State Consumer Disputes Redressal Commission
Sudhir Kumar Dixit & Anr. vs Parteek Realots India Pvt. Ltd. on 22 July, 2019
IN THE STATE COMMISSION: DELHI (Constituted under section 9 of the Consumer Protection Act, 1986) Date of Hearing:22.07.2019 Date of decision:26.07.2019 Complaint No. 43/2011 IN THE MATTER OF Sh. Sudhir Kumar Dixit R/o 418, Sector-12, Pocket-8, Dwarka, New Delhi-110075 Smt. Manju Dixit, W/o Sh. Sudhir Kumar Dixit, R/o 418, Sector-12, Pocket-8, Dwarka, New Delhi-110075 ....Complainant VERSUS M/s Prateek Realtors India Pvt. Ltd., (A company incorporated under the Companies Act 1956) Having its Regd Office at:- 21, Ras Vihar, 99 A, I.P. Extension, Delhi-110092 Through its Authorised Representative ....Opposite Party HON'BLE SH. ANIL SRIVASTAVA, MEMBER 1. Whether reporters of local newspaper be allowed to see the judgment? Yes 2. To be referred to the reporter or not? Yes Present: Sh. Pallav Kumar, Counsel for the complainant 1 Sh. Sudeep Singh, Counsel for the OP ANIL SRIVASTAVA, MEMBER JUDGEMENT
1. This complaint has been filed by Sh. Sudhir Kumar Dixit and Anr.
resident of New Delhi for short complainants under Section 17 of the Consumer Protection Act 1986, the Act, against M/s Prateek Realtors India Pvt. Ltd. hereinafter referred to as OPs, alleging deficiency of service on part of the above named OP whereby the latter by way of its fraudulent and malafide intentions coupled with indifferent attitude towards the complainants created circumstances leading to the cancellation of allotment of the residential apartment/flat of the complainants thereby unduly enriching the OP at the expense of the helpless complainants and praying for the relief as under:-
a. Quash the impugned cancellation letter dated 21.12.2010 issued by the OP with reference to flat no.
D-1406 at „The Prateek Laurel‟, GH-001, Sector-120, Noida (U.P.) ;and b. Direct the OP to pay interest @ 21% p.a. on the amount withheld malafidely by the OP i.e. Rs. 12,12,060/- from the date of cancellation letter i.e. 21.12.2010 till the actual/final quashing of the impugned cancellation letter by this Hon‟ble Commission; and c. Direct the OP to compensate the complainants by awarding damages of Rs. 10,00,000/- for the mental agony, harassment and loss of reputation, and degradation of social standing suffered by the complainants on account of the deficiency of service by the OP; and d. Direct the OP to pay the complainant the litigation cost of Rs. 1,25,000/-; and e. Pass such other order(s) as are deem fit and proper in the facts and circumstances of the case and in the interest of justice and equity.
2. Facts of the case necessary for the adjudication of the complaint are these.
23. On 04.02.2010 the complainants herein booked a residential unit in the above mentioned Residential Apartments in the joint name in Block 'D', Type-V, at 14th floor bearing Unit No. D-1406, having a super area of 1135 sq. ft. by paying the OP Rs. 1,00,000/- as earnest money. The Basic Sale Price of the unit was fixed at Rs. 28,67,010/-. The booking booklet contained a clause whereby car parking in the stilt area was made optional and is being sold by the OP for Rs. 2,00,000/-. However, in Clause-6 of the booklet it was written that 'One covered car parking is compulsory for each apartment' thereby creating a kind of dichotomy by making the car parking compulsory rather than optional as envisaged in the list of optional items given in the booking booklet. The complainant was issued the allotment letter on 19.04.2010.
4. After the issuance of the allotment letter the complainant made the payment of Rs. 12,12,060/- on different dates but not as per the schedule. It is noticed from the records that payment was never made to the OPs within the prescribed time. The complainant did not pay the service tax as demanded keeping in view the instructions in vogue. Shorn of superfluities the OPs owing to the delay done in making the payment at various stages and not making any payment after paying Rs. 12,12,060/-, cancelled the allotment as per their letter dated 21.12.2010 the relevant extracts of which is indicated as under:-
Mr. Sudhir Kumar Dixit and Mrs. Manju Dixit 418, Sector-12, Pocket-8, Dwarka New Delhi Sub:- In reference of cancellation of flat no. D-1406 At "The Prateek Laurel", GH-001 Sec-120 Noida (U.P.) Dear Sir, Kindly refer to the above. In this regard it is mentioned that as the balance amount for the said flat has not been received by us on time for this we have given a reminder letter also. Hence the booking of the said flat has been cancelled.
Thank you Prateek Realtors India Pvt. Ltd.
5. It is this cancellation letter assailed in this complaint. The complainant has alleged that the OPs even after cancellation of allotment had sent a demand notice which act on the part of the OP reflects unfair trade practice OPs were noticed and in response thereto they have filed 3 their reply resisting the complaint both on merit and on technical ground stating that this Commission does not enjoy the territorial jurisdiction. However the registered office of the OPs being in Delhi, the objection of OP to this effect relying on the provisions of Section 17 of the Consumer Protection Act 1986 which says that the territorial jurisdiction of the consumer forum is determined, from the place where OPs have their registered office and the OPs having their office at Delhi, the objection to this effect is not maintainable, and is sequentially rejected. Their objection on merit is that the complainant has not made the payment as per schedule and therefore defaulter and thus the cancellation of the allotment as a consequence thereof does not suffer from any infirmity.
6. The complainant had thereafter filed rejoinder rebutting the contentions raised by the OPs and reiterating their stand as contained in the complaint. Both sides have filed evidence in support of their pleadings. Written Submission filed by both sides are also on record.
7. This matter was listed before this Commission for final hearing on 22.07.2019 when the counsel for both sides appeared and advanced their argument, the complainant pressing for refund of the amount deposited with interest and the OPs, for forfeiture of the earnest money while refunding the amount.
8. Point for adjudication in this complaint is as to what is earnest money and whether, consequent upon the cancellation of the unit owing to the default done by the complainant, the OPs can enforce deduction or withheld the earnest money.
9. The Hon'ble NCDRC in their order dated 06.01.2015 passed in the matter of DLF vs. Bhagwanti Narula as reported in I [2015] CPJ 310 (NC) is pleased to observe as under:
It is also evident from a perusal of Clause 9 of the Agreement that in the event of failure of the complainant to make payment in terms of the agreement between the parties, the Petitioner Company was entitled to forfeit the entire amount of the earnest money and the Agreement to Sell was to stand cancelled. In view of the aforesaid Clause, it cannot be disputed that since the complainant had failed to make payment as per her Agreement with the Petitioner Company, the Agreement between the parties could be cancelled and the Petitioner Company was entitled to forfeit the earnest money. However, the question which primarily arises for consideration in this case is as what would constitute the earnest money and to what 4 extent the Petitioner Company is entitled to forfeit the same. The contention of the petitioner is that as agreed by the parties in terms of Clause 8 of the Agreement, 20% of the sale price, irrespective of the stage at which the payment was made constitutes earnest money whereas the case of the complainant as submitted during the course of arguments was that only the amount of Rs.63,469/- which was paid at the time of booking the apartment can be said to be the earnest money and only that amount could be forfeited.
In Maula Bux Vs. Union of India 1969 (2) SCC 554, the Honble Supreme Court quoted the following observations made by the Judicial Committee in Kunwar Chiranjit Singh Vs. Har Swarup AIR 1926 PC 1 Earnest money is part of the purchase price when the transaction goes forward; it is forfeited when the transaction falls through, by reason of the fault or failure of the vendee.
In Shree Hanuman Cotton Mills & Ors. Vs. Tata Air Craft Ltd. 1969 (3) SCC 522, the Honble Supreme Court quoted the following characteristics of the earnest money:-
15. Borrows, in Words & Phrases, Vol. II, gives the characteristics of "earnest". According to the author, "An earnest must be a tangible thing. That thing must be given at the moment at which the contract is concluded, because it is something given to bind the contract, and, therefore, it must come into existence at the making or conclusion of the contract. The thing given in that way must be given by the contracting party who gives it, as an earnest or token of good faith, and as a guarantee that he will fulfil his contract, and subject to the terms that if, owing to his default, the contract goes off, it will be forfeited. If, on the other hand, the contract is fulfilled, an earnest may still serve a further purpose and operate by way of part payment."
After considering several decisions on the subject, the following principles were laid down by the Honble Supreme Court regarding earnest:
5(1) It must be given at the moment at which the contract is concluded.
(2) It represents a guarantee that the contract will be fulfilled or, in other words, 'earnest' is given to bind the contract.
(3) It is part of the purchase price when the transaction is carried out.
(4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.
(5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest.
The above referred principles were reiterated in Satish Batra Vs. Sudhir Rawal (2013) 1 SCC 345. It would, thus, be seen that only that amount would constitute earnest money which is paid at the time when contract is concluded between the parties. Any payment made after the contract is concluded, cannot be said to be part of the earnest money. In the case before us, admittedly, only a sum of Rs.63,469/- was paid to the Petitioner Company at the time the deal was concluded between the parties. Therefore, in view of the above said referred authoritative pronouncements of the Honble Supreme Court, only the aforesaid forfeited amount can constitute earnest money.
In Maula Bux case (Supra), the Honble Supreme Court took the following view with respect to forfeiture of the earnest money -
5. Forfeiture of earnest money under a contract for sale of property-movable or immovable--if the amount is reasonable, does not fall within s. 74. That has been decided in several cases: Kunwar Chiranjit Singh v. Hat Swarup (t); Roshan Lal v. The Delhi Cloth and General Mills Company Ltd., Delhi (2); Muhammad Habibullah v. Muhammad Shafi (3); Bishan Chand v. Radha Kishan Das(4); These cases are easily explained, for forfeiture of a reasonable amount paid as earnest money does not 6 amount to imposing a penalty. But if forfeiture is of the nature of penalty, s. 74 applies.
It would thus be seen that only a reasonable amount can be forfeited as earnest money in the event of default on the part of the purchaser and it is not permissible in law to forfeit any amount beyond a reasonable amount, unless it is shown that the person forfeiting the said amount had actually suffered loss to the extent of the amount forfeited by him. In our opinion, 20% of the sale price cannot be said to be a reasonable amount which the Petitioner Company could have forfeited on account of default on the part of the complainant unless it can show it had only suffered loss to the extent the amount was forfeited by it. In our opinion, in absence of evidence of actual loss, forfeiture of any amount exceeding 10% of the sale price cannot be said to be a reasonable amount.
10. The Hon'ble Supreme Court of India in the matter of HUDA and another versus in Kewal Krishan Goel and ors as reported in (1996) 4 SCC 249 is pleased to hold that the earnest money is a part of the purchase price when the transaction gets through and the same is forfeited when the transaction falls through by reason of the default or failure on the part of the vendee.
11. The Hon'ble Apex Court in the matter of Prashant Kumar Shahi versus Ghaziabad Development Authority as reported in (2000) 4 SCC 120 is pleased to hold as under:-
Having failed to perform his part of the contract, the appellant cannot be permitted to urge that he is not liable to pay the balance amount along with interest as according to him the respondent-authority had failed to deliver possession as per terms of the brochure. The authority was not expected to deliver possession in the absence of the payment of the agreed amount.
12. In the light of the facts of the case, it becomes clear that the complainant having not paid the instalments and when paid, paid after the schedule date had been a defaulter, in which case, relying on the aforesaid judgments, the OP had every right to forfeit amount of earnest money deposited by complainant.7
13. In this view of the matter I am of the considered view that the complaint deserves to be accepted and it is ordered accordingly. Having done so, the following directions are issued to the OPs, namely, a. The OPs shall refund the principal amount deposited by the complainant as agreed to by the ld. Counsel for the OP, with, simple interest at the rate of 10%. This be done within a period of two months from the date of receipt of this order, and, secondly, b. The OPs while refunding the amount as ordered in the preceding paragraph would be entitled to forfeit the earnest money paid while booking the flat.
14. Ordered accordingly.
15. A copy of this order be forwarded to the parties to the case free of cost as statutorily required.
16. File be consigned to record.
(ANIL SRIVASTAVA) Member sl 8