JUSTICE V.K.JAIN (ORAL)

The complainants booked a residential apartment with the opposite party in a project namely "Emerald Floors Premier" at Emerald Hills, which the opposite party was to construct on the land comprised in Village Maidawas in Sector 65 of Gurgaon.　The booking of the said flat was made on 23.9.2009.  Unit No. EFP-16-0201 was allotted to them for a basic sale price of Rs.7108025/- in addition to the cost of car parking, EDC etc. The parties than executed an agreement dated 9.2.2010 incorporating their respective obligations in respect of the aforesaid allotment.  Clause 11(a) of the Agreement related to offer of possession and reads as under:-

"11.　 POSSESSION –

(a)　Time of handing over the possession

Subject to terms of this clause and subject to the Allottee(s) having complied with all the terms and conditions of this Buyer’s Agreement, and not being in default under any of the provisions of this Buyer’s Agreement and compliance with all provisions, formalities, documentation etc., as prescribed by the Company, the Company proposes to hand over the possession of the Unit within 36 months from the date of execution of Buyers Agreement.　 The Allottee(s) agrees and understands that the Company shall be entitled to a grace period of three months for applying and obtaining the completion certificate / occupation certificate in respect of the Unit and / or the Project.”

2.      Since the possession of the allotted unit was not offered to them, despite they having paid Rs.74,93,964/- to the opposite party, the complainants approached this Commission seeking possession of the allotted unit with compensation etc.

3.      The complaint was resisted by the opposite party on several grounds.

4.      During pendency of this complaint, the OP has recently offered possession of the allotted unit to the complainants on 20.11.2019 and the complainants submit that they want to take possession alongwith compensation and they also want the balance amount demanded by the OP to be adjusted against the compensation.

5.      The learned counsel for the opposite party  fairly submits that the complaint has been resisted on the grounds which this Commission has already rejected vide  its judgement dated 2.11.2017 passed in CC No. 34 of 2015 - Jivitesh Nayal & Anr. Vs. M/s. Emaar MGF Land Ltd. & connected matters. He further submits that the opposite party  is now also contesting the complaint on two additional grounds, which have not  been pleaded in the written version. The said grounds are (i) there was a dispute between the opposite party  and the contractor whom they had engaged to carry out the development as a result of which, the development work was delayed for about two years (ii) After the construction was complete, the National Building Code, was amended in 2015 which necessitated construction of a second staircase and it took time for the opposite party  to construct the said staircase.

6.      In the absence of any pleadings with respect to the additional grounds advance by the learned counsel, during the course of the arguments, I am not inclined to consider those additional grounds. Moreover, the possession in this case has been delayed by more than six years since in terms of the agreement, the possession has to be delivered by February, 2013 though a grace period of three months was also available to the OP for obtaining the Occupancy Certificate. Giving benefit of three months for the purpose of obtaining the Occupancy Certificate, the possession ought to have been delivered within 39 months of the execution of the agreement between the parties. The possession, however, has been offered only on 20.11.2019, more than nine years after the agreement was executed between the parties. The delay of more than six years cannot be justified even if the grounds orally advanced during the course of arguments are taken as correct.

7.      The learned counsel for the complainants has drawn my attention to the decision of this Commission dated 23.4.2019 in CC/1712/2017  Amitava Shankar Guha Vs. M/s. Emaar MGF Land Ltd. & connected matters,  pertaining to allotment of residential flats in this very project. The above-referred decision to the extent it is relevant, reads as under:-

“4.     The decision of this Commission in the case of Jivitesh Nayal & Anr. Vs. M/s. Emaar MGF Land Ltd. and connected matters (supra), to the extent it is relevant reads as under:-

"3. The complaint has been resisted by the opposite party which has taken a preliminary objection that since the agreed consideration was less than Rupees One crore, this Commission lacks pecuniary jurisdiction to entertain the complaint.　 On merits, the allotment made to the complainant as well as the execution of the Builder Buyer Agreements with them, has been admitted.　 The payments made by the complainants have also not been disputed.　 It is claimed that in view of Clause 15 of the Builder Buyer Agreement, in the event of delay, the complainants are entitled only to compensation calculated at Rs.10/- per sq. ft. per month.　 The construction, according to the opposite party, is in full swing.　 It is alleged that all possible efforts are being made to complete the construction and deliver possession to the complainants.　

4. In terms of Section 21 of the Consumer Protection Act, this Commission possesses the requisite pecuniary jurisdiction to entertain a consumer complaint, where the value of the goods or services as the case may be, and the compensation, if any, claimed in the complaint, exceeds Rupees One Crore.　 As held by a Three-Members Bench of this Commission in CC No.97 of 2016 Ambrish Kumar Shukla & Ors. Vs. Ferrous Infrastructure Pvt. Ltd.,　decided on 07.10.2016, the value of services in such cases, means the sale consideration agreed to be paid by the flat buyer to the builder.　

6.　　　It was contended by the learned senior counsel for the opposite party that compensation for the purpose of pecuniary jurisdiction would mean only the contractual compensation agreed between the parties.　 However, I find no merit in the contention.　 A bare perusal of Section 21(a) of the Consumer Protection Act would show that for the purpose of pecuniary jurisdiction, compensation, if any, claimed by the complainant is to be added to the value of the goods or services, as the case may be.　 Of course, a highly exaggerated, fanciful or inflated claim cannot be considered to be a genuine claim and therefore, cannot be determinative of the pecuniary jurisdiction.　 However, considering that not only this Commission, but the Hon’ble Supreme Court has awarded compensation in the form of interest at the rate upto 18% per annum, compensation in the form of interest calculated @ 18% per annum would not be taken as a highly inflated or exaggerated claim so as to warrant outright rejection of the complaint, even though the Court / Forum may award a lesser compensation.　 Therefore, I find no merit in the contention that this Commission lacks pecuniary jurisdiction to entertain these complaints.　

7.　　　　 On merits, the following contentions were advanced by Shri A.S. Chadhiok, learned senior counsel for the opposite party:

(a)　　　 In view of the Clause 13(a) read with Clause 15 of the BBA, compensation @ Rs.10/- per sq. ft. per month is in the nature of a stipulation by way of penalty and therefore, the upper limit of the compensation which can be awarded to the complainants, in the event of breach of contract by the opposite party.

(b)　　　 No evidence of actual damages, if any, caused to the complainants has been led and therefore, they are not entitled to any compensation or damages.

(c)　　　 No loss or injury to the complainants has been established, and therefore, they are not entitled to any compensation.

(d)　　　 No negligence on the part of the opposite party is proved or even alleged.

(e)　　　 The complainants are seeking specific performance of the contract between the parties, and therefore are bound by its terms.

8.　　In terms of Section 14(1)(e) of the Consumer Protection Act, if this Commission is satisfied that any of the allegations contained in the complaint about the services of the opposite party are proved it is required to issue an order to the opposite party directing it to remove the deficiencies in the services in question.　 In terms of Section 14 (1)(d) of the Act this Commission is also required to pass an order directing the opposite party to pay compensation to the complainants for any loss or injury suffered by them due to the negligence of the opposite party.　 If the builder, whose services are engaged by a buyer for construction of a residential house for him fails to complete the construction and deliver its possession on or before the date committed by him for the purpose, such an act on the part of the builder would be an act of negligence, causing loss or injury to the flat buyer.　 The term ‘negligence’ has not been defined in the Consumer Protection Act but as per its dictionary meaning, it is the failure to give enough care or attention especially when such an act has serious results for another person (Oxford Advanced Learner’s Dictionary, New 8th Edition).　 As per Black’s Law Dictionary IX Edition, negligence includes the failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation.　 In the absence of force-majeure circumstances, a prudent builder in place of the opposite party would have been in a position to construct the flats and offer their possession to the complainants on or before the date committed for this purpose or at best within the grace period available under the BBA.　 By not delivering on the commitment made by it with respect to the delivery of the possession of the flats booked by the complainants, the opposite party certainly committed an act of negligence and since the said act of negligence has resulted in loss or injury to the complainants who have been deprived f the user of the flats booked by them, compensation in terms of Seciton14 (1)(d) of the Consumer Protection Act can be awarded to the complainants, against the opposite party.

　　　Since the Act empowers this Commission to direct removal of the deficiencies in the service in question, the opposite party, in exercise of the aforesaid power of this Commission, can also be directed and in fact ought to be directed to complete the construction and deliver possession of the flats to the complainants at the earliest possible.　 Therefore, both the directions sought by the complainants viz. direction for completion of the construction and delivery of possession of the flats and the direction for payment f compensation for the period the possession is delayed are within the competence of this Commission under Section 14 of the Consumer Protection Act.　 Therefore, it is not correct to say that the complainants are seeking specific performance of the agreement they had executed with the opposite party.　 The specific performance of a contract can be sought before a Civil Court in terms of the provisions contained in the Specific Relief Act 1963.　 Neither this Commission is a Civil Court nor have the complainants invoked the provisions of the Specific Relief Act, 1963.

9.　　 Also, I find no merit in the contention that the compensation stipulated in Clause 15(a) of the BBA is in the nature of a penalty attracting applicability of Section 74 of the India Contract Act.　 The aforesaid compensation is a unilateral and patently unfair term imposed by the builders upon the flat buyers.　 Having already paid the booking amount to the builder, they have no option but to sign on the dotted lines, since the failure to execute the agreement unilaterally drafted by the builder and imposed upon the flat builders is likely to result in the booking amount being forfeited by the builder.　 Therefore, executing an agreement containing such a term is nothing, but a consent given under coercion and cannot be said to be the result of the exercise of a free consent on the part of the flat buyer. Moreover, a term to pay such a paltry compensation to the flat buyer in the event of default on the part of the builder, while making him pay exorbitant interest in the event of default or delay on his part is an absolutely unfair term. 　In fact, the incorporation of a term for　 payment of a paltry compensation to the buyer in the event of the failure of the builder to deliver possession within the time period committed by him, had become so wide spread and rampant that the Legislature had to step in by enactment of the Real Estate (Regulation & Development) Act, 2016 to statutorily require the builder to pay compensation in the form of interest at prescribed rate in the event of the possession being delayed or the buyer deciding to quit on account of the delay on the part of the builder in delivering upon the promise made by him. Therefore, irrespective of Clause 15(a) of the BBA, the complainants in my view are entitled to a just and fair compensation for the period the possession of the flats is delayed by the opposite party.

10.　　 I am also unable to accept the contention that the complainants have failed to prove any loss or injury to them on account of the failure of the opposite party to deliver the possession of the flats on or before the time period stipulated in the BBA.　 Had the opposite party delivered possession of the flats within the time stipulated for this purpose, the complainants would have been enjoying the use and possession of the flats booked by them. They have been deprived of the user of the flats on account of the default committed by the opposite party. It can hardly be disputed that the deprivation of the user of a self- owned house amounts to a serious injury to the flat buyer who has booked the flat for the purpose of having a shelter over his head and therefore, has either to live in a rented accommodation or an accommodation which is not suitable or convenient to him. Also, we need to appreciate the satisfaction and enjoyment one would have if he lives in a house of choice owned by him as against living in a rented accommodation or in an accommodation which is not owned by him or is not otherwise suitable or convenient to him.

11.　　 If a paltry compensation of say Rs.10/- per sq. ft. per month is awarded against a builder, it may lead to dangerous consequences since the builder may be tempted not to complete the construction and divert the money collected from the flat buyers for other purposes, in the hope that in the event of the buyer approaching a Court or a Consumer Forum, he can get away by paying a paltry compensation of Rs.10/- per sq. ft. per month to him. Paying such a meagre compensation would always be a win win situation for a builder who is likely to pay many times more if he goes to market for arranging finances which he gets by diverting the money collected from the flat buyers to other purposes.　 This Commission, therefore, ought to refrain from taking a view which would lead to such serious consequences, against the innocent flat buyers.　 I also find some merit in the contention of the complainants that in a situation where the builder despite taking money from the flat buyers does not utilize the whole of the said money only for th construction of the flat sold to him, the amount which the builder has collected from the flat buyers should be treated as a cash deposit with the builder who should pay adequate interest to the flat buyer for utilizing his money.

12.　　 For the reasons stated hereinabove, I hold that:

(i)　　　　 The opposite party has been negligent in the matter of rendering services to the complainants

(ii)　　　 The flat buyers have suffered loss and injury due to negligence of the opposite party

(iii)　　 The term for payment of compensation under Clause 15(a) of the BBA does not bind the complainants, who are entitled to just and fair compensation against the opposite party for the deficiency on the part of the opposite party in the services rendered to them.

(iv)　　 The complainants are not seeking specific performance of the BBA in terms of the Specific Relief Act, 1963 but are seeking compensation in terms of Section 14(1)(d) of the Consumer Protection Act and

(v)　　　 This Commission in exercise of the powers conferred upon it by Section 14(1)(e) of the Consumer Protection Act can direct the opposite party remove the deficiencies in the services by completing the construction and delivering possession of the flats within a reasonable time."

5.　　 The opposite party has preferred a Civil Appeal Diary No(s). 7840/2018 – M/s. Emaar MGF Land Ltd. Vs. Kumar Vaibhav & Anr. before the Hon’ble Supreme Court against the above referred decision of this Commission and the order passed by this Commission has been partially stayed by the Hon’ble Supreme Court vide its order dated 27.04.2018, which reads as under:-

"There shall be stay of the impugned order to the extent of 50% of the interest amount directed to be paid to the respondents in terms of clause(b) of the said order. In so far as the remaining 50% amount is concerned, an amount of Rs.10/- per sq. ft. per month would be paid to the respondent(s) by the petitioner while the balance amount will be deposited in court. Such amount deposited in court would be kept in a fixed deposit initially for a period of six months to be kept renewed. The payment and deposit be made within two weeks."

6.      The learned counsel for the complainants has also drawn my attention to the recent order of the Hon’ble Supreme Court dated 2.4.2019  rendered  in Civil Appeal No.12238 of 2018 – Pioneer Urban Land & Infrastrucure Ltd. Vs. Govindan Raghavan & other connected matter wherein the Hon’ble Supreme Court interalia held as under:-

6.3. The National Commission in the Impugned Order dated 23.10.2018 held that the Clauses relied upon by the Builder were wholly one-sided, unfair and unreasonable, and could not be relied upon.

The Law Commission of India in its 199th  Report, addressed the issue of ‘Unfair (Procedural & Substantive) Terms in Contract’. The Law Commission inter-alia recommended that a legislation be enacted to counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that :

“A contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties.”

6.4. A perusal of the Apartment Buyer’s Agreement dated 08.05.2012 reveals stark incongruities between the remedies available to both the parties.

For instance, Clause 6.4 (ii) of the Agreement entitles the Appellant – Builder to charge Interest @18% p.a. on account of any delay in payment of installments from the Respondent – Flat Purchaser.

Clause 6.4 (iii) of the Agreement entitles the Appellant – Builder to cancel the allotment and terminate the Agreement, if any installment remains in arrears for more than 30 days.

On the other hand, as per Clause 11.5 of the Agreement, if the Appellant – Builder fails to deliver possession of the apartment within the stipulated period, the Respondent – Flat Purchaser has to wait for a period of 12 months after the end of the grace period, before serving a Termination Notice of 90 days on the Appellant – Builder, and even thereafter, the Appellant – Builder gets 90 days to refund only the actual installment paid by the Respondent – Flat Purchaser, after adjusting the taxes paid, interest and penalty on delayed payments. In case of any delay thereafter, the Appellant – Builder is liable to pay Interest @ 9% p.a. only.  

6.5. Another instance is Clause 23.4 of the Agreement which entitles the Appellant – Builder to serve a Termination Notice upon the Respondent – Flat Purchaser for breach of any contractual obligation. If the Respondent – Flat Purchaser fails to rectify the default within 30 days of the Termination Notice, then the Agreement automatically stands cancelled, and the Appellant – Builder has the right to forfeit the entire amount of Earnest Money towards liquidated damages.

On the other hand, as Clause 11.5 (v) of the Agreement, if the Respondent – Flat Purchaser fails to exercise his right of termination within the time limit provided in Clause 11.5, then he shall not be entitled to terminate the Agreement thereafter, and shall be bound by the provisions of the Agreement.

6.6. Section 2 (r) of the Consumer Protection Act, 1986 defines ‘unfair trade practices’ in the following words :

 “‘unfair trade practice’ means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice …”, and includes any of the practices enumerated therein. The provision is illustrative, and not exhaustive.

6.7. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder.

The contractual terms of the Agreement dated 08.05.2012 are ex-facie one-sided, unfair, and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2 (r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the Builder.

7. In view of the above discussion, we have no hesitation in holding that the terms of the Apartment Buyer’s Agreement dated 08.05.2012 were wholly one-sided and unfair to the Respondent – Flat Purchaser. The Appellant – Builder could not seek to bind the Respondent with such one-sided contractual terms.”

8.      The learned counsel for the OP submits that since there has been appreciation in the value of the houses in the locality in which the unit in question is situated, the compensation to the extent of 8% per annum which this Commission has awarded in Amitava Shankar Guha (supra) should not be awarded. I, however, find no reason to take a view different from the view taken in the  rather decision of this Commission in Amitava Shankar Guha (supra) against the same developer when this Commission has already directed that if the order passed by this Commission in Jivitesh Nayal (supra) is modified by the Hon’ble Supreme Court,  the necessary adjustments in terms of such modifications will be made within 30 days of such modification and if as a result of such adjustment any amount becomes payable by the complainants to the opposite party, it  shall be entitled to recover the same through the process of this  Commission.

9.      The learned counsel for the complainants has also drawn my attention to the consent order passed by this Commission in CC/764/2015 – Prashant Khanna Vs. M/s Emaar MGF Land Ltd. and CC/765/2015 – Ram Prakash Miyanbazas Vs. M/s Emaar MGF Land Ltd. decided on 5.8.2019. The learned counsel for the opposite party submits that since he has no instructions to give such a statement in the present case, he is unable to make such a concession.

10.    For the reasons sated hereinabove, the complaint is disposed of with the following directions:-

(a)　　The complainants shall be entitled to take immediate possession of the allotted flat in terms of the offer already made to them by the opposite party.

 (b)　　The opposite party shall pay compensation in the form of simple interest @ 8% per annum to the complainants with effect from 9.5.2013 till 20.11.2019.

(c)        The balance amount payable by the complainants to the opposite party shall be adjusted out of the compensation payable to the complainants in terms of this order. Balance amount of the compensation shall be paid to the complainants.

(d)　    The opposite party shall pay Rs.25,000/- as the cost of litigation to the complainants within three months from today.

(e)       If the order passed by this Commission in Jivitesh Nayal and connected matters (supra) is modified by the Hon’ble Supreme Court in Civil Appeal Diary No. 7840/2018, such modified  order of the Hon’ble Supreme Court in the said case shall ipso-facto, apply to this consumer complaint as well, and this complaint shall be deemed to have been disposed of in terms of the said  order of the Hon’ble Supreme Court.

(f)        If the Civil Appeal Diary No(s). 7840/2018 – M/s. Emaar MGF Land Ltd. Vs. Kumar Vaibhav & Anr. preferred by the OP and pending before the Hon’ble Supreme Court is not decided by 31.12.2019, the OP shall comply with this order with respect to the payment of the compensation unless this order is stayed or modified by the Hon’ble Supreme Court in the meanwhile. In that case, if the order passed by this Commission in Jivitesh Nayal & Kumar Vaibhav (supra) is modified by the Hon’ble Supreme Court after 31.12.2019, the necessary adjustment in terms of the said modification will be made within 30 days of the said modification by the Hon’ble Supreme Court. If as a result of such adjustment any amount becomes payable by the complainants to the OP and is not paid, the OP shall be entitled  to approach this Commission for the enforcement of this part of the order.