National Consumer Disputes Redressal
M/S. Jaiprakash Associates Ltd. vs Suranjana Borthakur on 26 September, 2022
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 859 OF 2019 (Against the Order dated 13/11/2018 in Complaint No. 411/2017 of the State Commission Uttar Pradesh) 1. M/S. JAIPRAKASH ASSOCIATES LTD. JAYPEE GREENS SECTO R128 NOIDA 201301 ...........Appellant(s) Versus 1. SURANJANA BORTHAKUR R/O. 110A/1, 3 FLOOR KRISHNA NAGAR NEW DELHI ...........Respondent(s)
BEFORE: HON'BLE MR. C. VISWANATH,PRESIDING MEMBER HON'BLE MR. JUSTICE RAM SURAT RAM MAURYA,MEMBER
For the Appellant : Mr. Krishnan Venugopal, Senior Advocate
: Mr. Sumeet Sharma, Advocate
: Mr. Tenzen Negi, Advocate
: Mr. Paras Chaudhary, Advocate
: Mr. Kaushik Advocate
: Ms. Pallavi, Advocate For the Respondent : Mr. Vivek Pathak, Advocate
Mr. Abhay Gupta, Advocate
Mr. Tanuj Dogra, Advocate
For Intervener : Mr. Aditya Parolia, Advocate
Dated : 26 Sep 2022 ORDER
1. Heard Mr. Krishnan Venugopal, Senior Advocate, assisted by Mr. Sumeet Sharma, Advocate, for the appellant and Mr. Vivek Pathak, Advocate, for the respondent. Mr. Aditya Parolia, Advocate argued as an intervener, for the complainant-respondent, on legal issue.
2. Jaiprakash Associate Limited (the opposite party) has filed above appeal from the order of State Consumer Disputes Redressal Commission, Uttar Pradesh, dated 13.11.2018, passed in CC/411/2017, partly allowing the complaint with cost of Rs.10000/- and directing the appellant to return Rs.2469704/- with interest @18% per annum from the date of respective deposit till the date of actual payment.
3. The office has reported 116 days delay in filing the appeal. The appellant has filed IA/7746/2019, for condonation of delay. Cause shown is sufficient. The delay in filing the appeal is condoned.
4. Suranjana Borthakur (the respondent) filed CC/411/2017 for directing Jaiprakash Associates Limited (the appellant) (i) to refund Rs.2469704/- with interest @18% per annum, from the date of respective deposits till the date of refund,, (ii) to pay Rs.25000/-, per month from due date of possession till the date of refund, as rent, (iii) to pay interest @8.5% per month on the amount claimed in prayer clause-2, (iv) to pay delayed compensation @ Rs.5/- per sq.ft. with interest @18% per annum, from due date of possession till actual payment, (v) to pay Rs.2.5/- lacs, as the cost of litigation, (vi) to pay Rs.10/- lacs as compensation for mental agony and harassment; and (vii) any other relief, which is deemed fit and proper in the facts and circumstance of the case.
5. The complainant stated that Jaiprakash Associates Limited (the appellant) (hereinafter referred to as the builder) was a company, registered under Companies Act, 1956 and engaged in the business of developing and constructing group housing project. The builder launched a group housing project in the name of "Kosmos" at Jaypee Greens, Sector-128, Noida and made wide publicity in the year 2010. Allured with lucrative advertisements and believing on it, the complainant applied for a flat and deposited the required money of Rs.1.5/- lacs on 22.12.2010. The builder allotted Falt No. KM 0046-1703, super area 850 sq.ft., total Consideration of Rs.2557900/- on 05.03.2011. Under the allotment letter dated 05.03.2011, the builder assured to deliver possession within 36 months with grace period of six months from the date of allotment. The complainant paid total Rs.2469704/- till 04.08.2012. The period of 42 months expired on 05.09.2014. The builder vide letter dated 09.09.2014, informed that the construction has been delayed and possession would be offered till March, 2016. Even this date of delivery possession has also expired. Then the complaint was filed, claiming deficiency in service.
6. In spite of service of the notice, the appellant did not file its written reply within time as prescribed under Section 13 (2) of the Consumer Protection Act, 1986 nor appeared before State Commission as such State Commission proceeded exparte against the appellant. The appellant filed written reply after expiry of statutory period, which was not taken on record.
7. The complainant filed Affidavit of Evidence of Suranjana Borthakur and documentary evidence. State Commission, vide impugned judgment dated 13.11.2018, held that the complainant had deposited Rs.2469704 till 04.08.2012 out of total consideration of Rs.2557900/-. Due date of possession was 05.09.2014. The construction was not completed till the date. On these findings, the complaint was allowed and the order as mentioned above has been passed. Hence Jaiprakash Associates Limited has filed this appeal.
8. In the appeal, it has been stated that the project "Kosmos" belonged to Jaypee Infratech Limited and the appellant was its agent. IDBI Bank instituted a proceeding under Insolvency and Bankruptcy Code, 2016 against Jaypee Infratech Limited before National Company Law Tribunal, Allahabad, in which, the Tribunal imposed moratorium vide order dated 09.08.2017 and appointed Interim Resolution Professional. Suranjana Borthakur (the respondent) submitted her claim of Rs.2469704/- on 23.08.2017 before Interim Resolution Professional. Various home buyers in the projects of Jaypee Infratech Limited also submitted their claims. Home buyers are financial creditors within the meaning of Section 5 (7) read with Explanation to Section 5 (8) (f) to Insolvency and Bankruptcy Code, 2016. National Building Construction Corporation of (India) Ltd. has submitted a plan for completion of the projects of Jaypee Infratech Limited, which was approved by Committee of Creditor on 17.12.2019. However, Supreme Court set aside this plan. Thereafter, National Company Law Tribunal invited fresh plan for completion of the project. Suraksha Realty Limited submitted its plan on 07.06.2021. Committee of Creditor approved the plan of Suraksha Realty Limited on 09.07.2021. Under this plan, Suraksha Realty Limited proposed to complete the project "Kosmos" within 14 months and the home buyers would be given possession of their flats without any delayed compensation.
9. The counsel for the appellant submitted that the project "Kosmos" belonged Jaypee Infratech Limited. National Company Law Tribunal, Allahabad has declared moratorium against Jaypee Infratech Limited, vide order dated 09.08.2017 under the Code, 2016 and the proceeding is still going on. Section-63 bars jurisdiction of Civil Court and by virtue of Section 238, the provisions of the Code, 2016 have overriding effect. Supreme Court in Hirakund Industrial Works Vs. Varsha Fabrics (P) Ltd. (2020) 14 SCC 198 and Ghanshyam Mishra and sons. Pvt. Ltd. Vs. Edelweiss ARC Ltd. (2021) 9 SCC 657, held that the provisions of the Code, 2016 had overriding effect over all other statute including Consumer Protection Act, 1986. The remedy of the home buyer is to submit his claim before Interim Resolution Professional. Suranjana Borthakur has submitted his claim of Rs.24697047/- along with interest, on 23.08.2017 before Interim Resolution Professional. Home buyers are 'financial creditors' within the meaning of Section 5 (7) read with Explanation to Section 5 (8) (f) of the Code, 2016. Committee of Creditors approved the plan of Suraksha Realty Limited on 09.07.2021, under which, Suraksha Realty Limited proposed to complete the project within 14 months and the home buyers would be given possession of their flat without any delayed compensation. Resolution of approval of the plan is binding on all 'financial creditors'. In view of moratorium dated 09.08.2017, State Commission ought to have abated the proceeding of the complaint before it. Some of the home buyers filed writ petition before Supreme Court, i.e. in Chitra Sharma and others Vs. Union of India and others, (2018) 18 SCC 575, by final order, Supreme Court declined to disburse the amount deposited by the appellant to the home buyers of Jaypee Infratech Limited, holding that home buyers were 'financial creditors' and member of Committee of Creditors and directing them to submit their claim before Interim Resolution Professional. Supreme Court in Innoventive Industries Limited Vs. ICICI Bank and anr., (2018) 1 SCC 407, held that the Code, 2016 is a complete code. Under Section-28 of the Code, 2016, Committee of Creditors supervises the affairs of Interim Resolution Professional, in respect of corporate debtor. Under Section 30(4) of the Code, 2016, the resolution plan has to be approved by Committee of Creditors by a majority voting share of at least 66%. In the present case, there were more than 21000 home buyer's votes. Committee of Creditors has approved the plan of Suraksha Realty Limited on 09.07.2021, under which, home buyer would be given possession of their flat. This is binding upon them as held by Supreme Court in Jaypee Kensington Boulevard Apartment Welfare Association and others Vs. NBCC (India) Ltd. and ors., (2021) SCC OnLine SC 253. In Committee of Creditors of Essar Steel India Ltd. Vs. Satish Kumar Gupta, (2020) 8 SCC 531, held that Committee of Creditors alone determines its feasibility and viability based on its own commercial wisdom. Even National Company Law Tribunal has limited jurisdiction to interfere with the approved plan. It is not open for the home buyer to claim flat from Jaypee Infratech Limited and also take refund from Jayprakash Associates Limited. Supreme Court in SAIL Vs. Union of India, (2006) 12 SCC 233, held that a litigant is estopped from raising inconsistent and mutually destructive plea. Relying upon Development Agreement dated 01.05.2009, executed between Jaypee Infratech Limited and Jaiprakash Associates Limited, in which task of development, construction, marketing, sale etc. were assigned to Jaiprakash Associates Limited as well as various clauses of provisional allotment letter and Standard Terms and Condition, it has been submitted that Jaiprakash Associates Limited was an agent of Jaypee Infratech Limited. The home buyer paid entire money to Jaypee Infratech Limited. This Commission has taken view that the person, who had received money, was liable to return it. In view of Section 230 of Contract Act, 1872, recovery proceeding cannot be initiated/continued against an agent for the acts of a disclosed principal. He relied upon the judgments in Marine Container Services South Pvt. Ltd. Vs. Go Go Garments, (1998) 3 SCC 247, Prem Nath Motors Vs. Anurag Mittal, (2009) 16 SCC 274, Vivek Automobiles Vs. Indian Inc., (2009) 17 SCC 657, for the proposition that an agent cannot be held liable for the acts of a disclosed principal. Clause-9.1.5 of Standard Terms and Conditions provides for return of the money without any interest or compensation and earnest money. State Commission has illegally directed for payment of interest @18% per annum. Delay was caused for the reasons of force majeure and the period was liable to be extended under Clause-7.1 of Standard Terms and Conditions. The judgments of this Commission in CC/1495/2015, Arvind Dhingra Vs. JAL (decided on 01.10.2018) has been set aside by Supreme Court. CC/2194/2016 Anish Singhal Vs. JAL (decided on 01.10.2019) was not related to the project of Jaypee Infratech Limited. Judgement in CC/11320-11329/2018 Gaurav Goel & anr. vs. JAL was challenged in Civil Appeal Diary No. 5804 of 2020, which was decided in terms of settlement vide order dated 25.10.2021. Judgment in CC/976/2017 Rajeev Kumar Singh Vs. JAL, (decided on 15.06.2020) has been stayed by Supreme Court in Civil Appeal No.4724-4725 of 2021, vide order dated 16.08.2021. None of these judgments can be considered as binding precedent. Judgment of Anjali Rathi Vs. Today Homes, (2021) SCC OnLine SC 729, is distinguishable as the promoter had given undertaking before Supreme Court to bear the liability, in that case. Jaypee Infratech Limited was necessary party but was not impleaded in the complaint, which was liable to be dismissed on this ground.
10. The complainant does not dispute that National Company Law Tribunal, Allahabad has declared moratorium against Jaypee Infratech Limited, vide order dated 09.08.2017 under the Code, 2016 and the proceeding was going on. However, the complainant argued that Jaiprakash Associates Limited was one of a joint promisor as such he is severally liable to refund the amount under Section 43 of the Contract Act, 1872. Jaiprakash Associates Limited was the 'promoter" as defined under the Real Estate (Regulation and Development) Act, 2016 and the complainant is entitled to claim refund of money from him under Section 19 (4) of this Act. The complaint is not liable to be abated due to pendency of insolvency proceeding against Jaypee Infratech Limited as the appellant is independently liable to return the money.
11. We have considered the arguments of the counsel for the parties and examined the record. First issue arises for consideration as to whether the proceeding before State Commission was liable to be abated against the appellant due to order of National Company Law Tribunal, Allahabad, dated 09.08.2017, declaring moratorium, in the proceeding under the Code, 2016, instituted against Jaypee Infratech Limited, which is still pending. The appellant relied upon Sections 63, 231 and 238 of the Code, 2016, which are quoted below:-
Section-63. Civil Court Not To Have Jurisdiction.- No civil court or authority shall have jurisdiction to entertain any suit or proceeding in respect of any matter on which, National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code.
Section-231. Bar of Jurisdiction.- No civil court shall have jurisdiction in respect of any matter, in which, the adjudicating authority over the board is empowered by or under this code to pass any order and no injunction shall be granted by any court or authority in respect of any action taken or to be taken in pursuance of any order passed by such adjudicating of the board under this Code.
Section-238. Overriding Effect.- The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
12. These provisions bars the jurisdiction of court/authority in respect of any matter, on which, National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under the Code, 2016. National Company Law Tribunal, while adjudicating 'corporate insolvency resolution process' under the Code, 2016 can declare moratorium against corporate debtor under Section-14, which is quoted below:-
Section-14. Moratorium.- Subject to provisions of sub-sections (2) and (3) on insolvency commencement date, the adjudicating authority shall by order declare moratorium for prohibiting all of the following, namely:-
(a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or authority;
(b) transferring, encumbering, alienating or disposing off by corporate debtor any of the assets or any legal right or beneficial interest therein.
13. Under Section-14 (a), institution of suit etc. against corporate debtor can be prohibited while under Section-14 (b) prohibition can be imposed upon the corporate debtor from transferring etc. its assets. Supreme Court in Chitra Sharma and others Vs. Union of India and others, (2018) 18 SCC 575 and Jaypee Kensington Boulevard Apartment Welfare Association and others Vs. NBCC (India) Ltd. and ors., (2021) SCC OnLine SC 253., did not held that the proceeding against the appellant for refund of money is liable to be abated/stayed due to pendency of proceeding under the Code, 2016, against Jaypee Infratech Limited. In none of the cases, relied upon by the appellant, it has been held that the proceeding against a promoter or co-promisor for refund is liable to be abated/stayed due to pendency of proceeding under the Code, 2016, against Jaypee Infratech Limited. Aforesaid provisions of the Code, 2016 bar suit etc. against corporate debtor only not against the appellant, who was not a corporate debtor.
14. No doubt, the plan of Suraksha Realty Limited dated on 07.06.2021, under which, home buyers would be given possession of their flat, has been approved by Committee of Creditors on 09.07.2021 but it is merely a proposal. Once the home buyer is refunded of his entire dues, then it is very well open to Jaypee Infratech Limited/Interim Resolution Professional to deny possession of the flat to him. Section-28 and 30 or any other provision of the Code, 2016 does not create any bar in this respect. The complainant submitted claim before Interim Resolution Professional under compulsion and he did not choose that remedy. The consumer complaint against the appellant for refund is not liable to be abated/stayed due to order of National Company Law Tribunal, Allahabad, dated 09.08.2017, nor the remedy of the complainant against the appellant is barred due to approval of plan.
15. Section 43 of the Contract Act, 1872 and the relevant provisions of the Real Estate (Regulation and Development) Act, 2016 are quoted blow:-.
"Section 43. Any one of joint promisors may be compelled to perform- When two or more persons make a joint promise, the promise may, in the absence of express agreement to the contrary, compel any [one or more] of such joint promisors to perform the whole of the promise.
Each promisor may compel contribution.- Each of two or more joint promisors may compel every other joint promisor to contribute equally with himself to the performance of the promise, unless a contrary intention appears from the contract.
Sharing of loss by default in contributions.- if any one of two or more joint promisors makes default in such contribution, the remaining joint promisors must bear the loss arising from such default in equal shares.
Explanation- Nothing in this section shall prevent a surety from recovering, from his principal, payments made by the surety on behalf of the principal, or entitle the principal to recover anything from the surety on account of payment made by the principal.
The Real Estate (Regulation and Development) Act, 2016
Section: 2 (zk) "promoter" means,--
(i) a person who constructs or causes to be constructed an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or
(ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or
(iii) any development authority or any other public body in respect of allottees of-- (a) buildings or apartments, as the case may be, constructed by such authority or body on lands owned by them or placed at their disposal by the Government; or
(b) plots owned by such authority or body or placed at their disposal by the Government,
for the purpose of selling all or some of the apartments or plots; or (iv) an apex State level co-operative housing finance society and a primary co-operative housing society which constructs apartments or buildings for its Members or in respect of the allottees of such apartments or buildings; or
(v) any other person who acts himself as a builder, coloniser, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or
(vi) such other person who constructs any building or apartment for sale to the general public.
Explanation.--For the purposes of this clause, where the person who constructs or converts a building into apartments or develops a plot for sale and the person who sells apartments or plots are different person, both of them shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified under this Act or the rules and regulations made thereunder;"
Section 19. Rights and duties of allottees; (1) ............
(2) ....................
(3) .....................
(4) The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under this Act, from the promoter, if the promoter fails to comply or is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of this Act or the rules or regulations made thereunder.
16. Under Development Agreement dated 01.05.2009, task of development, construction, marketing, sale etc. of the various projects of Jaypee Infratech Limited were assigned to Jaiprakash Associates Limited, who was also sharing the profit on cost plus basis. Under Provisional allotment letter and Standard Terms and Conditions, Jaiprakash Associates Limited has power to cancel allotment of the home buyer. In paragraph-8 (ii) of the written reply filed in CC/347/2016, the appellant has stated that Jaypee Infratech Limited was its subsidiary company. In paragraph-2 of memorandum of appeal in FA/380/2019, the appellant claimed to be holding company of Jaypee Infratech Limited. However, the appellant argued that it was an agent of Jaypee Infratech Limited under Development Agreement.
17. The Real Estate (Regulation and Development) Act, 2016, has been enacted to provide better protection to the home buyers in efficient and transparent manner. The appellant falls within the definition of the promoter under this Act. The home buyer is entitled to claim refund of money with interest from the appellant under Section-19 (4) of the Real Estate (Regulation and Development) Act, 2016. The provisions of the Code, 2016 do not bar initiation of proceeding and its continuation for refund against the promoter. Real Estate (Regulation and Development) Act, 2016 is a special law. Even if, for the sake of arguments, it is taken that the appellant was an agent of Jaypee Infrateck Limited under the Development Agreement, then also the appellant is falling within the definition of "promoter" as given under Real Estate (Regulation and Development) Act, 2016. Special Law will prevail over general law as held by Supreme Court in Vodaphone Idea Cellular Ltd. Vs. Ajay Kumar Agrawal, (2022) 6 SCC 496. The position of the appellant as promoter and liability to refund Section-19 (6) of Real Estate (Regulation and Development) Act, 2016 will override over its position as an agent of Jaiprakash Infratech Limited. The appellant being a co-promisor is jointly and severally liable to refund the money to the home buyer under Section 43 of the Contract Act, 1872. In Pioneer Urban Land and Infrastructure Ltd. and Ors. Vs. Union of India, (2019) 8 SCC 416, held that RERA and IBC are parallel remedy.
18. Supreme Court in Bank of India Vs. Ketan Parekh, (2008) 8 SCC 148 and S. Vanitha Vs. Deputy Commissioner, Bengaluru, 2020 SCC OnLine SC 1023, held that the cases might arise, where both the enactments have the non-obstante clause, then in that case, proper perspective would be that one has to see the subject and the dominant purpose for which the special enactment was made and in case the dominant purpose is covered by that contingency then notwithstanding that the Act might have come at a later point of time, still the intension can be ascertain by looking to the objects and reasons.
19. Relying upon the judgments of this Commission in CC/1702/2016 Shalabh Nigam Vs. Orris Infrastructure Pvt. Ltd. and Ors. (decided on 06.05.2019) and CC/3879-3880/2017 Deepak Agrawal and Ors. Vs. Three C Shelters (decided on 21.01.2020), the counsel for the appellant submitted that the person who had received the money would be liable to refund. We respectfully disagree with it, inasmuch as it has not taken notice of Section 43 of the Contract Act, 1872, where co-promisor is jointly and severally liable, Section-19 of Real Estate (Regulation and Development) Act, 2016, where the promoter is individually liable and well settled principle of law of tort relating to vicarious liability. (See Canara Bank Vs. Canara Sales Corporation, (1987) 2 SCC 666 and Pradeep Kumar Vs. Post Master General, (2022) 6 SCC 351.) As such these cases are per in curium.
20. Suraksha Realty Limited in its Plan dated 09.07.2021 proposed the complete the project within 14 months and the home buyers would be given possession of their flats without any delayed compensation. Due date of possession was 05.09.2014 as per allotment letter dated 05.03.2011. Supreme Court in Banglore Development Authority Vs. Syndicate Bank, (2007) 6 SCC 442, Fortune Infrastructure Vs. Trevor D'Lima, (2018) 5 SCC 442, Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, 2019 SCC OnLine SC 438 and Pioneer Urban Land & Infrastructure Ltd. Vs. Govind Raghavan, (2019) 5 SCC 725, held that a home buyer cannot be made to wait for possession of the flat for indefinite period.
21. In view of law laid down by Supreme Court, the home buyer is entitled to claim refund of his money along with interest in case of unreasonable delay in handing over possession. However, State Commission has awarded interest @18% per annum, which is on higher side. Compensation of Rs.20000/- for mental agony was also not payable. Supreme Court in Banglore Development Authority Vs. Syndicate Bank, (2007) 6 SCC 442, held that in the matter of contractual obligation, there is no scope for compensation for mental agony and harassment. In DLF Homes Panchkula Pvt. Ltd. Vs. D.S. Dhanda, II (2019) CPJ 117 (SC) held when interest is awarded as compensation in the cases of refund of money, then awarding additional compensation was not justified. Now Supreme Court in the cases of Ireao Grace Realtech (P) Ltd. Vs. Abhishek Khanna, (2021) 3 SCC 241 and Civil appeal No.2324 of 2021 M/s. Barnala Builders and Property Consultants Vs. Lt.Col. Sameer Balodi (decided on 06.06.2021), fixed the interest @9% per annum in the cases of refund.
22. Under the law, the appellant is individually liable to return entire money along with interest to the home buyers as such the complaint is not liable to be dismissed for non-joinder of Jaypee Infratech Limited as Order-1, Civil Procedure Code, 1908 has not been applied under Consumer Protection Act, 1986.
ORDER
In view of the aforesaid discussions, the appeal is partly allowed. The order of State Commission dated 13.11.2018 is modified. The appellant is directed to refund entire amount deposited by the respondent with interest @9% per annum from the date of respective deposit till the date of actual payment, within a period of two months from the date of this judgment. The respondent will also be entitled for a consolidated cost of Rs.20000/-.
...................... C. VISWANATH PRESIDING MEMBER ......................J RAM SURAT RAM MAURYA MEMBER