AVM J. RAJENDRA, AVSM, VSM (RETD.), MEMBER

1.      This First Appeal, under Section 51 of the Consumer Protection Act, 2019 (hereinafter referred to as “the Act”) has been filed by the Greater Mohali Area Development Authority (hereinafter referred as “GMADA”) and its Estate Officer, against the Order dated 14.02.2020 passed by the State Consumer Disputes Redressal Commission, Punjab, Chandigarh (hereinafter to be referred to as “the State Commission”) in Consumer Complaint No. 718 of 2019, wherein the Complaint filed by the Complainants (Respondents herein) was partly allowed.

2.      As per report of the Registry, there is a delay of 382 days in filing the present Appeal. The impugned order was passed by the State Commission on 14.02.2020 and received by the Appellants on 25.02.2020. While the prescribed period for filing the Appeal is 30 days, the present Appeal was filed on 12.04.2021.  in terms of the Order of Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No. 3 of 2020 in re: Cognizance for Extension of Limitation the present Appeal filed during the suspended period of limitation be treated having been filed within limitation. The delay in the filing the matter has accordingly been condoned.

3.      Brief facts of the case as per the Appellant are that the Appellant floated a scheme and invited applications for allotment of residential Flats at the project named Purab Premium Apartments at Mohali. Respondent No. 2 applied for the same. Thereafter, the Appellants conducted a draw of with respect to the allotment on 19.03.2012 and intimated Respondent No. 2 vide letter dated 23.03.2012 that he is a successful allottee and a Letter of Intent (LOI) dated 21.05.2012 was issued to Respondent No. 2. As per the same, the possession of flat was to be delivered by 21.05.2015. However, the Appellant/ OP failed to deliver the possession within the stipulated time, despite receiving 95% of the sale consideration. To pay the Appellants, the Complainants have taken loan from State Bank of India, which was subsequently repaid, as confirmed in a letter dated 16.01.2017 from the Bank. The allotment letter was issued to Complainants on 27.06.2016, offering possession within 30 days from the date of issue, subject to payment of the remaining payment. The Complainants, vide letter dated 15.07.2016, surrendered the flat under Clause 3(II) of LOI on the ground of delay in delivery of possession, financial constraints due to increase in area/price of flat, reduction in size of the project by 50% and the absence of a servant room. Based on the surrender, the Appellants/OP refunded Rs.45,00,673/- to the Complainants on 09.10.2017, after deducting Rs.5,52,370/-(10% of consideration amount) and Rs.16,995/- towards Service Tax, from amount deposited by them. As against the deductions and non-payment of interest on the amount deposited, the Complainants issued a Notice to the Appellants. The Appellants did not redress the grievances of the Complainants/ Respondents and refunded the dues.

4.      Being aggrieved, the Complainants filed a Consumer Complaint before the State Commission, Chandigarh. Considering the pleadings before it, the learned State Commission vide order on 14.02.2020 held GMADA deficient in service with respect to the Complainant for not delivering the possession of the said residential apartment under Category-A, Type-2 in the ‘Purab Premium Apartments’ Scheme and ordered as follows:-

1. To refund the balance amount of Rs.5,52,370/- along with interest at the rate of 8%, compounded annually, as per Clause 3(II) of the LOI from the date of deduction i.e., 09.10.2017 till realization.

2. To pay interest at the rate of 8% compounded annually on the refunded amount of Rs.45,00,673/- from the respective dates of deposit till date of refund i.e., 09.10.2017; and

3.  To pay Rs.20,000/- towards compensation for the mental agony and harassment suffered by the Complainants, including litigation.

5.      Aggrieved by the Impugned Order of the Appellants filed the present Appeal mainly averring that the learned State Commission erred in accepting the Respondents' baseless Complaint and imposing an unjustified liability on Appellants. The Respondents failed to exercise their right to seek a refund, as stipulated in clause 3(II) of the letter of intent dated 21.05.2012. The Respondent was offered possession of the apartment after necessary development work and amenities was completed. But, they chose not to take possession and instead, filed a complaint seeking a refund with interest, which, according to the Appellants, is legally untenable. The Appellants sought the following relief: -

(a). To allow the present appeal and set aside the order and judgment dated l 4.02.2020passed by the State Consumer Disputes Redressal Commission, Punjab, Chandigarh in Consumer Complaint No. 718 of 2019and/ or

(b) To pass any such and further order (s) which this Hon'ble Commission may deem fit and proper in the facts and circumstances of this case.

6.      The Respondents/Complainants contended that the OPs wrongfully and unlawfully withheld 10% of the total consideration amounting to Rs.5,52,370/-, even though they had deposited a total of Rs.50,70,038/-. Despite multiple requests made, the OPs failed to refund this withheld amount. The actions and behavior of the OPs reflect deficiency in service.

7.      The learned Counsel for the Appellants questioned the legality of the impugned Order and contended that the Respondents did not opt for a refund as per Clause 3(II) of the LOI before allotment. The Respondents were offered possession post completion of development works through a letter dated 27.06.2016, but they chose not to take possession to avoid potential liabilities stemming from the terms of allotment. Once Respondents were issued with the Allotment Letter, the terms and conditions stated therein became binding on both parties. Moreover, the Respondents' failure to deposit the remaining 5% after receiving the allotment letter made them eligible for a refund, subject to deductions as per Section 45(3) of the PAPRA, 1995. The State Commission erred in allowing refund to the Respondent under Clause 3(II) of the LOI. Additionally, the rate of interest awarded is excessive and unjustified. Further, the rate of interest awarded by the State Commission @ 8% per annum compound interest is overly high. She argued that in cases of refund, a rate of 9% per annum is typically awarded by the NCDRC and the Hon’ble Supreme Court. She cited Kolkata West International City Pvt. Ltd. Devasis  Rudra, 2020 (18) SCC 613; and Chief Administrator Punjab Urban Development Authority and Another v. Manju Chauhan, 2020 SCC OnLine NCDRC 555.

8.      The earned counsel for the Respondent asserted that as per Clause 3(II) of the LOI, the Allottee has the right to approach GMADA for withdrawing from the scheme due to non-delivery of lawful and legal possession. The Appellants offered possession without obtaining the Occupation/Completion certificate. The term 'shall' used in the said clause should be interpreted strictly. There is a clear failure in delivery of possession within the stipulated time of 36 months from the issuance of the LOI, which gives the right to exercise the option of the mentioned clause(s). Mere issue of a possession letter on 12.10.2016 does not override the already accrued right, especially when the offered possession was not legal. Thus, the State Commission correctly granted the refund to the Respondents in terms of Clause 3(II) of the LOI dated 21.05.2012. He placed reliance upon the following judgments:-

a)  Samruddhi Co-Operative Housing Society Ltd. Vs. Mumbai Mahalaxmi Construction Pvt. Ltd. (2022) 4 SCC 103., Para No. 23 to 25.

b)  Asheesh Aggarwal Vs. GMADA & Anr., CWP No. 19117 of 2018., Para No. 10 to 15.

c)  GMADA Vs. Gamdur Singh Bahadur, FA No. 834 of 2019, Decided on 12.06.2023, Para No. 5.

d)  Estate Officer (H), GMADA and Anr. Vs. Surjeet Bedi, FA. No. 1605 of 2019, Decided on 10.04.2023, Para No. 5 to 8.

e)  GMADA and Anr. Vs. Priyanka Nayyar, FA No. 1456 of 2016, Decided on 14.02.2023, Para No. 14 to 18.

9.      We have examined the pleadings and associated documents placed on record and thoughtfully heard the both the learned counsels. The main issues for consideration are:

(a)      Whether the Respondents rightly exercised their option of refund under Clause 3(II) of the LOI due to GMADA's failure to deliver lawful and legal possession of the flat.

(b)       Whether the compound interest @ 8% per annum granted on refund as per Clause 3(II) of the LOI from the date of deduction i.e., 09.10.2017 is legal and tenable.

10.    For the sake of ready reference, the relevant Clause in the letters of Intent between the Parties is reproduced below:

“3.     OWNERSHIP AND POSSESSION

1. Allotments shall be on free hold basis.

2. Possession of apartment shall be handed over after completion of development works at site in a period of 36 months from the date of issuance of Letter of Intent. In case for any reason, the Authority is unable to deliver the possession of apartments within stipulated period, allottee shall have the right to withdraw from the scheme by moving an application to the Estate Officer, in which case, the Authority shall refund the entire amount deposited by the applicant along with 8% interest compounded annually. Apart from this, there shall be no other liability of the Authority.”

11.    Bare perusal of the aforesaid Clause and associated facts and circumstances of the case reveals that, in the event of non-completion of the development work at site within the stipulated period of 36 months, an Allottee is entitled to withdraw from the Scheme and, if he chooses to do so, GMADA is obliged to refund the entire amount so deposited, along with interest @ 8% compounded annually. Therefore, the stand of GMADA in respect of the option of refund under Clause 3(II) of the LOI to the Respondents/ Complainants is not tenable within the terms of contract entered into between the parties.

12.    As regards the issue ‘whether the State Commission rightly awarded rate of interest (8% Compounded annually) on refund as per Clause 3(II) of LOI from the date of deduction i.e., 09.10.2017, it is well settled by the Hon’ble Supreme Court that a flat buyer cannot wait indefinitely for possession. In the vent of gross delay, he has option either to take possession with delay compensation or seek withdrawal with full refund and applicable interest. As regards delay in execution of construction projects and the rights of the consumers, the Hon’ble Supreme Court in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, II (2019) CPJ 29 SC, decided on 25.03.2021 it was observed as under:

“.....It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund. In the circumstances, we are of the view that the orders passed by SCDRC and by the NCDRC for refund of moneys were justified.

…In the circumstances, we are of the view that the orders passed by the SCDRC and by the NCDRC for refund of moneys were justified. Having regard to all the facts and circumstances of the case, we modify the order of the NCDRC by directing that the appellant shall pay interest at the rate of 9% per annum to the respondent instead and in place of 12% as directed by the NCDRC. Save and except for the above modification, we affirm the directions of NCDRC.”

13.    In view of the foregoing discussions and consideration of the entire facts and circumstances of the case the Order dated 14.02.2020 passed by the learned State Commission of Punjab in Complaint No. 718/2019 is modified as follows:

ORDER

1. The Appellants/Opposite Parties shall refund the balance amount of Rs.5,52,370/- along with interest @ 9% per annum, from the date of deduction i.e., 09.10.2017 till realization;

2. The Appellants/Opposite Parties shall pay interest @ 9% per annum on the refunded amount of Rs.45,00,673/- from the respective dates of deposit till date of refund on 09.10.2017; and

3.  To pay Rs.20,000/- towards cost of litigation.

4.  All the above payments are to be made within a period of one month from the date of this order. In the event of delay beyond one month, the interest rate applicable for such extended period will be @ 12% per annum.

14.    Pending Applications, if any, are disposed of accordingly.

15.    Registry is directed to release the Statutory deposit amount, if any, in favour of the Appellants, on due compliance of this order.