Chandigarh

StateCommission

CC/171/2014

Krishan Kumar Sachdeva - Complainant(s)

Versus

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

Sumit Narang & Ajay Singla

02 Mar 2015

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

Complaint case No.	:	171 of 2014
Date of Institution	:	02.12.2014
Date of Decision	:	02/03/2015

 

Krishan Kumar Sachdeva son of Sh. Ramesh Chand Sachdeva, resident of House No.218, 1^st Floor, Sector 44A, Chandigarh.

……Complainant

V e r s u s

1. M/s Emaar MGF Land Private Limited, through its Managing Director/Principal Officer, having its Registered Office at MGF House, 17-B, Asaf Ali Road, New Delhi-110002.
2. M/s Emaar MGF Land Private Limited, through its Branch Head/Manager, SCO No.120-122, 1^st Floor, Sector 17-C, Chandigarh.

              .... Opposite Parties

Complaint under Section 17 of the Consumer Protection Act, 1986

 

BEFORE: JUSTICE SHAM SUNDER (RETD.), PRESIDENT.

                MR. DEV RAJ, MEMBER.

                MRS. PADMA PANDEY, MEMBER

 

Argued by:Sh. Ajay Singla, Advocate, alongwith Sh. Sumit Narang, Advocate for the     complainant.

                 Sh. Sanjeev Sharma, Advocate for the Opposite         Parties.

 

JUSTICE SHAM SUNDER (RETD.), PRESIDENT

 

            The facts, in brief, are that the Opposite Parties made a number of assurances, with regard to the launching of their integrated residential township, under the name and style of Mohali Hills, in Sector 109,  Mohali, Punjab, having salient features. On such assurances, Mrs. Anu Bansal, applied to the Opposite Parties, vide application No.1612, for the allotment of a residential plot, measuring 300 square yards, in their proposed township, and paid a sum of Rs.10,35,000/-, as booking amount, on 23.09.2006. 

2.       Mrs. Anu Bansal, was allotted plot no.241, approximately measuring 300 square yards, in Augusta Greens, Sector 109, Mohali Hills, Mohali, @ Rs.11,500/- per square yard, vide Provisional Allotment letter dated 05.05.2007 Annexure C-2. The basic price of the said plot was to the tune of Rs.34,50,000/-. Apart from this amount, the allottee was also required to pay a sum of Rs.1,69,104/-, towards External Development Charges plus (+) Rs.4,31,250/-, towards Preferential Location Charges. Thus, the total sale consideration, in the sum of Rs.40,50,354/-, was required to be paid by the allottee, towards the said plot. Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, in respect of the said plot was executed between Mrs. Anu Bansal and the Opposite Parties, at Chandigarh.
3.       Thereafter, as per the installment payment plan, Mrs. Anu Bansal, in all, deposited an amount of Rs.40,50,355/-, by 05.04.2011. It was stated that, subsequently, the complainant (Mr. Krishan Kumar Sachdeva), purchased the said plot, from Mrs. Anu Bansal, the original allottee. Accordingly, the Opposite Parties, vide nomination letter dated 08.06.2011, transferred the plot, in favour of the complainant namely Mr. Krishan Kumar Sachdeva. It was further stated that, in this manner, all the rights and interest, in the plot, in question, were transferred, in favour of the complainant, by the Opposite Parties, as he stepped into the shoes of Mrs. Anu Bansal.
4.       It was further stated that according to Clause 8 of the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, the Opposite Parties were to hand over physical possession of the residential plot, in favour of the complainant, within a period of 2 years, and not later than three years, from the date of execution of the same (Plot Buyer's Agreement). It was further stated that it was also mentioned in Clause 8 of the said Agreement, that, in case, the Opposite Parties, failed to deliver possession of the plot, in question, within the stipulated period, they were liable to pay penalty/compensation, to the allottee, @Rs.50/- (Rupees Fifty only), per square yard, per month, for the period of delay. Thus, the Opposite Parties were to deliver possession of the residential plot, to the allottee, latest by 03.07.2010. The possession was not offered to the complainant by 03.07.2010.
5.       It was further stated that the allottee approached the Opposite Parties, in the year 2010, and even thereafter, a number of times, with a request to deliver possession of the plot, in question, in his favour, but they failed to give any positive reply. It was further stated that, later on, it came to the notice of the complainant, that the plot, in question, which was purchased by him, in the manner, referred to above, was under litigation.  It was further stated that when the complainant took up the matter, with the Opposite Parties, they vide email dated 05.07.2013, offered him new plot No.109-MLU-39-300. It was further stated that when the complainant visited the site, to see the said plot, it was found that the same was falling under the high tension electricity wires. As such, the complainant refused to accept plot No.109-MLU-39-300, vide email dated 02.08.2013.
6.       It was further stated that, thereafter, the complainant sent a number of emails to the Opposite Parties, in the matter, as a result whereof, he was offered another plot No.109-MLU-15-300, in the same project, vide email dated 13.09.2013 Annexure C-15. It was further stated that plot No.109-MLU-15-300, was accepted by the complainant. It was further stated that, since plot No.109-MLU-15-300, was not preferential located, the complainant vide email dated 13.09.2013 Annexure C-15, requested the Opposite Parties to refund the amount received by him, towards preferential location charges It was further stated that vide email dated 13.09.2013, the complainant also requested the Opposite Parties, to apprise him with regard to delivery of possession of plot No.109-MLU-15-300, as also payment of compensation/penalty, to him, for the period of delay, as per Clause 8 of the Agreement, aforesaid.
7.       It was further stated that the Amended Agreement dated 26.11.2013 Annexure C-17, in respect of plot No.109-MLU-15-300, was executed between the parties. It was further stated that, in response to email dated 13.09.2013, the Opposite Parties, vide email 17.09.2013 Annexure C-18, intimated the complainant that the work was in progress, in the area, where plot No.109-MLU-15-300, was located and possession thereof, would be offered upon completion of the same (work). It was also confirmed by the Opposite Parties, vide email dated 17.09.2013 that refund of the preferential location charges, alongwith interest would be made and also the compensation/penalty, for the period of delay, as per Clause 8 of the Agreement, would be honoured at the time of execution and registration of sale deed of the said plot.  
8.         It was further stated that the complainant visited the site, a number of times, but was surprised to see that the development work was being carried out at a snail speed. It was further stated that, on the other hand, the Opposite Parties issued letter of intimation of possession, dated 02.05.2014 Annexure C-19, wherein, another demand of Rs.15,18,036/-, under various heads, after a gap of around more than four years was made by them (Opposite Parties). It was further stated that after receiving the letter dated 02.05.2014 Annexure C-19,  the complainant again visited the site, but was surprised to see that there was no progress in development at the site, and the basic amenities, like roads, sewerage, water,  and electricity, were not available. 
9.        It was further stated that out of the total amount of Rs.15,18,036/-, demanded from him, by the Opposite Parties, vide Annexure C-19, a sum of Rs.1,12,360/-, on account of club membership charges, was not payable, because, as per the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, club membership was optional. It was further stated that not only this, in the said letter of intimation of possession, the demand of Rs.7,80,658/-, towards delayed payment charges was also illegal. It was further stated that after much persuasion, the said demand of Rs.7,80,658/-, towards delayed payment charges, was waived off by the Opposite Parties. It was further stated that since the demand of various amounts vide letter Annexure C-19, was illegal, as also the compensation/penalty amount was not paid to the complainant, a lot of correspondence, through emails took place between the parties, but finally the Opposite Parties vide email dated 19.08.2014, showed their inability to adjust the said amount of compensation/penalty, against the amount demanded vide letter dated 02.05.2014 Annexure C-19.
10.       It was further stated that, on the other hand, the Opposite Parties, without receiving necessary permissions/approvals, in respect of the project, in question, from the Competent Authorities, were trying to deliver possession of plot No.109-MLU-15-300. It was further stated that, as such, offer of possession made by the Opposite Parties, vide letter dated 02.05.2014 Annexure C-19, was merely a paper possession.
11.       It was further stated that the Opposite Parties collected the huge amount, towards price of the plot, in question, by making a false promise, that physical possession thereof, shall be handed over within the maximum period of 3 years, from 04.07.2007, but they did not abide by their commitment. It was further stated that the amount of Rs.40,50,355/-, deposited towards the sale price of the plot, was utilized by the Opposite Parties, for a long number of years, as a result whereof, the complainant was caused huge financial loss.
12.       It was further stated that since the Opposite Parties had not offered actual physical possession of the plot, in question, complete in all respects, in favour of the complainant, he was not able to construct house thereon, and reside in the same. It was further stated that, thus, the complainant underwent a lot of mental agony and physical harassment, on account of non-delivery of actual physical possession of the fully developed plot, to him, and also suffered further financial loss, on account of non-payment of compensation.
13.       It was further stated that the aforesaid acts, on the part of the Opposite Parties, amounted to deficiency, in rendering service, and indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 17 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed, directing the Opposite Parties to refund the amount of Rs.40,50,355/-, alongwith interest @18% P.A., from the respective dates of deposits, till realization; pay penalty/compensation @Rs.50/- per square yard, per month, as per Clause 8 of the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, from 04.07.2010 (the promised date), till realization;  interest @18% P.A., on the preferential location charges of Rs.4,31,250/-, from 01.01.2014,; compensation to the tune of Rs.5 lacs, on account of  mental agony, physical harassment, deficiency in rendering service and  adoption of unfair trade practice; and  cost of litigation, to the tune of Rs.1 lac
14.       The Opposite Parties were served and put in appearance on 08.01.2015. They filed their joint written version, on 27.02.2015. It was pleaded that the complainant had approached this Commission, with unclean hands, and, as such, the consumer complaint was liable to be dismissed, on this ground alone. It was further pleaded that the complainant did not fall within the definition of a “consumer” as defined under Section 2 (1) (d) of the Act, as he purchased the plot, 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. It was further pleaded that this Commission has no territorial Jurisdiction, to entertain and decide the complaint. It was further pleaded that the complaint was not maintainable, as an arbitration Clause, existed, in the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, and, in case of any dispute, the matter was to be referred to the Arbitration. The factum of allotment of plot, aforesaid, in favour of Mrs. Anu Bansal, and subsequent transfer thereof, in favour of the complainant was admitted. It was also admitted that the Opposite Parties had received the amount of Rs.40,50,355/-, as mentioned in the complaint, in the manner, referred to above. Execution of the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, between the allottee and the Opposite Parties was also admitted. It was also admitted that, as per Clause 8 of the Plot Buyer's  Agreement dated 04.07.2007, Annexure C-1,  the Opposite Parties were to hand over physical possession of the said plot, in favour of the complainant, within a period of 2 years, and not later than three years, from the date of execution of the same (Plot Buyer's Agreement), i.e. latest by 03.07.2010, failing which, they were liable to pay penalty/compensation, to the allottee, @Rs.50/- (Rupees Fifty only), per square yard, per month, for the period of delay. It was also admitted that possession of the plot, in question, was not delivered to the complainant, by the stipulated date i.e. 03.07.2010. It was stated that the predecessor of the complainant defaulted, in making payment of instalments, towards the said unit. It was further stated that, just as an exceptional case, waiver of delayed payment charges, was given to the predecessor of the complainant. She was also given waiver of 5% of the basic sale price. It was further stated that Preferential Location Charges to the tune of Rs.3,58,254/- were refunded to the complainant, vide cheque dated 31.12.2013, Annexure R-1, as the relocated plot allotted to him was a non-preferential one. It was further stated that all the necessary permissions were obtained by the Opposite Parties, from the Competent Authorities. It was further stated that time was not the essence of contract. It was further stated that it was well within the knowledge of the complainant that for any delays, stipulated penalty had been provided in the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, which safeguarded his rights. It was further stated that, no doubt, there was some delay, in the offer of possession of the unit, in question, yet, when the same was given to the complainant, vide letter dated 02.05.2014 Annexure C-19, he did not come forward to take the same, for the reasons best known to him, and kept on sending vague emails to the Opposite Parties, on the ground that the demands made therein were illegal and arbitrary. It was further stated that the amount demanded by the Opposite Parties, vide letter dated 02.05.2014 Annexure C-19, before taking over possession of the plot, in question, was legally due against the complainant. It was further stated that the complainant was, however, adamant for the refund of amount deposited. It was further stated that relocation of the plot was done, on the basis of request, made by the complainant. It was further stated that since the possession had already been offered to the complainant, the amenities were complete, at the site in terms of the Agreement, and, in case, he (complainant) still wanted refund, the same would amount to surrender of the unit, and attract forfeiture charges, as per Clause 2 (f) of the same (Plot Buyer's Agreement) i.e. 30% of its sale price. It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Parties, nor they indulged into unfair trade practice. The remaining averments, were denied, being wrong.
15.       In the rejoinder, filed by the complainant, he reiterated all the averments, contained in the complaint, and repudiated those, contained in the written version of the Opposite Parties. Alongwith the rejoinder, the complainant also attached copy of the transfer of ownership rights Annexure C-29, to the extent of 100% share, issued by the Chandigarh Administration on 12.12.2012, in respect of House No.218, Sector 44-A, Chandigarh, in favour of one Smt. Tejinder Kaur, wife of Late Sh. Baldev Singh, to prove that he (complainant) is not the owner of the said house, address of which has been given by him, in the head note of the consumer complaint.
16.       The complainant, in support of his case, submitted his own affidavit, by way of evidence, alongwith which, a number of documents were attached.
17.       The Opposite Parties, in support of their case, submitted the affidavit of Mr.Sachin Kapoor, their Senior Manager (Legal), by way of evidence, alongwith which, a number of documents were attached. 
18.       We have heard the Counsel for the parties, and, have gone through the evidence and record of the case, carefully. 
19.       The first question, that falls for consideration, is, as to whether, the complainant fell within the definition of  a consumer, as defined by Section 2 (1) (d) (ii) of the Act, or not. It may be stated here, that the mere objection of  the Opposite Parties, that the complainant  being a speculator, purchased the plot, in the manner, referred to above, by way of investment, to gain huge profits, by selling the same, as and when there was escalation in the prices, does not carry any weight and is liable to be rejected. It was clearly averred, by the complainant, in paragraph no.2 (iii) of the complaint, supported by his affidavit, by way of evidence, that he was desirous of having his residence, in the said project of the Opposite Parties, as a result whereof, he purchased the plot, in question. Even otherwise, the mere fact that a residential plot, was  purchased by the complainant, could be said to be sufficient to prove that it was to be used for the purpose of residence, by him. There is nothing, on the record, that the complainant is a property dealer, and deals in the sale and purchase of property. No reliable evidence was also produced, by the Opposite Parties, to prove that the complainant owned a number of other residential properties, in the tricity, and, as such, the plot, in question, was purchased by him, by way of investment, with a view to resell the same, as and when, there was escalation in the prices thereof. The complainant, thus, availed of the services of the Opposite Parties, for the allotment of a residential plot, in question, with a view to raise construction thereon, and reside in the same. The complainant, thus, fell within the definition of a consumer, as defined by Section 2(1)(d)(ii) of the Act. Such an objection, taken by  the Opposite Parties, in its written statement, therefore, being devoid of merit, is rejected. 
20.       The next question, that falls for consideration, is, as to whether, the complaint filed by the complainant, was within limitation or not. It may be stated here, that the Plot Buyer's  Agreement dated 04.07.2007, Annexure C-1, in respect of plot no.241, approximately measuring 300 square yards, in Augusta Greens, Sector 109, Mohali Hills, Mohali, was executed between Mrs. Anu Bansal, and the Opposite Parties, possession whereof was to be delivered by 03.07.2010.  Later on, the said plot was purchased by the complainant, in the manner, referred to above. Finally, on the request of the complainant, he was allotted plot No.109-MLU-15-300. Possession of plot No.109-MLU-15-300, was finally offered by the Opposite Parties, to the complainant, vide letter dated 02.05.2014 Annexure C-19. Since the offer of possession, in respect of the said plot was made, for the first time, only on 02.05.2014, the complaint having been filed on 02.12.2014, could very well be said to be within limitation. Under these circumstances, it is held that the complaint was not at all barred by time. The submission of the Counsel for the Opposite Parties,  in this regard, being devoid of merit, must fail, and the same stands rejected.
21.       The next question, that falls for consideration, is, as to whether, this Commission has got territorial Jurisdiction, to entertain and decide the complaint, or not. According to Section 17 of the Act,  a consumer  complaint could be filed, by the complainant, before the State Consumer Disputes Redressal Commission, within the territorial Jurisdiction whereof, a part of cause of action arose to him. In the instant case, the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, in respect of the plot, in question, was executed, at Chandigarh, as is evident from page 46 of the file. Not only this, payment to the tune of Rs.18,94,105/-, in respect of part price of the said plot, was also made at Chandigarh, as is evident from the receipt dated 05.04.2011, issued by the Opposite Parties, at page 64 of the file. It means that a part of cause of action arose to the complainant, within the territorial Jurisdiction of this Commission.  This Commission has, therefore, got territorial Jurisdiction to entertain and decide the complaint. The objection taken by the Opposite Parties, in their written version, that this Commission has no territorial Jurisdiction, to entertain and decide the complaint, therefore, being devoid of merit, must fail, and the same stands rejected.
22.       The next question, that falls for consideration, is, as to whether, the consumer complaint under Section 17 of the Act, was not maintainable, before this Commission, on account of the existence of an arbitration Clause in the Plot Buyer's  Agreement dated 04.07.2007, Annexure C-1.  With a view to appreciate the controversy, in its proper perspective, reference to Section 3 of the Consumer Protection  Act, 1986, is required to be made, 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.”

Section 3 of the Act, is worded in widest terms, and leaves no manner of doubt, that the provisions of the Act, shall be, in addition to, and not in derogation of any other law, for the time being, in force. The mere existence of arbitration Clause, in the Plot Buyer's  Agreement dated 04.07.2007, Annexure C-1, would not oust the Jurisdiction of this Commission, in view of the provisions of Section 3 of the Act.  Similar principle of law, was laid down, in  Fair Engg. Pvt. Ltd. & another Vs N.K.Modi III (1996) CPJ 1 (SC) and C.C.I Chambers Coop. Housing Society Ltd. Vs Development Credit Bank Ltd. III (2003) CPJ 9 (SC). In this view of the matter, the submission of the Counsel for the  Opposite  Parties, being devoid of merit, must fail, and the same stands rejected.

23.       The next question, that falls for consideration, is, as to within which period, the delivery of possession of the unit, in question, was to be given to the complainant.  According to Clause 8 of the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, in respect of plot no.241, approximately measuring 300 square yards, in Augusta Greens, Sector 109, Mohali Hills, Mohali, was executed between Mrs. Anu Bansal, and the Opposite Parties, possession whereof was to be delivered by 03.07.2010. When the said plot was purchased by the complainant, the same was found to be under litigation, and, as such, he was finally allotted plot No.109-MLU-15-300. Admittedly, possession of plot No.109-MLU-15-300, was not delivered by the Opposite Parties, to the complainant, by 03.07.2010. By not delivering the possession by the stipulated date, the Opposite Parties were not only deficient in rendering service, but also indulged into unfair trade practice.
24.       The next question, that falls for consideration, is, as to whether, possession of plot No.109-MLU-15-300, was actually offered by the Opposite Parties, to the complainant. It is an admitted fact that possession of plot No.109-MLU-15-300, was offered to the complainant, vide letter dated 02.05.2014 Annexure C-19, whereby it was clearly intimated to him, that the same (possession of the unit), was ready for delivery, subject to making the pending payments, mentioned therein. Thus, it is held that possession of plot No.109-MLU-15-300, which was purchased by the complainant, in the manner, referred to above, was for the first time genuinely offered to him (complainant), on 02.05.2014.
25.       The next question, that falls for consideration, is, as to whether, all the amenities at the site, as per Clause 23 of Plot Buyer's  Agreement dated 04.07.2007, Annexure C-1, where plot No.109-MLU-15-300 is located were complete and that the complainant was ready to take the possession thereof or not, when it was offered to him, vide letter dated 02.05.2014 Annexure C-19. As stated above, possession of plot No.109-MLU-15-300, was offered to the complainant, vide letter dated 02.05.2014 Annexure C-19, i.e. before filing the complaint and demand of Rs.15,18,036/-, was also made from him. Even, Annexure R-2 dated 30.04.2014, is a copy of the completion certificate, in respect of plot No.109-MLU-15-300, issued by Array Consortium, Architect and Project Management, wherein it was clearly mentioned that the basic amenities, where plot No.109-MLU-15-300 is carved were complete. It means that the Array Consortium, Architect and Project Management,   issued completion certificate Annexure R-2, in respect of plot No.109-MLU-15-300, only after verifying that all the amenities, which were promised to be provided by the Opposite Parties, as per Clause 23 of Plot  Buyer's  Agreement dated 04.07.2007, Annexure C-1, were in existence at the site.
26.       No doubt, the complainant, in his complaint, stated that the amenities, where plot No.109-MLU-15-300 is located, were not complete, as per Clause 23 of the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, and, as such, the offer of possession vide letter dated 02.05.2014 Annexure C-19, was not accepted by him. He also placed, on record, the photographs Annexure C-28 (colly.), in support of his averment. It may be stated here, that these photographs cannot be said to be depicting the correct position, at the site. The mere fact that some small grass was standing near plot No.109-MLU-15-300, and that some water tankers or bulldozers were found there, did not mean that the amenities as per Clause 23 of the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, were not provided by the Opposite Parties. There is nothing, on the record, as to on which date, these photographs were clicked. On the other hand, the Opposite Parties, categorically denied that there was no development, in the area, where the unit of the complainant is located. No expert evidence, was produced by the complainant, to the effect that the amenities, which were promised by the Opposite Parties, as per Clause 23 of the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, were not in existence, at the site. In the absence of any expert evidence, in the shape of report(s) of the engineer(s)/architect(s), no reliance on these photographs can be placed. It is, therefore, held that the version of the Opposite Parties, duly supported by completion certificate, issued by the Array Consortium, Architect and Project Management, that they were in possession of all the requisite permissions and the amenities, as promised, in the Agreement, were available at the site, and as such, the offer made to the complainant,   vide   letter dated 02.05.2014 Annexure C-19, was a genuine offer, is correct. It was, thus, abundantly proved that the complainant was only interested in the refund of amount deposited, on the false pretext of no development at the site and non-existence of the requisite amenities. The complainant, thus, avoided the taking of possession of the unit, in question. This amounted to the cancellation of allotment, and surrender of the unit, on the part of the complainant.
27.       The next question, that falls for consideration, is, as to whether, the complainant is entitled to the refund of amount, if so, to what extent.  Clause 2(f) of the Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, reads as under:-

“2(f) The Allottee has entered into this Agreement on the condition that out of the amounts paid/payable by the Allottee towards the Sale Price, the Company shall treat 30% of the Sale Price as Earnest Money (hereinafter referred to as “the Earnest Money”). However, if the Allottee chooses not to sign this Agreement and further chooses to forfeit his allotment, then 20% of the amount paid by the Allottee at the time of the Expression of Interest shall stand forfeited. And the rest of the amount (if any) shall be refunded to the Allottee. However, after signing this Agreement, in order to ensure the fulfillment, by the Allottee, of all the terms and conditions as contained in the application and this Agreement and in the event of the failure of the Allottee to perform all obligations set out in this Agreement or fulfill all the terms and conditions of this Agreement or in the event of failure of the Allottee to sign and return this Agreement in its original form to the Company within 30 (Thirty) days from its date of Receipt by the Company, the Allottee hereby authorizes the Company at its sole option and discretion, to forfeit out of the amounts paid by the Allottee, the Earnest Money as aforementioned together with any interest paid, due or payable, any other amount of a non-refundable nature. The Allottee further agrees that the condition of forfeiture of Earnest Money shall remain valid and effective till the execution and registration of the Conveyance Deed for the Plot and the Allottee hereby authorizes the Company to resort to such forfeiture after considering the above mentioned 30 (thirty) days as notice period to the Allottee and the Allottee has agreed to this condition to indicate the Allottee’s commitment to faithfully fulfill all the terms and conditions contained in the Allottee’s application and this Agreement.”

28.       Perusal of the afore-extracted Clause 2(f) of the Plot   Buyer's Agreement dated 04.07.2007, Annexure C-1, makes it clear,  that the Company was to treat 30% of sale price, as earnest money. It is further evident, from the afore-extracted Clause that, if after signing the agreement, the allottee failed to fulfill the obligations contained in the same, then the Opposite Parties shall be entitled to forfeit 30% being earnest money, from the amount paid by the allottee. However, in our considered opinion, fixing 30% of sale consideration, as earnest money, and forfeiture thereof, can be said to be unreasonable, excessive and unconscionable. Since such a condition in the Plot Buyer's  Agreement dated 04.07.2007, Annexure C-1,  is unilateral, unreasonable and unconscionable, it can be said that by incorporating the same, the Opposite Parties indulged into unfair trade practice. A similar question arose for determination in DLF Ltd. Vs. Bhagwanti Narula, Revision Petition No.3860 of 2014, decided on 06.01.2015, before the National Consumer Disputes Redressal Commission, New Delhi, wherein as per the Agreement, 20% of the sale price of the premises was to collectively constitute the earnest money, which was to be forfeited, in case, the allottee made a default in payment of instalments(s) and asked for refund of the amount deposited. Such Clause came up for interpretation, before the National Commission, in the aforesaid case. The National Commission, ultimately, held as under:-

 “7. ……………..However, the question which primarily arises for consideration in this case is as what would constitute the “earnest money” and to what extent the Petitioner Company is entitled to forfeit the same.  The contention of the petitioner is that as agreed by the parties in terms of Clause 8 of the Agreement, 20% of the sale price, irrespective of the stage at which the payment was made constitutes earnest money whereas the case of the complainant as submitted during the course of arguments was that only the amount of Rs.63,469/- which was paid at the time of booking the apartment can be said to be the earnest money and only that amount could be forfeited. 

 8.      In Maula Bux Vs. Union of India – 1969 (2) SCC 554, the Hon’ble Supreme Court quoted the following observations made by the Judicial Committee in  Kunwar  Chiranjit  Singh Vs. Har Swarup – AIR 1926 PC 1 –

 

“Earnest money is part of the purchase price when the transaction goes forward; it is forfeited when the transaction falls through, by reason of the fault or failure of the vendee”.        

 9.   In Shree Hanuman Cotton Mills & Ors. Vs. Tata Air Craft Ltd. – 1969 (3) SCC 522, the Hon’ble Supreme Court quoted the following characteristics of the   earnest money –

“15.Borrows, in Words & Phrases, Vol. II, gives the characteristics of "earnest". According to the author,

"An earnest must be a tangible thing. That thing must be given at the moment at which the contract is concluded, because it is something given to bind the contract, and, therefore, it must come into existence at the making or conclusion of the contract. The thing given in that way must be given by the contracting party who gives it, as an earnest or token of good faith, and as a guarantee that he will fulfil his contract, and subject to the terms that if, owing to his default, the contract goes off, it will be forfeited. If, on the other hand, the contract is fulfilled, an earnest may still serve a further purpose and operate by way of part payment."

 

After considering several decisions on the subject, the following principles were laid down by the Hon’ble Supreme Court regarding ‘earnest’:

 

 (1) It must be given at the moment at which the contract is concluded.

 (2) It represents a guarantee that the contract will be fulfilled or, in other words, 'earnest' is given to bind the contract.

 (3) It is part of the purchase price when the transaction is carried out.

 (4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.

 (5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest”.

The above referred principles were reiterated in  Satish Batra  Vs.  Sudhir Rawal  – (2013) 1 SCC 345.  It would, thus, be seen that only that amount would constitute earnest money which is paid at the time of contract is concluded between the parties.  Any payment made after the contract is concluded, cannot be said to be part of the earnest money. In the case before us, admittedly, only a sum of Rs.63,469/- was paid to the Petitioner Company at the time the deal  was concluded between the parties.   Therefore, in view of the above said referred authoritative pronouncements  of the Hon’ble Supreme Court, only the aforesaid forfeited amount can constitute earnest money.

 

10.    In Maula Bux case (Supra), the  Hon’ble  Supreme  Court took the following view with respect to forfeiture of the earnest money -

 

“5.   Forfeiture of earnest money under a contract for sale of property-movable or immovable-if the amount is reasonable, does not fall within s. 74. That has been decided in several cases:

       Kunwar ChiranjitSingh v. Hat  Swarup  (t); Roshan Lal v. The Delhi Cloth and General Mills Company Ltd., Delhi (2); Muhammad Habibullah v. Muhammad Shafi   (3);  Bishan Chand v. Radha  Kishan  Das (4); These cases are easily explained, for forfeiture of a reasonable amount paid as earnest money does not amount to imposing a penalty. But if forfeiture is of the nature of penalty, s. 74 applies”.

 

It would thus be seen that only a ‘reasonable amount’ can be forfeited as earnest money in the event of default on the part of the purchaser and it is not permissible in law to forfeit any amount beyond a reasonable amount, unless it is shown that the person forfeiting the said amount had actually suffered loss to the extent of the amount forfeited by him.   In our opinion, 20% of the sale price cannot be said to be a reasonable amount which the Petitioner Company could have forfeited on account of default on the part of the complainant unless it can show it had only suffered loss to the extent the amount was forfeited by it.  In our opinion, in absence of evidence of actual loss, forfeiture of any amount exceeding 10% of the sale price cannot be said to be a reasonable amount.

 

11.    It was contended by the learned Counsel for the Petitioner Company that since the complainant had specifically agreed to deliver 20% of the sale price as earnest money, the forfeiture to the extent of 20% of the sale price cannot be said to be unreasonable, the same being inconsonance with the terms agreed between the parties. This was also his contention that so long as the Petitioner Company was acting as per the terms and conditions agreed between the parties, it cannot be said to be deficient in rendering services to the complainant. We, however, find ourselves unable to accept the aforesaid contention, since, in our view, forfeiture of the amount which cannot be shown to be a reasonable amount would be contrary to the very concept of forfeiture of the earnest money.  If we accept the aforesaid contention, an unreasonable person, in a given case may insert a clause in Buyers Agreement whereby say 50% or even 75% of the sale price is to be treated as earnest money and in the event of default on the part of the Buyer; he may seek to forfeit 50% of the sale price as earnest money.  An Agreement for forfeiting more than 10% of the sale price, in our view, would be invalid since it would be contrary to the established legal principle that only a reasonable amount can be forfeited in the event of default on the part of the Buyer.  In Bharathi Knitting Company Vs.DHL Worldwide Express Courier Division of Airfreight Ltd.- (1996) 4 SCC 704, the Hon’ble Supreme Court accepted the contention that in an appropriate case, the Consumer Forum without trenching upon acute disputed question of facts may decide the validity of the  terms of the contract based upon the fact situation and may grant relief, though, each case depends upon its own facts”.

 

29.       Since the National Commission, in the aforesaid case, held that the amount exceeding 10% of the total sale price, could not be forfeited, by the seller, in our considered opinion, Clause 2 (f) contained in Plot Buyer's Agreement dated 04.07.2007, Annexure C-1, providing for forfeiting more than 10% of the sale consideration, being unreasonable and  unconscionable,  amounted to unfair trade practice. Following the ration laid down in DLF Ltd.'s case (supra), it is held that the Opposite Parties are only entitled to forfeit 10% of the sale consideration of plot No.109-MLU-15-300, and not 30% of the same.
30.       The next question, that falls for consideration, is, as to what amount the complainant would be entitled, in such circumstances. As stated above, the complainant was not interested in taking possession of plot No.109-MLU-15-300, despite the fact that the same was offered to him, vide letter dated 02.05.2014 Annexure C-19, before filing the complaint, and sought refund of the amount. Thus, the Agreement between the parties, stood rescinded. This amounted to surrender of the unit, in question. Since it is held above, that only 10% of the sale consideration could be forfeited, the amount of such forfeiture shall come to be Rs.4,05,035/- (i.e. Rs.40,50,354/- being the sale price, minus (-) 10% of the same, as held above). Out of the sale price of Rs.40,50,354/-, paid by the complainant and his predecessor, a sum of Rs.3,58,254/-, as PLC was refunded to him (complainant) vide cheque dated 31.12.2013 Annexure R-1, as the relocated plot finally allotted to him was a non-preferential one.  It is, therefore, held that the complainant is entitled to the refund of amount, to the tune of Rs.32,87,065/- [i.e.Rs.40,50,355/- (amount paid) minus (-) Rs.4,05,035/- being 10% of the price of Rs.40,50,354/- minus (-) Rs.3,58,254/- already refunded by the Opposite Parties vide cheque dated 31.12.2013]. By not refunding this amount, as per the aforesaid Clause of the Agreement, when the complainant sought cancellation of the unit, the Opposite Parties, were certainly deficient, in rendering service, thereby causing financial loss to him.
31.       The next question, that falls for consideration, is, as to whether, the complainant is, entitled to the refund of the said amount of Rs.32,87,065/-, with interest. It may be stated here, that ‘Interest’ in general terms is the return or compensation for the use or retention by one person of a sum of money belonging to or owed to another.  In its narrow sense, ‘interest’ is understood to mean the amount, which one has contracted to pay for use of borrowed money.  In whatever category ‘interest’ in a particular case may be put, it is a consideration, paid either for the use of money, or for forbearance in demanding it, after it has fallen due, and, thus, it is a charge for the use or forbearance of money. In this sense, it is a compensation allowed by law or fixed by the parties, or permitted by custom or usage, for use of money, belonging to another, or for the delay in paying money after it has become payable. The interest is granted, for improper and illegal retention of the amount deposited by the complainant, with the Opposite Parties, by the latter, for a long time. The possession was promised to be delivered, as per the Plot Buyer's Agreement Annexure C-1, by 03.07.2010. It was, on the other hand, offered vide letter dated 02.05.2014 Annexure C-19, i.e. after about more than 4 years of the promised date. The amount deposited by the complainant was utilized by the Opposite Parties for a long number of years, by investing the same in their building activities, without rendering any service to him. The complainant was, thus, illegally and improperly deprived of the use of money deposited with the Opposite Parties, for a sufficient longer period. It has been held above that since the complainant failed to accept offer of possession, sent to him vide letter dated 02.05.2014 Annexure C-19, the contract stood rescinded, and the Opposite Parties were entitled to forfeit 10% of the sale price. The complainant, thus, stood penalized, by invoking the forfeiture Clause, on account of non-acceptance of offer of possession by him, without any rhyme or reason. He, thus, cannot be penalized twice, by disallowing interest to him, at a reasonable rate, on the amount to which he is entitled. The equities are required to be balanced, by not enriching one party, at the cost of other. For the financial loss, which the complainant suffered, interest @ 12% P.A., on the amount of Rs.32,87,065/-, if granted, could be said to be just, fair and reasonable. Thus, in our considered opinion, the complainant is entitled to the refund of Rs.32,87,065/- calculated, in the manner, referred to above, alongwith interest @12% P.A., from the respective dates of deposit. 
32.           The next question, that falls for consideration, is, as to whether, the complainant is entitled to compensation, or not. It may be stated here, that according to Section 14(d) of the Act, the Consumer Foras can grant compensation, to the complainant. The word ‘compensation’ is again of very wide connotation.  It has not been defined, in the Act. According to the dictionary, it means compensating or being compensated, thing given as recompense. In legal sense, it may constitute actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult or injury or loss.  Therefore, when the Consumer Foras have been vested with the Jurisdiction to award value of the goods or services and compensation, it has to be construed widely enabling the Consumer Foras, to determine compensation, for any loss or damage suffered by the consumers, which in law is otherwise, the wide meaning of ‘compensation’. The provision, in our considered opinion, enables the consumers to claim and empowers the Consumer Foras to redress any injustice done to the complainant. The Commission or the Forum in the Act, is, thus, entitled to award not only the value of the goods or services, but also to compensate the consumers, for injustice suffered by them. Similar principle of law was laid down, in Ghaziabad Development Authority v. Balbir Singh, II (2004) CPJ 12 (SC)=III (2004) SLT 161=(2004) 5 SCC 65.  In the instant case, after making payment of Rs.40,50,355/-, i.e. 100%, towards the price of plot No.109-MLU-15-300, possession thereof, was not offered to the complainant, by the stipulated date, but was offered after a delay of about 4 years, as a result whereof, he cancelled the allotment of unit and sought refund of the amount deposited by him,  but the Opposite Parties failed to do so, thereby causing mental agony, physical harassment and injustice to him. On account of this act of the Opposite Parties, the complainant was dragged into unnecessary litigation. The complainant, is, thus, entitled to compensation, to the tune of Rs.one lac, on account of this reason.
33.       The Counsel for the complainant, submitted that the complainant, besides refund of the amount, aforesaid, deposited by him, alongwith interest and compensation, is also entitled to penalty @ Rs.50/- per square yard, as per Clause 8 of the Agreement, referred to above, per month, for such period of delay, beyond three years, from the date of execution of the same. This submission of the Counsel for the complainant, does not appear to be correct. Such a submission of the Counsel for the complainant, would have been considered to be correct, had the complainant, prayed for delivery of physical possession of plot No.109-MLU-15-300. In the instant case, as stated above, prayer for the refund of amount, aforesaid, was made by the complainant. This Clause could be invoked by the complainant, only, in the event, he had sought the relief of delivery of physical possession of the residential plot. The complainant, in our considered opinion, as stated above, is only entitled to the refund of amount, after forfeiture, in the manner, referred to above, alongwith interest @12% P.A., which (interest) would take care of financial loss, suffered by him. As far as compensation for mental agony and physical harassment, is concerned, the complainant has been separately awarded the same, to the tune of Rs.one lac, as held in paragraph 33 above. 
34.       No other point, was urged, by the Counsel for the parties.
35.       For the reasons recorded above, the complaint is partly accepted, with costs. The Opposite Parties are jointly and severally held liable and directed in the following manner:-

1. To refund the amount of Rs.32,87,065/- [i.e. Rs.40,50,355/- (amount paid) minus (-) Rs.4,05,035/- being 10% of the price of Rs.40,50,354/- minus (-) Rs.3,58,254/- already refunded by the Opposite Parties vide cheque dated 31.12.2013], to the complainant, alongwith interest @ 12 % per annum, from the respective dates of deposits, till realization, within 45 days, from the date of receipt of a certified copy of this order.
2. To pay compensation, in the sum of Rs. one lac, for causing mental agony, physical harassment and injustice, to the complainant, by not refunding the amount of Rs.32,87,065/-, within 45 days, from the date of receipt of a certified copy of this order.
3. To pay cost of litigation, to the tune of Rs.20,000/-, to the complainant.
4. In case, the payment of amounts, mentioned in Clauses (i) and (ii), is not made, within the stipulated period, then the Opposite Parties, shall be liable to pay the amount mentioned in Clause (i) with interest   @15% P.A., instead of 12% P.A., from the respective dates  of deposits, till realization and interest @12% P.A., on the  amount of compensation, mentioned in Clause (ii), from the date of filing the complaint, till realization, besides payment of costs, to the tune of Rs.20,000/-.

36.       Certified Copies of this order be sent to the parties, free of charge.
37.       The file be consigned to Record Room, after completion

Pronounced

02/03/2015

Sd/-

[JUSTICE SHAM SUNDER (RETD.)]

PRESIDENT

 

Sd/-

 [DEV RAJ]

MEMBER

 

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 [PADMA PANDEY]

 MEMBER

 

Rg