National Consumer Disputes Redressal
M. Prerna Pai & 4 Ors. vs M/S. Trishul Developers & 4 Ors. on 12 October, 2022
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 923 OF 2017 1. M. PRERNA PAI & 4 ORS. B-908, Krishna Apartment, 170/1, 16th Main, BTM 1st Stage, Bangalore - 560 068. 2. Mrs. Sulatha Griselda Eric C/o. Sajan Rhine, # 13 G-1, Vintage Prime, 4th Main Road, Hennur Cross, HBR Layout, Kalyan Nagar, Bangalore - 560 043. 3. Mr. Pramod Francis C/o. Sajan Rhine # 13 G-1, Vintage Prime 4th Main Road, Hennur Cross, HBR Layout Kalyan Nagar, Bangalore - 560 043. 4. Mrs. Savita Sharma F-2, FB Castle 2nd E Cross, Hanumantappa Layout, Sultanpalya, Bangalore - 560 032. 5. Mr. Sathyanarayanan S. F-2, FB Castle, 2nd E Cross, Hanumantappa Layout, Sultanpaly, Bangalore - 560 032. 6. JASMA MERCHANT . 7. PAYAL MERCHANT . 8. AMIT ANAND . 9. BALJEET SINGH . 10. KULPREET BHUI . ...........Complainant(s) Versus 1. M/S. TRISHUL DEVELOPERS & 4 ORS. Through Its Partners Mittal Towers, Office No. 109, "B" Wing, First Floor, No. 6, M.G. Road, Bangalroe - 560 001. 2. Om Prakash Mittal S/o. Late Maliramji, Residing at No. 94 -D, 9th Cross Road, RMV Extension, banglaore - 560 080 3. Niraj Mittal S/o. Om Prakash Mittal Residing at No. 94-D, 9th Cross Road, RMV Extension, Bangalore -560080 4. Uma Mittal W/o. Om Prakash Mittal Residing at No. 94-D, 9th Cross Road, RMV Extension, Bangalore - 560 080. 5. Jyoti Mittal W/o. Niraj Mittal Residing at No. -94-D, 9th Cross Road, RMV Extension, Bangalore - 560 080. ...........Opp.Party(s)
BEFORE: HON'BLE MR. SUBHASH CHANDRA,PRESIDING MEMBER
For the Complainant : Ms Garima Jain, Advocate
(having authority letter)
Mr Amit Anand - IN PERSON For the Opp.Party : Ms Rekha Agarwal, Advocate
Mr Pawan Kumar Ray, Advocate
Mr Riju Mani, Advocate
Dated : 12 Oct 2022 ORDER
PER MR SUBHASH CHANDRA, PRESIDING MEMBER
1. This complaint is filed under section 21 (a) (i) of the Consumer Protection Act, 1986 (hereinafter 'Act') alleging deficiency in service and unfair trade practice by M/s Trishul Developers, Bangalore, the opposite party, in respect of a residential flat booked by the complainants in project 'Mittal Farms', Shivanahalli village, Yelahanka, Bangalore, Karnataka (in short 'the project') promoted and developed by the opposite party.
2. The factual matrix of the case in brief is that the complainants had booked residential flats with the opposite party in the project on various dates by paying different booking amounts. As the project was delayed and there was no offer of possession as per clause 2 of the Agreement to Sell (hereinafter, 'Agreement'), the complainants filed the present complaint seeking refund with interest as compensation and other reliefs. On 19.03.2018 this Commission allowed an Interim Application (IA) for converting the applications into a class action suit under section 12 (1) (c) of the Act. The complainants are now seeking refund of their deposits with compensation on grounds of deficiency and unfair trade practices by the opposite party. The complaints of the present applicants are identical in the grounds urged and the relief claimed. For the sake of convenience, however, the facts of the complaint of the first complainant, M. Prerna Pai, are being taken for the purpose of this case.
3. The facts pertaining to the complainant are that she had booked a flat in the project by paying an amount of Rs 6,67,710/- at the time of booking on 30.04.2013. As per an Agreement to Sell (in short 'Agreement') and a Construction Agreement dated 27.04.2013 she was allotted apartment no. E-401 admeasuring 1340 sq ft (super built area) on the 4th floor of E Block of the project at a sale consideration of Rs 44,51,400/- excluding other charges such as maintenance, electricity and water connection charges, stamp duty and registration charges. As per clause 2 of the Construction Agreement it was promised by the opposite party that construction would be completed within 30 months i.e., by 27.10.2015. The complainant has averred that it took a loan of Rs 35 lakhs from the Syndicate Bank, VV Puram, Bangalore from which Rs 30,96,224/- was paid in instalments to the opposite party. However, the project has not been completed and no offer of possession made as on 27.10.2015, the date of filing of the complaint. This is despite several assurances and revisions in dates of possession by the opposite party indicating dates of possession without disclosing reasons for the delay. The case of the complainant is that there has been an inordinate delay in handing over possession of a flat for which she deposited Rs. 39,57,734/- in instalments with the opposite party as per the Construction Agreement and that this constitutes deficiency in service as possession has not been offered. The false and misleading assurances and one-sided clauses in the agreement amount to unfair trade practices. It is her case that the delay is inordinate as the opposite party has not delivered possession even after 2 years from the committed date of possession. It is averred that she was unable to contest the one-sided clauses in the Agreement having already deposited a substantial amount of money with the opposite party. Therefore, the complainant is before this Commission with the following prayer:
Direct the opposite parties to refund to the complainants and other buyers/ apartment purchasers of the apartments having common grievance and interest in the housing project "Mittal Palms", amounts paid to the opposite parties towards the sale consideration for the apartments allotted to them in terms of the agreement to sell and construction agreement;
Direct the opposite parties to pay to the complainants and other buyers/ apartment purchasers of the apartments having common grievance and interest in the housing project "Mittal Palms", the difference between the purchase price of apartment allotted to them and the cost of acquisition by the complainants of a comparable apartment in the vicinity of the project on account of the failure on the part of the opposite parties in handing over the physical possession of the residential unit beyond the stipulated period amounting to gross deficiency in service and unfair trade practice on part of the opposite parties;
Award interest @18% per annum on the amounts paid by the complainants and other buyers/ apartments purchasers of flats having common grievance and interest in the housing project 'Mittal Palms", from the date of respective payments made by the complainants until the date of actual refund/ payment;
Award to the complainants and other buyers/ apartment purchasers of flats having common grievance and interest in the housing project "Mittal Palms", damages to the tune of Rs.5,00,000/- each towards mental agony, stress and tension on account of inability on the part of the opposite parties in handing over possession;
Award to the complainants and other buyers/ apartment purchasers of flats having common grievance and interest in the housing project "Mittal Palms", costs of and relating to the present complaint to the tune of Rs.3,00,000/- each; and
Grant to the complainants and other buyers/ apartment purchasers of flats having common grievance and interest in the housing project "Mittal Palms", such other and / or further relief (s) as this Hon'ble Commission may deem fit in the facts and circumstances of the present case.
4. The complainants have relied upon the judgments of the Hon'ble Supreme Court in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra 2019 SCC OnLine SC 438, IREO Grace Realtech Pvt. Ltd. Vs Abhishek Khanna & Ors. 2021 SCC OnLine SC 14, Newtech Promoters & Developers Pvt. Ltd. Vs State of UP 2021 SCC OnLine SC 1044, Dalip Singh Vs. State of Uttar Pradesh & Ors. (2010) 2 SCC 114 and this Commission's orders in Ashok Kumar Taneja Vs. Orris Infrastructure Pvt. Ltd. in CC No. 2604 of 2017, 2019 SCC OnLine NCDRC 156 and Sunny Ahuja Vs. Raheja Developers Ltd. CC No. 180 of 2020 dated 03.01.2022. It is her case that deficiency on part of the opposite party is established in view of delay in completion of the project and therefore, as held by this Commission in Emmar MGF Land Ltd Vs. Amit Puri [II (2015) CPJ 568 NC], after the promised date of delivery, it is the discretion of the complainant whether or not to accept possession or to seek refund of the amounts paid with reasonable interest. It is also averred that as laid down by the Hon'ble Supreme Court in Kolkata West International City (supra) "...it would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession...A buyer can be expected to wait for a reasonable period. A period of seven ears is beyond what is reasonable." She has relied upon the law laid down by the Hon'ble Supreme Court in Pioneer Urban Land and Infrastructure Ltd. Vs. Govindan Raghavan in (2019) 5 SCC 725 that home buyers cannot be compelled to take delivery of a flat when there is delay in the delivery of possession by the builder and upon the Hon'ble Supreme Court's judgment in Abhishek Khanna (supra) and Wg Cdr Arifur Rahman Khan & Ors. Vs. DLF Southern Homes Pvt. Ltd. (2020) 16 SCC 512 that one sided agreements amount to unfair trade practice under section 2(i)(r) of the Act and the developer cannot compel apartment buyers to be bound by one sided contractual terms.
5. The complaint has been resisted by the opposite party by way of reply. Preliminary objections have been taken on the grounds that the complainant is not a 'consumer' under the Act but an investor and that in view of there being a provision for arbitration in the Agreement, this Commission lacks jurisdiction in the matter. It is also contended that the matter is barred by limitation as the cause of action arose in 2014 and the complaint has been filed after a year. It is contended, relying on Hon'ble Supreme Court's judgment in Chand Rani Vs. Smt. Kamal Rani in CA No 3377 of 1979 that time was not of the essence as the contract relates to immovable property merely because of the inclusion of a penalty clause in case of default. It is alleged that the complainant and other allottees were defaulters in not making payments which impacted the progress of the project The opposite party has denied making false or misleading promises and instead contended that it has tried to keep the interest of the allottees first. It is not denied that there has been a delay in completing the project and obtaining an occupation certificate and stated that the reasons were not in its control. It is not denied that an offer of possession has not been made so far. However, it is contended by the opposite party that delay is due to reasons not attributable to the opposite party which are ascribed by it to Government orders that were issued from time to time by the local Planning Authority and the Municipal Authority which is the cause for the delay. It is argued that the de-notification of the land that was ear-marked for the approach road to the project by the Government on 10.05.2013 was a circumstance beyond its control and therefore qualifies as a force majeure condition. Thereafter there was an order of the Bangalore Development Authority on 28.08.2014 cancelling the building plan sanctioned earlier on 23.02.2013. This was followed by a 'stop work order' dated 06.11.2015 by the BBMP. The opposite party contested both the orders of the BDA and the BBMP by way of writ petitions. WP no.18399-304 of 2014 was filed on the issue of de-notification of the 60 feet wide approach road and WP No. 53809-13 of 2015 in the Hon'ble High Court of Karnataka challenged BBMP's order dated 28.08.2014 and 06.11.2015. WP No.18300 of 2014 was disposed in terms of a compromise petition on 04.09.2018 while WP no.58309 of 2019 vide order dated 08.04.2021 cancelled BBMP's orders dated 28.08.2014 withdrawing the building plan sanction and restored the plan sanction dated 21.02.2013. Delay in execution of the project is attributed by the opposite party to these developments as a consequence of Government orders. It is contended that the builder also made an offer of an alternate apartment in its project in Mysore viz. 'Mittal Pride' which was not acceptable to the complainant. The agreement was signed by the complainant voluntarily and cannot be challenged now according to the opposite party. It is contended that the complainant and many other allottees are defaulters in the project since 2014 and therefore do not qualify for any relief. Opposite party also contends that another reason for the delay was the non-availability of sand for construction. It is therefore his case that the complaint is malicious and motivated and deserves to be dismissed as being without merits.
6. Parties led their evidences and filed their written synopsis. I have heard the learned counsels for the parties and perused the records carefully.
7. The preliminary objection of the opposite party that the complainant is not a 'consumer' but an investor needs consideration in light of the Hon'ble Supreme Court's judgment in Laxmi Engineering Works Vs. PS G Industrial Institute Civil Appeal No of 4193 of 1995 (1995) 3 SCC 583 which defines 'commercial purpose' and this Commission's orders in in Kavita Ahuja vs Shipra Estates - I (2016) CPJ 31, wherein it was held that the onus of establishing that the complainant was dealing in real estate, i.e., in the purchase and sale of plots/ flats for commercial purposes to earn profits lies upon the opposite party. This has not been done by the opposite party in the present case. Only a bald assertion is made. Further, in Rajnish Bhardwaj and Ors vs M/s CHD Developers Ltd., and Ors in CC no. 3775 of 2017 decided on 26.11.2019, this Commission had observed as under:
"13. The first contention of the Learned Counsel for the Opposite Party that the Complainants are not "Consumers" and only "investors" is not supported by any documentary evidence. In a catena of judgments, this Commission has laid down that the onus of proof shifts to the Opposite Party to prove that the Complainant is "investor" and it is observed that the Opposite Party did not discharge their onus of proof regarding this aspect. Hence, we are of the considered view that the Complainants are "Consumers" as defined under Section 2 (1) (d) of the Consumer Protection Act, 1986".
The contention of the opposite party therefore does not sustain.
8. The contention that this Commission lacks jurisdiction since clause 40 in the Agreement provides for an arbitration mechanism has also been considered. This issue was put to rest by the Hon'ble Supreme Court in M/s Emaar MGF Land Limited Vs. Aftab Singh I (2019) CPJ 5 (SC) wherein it was held that an arbitration clause in the Agreement does not bar the jurisdiction of the consumer fora to entertain the complaint. This contention is therefore not justified and is not accepted. While on the issue of jurisdiction, it is relevant to also consider pecuniary jurisdiction of this Commission which has been spelt out in the case of Ambrish Kumar Shukla and 21 Ors vs Ferrous Infrastructure Pvt. Ltd., by this Commission in CC no.97 of 2016 on 07.10.2016 and recently clarified in Renu Singh Vs. Experion Developers Pvt. Ltd., in CC no. 2228 of 2017 on 26.10.2021 that the aggregate of claims will determine pecuniary jurisdiction. The claim of the complainant amounts to Rs.2,32,53,591/- as a totality of the claims preferred and is therefore valid. The contention that the complaint does not qualify as a class action suit under section 12(i)(c) of the Act also does not sustain since in the instant case, the IA under section 12 (1) (c) of the Act was allowed on 13.09.2017 and public notice ordered to be issued. The opposite party could have challenged it. However, it chose not to do so. At this stage, this argument does not wash, especially when the grievances of the complainants before us are valid on the grounds of deficiency in service and unfair trade practices. As regards the issues regarding the complaint being barred by limitation under section 24 (A) of the Act, it is apparent that the cause of action still subsists as no offer of possession has been made even as on date. The contention of the opposite party that the agreement was voluntary and does not include any unfair trade practices as it is not one-sided does not sustain in light of the judgement of the Hon'ble Supreme Court in Pioneer Urban Land & Infrastructure Ltd (supra) wherein it has been categorically held that "... terms 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" (para 6.7) and that "The Appellant-Builder cannot seek to bind the Respondent with such one-sided contractual terms" (para 7). It is evident that clauses such as 39 that bind the complainant to penalties of 18% rates of interest for delays in payments while providing for compensation at Rs 2/- per sq ft per month are grossly iniquitous and cannot but be held to be one-sided. It is also not possible to consider the argument of the opposite party that the complainants being defaulters in making payments are not eligible for any relief. As held in Ankur Goswami vs Supertech Ltd., and Ors., (2017) Online NCDC 1240 (CC no.930 of 2016 decided on 13.07.2017) this Commission has held that for not having taken action to cancel the allotment of the complainant on grounds of defaulting on payments, it is now not open to the opposite party to contend thus.
9. The opposite party has also relied upon the judgement of the Hon'ble Supreme Court in Brigade Enterprises Limited vs Anil Kumar Virmani and Ors., in CA no. 1779 of 2021 decided on 17.12.2021 which held that a complaint filed by 4.49% of the apartment owners cannot be held to be in a representative capacity justifying class action.
10. The argument relating to shortage of building materials such as sand as a force majeure argument have been considered and addressed at length in this Commission's order in the case of Anil Kumar Jain & Anr. Vs. M/s Nexgen Infracon Private Limited CC No. 1605 of 2018 dated 23.12.2019 wherein it was held that in the absence of any proof to substantiate such claims adversely causing delay in completion of the project and impacting the date of handing over of flats, such reliance on force majeure conditions was not justifiable. The argument therefore does not merit consideration.
11. During arguments, learned counsel for the opposite party has relied in the main on clause 9 of the Agreement relating to force majeure. It has been contended that the delay is for reasons not attributable to the opposite party but to orders emanating from the BDA and the BBMP which was not in control of the opposite party. Clause 9 reads as under:
9. The date stipulated for delivery of the completed apartment/ unit is subject to variation on account of force majeure, availability of cement, steel, labour and other essential items for the constructions and also subject to unforeseen even like acts of God, earthquakes, floods, war or other local disturbances or Government orders and other reasons which are beyond the control of the developer, including delay due to any order of injunction, stay or other orders of court and other statutory authorities as also delay in the grant of occupation certificate by the authorities. Though every effort will be made to obtain electrical, sanitary and water connections within the stipulated date, no responsibility will be accepted by the Developers for delays in obtaining such connections from statutory authorities. The second part shall not be entitled to claim any damages/ loss against the Developer under any circumstances on the ground of delay.
It is apparent from the records that the de-notification of the 60 feet road forming the approach to the project site was de-notified as a road under the provisions of the regulations governing the land use by the BDA, which is the local planning authority. This matter was settled though a compromise before the Hon'ble High Court where Writ Petitions were filed by the opposite party and the complainant also impleaded herself through WP No. 53809/2015. The settlement of this issue brought quietus to the objection raised by the BBMP in withdrawing the building plan sanction too. The reason advanced by the opposite party as a force majeure ground for the delay in completion of the construction cannot be considered as a valid ground in view of the fact that it was his risk to manage having collected deposits against the booking made and the agreement having been signed. In projects relating to land development/ real estate development, management of external risks is the responsibility of the builder. We are, therefore, of the view that the contention of the opposite party is without merit and cannot be sustained.
12. Admittedly, there has been a delay of nearly 7 years as on date in the handing over of the subject flat. Even on date there is neither an occupation certificate nor an offer of possession by the opposite party. The opposite party has not denied the receipt of Rs. 39,57,734/- towards the sale consideration of the subject flat. The opposite party has pinned its arguments on the ground that force majeure circumstances prevented it from completing the project as per schedule. The circumstances as discussed above do not justify the application of clause 9 as the opposite party was required to do the due diligence for the access road prior to the commencement of the project and to have compromised the matter when it arose with adjoining land owners, which it ultimately did, in a far more expeditious manner.
13. The other arguments of the opposite party have also been considered in light of the facts and previous judgments of the Hon'ble Supreme Court and this Commission. We are also guided by the law laid down by the Hon'ble Supreme Court in Fortune Infrastructure Vs Trevor D'Lima (2018) 5 SCC 442 that a buyer cannot be expected to wait indefinitely for possession and in a case of an unreasonable delay in offering possession, he cannot be compelled to accept possession at a belated stage and is entitled to seek refund of the amount paid with compensation. As the project was admittedly not complete, the complainant's exercising of his option to seek a refund cannot be construed to be unjustified. The prayer of the complainant for refund with compensation in the form of interest is therefore justified.
14. In view of the foregoing I am of the considered view that there has been deficiency in service as well as unfair trade practice on part of the opposite party in respect of the flat booked by the complainant. In a catena of judgments the issue of compensation to consumers as homebuyers has been considered by the Hon'ble Apex Court and this Commission, balancing the equities of both parties.
15. For the aforesaid reasons, I am inclined to accept the contentions of the complainants and allow complaint with the following directions:
(i) opposite party shall refund the amount of Rs.39,57,734/- deposited by the complainant towards the sale consideration of the flat with interest @ 9% from the respective dates of deposit till the date of payment;
(ii) opposite party shall also pay Rs 50,000/- as litigation costs to the complainant;
(iii) this order be complied with within 8 weeks failing which the amount to be repaid shall be repaid with 12% rate of interest.
16. The complaint is disposed of with these directions.
17. The other complaints in this case are also accordingly disposed of.
...................... SUBHASH CHANDRA PRESIDING MEMBER