National Consumer Disputes Redressal
Perin Hills Bazun Dittia & Anr. vs M/S. Emaar Hills Township Pvt. Ltd. & ... on 9 March, 2016
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 355 OF 2014 1. PERIN HILLS BAZUN DITTIA & ANR. R/o. LA Creative Heights Apartments, S-02, H. No. 8-2-696 & 697, Road No. 12, Banjara Hills, Hyderabad - 500 034. ...........Complainant(s) Versus 1. M/S. EMAAR HILLS TOWNSHIP PVT. LTD. & ANR. Rep. By its Authorized Signatory,
Manikonda Village Gachibowli, Hyderabad 2. M/s. Emaar MGF Land Ltd., ECE House 28, Kasturba Gandhi Marg, New Delhi -110 001. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE DR. B.C. GUPTA, MEMBER
For the Complainant : Mr. Anish Virmani, Advocate For the Opp.Party : For Opposite Party No. 1 : Mr. Atul Sharma, Advocate and
Ms. Isha J. Kumar, Advocate
For Opposite Party No. 2 : Mr. Aditya Narain, Advocate
Mr. Arnav Narain, Advocate
Mr. Siddharth Matai, Advocate
Dated : 09 Mar 2016 ORDER
HON'BLE MR. JUSTICE V.K.JAIN, PRESIDING MEMBER
1.Pursuant to a Memorandum of Understanding dated 06.11.2002, a collaboration agreement dated 19.08.2003 and a supplementary agreement dated 19.08.2005 between Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC) and Emaar Properties, PGSC, Dubai, a Special Purpose Vehicle, namely Emaar Hills Township Pvt. Ltd. (Opposite Party No. 1) was formed, with equity participation to the extent of 26% from APIIC and 74% from Emaar PGSC. Andhra Pradesh Industrial Infrastructure Corporation Ltd. transferred certain land to opposite party no. 1 by way of a conveyance deed dated 28.12.2005. Opposite party no. 1 entered into development agreement dated 03.12.2006 with opposite party no. 2 namely Emaar MGF Land Ltd., for development of the said land and construction of flat thereon.
The complainant agreed to purchase a residential flat in the aforesaid project from the opposite parties for a total sale consideration of Rs. 1,91,85,362/-, which was later reduced to Rs. 19021426/-. An allotment letter dated 30.07.2008 was issued to the complainants. The complainants entered into a sale agreement for purchase of the said flat alongwith a construction agreement for construction of the said flat. As per the terms of the construction agreement, the construction was to be completed and possession of the flat was to be delivered to the complainants within 36 months from the date of the agreement. The builder however, had a grace period of six months for this purpose, meaning thereby that after completing the construction, possession of the flat was to be delivered to the complainants latest by 31.10.2011.
2. The case of the complainant is that on visiting the project site, they found that there has been almost no development in the area and opposite party no. 2 will not be able to complete the construction of the flat sold to them. The complainants are therefore, before this Commission seeking refund of the amount of Rs. 1,52,21,426/- which they paid to the opposite parties alongwith interest on that amount @ 24% per annum. They have also sought compensation quantified at Rs.1 Crore from the opposite parties.
3. In its written version, opposite party no. 1 has inter-alia averred that the complainants are not its consumers as no consideration was paid by them to it. The entire consideration, according to opposite party no. 1 was paid to opposite party no. 2, which was to construct and deliver the flats to the complainants. It has also taken a preliminary objection that having been filed more than two years from the date of accrual of cause of action, the complaint is barred by limitation. It is also claimed in the reply that due to the embargo created by G.O. No. 9279 dated 08.10.2010 of the Government of Andhra Pradesh, registration of documents in respect of the property in question has been prohibited and vide status quo order passed by the Civil Court in OS No. 655/2010, the construction activity of the flat in question has been stalled.
4. In its reply, opposite party no. 2 has admitted the agreement with the complainants as well as the receipt of consideration from them. Opposite party no. 2 also has placed reliance upon the order passed by the Civil Court in OS No.655/2010 directing status quo with respect to the subject property and the G.O. issued by Government of Andhra Pradesh on 08.10.2010, to justify its inability to complete the construction of the flat.
5. The first question which arises for our consideration in this case is as to whether the complaint is barred by limitation or not. Section 24A of the Consumer Protection Act provides a limitation of two years from the date of accrual of the cause of action in filing a complaint before a Consumer Forum. Admittedly, the possession of the flat was to be delivered to the complainants by 31.10.2011. It was held by the Hon'ble Supreme Court in Meerut Development Authority Vs. M.K. Gupta IV (2012) CPJ 12 that a buyer has a recurrent cause of action for filing a complaint for non-delivery of possession of the plot. A consumer books a residential flat for the purpose of having a shelter over his head and not for the purpose of taking refund at later date with or without interest. If the builder performs all his contractual obligations under the sale agreement, the buyer in such a case would have no right to claim refund and will be entitled only to possession of the flat as per the terms and conditions agreed between the parties. It is only in a case where the builder fails to perform his contractual obligations and deliver possession of the flat to the buyer that he would have a cause of action to seek refund of the money which he has paid to the builder, alongwith appropriate compensation in the form of interest or otherwise. It would be unrealistic to expect a flat buyer to seek refund of the sale consideration paid by him, immediately on expiry of the time period agreed between the parties for delivery of the possession of the flat to him. His purpose behind taking the flat being to have a shelter over his head, he would like to give some more time to the builder in order to enable him to complete the construction and deliver possession of the flat. It is only when he finds that the builder is unable or unwilling to complete the construction and deliver possession to him within a reasonable time from the last date stipulated for delivery of possession, that he would ask the builder to refund the sale consideration paid by him. Therefore, in such a case, the date on which the refund is demanded by the flat buyer for the first time will be the date from which the period of limitation prescribed in Section 24A of the Consumer Protection Act has to be computed, unless the builder has even before the flat buyer asking for a refund, expressed his inability or unwillingness to complete the construction and deliver possession to him. Admittedly, in the present case, the complainant did not seek refund of the sale consideration paid by them, within two years prior to filing of this complaint, the legal notice sent to the opposite parties being dated 18.11.2013. Admittedly, at no stage, the opposite parties expressed their inability or unwillingness to deliver possession of the flat or to give refund to the complainants. Therefore, it would be difficult to say that the complaint is barred by limitation prescribed in Section 24A of the Consumer Protection Act.
6. The next question which arises for our consideration in this case is as to whether the complainants are consumers of opposite party no. 1 or not. The case of opposite party no. 1 in this regard is that since the entire sale consideration was paid only to opposite party no. 2, the complainant cannot be said to be its consumers. We however, find no merit in this contention. Admittedly, both the OPs were parties to the agreement executed with the complainants. Therefore, both of them are bound by the terms and conditions of the said agreement and accordingly, under a contractual obligation, to deliver possession of the flat to the complainants by 31.10.2011. It would in such a case be immaterial as to who was to receive the consideration. What is material is that by entering into agreements with both the opposite parties, the complainants hired or availed the services of both of them for a consideration, though the said consideration was paid only to opposite party no. 2. In a case where two service providers enter into an agreement with a consumer, it is not necessary that the sale consideration should flow to both of them. What is necessary is that the consumer must pay consideration for the services hired by him and if this is so, it would be immaterial whether the consideration is paid to one or both the service providers. We therefore, have no hesitation in holding that the complainants were the consumers of both the opposite parties.
7. Clause 28.2 of the construction agreement reads as under:
28.2 Force Majeure 28.2.1 The Owner and Developer cum General Power of Attorney shall not be liable for any failure to perform its obligations hereunder to the extent that such performance has been delayed, hindered or prevented due to circumstances beyond the control of Owner and Developer cum Power of Attorney, its contractor and subcontractors, hindering but not limited to war, civil war, armed conflict (whether, in all cases declared or undeclared and including the serious threat of same), invasion and acts of foreign enemies; riots, sabotage, blockades and embargoes; civil commotion or rebellion; any act or credible threat of terrorism; any act of God, lightning, earthquake, flood, storm, nuclear, chemical or biological contamination or explosion; plague, epidemic; theft, malicious damage, strikes, lock-outs, shortage of steel, cement etc. or other industrial action of general application; any act of any authority (including refusal or revocation of a license or consent or repossession of part or whole of the Project Land); compliance with any law or government order, rule regulation nor direction; shortage of components, explosion, fire, destruction of machines, equipment, factories and of any kind of installation, break-down of transport telecommunication or electric current.
28.2.2 If at any time during the continuance of this Construction Agreement, the performance in whole or in part by Owner and Developer cum General Power of Attorney of any obligation is prevented or delayed by reason of force majeure events, notice of the happening of any such event will be given by them to the Purchaser within 5 (five days) from the date of occurrence thereof.
28.2.3 the "Force Majeure Period" as determined by the Parties herein shall commence from the date of occurrence of a Force Majeure Event and ending on (i) the date on which the Parties, acting in accordance with the Good Industry Practice, resumes or should have resumed such of its obligations the performance of which was excused or (ii) the Termination Date, as applicable.
28.2.4 During the operation of force majeure events, the obligation of Owner and Developer cum General Power of Attorney hereunder shall be suspended until the termination of such force majeure events.
28.2.5 The Purchaser shall not be entitled to terminate this Agreement if there is default/delay by Owner and Developer cum Power of Attorney due to any force majeure events. The Purchaser shall also not have any claim for damages against the Owner and Developer cum General Power of Attorney in respect of such non-performance.
Relying upon the aforesaid provisions, it was contended by the learned counsel for the opposite parties that since construction was stopped by an order of the Civil Court and registration of the deeds was suspended by the Government of Andhra Pradesh, neither the petitioners are entitled to terminate the agreement and claim refund nor are they liable to pay any compensation either in the form of interest or otherwise to them. Thus, according to the learned counsel, the complainants must necessarily wait till the opposite parties are able to complete the construction of the flat and deliver possession to them irrespective of the time they may take for the purpose. It would be pertinent to note here that the opposite parties were not willing to commit any particular time period for completing the construction and delivering possession to the complainants.
8. A perusal of the order passed by the Civil Court on 15.12.2010 in IA No. 3941 of 2010 in O.S. No. 655/2010 would show that the said Court directed maintenance of status quo with respect to the title suit property. The aforesaid Civil Suit was filed by APIIC. The aforesaid order was challenged by way of CRP No. 5786/2010 filed in Andhra Pradesh High Court. Vide order dated 16.12.2010, the High Court stayed the proceedings in O.S. No. 655/2010. It would thus be seen that as on today, the order of the Civil Court directing maintenance of status quo continues to operate and consequently, the opposite parties cannot go ahead with consideration of the flat which was the subject matter of the agreements with the complainants.
9. Vide G.O. dated 08.10.2010, Government of Andhra Pradesh banned further registration in respect of land in question and in view of the order passed by the Division Bench of the High Court, the said G.O. continues to remain in force. Consequently, the sale deeds in respect of the flats agreed to be sold to the complainants cannot be executed.
In our view, as far as G.O. dated 08.10.2010 is concerned, it could not have come in the way of the opposite parties completing the construction of the flats, though it would not have been possible for them to execute a title deed of the said flats in favour of the complainants. Therefore, the aforesaid G.O. did not justify the delay in construction of the flat agreed to be sold to the complainants. We are however, in agreement that considering the order passed by the Civil Court on 15.12.2010, the opposite party no. 2 could not have gone ahead with the construction of the said flat.
10. The next question which arises for our consideration is as to whether considering all the facts and circumstances of the case including the order passed by the Civil Court, the complainants are entitled to seek refund of the sale consideration paid by them and whether they are also entitled to any compensation in the form of interest on the said amount or not.
11. As would be seen from a perusal of clause 28.2.2 of the construction agreement, the opposite parties were required to give notice of the passing of the said order to the complainants within five days from the date of the order i.e. by 20.10.2010. By not bringing the aforesaid order to the notice of the complainants, the opposite parties committed breach of the terms of the construction agreement. As a result, the complainants are not bound by clause 28.2.5 of the construction agreement which takes away their right to claim damages against opposite parties on account of non-performance due to reasons beyond the control of the said opposite parties. In our opinion, the complainants were seriously prejudiced due to failure of the opposite parties, to intimate the order of the Civil Court to them. Had such intimation been given, it would have been possible for the complainants to apply to the Civil Court to implead them in the suit and vacate the status quo order. Therefore, in our opinion, the complainants are entitled to claim refund of the entire amount which they have paid as sale consideration to the opposite parties.
12. In our opinion, even in case where the builder is unable to complete the construction on account of reasons beyond his control, the purchaser should be entitled to atleast take refund of the principal amount, paid by him to the builder, he not in any manner being responsible for the act which prevents the builder from completing the construction. In such a case, the contract should be treated as frustrated in terms of Section 56 of the Contract Act since it is not known, whether the builder will at all and if so when be allowed to resume construction. If the contract is treated as frustrated, the buyer will be entitled to refund of his money. The opposite parties therefore, ought to have made an offer to the complainants to refund the principal amount paid by them as soon as the status quo order dated 15.12.2010 was passed by the Civil Court. Had that been done, the complainants would have got an opportunity to take refund of the amount which they had paid to the opposite parties and acquire a residential flat in some other project.
13. Coming to the claim for compensation, as noted earlier, the construction was to be completed within 36 months though the opposite parties had a grace period of six months available to them under the agreement. The period of 36 months along with the grace period of six months for completion of the flat and delivery of possession of the flats to the complainants expired on 31.10.2011. The opposite party no. 2 therefore, ought to have carried out substantial work by the time Civil Court passed status quo order on 15.12.2010. The case of the complainants is that there is hardly any development on the site.
14. It has been alleged in para 30 of the complaint that on visiting the site, the complainants found that there was almost no development in the area. Opposite party no. 2 however has refuted the said averment and expressly stated that construction of the subject flat has been completed per schedule and only internal works inside the flat were remaining prior to initiation of the legal proceedings. The opposite party has placed on record a communication sent to the investors in this project. The said communication is Annexure-R2/1 to its written version/reply. It is stated in the aforesaid communication that construction activity was on full swing at the site. The photographs of the project titled 'The Excellsior Boulder Hills' clearly shows super structure of about 12 floors in towers 1, 2, 3 & 4. In the rejoinder, this is not the case of the complainant that the aforesaid photographs do not pertain to the tower in which the flat sold to them was to be located. The payment plan opted by the complainants was a construction linked payment plan as is evident from the statement of account filed by them which shows payments on completion of different stages of the construction. There is a debit of Rs. 826488/- on 30.07.2010 on construction of final roof, followed by two credit entries of Rs. 834753/- each, one on 30.07.2010 and the other on 11.10.2010. The last debit entry is of Rs. 826488/- on internal plastering. No evidence has been led by the complainants to prove that the construction of the super structure was not complete and neither the final roof had been laid nor the internal plastering commenced in the tower in which the flat sold to them was to be located. Therefore, it would be difficult for us to accept the contention that there was hardly any construction activity before the Civil Court passed the status quo order on 15.12.2010.
15. In our opinion, considering that opposite party no. 2 was going ahead with the construction till it came to be stopped by an order of the Civil Court on 15.12.2010, and since there is no material before us to infer that even if the said order had not been passed, the builder would not have been able to complete the construction by 31.10.2011, the complainants who are seeking refund of the money paid by them should not be awarded any interest till 20.12.2010 i.e. till five days from the date on which the Civil Court stayed further construction of the building. However, since the builder failed to intimate the order of the Civil Court to the complainants within five days from the date on which the said order was passed and thereby committed breach of its contractual obligation, it should pay appropriate interest to the complainants on the entire amount deposited by them, with effect from 21.12.2010. Considering the prevailing rates of interest in the market and other facts and circumstances of the case, we are of the view that the builder who has retained without utilizing it, part of the consideration paid to it by the complainants, should pay interest on the entire amount paid by the complainants, @ 10% per annum.
16. The next question which arises for our consideration is as to whether only opposite party no. 1 or both the parties should be directed to make refund and pay compensation to the complainants. Considering the clause 11.1 and 11.2 of the construction agreement, which makes opposite party no. 2 responsible for any loss/damage to the complainants due to any act of omission or commission or any loss or harm caused to them, and also considering the fact that the entire sale consideration is stated to have been paid only to opposite party no. 2, we are of the considered view that the aforesaid payment should be made only by opposite party no. 2.
17. For the reasons stated hereinabove, we direct opposite party no. 2 to refund the entire amount of Rs.1,52,21,426/- to the complainants alongwith simple interest on that amount at the rate of 10% per annum with effect from 21.12.2010 till the date the aforesaid amount alongwith interest in terms of this order is paid. The complaint stands disposed of accordingly.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER