Mr. Rajan Sodhi, M/S Ethnic Kraft vs M/S Parsvnath Developers Ltd. on 21 October, 2020

[Cites 22, Cited by 0]

State Consumer Disputes Redressal Commission

Mr. Rajan Sodhi, M/S Ethnic Kraft vs M/S Parsvnath Developers Ltd. on 21 October, 2020

IN THE DELHI STATE CONSUMER DISPUTES REDRESSAL COMMISSION

                                    JUDGMENT RESERVED ON: 08.10.2020
                                  JUDGMENT PRONOUNCED ON: 21.10.2020

                              COMPLAINT NO. 987/2016

     IN THE MATTER OF

     MR. RAJAN SODHI
     PROPRIETOR OF M/S. ETHNIC KRAFT                           ...... COMPLAINANT

                                         VERSUS

     PARASVNATH DEVELOPERS LTD.                              ......OPPOSITE PARTY

     CORAM:

     HON'BLE          DR.     JUSTICE        SANGITA         DHINGRA       SEHGAL
     (PRESIDENT)
     HON'BLE SH. ANIL SRIVASTAVA, (MEMBER)

     Present: Ms. Priyanka Rawat, Counsel for Complainant.
                  Mr. Rakesh Bhardwaj, Counsel for Opposite Party.

     PER: HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL,
               PRESIDENT
                                    JUDGMENT

[Via Video Conferencing]

1. The present complaint has been filed by the complainant under Section 17 of the Consumer Protection Act, 1986 alleging deficiency of services by the opposite party and has prayed as under:

a) Pass an award directing opposite party/Respondent to refund the amount of Rs. 18,98,593.50/- to the CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 1 of 27 Complainant, which was deposited in respect of the residential flat booked in the project of the Respondent, along with interest @ 18 % p.a. with effect from 28.03.2008, till the date of payment.

b) Award a sum of Rs. 5,00,000/- as Compensation/damages, on account of the monitory loss suffered by the complainant due to false and malafide representations and omissions made by the Respondent.

c) Award the cost of the present proceeding.

2. Brief facts necessary for the adjudication of the present complaint are that the complainant booked a Flat i.e. T10-901 in the said project. Thereafter, Flat buyer agreement was executed between the parties on 31.01.2008. As per Clause 10(a) of the Flat Buyer Agreement dated 31.01.2008, the OP had to complete the construction of the said flat within 36 months from the date of commencement of construction of the particular Block in which the flat is located. However, till date construction of the flat has not been completed by the OP. The complainant over the time had paid a sum of Rs. 18,98,593.50/- to the OP as and when demanded by him. The complainant also sent a notice dated 20.05.2016 to the OP asking for refund but of no avail.

3. The Opposite Party has contested the present case and has raised some preliminary objections as to the maintainability of the complaint case. Mr. Rakesh Bhardwaj, Advocate, appeared on behalf of the Opposite Party submitted that the complainant was not "Consumers" as defined under the Consumer Protection Act, 1986 as the said flat has been purchased for investment purpose in order to earn profit; that the present complaint has been filed before this commission CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 2 of 27 in order to avoid payment of court fees whereas, a recovery suit would lie in the civil court.

4. The counsel for the Opposite Party further submitted that the commission lacked territorial jurisdiction to decide the present case as the property in question is situated in Greater Noida, Uttar Pradesh. Pressing the aforesaid preliminary objections, the counsel appearing on behalf of the Opposite Party prayed that the complaint should be dismissed.

5. The complainant filed their Rejoinder rebutting the written statement filed by the Opposite Party. Both the parties filed their Evidence by way of Affidavit in order to prove their averments on record.

6. We have perused the material available on record and heard the arguments.

7. The fact that the complainant had booked a flat with the OP is not in dispute from the evidence on record. Payment to the extent of Rs. 18,98,593/- by the complainant to the OP is also evident from the Receipt No. PY000600, PY001157, S0046959 & S0070925.

8. Before delving into the merits of the case, we deem it appropriate to adjudicate the preliminary objections raised on behalf of the Opposite Party.

 WHETHER COMPLAINANT FALLS IN THE CATEGORY OF 'CONSUMER' UNDER THE CONSUMER PROTECTION ACT, 1986?

9. To deal with this issue, it is appropriate to refer to Mehnga Singh Khera and Ors. Vs. Unitech Ltd. as reported in I CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 3 of 27 (2020) CPJ 93 (NC) wherein the Hon'ble National Commission has held as under:

"In the case of the purchase of houses which the service provider undertakes to construct for the purchaser, the purchase can be said to be for a commercial purpose only where it is shown that the purchaser is engaged in the business of purchasing and selling houses and/or plots on a regular basis, solely with a view to make profit by sale of such houses. If however, a house to be constructed by the service provider is purchased by him purely as an investment and he is not undertaking the trading of houses on a regular basis and in the normal course of the business profession or services in which he is engaged, it would be difficult to say that he had purchased houses for a commercial purpose. A person having surplus funds available with him would not like to keep such funds idle and would seek to invest them in such a manner that he gets maximum returns on his investment. He may invest such funds in a Bank Deposits, Shares, Mutual Funds and Bonds or Debentures etc. Likewise, he may also invest his surplus funds in purchase of one or more houses, which is/are proposed to be constructed by the service provider, in the hope that he would get better return on his investment by selling the said house(s) on a future date when the market value of such house (s) is higher than the price paid or agreed to be paid by him. That by itself would not CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 4 of 27 mean that he was engaged in the commerce or business of purchasing and selling the house (s)."

10. Further, the aspect as to what constitutes "Commercial purpose" has been elaborately dealt with by the Hon'ble Apex Court in Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers and Ors. reported at (2020) 2 SCC 265. The relevant portion has been reproduced as under:

"3. Section 2(1)(d) of the 1986 Act defines 'consumer' as follows:

(d) "consumer" means any person who--

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose;

(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who 'hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purposes.

Explanation.-- For the purposes of this clause, "commercial purpose" does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.

CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 5 of 27

The above Explanation Clause was added to Section 2(1)(d) by way of Ordinance No. 24 of 1993 (subsequently replaced by Amendment Act No. 50 of 1993), with effect from 18.6.1993. Amendment Act No. 50 of 1993 also added 'housing construction' to the definition of 'service' Under Section 2(o) of the 1986 Act.

In the present case, it is not denied that the Appellant has validly taken possession of the flats constructed by Respondent No. 1 and paid consideration for the same, and can therefore be said to have availed of its housing construction services. This Court has held in Spring Meadows Hospital v. Harjol Ahluwalia through K.S. Ahluwalia, I (1998) CPJ 1 (SC), that the person who hires the service for a beneficiary can also be included in the definition of 'consumer' Under Section 2(1)(d)(ii). Though that case was in the context of parents hiring the services of a hospital for their minor child, the same principle may also be extended to a case such as the present one where an employer such as the Appellant trust hires certain services for the welfare of its employees. Hence, though possession of the flats was acquired for the purpose of providing housing facility to the hospital nurses, the Appellant is entitled to claim against Respondent No. 1 as a consumer.

The only issue which arises for our consideration therefore is whether the purchase of flats for the purpose of providing accommodation to nurses employed by the Appellant trust's hospital qualifies as a 'purchase of services for a commercial purpose'; and consequently whether the Appellant is excluded from the definition of 'consumer' Under Section 2(1)(d) of the 1986 Act?

Learned senior Counsel for the Appellant, Mr. Guru Krishna Kumar argued in reliance upon this Court's decisions in Laxmi Engineering Works v. P.S.G. Industrial Institute, (1995) 3 SCC 583, and Paramount Digital Colour Lab v. Agfa India Private Limited, (2018) 14 SCC 81, that the Court has to look at the dominant purpose for which the purchase is made in order to decide whether it was for a 'commercial purpose.' In this case, the dominant purpose for purchasing the flats was to provide housing to the nurses CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 6 of 27 and was not linked to the commercial operations of the hospital.

Per contra, learned senior Counsel for the Respondents Ms. Kiran Suri argued that under the Explanation to Section 2(1)(d), only goods and services availed "exclusively for the purpose of earning livelihood by self-employment" are excluded from the ambit of 'commercial purpose'. In the present case, the hostel facilities in the flats constructed by Respondent No. 1 were for the purpose of providing comfortable accommodation to the nurses, which in turn would increase their efficiency and lead to provision of better services to the hospital. Hence the flats were indirectly connected to the commercial purpose of increasing profits for the hospital. Such a purchase would not fall in the category of 'earning livelihood by self- employment'. Learned senior Counsel relied on this Court's decisions in Laxmi Engineering (supra), Cheema Engineering Services v. Rajan Singh, (1997) 1 SCC 131, and Kalpavruksha Charitable Trust v. Toshniwal Brothers (Bombay) Pvt. Ltd., (2000) 1 SCC 512, to buttress her argument.

4. Taking into account the material on record and the relevant jurisprudence on this issue, we are of the considered opinion that the purchase of flats by the Appellant for the purpose of providing hostel facilities to the hospital nurses does not qualify as meant for a 'commercial purpose'. Though the term 'commercial purpose' as referred to Under Section 2(1)(d) has nowhere been defined under the provisions of the 1986 Act, this Court has expounded upon it based on its lateral dictionary meaning in various decisions.

In Laxmi Engineering (supra), which is one of the leading authorities on this point, a two-Judge Bench of this Court elucidated upon the meaning of 'commercial purpose' as follows:

10. A review of the provisions of the Act discloses that the quasi-judicial bodies/authorities/agencies created by the Act known as District Forums, State Commissions and CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 7 of 27 the National Commission are not courts though invested with some of the powers of a civil court. They are quasi-

judicial tribunals brought into existence to render inexpensive and speedy remedies to consumers...The idea was to help the consumers get justice and fair treatment in the matter of goods and services purchased and availed by them in a market dominated by large trading and manufacturing bodies. Indeed, the entire Act revolves round the consumer and is designed to protect his interest. The Act provides for "business-to-consumer' disputes and not for "business-to-business" disputes. This scheme of the Act, in our opinion, is relevant to and helps in interpreting the words that fall for consideration in this appeal.

11. Controversy has, however, arisen with respect to meaning of the expression "commercial purpose". It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning. "Commercial" denotes "pertaining to commerce" (Chamber's Twentieth Century Dictionary); it means "connected with, or engaged in commerce; mercantile; having profit as the main aim" (Collins English Dictionary) whereas the word "commerce" means "financial transactions especially buying and selling of merchandise, on a large scale"

(Concise Oxford Dictionary). The National Commission appears to have been taking a consistent view that where a person purchases goods "with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit" he will not be a "consumer"

within the meaning of Section 2(d)(i) of the Act...

...The explanation reduces the question, what is a "commercial purpose", to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., "uses them by himself", "exclusively for the purpose of earning his livelihood"

and "by means of self-employment" make the intention of Parliament abundantly clear, that the goods bought CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 8 of 27 must be used by the buyer himself, by employing himself for earning his livelihood.

In the aforementioned discussion in Laxmi Engineering, this Court relied upon Synco Textiles Pvt. Ltd. v. Greaves Cotton and Company Limited, (1991) 1 CPJ 499. In Synco Textiles, a 4 Member-Bench of the National Commission headed by V. Balakrishna Eradi J., expounded upon the meaning of the term 'commercial purpose', prior to the insertion of the Explanation Clause to Section 2(1)(d) of the 1986 Act:

3....The words "for any commercial purpose" are wide enough to take in all cases where goods are purchased for being used in any activity directly intended to generate profit...

4. Going by the plain dictionary meaning of the words used in the definition Section the intention of Parliament must be understood to be to exclude from the scope of the expression 'consumer' any person who buys goods for the purpose of their being used in any activity engaged on a large scale for the purpose of making profit. It is obvious that Parliament intended to restrict the benefits of the Act to ordinary consumers purchasing goods either for their own consumption or even for use in some small venture which they may have embarked upon in order to make a living as distinct from large scale manufacturing or processing activity carried on for profit. In order that exclusion Clause should apply it is however necessary that there should be a close nexus between the transaction of purchase of goods and the large scale activity carried on for earning profit.

6. There is a close and direct nexus between the purpose of purchase of the generating sets and the commercial activity of manufacturing of edible oils for trade carried on by the Appellant company, since the generating sets were intended to be used, as and when the need arose, for generating electric current for manufacture of edible oils for the purpose of trade. We do not, therefore, find any CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 9 of 27 reason to interfere with the view taken by the State Commission that the Appellant is not a 'consumer'.

Recently, a two-Judge bench of this Court, comprising of one of us, in Paramount Digital Colour Lab (supra) has re- emphasized the importance of there being a 'close nexus' between the purpose for which the good or service is availed of and a large-scale profit activity in order to classify such a transaction as commercial in nature, as illustrated below:

12....It is therefore clear, that despite "commercial activity", whether a person would fall within the definition of "consumer" or not would be a question of fact in every case. Such question of fact ought to be decided in the facts and circumstances of each case.

17. Since there is nothing on record to show that they wanted the machine to be installed for a commercial purpose and not exclusively for the purposes of earning their livelihood by means of self-employment, the National Commission was not justified in concluding that the Appellants have utilised the services of an operator or a helper to run a commercial venture. One machine does not need many operators or helpers to complete the work entrusted. Since the Appellants were two partners, they must have been doing the work on their own, of course, may be with the aid of a helper or an operator. The machine would not have been used in a large-scale profit-making activity but, on the contrary, the Appellants purchased the machine for their own utility, personal handling and for their small venture which they had embarked upon to make a livelihood. The same is distinct from large-scale manufacturing or processing activity carried on for huge profits. There is no close nexus between the transaction of purchase of the machine and the alleged large-scale activity carried on for earning profit. Since the Appellants had got no employment and they were unemployed graduates, that too without finances, it is but natural for them to raise a loan to start the business of photography on a small scale for earning their livelihood.

CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 10 of 27

Therefore this Court in Paramount Digital Colour Lab (supra) held that the purchase of a machine for Appellants' photography business, which was a small-scale business meant for earning their livelihood, would not be interpreted as being for a 'commercial purpose.'

5. It is true that the aforementioned decisions were rendered in the context of deciding whether the goods or services availed of in the facts of those cases were for a commercial purpose or exclusively for the purpose of self-employment. This does not mean, however, that in every case a negative test has to be adopted wherein any activity that does not fall within the ambit of 'earning livelihood by means of self- employment' would necessarily be for a commercial purpose. We reject Respondent No. 1's argument in this regard. The Explanation Clause to Section 2(1)(d) of the 1986 Act is only clarificatory in nature, as was highlighted by this Court in Laxmi Engineering (supra):

14. Yet another clarification; the Explanation, in our opinion is only explanatory: it is more in the nature of a clarification a fact which would become evident if one examines the definition (minus the explanation) in the context and scheme of the enactment. As indicated earlier, the explanation broadly affirms the decisions of the National Commission. It merely makes explicit what was implicit in the Act. It is not as if the law is changed by the said explanation; it has been merely made clearer.

Therefore the Explanation Clause only re-affirms the definition of 'consumer' as it already exists. Ultimately, whether or not a person is a consumer or whether an activity is meant for a commercial purpose will depend upon the facts and circumstances of each case. It may be the case that a person who engages in commercial activities has purchased a good or availed of a service for their personal use and consumption, or for the personal use of a beneficiary, and such purchase is not linked to their ordinary profit-generating activities or for creation of self- employment. Such a person may still claim to be a 'consumer.' CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 11 of 27 For example, a large corporation may hire the services of a caterer or a 5-star hotel for hosting a function for its employees and their families. If there is any deficiency in service, the service-provider cannot claim that merely because the person availing of the service is a profit- generating entity, and because such transaction does not relate to generation of livelihood through self-employment, they do not fall under the definition of a 'consumer.' A commercial entity may also be a consumer depending upon the facts of the case. It is not the identity of the person but the purpose for which the transaction is made which is relevant.

6. With regard to goods and services availed of by employers for the benefit of their employees, it is particularly important to note that we live in a socialist economy, wherein the ethos dictates that employers are obligated to make provisions for the welfare of their employees. No doubt, welfare measures undertaken by employers may increase workers' health and efficiency, and therefore improve the employing entity's overall productivity. However this is a duty to be shared by all employer organisations and not merely those looking to increase their productivity/profits. This obligation exists irrespective of how much profit or turnover the organization generates in a year, though the degree to which it extends may differ depending upon the financial capacity of the employer.

Hence private corporate bodies such as the Appellant trust may engage the services of third parties for the purpose of providing perquisites to their employees. For example, an employer may book flight tickets or train tickets for an employee so as to facilitate their travel in the ordinary course of business. If any negligence occurs resulting in injury to the employee or their property, the airline/railway company cannot disclaim liability on the ground that the activity was carried out for a 'commercial purpose'.

As discussed earlier, if in all such cases the third party service-provider disclaims liability before consumer forums CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 12 of 27 on the ground that the hirer of the service is engaged in trade and commerce, it will open a Pandora's box wherein the employer as well as the employees will not have any remedy. This would defeat the object of providing a speedy remedy to consumers, as outlined in the provisions of the 1986 Act. Further, setting such a precedent may discourage employers from undertaking to provide any facilities for their employees. Hence, it is necessary to clarify that the provision of such services would not usually be included in the definition of 'commercial purpose.'

7. To summarize from the above discussion, though a straight-jacket formula cannot be adopted in every case, the following broad principles can be culled out for determining whether an activity or transaction is 'for a commercial purpose':

(i) The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, 'commercial purpose' is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities.

(ii) The purchase of the good or service should have a close and direct nexus with a profit-generating activity.

(iii) The identity of the person making the purchase or the value of the transaction is not conclusive to the question of whether it is for a commercial purpose. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary.

(iv) If it is found that the dominant purpose behind purchasing the good or service was for the personal use and consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of 'generating livelihood by means of self-

employment' need not be looked into.

(emphasis supplied) CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 13 of 27

11. The OP though contended that the complainant is not 'consumer' under the Act but failed to support their contention. Even on perusal of record before us we fail to find any material which shows that the complainant is engaged in the business of purchasing and selling houses and/or plots on a regular basis, solely with a view to make profit by sale of such houses. Relying on the above settled law, we are of the considered view that the complainant is 'consumer' within the under the Consumer Protection Act, 1986.

 WHETHER THIS COMMISSION HAS JURISDICTION TO DECIDE THE PRESENT COMPLAINT?

12. The counsel for the Opposite Party has raised an issue relating to the jurisdiction of this commission to try the present suit. The counsel for the Opposite Party submits that the complainant, in order to avoid heavy court fees, which they would otherwise have to pay, if they approach the Civil Court, have brought the present complaint case and as the issue relates to recovery of money, this commission does not have the jurisdiction to adjudicate the present consumer complaint. He further submitted that this commission has no territorial jurisdiction as the property in question is situated in Greater Noida, Uttar Pradesh.

13. The jurisdiction of consumer commissions to entertain cases of this nature has been settled via array of judgments. We tend to rely on the dicta of Hon'ble Supreme Court in Narne Construction P. Ltd., etc. v. Union Of India and Ors. Etc., reported at AIR 2012 SC 2369, wherein it was held that when a person applies for the allotment of a building or site or for a flat constructed by the Development Authority and CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 14 of 27 enters into an agreement with the Developer, or the Contractor, the nature of transaction is covered by the expression 'service' of any description. Housing construction or building activity carried on by a private or statutory body constitutes 'service' within the ambit of Section 2(1)(o) of the Act and any deficiency or defect in such service would make it accountable before the competent consumer forum at the instance of consumers.

14. The Hon'ble National Commission in the case of Rohit Srivastava v. Paramount Villas Pvt. Ltd. reported at 2017 SCC OnLine NCDRC 1198, has held as under:

"Having heard learned Counsel for the parties at some length, we are of the opinion that the order cannot be sustained. It is not in dispute that the Registered Office of Opposite Party No. 1 Company is situated in Delhi, i.e., within the territorial jurisdiction of the State Commission at Delhi and therefore, in the light of clear provision contained in Section 17(2)(a), which stipulates that a Complaint can be instituted in a State Commission, within the limits of whose jurisdiction, the Opposite Party actually carries on business. In view of the said provision, we have no hesitation in coming to the conclusion that since the Registered Office of the first Opposite Party is situated in Delhi, the State Commission did have the territorial jurisdiction to entertain the Complaint. In the light of the said provision, in our view, it was open to the Complainant to choose the Forum to file the Complaint, which on the second occasion he decided to file before the State Commission at Delhi."

15. Relying on the above settled law, there is no iota of doubt that this commission has the jurisdiction to entertain the cases CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 15 of 27 including refund of amount, as the refund is sought due to the deficient services of the opposite party and not for any other reason. Consequently, the said contention of the opposite party is also answered in the negative. Moreover, the Opposite Party has a registered office at Parasvnath Metro Tower, Shahdara, New Delhi, till which, the jurisdiction of this commission extends. Therefore, this commission is fully empowered to adjudicate the present consumer complaint and is not paralyzed due to the want of territorial jurisdiction.

 DEFICIENCY OF SERVICE

16. Having discussed the preliminary objections raised on behalf of the Opposite Party, the next issue which arises is whether the Opposite Party is actually deficient in providing its services to the complainant or not. The expression Deficiency of Service has been dealt with by the Hon'ble Apex Court in Arifur Rahman Khan and Ors. vs. DLF Southern Homes Pvt. Ltd. and Ors. reported at 2020 (3) RCR (Civil) 544, wherein it has been discussed as follows:

"23. .......The expression deficiency of services is defined in Section 2 (1) (g) of the CP Act 1986 as:

(g) "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.

17. At this stage, we deem it appropriate to refer to clause 10(a) of the Agreement entered into by both the contesting parties. The perusal of the said clause 10(a) of the flat Buyer Agreement, which has been brought on record by the complainant and has not been disputed by the Opposite Party reflects that the Opposite Party was bound to complete the construction of the flat within 36 months of commencement of construction.

18. However, till date the construction of the tower, in which the flat purchased by the complainant is situated, is not complete as has been submitted by the complainant. The fact has not been negated by the Opposite Party; more so, no evidence to the contrary has been brought on record to prove that the construction has started of the said project. Moreover, it has CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 17 of 27 been well settled that the complainant cannot be expected to wait for an indefinite time period to get the benefits of the hard earned money which they have spent in order to purchase the property in question (Ref: Fortune Infrastructure v. Trevor D'Lima reported at (2018) 5 SCC

442).

19. Consequently, we hold that the Opposite Party is deficient in providing its services to Complainant, due to its failure to handover the said flat to the complainant within the stipulated time period.

20. Having discussed the liability of the Opposite Party, the only question left to adjudicate is as to how the complainant is to be compensated for the deficient acts of the Opposite Party. The counsel appearing on behalf of the Opposite Party has argued that the complainant and the Opposite Party are contractually bound by Clause 10(c) of the Flat Buyer Agreement.

21. The perusal of the clause 10 (c) reflects that the compensation payable by the Opposite Party shall be calculated @ Rs. 5/- per sq. ft. per month for the period of delay. The Hon'ble Supreme Court and the Hon'ble National Commission has time and again held that such stipulation in the Buyers Agreement is against the essence of the Consumer Protection Act, as the same is inclined more towards the builders/developers and the consumer commissions can go beyond the said stipulations to compensate the consumers. Our view is fortified by the recent pronouncement of the Hon'ble Apex Court in Arifur Rahman Khan and Ors. (supra), wherein it has been held as under:

CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 18 of 27

"22. The only issue which then falls for determination is whether the flat buyers in these circumstances are constrained by the stipulation contained in Clause 14 of ABA providing compensation for delay at the rate of Rs. 5 per square feet per month. In assessing the legal position, it is necessary to record that the ABA is clearly one-sided. Where a flat purchaser pays the instalments that are due in terms of the agreement with a delay, Clause 39(a) stipulates that the developer would "at its sole option and discretion"

waive a breach by the allottee of failing to make payments in accordance with the schedule, subject to the condition that the allottee would be charged interest at the rate of 15 per cent per month for the first ninety days and thereafter at an additional penal interest of 3 per cent per annum. In other words, a delay on the part of the flat buyer attracts interest at the rate of 18 per cent per annum beyond ninety days. On the other hand, where a developer delays in handing over possession the flat buyer is restricted to receiving interest at Rs. 5 per square foot per month under Clause 14 (which in the submission of Mr. Prashant Bhushan works out to 1-1.5 per cent interest per annum). Would the condition which has been prescribed in Clause 14 continue to bind the flat purchaser indefinitely irrespective of the length of the delay? The agreement stipulates thirty-six months as the date for the handing over of possession. Evidently, the terms of the agreement have been drafted by the developer. They do not maintain a level platform as between the developer and purchaser. The stringency of the terms which bind the purchaser are not mirrored by the obligations for meeting times lines by the developer. The agreement does not reflect an even bargain.

23. On behalf of the flat purchasers it has been urged by Mr. R Balasubramanian (a submission which has not been controverted in rejoinder) that 95 per cent of the purchase price was paid during the course of the first two and a half to three years. The agreement did not stipulate that the developer would pay any interest on the amount which had already been received. A large chunk of the purchase price was CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 19 of 27 thus available to the developer to complete construction. The court must take a robust and common-sense based approach by taking judicial notice of the fact that flat purchasers obtain loans and are required to pay EMIs to financial institutions for servicing their debt. Delays on the part of the developer in handing over possession postpone the date on which purchasers will obtain a home. Besides servicing their loans, purchasers have to finance the expenses of living elsewhere. To postulate that a Clause in the agreement confining the right of the purchaser to receive compensation at the rate of Rs. 5 per square foot per month (Rs. 7,500 per month for a flat of 1500 square feet) precludes any other claim would be a manifestly unreasonable construction of the rights and obligations of the parties. Where there is a delay of the nature that has taken place in the present case ranging between periods of two years and four years, the jurisdiction of the consumer forum to award reasonable compensation cannot be foreclosed by a term of the agreement. The expression deficiency of services is defined in Section 2 (1) (g) of the CP Act 1986 as:

(g) "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service

24. A failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within a contractually stipulated period amounts to a deficiency. There is a fault, shortcoming or inadequacy in the nature and manner of performance which has been undertaken to be performed in pursuance of the contract in relation to the service. The expression 'service' in Section 2(1) (o) means a service of any description which is made available to potential users including the provision of facilities in connection with (among other things) housing construction. Under Section 14(1)(e), the jurisdiction of the consumer forum extends to directing the opposite party inter alia to remove the deficiency CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 20 of 27 in the service in question. Intrinsic to the jurisdiction which has been conferred to direct the removal of a deficiency in service is the provision of compensation as a measure of restitution to a flat buyer for the delay which has been occasioned by the developer beyond the period within which possession was to be handed over to the purchaser. Flat purchasers suffer agony and harassment, as a result of the default of the developer. Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These legitimate expectations are belied when the developer as in the present case is guilty of a delay of years in the fulfilment of a contractual obligation. To uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate irrespective of the nature or extent of delay would result in a miscarriage of justice. Undoubtedly, as this Court held in Dhanda, courts ordinarily would hold parties down to a contractual bargain. Equally the court cannot be oblivious to the one-sided nature of ABAs which are drafted by and to protect the interest of the developer. Parliament consciously designed remedies in the CP Act 1986 to protect consumers. Where, as in the present case, there has been a gross delay in the handing over of possession beyond the contractually stipulated debt, we are clearly of the view that the jurisdiction of the consumer forum to award just and reasonable compensation as an incident of its power to direct the removal of a deficiency in service is not constrained by the terms of a rate which is prescribed in an unfair bargain.

25. Numerous judgments of this Court have elaborated on the nature and extent of the jurisdiction of the consumer forum to award just and reasonable compensation. Since the decision of this Court in Lucknow Development Authority v. M K Gupta (1994) 1 SCC 243, it has been a settled principle of law that the jurisdiction of the consumer forum extends to the award of compensation to alleviate the harassment and agony to a consumer. In Balbir Singh (2004) 5 SCC 65, a two judge Bench of this Court, while CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 21 of 27 explaining the ambit of the jurisdiction of the adjudicatory fora under the CP Act 1986 observed:

6...The word compensation is of a very wide connotation. It may constitute actual loss or expected loss and may extend to compensation for physical, mental or even emotional suffering, insult or injury or loss. The provisions of the Consumer Protection Act enable a consumer to claim and empower the Commission to redress any injustice done.

26. The court observed that the award of compensation has to be based on a finding of loss or injury and must correlate to it. The court observed that no "hard and fast rule" could be prescribed:

8...No hard-and-fast Rule can be laid down, however, a few examples would be where an allotment is made, price is received/paid but possession is not given within the period set out in the brochure. The Commission/Forum would then need to determine the loss. Loss could be determined on basis of loss of rent which could have been earned if possession was given and the premises let out or if the consumer has had to stay in rented premises then on basis of rent actually paid by him. Along with recompensing the loss the Commission/Forum may also compensate for harassment/injury, both mental and physical.

Where possession has been given, one of the circumstances which must be factored in is that the purchaser has been compensated by the increase in the value of the property.

27. In R.V. Prasannakumaar v. Mantri Castles Pvt. Ltd. under the terms of the ABA, possession of the flats was to be handed over to the buyers on 31 January 2014. However, the developer received an occupation certificate only on 10 February 2016 and it was thereafter from May 2016 that the developer started issuing letters offering possession. Based on this, the NCDRC awarded compensation in the form of interest at the rate of 6 per cent per annum. The developer had pleaded that since the agreement CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 22 of 27 provided compensation at the rate of Rs. 3 per square foot per month for delayed possession, the purchasers were not entitled to anything in addition. Dealing with the submission, this Court observed:

9. We are in agreement with the view of the NCDRC that the rate which has been stipulated by the developer, of compensation at the rate of 3 per sq. ft. per month does not provide just or reasonable recompense to a flat buyer who has invested money and has not been handed over possession as on the stipulated date of 31 January 2014. To take a simple illustration, a flat buyer with an agreement of a flat admeasuring a 1000 sq. ft. would receive, under the agreement, not more than Rs. 3000/- per month. This in a city such as Bangalore does not provide just or adequate compensation. The jurisdiction of the NCDRC to award just compensation under the provisions of the Consumer Protection Act, 1986 cannot in the circumstances be constrained by the terms of the agreement. The agreement in its view is one sided and does not provide sufficient recompense to the flat purchasers.

The Court observed that there was a delay of two years and hence the award of interest at the rate of 6 per cent was reasonable and justified.

28. In Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan (2019) 5 SCC 725, there was a delay of almost two years in obtaining an occupancy certificate after the date stipulated in the ABA. As a consequence, there was a failure to provide possession of the flat to the purchaser within a reasonable period. This Court dwelt on the terms of the ABA under which the builder was entitled to charge interest at 18 per cent per annum for the delay in payment of instalments by the purchaser. On the other hand, the failure to provide possession on the part of the developer was subject to a grace period of twelve months followed by a termination notice of ninety days and a further period of ninety days to the developer to effect a refund. Adverting to these clauses, the court noted:

CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 23 of 27

6.4. A perusal of the apartment buyer's agreement dated 8-5-2012 reveals stark incongruities between the remedies available to both the parties. For instance, Clause 6.4(ii) of the agreement entitles the Appellant builder to charge interest @18% p.a. on account of any delay in payment of instalments from the Respondent flat purchaser. Clause 6.4(iii) of the agreement entitles the Appellant builder to cancel the allotment and terminate the agreement, if any instalment remains in arrears for more than 30 days. On the other hand, as per Clause 11.5 of the agreement, if the Appellant builder fails to deliver possession of the apartment within the stipulated period, the Respondent flat purchaser has to wait for a period of 12 months after the end of the grace period, before serving a termination notice of 90 days on the Appellant builder, and even thereafter, the Appellant builder gets 90 days to refund only the actual instalment paid by the Respondent flat purchaser, after adjusting the taxes paid, interest and penalty on delayed payments. In case of any delay thereafter, the Appellant builder is liable to pay interest @9% p.a. only.

6.5. Another instance is Clause 23.4 of the agreement which entitles the Appellant builder to serve a termination notice upon the Respondent flat purchaser for breach of any contractual obligation.

If the Respondent flat purchaser fails to rectify the default within 30 days of the termination notice, then the agreement automatically stands cancelled, and the Appellant builder has the right to forfeit the entire amount of earnest money towards liquidated damages. On the other hand, as per Clause 11.5(v) of the agreement, if the Respondent flat purchaser fails to exercise his right of termination within the time limit provided in Clause 11.5, then he shall not be entitled to terminate the agreement thereafter, and shall be bound by the provisions of the agreement.

Justice Indu Malhotra speaking for the Court noted:

6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 24 of 27 contract framed by the builder. The contractual terms of the agreement dated 8-5-2012 are ex facie one-sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder.

The Court observed that in these circumstances, the flat purchasers could not be compelled to obtain possession which was offered almost two years after the grace period under the agreement had expired. Hence, the NCDRC was held to have correctly awarded interest at the rate of 10 percent per annum."

22. Having discussed the law as it stands today, the submission of the Opposite Party that the complainant is not entitled to compensation beyond what has been provided under clause 10 (c) of the Flat Buyer Agreement is unsustainable being a one sided clause, favoring the Opposite Party. Consequently, we hold that the Complainant is entitled to refund of the entire amount paid by them along with substantial interest which would serve the ends justice along with cost for mental agony and harassment as well as litigation cost.

23. Before we finally adjudicate the quantum of the compensation payable, it is imperative to refer to the recent pronouncements of the Hon'ble Supreme Court in terms of "Interest" which is being allowed on the refunded amount. In Arifur Rahman Khan and Ors. (supra) which is the latest pronouncement (24.08.2020) on the cause, the Hon'ble Apex Court has allowed an interest @ 6% p.a. on the amount received by the Opposite Party, payable within one month and CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 25 of 27 in case of default to pay within the stipulated period, an interest @ 9% p.a. was payable on the said amount.

24. Keeping in view the facts of the present case and the extensive law as discussed above, we direct the Opposite Party to refund the entire amount paid by the complainant i.e. Rs. 18,98,593.50/- along with interest as per the following arrangement:

A. An interest @ 6% p.a. calculated from 01.05.2006 (the first payment received by the OP) till 21.10.2020 (being the date of the present judgment);

B. The rate of interest payable as per the aforesaid clause (A) is subject to the condition that the OP pays the entire amount on or before 20.12.2020; C. Being guided by the principles as discussed above, in case the OP fails to refund the amount as per the aforesaid clause (A) on or before 20.12.2020, the entire amount is to be refunded with an interest @ 9% p.a. calculated from 01.05.2006 till the actual realization of the amount.

25. In addition to the aforesaid and taking into consideration the facts of the present case, the Opposite Party is directed to pay a sum of A. Rs. 2,50,000/- as cost for mental agony and harassment to the complainant; and B. The litigation cost to the extent of Rs. 50,000/-.

26. Applications pending, if any, stands disposed of in terms of the aforesaid judgment.

27. A copy of this judgment be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986. The CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 26 of 27 judgment be uploaded forthwith on the website of the commission for the perusal of the parties.

28. File be consigned to record room along with a copy of this Judgment.

(DR. JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (ANIL SRIVASTAVA) MEMBER Pronounced On:

21.10.2020 CC 987/2016 RAJAN SODHI VS. PARSVNATH DEVELOPERS LTD. Page 27 of 27

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