 8 of the principal Act, any additional right has accrued to the service provider(s), to say that on account of existence of arbitration agreement, for settling the disputes through an Arbitrator, the Consumer Foras have no jurisdiction to entertain a consumer complaint. As has been held by Hon'ble Supreme Court of India, in various cases, and also of the National Commission, in large number of judgments, Section 3 of the 1986 Act, provides additional remedy, notwithstanding any other remedy available to a consumer. The said remedy is also not in derogation to any other Act/Law.
20.         Now, we will have to see what difference has been made by the amendment, in the provisions of Section 8 of 1996 Act. After amendment, it reads that a Judicial Authority is supposed to refer the matter to an Arbitrator, if there exists an arbitration clause in the agreement, notwithstanding any judgment, decree, order of the Hon'ble Supreme Court of India, or any other Court, unless it finds that prima facie, no valid arbitration agreement exists. The legislation was alive to the ratio of the judgments, as referred to above, in earlier part of this order. Vide those judgments, it is specifically mandated that under Section 3 of 1986 Act, an additional remedy is available to the consumer(s), which is not in derogation to any other Act. As and when any argument was raised, the Hon'ble Supreme Court of India and the National Commission in the judgments, referred to above, have made it very clear that in the face of Section 8 of 1996 Act and existence of arbitration agreement, it is still opened to the Consumer Foras to entertain the consumer complaints. None of the judgments ever conferred any jurisdiction upon the Consumer Foras to entertain such like complaints. Only the legal issues, as existed in the Statute Book, were explained vide different judgments. If we look into amended provisions of Section 8 of the principal Act, it explains  that judicial Authority needs to refer dispute, in which arbitration agreement exist to settle the disputes notwithstanding any judgment/decree or order of any Court. That may be true where in a case,  some order has been passed by any Court, making arbitration Agreement non-applicable to a dispute/parties. However, in the present case, the above said argument is not available. The jurisdiction of Consumer Foras to entertain consumer complaints, in the face of arbitration clause in the Agreement, is in-built in 1986 Act. It was not given to these Foras, by any judgment ever. The provisions of Section 3 of 1986 Act interpreted vide judgments vis a vis Section 8 of un-amended 1996 Act, were known to the legislature, when the amended Act 2015 was passed. If there was any intention on the part of the legislature, then it would have been very conveniently provided that notwithstanding any remedy available in 1986 Act, it would be binding upon the judicial Authority to refer the matter to an Arbitrator, in case of existence of arbitration agreement, however, it was not so said.
21.         We can deal with this issue, from another angle also. If this contention raised is accepted, it will go against the basic spirit of 1986 Act. The said Act (1986) was enacted to protect poor consumers against might of the service providers/multinational companies/traders. As in the present case, the complainants have spent their life savings to get a unit, for the purpose referred to above. Their hopes were shattered. Litigation in the Consumer Fora is cost effective. It does not involve huge expenses and further it is very quick. A complaint in the State Commission can be filed, by making payment between Rs.2000/- to Rs.4000/- (in the present case Rs.4000/-). As per the mandate of 1986 Act,  a complaint is supposed to be decided within three months, from the date of service to the opposite parties. In cases involving ticklish issues (like the present one, maximum not more than six months to seven months time can be consumed), whereas, to the contrary, as per the principal Act (1996 Act),  the consumer will be forced to incur huge expenses towards his/her share of Arbitrator’s fees. Not only as above, it is admissible to an Arbitrator, to decide a dispute within one year. Thereafter, the Court wherever it is challenged may also take upto one year and then there is likelihood that the matter will go to the High Court or the Hon'ble Supreme Court of India. Such an effort will be a time consuming and costly one. Taking note of fee component and time consumed in arbitration, it can safely be said that if the matter is referred to an Arbitrator, as prayed, in the present case, it will defeat the very purpose of the provisions of 1986 Act.
22.         The 1986 Act provides for better protection of interests and rights of the consumers. For the said purpose, the Consumer Foras were created under the Act. In Section 3 of 1986 Act, it is clearly provided that the said provision is in addition to and not in derogation of any provisions of any other law, for the time being in force. The 1986 Act is special legislation qua the consumers. The poor consumers are not expected to fight the might of multinational companies/traders, as those entities have lot of resources at their command. As stated above, in the present case, the complainants have spent their entire  life earnings to purchase the unit, in the said project, launched by the opposite parties. However, their hopes were shattered, when despite making substantial payment of the sale consideration, they failed to get possession of the unit, in question. As per ratio of the judgments in the case of Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (2004) 1 SCC 305 and United India Insurance Co. Ltd. Vs. M/s Pushpalaya Printers, I (2004) CPJ 22 (SC),  and LIC of India and another Vs. Hira Lal, IV (2011) CPJ 4 (SC), the consumers are always in a weak position, and in cases where two interpretations are possible, the one beneficial to the consumer needs to be accepted. The opinion expressed above, qua applicability of Section 8 (amended) of 1996 Act, has been given keeping in mind the above said principle.
23.         Not only this, recently, it was also so said by the National Commission, in a case titled as Lt. Col. Anil Raj & anr. Vs. M/s. Unitech Limited, and another, Consumer Case No.346 of 2013, decided on 02.05.2016. Relevant portion of the said case, reads thus:-

 

“In so far as the question of a remedy under the Act being barred because of the existence of Arbitration Agreement between the parties, the issue is no longer res-integra.  In a catena of decisions of the Hon’ble Supreme Court, it has been held that even if there exists an arbitration clause in the agreement and a Complaint is filed by the consumer, in relation to certain deficiency of service, then the existence of an arbitration clause will not be a bar for the entertainment of the Complaint by a Consumer Fora, constituted under the Act, since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force. The reasoning and ratio of these decisions, particularly in  Secretary, Thirumurugan Cooperative Agricultural Credit Society Vs. M. Lalitha  (Dead) Through LRs. & Others  - (2004) 1 SCC 305; still holds the field, notwithstanding the recent amendments in the Arbitration and Conciliation Act, 1986.  [Also see: Skypak Couriers Ltd. Vs. Tata Chemicals Ltd. - (2000) 5 SCC 294 and National Seeds Corporation Limited Vs. M. Madhusudhan Reddy & Anr. - (2012) 2 SCC 506.] It has thus, been authoritatively held that the protection provided to the Consumers under the Act is in addition to the remedies available under any other Statute, including the consentient arbitration under the Arbitration and Conciliation Act, 1986.”

                In view of the above, the plea taken by the opposite parties, that in the face of existence of arbitration clause in the Agreement, to settle disputes between the parties through Arbitration, in terms of provisions of Section 8 (amended) of 1996 Act, this Commission has no jurisdiction to entertain the consumer complaint, being devoid of merit, is rejected.

24.         Another objection taken by the opposite parties, with regard to pecuniary jurisdiction of the Commission, also deserves rejection. It may be stated here, that the complainants have sought refund of amount of Rs.46,63,840/-  alongwith interest 24% p.a. from the respective dates of deposits; compensation to the tune of Rs.5 lacs, for mental agony, physical harassment, deficiency in providing service and adoption of unfair trade practice; and cost of litigation, to the tune of Rs.55,000/-, aggregate value whereof [excluding the interest claimed] fell above Rs.20 lacs and below Rs.1 crore. Thus, this Commission has got pecuniary Jurisdiction, to entertain and decide the complaint.

                As far as the interest claimed by the complainants, on the amount aforesaid is concerned, it is not required to be added, at this stage, to the value of the reliefs claimed, for determining the pecuniary Jurisdiction of this Commission, in view of law laid down by three Member Bench of the National Commission, in a case titled as Shahbad Cooperative Sugar Mills Ltd. Vs. National Insurance Co. Ltd. & Ors. II (2003) CPJ 81 (NC), wherein it was clearly held that since rate and the period for which interest has to be allowed, is within the discretion of Consumer Foras, and that too at the stage, when the complaint is finally disposed of, as such, the same being imaginary would not be taken into consideration, at the time of filing of the same (complaint), for the purpose of determination of pecuniary jurisdiction. Not only as above, in the case of Denis Exports Pvt. Ltd Vs. United India Insurance Co. Ltd, Consumer Case No. 196 of 2016, decided on 08 March 2016, it was clearly held by the National Commission that interest component being imaginary, will not be added in the reliefs sought by the consumers, for determining pecuniary jurisdiction of the Consumer Foras. The principles of law, laid down, in the cases referred to above, are fully applicable, to the facts of the instant case. In view of the above, the objection taken by the opposite parties, that this Commission lacks pecuniary Jurisdiction, being devoid of merit, must fail and the same stands rejected.

25.         The next question, that falls for consideration, is, as to whether, the complainants are entitled to refund of the amount of Rs.46,63,840/- deposited by them. It is an admitted fact that the opposite parties were unable to deliver actual physical possession of the unit, in question, by the stipulated date. The hopes of the complainants to shift their small boutique business in the said unit, for earning their livelihood, were not fulfilled when possession of the unit, in question, was not even offered to them, by the stipulated date. Thus, the opposite parties have failed to perform their part of the Agreement. The act in not handing over actual physical possession in time, as per the Agreement, is a material deficiency, in providing service on the part of the opposite parties. At the same time, it has been held above that the complainants are not bound to accept the possession, so offered by the opposite parties, after a long delay of about five years. The opposite parties, therefore, had no right, to retain the hard-earned money of the complainants, deposited towards price of the unit, in question. The  complainants are, thus, entitled to get refund of amount deposited by them.

                In view of above facts of the case, the opposite parties are also under an obligation to compensate the complainants, for inflicting mental agony and causing physical harassment to them, as also escalation in prices.

26.         It is to be further seen, as to whether, interest, on the amount refunded, can be granted, in favour of the  complainants. It is not in dispute that an amount of Rs.46,63,840/- was paid by the complainants, without getting anything, in lieu thereof by the stipulated date. There has been an inordinate delay in offer of possession, which entitles the complainant to seek refund of the deposited amount alongwith interest. The said amount has been used by the  opposite parties, for their own benefit. There is no dispute that for making delayed payments, the  opposite parties were charging heavy rate of interest (simple @15%) as per Clause 4.1 of the Agreement, for the period of delay in making payment of instalments.  It is well settled law that whenever money has been received by a party and when its refund is ordered, the right to get interest follows, as a matter of course. The obligation to refund money received and retained without right implies and carries with it, the said right. It was also so said by the Hon'ble Supreme Court of India, in UOI vs. Tata Chemicals Ltd (Supreme Court), (2014) 6 SCC 335 decided on March 20th, 2014 (2014) 6 SCC 335). In view of above, the  complainants are certainly entitled to get refund of the amount deposited by them, to the tune of Rs.46,63,840/- alongwith interest @12% p.a., from the respective dates of deposits till realization.  
27.         As far as the plea taken by the opposite parties, regarding forfeiture of earnest money is concerned, the same stands rejected, because it is not their (opposite parties) case, that they were ready with possession of the unit, to be delivered to the complainants, by the stipulated date but the complainants wanted to rescind the contract, on account of some unavoidable circumstances/financial constraints or for any personal reason, and are seeking refund of the amount deposited. Had this been the case of the opposite parties, only in those circumstances, it would have been held that since the complainants are rescinding the contract, as such, they are entitled to the amount deposited, after deduction of the earnest money, as per the terms and conditions of the Agreement. In this view of the matter, the plea taken by the opposite parties, in this regard, has no legs to stand and is accordingly rejected.
28.         As far as the objection regarding limitation is concerned, it may be stated here that the same stands rejected, in view of the letter dated 30.05.2016 issued by the opposite parties, offering possession of the unit, in question, after a delay of about five years, which is being challenged in the present case. As such, if the period of two years is counted from 30.05.2016, the complaint filed by the complainants on 12.07.2016 is well within limitation.
29.         No other point, was urged, by Counsel for the parties.
30.         For the reasons recorded above, the complaint is partly accepted, with costs. The  opposite parties are jointly and severally directed as under:-

 

1. To refund the amount Rs.46,63,840/- to  the  complainants, alongwith interest @12% p.a.,  from the respective  dates  of  deposits onwards.
2.       To pay compensation, in the sum of Rs.1.25 lacs, for causing mental agony and physical harassment, to the complainants, as also escalation in prices.
3.       To pay cost of litigation, to the tune of Rs.40,000/- to the  complainants.
4.       The payment of awarded amounts mentioned at sr.nos.(i) to (iii), shall be made, within a period of 02 (two) months from the date of receipt of a certified copy of this order, failing which, the amount mentioned at sr.no.(i) shall carry penal interest @15% p.a., instead of @12%, from the respective dates of deposits onwards, and interest @12% p.a., on the amounts mentioned at sr.nos.(ii) and (iii), from the date of filing of this complaint, till realization.

31.         However, it is made clear that, if the complainants have availed loan facility from any banking or financial institution, for making payment of installments towards the said unit, it will have the first charge of the amount payable, to the extent, the same is due to be paid by them (complainants).
32.         Certified Copies of this order be sent to the parties, free of charge.
33.         The file be consigned to Record Room, after completion.

Pronounced.

03.10.2016

Sd/-

[JUSTICE JASBIR SINGH (RETD.)]

PRESIDENT

 

Sd/-

 (DEV RAJ)

MEMBER

 

 

Sd/-

 (PADMA PANDEY)

        MEMBER

 Rg