National Consumer Disputes Redressal
Bijay Madan vs Unitech Ltd. & Anr. on 1 October, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 505 OF 2014 1. BIJAY MADAN S/o. Mr. K.K. Madan, R/o. 1018, Sector - 17 B, Gurgaon Haryana - 122 001. ...........Complainant(s) Versus 1. UNITECH LTD. & ANR. Grande Pavilion, Sector - 96, Express Way (Near Amity Management School), Noida, U.P. - 201 305 2. Unitech Limited, 6, Community Centre, Saket, New Delhi - 110 017 ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE DR. B.C. GUPTA, MEMBER
For the Complainant : MR. SHEKHAR RAJ SHARMA For the Opp.Party : Ms. Simran Jeet, Advocate
Dated : 01 Oct 2015 ORDER JUDGMENT
JUSTICE V.K.JAIN, PRESIDING MEMBER (ORAL)
The complainant booked a residential flat with the opposite party in its project known as United Cascades at plot no. 8, Sector Pi- ii, Greater Noida, Gautam Budh Nagar paying a sum of Rs. 4 lakhs as the booking amount. The payment plan agreed between the parties stipulated payment of a total sum of
Rs. 49,34,130/- in the following manner:-
Agreed Payment Plan
S. No.
Installment
Due Dates
Amount to be Paid
1
On Booking
--------
4,60,012.5/-
21st Installment 01.11.05 4,60,012.5/-
3. 2nd Installment 01.01.06 4,60,012.5/-
43rd Installment 01.03.06 4,60,012.5/-
54th Installment 01.05.06 2,30,006.25/-
65th Installment 01.07.06 2,30,006.25/-
76th Installment 01.09.06 4,85,756.25/-
87th Installment 01.11.06 2,30,006.25/-
98th Installment 01.01.07 2,30,006.25/-
109th Installment 01.03.07 2,30,006.25/-
1110th Installment 01.05.07 2,30,006.25/-
1211th Installment 01.07.07 2,30,006.25/-
1312th Installment 01.09.07 2,30,006.25/-
1413th Installment 01.11.07 2,30,006.25/-
1514th Installment 01.01.08 2,30,006.25/-
On Final Notice of Possession 4,82,656.25/-
Total 52,01,780/-
The complainant after making the initial payment of Rs. 4 lakhs as booking amount made payment of Rs. 60,012/- on 06.09.2005 followed by payment of Rs. 4,60,640/- on 07.11.2005, payment of Rs. 4,76,629/- (inclusive of Rs. 17,074/- as interest) on 06.03.2006 and payment of Rs. 4,60,012/- again on 06.03.2006. Thereafter the complainant did not make any payment to the opposite party.
2. Vide letter dated 15.11.2010, the opposite party informed the complainant that the unit booked by him was ready for possession and requested him to pay the dues as per enclosed statement of account and maintenance invoice, within 30 days thereof. The amount demanded from the complainant was Rs. 62,12,678/- alongwith interest free maintenance deposit of Rs. 64,440/-. A sum of Rs. 99,508/- was demanded from the complainant as maintenance charges for the period from 01.02.2011 to 31.01.2013 alongwith service tax. The complainant did not make the aforesaid payment.
3. The case of the complainant is that though the opposite party had promised to deliver possession of the flat by March, 2008, on visiting the site of the project, he came to know that no construction activity was going on and therefore he stopped making further payment to the opposite party. In our view, since the payment plan agreed by the complainant with the opposite party was a time linked plan and not a construction linked plan, the failure of the opposite party to complete or even start construction could not have been a ground for withholding further payment to the opposite party, after March 2006. The last payment by the complainant to the opposite party was made on 06.03.2006. The possession to the complainant was to be delivered by March, 2008. Considering that two years were still left when the complainant stopped making payment to the opposite party, he could not have assumed that the opposite party shall not be able to deliver possession by the stipulated date and accordingly could not have withheld further payment to the opposite party. We would like to note here that the fourth instalment became due on 01.05.2006, fifth instalment became due on 01.07.2006, sixth instalment became due on 01.09.2006, seventh instalment became due on 01.11.2006, eighth instalment became due on 01.01.2007 and ninth instalment became due on 01.03.2007. All the 14 instalments except the last instalment had become due for payment for 01.01.2008. The complainant paid only the instalments which had fallen due by 01.03.2006. He committed default for the first time on 01.05.2006. At that time, he could not have apprehended that the opposite party will not be able to deliver the possession of the apartment by March, 2008. Therefore, there was no justification for withholding the aforesaid payments.
4. As noted earlier, the opposite party vide its letter dated 15.11.2010 required the complainant to pay the balance amount within 30 days of the issue of the said letter. The complainant had an opportunity to make payment at that time since it was clearly stated in the aforesaid letter that the unit allotted to him was ready for delivery of possession.
5. Had the complainant made payment as per the payment schedule agreed by him and the opposite party defaulted in delivery of possession by the stipulated date, he would have been entitled to seek appropriate compensation from the opposite party, but having defaulted since May 2006, in payment of the instalment as per the schedule agreed by him, he failed to perform his part of the obligation under the agreement between the parties. Since the complainant himself defaulted in performing his part of obligation under the agreement, he cannot insist upon the opposite party continuing to perform the obligation cast on it under the said agreement. Therefore, in our opinion, the opposite party was justified in cancelling the allotment, forfeiting the earnest money from the amount deposited by the complainant and refunding the balance amount to him.
6. A perusal of the cancellation letter dated 07.01.2014, issued by the opposite party to the complainant, would show that a sum of Rs. 10,73,104/- was forfeited claiming the aforesaid amount to be the earnest money and Rs. 4,65,158/- was refunded to the complainant without any interest. A perusal of the reply filed by the opposite party shows that they had also deducted a sum of Rs. 71,349/- being the brokerage paid to the broker and simple interest at a nominal rate of 2% per annum was deducted for the delayed payment. The case of the opposite party in this regard is though in terms of clause 7 of the agreement, they could have deducted interest @ 18% per annum, they have actually deducted only a nominal interest calculated @ 2% per annum from the date the instalment became due till the date the allotment was cancelled.
7. The question as to what would constitute earnest money which the seller of the property is entitled to forfeit, came up before this Commission in DLF Ltd. Vs. Bhagwanti Narula, Revision Petition No. 3860 of 2014, decided on 06.01.2015 and the following view was taken:-
It would thus be seen that only a 'reasonable amount' can be forfeited as earnest money in the event of default on the part of the purchaser and it is not permissible in law to forfeit any amount beyond a reasonable amount, unless it is shown that the person forfeiting the said amount had actually suffered loss to the extent of the amount forfeited by him. In our opinion, 20% of the sale price cannot be said to be a reasonable amount which the Petitioner Company could have forfeited on account of default on the part of the complainant unless it can show it had only suffered loss to the extent the amount was forfeited by it. In our opinion, in absence of evidence of actual loss, forfeiture of any amount exceeding 10% of the sale price cannot be said to be a reasonable amount.
It was contended by the learned Counsel for the Petitioner Company that since the complainant had specifically agreed to treat 20% of the sale price as earnest money, the forfeiture to the extent of 20% of the sale price cannot be said to be unreasonable, the same being inconsonance with the terms agreed between the parties. This was also his contention that so long as the Petitioner Company was acting as per the terms and conditions agreed between the parties, it cannot be said to be deficient in rendering services to the complainant. We, however, find ourselves unable to accept the aforesaid contention, since, in our view, forfeiture of the amount which cannot be shown to be a reasonable amount would be contrary to the very concept of forfeiture of the earnest money. If we accept the aforesaid contention, an unreasonable person, in a given case may insert a clause in Buyers Agreement whereby say 50% or even 75% of the sale price is to be treated as earnest money and in the event of default on the part of the Buyer; he may seek to forfeit 50% of the sale price as earnest money. An Agreement for forfeiting more than 10% of the sale price, in our view, would be invalid since it would be contrary to the established legal principle that only a reasonable amount can be forfeited in the event of default on the part of the Buyer.
For the reasons stated herein above, we hold that (i) an amount exceeding 10% of the total price cannot be forfeited by the seller, since forfeiture beyond 10% of the sale price would be unreasonable and (ii) only the amount, which is paid at the time of concluding the contract can be said to be the earnest money."
8. In view of the aforesaid decision, 10% of the total price of the flat, which comes to Rs. 4,93,413/-, constituted the booking amount. In fact the complainant himself has stated in the complaint that after making initial payment of Rs. 4 lakhs, the balance booking amount of Rs. 60,012/- was paid by him to the opposite party. Thus the payment made at the time of booking will be taken as Rs. 4,60,012/-, which the opposite party was entitled to deduct from the amount deposited by the complainant.
9. However, as far as the brokerage is concerned, the opposite party was not entitled to deduct the aforesaid amount from the amount deposited by the complainant. The brokerage has to be paid by the opposite party out of its own profit and not out of the booking amount or sale consideration paid by the flat buyer.
10. As regards interest on the overdue instalments, which the opposite party has charged only at the nominal rate of 2% per annum, in our opinion, since the complainant committed default for the first time on 01.05.2006, the opposite party had a legal right to cancel the allotment on that date itself. Had the opposite party cancelled the allotment on that very date, no interest on the unpaid instalment would have accrued. Having itself delayed the cancellation of allotment on account of non-payment of the instalments, the opposite party cannot recover interest for the period the cancellation was delayed by it. The opposite party cannot on the one hand defer the cancellation of allotment despite default by the allottee, and charge interest on the overdue payment on the other hand. It can not be allowed to take advantage of its own act, at the cost of the Consumer. Had the opposite party cancelled the allotment on 01.05.2006 and sold the flat to some other person, it would have been able to receive the cost of the flat from the new buyer. An identical view was taken by this Commission in Revision Petition No. 3861/2014 alongwith First Appeal No. 574/2014, decided on 26.08.2015. Accordingly we hold that since the opposite party could have cancelled the allotment immediately on the fourth instalment falling due on 01.05.2006, it was not entitled to deduct any amount as interest on the overdue instalment.
11. For the reasons stated hereinabove, we direct the opposite party to refund the balance amount of Rs. 13,64,510/-
(Rs. 18,57,923 - Rs. 4,93,413) to the complainant within six weeks from today alongwith interest on that amount @ 12% per annum from the date of deposit till the date of payment. No order as to costs. The payment shall be made personally to the complainant, by way of a payees account cheque in his name, on his attending the office of the opposite party, with proper proof of his identity.
The Consumer Complaint stands disposed of.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER