Anup K. Thakur

          This Consumer Complaint No.105 of 2013 has been filed under Section 21 of the Consumer Protection Act, 1986 on 25.04.2013, by Mr. Milan against OP1, Mahindra Lifespace Developers Ltd., a company registered under Companies Act, 1956, with registered office at Worli, Mumbai-400018, alleging unfair trade practice and gross negligence in service.

2.      Complainant, lured by various advertisements of a residential project “Angelica” at Mahindra Eminents S V Road Goregaon (West), Mumbai- 400062, approached OP1 and filled in a standard application form on 28.3.2011 towards purchase of Flat No.2003 in the said project of approximately carpet area of 1255.94 Sq. feet comprising 3 BHK with 2 covered car parking against a total agreed sale consideration of Rs.2,26,81,250/- (Rupees two crore twenty six lakh eighty one thousand two hundred fifty only).  After a token payment of Rs.10,30,000/-, he was given a reservation letter dated 30.03.2011 by OP1 containing terms and conditions and schedule of payments (Annexure-C1).  He made a total payment of Rs.45,62,107/- (Rupees Forty Five Lakh Sixty Two Thousand One Hundred and seven only) on different dates in a period of three months, from 29.3.2011 to 27.6.2011 (receipts attached as Annexure-C2).  It is his case that while no documents relating to title of the project, sale agreement etc. were provided, making it difficult for him to apply for a loan, OP1 continued to make demands for payment.  OP1 vide letter dated 6.7.2012 demanded Rs.1,53,80,730/- in which it was also threatened that failure to pay would entitle the OP to cancel the flat and be at liberty to sell/dispose of to any other person without further recourse to the complainant (Annexure-C4).  Per the plaint, complainant made several requests for extension of time, but in vain.  Correspondence between the complainant and the OP is at Annexure-C5.  Per the plaint, after much persuasion by the complainant, a meeting was held on 27.07.2012 with OP1, wherein it was decided that the complainant shall submit cheques for a total amount of Rs.1,60,00,000/- and thereafter OP1 shall execute an agreement to sell in the complainant’s favour.  Accordingly, the complainant submitted six post-dated cheques to the OP vide letter dated 31.07.2012.  However, these were returned by vide letter dated 7.8.2018 along with a refund cheque no.307067 of Rs.27,64,276/- (Annexure-C6 colly).  The complainant has not encashed this cheque.  Faced with this, this consumer complaint was filed on 25.4.2013 seeking essentially setting aside the cancellation letter dated 7.8.2012, and direction to the OP to provide all information and documents of the allotted flat as required under Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act, 1963 (MOFA), failing which to allot an alternative flat if the said flat was not available, failing which to refund Rs.45,62,107/- from date of each payment @ 18% per annum till the actual date of payment along with exemplary compensation of Rs.100 lakh and mental agony etc., and costs.

3.      This was contested through a written version filed on behalf of the OPs.  All the allegations, save those which were a matter of record, were denied.  In particular, the complainant was described as a contumacious defaulter, who was an employee of OP1 at the time of his booking the said flat, and who had been afforded a great deal of latitude in making payments under the reservation letter agreement. The present complaint, per the reply, was a misuse of the legal process, without any basis in law or facts, aimed at somehow getting an apartment at favorable terms and conditions.  OPs have discharged their contractual obligations in a fair and transparent manner and had gone beyond the letter of the agreement to accommodate the complainant in all manner possible.  However, it was the complainant who had fallen woefully short of discharging his responsibilities.  While the complainant’s case rests on alleged non-registration of the sale agreement under MOFA, OP has argued that the act was inapplicable to the facts of the case.

4.      Rejoinder to the reply, an amended reply by the parties, and synopsis of arguments were filed. Final arguments were heard on 13.10.2020.

5.      Learned counsel for the complainant submitted at the outset that at the time of filing of the complaint, it was not known that the impugned flat had been allotted to someone else and was therefore no longer available.  In view of this, he submitted that the complainant no longer sought the same flat; however, he wanted relief by way of an alternative flat subject to payment of balance amount as per the agreement; if this was not possible, he wanted refund of the entire amount of Rs.45,62,107/- with 18% interest, with Rs.1 crore for mental agony etc. and costs.  He mentioned that the refund cheque for Rs.27,64,276/- had not been encashed by the complainant.  He then made a mention that at the time of filing the complaint, old Act of MOFA had been furnished.  This was a mistake.  He had subsequently furnished the new Act of MOFA vide I.A. No.19239 of 2019.  He drew attention to Section 3 – General liabilities of promoter and Section 4 – Promoter before accepting advance payment or deposit to enter into agreement and agreement to be registered.  He read out Section 3 and 4, highlighting the obligations of the promoter. Section 3 mandated that the OP make full and true disclosure of the nature of title to the land, all encumbrances etc., carpet area, price including the proportionate price of common areas and facilities.  Section 4 (1) was read out to emphasize that  “promoter (OP) who intends to construct or constructs a block or building of flats all or some of which are to be taken or are taken on ownership basis,  shall, before, he accepts any sum of money as advance payment or deposit, which shall not be more than 20 per cent of the sale price enter into a written agreement for sale with each of such persons who are to take or have taken such flats, and the agreement shall be registered under the Registration Act, 1908.”  What was being emphasized by the learned counsel was that OP could not have demanded more than 20% of the sale price till he had signed a registered agreement with the complainant, something which was not done, despite the complainant having paid 20.11% of the sale consideration.

6.      With this preamble, learned counsel, referring to the synopsis of his arguments, went through facts of the case. On 28.03.2011, he applied for flat no.2003 in the project “Anglica” at Mahindra Eminents, S V Road, Goregaon (West) Mumbai-400 062.  Booking was accepted vide OP’s reservation letter dated 30.03.2011 and a token money of Rs.10,30,000/- was paid.  He drew attention to clause 1 of this reservation letter which obligated the complainant to make timely payments per schedule of payments annexed.  Further, clause 2 provided that the complainant shall execute and register the detailed agreement(s) in accordance with MOFA within 45 days of providing a copy of such agreement by the OP and that this letter shall be valid only till execution of detailed agreement(s).  Referring to the schedule of payment, he pointed out that till 23^rd slab construction, 75% of the basic consideration was to be paid.  Balance was to be paid thereafter at the time of possession.  The amount of basic consideration was Rs.2,26,81,250/- and the complainant had paid, after booking till 27.6.2011, Rs.45,62,107/-, which was 20.11% of the basic consideration. He then drew attention to letter dated 6.7.2012 from the OP, the notice prior to cancellation which was the cause of dispute.  Vide this letter, OP had demanded payment of Rs.1,37,11,595/- and had further intimated that payment was due by 26.7.2012 failing which clause 5 of the reservation letter would bestow entitlement to the OP to cancel and sell/dispose off the said flat (Annexure-C4).  Counsel argued that as soon as the complainant had paid in excess of 20% of the sale consideration, OP was bound to first give the agreement for sale and register the same and only then could the OP have demanded further payments.  He further argued that in case the payments made by the complainant was short of 20%, then OP had the right to demand the balance of 20%, and to threaten cancellation. However, since more than 20% had been paid, the OP could not have threatened cancellation.  Further, in the same letter, counsel added that there was no explanation for the amount demanded.  Learned counsel then referred to the amended complaint filed on behalf of the complainant, para 19 thereof, wherein it has been pointed out that malafide of OP1 was writ apparent : on the one hand, OP  had failed to discharge its statutory obligation in providing copies of relevant title documents, maps, approvals etc. and the draft agreement for registration, while on the other hand, OP had unlawfully demanded payment of the installments and thereafter had arbitrarily cancelled the reservation of the flat even after the complainant depositing cheques amounting to Rs.1,60,00,000.00, after discussion and settlement arrived at on 27.07.2012.  Counsel added that complainant had been forced to deposit these cheques as he was not in position not to do so in view of the dominant position of the OP.  Learned counsel then drew attention to OP’s letter dated 7.8.2012 (Annexure-C6 - colly) vide which OP had returned the post-dated cheques of the complainant and sent a refund cheque for Rs.27,64,276/-, vide cheque no.307067 drawn on Citi Bank, Mumbai dated 7.8.2012.  Complainant served a legal notice dated 4.10.2012 upon the OP; OP responded vide reply dated 7.11.2012 ( Ann. C-7 & C-8). Learned counsel drew attention to the last but one para of OP’s reply viz. “We therefore reiterate that the reservation of the said flat stands cancelled ansd we shall be at liberty to deal with, sell and dispose the said Flat to any other person without any recourse to your client.” He argued that this showed that as on 7.11.2012, the said flat was still available.  He then referred to the amended written version of the OP dated 2.5.2014, para 28 thereof, which stated that it was pertinent to mention that the flat after cancellation had already been allotted to Mr. Sawraj Kumar Bhatia and Mr. Venkatesh Bhatia in a bonafide manner and in the ordinary course of business vide letter dated 30.09.2012, well before filing of the complaint, and therefore, submitting that the complaint including the relief for re-allotment of the flat was infructuous and may be rejected in-limine.  Learned counsel elaborated that this sale was made because of the much higher price that was offered and that this indicated malafide of the OP.  Learned counsel for the complainant mentioned that along with amended written version, OP did not provide a copy of the reservation letter dated 30.09.2012 in favour of Mr. Sawraj Kumar Bhatia; this letter was submitted with OP’s affidavit evidence and this would show that the same flat allotted to the complainant was now sold to Mr. Bhatia for a basic consideration of Rs.3,22,62,500/-.  He further drew attention to the fact that in this case, OP had taken Rs.64,52,500/- for reservation of the flat which was 20% of the basic consideration.  This was not so in the case of the complainant where they had taken more than 20% and still not complied with the requirements of MOFA (supra). He particularly drew attention to the fact that between 30.9.2012 and 30.3.2011, the date of allotment to the complainant, the OP had earned, illegally over Rs.90 lakh.  He also emphasized that this indicates the hike in market price of this flat.  He submitted that the consumer complaint was filed in 2012 and now it was 2020.  No equivalent property was now available in Rs.2 crore and the same would now cost Rs.5 crore plus.  Since the complainant’s right to own the flat at the time he booked it had been taken away by the illegal conduct of the OP, his right to get an equivalent property remained.  He further argued that if the OP was entering into such a sale agreement with a third party, why had the OP not asked the complainant first?  Counsel also responded to allegation of the OP in their amended written version, paras 5 and 9 thereof, wherein OP contended that it was wrong for the complainant to say that he was lured by various advertisements regarding “Angelica” as he was an employee of OP at the time and was fully aware of the project and did not need to be either ‘led’ or ‘misled’ by advertisements.  Counsel argued that I.A. No.11119 of 2019 had been filed to dispel this notion advanced by the OP by filing documents to show that the complainant was an employee of OP only till 2.5.2006, and  as such, contention of the OP that the complainant was fully aware of the project was not correct. 

7.      Concluding learned counsel made the following submissions:

(i) the reservation letter issued to the complainant had been arbitrarily and illegally cancelled;

(ii) OP had miserably failed to comply with Sections 3 and 4 of MOFA;

(iii) complainant had complied with MOFA and had paid in excess of 20% i.e. 20.11%, and in spite of that, OP had not carried out its obligation;

(iv) OP may be directed to make an alternative flat in the same project or in the vicinity, failing which, OP be directed to enable the complainant to have a new property which would now be in the region of Rs.5 crore. 

8.      Learned counsel for the OP began his arguments by submitting that it has been well said that “No good deed goes unpunished”.  He went on to submit that the complainant was an employee and had been shown a good deal of indulgence by the OP only for this reason.  For a good one year or so, the OP kept on building his flat, with its own money, while the complainant was not paying the installments due. He submitted, reference para 5 of written arguments. that from August 2011 to June 2012, ten demand letters and reminders were sent to the complainant in this regard but to no avail: the complainant kept asking for more time but did not make any further payments; in this period, not once was there a threat of cancellation despite the stipulation in the reservation letter that the booking could be cancelled upon non-payment of even one installment beyond 30 days of due date.  In August 2011, on the complainant’s first default, allotment could have been cancelled as per terms and conditions of the reservation letter; however, OP did not do this, only because he was an employee earlier and enjoyed a certain relationship with the OP. At the time the OP and the complainant met to discuss the situation, the liability of the complainant was of the order of Rs.1.53 crore.  This is well brought out in the complainant’s own documents through emails dated 8.5.2012, 19.6.2012 and 21.6.2012 (Ann. C-5) where the complainant is clearly told that he was being accommodated and time extension was being given because of his association with the Mahindra group contrary to the contractual clause which fact was indeed appreciated by the complainant.  The argument of the learned counsel was that if the OP was acting in a malafide way due to greed as alleged by the complainant, it is open to question as to whether the OP would have shown such indulgence to the complainant.  He drew attention to email of the complainant dated 19.6.2012 (Ann.-C5 colly) in which the complainant has clearly shown his awareness of the fact that time extension was given to him as a special case considering his association with Mahindra group and has explicitly thanked the OP for not levying interest on outstandings as a special case.  He also drew attention to another email of the complainant dated 19.06.2012 (Annexure-C5 colly) in which he, responding to OP’s letter dated 5.6.2012, a reminder for outstanding payments with interest,  informed that he was expecting huge payment by month end and would be able clear the outstanding amount and sought OP’s cooperation, including not charging interest, for a few more days.  He also pointed out another similar email dated 28.04.2012 from the complainant to the OP, in which, he referred to some unexpected and unavoidable financial circumstances which had led to outstanding against the said flat and appreciated the cooperation that was being extended to him in the matter and promised that as the financial situation had started to ease out, he would start making payment on top priority basis and clear the outstanding (Annexure-C5 colly).  In the same email, the complainant has also stated that he had great faith and respect for Mahindra Lifespaces as he has served with Mahindra Group for more than six years.  Learned counsel pointed out that quite clearly, the complainant was very well aware of all the terms and conditions and had been shown a fair amount of indulgence by the OP.  Finally, however, the cancellation was as per terms and conditions of the reservation letter: Clause 5 thereof provided that in the event of any default in the payment of any amount in accordance with the payment schedule annexed or in the compliance of any of the terms and condition in connection with the purchase of the flat, OP shall be, without prejudice to their right to insist on specific performance, entitled to cancel the reservation of flat and be thereafter at liberty to sell and dispose of the aforesaid unit without any recourse to the allottee;  Clause 6 thereof had clearly provided that in the event of cancellation of reservation by the complainant or by OP in accordance with clause 5 above, all amounts paid shall be refunded after deducting losses suffered by the OP, if any, and interest due/paid by the complainant on delayed payments, subject, however, to a minimum recovery of 5% of basic consideration amount of Rs.11,34,063/- towards cancellation and administration charges.  This refund amount was not to carry any interest. 

9.      Concluding, learned counsel for the OP summarized his arguments as follows:

(i) The cancellation of the complainant’s flat was well within the ambit of the reservation letter dated 30.03.2011.  

(ii) It was never agreed to by the OP in the meeting held with the complainant in July 2012 that the complainant would make payments of outstandings by way of post-dated cheques. There were no recorded minutes.

(iii) Qua section 4 of MOFA and the sale agreement argument, a close look at the schedule of payments attached with the reservation letter showed that even on this ground the complainant had no case. This was so because section 4 of MOFA provided for payment of 20% of sale price; sale price was the basic price + service tax, and came to Rs.2,34,35,532/-.  Complainant had thus paid only 19.46% of this sale price, not 20% as claimed.  A close look at the schedule of payments indicated that the first two columns, against 11% payment and 9% payment slabs, added upto Rs.46,87,107/- while the complainant had paid only Rs.45,62,107/-; therefore, clearly the complainant’s paid amount had fallen short of 20% stipulated in section 4 of MOFA that the complainant was relying upon. 

(iv) Sufficient opportunities were given to the complainant to pay the outstandings. Letters are on record intimating stage of construction and demanding payment due.

(v) Project update was provided in December 2011 to all the allottees including the complainant.  In this project update, a clear request to all allottees was made to initiate the registration process for their apartments.  There was no complaint about the agreement mentioned in section 4 of MOFA, and that this came only when the consumer complaint was filed. 

10.    In a short rebuttal, counsel for the complainant, qua the reservation letter dated 30.3.2011, emphasized para 2 thereof which cast the responsibility upon the complainant to execute and register the detailed agreement within 45 days. He argued that it also cast a duty on the OP to provide a copy of such agreement, which was never done.  So, it was wrong on the part of counsel for the OP to only refer to the obligation of the complainant and not that of the OP.  Further, learned counsel argued that the complainant’s right under sections 3 and 4 of MOFA could not be wiped out whether payment was made or not.  He further argued that if the complainant had paid less than 20%, OP should have demanded 20% and if they did not, complainant could be held responsible for that.  Regarding deduction made of Rs. 17,97,276/- i.e. almost Rs. 18 lakh, counsel called this patently unfair. He argued that clause 6 of the reservation letter providing for a minimum recovery of 5% of the basic consideration amount ought to have been 5% of the amount paid. Finally, the learned Counsel invoked an order of the National Commission in R.P. No.3497 of 2016, M/s. R.K. Constro Project Pvt. Ltd. Vs. Sonal Devendra Jain & Anr., decided on 26.07.2017, para 7 thereof, to make the point that Section 4 of MOFA was binding on the developer after receipt of 20% of the construction amount and failure thereafter of OP to execute the agreement was a deficiency in service. 

11.    After hearing the learned counsels and carefully perused the record, the following picture emerges. 

12.    The complainant’s case is that after receiving a reservation letter dated 30.03.2011, he had made payments amounting to Rs.45,62,107/-, by 27.6.2011.  In this period, OP should have made available agreement for sale and the same should have been executed and registered. This was not done. This therefore was a deficiency in service on the part of the OP: OP did not do what he was required to do by law following the reservation letter and the payments made.  However, counsel for the OP has argued to the contrary: section 4 of MOFA provides for payment of 20% of the sale price; sale price includes service tax; if taxes are included, the amount paid by the complainant does not work out to 20%.  In my opinion, this argument on the part of the complainant cannot sustain. Not only is it the case that there would always a question of interpretation of what is meant by sale price mentioned in Section 4 of MOFA, it defies the test of reasonableness that only for a few basis points on this or that side of 20%, the complainant could have taken the risk of inviting cancellation of his apartment under the terms of the reservation letter. It is hard to comprehend the emails referred to by the counsel for the OP in which complainant had clearly expressed his gratitude to the OP and had acknowledged their prior relationship in the context of the extant consumer complaint: simply put, the e-mails  invoking relationship, special consideration and gratitude for being accommodating does not sit well with the tenor of the complaint relying upon section 4 of MOFA in a major way.  As such, I find this argument to be belonging to the category of an afterthought, finding some basis, tenuous though it may be, in section 4 of MOFA. In fine, it is not a reasonable argument leave alone a very weighty argument.  Quite apart from the technical interpretation involved in 20% plus or minus a few basis points, as to whether it is on basic sale price or actual sale price (inclusive of tax), it is also not clear- and has not been explained- as to how the complainant made these payments in the manner that it did as it does not appear to be as per the schedule of payment attached with the reservation letter.  Thus, as per schedule of payment, 11% was to be made on application, and 9% was to be paid on construction till plinth level, making it 20% of the agreement value of Rs. 22,681,250/-; with taxes, payments of 11% and 9%, also work out to 20% of the actual or total payable amount. So, in either case viz, whether payment is made without taxes or with taxes, the schedule of payment ensures that it comes to 20% after the first two installments. Clearly, complainant would want the 20% to be of the basic sale price whereas the OP would want it to be of the actual sale price. But that is only because the payments were not made as prescribed, in installments of 11% and 9%. The payments made between 28.3.2011 to 27.6.2011 were in fact as per table below:

It does seem therefore that these were paid by the complainant as per his convenience and not as per the schedule of payments or as per demand made by the OP. If so, this would support the case of the OP that it had shown accommodation and adjustment to the complainant. Still further, there is nothing on record to show that the complainant had brought the matter of sale agreement and section 4 of MOFA to the OP’s notice and that OP had refused to cooperate.

13.    Notably, the complainant has emphasized that because of non-signing and registration of the sale agreement, he was prevented from obtaining a loan from the banks.  However, no evidence has been submitted by the complainant in this regard.  It is just a statement without any basis. Also, it is hard to understand why the complainant being aware of Section 4 of MOFA and its importance, did not take any steps to ask the OP for the agreement and its registration and has only come up with this argument now in his complaint petition much after his allotment was cancelled for non-payment.  There is no evidence on record submitted by the complainant to show that he had made any effort to persuade the OP to sign and register the agreement envisaged under Section 4 of MOFA.  Therefore, reliance on Section 4 of MOFA and non-compliance thereof by the OP as the main argument for this consumer complaint cannot sustain. 

14.    Complainant has drawn attention to another aspect of the matter. In response to it’s legal notice dated 4.10.2012, OP, in reply dated 7.11.2012, has made the following statement: “We therefore, reiterate that the reservation of the said Flat stands cancelled and we shall be at liberty to deal with, sell and dispose the said flat to any other person without any recourse to your client.” Counsel has argued that this conclusively proved that till 7.11.2012 at least his flat had not yet been disposed off. This however is at variance with the amended reply of the OP in which in para 28 it has been stated as follows: “It is pertinent to mention that the flat after cancellation has already been allotted to Mr. Sawraj Kumat Bhatia and Mr. Venkatesh Bhatia in a bonafide manner and in the ordinary course of business vide letter dt.30/09/2012, copy whereof is annexed herewith as Annexure 11, well before filing of the complaint.  The complaint including the relief for re-allotment of the flat is, therefore, infructuous and may be rejected in limine.”  I cannot agree with this position. There is nothing blatantly or obviously wrong in the two statements: the reply to the legal notice states the legal position and cannot be construed to mean that the flat was available till that date. Moreover, even if it was, it did not automatically confer any right to the complainant, the same having been taken away vide the cancellation made on account of the complainant not having made payments as per schedule. As far as the consumer court is concerned, it has to see whether the complainant has carried his part of the obligations per agreement by way of payments of installments on time, and whether, after having made payments, he has still been deprived of his rightful claim.  In the instant case, it is clear that apart from a technical argument under Section 4 of MOFA, complainant is harping on the fact that OP has made a huge profit by selling his flat to someone else.  It is not clear how this helps the case of the complainant.  Complainant would have had a case if he not defaulted in his payments. It is also clear from the record that OP has shown flexibility and has accommodated the complainant in this respect.  The reference by the complainant to the meeting to arrive at a settlement on payments has not been denied by the OP; however, the argument of the OP that even at this stage, the complainant, in payment defaults by over a year, was only offering post-dated cheques, left no option but for the OP to terminate the agreement, has much merit. 

15.    There is one other issue i.e. refund that was made to the complainant by making certain deductions.  These deductions have been made in terms of clause 6 of the reservation letter.  As per this, a minimum recovery of 5% of basic consideration amount of Rs.11,34,063/-, towards cancellation and administration charges were clearly provided for.  After making this deduction, and deduction on account of losses suffered by the OP, the refund of Rs.27,64,276/- was made.  That the complainant has not encashed this cheque for Rs.27,64,276/- does not improve his case.  The grounds for this complaint have been found to be specious in the discussion above and the factum of non-encashment of cheque has no bearing on the merits of the case.

16.    In view of the discussion above, it seems fairly clear that after having made an initial investment of Rs.45 lakh towards acquisition of a flat of over Rs.2 crore, the complainant has, for whatever reason, not behaved in a manner that a serious and responsible consumer ought to have and has depended on accommodation of the OP and thereafter on section 4 of MOFA: The former had limited life and could not have been extended indefinitely; the latter was always a tenuous argument and could not have sustained this complaint.

17.    Accordingly, this consumer complaint is dismissed.  There shall be no order as to costs in the facts of the case.