State Consumer Disputes Redressal Commission
M/S B.L. International Pvt. Ltd. vs Parsvnath Developers Ltd. on 3 September, 2019
IN THE STATE COMMISSION : DELHI (Constituted under Section 9 of the Consumer Protection Act, 1986) Date of Decision: 03.09.2019 Complaint Case No.188/2015 M/s. B.L. International (P) Limited, B.L. Mansion, J-161/2, Gautam Nagar, New Delhi-110 049. ...Complainant Versus Parsvnath Developers Limited Parsvnath Metro Tower, Near Shahdara Metro Station, Delhi-110032. ... Opposite Party CORAM Salma Noor, Presiding Member
1. Whether reporters of local newspaper be allowed to see the judgment?
2. To be referred to the reporter or not?
Ms. Salma Noor, Presiding Member
1. A complaint under Section 17 of the Consumer Protection Act, 1986 (in short, the "Act") is filed by the complainant, which is a public limited company, registered under the provisions of Companies Act, 1956, booked a residential flat with the OP in a project, namely, 'Parsvnath Page 1 of 18 Privilege', which the OP is developing in Greater Noida. According to the complainant, the flat was booked for temporary residence of its employees, officers and senior management personnel without charging any kind of monetary consideration from its employees. The sale consideration of the flat was Rs.52,86,750/-. It is stated that at the time of provisional allotment, complainant paid an amount of Rs.10,00,000/- towards advance payment for the said flat, which duly acknowledged by the OP. It is stated that a provisional allotment letter dated 23.02.2007 was issued to the complainant whereby Flat No.T-4-701 in Tower 4 of the said project was allotted. It is stated that thereafter complainant paid an amount of Rs.3,21,688/- towards 25% of the total price of the flat. It is stated that on 20.06.2007 the complainant entered into a Flat Buyer Agreement with the OP, wherein the complainant opted for construction linked plan. It is stated that as per clause 10(a) of the Agreement, the date of completion was 36 months from the date of commencement of construction of the particular block in which the flat was located. It is stated that as per clause 10(c) of the Agreement in the event of delay in construction and handing over the possession of the flat, OP had agreed to pay to the complainant compensation @Rs.52.82 per sq. meter or @Rs.5/- per sq. f.t of the super area of the flat per month for the period of delay. It is stated that construction of the project did not start in the manner as Page 2 of 18 promised by the OP and during the next few months the progress of project continued in an extremely slow manner with no adherence to the promised contractual timeline. It is stated that subsequently, the OP addressed a letter dated 10.06.2010 to all the allottees in the said project including the complainant whereby the OP admitted that it would not be able to complete the project within 36 months as promised in the Agreement and citing false and frivolous reasons of general slowdown in the real estate sector unilaterally proposed March 2012 as the month of completion of project and re-scheduled the payment plans and timelines. It is stated that thereafter despite repeated assurance being given by OP the progress of the project remained negligent and had effectively stopped by the end of 2010. It is stated that as the construction of the project had completely stopped and there was no scope that the project would be completed in the near future, the complainant decided to ask for refund of the money already paid. It is stated that the complainant through its representative met the officials of the OP and requested for refund of the amount, wherein though the OP agreed to refund the money but did not do so. It is stated that thereafter complainant addressed a letter dated 02.07.2011 to OP requesting for refund of the amount of Rs.13,21,688/-. However, the OP neither replied to the aforesaid letter nor refunded the amount. It is stated that thereafter, again vide letter dated 22.11.2012 Page 3 of 18 complainant again requested for refund of the amount as OP had failed to complete the project by 20.06.2010. It is stated that OP instead of reply to above communications started sending frivolous demand notices to the complainant. It is stated that complainant protested time and again but OP kept on representing that project would be completed soon and construction activity would start. It is stated that as there was no progress at all on the site and no position was being confirmed by OP, the complainant through its counsel sent a legal notice dated 22.05.2013 calling upon the OP to refund amount of Rs.13,21,668/- alongwith interest @18% p.a. and delay charges of Rs.3,15,350/-. OP again failed to even reply to the said legal notice and complainant was constrained to send a reminder notice dated 11.02.2014, however, no reply was received from the OP.
2. Alleging deficiency in service on the part of OP, present complaint is filed seeking refund of Rs.13,21,668/- alongwith interest @18% p.a. from the date of payment till the date of realization of amount. Rs.5,29,293/- as delay charges payable @Rs.5/- per sq. ft. for failure to given possession of the said. There is also a prayer for award of compensation of Rs.25,00,000/- towards harassment and mental agony.
3. OP filed written statement wherein apart from denying the allegations of the complainant, the OP, inter-alia, raised several Page 4 of 18 preliminary issues that the complainant is not a consumer, complaint involved complicated question of facts and law which need to be proved by leading detailed oral as well as documentary evidence and that since the proceedings before the consumer courts are summary in nature, this Commission has no jurisdiction to entertain the present complaint. It is stated that the complaint is time barred in terms of Section 24A of the Act. It is stated that clause 10(a) of the Agreement states that construction of the flat is likely to be completed within a period of 36 months from the date of commencement of construction of particular block in which the flat is located. It is further stated that as per clause 10 (c) of the Agreement, the rights of the complainants are well protected as OP has agreed to give compensation @Rs.53.82 per sq. mtr. or @ Rs.5/- per sq. ft. of the super area of the flat per month for the period of delay.
4. On merits, OP has admitted that the flat in question was booked by the complainant. OP has also admitted the payments made by complainant. OP has denied that complainant was assured that possession shall be handed over within 36 months. OP has denied deficiency in service and unfair trade practice on their part. It is denied that OP is liable to pay interest, compensation etc. as is claimed by the complainant. A prayer is made for dismissal of complaint.
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5. Rejoinder is filed by the complainant to the written statement of the OP wherein the allegations made by the OP against complainant are denied. The complainant has reiterated averments of the complaint case.
6. Both the parties filed evidence in the form of affidavits and also filed written arguments.
7. Complainant has filed his own affidavit wherein averments made in the complaint case are reiterated on oath. Complainant has proved on record copy of provisional allotment letter dated 23.02.2007 Ex-CW1/1; copy of letter dated 22.03.2007 and cheque by which the amount of Rs.3,21,688/- was paid to OP Ex-CW-1/2; copy of receipt issued by OP Ex.CW -1/3; copy of flat buyer agreement dated 20.6.2007 Ex. CW - 1/4; copy of letter dated 10.06.2010 issued by OP Ex. CW -1/5; copy of letter dated 02.07.2011 Ex. CW -1/6; copy of letter dated 22.11.2012 Ex. CW -1/7; copies of demand letters sent by OP Ex. CW-1/8; copy of legal notice dated 22.05.2013 issued by complainant Ex-CW1/9 and copy of reminder notice dated 11.02.2014 Ex-CW1/10.
8. OP has filed evidence by way of affidavit of Shri Madan Dogra, its Deputy General Manager (CRM) who has reiterated contents of written statement on oath and has exhibited copy of Board Resolution dated 14.09.2016 Ex. OP-1/1, copy of advance registration and letter dated Page 6 of 18 23.02.2007 Ex. OP -1/2(Colly), copy of letter dated 08.06.2007 and flat buyer agreement dated 20.06.2007 Ex-OP -1/3(Colly); copy of the
9. Counsel for the parties are heard and material on record is perused.
10. The first question which arises for consideration in this complaint is as to whether the complainant is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act or not. The aforesaid issue came up for consideration of a Three-Members Bench of National Commission in Consumer Complaint No. CC/51/2006 CG Power & Industrial Solutions Ltd. Vs. Mercedes-Benz India Pvt. Ltd., decided on 08.7.2016, and the following view was taken:
"3. Section 2(1)(d) of the Consumer Protection Act which defines the term 'consumer', to the extent it is relevant, reads as under:-
"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; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, Page 7 of 18 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;
It would thus be seen that the emphasis is on the purpose for which the goods are obtained, though the use to which the goods are actually put would be helpful in deciding the purpose for which they were obtained.
4. The term 'commercial purpose' has not been defined in the Consumer Protection Act and as held in Laxmi Engineering Works v. P.S.G. Industrial Institute [(1995) 3 SCC 583], in the absence of a statutory 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" (Collin's English Dictionary) and the word 'commerce' means "financial transactions, especially buying and selling of merchandise on a large scale" (Concise Oxford Dictionary)".
4. Going by the dictionary meaning, a car or for that matter any goods obtained and the services hired or availed by a company can be said to have been obtained or hired or availed for a commercial purpose, only if the said goods or services are intrinsically connected with, or related to the business or commerce in which the company is engaged. The acquisition of the goods or the hiring or availing of services, in order to bring the transaction within the purview of section 2 (1) (d) of the Consumer Protection Act, therefore, should be aimed at generating profits for the company or should otherwise be connected or interwoven with the business activities of the company. The purpose behind such acquisition should be to promote, advance or augment the business activities of the company, by the use of such goods or services. As observed by the Hon'ble Supreme Court in Laxmi Engineering Works Page 8 of 18 (supra), it is not the value of the goods but the purpose for which the goods are brought or put to use, which is relevant to decide whether the goods were obtained for a commercial purpose or not. The same would be the position, where services are hired or availed by a company. If the business activities of a company cannot be conveniently undertaken without the goods purchased or the services hired or availed by a company, such purchase or hiring/availing as the case may be, would be for a commercial purpose, because the objective behind such purchase of goods or hiring or availing of the services would be to enable the company to earn profits by undertaking and advancing its business activities.
5. If a car or other goods are purchased or the services are hired or availed by a company for the personal use of its directors or employees, the purpose behind such acquisition is not to earn profits or to advance the business activities of the company. The purpose is to make certain facilities and amenities available to the directors and employees of the company as a part of the incentive offered to them by the company, as a reward or remuneration for the work which they are expected to perform for the company. It is not as if a company cannot run its business without providing such facilities and amenities to its directors and employees. It is not necessary for the business of the company, to provide such facilities and amenities to its directors and employees. Providing such facilities and amenities only motivates them to perform their work in an efficient and congenial environment, besides serving as an incentive aimed at eliciting better performance. The company does not earn profit merely by making a car or certain other goods or services available to its directors and employees. Therefore, it would be difficult to say that such goods are purchased or the services are hired or availed by the company for a commercial purpose.
6. The goods and services made available by a company to its directors or employees can be classified into the following three broad categories:-
(a) The goods and services which are obtained for and made available to the directors or employees of the company and are Page 9 of 18 used by them only for their personal purposes, unconnected with the business of the company. For instance, the cars used by the directors and employees of the company for their shopping, outings, recreations, etc. or for commuting to and from the office of the company. Another example can be the air conditioners and furniture provided at the residence of the directors and employees of the company or the telephone or broadband got installed by the company at their residence.
(b) The goods and services made available to the directors or employees of the company and used by them primarily for their personal purposes but incidentally, also for the purposes of the company. For instance, a car used mainly for outings, recreations, personal commuting etc. of the directors and employees or their families, but also for visiting the factory and offices of the company or attending the business meetings.
(c) The goods and services made available by a company to its directors and employees primarily for the purposes of the company and used by them mainly for the purposes of the company but incidentally also for their personal purposes. For instance, a vehicle purchased for being used as a staff car or a delivery van, but sometimes also used for the personal purposes of the directors or employees, unrelated to the business of the company.
7. As far as the goods and services falling in category (a) are concerned, there can be no dispute that since such goods were purchased or the services were hired or availed by the company and made available to its directors and employees for the purposes wholly unrelated to the business activities of the company, such an acquisition cannot be said to be for a commercial purpose. No commercial purpose of the company is achieved by purchasing such goods or hiring or availing such services and then making them available to its directors and employees.
11. For the reasons stated hereinabove, the issue referred to the larger Bench is answered as follows:-
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(a) If a car or any other goods are obtained or any services are hired or availed by a company for the use/personal use of its directors or employees, such a transaction does not amount to purchase of goods or hiring or availing of services for a commercial purpose, irrespective of whether the goods or services are used solely for the personal purposes of the directors or employees of the company or they are used primarily for the use of the directors or employees of the company and incidentally for the purposes of the company."
(b) The purchase of a car or any other goods or hiring or availing of services by a company for the purposes of the company amount to purchase for a commercial purpose, even if such a car or other goods or such services are incidentally used by the directors or employees of the company for their personal purposes."
11. It would thus be seen that if a residential flat is booked by a company for the residence of its employees, it cannot be said that the services were hired or availed for a commercial purpose. It is expressly alleged in the complaint that the flats were booked by the complainant for the residence of its officials. There is no evidence to controvert the aforesaid stand taken by the complainant. There is no evidence of the complainant having booked these flats for speculative purposes such as making profit by selling the same at a higher price or even for the purpose of earning rental income by letting out the same to outsiders. The residence meant to be used as staff quarter is not meant for any particular employee and can be allotted by the employer to any employee. I, therefore, hold that since the residential flat in question was booked by Page 11 of 18 the complainant for the residences of its employees, the complainant is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act.
12. Another preliminary objection raised by the OP is that the complaint involves complicated question of law and facts as such the same can't be entertained by the Commission. However, the same is not pressed at the time of arguments. Further we don't find any complicated question of law and facts being involved in the present case. Accordingly, the aforesaid objection is rejected.
13. As regards the objection that complaint is time barring, I find that complaint is not time barred. The complainant has been requesting the OP for possession and when the possession is not delivered the complainant had written letters for refund of the amount alongwith the interest, OP did not refund the money. Further, non-delivery of possession would be a continuing cause of action till actual physical possession of the allotted flat is delivered. Hence, the Complaint is not barred by limitation. The objection raised in this regard is also rejected.
14. On merits, learned counsel for the opposite party has relied upon clauses 10(a) and 10(c) and Clause 5(a) of the Buyers Agreement. The same read as under:
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"10(a) Construction of the flat is likely to be completed within a period of 36 months from the date of commencement of construction of the particular Block in which the flat is located on receipt of all requisite approvals including sanction of building plans, environmental clearance, etc. subject to force majeure and restraints / restrictions from any courts / authorities, non-availability of building materials and any circumstances beyond the control of the Developer and subject to timely payments by the Buyer. No claim by way of damages / compensation shall lie against the Developer in case of delay in handing over possession of the flat on account of the said reasons. The flat shall be deemed to be completed for the purpose of this clause / agreement when the Developer submits application / completion plans to authorities for obtaining completion certificate which may be for the complex as a whole or in parts. Possession of the Flat would be given only on clearance of the entire dues payable by the Buyer to the Developer in terms of this Agreement and after execution of the Tripartite Sub-Lease Deed.
10(c) 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/- per sq. ft.
5(a) Timely payment of the installments / amount due shall be the essence of this Agreement. If payment is not made within the period stipulated and or the Buyer commits breach of any of the terms and conditions of this agreement, the agreement shall be liable to be cancelled. In the eventuality of cancellation, earnest money being 15% of the basic price would be forfeited and the balance, if any, would be refundable without interest. On cancellation of the agreement, the Buyer shall also be liable to reimburse to the Developer the amount of brokerage paid, if any, by the Developer towards the booking of the Flat. In any case, all the dues, whatsoever, including interest, if any, shall be payable before taking possession of the Flat".Page 13 of 18
15. A bare perusal of Clause 10(a) shows that the OP was required to complete the construction of the flat within thirty six months from the date on which the construction was to commence. The documents filed by the complainant do not indicate the actual date on which the construction had actually commenced. However, they have placed on record a letter dated 10.6.2010 sent by the opposite party. The aforesaid letter to the extent it is relevant reads as under:
"We wish to inform that there has been a general slowdown experienced by the Real Estate Sector in the Country on account of the global economic meltdown and this has adversely affected the construction schedules which Developers had planned for execution of the projects. As a result thereof the progress of construction activity of the Project got slowed down in the past. However, the pace of work at site has now started picking up momentum.
We wish to inform you that we are taking active steps in putting new initiatives like mobilizing resources, re-scheduling work and augmenting labour force at site to expeditiously complete remaining works of the project for early completion. As per our re-scheduling plan, we propose to complete the project by March, 2012".
16. In view of the commitment made in the aforesaid letter, the opposite party was required to complete entire project by March, 2012. Admittedly, the construction of the Tower in which the flat allotted to the complainant has not been completed till date, though almost seven years have expired since the date by which this project was to be completed in Page 14 of 18 terms of the letter dated 10.6.2010. Thus, there is already a delay of about seven years in completion of the construction of the flat allotted to the complainant. Even at the time of arguments, Ld. Counsel for OP has failed to give any specific period as to when the construction is likely to be completed. The stand of the OP is that the project could not be completed on account of recession in the real estate market. However, OP has not been able to show that there were justified reasons for delay in handing over the possession. The global recession having hit the economy, as is alleged, is no ground to explain the delay and even till date i.e. after more than 12 years, there is no offer of possession from the OP to the complainant. The same amounts to deficiency in service on the part of OP.
17. Ld. Counsel for complainant has contended that there is a substantial delay of over 12 years. It is stated that the complainant deserve to be compensated. It is submitted that complainant has suffered a lot at the hands of OP. Ld. Counsel for complainant submits that complainant has been deprived of the use of flat on account of default by OP which has caused serious injury to him as such the complainant be given suitable compensation. It is submitted that OP has failed to explain the delay in completion of project and has rather mis-utilized the funds of complainant. Ld. Counsel prays for grant of suitable compensation. Page 15 of 18
18. Considering the abnormal delay on the part of the opposite party in completion of the project, the complainant, in my view, cannot be compelled to wait any more and OP is entitled to refund the entire amount paid by complainant along with compensation in the form of appropriate interest.
19. Counsel for OP has submitted that the complainant is entitled for compensation as per clause 10(c) of the Agreement as per which provides that in case of delay in construction of the Flat beyond the period as stipulated subject to force majeure and other circumstances then the Developer shall pay to the Buyer compensation @ Rs. 53.80 (Rupees Fifty Three and Paise Eighty only) per sq. meter or @ Rs. 5/- per sq. ft. of the super area of the Flat per month for the period of delay.
20. As discussed above, OP has not been able to show any justified reasons for delay in completion of project. There is delay of over 12 years. The complainant has made out a clear case of deficiency in service on the part of the OP. The complainant cannot be compelled to wait for indefinite period for the possession of flat allotted to them, whenever it is offered by the OP and is entitled to refund of amount paid with reasonable interest thereon. Reliance is placed on Fortune Infrastructure & Anr. v. Trevor D'Lima & Ors., (2018) 5 SCC 442 and judgments of National Commission titled Subodh Pawar v. M/s Ireo Grace Realtech Pvt. Ltd. & Page 16 of 18 4 Ors. dated 24.09.2018 in CC No.1998/2016 and Amit Arora v. M/s Ireo Grace Realtech Pvt. Ltd. dated 27.03.2019 in CC No.696/2017.
21. The learned counsel for the opposite party states that seeking refund amounts to cancellation of the agreement attracts Clause 5 of the Buyers Agreement and therefore, the opposite party is entitled to deduct 15% of the sale consideration from the amount paid by the complainant to it. I, however, find no merit in this contention, since Clause 5 envisages a situation where there is no default on the part of the builder and the buyers, of his own, seeks to cancel the booking made by him. However, in the present case, the complainant has been compelled to seek refund of the amount paid by him on account of the abnormal delay of almost seven years on the part of the opposite party in completing the project. Further, it is not the case of the OP that complainant is in default of making payment. Therefore, reliance upon Clause-5 of the Buyers Agreement is wholly misplaced.
22. Present is a clear case of deficiency in service on the part of OP. Complainant is legally entitled to seek refund of the money deposited by him with OP along with appropriate compensation. The complainant has prayed for award of interest @ 18% p.a. Ld. Counsel for OP has opposed the award of interest by contending that same is on very higher side. However, keeping in mind the facts and circumstances of the case, I award Page 17 of 18 compensation in the form of interest @ 12% p.a. from date of deposit till realization. Accordingly, OP is directed as under:
1) The Opposite Party is directed to refund the amount deposited by the complainant with the OP i.e. Rs.13,21,688/- along with compensation in the form of interest @ 12% p.a. from the date of each deposit till realization.
2) The Opposite Party shall also pay a sum of Rs.25,000/- towards cost of litigation to complainant.
23. A copy of this order as per statutory requirements be sent to the parties free of cost. Thereafter the file be consigned to record room.
(Salma Noor) Presiding Member Tri Page 18 of 18