JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)            

                The complainant company booked a residential apartment with the opposite party for the residence of its Director (s) in a project namely ‘ARAYA’, which the opposite party was to develop in Gurgaon.  The sale price of the apartment was agreed at Rs.5,11,01,238/- .  An allotment letter dated 29.11.2011 was issued to the complainant, followed by the execution of the agreement on 13.3.2012.  As per Clause 11.2 of the Agreement, the developer was to make all efforts to apply for the occupancy certificate within 39 months from the excavation, though it was also entitled to a grace period of six months for applying and obtaining the requisite occupancy.  Computed accordingly, the occupancy certificate ought to have been applied by 04.9.2015 and obtained by 04.3.2016.  That having not been done, the complainant  has approached this Commission by way of this consumer complaint, seeking possession of the allotted flat with compensation etc., or refund of the amount paid to the opposite party, in case the possession cannot be delivered within eight months of the completion. 

2.      The learned counsel for the complainant states on instructions that the complainant is ready and willing to take possession even at a belated stage.

3.      The complaint has been resisted by the opposite party which has taken a preliminary objection that being a company, the complainant is not a consumer.    On merits, it has been denied that the booking was made for the residence of the Director (s) of the complainant company.  It was however, admitted in the written version filed by the opposite party that the possession of the allotted flat had not been offered to the complainant. 

4.      The opposite party obtained the requisite occupancy certificate during pendency of this complaint on 03.4.2019 and offered possession to the complainant on the same day.

5.      As far as preliminary objection taken by the opposite party is concerned, the issue stands settled by a Larger Bench of this Commission in a reference made in this very consumer complaint.  The Larger Bench vide its order dated 16.3.2020, held as under:

          “1.    It is the purpose for which the residential plot / house is booked / purchased, which is material for determining whether the purchaser is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act.  The legal status of the purchaser, be it an individual, a partnership, an Association of Persons, a Trust, a Society or a Company is immaterial for such determination.

2.     If a house / residential plot is booked / purchased by a company for the residential use of its Directors / employees the company will be a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, as far as such a booking / purchase is concerned.

3.    If a house / residential plot is bought / booked by a company as a part of its business activities and such purchase / booking has a close and direct nexus with the regular profit generating activities of the company, it will not be a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act as far as such a purchase / booking is concerned.”

6.      The next question which arises for consideration is as to whether the flat was booked by the complainant for the residence of its Director(s) or was booked for speculative purposes, as is claimed by the opposite party.  The complainant has placed on record a Resolution passed by its Board of Directors on 14.11.2011, thereby resolving to book this flat for the residence of one of the Directors of the company namely Dr. (Mrs.) Kirat Cheema.  The submission of the learned senior counsel for the opposite party is that the complainant being a private limited company, the resolution may have been manufactured at a later date.  This is also his submission that as per the information provided by the company to the Registrar of Companies, the business activities of the complainant were confined to Amritsar and all the Directors of the Company, including Dr. Kirat Cheema were residents of Amritsar.  This is also his submission that Dr. Cheema was also a partner of a LLP engaged in the business of Real Estate.

7.      As far as the business of the LLP is concerned, the information filed by the opposite party shows that Mrs. Cheema became a partner of the said LLP only in the year 2017 for the first time.  The flat in question on the other hand was booked in the year 2011.  Therefore, it would be difficult to infer that the flat in question was booked for speculative purposes and not for the bonafide residence of Dr. Kirat Cheema.

8.      As regards Mrs. Cheema being a resident of Amritsar, a perusal of the affidavit filed by Dr. Cheema would show that at the time the affidavit was filed she was residing at Y-164 Regency part DLF Phase IV, Gurgaon.  It is therefore evident that at the time the flat in question was booked she must be planning to shift to Gurgaon even if she was residing at Amritsar.  In these circumstances, it would be difficult to dispute the case of the complainant that the flat in question was booked by it for the residence of one of its Director(s) namely Dr. Kirat Cheema.

9.      As far as the merit of this case is concerned, the matter is covered by the previous decision of this Commission in CC No.1238 of 2017 Vishal Malik & Anr. Vs. Pioneer Urban Land and Infrastructure Ltd. decided on 29.03.2019 pertaining to an allotment made in this very project where possession of the allotted flat was directed by this Commission, with compensation.  The said decision to the extent it is relevant reads as under:

          “4.      It is not disputed before me that the delay in completion of construction is sought to be justified on the grounds which this Commission has already rejected in CC/239/2017 – Govindran Raghavan Vs. Pioneer Urban Land & Infrastructure Ltd., decided on 23.10.2018. The said grounds, therefore, need not be revisited in this complaint.

5.      The decision of this Commission in Govindran Raghavan (supra) to the extent it is relevant for the purpose of this complaint, reads as under:-

“3.      The complaints have been resisted by the OP which had admitted the allotment made to the complainants as well as the payment received from them.  It is inter-alia stated in the written version filed by the OP that the construction could not be completed within the stipulated time on account of reasons beyond its control.  The said reasons, according to the OP, are as under:

(a) The delay on the part of several flat buyers in making timely payment, (b) the dispute of the developer with the contractor, (c) shortage of water, (d) Lack of infrastructural support from the State Government, (e) Shortage of raw material, (f) Delay in approvals, (g) Jat reservation agitation, (h) NGT order stopping construction and (i) Demonetization of the currency.

4.      As far as the delay on the part of the several flat buyers is concerned, admittedly, the OP had a right to cancel the allotment due to the alleged non-payments.  After cancelling the allotments made to the defaulting customers, the OP could have sold those flats in the open market to other willing buyers.  Having not exercised the right available to it, to cancel the allotment on account of the alleged non-payment, the OP, in my view, cannot deny refund and compensation to the flat buyers who have been making payments in time or from whom interest for delay in payment has been charged.  Therefore, I find no merit in the aforesaid ground.

6.      As far as the alleged dispute with the contractor is concerned, the case of the OP is that initially, the work was awarded to M/s Urban Eco Infra Pvt. Ltd. which did not maintain the assured timeline and therefore, the OP took over the construction work from the said contactor and awarded the same to another contractor M/s Leighton Contractors Pvt. Ltd.  In my view, the dispute if any, between OP and the contractor engaged by it, cannot justify the delay in completion of the construction. If the OP suffers any loss or has to pay compensation/damages on account of the delay committed by the contractor engaged by it, it will be entitled to avail such remedy as may be available to it in law against the contractor responsible for the delay, but it cannot deny refund and a fair compensation to a flat buyer who does not wish to wait any more for the possession of the alleged flat and wants refund of the money paid by him alongwith compensation.

7.      As far as the alleged water shortage and labour shortage is concerned, there is no evidence on record to prove that no water or labour was actually available in the market at the relevant time to carry out construction.  The delay cannot be justified on such bald allegations without substantiating the same by hard evidence showing actual non-availability of water and labour in the market.  

8.      As far as the alleged delay on the part of the Government agencies in laying infrastructure is concerned, there is no evidence of any particular timeline having been committed by such agencies to the developer for laying infrastructure and having not maintained the said timeline.  As far as the alleged shortage of raw material is concerned, the case of the OP is that sand was not available in the vicinity of the complex due to restriction on mining imposed in Aravali region and therefore, they had to procure sand from the neighbouring city of Rajasthan.  In its written version, the OP has referred to an order dated 08.05.2009 stated to have been passed by the Hon’ble Supreme Court stopping the mining operations in Aravali range.  The agreement with the complainant having been executed much much later on 04.06.2012, the said order was already in the knowledge of the developer and therefore, it knew that it will have to procure sand from other places, on account of mining having been stopped in Aravali region.  Therefore, shortage of sand in Aravali region cannot be a good ground for delaying the construction. 

9.      As regards the delay in grant of approvals from the State Government is concerned, neither any particulars of the alleged delay have been given nor any evidence has been led to prove that there was abnormal delay on the part of Government Authorities in granting approval and the said delay had contributed to the delay in completion of the construction. 

10.    As regards the Jat reservation agitation, there is no evidence of the said agitation having actually resulted in stoppage of work at the site of the project.  More importantly, the aforesaid protest is stated to have started in February 2016 whereas the construction was required to be completed by September 2015, much before the said agitation started in Gurgaon. 

11.    As regards NGT having stopped construction in April 2015 and November 2016, no order of NGT passed in April 2015 and stopping construction on the project in question has been placed on record.  As far as the order of NGT dated 08.11.2016 is concerned, that came to be passed much later than the last date stipulated in the Buyers Agreement for completion of the construction.  Moreover, the said order was operative only for a period of one week. 

12.    As far as demonetization is concerned, I fail to appreciate how it could have affected the construction since there was no restriction on payment by means of cheques/demand drafts and through other modes of banking transactions.  Moreover, the demonetization came to force on 08.11.2016, much after the last date stipulated for completion of the construction had already expired. 

10.    The decision of this Commission in Vishal Malik (supra), followed in the later decision in CC/94/2017 Rajesh Mehta & Anr. Vs. M/s. Pioneer Urban Land & Infrastructure Ltd. decided on 30.10.2019.

11.    It is informed during the course of hearing that an appeal preferred by the opposite party is pending before the Hon’ble Supreme Court against the decision of this Commission in Vishal Malik (supra).

12.    The learned senior counsel for the opposite party submits and in my opinion rightly too, that the case of this nature where possession of the allotted residential flat is directed, the compensation for the delay in the delivery of the possession, where the complainant is a company should not be at par with the compensation granted to an individual since a company would not be entitled to compensation for the mental agony and harassment to which an individual would be entitled.  The compensation in the form of interest, which this Commission has been awarding, is an all-inclusive compensation, including the compensation for the mental agony and harassment undergone by a buyer on account of the delay in delivery of the possession.  Since a company would not be entitled to compensation for a mental agony and harassment, the compensation granted to a company in a case where possession of the flat is also directed should be somewhat less than the compensation granted to an individual.  Moreover, the present day economic environment on account of a pandemic in the country also justifies some reduction in the compensation. 

13.    The learned senior counsel for the OP submits that they have filed lease deeds to show the prevailing rate of interest in this very project and there would be no justification for awarding compensation higher than the prevailing rentals in the project.  

14.    No doubt, the prevailing rents in respect of the similarly situated flats of identical specifications and size would a relevant factor while quantifying the compensation for the delay in delivery of possession but the said rentals, in my opinion, should not be made the sole basis for grant of such compensation.  It has to be kept in mind that the rentals in our country being very low they do not constitute even 3-4% return on the price of the house.  If compensation in such cases is computed solely on the basis of the prevailing rentals, the builder would have no incentive to complete the construction within the agreed timeframe, since he would know that even if he diverts the funds collected from the flat buyers to another project or for other purposes and that leads to delay in completion of the construction he would be able to get away paying a paltry compensation which would cost him not more than 3-4% of the capital employed.  If the builder has to go to market to raise resources, he would have to pay interest at a rate which would be many times higher.  Therefore, grant of compensation linked with the rental value alone would be an incentive for the builder to prolong the completion of the construction and an unscrupulous builder may go to the extent of diverting funds collected from the flat buyers of a particular project to its other project.  In fact, the submission of the flat buyers has been that in such cases, the money collected by the builder from them should be treated as a deposit from them with the builder with effect from the date committed for delivery of possession.  Therefore, a balanced approach has to be adopted so as to take care of the genuine interest of the parties concerned while giving preference to the interest of the consumer, the consumer fora having been established primarily for protecting the rights of the consumers.

15.    The opposite party is claiming holding charges from the complainant, but, in view of the decision of this Commission in Capital Greens Flat Buyer Association & Ors. Vs. DLF Universal Limited & Anr. alongwith connected matters, decided on 03.01.2020, the opposite party is not entitled to such charges.  The above referred decision of this Commission, to the extent it is relevant reads as under:

   “As far as holding charges are concerned, the developer having received the sale consideration has nothing to lose by holding possession of the allotted flat except that it would be required to maintain the apartment. Therefore, the holding charges will not be payable to the developer. Even in a case where the possession has been delayed on account of the allottee having not paid the entire sale consideration, the developer shall not be entitled to any holding charges though it would be entitled to interest for the period the payment is delayed.”

16.    For the reasons stated hereinabove, the complaint is disposed of with the following directions:

(i)      The opposite party shall deliver possession of the allotted flat complete in all respects to the complainant within eight weeks from today.

(ii)      The opposite party shall pay compensation in the form of simple interest @ 6% per annum to the complainant on the amount of Rs.4,81,51,038/-  with effect from 05.3.2016 till the date on which the possession as offered vide letter dated 03.4.2019.

(iii)     The balance amount, if any, payable by the complainant to the opposite party, shall be adjusted out of the compensation payable to the complainant in terms of this order. 

(iv)    If the decision of this Commission in Vishal Malik (supra) is set aside / modified by the Hon’ble Supreme Court in the Civil Appeal No.7003 of 2019 pending before it, the decision of the Hon’ble Supreme Court to the extent applicable shall also apply to the present case.

(v)     While computing compensation payable to the complainant in terms of this order, the opposite party shall be entitled to adjust the compensation for the delay in offering possession already credited to the account of the complainant.

(vi)    The complainant shall also be entitled to Rs.50,000/- as the cost of litigation.