State Consumer Disputes Redressal Commission
Narender Kumar Dhameja vs Parsvanth Developers Ltd. on 13 October, 2017
IN THE STATE COMMISSION: DELHI
(Constituted under Section 9 of the Consumer Protection Act, 1986)
Date of Decision: 13.10.2017
Complaint Case No.245/2012
In the matter of:
Sh. Narender Kumar Dhameja
S/o Sh. Teju Mal
R/o 103, A-8/15A
Rana Pratap Bagh
Delhi-110007 ........Complainant
Versus
M/s. Parsvanath Developers ltd.
Parsvnath Metro Tower
Near Shahdara Metro Station
Shahdara, Delhi-110032 ........Opposite Party
CORAM
N P KAUSHIK - Member (Judicial)
1. Whether reporters of local newspaper be allowed to see the judgment? Yes
2. To be referred to the reporter or not? Yes
N P KAUSHIK - MEMBER (JUDICIAL)
JUDGMENT
1) Complainant gave a cheque for an amount of Rs.
3,92,850/- dated 11.11.2007 to Parsvnath Developers Ltd. (in short the OP) towards booking of a flat in one of its projects known as 'Parsvnath Sterling Ghaziabad'. Flat bore the number T1-1001 on 3rd floor in tower No. T-1 having an area of 1620 sq. ft. Total cost of the flat was Rs. 39,28,500/-. A 'flat buyer's agreement' dated 04.12.2007 was entered into between the Page 1 of 12 parties. In terms of clause 10(a) of the flat buyers' agreement, the construction of the flat was to be completed by the OP by March 2008. Complainants submitted that he had been paying money demanded by the OP from time to time. Uptil the date of filing of the present complaint, an amount of Rs. 36,53,220/- stood paid to the OP which was almost 90% of the total cost of the flat.
2) Submission of the complainant is that the OP instead of spending the money on the project in question invested the same in other projects for expansion of his business. OP started dilly dallying the handing over of the possession of the flat. Complainant was told that due to exponential prices of the flats, OP wanted to cancel the allotment and sell the flat to a third person.
3) Frustrated with the cold responses received from the OP, complainant sent legal notice dated 26.05.2012 demanding refund of the entire amount alongwith interest @ 24% p.a.
4) OP replied to the legal notice. Vide its reply dated 15.06.2012 OP stated that the active measures were being taken by mobilizing resources, rescheduling work and augmenting labour force at the site to expeditiously complete the remaining work at the site. Delay that occurred was due to restraints from Page 2 of 12 courts/authorities, non-availability of building materials and disputes with the contractors. Finally the complainant filed the present complaint in this Commission in July 2012, praying for refund of the entire amount of Rs. 36,53,220/- alongwith interest @ 24% p.a. Compensation to the tune of Rs. 5,00,000/- and litigation charges of Rs. 75,000/- had also been prayed for.
5) OP filed its written version and stated that a 'global recession' hit the economy in the country in 2009. Thereafter it affected real estate sector of India which obstructed the continuation of the construction. Due to the slowdown trend of the economy, OP experienced financial constraints. OP vehemently relied upon clause 10(c) of the flat buyers' agreement providing for compensation to the buyers @ Rs. 5/- per sq. ft. per month of the super area in the event of delay in handing over the possession. OP also submitted that clause 10(a) of the flat buyers' agreement provided for a total time period of 24 months besides an additional grace period of 6 months for completion of the construction.
6) Complainant filed rejoinder reiterating the averments made in the complaint. Parties filed their affidavits towards evidence. Written arguments too have been placed on record. Page 3 of 12
7) I have heard at length the arguments addressed by the counsels for the parties.
8) OP in his legal notice and in the written version admitted having received the amount of Rs. 36,53,220/- from the complainant. Sole controversy in the matter is the delay in handing over the possession of the flat. 'Flat buyer's agreement' was entered into between the parties on 04.12.2007 and the possession was to be handed over within a period of 24 months therefrom. In its reply to the legal notice dated 26.05.2012 OP admitted that the construction could not be completed. Even in its written arguments filed before this Commission on 23.05.2014, OP admitted that the flat in question was not complete in all respects for handing over the physical possession.
9) Defence raised by the OP in its written arguments is the 'economic slowdown' in the world economy. On the contrary, the plea taken by the OP in its reply to the legal notice is that there were restraint orders from the courts/authorities, non-availability of building materials and disputes with the contractors. No plea of the economic slowdown worldwide has been taken in the reply to the legal notice. On the contrary in its written version OP has not raised any plea of restraints from courts/authorities, non- Page 4 of 12 availability of building materials and disputes with the contractor. Clearly the OP is taking different pleas at different places. The sole defence thus raised by the OP is not worthy of credit. Be that as it may, the Hon'ble National Commission in the case of Puneet Malhotra v. Parsvnath Developers Ltd., II (2015) CPJ 18 (NC) had the occasion to deal with the defence of 'global recession' as raised by the present OP in the said case. Relevant portion of the judgment is reproduced below:
"6. Vide Clause 10(a) of the Flat Buyers Agreement, the opposite party represented to the complainants that the construction of the flat was likely to be completed within thirty six months from the date of commencement of the construction of the particular block in which the flat was located, on receipt of all requisite approvals but subject to force majeure and restraints/restrictions from any Court/Authorities, non- availability of building material and any circumstances beyond the control of the Developers, subject to timely payment by the buyer. It is an admitted case that the opposite party failed to complete the construction within the aforesaid time. As far as the statutory approvals are concerned, the same were to be obtained by the opposite party and the complainants cannot be held responsible for any delay in grant of such approvals though, it is not the case of the opposite party that the construction could not be completed for want of aforesaid statutory approvals. The case of the opposite party is that the project could not be completed on account of the recession in the Real Estate market, including reduction in the number of bookings and default on the party of the some of the allottees in making timely payment. The terms of the agreement between the parties do not justify the delay in completion of the project on the aforesaid grounds and therefore, the opposite party was duty bound to complete the construction irrespective of the recession in the market, reduction in bookings and the alleged default on the part of some of the allottees in making timely payment. This is not the case of the opposite party; that the construction could not be completed due to any Page 5 of 12 restriction from any Court/Authority or due to non- availability of building material. If some of the allottees had not made timely payment, it was for the opposite party to arrange the requisite finance either by taking loan or from its own resources or by liquidating Inventory at a lower price. Therefore, the delay in completion of the projects cannot be justified."
10) Defence relating to the global recession and non- availability of building materials was also dealt with by the Hon'ble National Commission in the case of Swarn Talwar and two Ors. v. Unitech Ltd. (consumer case No. 347 of 2014 decided on 14.08.2015) National Commission noticed the case of Satish Kumar Pandey & Anr. v. Unitech Ltd. (decided on 8.6.15 in CC No.427/14). The relevant portion of the judgment is reproduced below:-
"Neither any new legislation was enacted nor an existing rule, regulation or order was amended stopping suspending or delaying the construction of the complex in which apartments were agreed to be sold to the complainants. There is no allegation of any lock out or strike by the labour at the site of the project. There is no allegation of any slow down having been resorted to by the labourers of the opposite party or the contractors engaged by it at the site of the project. There was no civil commotion, war, enemy action, terrorist action, earthquake or any act of God which could have delayed the completion of the project within the time stipulated in the Buyers Agreement. It was contended by the Counsel for the OP that the expression 'slow down' would include economic slow down or recession in the Real Estate sector. I, however, find no merit in this contention. The word 'slow down' having been used alongwith the words lock-out and strike, I have to be read ejusdem generis with the words lock-out and strike and therefore, can mean only a slow down if resorted by the labourers engaged in construction of the project.Page 6 of 12
As regards, alleged shortage of labour, I find that no material has been placed on record by the OP that despite trying, it could not be get labourers to complete the construction of the project within the time stipulated in the Buyers Agreement. It was submitted by the learned counsel for the complainants that ordinarily big builders such as the OP in these cases, are contracting/sub contracting the construction work to the contractors engaged by them, instead of employing their own labourers on a regular basis, the purpose being to ensure that they are not saddled with the wage bill of those regular laboures, in case the opposite party does not have adequate work for them. There is no evidence of the OP having been invited tenders for appointment of contractors/sub contractors for executing the work at the site of those projects and no contractor/sub contractor having come forward to execute the project on the ground that adequate labour was not available in the market. Therefore, it cannot be accepted that the opposite party could not have arranged adequate labor, either directly or through contractors/sub-contractors, for timely completion of the project. As regards the alleged shortage of water, bricks and sand in the market, I find that there is no evidence filed by the OP, to prove that it was unable to procure water, sand and brick in adequate quantity. This is also their case that the notification of the Government, being relied upon by the opposite party, is an old notification, which was in force even at the time of the opposite party promised possession in 36 months. There is no evidence of the opposite party having invited tenders for supply of bricks and water and there being no response to such tenders. In fact, if the work is to be executed through contractors/sub-contractors, the material such as bricks, and and even water will be arranged by the contractors/sub-contractors and not by the opposite party. As noted earlier, there is no evidence of the opposite party having invited tenders after awarding the work of project in question to the contracts/sub-contractors and there being no response to such tenders. Therefore, I find no merit in the plea that the completion of the project was delayed due to non availability of water, sand and bricks in adequate quantity."
11) In view of the legal position laid down by the Hon'ble National Commission the plea of 'global recession' is of no avail Page 7 of 12 to the OP. OP has relied upon clause 10 (c) of the 'flat buyers agreement' in support of his contention that the complainant can be compensated for the period of delay in completion of the project. Hon'ble National Commission in the case of Puneet Malhotra (supra) dealt with the proposition and observed as under :
8. The Clause on which the reliance is placed by the opposite party, reads as under:
In case of delay in construction of the Flat beyond the period as stipulated subject to force majeure and other circumstances as aforesaid under:
Clause 10:
(a), the Developer shall pay to the Buyer compensation @ Rs.53.82/- (Rupees Fifty three and paise eighty two only) per sq. meter or @ Rs.5/- (Rupees Five only) per sq. ft. of the super area of the Flat per month for the period of delay. Likewise, if the Buyer fails to settle the final account of the Flat within thirty days from the date of issue of the final call notice, the buyer shall be liable to pay to the Developer holding charges @ Rs.53.82/-
(Rupees Fifty three and paise eighty two only) per sq. meter or @ Rs.5/- (Rupees Five only) per sq. ft. of the super area of the Flat per month on expiry of thirty days notice. Further, in the event of his failure to take possession for any reason whatsoever, the Buyer shall be deemed to have taken possession of the Flat on expiry of thirty days of offer of possession for all intents and purpose under this Clause/Agreement including for liability to payment of maintenance and any other charges, levies in respect of the Flat.
9. In our opinion, the aforesaid Clause applies only in a case where construction of the flat is delayed but despite delay, the buyer accepts possession of the said flat from the seller, and consequently, accounts have to be settled between the parties. At that stage, the buyer would pay the agreed holding charges to the seller, who will pay the Page 8 of 12 agreed compensation on account of delaying the construction of the flat. The aforesaid Clause, in our opinion would not apply to a case where the buyer, on account of the delay on the part of the seller in constructing the flat, is no more interested in the flat subject matter of the agreement and wants to take refund of the amount, which he had paid to the seller. In any case, such a clause, where the seller, in case of default on the part of the buyer, seeks to recover interest from him at the rate of 24% per annum will amount to an unfair trade practice since it gives an unfair advantage to the seller over the buyer.
12) Hon'ble National Commission also had the occasion to deal with the plea of compensation @ Rs. 5 per sq. ft. per month of the super area in the case of Swarn Talwar (supra). Relevant portion of the judgment is given below:
"It is an undisputed proposition of law that ordinarily the parties are bound by the terms and conditions of the contract voluntarily agreed by them and it is not for a Consumer Forum or even a Court to revise the said terms.
However, a term of a contract, in my view will not be final and binding if it is shown that the consent to the said term was not really voluntary but was given under a sort of compulsion on account of the person giving consent being left with no other choice or if the said term amounts to an unfair trade practice. It was submitted that the learned Counsel for the complainants that the terms providing for payment of a nominal compensation such as Rs.5/- per square foot of the super area having become the order of the day in the contracts designed by big builders a person seeking to buy an apartment is left with no option but to sign on the dotted lines since the rejection of such term by him would mean cancellation of the allotment. He further submitted that a person seeking to acquire a built up flat instead of purchasing a plot and then raising construction on it, therefore, is not in a position to protest resist the inclusion of such a term in the Buyer's Agreement, and has to rely upon the reputation of the builder, particularly if he is a big builder such as Unitech Ltd. He also submitted that the format of Page 9 of 12 the Buyer's Agreement is never shown to the purchasers at the time of booking the apartment and if he refuses to sign the Buyer's Agreement on the format provided by the builder, not only will he lose the booking, even the booking amount/earnest money paid by him will be forfeited by the builder. I find merit in the above referred submission of the learned counsel. A person who, for one reason on the other, either cannot or does not want to buy a plot and raise construction of his own, has to necessarily go in for purchase of built up flat. It is only natural and logical for him to look for an apartment in a project being developed by a big builder such as the opposite party in these complaints. Since the contracts of all the big builders contain a term for payment of a specified sum as compensation in the event of default on the part of the builder in handing over possession of the flat to the buyer and the flat compensation offered by all big builders is almost a nominal compensation being less than .25% of the estimated cost of construction er month, the flat buyer is left with no option but to sign the Buyer's Agreement in the format provided by the builder. No sensible person will volunteer to accept compensation constituting about 2-3% of his investment in case of delay on the part of the contractor, when he is made to pay 18% compound interest if there is delay on his part in making payment.
It can hardly be disputed that a terms of this nature is wholly one sided, unfair and unreasonable. The builder charges compound interest @ 18% per annum in the event of the delay on the part of buyer in making payment to him but seeks to pay less that 3% per annum of the capital investment, in case he does not honour his part of the contract by defaulting in giving timely possession of the flat to the buyer. Such a term in the Buyer's Agreement also encourages the builder to divert the funds collected by him for one project, to another project being undertaken by him. He thus, is able to finance a new project at the cost of the buyers of the existing project and that too at a very low cost of finance. If the builder is to take loan from Banks or Financial Institutions, it will have to pay the interest which the Banks and Financial Institutions charge on term loan or cash credit facilities etc. The interest being charged by the Banks and Financial Institutions for financing projects of the builders is many times more than the nominal compensation which the builder would pay to the flat buyers in the form of flat compensation. In fact, the Page 10 of 12 opposite party has not even claimed that the entire amount recovered by it from the flat buyers was spent on this very project. This gives credence to the allegation of the complainants that their money has been used elsewhere. Such a practice, in my view, constitutes unfair trade practice within the meaning of Section 2 ® of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the Clauses of Section 2 ® (1) of the Act that would be immaterial considering that the unfair trades, methods and practices enumerated in Section 2 9r) (1) of the Act are inclusive and not exhaustive, as would be evident from the use of word "including" before the words "any of the following practices".
13) Hard earned money of the house buyers is being used by the builders in expanding their business by way of investing in other projects. It was for these reasons that the legislature had to enact Real Estate (Regulations and Development) Act 2016. Dream of the complainant to have her own house is shattered. In the circumstances OP is directed to pay to the complainant as under:-
(a) refund the amount of Rs.36,53,220/- alongwith interest @ 18% p.a. from the date of its deposit till the date of its realization.
(b) to pay compensation to the tune of Rs.5,00,000/-
to the complainant for harassment inconvenience, frustration, sadness, anguish and mental agony caused to her.
(c) to pay litigation charges to the tune of Rs.50,000/- All the abovesaid payments shall be made by the OP to the complainant within a period of 90 days failing which the aforesaid amounts shall carry interest @ 24% p.a. Complaint is accordingly disposed of.
Page 11 of 12
14) Copy of the orders be made available to the parties free of costs as per rules and thereafter the file be consigned to Records.
(N P KAUSHIK) MEMBER (JUDICIAL) (fatima) Page 12 of 12