State Consumer Disputes Redressal Commission
Col Sandeep Manhas vs Emerging India Housing Corporation on 4 January, 2024
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UP C-1 Vikrant Khand 1 (Near Shaheed Path), Gomti Nagar Lucknow-226010 Complaint Case No. C/2013/127 ( Date of Filing : 02 Sep 2013 ) 1. Col Sandeep Manhas a ...........Complainant(s) Versus 1. Emerging India Housing Corporation a ............Opp.Party(s) BEFORE: HON'BLE MR. Rajendra Singh PRESIDING MEMBER HON'BLE MR. Vikas Saxena JUDICIAL MEMBER PRESENT: Dated : 04 Jan 2024 Final Order / Judgement Reserved State Consumer Disputes Redressal Commission U.P. Lucknow. Complaint Case No.127 of 2013 Col. Sandeep Manhas s/o CDR O.R. Manhas, Permanent R/o Village & Post Office, Sidhpur, District Kangra, Dharmshala (H.P.) And R/o 2, Army Head Quarters, Singhal Regiment C/o 56 APO, Army Regiment, Meerut (U.P.) ...Complainant. Versus 1- Emerging India Housing Corporation (P) Ltd., through its Managing Director/CEO, Head Office, B-75, Lower Ground, South Extension Part-2, New Delhi-110049 2- Monga Relators Pvt. Ltd., through its Administrative Officer (Sales), S.Co.672, Second Floor, Sector 70, Mohali, Punjab-160071 3- Monga Relators Pvt. Ltd., through its Ankur Sharma (Sales), Administrative Office no.2, 2nd Floor, Mahalaxmi Metro Tower, Sector 4, Vaishali, Ghaziabad-201011 U.P. ...Opp. parties. Present:- 1- Hon'ble Sri Rajendra Singh, Presiding Member. 2- Hon'ble Sri Vikas Saxena, Member. Mr. Neeraj Kumar, Advocate for complainants. None for the opposite parties. Date: 13.2.2024 JUDGMENT
Per Sri Rajendra Singh, Member- This complaint has been filed by the complainant against the opposite parties.
The brief facts of the complaint are that, that the complainant was interested to purchase a flat and he was approached by the opposite party no.3 (Ankur Sharma) as the representative of Emerging India Housing Corporation Pvt. Ltd./Monga Relators. The complainant was assured that the organization and builders are genuine and all papers etc. are approved by local government authorities.
The complainant visited to Chandigarh and was introduced to the opposite party no.2 (Monga Relators Pvt. Ltd.) who was the builder/incharge for building of flats "Emerging Heights", through opposite party no.3 and they demonstrated "A Typical Floor Plan-2BHK Apartment within Fascinating Specification with Artistic Interiors, Additional Features Basis Amenities, Special Facilities" on a piece of paper.
The complainant was shown Government approved lay out plan and to show the genuineness of the Organization, the complainant was also presented with the seal and signatures of Government Official Authorities by the opposite party no.2 and the opposite party no.3. The complainant after going through the plan shown by the opposite parties hence, requested to visit site plan "Emerging Heights-HI" at 115, Greater Mohali, Khrar Landran Road (Punjab) but his request was given no heed and instead of this the complainant was engaged in verbal communication and given "Audio-Visual" presentation, shown attractive pictures and given fake representation. The complainant relying upon the representation given by the opposite party no.2 and opposite party no.3, tendered the allotment form in the name of Emerging India Housing Corporation (P) Ltd., B-75 Lower Ground, Sound Extension, Part-2, New Delhi-49 registered office and Head Office at Mohali and one of the Sales Office at Ghaziabad.
The complainant under influence completed the FORM under instruction of the opposite parties no.2 & 3. The form 'A' in basic terms and condition para-7 mentioned "all payment by the applicant/allottee shall be made to the company through demand draft/cheques drawn upon scheduled banks in favour of Emerging India Housing Corporation (P) Ltd." The complainant relied upon the presentation made by the opposite parties and had agreed to purchase the said flat no.601 situated at 6th floor having built up area 1285 sq. ft. of category-E at the basic sale price of Rs.33,50,000.00. The complainant made payment of 1st installment as desired by opposite parties within stipulated time period for flat no.E-601, Situated at "Emerging Heights, 3rd, 115, Greater Mohali, Kharar Landran Road (Punjab) through cheques as it is shown in following chart :
S.No. Bank/Account No. Paid in favour of Date of cheque Amount Status
1.
Punjab National Bank/ 07290204000440888 E/C 510, Army Base Workshop, U/B Kankar Khera, Meerut U.P. Emerging India Housing Corporation Ltd.
15.07.2012 4,72,675 Cleared
2. Punjab National Bank/ 07290204000440888 E/C 510, Army Base Workshop, U/B Kankar Khera, Meerut U.P. Emerging India Housing Corporation Ltd.
12.06.2012 2,25,000 Cleared
3. Punjab National Bank/ 07290204000440888 E/C 510, Army Base Workshop, U/B Kankar Khera, Meerut U.P. Emerging India Housing Corporation Ltd.
30.06.2012 1,18,816 Cleared Total amount Rupees Five Lacs Sixteen Thousand Four Hundred Ninety One only.
5,16,491 It is pertinent to mention here that the said entire money has been deposited in account of "Emerging India Housing Corporation Pvt. Ltd." through cheques as mentioned in chart 'A' from Punjab National Bank branch at Meerut.
The complainant got installment deposit receipt S. no.02599 for flat no.E-601 receipt dated 25.7.2012 of installment amount Rs.5,16,419.00 as first installment, for plan name A. It is pertinent to mention here that the said receipt no.02599 is not having any reference number nor town/place and the full name signature of the authorized officer.
The complainant had made many requests to the opposite parties to show the status of his flat no.E-601situated at the aforementioned address in para no.12 of the said complaint, but no attention was paid to the request of complainant and opposite parties and they lingered the things. The complainant was informed by the authorized agent, the second installment will be demanded only after when the construction of 6th floor commences but the complainant has been cheated and deceived by the opposite parties by making random and arbitrary demand of Rs.22,33,509.00 and the complainant was put under financial pressure.
The arbitrary and unreasonable demand of full and final payment of Rs.22,33,509.00 was raised by the opposite parties in order to gain quick profits and to further forfeit the hard earned money of the complainant. The complainant spoke to opposite party no.2 about the deliberate ignorance created by/from opposite party no.3 and stated that he want to terminate the agreement on grounds of default in service by the opposite parties.
The complainant demanded to redeem the money advanced by him to the opposite party i.e. Rs.5,16,491.00 and does not want to continue business with the corporation. The complainant has no residential property of his own and was keen to purchase a flat for residential purpose owing to which he booked a flat and provided Rs.5,16,491.00 but further he terminated the agreement due to gross negligence and defective service of the opposite parties and the complaint demanded the above noted amount from the opposite parties. The opposite parties created undue pressure to deduct 20% from Rs.5,16,491.00 but there was no such stipulation the prescribed form that if the complainant withdraw/terminate, the opposite party will deduct 20% from advance money.
The complainant has been deceived as well as he was given physical, mental and financial injury by opposite parties' act of criminal conspiracy, false representation and fraudulent act and defective service.
It is crystal clear from the facts and circumstances of the case that there has been a deficiency in services rendered by the opposite parties and the opposite parties have opted unfair trade practices for selling the flats to the innocent purchasers and deceived the complaint.
The complainant has sent a legal notice through his counsel to the opposite parties on 6.4.2013 that the opposite parties have cheated, did a fraudulent act and act of deficiency in service, hence opposite parties shall return the said deposited amount as mentioned in para 16 'chart A', with an immediate effect. The opposite parties sent a rebuttal through their counsel of the said notice issued by the counsel of the complainant on 26.4.2013 in which the opposite parties are agreed upon to release the money in question after deduction of 20% of the net sale price of Rs.11,25,000.00. This act of opposite parties fall into an ambit of deficiency in service and is a mall practice.
The complainant has visited the opposite party sales office at Ghaziabad in July, 2013 but there was no existence of the said office and neighbors said that the office of the opposite party has been closed. It means the opposite parties have digest the hard money of the complainant and might be of other buyers.
Therefore, it is most respectfully prayed that his Hon'ble Commission may graciously be pleased to pass and order as under:
1- The opposite parties shall be directed to redeem the earnest money without arbitrary deduction of 20% of the said amount.
2- That, earnest money shall be returned along with the interest at rate of 11% to the complainant by the opposite parties.
3- The opposite parties shall be directed to rectify the deficiency in service rendered by the opposite party.
4- The opposite parties shall be directed to pay an amount of Rs.15,00,000.00 to the complainant as a compensation for the mental agony and harassment.
5- The opposite parties shall be directed to stop such unfair trade practice.
6- The opposite parties shall be directed to pay Rs.1,50,000.00 to the complainant as accost of legal expenses.
7- That this Hon'ble Commission may kindly be pass any other order or direction which it may deem fit in the interest of natural justice and equity.
The opposite party no.2 filed his written statement in which the opposite party no.2 stated that the opposite party no.2 never ever had any office at Ghaziabad and the opposite party no.3 has been impleaded on a false, imaginary, non-existent address solely for the purpose manufacturing territorial jurisdiction for the instant complaint. Further, it is pointed out that Shri Ankur Sharma has never been associated in any manner whatsoever with the opposite party no.2, rather he runs a different business in Mohali, Punjab, consequently, the opposite party no.3 being non-existent, is liable to be deleted and the complaint itself is liable to be dismissed for want to territorial jurisdiction.
It is submitted that Shri Ankur Sharma never had any employment with the opposite party no.2 (as aforesaid). It is submitted that after perusing the entire documents and being satisfied with the project of opposite party no.1, the complainant filled the form to apply for purchase of the flat in question. It is also submitted that the agreement was entered into by the complainant with the opposite party no.1 after being fully satisfied regarding the legality, validity, viability, title and bona fides of the project.
It is pointed out that undisputedly and admittedly, all the payments have been made by the complainant to the opposite party no.1 only. It is also pointed out that the 'deliberate ignorance' created by the opposite party no.3 (Ankur Sharma) cannot be fastened upon the opposite party no.2.
It is submitted that sale/purchase of flat does not come within the purview of service, consequently, the complaint itself is not maintainable. It is pointed out that the legal notice has been addressed only to the opposite party no.1 and not the opposite parties no.2 & 3.
It is specifically stated that the opposite party no.2 did not have any authority or permission to receive even a single penny directly from any of the customers of the opposite party no.1, consequently, there is neither any privity of contract between the complainant and answering opposite party no.2 nor any services have been rendered to the complainant on account of lack of any consideration therefore, as such, neither the complainant is a consumer nor the opposite party no.2 a service provider for consideration.
It is submitted that the complainant showed keen interest to purchase a flat in the Group Housing Project of the opposite party no.1 and the opposite party no.2 facilitated the same without charging any penny from the complainant. The opposite party no.2 provided the entire documents, layout plans, various statutory permissions, title papers etc. and only upon total satisfaction in that respect the complainant decided to purchase the flat in question from the opposite party no.1.
It is submitted that the opposite party no.2 did not exceed its brief in any manner whatsoever and never represented itself otherwise that a mere authorized marketer of the opposite party no.1. The opposite party nos.1 & 2 are two separate legal entities and liability of one cannot be fastened another. It is pointed out that payment, construction, possession and all other activities related to the booking made in favor of any customer by opposite party no.1 are within the domain of the opposite party no.1 only the answering opposite party no.2 does not have role or control in any such matter.
The opposite party no.2 has been needlessly impleaded with ulterior motives without any cause of action. Consequently, the complainant is liable to be directed to delete the opposite party no.2 from the array of parties and/or the complaint is liable to be dismissed against it. Also, the opposite party no.3 is non-existent, as such the complainant is liable to be directed to delete the opposite party no.3 from the array of parties and/or the complaint is liable to be dismissed against it. It is pointed out that upon deletion of opposite parties no.2 & 3, the complaint itself would lack territorial jurisdiction and the same would be liable to be dismissed as such.
It is submitted that clause of cancellation as contained in the terms and conditions is part of a binding, legal contract between the complainant and opposite party no.1 and has to be applied accordingly. The complainant cannot be allowed to resile there-from or blow hot and cold at the same time.
In the light of the aforesaid facts and circumstances, the instant complaint is misconceived, baseless, meritless, illegal and not maintainable against the answering opposite party no.2 and is liable to be dismissed as such.
It is submitted that alleged contract was for purchase of a Unit/Flat and not for construction by a site owner with contractor. Consequently, the opposite party is neither service provider nor the complainant a consumer.
In the light of above, the instant proceedings are liable to be dismissed in-limine as not maintainable and without jurisdiction with exemplary costs in favour of the answering opposite party against the complainant.
We have heard Mr. Neeraj Kumar, ld. counsel for the complainant. None appeared for the opposite parties.
We perused the evidence and documents filed by the complainant. No evidence has been filed by the opposite parties.
We have seen the account payee cheque dated 15.07.2012 given to Emerging India Housing Corporation amounting to ₹ 172,675/- by the complainant. After that on 12.06.2012 and 30.06.2012, two cheques of Rs.2,25,000.00 and ₹ 118,816/- were given to the Emerging India Housing Corporation. It shows that total ₹ 516,491/- has been deposited by the complainant with opposite party. This amount has been acknowledged by Emerging India Housing Corporation Private Limited through its receipt no.02599 for flat no.E-601. The total cost of the flat had shown as ₹ 3,350,000/-. A letter has been sent to the director/Chairman, Emerging India Housing Corporation Private Limited by the complainant in which it has been clearly mentioned that Mr Ankur Sharma Mobile no + 919356584888 approached to the complainant on behalf of of Emerging India Housing Corporation and gave presentation of residential flat. Thereafter the complainant visited Chandigarh and met Mr. Ankur Sharma who demonstrated the flat. So it is clear that opposite parties were acting on behalf of the Emerging India Housing Corporation. So all the opposite parties are involved in this matter and no one can be separated from the other.
The opposite parties have not filed any document regarding delivery of possession of the apartment. As per admission of the opposite party and his receipt dated 25.07.2012 we may take this date as the commencing period for delivery possession. No date has been specified for giving delivery of possession. In such case we have to see the judgment of the Hon'ble Supreme Court which is mentioned hereinbelow.
Hon'ble Supreme Court in civil appeal number(s) 3533-3534 of 2017, M/s Fortune infrastructure (Now known as M/s Hicon Infrastructure) & Anr. Vs. Trevor D'Lima & Ors., Judgment 12.03.2018 has held:
"Moreover, a person cannot be made to wait indefinitely for the possession of the flats allotted to them and they are entitled to seek the refund of the amount paid by them, along with compensation. Although we are aware of the fact that when there was no delivery period stipulated in the agreement, a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a time period of 3 years would have been reasonable for completion of the contract i.e., the possession was required to be given by last quarter of 2014. Further there is no dispute as to the fact that until now there is no redevelopment of the property. Hence, in view of the above discussion, which draw us to an irresistible conclusion that there is deficiency of service on the part of the appellants and accordingly the issue is answered. When once this Court comes to the conclusion that, there is deficiency of services, then the question is what compensation the respondents/complainants is entitled to ?"
Now it has become clear that the possession was to be delivered within three years from 25.07.2012 meaning thereby that the possession should have been given on or before 24.07.2015 to the complainant with all the required NOC's and Completion and Occupancy Certificates. There is nothing about regarding offer of possession. It is very important to get the different NOC's like pollution control Department, civil aviation department, fire department, regarding lifts but no such copy of any NOC has been filed. Further if the apartment of the concerned tower has been completed, completion certificate is necessary and before giving possession to the allottee, occupation certificate is necessary. Regarding completion certificate and occupancy certificate, the following article is worth reading along with the judgment of Hon'ble Supreme Court.
COMPLETION / OCCUPANCY CERTIFICATE When buying a home, it is vital to obtain documents, such as the Occupancy Certificate (OC) and Completion Certificate (CC). These are essential documents that allow you to mortgage or sell your home. Hence, homebuyers are advised to take possession of their flat or property only after these documents have been issued.
According to Vikas Bhasin, CMD, Saya Group, "Completion Certificate and Occupancy Certificate are some of the most important documents for a home buyer. Civic authorities can evict the occupants in case of non-availability of the necessary approvals. Before investing in a property, people must be doubly assured that all the certificates and approvals are in place."
Let us dive a little deeper into the details of these documents and their importance before you make a move to buy your dream home.
Owning a home is the culmination of years of savings, research, and paperwork. After patiently waiting for the construction to be complete, you finally register the property and take possession of your flat. But what if your dream home is declared unauthorised, and you are evicted by the authorities? This is not as far-fetched as it sounds. This nightmare could turn into reality without a crucial link in the property sale process - the Occupancy Certificate (OC).
The majority of apartments in different Indian cities have been occupied by owners without any occupancy certificate. This oversight can turn into a costly mistake, jeopardising the legal status of your dream home. The importance of the occupancy certificate cannot be overstated as it seals the legal status of your property and protects your ownership rights.
Decoding legal documents To understand the importance of an occupancy certificate and other legal documents, let's decode the legal jargon and understand their meaning in simple terms. Here's a ready reckoner of the most important legal documents related to your property:
Occupancy Certificate An OC certifies that the construction of the building has complied with the approved plans. It is issued by local municipal authorities or the building proposal department once the building has been completed and is ready to be occupied. Simply put, without an OC, your building has not been awarded a 'pass certificate'.
Completion Certificate A Completion Certificate (CC) is issued only after the construction meets other building standards like distance from the road, the height of the building, and rainwater harvesting system. A CC alone cannot legalise occupation; the OC is a must.
Commencement Certificate If you are buying an under construction property, make sure you check the Commencement Certificate before signing the agreement. Many builders do not wait for a Commencement Certificate. This is illegal and can create serious problems in obtaining an OC at a subsequent stage.
Why is it unsafe to buy a flat without OC?
In the absence of a valid OC, the local municipal body can initiate serious action against flat owners. In 2014, residents of a well-known building complex in Mumbai's upscale Worli area were hit with a bolt from the blue after their complex was declared unauthorised. At the time of possession, buyers overlooked the issuance of an OC from the builder. It was only after that they were forced to evacuate their flats that the writing on the wall became clear to them.
This is just one instance, and if buyers are not careful about getting the OC, they may face the following repercussions:
• In the absence of a valid OC, your building can be demolished as it can be classified as an unauthorised structure.
• The OC is crucial while applying for a home loan or loan to purchase a resale flat. If you wish to sell or hypothecate the property after a lapse of time, you will not be able to do so without a valid OC.
• The water connection, sanitary connection or electricity supply can be disconnected in the absence of an OC.
How to obtain an OC The OC is obtained from local municipal bodies by submitting an OC application form along with the following documents:
• Commencement Certificate • Completion Certificate • Built and Section plan • NOC for fire and pollution • Area calculation sheet of floor signed by an authorised architect • Photographs of the completed building • Tax assessment with tax paid receipt • Photographs of rain harvesting and solar panels • Copy of the sanctioned plan After submitting the form, authorities inspect the complex and confirm if it has conformed to the approved plan before issuing an OC. Legally and ideally, a builder should submit an application with the municipal commissioner for the OC within 30 days of completion of the property.
How you can apply for an OC As a flat owner, you can also apply for an OC by approaching the local corporation or municipality, and if all approvals are in place, an OC is issued within 30 days of application. You will have to submit the same documents as the builder to procure an OC.
Know your rights If the builder refuses to provide an OC, you should consider exercising your legal rights. You can issue a notice against the builder asking him to apply and hand over the copy of the OC within a month. You can also approach consumer forums and file a writ petition demanding the OC.
Some canny builders simply present the receipt of the OC and dupe gullible customers. But you shouldn't accept anything less than the actual OC as the receipt may be dated.
Landmark legislations like the Real Estate Regulatory Act (RERA) have been passed to regulate the sector, promote transparency and protect consumer rights. However, consumers must be vigilant and understand their rights and responsibilities towards owning a property. Documents like OC are essential and ensure the security of your investment.
Going forward, real estate experts believe that the OC should be made mandatory for the registration of flats and essential services. Until then, buyers must ensure builders get all the necessary approvals before handing over a property.
A Completion Certificate (CC) is an important legal document that certifies that a building is constructed according to the laid down norms and master plan of the city. This document has all the information related to the project, such as the building materials used, building height, and building plan, among other things like provision for green belt.
In a nutshell, this document certifies that the building adheres to all the prevailing rules and has not violated any norms. In fact, this document is to be shown compulsorily to the authorities to obtain electricity and water connection.
Builders are allowed to obtain a provisional Completion Certificate when there are minor works left in the project. Authorities then provide a provisional certificate valid for six months. After the expiry of the six months, the developer is bound to get a final CC.
Who issues a Completion Certificate?
Local authorities issue the Completion Certificate after a thorough inspection of the premises. If the developer violates no rules, authority issues a Completion Certificate.
Why is Completion Certificate important?
Buyers must be aware of the fact that if they are buying or moving into a property that does not have a Completion Certificate, they might be making a risky investment choice. The civic authorities hold the power to slap heavy penalties on the developer, leading to stalling or cancellation of the registered layout of the project. In case the building is already occupied, residents may also have to face eviction in extreme cases.
Difference between Occupancy Certificate and Completion Certificate Occupancy Certificate examines and certifies a property for adherence to bye-laws, civic amenities, electricity, sanitation and other clearances. On the other hand, a Completion Certificate is a document that certifies that a property is fit for possession by the buyers.
Clarifying the difference, Deepak Kapoor, Director, Gulshan Homz, says, "Completion Certificate is just a reaffirmation that the building has been constructed as per the building byelaws and the layout plan has been approved by various concerned authorities. Occupation Certificate signals that there is no violation of building construction norms, and thus, the structure is safe for occupants.
Generally, these documents are not required at the time of registry, and hence, buyers tend to overlook or ignore these. But for their own benefit and peace of mind, it is warranted that buyers of both ready-to-move-in as well as under-construction properties check these documents before taking possession. This would help avoid any unnecessary dispute or confrontation in the future."
Hon'ble Supreme Court on occupancy certificate by the builders.
Supreme Court: The bench of Dr. DY Chandrachud* and AS Bopanna, JJ has held that failure on the part of the builder to provide occupancy certificate is a continuing breach under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 and amounts to a continuing wrong.
Factual Background The appellant is a co-operative housing society. The respondent constructed Wings 'A' and 'B' and entered into agreements to sell flats with individual purchasers in accordance with the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (MOFA). The members of the appellant booked the flats in 1993 and were granted possession in 1997. According to the appellant, the respondent failed to take steps to obtain the occupation certificate from the municipal authorities.
There was an obligation on the respondent to provide the occupancy certificate and pay for the relevant charges till the certificate has been provided, however, the respondent time and again failed to provide the occupancy certificate to the appellant society. For this reason, a complaint was instituted in 1998 by the appellant against the respondent. The NCDRC on 20 August 2014 directed the respondent to obtain the certificate within a period of four months. Further, the NCDRC also imposed a penalty for any the delay in obtaining the occupancy certificate beyond these 4 months. Since 2014 till date, the respondent failed to provide the occupancy certificate.
In the absence of the occupation certificate, individual flat owners were not eligible for electricity and water connections. Due to the efforts of the appellant, temporary water and electricity connections were granted by the authorities. However, the members of the appellant had to pay property tax at a rate 25% higher than the normal rate and water charges at a rate which was 50% higher than the normal charge.
Analysis Obligations of Promoter under MOFA Section 3 of the MOFA imposes certain general obligations on a promoter. These obligations inter alia include making disclosures on the nature of title to the land, encumbrances on the land, fixtures, fittings and amenities to be provided, and to not grant possession of a flat until a completion certificate is given by the local authority. The responsibility to obtain the occupancy certificate from the local authority has also been imposed under the agreement to sell between the members of the appellant and the respondent on the latter.
Sections 3 and 6 of the MOFA indicate that the promoter has an obligation to provide the occupancy certificate to the flat owners. Apart from this, the promoter must make payments of outgoings such as ground rent, municipal taxes, water charges and electricity charges till the time the property is transferred to the flat-owners. Where the promoter fails to pay such charges, the promoter is liable even after the transfer of property.
Limitation In the instant case, the appellant submitted that since the cause of action is founded on a continuing wrong, the complaint is within limitation.
Section 24A of the Consumer Protection Act 1986 provides for the period of limitation period for lodging a complaint. A complaint to a consumer forum has to be filed within two years of the date on which the cause of action has arisen.
Section 22 of the Limitation Act 1963 provides for the computation of limitation in the case of a continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues. A continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. The continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong.
The appellants, therefore, were entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation.
"Rejecting the complaint as being barred by limitation, when the demand for higher taxes is made repeatedly due to the lack of an occupancy certificate, is a narrow view which is not consonance with the welfare objective of the Consumer Protection Act 1986."
Consumer Section 2(1)(d) of the Consumer Protection Act defines a 'consumer' as a person that avails of any service for a consideration. A 'deficiency' is defined under Section 2(1)(g) as the shortcoming or inadequacy in the quality of service that is required to be maintained by law.
In the present case, the NCDRC had held that the appellant is not a 'consumer' under the provisions of the Consumer Protection Act as they have claimed the recovery of higher charges paid to the municipal authorities from the respondent. Extending this further, the NCDRC observed that the respondent is not the service provider for water or electricity and thus, the complaint is not maintainable.
The respondent was responsible for transferring the title to the flats to the society along with the occupancy certificate. The failure of the respondent to obtain the occupation certificate is a deficiency in service for which the respondent is liable. Thus, the members of the appellant society are well within their rights as 'consumers' to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate.
[Samruddhi Co-operative Housing Society Ltd v. Mumbai Mahalaxmi Construction Pvt. Ltd, 2022 SCC OnLine SC 35, decided on 11.01.2022] Regarding completion certificate, Hon'ble Supreme Court in the case of Faqir Chand Gulati vs Uppal Agencies Pvt. Ltd. & Anr on 10 July, 2008 , Civil Appeal no 3302 /2005 ( July 10, 2008) has said:
"25. Under the agreement, the builder is required to construct the ground floor in accordance with the sanctioned plan, and specifications and the terms in the agreement and deliver the same to the owner. If the construction is part of a building which in law requires a completion certificate or C&D forms (relating to assessment), the builder is bound to provide the completion certificate or C&D forms. He is also bound to provide amenities and facilities like water, electricity and drainage in terms of the agreement. If the completion certificate and C&D forms are not being issued by the Corporation because the builder has made deviations/violations in construction, it is his duty to rectify those deviations or bring the deviations within permissible limits and secure a completion certificate and C&D forms from MCD. The builder can not say that he has constructed a ground floor and delivered it and therefore fulfilled his obligations. Nor can the builder contend that he is not bound to produce the completion certificate, but only bound to apply for completion certificate. He cannot say that he is not concerned whether the building is in accordance with the sanction plan or not, whether it fulfills the requirements of the municipal bye-laws or not, or whether there are violations or deviations. The builder cannot be permitted to avoid or escape the consequences of his illegal acts. The obligation on the part of the builder to secure a sanctioned plan and construct a building, carries with it an implied obligation to comply with the requirements of municipal and building laws and secure the mandatory permissions/certificates.
26. The surviving prayer is no doubt only for a direction to the builder to furnish the completion certificate and C&D forms. It is not disputed that a building of this nature requires a completion certificate and building assessment (C&D forms). The completion certificate and C&D forms will not be issued if the building constructed is contrary to the bye-laws and sanctioned plan or if the deviations are beyond the permissible compoundable limits. The agreement clearly contemplates the builder completing the construction and securing completion certificate. The agreement, in fact, refers to the possibility of deviations and provides that if there are deviations, the builder will have to pay the penalties, that is do whatever is necessary to get the same regularized. Even if such a provision for providing completion certificate or payment of penalties is not found in the agreement, the builder cannot escape the liability for securing the completion certificate and providing a copy thereof to the owner if the law requires the builder to obtain completion certificate for such a building.
27. A prayer for completion certificate and C&D Forms cannot be brushed aside by stating that the builder has already applied for the completion certificate or C&D Forms. If it is not issued, the builder owes a duty to make necessary application and obtain it. If it is wrongly withheld, he may have to approach the appropriate court or other forum to secure it. If it is justifiably withheld or refused, necessarily the builder will have to do whatever that is required to be done to bring the building in consonance with the sanctioned plan so that the municipal authorities can inspect and issue the completion certificate and also assess the property to tax. If the builder fails to do so, he will be liable to compensate the complainant for all loss/damage. Therefore, the assumption of the State Commission and National Commission that the obligation of the builder was discharged when he merely applied for a completion certificate is incorrect. Conclusion.
28. The District Forum and National Commission did not examine the matter with reference to facts. The State Commission held that the complaint was not maintainable but purported to consider the factual question in a half-hearted and casual manner. The matter will now have to go back to District Forum for deciding the matter on merits. We, accordingly, allow this appeal as follows:
a) The orders of the National Commission, State Commission and District Forum are set aside.
b) The appellant's complaint is held to be maintainable.
c) The District Forum is directed to consider the matter on merits and dispose of the matter in accordance with law, within six months from the date of receipt of this order.
d) The respondents shall pay costs of Rs.25,000/- to the appellant."
So these certificates are of utmost importance and cannot be brushed aside by the builders. In the present case not a single copy of any certificate has been filed by the opposite party which shows that they failed to comply the legal process as prescribed in the Act.
Now it is clear that the builder could not deliver the possession of the apartment within the promised time as mentioned in the Provisional Allotment Letter. So in such circumstances he is entitled for compensation and interest as per the following case laws. Before discussing the case laws we should know the main object of the Consumer Protection Act.
What are the main objectives of consumer protection act?
The Consumer Protection Act, came into existence and implemented in 1986, provides Consumer Rights to prevent consumers from fraud or specified unfair practices. It safeguards and encourages and gives an opportunity to consumers to speak against insufficiency and flaws in goods and services. If traders, manufacturers and distributors follow any foul trade, this act protects their rights as a consumer.
On which products are these right applicable?
This Protection Act covers entire goods and services of all sectors that are public, private, or cooperative sectors, except those exempted by the central government. The act provides a floor for a consumer where one can file their complaint against the product and the forum takes an action against the concerned supplier and compensation is granted to the consumer for the inconvenience he/she has encountered.
Objectives of Consumer Protection Act.
To Provide better and all round protection to consumer.
To Provide machinery for the speedy redressal of the grievances.
To Create framework for consumers to seek redressal.
To Provide rights to consumers.
To Safeguarde rights of Consumers.
Let us know more about the rights and responsiblities of consumer.
Consumer Rights.
Listed below are the Rights of the Consumer Right to Safety- Before buying, a consumer can examine on the quality and guarantee of the goods and opt for ISI or AGMARK products.
Right to Choose- Consumer must have the right to choose from a variety and number of goods and in a competitive price Right to be informed- The buyers must be provided with complete information with all the necessary and adequate details of the product, make her/him act wise, and change the buying decision.
Right to Consumer Education- The consumer must be aware of his/her rights and avoid exploitation.
Right to be heard- The consumer will get due attention to express their grievances at a suitable platform.
Right to seek compensation- The consumer has the right to seek or ask for redressal against unfair and inhumane practices or exploitation of the consumer.
Consumer Responsibilities.
Responsibility to be aware - A consumer has to be careful of the safety and quality of products and services before purchasing.
Responsibility to think independently- Consumer should be well bothered about what they want and need and hence make independent choices.
Responsibility to speak out- The buyer should be fearless to speak out their problems and tell to traders what they exactly want Responsibility to complain- It becomes the consumer's responsibility to express and file a complaint about their dissatisfaction with goods or services in a sincere and fair manner.
Responsibility to be an Ethical Consumer- Consumer must be fair and not engage themselves with any deceptive practice.
The Consumer Protection Act 1986 was enacted to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of Consumers Councils and other authorities for the settlement of consumers' disputes and for matters connected therewith (Preamble).
The Act Inter alia, seeks to promote and protect the rights of consumers such as --
(1) right to be protected against marketing of goods which are hazardous to life and property;
(2) right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices;
(3) right to be assured, wherever possible, access to variety of goods at competitive prices;
(4) right to be heard and to assured that customers' interests will receive due consideration at appropriate forums.
(5) Right to seek redressal against unfair practices or unscrupulous exploitation of consumers; and (6) Right to consumer education The objects are sought to be promoted and protected by the Consumer Protection Councils to be established at the Central and State levels.
The Act applies to all goods and services, except if otherwise provided by the Central Government by Notification. To provide speedy and simple redressal of consumer disputes, a quasi judicial machinery is set up at the District, State and Central levels. The three tier system of quasi judicial bodies will observe the principle of natural justice and are empowered to give relief of a specific nature and to award, wherever appropriate, compensation to consumers. Penalties for non-compliance of the orders given by the quasi judicial bodies have also been provided.
Thus the Consumer Protection Act is to serve the interests of the consumers. Consumer education and redressal of consumers' grievances are the two aspects of the Act. It makes good the loss a consumer suffers and increases the feeling of responsibility of the manufacturer, trader, supplier or businessman.
The provisions of the Act have to be construed in favor of the consumer to achieve the purpose of enactment as it is social benefit oriented legislation. The primary duty of the Court while construing the provisions of such an Act is to adopt a constructive approach subject to that it should not do violence to the language of the provisions and not contrary to attempted objective of the enactment.
Extent of Consumer Protection:
While other legislations may be either punitive or preventive, the Consumer Protection Act compensates the consumer. The provisions of the Act are in addition to and not in derogation of the provisions of any law at the time being in force (Sec 3). In Maine Container Services South Pvt Ltd v Go Garments 1998 (3) SCC 247 it has been held that the Contract Act applies to all litigants before the Commissioner under the Consumers Protection Act. Passengers traveling in train suffering injuries and loss of Jewelry as a result of assault by unruly crowd are eligible for filing of complaint before State Commission is maintainable notwithstanding the provisions of sections 100 and 103 of Railways Act, 1889. The Consumer Protection Act therefore gives the consumer an additional remedy besides those which may be available under other existing laws. Existence of an arbitration clause in the agreement is no bar to the entertainment of complaint by the Redressal Agency as the remedy under the Act is in addition to the provisions of any other law. However, the Consumer Forums under the Act have not taken over the jurisdiction of civil Courts. If the dispute between the parties is pending in Civil Court no Consumer Forum will adjudicate the dispute. Similarly if evidence be laid by the parties to the dispute is voluminous or complicated the parties will be referred to the appropriate Civil Court.
Consumers Protection Act, thus enshrines the rights of a consumer to be informed about the quality, quantity, potency, price etc., of the goods to be protected against unfair trade practices, to seek inexpensive and expeditious redressal of grievances before the Consumer Forums. Consumer Protection Act is a benevolent piece of legislation to protect a large body of consumers from exploitation.
So it is clear that the consumer petition act is enacted for the consumers, to safeguard their rights and to protect them from the builders.
Before discussing further we have to see the following case laws of the Hon'ble Supreme Court, Hon'ble NCDRC.
Ghaziabad Development Authority v. Balbir Singh In the Supreme Court of India Name of the Case Ghaziabad Development Authority v.
Balbir Singh Citation (2004) 4 SCC 65 Year of the Case 2004 Petitioner Ghaziabad Development Authority Respondent Balbir Singh The case of Ghaziabad Development Authority v Balbir Singh is a landmark decision that laid down certain judicial standards regarding the grounds on which compensation may be awarded, particularly, in matters of allotment of flats/plots by land development authorities. Compensation under consumer protection laws is required to recompense for loss or injury suffered by consumers, and therefore, the quantum of compensation to be awarded would necessarily have to be determined based on the facts and circumstances of each case. This decision set an established precedent on the issue of compensation to be awarded in consumer disputes, and its principles have been relied upon in numerous subsequent cases.
Introduction.
The consumer protection laws establish a redressal mechanism whereby consumers can claim monetary reliefs for defective goods, deficiency in service, and unfair trade practices. Sections 14 and 22 of the Consumer Protection Act, 1986 empower the District, State, and National Consumer Disputes Redressal Commission to "to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party". Such monetary reliefs i.e., compensation awarded would have to be based on the facts and circumstances of each case, since the loss and injury suffered would vary. Given the absence of a straight-jacket formula for the determination of the amount of compensation to be awarded in each case, it follows that there can be no uniformity in the award of compensation.
It is for the Consumer Forum to grant compensation to the extent it finds it reasonable, fair, and proper in the facts and circumstances of a given case according to the established judicial standards where the claimant can establish his charge.[1] These 'established judicial standards' have been laid down in a plethora of cases. The case of Ghaziabad Development Authority v Balbir Singh[2] is a landmark decision that discussed the grounds on which compensation may be awarded, particularly, in matters of allotment of flats/plots by land development authorities. It set an established precedent on the issue of compensation to be awarded in consumer disputes, and its principles have been relied upon in numerous subsequent cases.
Background and Facts of the Case The present case of Ghaziabad Development Authority v Balbir Singh arose out of an appeal directed against the judgment and award passed by the National Consumer Disputes Redressal Commission (NCDRC) awarding an interest @ 18% per annum. The Commission was considering a bunch of matters, the lead being the case of Haryana Urban Development Authority vs. Darsh Kumar, where it held that in cases of deficiency of service by development authorities, the rate of interest awarded must be 18% per annum. Following this, the Commission disposed of subsequent matters by its preceding award. Numerous appeals were filed before the Supreme Court against the decision of the Commission in various cases, primarily against its award of 18% interest.
Since the Supreme Court was considering a wide number of matters relating to allotment of land by development authorities, the facts of each case vary. In some cases, the scheme had gotten canceled after the payment of monies and allotment of flats/plots. Delivery of possession of the flats was therefore refused to the allottees. In some cases, either possession was offered at an increased rate at a much later date possession or was offered but not taken by the party. Possession was not delivered in some cases despite payment of monies and no refusal to deliver possession. In some cases, the construction was of sub-standard quality or it was incomplete, or the authority demanded extra amounts from the party which was paid only by some. In some cases, allotments were made and possession offered of flats/land which was encumbered or occupied by some other party.
The appeal in the Supreme Court was filed due to the Commission granting interest at the rate of 18% per annum irrespective of the type of case or amount of delay and without even going into the facts of the case. Complainants had asked for the refund of amounts wrongly collected and in other cases, asked for a refund of the amounts paid.
Issues Involved Whether the grant of interest at the rate of 18% per annum by the National Consumer Disputes Redressal Commission in all cases is justifiable?
Related Provisions Section 14 of the Consumer Protection Act, 1986 Section 22 of the Consumer Protection Act, 1986 Related Cases The Supreme Court relied upon the case of Lucknow Development Authority v. M. K. Gupta[3] which firstly widened the scope of "service" defined under Section 2(1)(o) of the Consumer Protection Act, 1986 to include the housing construction or building activities carried on by private or statutory bodies.
The Court relied upon the English case Geddis v. Proprietors of Bann Reservoir[4] which gave a wide connotation to the word compensation, holding that "Compensation has not been defined in the Act. According to the dictionary, it means, 'compensating or being compensated; thing given as recompense;'. In a legal sense, it may constitute actual loss or expected loss and may extend to physical mental or even emotional suffering, insult or injury or loss."
Judgment.
The Supreme Court, at the outset, reiterated the position taken in the case of Lucknow Development Authority v. M.K. Gupta, and held that "the Consumer Protection Act has a wide reach and the Commission has jurisdiction even in cases of service rendered by statutory and public authorities". It further held that the power of the NCDRC extends to awarding compensation to consumers for misfeasance in the public office i.e. an act which is oppressive or capricious or arbitrary or negligent provided loss or injury is suffered by a citizen. Therefore, it upheld the appeals filed before it to the extent that it confirmed the jurisdiction of the NCDRC to award compensation in cases of service rendered by statutory & public authorities (the land development authorities in the present case).
As to the issue of whether the grant of interest at the rate of 18% per annum by the NCDRC in all cases is justifiable, the Supreme Court held in the negative. It stated that "the power to and duty to award compensation does not mean that irrespective of facts of the case compensation can be awarded in all matters at a uniform rate of 18% per annum." It held it to be unsustainable. The Court further stated that the "Award of compensation must be under different separate heads and must vary from case to case depending on the facts of each case." The purpose of awarding compensation is to recompense for a loss or injury suffered and such compensation would therefore be proportional to the amount of loss and injury.
While considering the compensation to be awarded to the consumers in cases of deficiency of service by Development Authorities, the Court laid down a range of principles for the determination of the amount of compensation, summarised below:
To award compensation, the Forum or the Commission must determine that service has been deficient and/or misfeasance in public office which has resulted in loss or injury. While no hard and fast rule can be laid down, the Court gave a few instances where the award of compensation would be justifiable, including where possession is not handed over within the intimated period even though allotment is made and the price is paid. In such cases, the loss could be determined based on loss of rent which could have been earned if possession was given. Compensation could also be the scheme has been canceled without any justifiable cause, after the allotment.
Compensation cannot be uniform and to illustrate this, the Court lays down the principle to be followed for the determination of compensation in two cases- - (a) where the delivery of possession is being directed, and (b) where only the monies are directed to be returned or refunded by the Court. In case (a), the compensation for harassment will necessarily have to be less since in a way the aggrieved party is being compensated by an increase in the value of the property he is getting. In case (b) however, the party is suffering a greater loss since he has been deprived of the flat/plot, and his expectation of delivery of possession. He would also be denied the benefit of an increase in the value of land and the compensation thereof. Therefore, the compensation to be awarded in such cases would have to be higher than in case (a).
The Court held that "such compensation has to be worked out after looking into the facts of each case and after determining what is the amount of harassment/loss which has been caused to the consumer."
Compensation would include compensation for physical, mental, or even emotional suffering, insult, or injury or loss.
Awarding of Compensation in the Event of Deficiency in Service Rendered The consumer protection laws have a wide reach and the consumers are entitled to receive compensation for deficiency in services rendered by statutory and public authorities. The Consumer Commissions have been vested with the jurisdiction to award the value of goods or services and compensation. On being satisfied that a complainant is entitled to compensation for loss or injury or harassment or mental agony or oppression, it must direct the authority to pay compensation. A wide discretion has been given to determine the quantum of compensation for any loss or damage suffered by a consumer, to redress any injustice. However, it is a well-established principle that the computation of compensation has to be fair, reasonable, and must reconcile with the loss or injury suffered. The Consumer Forum is cast with the duty to take into account all relevant factors for arriving at the compensation to be paid.
This landmark decision has set a precedent on the matter of compensation to be awarded in matters relating to allotment of land by development authorities and has been relied upon in many subsequent cases of the Supreme Court. In the case of H. P. Housing Board v Varinder Kumar Garg[5] and Haryana Urban Development Authority vs Darsh Kumar[6], the Supreme Court directed the Commission to follow the principles laid down in the case of Ghaziabad Development Authority vs. Balbir Singh in future cases.
Conclusion This landmark decision laid down rudimentary principles and set judicial standards concerning the awarding of compensation and the determination of the quantum of compensation to be awarded. It struck down the mechanical application of a fixed rate of interest at 18% per annum by the National Commission in numerous cases, asserting that there can be no hard and fast rule.
The principles enunciated go a long way in ensuring that consumers are compensated appropriately and proportionally for the loss and injury suffered. This decision has further strengthened the consumer protection laws by bringing clarity to how the consumer is required to award compensation.
References [1] Chief Administrator, H.U.D.A. & Anr. v. Shakuntla Devi, (2017) 2 SCC 301 [2] (2004) 5 SCC 65 [3] (1994) 1 SCC 243 [4] (1878) 3 AC 430 [5] (2005) 9 SCC 430 [6] (2005) 9 SCC 449 Regarding delay of possession the Hon'ble Supreme Court has held in the following case law, "In Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra Citation : 2019 Latest Caselaw 299 SC Judgment Date : Mar/2019[Civil Appeal No. 3182 of 2019 @ SLP (C) No(S). 1795 of 2017], the Hon'ble Supreme Court has held regarding delay in giving possession.
"This appeal arises from the judgment dated 21 November 2016 of the National Consumer Disputes Redressal Commission1. A Buyer's Agreement dated 2 July 2007 was entered into between the appellant and the respondent. The respondent paid an amount of Rs 39,29,280 in 2006 in terms of a letter of allotment dated 20 September 2006. The agreement between the parties envisaged that the appellant would hand over possession of a Row House to the respondent by 31 December 2008 with a grace period of a further six months ending on 30 June 2009.
The respondent filed a consumer complaint before the West Bengal State Consumer Disputes Redressal Commission2 in 2011 1 "NCDRC" "SCDRC" 2 praying for possession of the Row House and in the alternative for the refund of the amount paid to the developer together with interest at 12% per annum. Compensation of Rs 20 lakhs was also claimed. The SCDRC allowed the complaint by directing the appellant to refund the moneys paid by the respondent together with interest at 12% per annum and compensation of Rs.5 lakhs. The NCDRC has modified this order by reducing the compensation from Rs 5 lakhs to Rs 2 lakhs. Mr. Ravinder Narain, learned counsel appearing on behalf of the appellant submits that the primary relief which was sought in the consumer complaint was for delivery of possession. According to the appellant, the completion certificate was received on 29 March 2016, which was intimated to the respondent on 11 April 2016.
Moreover, before the SCDRC, in its written submissions, the appellant had offered possession of the Row House to the respondent. It has also been stated that in a complaint which was filed by an association representing the allottees of 161 Row houses, a settlement was arrived on 11 September 2018 before the NCDRC specifying the date on which possession would be handed over together with interest at 6% per annum instead of 4% as mentioned in the Buyers' Agreement. It was urged that the developer having made a substantial investment in terms of the agreement, a direction for refund is not warranted. It has also been urged that the SCDRC in the course of its decision erroneously observed that the developer was unable to fulfill its obligation to complete the construction within the agreed period and it was not certain when the Row house would be handed over. It was urged that this observation by the SCDRC is contrary to the record since before it, a specific offer of possession was made.
It has been urged on behalf of the respondent by Mr. Supriya Bose, learned senior counsel that a consumer complaint was filed in the year 2011. At that stage, the appellant was bonafide ready and willing to accept possession. However, nearly seven years have elapsed after the extended date for the delivery of possession which expired on 30 June 2009. In spite of this, no offer of possession was forthcoming. Learned senior counsel submitted that the letter dated 22 March 2016 of the developer was conditional and despite the subsequent letter dated 11 April 2016, no formal offer of possession was ever made by the appellant. Moreover, it was urged that the interest awarded by the NCDRC at the rate of 12% is just having regard to the economic loss and hardship suffered by the respondent. While considering the rival submissions, we must at the outset advert to the following clause which was contained in the Buyer's Agreement:
"Unless prevented by circumstances beyond the control of the company and subject to Force Majeure, KWIC shall ensure to complete the said unit in all respect within 31st December 2008 only for the Cluster D. Further there will be a grace period of 6 months (up to 30th June, 2009) from the date of completion. In case the possession is not transferred after expiry of the said grace period, KWIC will be liable to pay prevailing 4 saving Bank interest of the State Bank of India for each month of delay on the money given by the allottee as compensation but no compensation will be paid on account of force majeure reasons." It is the above clause which is pressed in aid by the developer. Under the aforesaid clause, any delay beyond 30 June 2009 would result in the developer being required to pay interest at the prevailing savings bank interest of the State Bank of India.
Interestingly, where the buyer is in default, the agreement stipulates that interest at the rate of 18 per cent from the date of default until the date of payment would be charged for a period of two months, failing which the allotment would be cancelled by deducting 5% of the entire value of the property. The agreement was evidently one sided. For a default on the part of the buyer, interest at the rate of 18% was liable to be charged. However, a default on the part of the developer in handing over possession would make him liable to pay interest only at the savings bank rate prescribed by the SBI. There is merit in the submission which has been urged by the buyer that the agreement was one sided.
The clause which has been extracted in the earlier part of this order will not preclude the right and remedy available to the buyer to claim reasonable interest or, as the case may be, compensation. The essential aspect of the case which is required to be analysed is whether the buyer was entitled to seek a refund or was estopped from doing so, having claimed compensation as the primary relief in the consumer complaint.
The Buyer's Agreement is dated 2 July 2007. In terms of the agreement, the date for handing over possession was 31 December 2008, with a grace period of six months. Even in 2011, when the buyer filed a consumer complaint, he was ready and willing to accept possession. 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 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 the NCDRC.
The amount outstanding in terms of the directions of this Court shall be released out of the moneys which have been deposited by the appellant. The balance, if any, that remains shall be refunded to the appellant. The appeal is, accordingly, disposed of. There shall be no order as to costs. Pending application(s), if any, shall stand disposed of."
In the case of PRIYANKA MITTAL & ANR. V. PARSVNATH DEVELOPERS LTD. & ANR. (NCDRC).These appeals arise out of single order of State Commission, hence, decided by common order. These appeals have been filed against the order dated 25.2.2015 in Complaint Nos. 18 of 2013- Nalin Bhargava & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 34 of 2013- Jasleen Viswanathan & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 58 of 2011- Janmejai Mani Tiwari Vs. Parsvnath Developers Ltd. & Anr.; 68 of 2013- Indu Singh Vs. Parsvnath Developers Ltd. & Anr.; 69 of 2013- Poonam Sagar Vs. Parsvnath Developers Ltd. & Anr.; 86 of 2010- Priyanka Mittal & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 101 of 2011- Mohd. Aslam Khan & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 130 of 2012- Dr. Sunil Kr. Singh & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 49 of 2012- Neera Mittal & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 74 of 2011- Deepak Bhalla Vs. Parsvnath Developers Ltd. & Anr.; 87 of 2010- Syed Gufran Ali Alvi & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 96 of 2011- Uppasana Malik Vs. Parsvnath Developers Ltd. & Anr.; 175 of 20130- Umesh Chandra Dixit & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 97 of 2011- Pravin Kumar Goel & Anr. Vs. Parsvnath Developers Ltd. & Anr. which complaints were partly allowed.
The Hon'ble NCDRC held that:
"Brief facts of the cases are that opposite parties/respondents are engaged in the activity of housing construction and accordingly they have launched a project named as Parsvnath Planet situated in Gomti Nagar, Lucknow. The project was demonstrated to be very lucrative and made attractive to the vendees, in order to procure/collect money from the needy persons demonstrating themselves to be excellence in the field of construction activity as compared to other builders and assured the buyers/complainants that it has been duly approved by the Lucknow Development Authority and necessary permission has also been obtained from them. The emphasis was made by the opposite parties that the possession of the Unit shall be given within a scheduled period of 36+6=42 months stipulated in agreements executed in between the parties for the project launched in the year 2006. The complainants/appellants attracted by the promise and assurance of the opposite parties, somehow managed and arranged the money from their personal sources as well as on loan at attractive rate of interest and the hard earned money was paid by them to the opposite parties in a hope that the possession of the units shall be provided to them in the year 2009 and they can leave peacefully in their own houses, since the complainants are living in rented houses.
The complainants visited the construction site of the opposite parties after depositing the entire amount, where it was revealed that the construction activities were on halt and the persons available on the site told the complainants that the apartments are likely to be completed till 2015. Even the partial construction done by the opposite parties was defective and did not match the specifications provided in the agreement. The complainants were shocked on hearing it and observing the site. The complainants immediately contacted the Area Manager, who told the complainants that there is some delay in the construction of the apartment and the apartments shall be ready till June, 2010. The complainants have to repay the amount taken on loan alongwith interest without getting the possession of the allotted units causing irreparable loss and injury to them. The complainants have come to know that the opposite parties have invested the funds earmarked for this project into their other projects in other city due to which they have not been able to complete the project in time. Besides this, it has also come to the light that although the opposite parties had collected huge funds from the buyers but in spite of that the opposite parties have miserably failed to pay the dues of Lucknow Development Authority which forced the Lucknow Development Authority to issue coercive measures against the opposite parties for the recovery of their dues. Alleging deficiency on the part of opposite parties/ respondents, complainants filed separate complaints before State Commission. Aggrieved by the order of Hon'ble State Commission, these appeals preferred before Hon'ble National Consumer Disputes Redressal Commission.
Hon'ble NCDRC discussed various case laws and after hearing the parties held, "Learned Counsel for appellants submitted that as complainants have been deprived of possession for a long period beyond agreed period, it amounts to restrictive trade practice under Section 2 (nnn) of Consumer Protection Act and complainants are entitled to get compensation. Section 2 (nnn) runs as under:- means a trade practice which tends to bring about restrictive trade practice manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include- Delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the price; Any trade practice which requires a consumer to buy, hire or avail of any goods, or, as the case may be, services as condition precedent to buying, hiring or availing of other goods or services; Perusal of aforesaid provision reveals that when opposite party delays in delivery of goods which leads to rise in the price of goods meaning thereby, more price is charged from complainant, it amounts to restrictive trade practice. In the case in hand, opposite party on account of delayed delivery of possession is not charging higher rate than the agreed rate for delivery of possession of flat, so, it does not fall within the purview of restrictive trade practice under Section 2(nnn) of Consumer Protection Act."
"Admittedly, agreements were executed in 2006 and as per agreements, possession of flats was to be delivered within 42 months, meaning thereby, possession was to be given in the year 2009-2010 and possession has not been handed over so far though year 2016 has started. No doubt, complainants are entitled to get penalty amount for delayed delivery of possession as per clause 10(c) of the agreement but opposite party cannot be permitted to avail benefit of aforesaid clause for indefinite period. This penalty clause should be allowed for the benefit of parties for a limited period and in the cases in hand, I deem it appropriate to extend applicability of aforesaid clause for a period of one year beyond 42 months and after that, complainants are certainly entitled to compensation. Opposite party cannot be allowed to avail huge funds of complainants by paying merely Rs. 5/- per sq. ft. for example, complainants who have purchased flat measuring 164.901 sq. mtr., they have made payment of about Rs. 31.00 to 32 lakhs and in the garb of clause 10 (c), opposite party is paying penalty @ approximately Rs. 9,000/- per month against enjoying funds more than Rs. 30.00 lakhs. As complainants have been deprived to shift to their flats for a long period which would not only have given them satisfaction of living in their own house but also have raised their social status and opposite party has enjoyed funds of complainants for a long period, I deem it appropriate to allow compensation @ Rs. 15,000/- p.m. to the complainants who have applied for flats upto 175 sq. mtr and Rs. 20,000/- per month to complainants who have applied for flats above 175 sq. after 54 months of execution of agreement till delivery of possession."
Against this judgment, parties went to Hon'ble Supreme Court. The judgment of Hon'ble Supreme Court is:-
In Nalin Bhargava vs. Parsvnath Developers Ltd. CA 6662/2018 @ SLP(C) 7596/2016 etc and other related civil appeals on 13 July, 2018, Hon'ble Supreme Court held:-
"Leave granted in all the special leave petitions.CA 6662/2018 @ SLP(C) 7596/2016 etc. It is submitted by Mr. M.L. Lahoty, learned counsel appearing for the appellants in all the appeals that the possession has been handed over and the deficiencies have been removed and, therefore, he has no grievance. However, Mr. Lahoty would insist that there should be imposition of costs as compensation.
Mr. Sachin Datta, learned senior counsel appearing for the developer has raised objections with regard to imposition of costs.
Having heard learned counsel for the parties, we are of the considered opinion that the cause of justice would be best subserved if each of the appellants in the present appeals are given Rs.1,50,000/- (Rupees one lakh fifty thousand only) per flat, towards costs. When we say "cost", we mean costs alone and nothing else."
In a latest case, on Supreme Court in Petition(s) for Special Leave to Appeal (C) No(s). 24059/2022 (Arising out of impugned final judgment and order dated 19-09-2022 in RP No. 1187/2022 passed by the National Consumers Disputes Redressal Commission, New Delhi) MEERUT DEVELOPMENT AUTHORITY Petitioner(s) VERSUS SURESH CHAND GARG Respondent(s) (FOR ADMISSION and IA No.202401/2022-EXEMPTION FROM FILING O.T. ) Date: 05-01-2023 This petition was called on for hearing today.
Held :
"We have heard learned counsel for the petitioner and find that the order passed by the Consumer Commission was reasonable and there was no reason of filing appeal/revision against the substantive order passed on the consumer complaint by the District Consumer Commission dated 06.09.2019. Consequently, the present petition is disposed of with a direction, to sum up the litigation which is pending for a long time, that let the order of the District Consumer Commission dated 06.09.2019 shall be complied with and the respondent be refunded the entire deposit with simple interest at the rate of 12% per annum within a further period of 60 days from today, failing which it shall carry interest at the rate of 15% per annum until actual payment."
So the Hon'ble Supreme Court has specifically said that the rate of interest shall be 12% if paid within 60 days from the date of judgment otherwise the rate of interest will be 15% per annum until actual payment.
The Hon'ble Supreme Court further goes and in the following judgemnt the rate of interest against the builder was given the same rate of interest which the builder takes from the buyer in case of default of payment.
CIVIL APPEAL NO(s).4913 of 2015 M/s. ASHOKA INVESTMENT CO. vs. M/s. UNITED TOWERS INDIA (PVT.) LTD. SC Judgment OCTOBER 11, 2022.
Vikram Nath, J.
This appeal by the Consumer under Section 23 of the Consumer Protection Act, 19861 has been filed assailing the correctness of the order dated 16.03.2015 passed by the National Consumer Disputes Redressal Commission 2, (NCDRC), Delhi in Original Petition No.377 of 2000 between M/s. Ashoka Investment Company Vs. M/s. United Towers India (Pvt.) Ltd. By the said order, the NCDRC directed the respondents to refund an amount of Rs.4,95,000/(four lakhs and ninety five thousand) 1 In short "the 1986 Act" 2 In short "NCDRC" being total sale consideration to the appellant with interest @ 9 % per annum w.e.f. 17.01.1995 till the date of refund/compliance.
2. The admitted facts are that, the appellant on 12.05.1980 applied for purchase of two flats bearing Nos.501 and 502 on the 5th Floor, 1st Block, Krishna Apartments, Bangalore for a total sale consideration of Rs.4,95,000/(four lakhs and ninety five thousand). Along with the application, the appellant paid Rs.1,00,000/ (one lakh) each for the two flats by way of two Demand Drafts.
3. An agreement to sell was executed between the parties on 17.05.1980. As per para 3 of the agreement, possession was to be delivered within a period of 1821 months under normal conditions subject, however, to the availability of cement, steel and other building materials, electrical or power connections, drainage connection and subject to and including any Act of God, drought, flood or any other natural calamity and/or war restrictions by the Government, Municipal Corporation or any other public authorities or any other acts beyond the control of the builders.
4. Under paragraph 6 of the agreement, it is provided that if there was any default in payment of installments, the builder would be at liberty to insist for payment of the amount due together with interest @ 18% per annum from the date of default till the date of payment on the defaulted amount.
5. The entire amount of Rs.4,95,000/ (four lakhs and ninety five thousand) has since been paid by the appellant to the respondent. A dispute arose sometimes in 1991 when the respondent raised demand of Rs.1,56,046/(one lakh fifty six thousand and forty six) with respect to one apartment and Rs.1,62,202/(one lakh sixty two thousand and two hundred two) for the other apartment. These demands were raised vide bill dated 15.12.1991. These demands were objected to by the appellant and a request was made to hand over the possession of the two flats.
6. Apparently, possession was not given and, thereafter, it appears that in January, 1999, the appellant visited the apartments only to find that both the apartment Nos.501 and 502 had been transferred by the respondent in favour of third parties. It was thereupon that the appellant made enquiries and came to know that the respondent had cancelled the allotment on 17.01.1995 and, thereafter, transferred it to the third parties.
7. After giving due notice, the appellant approached the NCDRC by way of a complaint praying for following reliefs:
"(a) To direct the Opposite Party to forthwith hand over to the Complainant vacant and peaceful possession of the flats allotted to it being Flats No.501 and 502, Krishna Apartments, Corporation No.13, Ali Asker Road, in Corporation Division No.59, Bangalore and to further pay a sum of Rs.22,50,000/ towards delayed delivery till the date of the application together with damages in the sum of Rs.3,00,000/ as specified in para 22 of the application:
(b) In the alternative to pay to the Complainant a sum of Rs.48,27,000/ as detailed in Paras 21 and 22 above, with pendente lite and further interest at the rate of 18% per annum.
(c) Costs of and incidental to these proceedings be provided for, and
(d) Such other and further orders as this Hon'ble Commission may deem fit and proper in the circumstances of the case be passed."
8. The respondent contested the complaint on technical grounds as also on merit. According to the respondent, the appellant was not a consumer and further that the cancellation had taken place after several opportunities and due notice. The appellant had disputed receiving of any notice.
9. The NCDRC by the impugned order held that the appellant was a consumer as the amendment in the 1986 Act has been brought in 2003 whereby a person who obtains goods for resale or for any commercial purpose was not to be treated as a consumer within the meaning of the definition of consumer provided under Section 2(1)(d)(i) of the 1986 Act. Further, the NCDRC also found fault on the part of both the parties. The appellant not approaching the Commission with clean hands, with much delay and further the respondent conducting himself in a high handed and arbitrary manner. It accordingly disposed of the complaint by directing the respondents to refund the amount along with interest @ 9% w.e.f. 17.01.1995 till the date of refund/compliance.
10. After hearing learned counsel for the parties and perusing the material on record, we enquired from the respondents, as to whether, the amount as awarded by the NCDRC in the impugned order dated 16.03.2015 has been paid to the appellant or not. We were informed that amount has not been paid so far. No justification has come forward as to why the awarded amount was not tendered to the appellant. The appellant has pressed for the entire complaint being allowed as per the relief claimed therein. On the other hand, the respondent has sought to justify the order of NCDRC. However, there is no appeal by the respondent. The appellant has also pressed vehemently that respondent should be called upon to produce the sale deeds of the two flats in question, transferred in favour of the third parties and that the said amount ought to be paid to the appellant along with other claims, the respondent has unjustly enriched itself by the aforesaid conduct. On the other hand, this request has been resisted by the respondents.
11. Having considered the submissions of the learned counsel for the parties, we are in agreement with the findings recorded by the NCDRC regarding the conduct of both the parties, however, we feel that in the fitness of things and in the interest of both the parties considering the nature of agreement made and also their conduct that the order of the NCDRC requires to be modified. The rate of interest awarded is only 9%. Once, we find that under the agreement, in the event of default, the appellant's liability to pay interest on the defaulted amount could go up to 18%, it would be just and proper in the facts of the present case that 18% interest be awarded on the refund amount.
12. We accordingly partly allow this appeal and in partial modification of the impugned order of the NCDRC, we direct that respondent will refund the amount of Rs.4,95,000/(four lakhs and ninetyfive thousand) being the total sale consideration to the appellant along with interest @ 18% per annum w.e.f. 17.01.1995 till the date, it is paid. The said amount be paid at the earliest and in any case within a period of four weeks from today."
So it is clear that the rate of interest should be same as the builder receives from a buyer in case of default of payment. It is this were justice because if a buyer is charged high rate of interest, in default why should the builder be not asked to pay same rate of interest to the buyer?
These builders are just earning money from the consumers to whom they issued allotment letters and got a huge amount. They keep this amount for a long time and earn interest on it. Property dealing is that part of business where they never pay a penny to the consumers on their amounts deposited for a long-term or if they pay, they pay a meagre interest of about 5% or so but they charge 18 to 24% or more if the consumers default in depositing any instalment. It reminds us the story of "The Merchant of Venice" The Merchant of Venice is the story of a Jewish money lender Shylock who demands that an antisemitic Christian offer "a pound of flesh" as collateral against a loan. These acts of builders also remind us the age of Sahukari during ancient India and also during British Raj. Whether these builders have power to frame their own law? They put their terms and conditions in such a way that the sufferer will always be the consumer. The Consumer Protection Act 1986 has been enacted for the benefits of consumers, so the courts dealing with Consumer Protection Act 1986 should come forward for their rescue. The courts are not governed by the builders but they are governed by the law, Custom and Usages. Now in the background of all the facts and also the facts of the present case, we will also discuss something more.
Now we see the present case. There is no completion certificate. There is no occupancy certificate. Delivery of possession has not been given. The possession was to be given by14.07.2015. Now in this case the complainant is not the defaulter but the opposite parties are defaulter. When the complainant came to know that there is no scope of the timely construction, he asked for refund of his deposited money. He asked for refund of his money but the opposite parties created a new pressure to detect 20% of the amount deposited by him. The allotment order or the builder buyer agreement has not been produced by the opposite parties. You cannot deduct any amount if you are at default. In spite of refund you are liable to pay interest, damages, compensation to the complainant. It is the highhandedness of the builders to deduct a certain amount which was deposited by the consumers in the hope of getting a flat or plot. Therefore in this case we came to the conclusion that the deduction was unauthorised and the opposite parties have shown arbitrariness. The opposite parties are liable to pay proper compensation for the mental agony and torture given to the complainant. After considering all the facts and circumstances of this case we are of the view that the complainant is entitled for the following reliefs and therefore the complaint cases decided accordingly.
ORDER 1- The opposite parties are directed jointly and severally to refund the earnest money which was deducted from the deposited amount of the complainant with interest at a rate of 11% per annum from the date of deduction if paid within 30 days from the date of judgment of this complaint case otherwise the rate of interest shall be 15% per annum from the date of deduction till the date of actual payment.
2- The opposite parties are directed jointly and severally to pay to the complainant ₹ 150,000/- as cost of the case.
3- The opposite parties are directed jointly and severally to pay to the complainant ₹ 12 lakhs towards mental agony, torture, harassment with interest at a rate of 12% per annum from 14.07.2015 (the expected date of delivery of possession if paid within 30 days from the date of judgment of this complaint case otherwise the rate of interest shall be 15% from 14.07.2015 till the date of actual payment.
4- Under relief clause 7, the opposite parties are directed jointly and surely to pay ₹ 150,000/- as damages (Nalin Bhargava vs. Parsvnath Developers Ltd. CA 6662/2018 @ SLP(C) 7596/2016 etc), ₹ 15,000/-per month towards loss of the rent from 14.07.2015 till the date of refund of complainants money (Priyanka Mittal Case). If both these amounts have not been paid within 30 days from the date of judgment of this complaint case the opposite party shall pay interest at a rate of 12% per annum on this amount from 14.07.2015 till the date of actual payment and on the rent from the due month.
The stenographer is requested to upload this order on the Website of this Commission today itself.
Certified copy of this judgment be provided to the parties as per rules.
(Vikas Saxena) (Rajendra Singh) Member Presiding Member Judgment dated/typed signed by us and pronounced in the open court. Consign to the Record-room. (Vikas Saxena) (Rajendra Singh) Member Presiding Member Dated 13.2.2024 JafRi, PA I C-2 [HON'BLE MR. Rajendra Singh] PRESIDING MEMBER [HON'BLE MR. Vikas Saxena] JUDICIAL MEMBER