National Consumer Disputes Redressal
Ajay Enterprises Pvt. Ltd. & 2 Ors. vs Shobha Arora & Anr. on 10 May, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 348 OF 2016 (Against the Order dated 22/01/2016 in Complaint No. 113/2011 of the State Commission Delhi) 1. AJAY ENTERPRISES PVT. LTD. & 2 ORS. THROUGH AUTHORIZED REPRESENTATIVE, REGD. OFFICE AT 8TH FLOOR, EROS CORPORATE TOWER, NEHRU PLACE, NEW DELHI-110019 2. SH. JAGDISH RAI SOOD THE CHIEF MANAGING DIRECTOR, AJAY ENTERPRISES PVT. LTD., 8TH FLOOR, EROS CORPORATE TOWER, NEHRU PLACE, NEW DELHI-110019 3. MR. MD. AWAISH AKHTER GENERAL MANAGER (SALES & MARKETING), AJAY ENTERPRISES PVT. LTD., 8TH FLOOR, EROS CORPORATE TOWER, NEHRU PLACE, NEW DELHI-110019 ...........Appellant(s) Versus 1. SHOBHA ARORA & ANR. W/O. LATE SH. UGAR SAIN ARORA, R/O. A-19, NIZAMUDDIN EAST, NEW DELHI-110013 2. VARUN ARORA S/O. LATE SH. UGAR SAIN ARORA, R/O. A-19, NIZAMUDDIN EAST, NEW DELHI-110013 ...........Respondent(s)
BEFORE: HON'BLE MR. PREM NARAIN,PRESIDING MEMBER
For the Appellant : Mr Vikas Mishra, Advocate with
Ms Priya Deep and Ms Sangeeta
Chaudhary, Advocates For the Respondent : Mr Vaibhav Gaggar, Advocate with
Ms Smriti Jain and Ms Sweta Jain,
Advocates
Dated : 10 May 2019 ORDER
PER MR PREM NARAIN, PRESIDING MEMBER
This appeal has been filed by appellants Ajay Enterprises Pvt. Ltd and others against the order dated 22.01.2016 passed by the State Commission in Consumer Complaint no. 113 of 2011. The brief facts of the case as mentioned in the State Commission's order are that:
2. Respondent/Complainant Nos. 1 and 2 who are the mother and son respectively, got booked a commercial space in one of the projects of M/s Ajay Enterprises Pvt., Ltd., 8 TH Floor Eros Corporate Tower, Nehru Place, New Delhi-110019 on 20.11.2006. The project is located at K Block, I.M.T. Manesar and known by the name of Eros Corporate Park, Manesar, Gurgaon (Haryana). Plot buyer's agreement was entered into between the parties on 20.11.2006. The commercial space measures 876 sq.ft. and was agreed to be sold @ Rs 5435 per sq.ft. Unit No. 514 on 5th floor of the project was allotted to the complainants. Total sale consideration of the commercial space was Rs.47,61,060/-. OP also charged an amount of Rs.2,25,000/- towards car parking space. Initially an amount of Rs.7,14,160/- was paid by the complainants to the OP on 03.10.2006. In all complainants had paid an amount of Rs.27,12,462/- by 08.09.2008.
3. Grievance of the complainants was that the OP at the time of signing of the agreement represented that the project has the sanction of the Haryana Urban Development Authority. But the said sanction was however received only on 19.06.2007. Next submission of the complainant was that the OP vide its letter dated 04.08.2007 informed the complainants that as per revised sanction plan the number of floors was increased to ground floor plus 14 floor whereas initially it was agreed as ground floor plus 7 floors. OP vide its letter dated 24.01.2009 sent a new payment schedule. Complainants further stated that on their visit to the site on 25.01.2009, they found the project still incomplete and building under construction. Complainants further submitted that the OPs had assured that the project would be completed in 2 or 3 years but even in January 2009 they found the same incomplete.
4. The complainants contended that they had got the commercial space booked for opening an advertising consultancy. The same was to be run for earning their livelihood through self-employment. Complainants submitted that after a lapse of a period of six years and waiting for the possession of the commercial space, complainant No. 2 joined a job in a private company. Complainants stated that complainant No. 1 is an old lady of 74 years. On 14.01.2011 complainants received a letter from the OP calling upon the complainants to make payment of the amount of Rs. 28,24,366/-. Complainants then sent a legal notice dated 04.02.2011 asking the OPs to refund the amount paid by them.
5. On the basis of the aforesaid facts, the complainants filed a consumer complaint and prayed for refund of the amount deposited by them along with interest @ 24% p.a. w.e.f. January 2009, compensation to the tune of Rs.1,50,000/- along with litigation charges of Rs.50,000/-.
6. Defence raised by the OPs in their written version is that the complainants applied for allotment of the commercial space for commercial purposes only and for that reason they do not fall within the ambit of the expression, 'consumer'. OPs further submitted that it received occupation certificate on 26.05.2011. OP contended that in terms of clause 13 of the agreement, 25% of the total value of the commercial space constituted the earnest money. In case of the complainants asking for cancellation of the allotment, the earnest money is liable to be forfeited. Next submission of the OPs was that at the time of booking, the complainants were allotted commercial space bearing No. 514 on 5th floor of the building for an area of 876 sq. ft. The super area of the commercial space got increased to 971 sq. ft. as per revised sanctioned plan. Last contention of the OP was that it never promised to handover the possession of the commercial space to the complainant within a particular time frame.
7. The State Commission vide its order dated 22.01.2016 allowed the complaint and ordered the refund of deposited amount of Rs.27,12,462/- along with 18% interest per annum from 01.01.2009 till the date of realisation as well as compensation of Rs.1.5 lakh and cost of litigation as Rs.50,000/-.
8. Aggrieved by the order of the State Commission the present appeal has been filed.
9. Heard the learned counsel for both the parties and perused the records. Learned counsel for the appellants states that the complaint was barred by limitation and the complainants were not consumers as the booking was made for a commercial unit. The complainant amended the complaint and added that the commercial space was booked for earning livelihood through self-employment. Though the issue of limitation was not raised before the State Commission, however, it is a legal point and can be raised at any stage. In this regard learned counsel referred to the judgment of Hon'ble Supreme Court in State Bank of India vs B S Agriculture Industries (I) - Civil Appeal no. 2067 of 2002 decided on 20th March 2009, wherein it has been held that it was incumbent upon the State Commission to have examined the issue of limitation even if the same was not raised by the appellant. The learned counsel further contended that in refund cases, the limitation will be seen from the date on which first request for refund was made and in the present case, the first refund application was sent to the appellants on 09.01.2009. To support his contention he has relied upon the decision of this Commission in CC no. 355 of 2014 Perin Bazun Dittia and Ors. Vs Emaar Hills Township Pvt. Ltd., and Ors. Decided on 9th March 2016, wherein it has held that:
"xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxTherefore, in such a case, the date on which the refund is demanded by the flat buyer for the first time will be the date from which the period of limitation prescribed in Section 24A of the Consumer Protection Act has to be computed, unless the builder has even before the flat buyer asking for a refund, expressed his inability or unwillingness to complete the construction and deliver possession to him. Admittedly, in the present case, the complainant did not seek refund of the sale consideration paid by them, within two years prior to filing of this complaint, the legal notice sent to the opposite parties being dated 18.11.2013. Admittedly, at no stage, the opposite parties expressed their inability or unwillingness to deliver possession of the flat or to give refund to the complainants. Therefore, it would be difficult to say that the complaint is barred by limitation prescribed in Section 24A of the Consumer Protection Act.
10. It was further argued by the learned counsel for the appellant that period of limitation cannot be extended by any amount of correspondence by the parties. In this regard, the learned counsel referred to the decision of this Commission in FA no. 854 of 2013 Vandan Paresh Kumar Manghita vs Divisional Manager, National Insurance Co. Ltd., decided on 8th October 2014, wherein it has been held as under:
"xxxxxxxxxxxxxxxxxxxxxxxxxLearned Counsel for the appellant submitted that claim was repudiated by letter dated 21.3.2012 which is apparently not correct. By this letter it was communicated that claim had already been closed vide letter dated 8.9.2009 and perusal of this letter does not reveal that claim was repudiated by this letter. Mere correspondence does not extend limitation and complaint was to be filed within period of 2 years from first intimation dated 8.9.2009 regarding 'no claim'.
11. It was stated by the learned counsel for the appellant that the unit was booked by two complainants who are mother and son. Both of them cannot claim that they booked the unit for earning livelihood through self-employment. First of all the State Commission wrongly allowed the amendment in the complaint and in the final order the State Commission has given a finding that they are consumers. The fact is that the complainant no. 1 is about 74 years old and she cannot earn her livelihood by means of self-employment. The State Commission has wrongly given its finding. In this regard, the learned counsel has relied upon the following judgments of this Commission in CC no. 34 of 2010 Vishwani Puri and Ors. Vs DLF Universal Ltd. decided on 15.12.2014, where this Commission has held as under:
"xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Looking above issue from a different angle, on reading of Section 2(1)(d) of the Act it is clear that a person who avails of services for a commercial purpose is not a consumer for the purpose of the Act. An exception, however, has been carved out to the aforesaid general provisions by providing an explanation that for the purpose of Section 2 (1) (d) commercial purpose does not include the service availed by a person exclusively for the purpose of earning his livelihood by means of self-employment. As the complainants are trying to take benefit of the above explanation which is in the nature of exception to the main provision, therefore, the onus of proving that the services were availed by respective complainants exclusively for the purpose of earning livelihood by means of self-employment is on each and every complainant. Thus, in order to succeed on the issue of maintainability each and every complainant will have to lead separate evidence to prove that he or she booked the commercial space for the purpose exclusively for earning livelihood by means of self-employment. As each and every complainant has to separately prove that he is covered by the explanation to Section 2 (1) (d), they cannot be permitted to maintain a joint complaint".
12. Apart from these two technical points, learned counsel for the appellant stated that the State Commission has wrongly allowed the refund of the total paid amount along with 18% interest per annum. It was stated that as per the builder buyer agreement the appellant is entitled to forfeit the earnest money as the complainants have defaulted on payment. Moreover, State Commission has allowed interest at the rate of 18% per annum which is not justified as there is no such agreement between the parties and interest of 18% is too excessive. Interest is also in the form of compensation and therefore, there was no justification for the State Commission to award compensation of Rs.1.5 lakh. The learned counsel for the appellant argued that when there is no time limit mentioned in the builder-buyer agreement, the appellant cannot be held deficient for any delay in handing over possession. To support his contention he has relied on the decision of this Commission in RP no. 2002 of 2005 and Appeal no.1971 of 1997 - Ashok Khanna vs Ghaziabad Development Authority decided on 18.08.2009 wherein this Commission has held as under:
"xxxxxxxxxxxxxxxxxxxxxxxxxxx The point before us is as to whether the facts and circumstances of this case warrant a finding of negligence in delivery of possession on the part of GDA necessitating award of compensation by way of interest? The brochure relating to GDA Scheme did not mention any specific date for delivery of possession of the flats. No agreement was entered into between the parties stipulating any time for performance or delivery of flats. The only document on which reliance is being placed by both the parties is the brochure in which the expected date of completion of construction is mentioned to be two years. In the absence of any agreement making time to be the essence of the contract or agreement or promise held the GDA cannot be held negligent in providing the service requiring the GDA to either pay compensation or interest on the deposited amount to the petitioner".
13. On the other hand, the learned counsel for the respondents stated that respondents have paid the amounts as per the demand made by the appellant, however, the progress of the construction was not commensurate to the amount paid. It was planned to hand over the unit in the year 2009, however, the same was not ready till 2011 and therefore, there is no question of forfeiture of earnest money because it is the appellant who has breached the agreement first by not providing the unit within a reasonable time. The appellant has not suffered any loss in the whole process and therefore, the appellant cannot forfeit any amount in the name of earnest money. In support of his contention, he relied on the judgment of the Hon'ble Supreme Court in Civil Appeal no. 193 of 2015 - M/s Kailash Nath Associates vs Delhi Development Authority decided on 09.01.2015 wherein the Hon'ble Court has held as under:
"29................................................................ Based on the facts of this case, it would be arbitrary for the DDA to forfeit the earnest money on two fundamental grounds. First there is no breach of contract on the part of the appellant as has been held above. And second, DDA not having been put to any loss, even if DDA could insist on a contractual stipulation in its favour, it would be arbitrary to allow DDA as a public authority to appropriate Rs.78,00,000/- without any loss being caused. It is clear, therefore, that Article 14 would apply in the field of contract in this case and the finding of the Division Bench on this aspect is hereby reversed".
14. It was further argued that it is itself an unfair trade practice that the appellant has not specified any time limit for giving possession of the property. Not only this, the project was advertised and applications invited even before the statutory approvals were obtained. In fact, the builder-buyer agreement was signed on 20.11.2006 whereas the approval of HUDA was obtained on 19.06.2007. This is an example of unfair trade practice adopted by the appellant. In support of his contention, the learned counsel has referred to the decision of this Commission in Brig (Retd.) Kamal Sood vs DLF Universal Ltd., through its Managing Director and DLF Universal Ltd., vs Brig (Retd) Kamal Sood, decided on 20.04.2007; wherein this Commission held as under:
"............................................................... In our view, it is unfair trade practice on the part of the builder to collect money from the prospective buyers without obtaining the required permission such as zoning plan, layout plan and schematic building plan. It is the duty of the builder to obtain the requisite permission or sanctions such as sanction for construction, etc., in the first instance, and thereafter, recover the consideration money from the purchaser of the flat/ buildings".
15. On the basis of the above arguments, the learned counsel has stated that the State Commission has rightly ordered refund of the deposited amount along with 18% interest per annum. There is no illegality in the order of the State Commission in awarding compensation and cost of litigation. It was requested that the appeal may be dismissed.
16. I have given a thoughtful consideration to the arguments advanced by both the sides and have examined the material on record.
17. As there was no time limit given by the appellant for completion of the project and for handing over the possession of the unit, and neither the possession was given nor the amount was refunded by the appellant whereby the cause of action continued, it cannot be said that the complaint was time barred. The booking was made in the year 2006 and till 2011 the complainants did not get the possession therefore, they asked for the refund of the deposited amount. In this situation, the appellant cannot claim forfeiture of the earnest money as there has been inordinate delay in handing over the possession. Even if no time limit has been given in the agreement for completion of the construction and handing over of the unit, indefinite time cannot be allowed to the opposite party for handing over the possession to the complainants. Clearly in the present matter, legal notice was given on 04.02.2011 to the appellant by the complainant in which refund was sought. This was necessary as there was no response from the appellant to the earlier application for refund which was allegedly moved in January 2009. As alleged by the appellant when there was no time limit given by the appellant in the builder buyer agreement for giving possession and appellant did not respond to the application for refund therefore, the cause of action arose only in the year 2011 when the complainant received a notice from the appellant for making further payment on 14.01.2011. This only means that the appellants did not take any cognizance of the request for refund (if any) allegedly sent by the complainant on 09.01.2009 and sent a demand letter as if the opposite party did not receive any letter for refund. So, now the appellants cannot acknowledge this letter of refund and claim limitation for the complaint on the basis of the judgment of this Commission in Perin Bazun Dittia and Ors. (Supra). Complaint has been filed in the year 2011 and therefore, the complaint is well within time prescribed under the Consumer Protection Act, 1986.
18. So far as the issue of non-mentioning of the period for completion of construction and for handing over the possession is concerned, it is seen that the Real Estate (Regulation and Development) Act, 2016 provides for obligation on the part of the builder to give a date for completion of construction and handing over the possession. Under section 13 (2) of the Real Estate (Regulation and Development) Act, 2016, it is mandatory to provide "the date on which the possession of the apartment, plot or building is to be handed over". Though this Act came into existence only in the year 2006, however, this implies that such an obligation is essential on the part of the builder so that the consumers do not suffer. Though the present complaint case is of prior to 2016, therefore, this provision of Real Estate (Regulation and Development) Act, 2016 may not be directly applicable but the spirit is to be kept in mind that the builder is obliged to give a date for handing over the possession. Moreover, under Section 46 of the Indian Contract Act, 1872, the following provision is there:
"46. Time for performance of promise, where no application is to be made and no time is specified - Where, by the contract, a promisor is to perform his promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.
Explanation - The question "what is a reasonable time" is, in each particular case, a question of fact".
19. From the above provision it is clear that if there is no time limit for the performance of a particular promise given by one party, it is to be performed within a reasonable time. In most of the builder buyer agreements, the period ranges from 24 to 48 months and the most common agreement seems to be for 36 months plus grace period of six months for completion of construction and delivery of possession. If the possession is delivered beyond 42 months or beyond 48 months, the deficiency in service on the part of the opposite party shall stand proved. In the present case, the possession was not given within this period therefore, the complainant had the right to seek refund in this case.
20. Thus in the light of the above-mentioned provision of RERA 2016 and in the light of "reasonable time" as mentioned-above the builder cannot escape the liability of compensating the allottee if possession is delayed beyond four years. Clearly, the judgment of this Commission, in Ashok Kumar vs Gaziabad Development Authority (Supra) is not attracted in the present case as in that case, no agreement was signed between the parties whereas in the present case an agreement is in place. Moreover, in that case a time for completion of construction of two years is mentioned in the brochure whereas in the present case, no time period is mentioned in the agreement. Thus, the appellants cannot expect to get any benefit from the decision of this Commission in Ashok Kumar vs Gaziabad Development Authority (Supra).
21. Similarly, State Commission has observed that the amendment was allowed in the complaint which became final and therefore, it has observed that the complainants had booked the unit for earning the livelihood by means of self-employment. As this order of the State Commission was not challenged in appeal, hence that order had become final. Therefore, reliance of the State Commission on this order is totally justified. In this context, this Commission would not like to look into this aspect in the present appeal.
22. From the above examination, it becomes clear that the complainants are consumers within the meaning of 'consumer' under the Consumer Protection Act, 1986 and that the complaint is also not time barred. The booking was made in the year 2006 and till 2011, the possession was not offered before the complainant asked for the refund. Though no period for handing over the possession is prescribed in the agreement, but if one goes by the "reasonable time" for such constructions and for handing over of the possession in terms of the above observations which is four years, it is realised that the possession was not offered, within the expected time. However, clearly the complainant cannot wait for indefinite period to get possession of the property and he has every right to seek refund. However, I do not find any mis-carriage of justice if the State Commission has ordered refund of the deposited amount. Clearly, the respondents are entitled to get refund along with reasonable compensation.
23. Coming to the question of compensation, it is seen that the State Commission has awarded an interest of 18% per annum on the deposited amount as well as compensation of Rs.1.5 lakh. It is observed that the interest rates are falling and this Commission is generally awarding interest at the rate of 9% per annum to 12% per annum in such cases. Clearly award of 18% interest per annum is on a higher side. In the facts and circumstances of the case, I deem it appropriate to allow refund of the deposited amount along with 11% per annum interest.
24. Based on the above discussion, the appeal is partly allowed and the order of the State Commission is modified to the extent that the amount of Rs.27,12,462/- be refunded by the appellants along with 11% per annum interest on this amount instead of 18% per annum interest as awarded by the State Commission, from the date of respective deposits till realisation. The award of compensation of Rs.1.5 lakh by the State Commission and the cost of litigation of Rs.50,000/- is maintained.
...................... PREM NARAIN PRESIDING MEMBER