State Consumer Disputes Redressal Commission
Harminder Singh Pannu vs Unitech Ltd. on 4 April, 2018
2nd Additional Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, CHANDIGARH
Consumer Complaint No. 429 of 2017
Date of Institution : 26.05.2017
Date of Reserve : 21.03.2018
Date of Decision : 04.04.2018
Harminder Singh Pannu S/o Sh. Tara Singh, resident of Street No.
A, Friends Colony, Gill Avenue, Sunder Nagar, Pathankot, Punjab.
....Complainant
Versus
1. Unitech Limited, Marketing Office at S.C.O. No. 189-90-91,
Sector 17 C, Chandigarh, PIN 160 017 through its Managing
Director.
4. ALICE Developers Private Ltd., registered office at
Basement, 6, Community Centre, Saket, New Delhi - 110017
....Opposite parties
Consumer Complaint under Section 17 of
the Consumer Protection Act, 1986.
Quorum:-
Shri Gurcharan Singh Saran, Presiding Judicial Member.
Shri Rajinder Kumar Goyal, Member
Present:-
For the complainant : Sh. Rohit Sharma, Advocate
For opposite party No.1: Ms. V.H. Singh, Advocate
For opposite party No.2: Ex.-parte
Consumer Complaint No. 429 of 2017 2
GURCHARAN SINGH SARAN, PRESIDING JUDICIAL MEMBER
ORDER
Complainant has filed this complaint against the opposite parties (hereinafter referred as Ops) under Section 17 of the Consumer Protection Act, 1986 (for short the Act) on the averments that Ops came up with the project under the name and style of "Gardens, Sector 97, Uniworld City, Mohali" in their mega township comprising plots, villas, multi-storey group housing, commercial complexes etc. In a part of land i.e. 8.17 acres, they were to construct multi story group housing complex. It was further assured that the layout plan of the said township has already been approved by the Government of Punjab, accordingly, the complainant agreed to purchase one flat and moved an application dated 22.7.2011. He was allotted flat No. 0504, Tower C-2, Floor- 05, measuring 1485 sq. ft. in Mega Township, Uniworld City, Sector 97, Mohali, Punjab for a sum of Rs. 43,41,420/-. The complainant paid the following payments:-
Amount in Receipt No. Dated
Rupees
4,80,000/- 000809 18.1.2012
3,00,000/- 000926 4.4.2012
1,44,000/- 000929 9.4.2012
3,80,000/- 001114 15.6.2012
64,000/- 001115 15.6.2012
The Ops promised to hand over the possession of the flat at an agreed time but the complainant was surprised to find that the construction was yet not started. He wrote a letter to the Ops to know as to when the construction is going to be commenced. In Consumer Complaint No. 429 of 2017 3 response, they informed that the construction is expected to commence as early as possible. Apartment allotment agreement was also executed between the parties on 10.2.2012, according to which the possession of the apartment was to be offered to the complainant within 36 months from the signing of the agreement, subject to force majeure. 36 months have already expired on 9.2.2015. Alleging deficiency in service on the part of Ops to execute the project as promised, this complaint has been filed by the complainant for refund of the amount of Rs. 12,96,000/- alongwith interest @ 18% p.a., compensation for causing mental tension and harassment and undue hardship and agony to the tune of Rs. 4 Lacs, Rs. 2 Lacs for unfair trade practice and Rs. 50,000/- as cost of litigation.
2. Upon notice, Op No. 1 in its written reply filed through Mr. Lalit Gupta, Legal Executive took the preliminary objections that this Commission does not have the territorial jurisdiction to adjudicate the present complaint because buyer's agreement was executed at New Delhi. The demands were raised by Gurgaon Office of the Ops on behalf of Op No. 2 and the receipts of payments were also issued by their Gurgaon office; as per the Buyer's Agreement, the project was to be executed by Op No. 2 and Op No. 1 is only the confirming party. It was also stipulated in the buyer's agreement that by virtue of Trademark License Agreement dated 9.5.2009, the Developer was authorized to use Unitech Trademark and Unitech Corporate Logo for various purposes, therefore, this Op has a very limited role. The dispute Consumer Complaint No. 429 of 2017 4 between the parties does not constitute a consumer dispute as defined under Section 2(e) of the Act; the complainant has filed this complaint for refund for which in fact the suit for recovery should have been filed and that no cause of action has arisen to the complainant to file this complaint. It is a false and frivolous complaint, due to slump in the market, the complainant has asked for refund of the amount deposited. On merits, booking of the flat with the Ops for a cost as referred in the complaint is a matter of record. It is also a matter of record that the flat was to be handed over subject to force majeure within a period of 3 years from the date of execution of the agreement and according to Clause 4 (c)
(iii), in case there is any delay in executing the project and delay in delivery of possession, the complainant will be entitled to penal charges @ Rs. 5/- per sq. ft. per month of the super area of the apartment. Further according to Article 13 of the Buyer's Agreement, in case of any dispute/differences between the parties, the matter is required to be referred to the Arbitrator as provided under the Buyer's Agreement. It was denied that there was any unfair trade practice on the part of Ops. It has also been referred in Clause 2(e) of the agreement that in case of cancellation of the allotment or refund, the developer may in its discretion forfeit the booking/registration amount or the earnest money and the remaining amount can be refunded alongwith interest @ 10%, which can be claimed by the complainant from Op No. 2. It has been further stated that there is no deficiency in services on the part of this Op. Complaint is without merit, it be dismissed. Consumer Complaint No. 429 of 2017 5
3. Vide order dated 3.8.2017, Op No. 2 was proceeded ex-parte.
4. The parties were allowed to lead their respective evidence in support of their complaint. Complainant in his evidence has tendered his affidavit Ex. CA and documents Exs. C-1 to C-9. On the other hand, Op No.1 has tendered affidavit of Lalit Gupta, Auth. Representative, Unitech Ltd. and documents Exs. Op-1/1 & Op-1/2.
5. We have heard the counsel for the parties and have carefully gone through the averments in the complaint, written reply filed by the Op No. 1, evidence and documents on the record.
6. A plea has been taken by Op No. 1 in its written statement that this Commission does not have the territorial jurisdiction to adjudicate the present complaint on the plea that the buyer's agreement was issued at New Delhi and payment receipts were issued by their Gurgaon office, however, as per the apartment allottee agreement Ex. C-9, the properties are located in Mohali's Sector 97, 106, 107, therefore, the project was to be executed at Mohali within the territorial jurisdiction of this Commission, therefore, a part of cause of action has arisen at Mohali within the territorial jurisdiction of this Commission. According to Section 17(2)(c), in case a part of cause of action has arisen within the territorial jurisdiction of this Commission then this Commission has the territorial jurisdiction to entertain this complaint. This plea was not rebutted by the counsel for Op No. 1 during the course of arguments whereas Op No. 2 is ex-parte, therefore, we do not Consumer Complaint No. 429 of 2017 6 agree with the plea raised by Op No. 1 in the written reply that this Commission does not have the territorial jurisdiction to entertain this complaint.
7. It has been further stated that the dispute between the parties is not a consumer dispute. According to Section 2(e) of the Act, consumer dispute has been defined, which reads as under:-
(e) "consumer dispute" means a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint."
In this complaint allegations have been made by the complainant, which have been denied by Op No. 1 and has stated that it was the duty of Op No. 2 to complete the project whereas Op No. 2 has not come forward to say why the project was not completed. Otherwise, in case the complainant has availed the services from Ops against consideration then he is a consumer. The payments were made to Op No. 1 as per the receipts issued by Op No. 1 i.e. Exs.C-4, C-5, C-6, C-7 & C-8, therefore, the amount paid by the complainant was received by Op No. 1. The services have been defined under Section 2(i)(o) of the Act, which includes construction services also. Therefore, in case the Ops had undertaken to deliver construction services to the complainant i.e. to construct a flat for the complainant against payment and in case they have failed to do so, it is a consumer dispute and we do not agree with the plea raised by Op No. 1 that the dispute between the parties is not a consumer dispute.
Consumer Complaint No. 429 of 2017 7
8. It has been stated that the complainant has sought for the refund for which he should have filed a recovery suit. As discussed above, the relationship between the complainant and Ops is that of 'consumer' and 'service provider'. As discussed above, the Ops failed to deliver the services i.e. constructed flat against consideration, therefore, it is a consumer dispute and consumer complaint is maintainable. It is not necessary for the complainant to go for the recovery suit because under Section 3 of the Act, additional remedy has been provided to the Consumer Fora to entertain this type of matters, therefore, again we do not agree with the plea raised by Op No. 1 that for refund, 'consumer complaint' is not maintainable.
9. According to Article 13 of the buyer's agreement, in case of any dispute, differences or disagreements between the parties, the matter was required to be referred to the Arbitrator, therefore, the complaint before this Commission is not maintainable. In case the Op No.1 was really interested that the matter should be referred to the Arbitrator then they should have moved an application under Section 8 of the Arbitration and Conciliation Act, 1996 alongwith the written reply but no such application was filed. Otherwise under Section 3 of the CP Act, additional remedy has been provided under the Act, therefore, we are of the opinion that the Consumer Fora are duly empowered to deal with the complaint despite having the arbitration clause in the agreement. Therefore, we do not agree with the plea taken by the Consumer Complaint No. 429 of 2017 8 Ops that consumer complaint is not maintainable in view of the arbitration clause in the agreement.
10. It is an admitted fact that the complainant had applied for a flat in the project of the Ops i.e. "Gardens, Sector 97, Uniworld City, Mohali". Vide allotment letter dated 18.1.2011 (Ex. C-1) Flat No. C2-05-0504 was allotted in favour of the complainant. The payment schedule was conveyed to the complainant vide letter dated 18.1.2012 Ex. C-3, which reads as under:-
S. No. Payment Description Due Date Amount
1. At the time of Registration 18.1.2012 397534.00
2. Within 75 days of Allotment 2.4.2012 430946.00
3. Within 150 days of Allotment 16.6.2012 430947.00
4. *On Commencement of - - 434659.00
Construction
5. On casting of Level 1 Roof - - 434659.00
6. On casting of Level 3 Roof - - 397534.00
7. On casting of 6 Roof - - 510034.00
8. On casting of Top Floor Roof - - 510034.00+50%
CMRC
9. On Completion of Masonry work - - 198767.00
10. On completion of Int. Plaster - - 198767.00
11. On completion of Flooring - - 198767.00
12. On Final Notice of Possession - - 198772.00 +
50% CMRC +
SDC + other
charges as
appl.
Total Amount - 4341420.00
As per the averments in the compliant, the complainant has paid a total amount of Rs. 12.96 Lacs. Further payments were to be made on commencement of the construction and as per the stage of the construction. Total cost of the flat was fixed as Rs. 43,41,420/-. The payment receipts are Exs. C-4 to C-8. As per buyer's agreement Ex. C-9, Clause 4.a(i), it was to be delivered within 36 months of signing the agreement. It was signed on 10.2.2012, therefore, the possession was to be delivered upto 10.2.2015. The Ops apart Consumer Complaint No. 429 of 2017 9 from the affidavit of Sh. Lalit Gupta, Authorized Signatory has not placed any document telling the reasons for delay in raising the construction. It has been further stated that actually the flats were to be construction by Op No. 2, who is also a party to the agreement but no one has appeared on behalf of Op No. 2 to tell the reasons for delay. No notice was received by the complainant for the commencement of the construction and any stage of the construction, therefore, there was no reason for the complainant to make further payment. In case the Ops had agreed to construct the flat and delivered it within a specific time and it is not given, it amounts to deficiency in service. A reference has been taken from the judgment of the Hon'ble National Commission reported as II (2014) CPJ 131 "PUDA versus Kanwalpreet Singh" that in case there is delay in handing over the possession, it amounts to deficiency in service and refund order can be passed. A reference has also been made to I (2017) CPJ 513 (NC) "Neha Suri versus Unitech Reliable Project Pvt. Ltd." In that case, the possession of the flat was not given as agreed. It amounts to deficiency in service. Amount deposited alongwith interest was ordered to be refunded. Similar order was passed in I (2017) CPJ 113 "Vishal Issar v. Park Wood Developers Pvt. Ltd.". This Commission has already held in Consumer Complaint No. 164 of 2016 "Harmit Singh Arora versus M/s Country Colonisers Private Limited", decided on 2.2.2017 against the same opposite party that in case possession of the apartment has not been given as agreed then it amounts to deficiency in service and that the complainants are not Consumer Complaint No. 429 of 2017 10 bound to pay further payments when the project is not coming at the site and refund alongwith interest order was ordered. Counsel for Op No. 1 was unable to rebut it.
11. The main plea taken by Op No. 1 is that this agreement is between the complainant, Op No. 1 and Alice Developers (Op No.2) and the project was to be developed by Op No. 2 and that Op No. 1 was just a confirming party but the payment receipts Exs. C-4 to C-8 show that the payments were received by Op No. 1. Therefore, once the Op No. 1 has received the payment, then Op No. 1 cannot take a plea that there is no liability even if the project was to be developed by Op No. 2 as per authorization given by Op No. 1. When payments were received by Op No. 1, then both the Ops are vicariously liable to deliver the flat within the agreed time and in case possession has not been delivered then the complainant is entitled to the refund. Therefore, both Ops are jointly and severally liable to pay the amount.
12. It has been further argued by the counsel for Op No.1 that according to Clause No. 4.c, in case there is delay in delivery of the possession then the Ops are liable to pay the penalty as per Clause 4.c(ii) i.e. @ Rs. 5/- per sq. ft. per month of super area for the period of delay in offering the possession of the said apartment. Whereas it has been contended by the counsel for the complainant that in case of late payment, the Ops are claiming interest @ 18% then similar treatment be given to the complainant. It is one sided agreement and in case of default on the part of complainant, he has to pay 18% interest whereas Ops are to pay just 3%. This Consumer Complaint No. 429 of 2017 11 question has been dealt in detail by the Hon'ble National Commission in CC No. 427 of 2014 "Satish Kumar Pandey & Anr. Vs. M/s Unitech Ltd." decided on 8.6.2015 wherein the Hon'ble National Commission observed as under:-
"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 by the learned counsel for the complainants that the term 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 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 submissions of the learned Consumer Complaint No. 429 of 2017 12 counsel. A person who, for one reason or 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 the 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 per 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 term 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 the buyer in making payment to him but seeks to pay less than 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 Consumer Complaint No. 429 of 2017 13 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 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(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the product of the builder. Though, such a practice does not specifically fall under any of the Clauses of Section 2(r) (1) of the Act that would be immaterial considering that the unfair trades, methods and practices enumerated in Section 2(r) (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".
The same view was upheld by the Hon'ble National Commission in CC No. 347 of 2014, "Swarn Talwar & Ors. Vs. Unitech Ltd." decided on 14.8.2015. A reference has also been made to the judgment of the Hon'ble Supreme Court in "K.A. Nagmani Vs. Housing Commissioner, Karnataka Housing Board", C.A. No. 6730-6731, decided on 19.9.2012. In that case, the District Forum Consumer Complaint No. 429 of 2017 14 has allowed interest @ 12% p.a. and its appeal was dismissed by the State Commission as well as the Hon'ble National Commission and after relying upon the judgment of "Ghaziabad Development Authority Vs. Balbir Singh", (2004) 5 SCC 65, the interest @ 18% per annum on the deposited amount was allowed alongwith Rs. 50,000/- as compensation. Against the judgment of the Hon'ble National Commission in "Swarn Talwar & Ors. Vs. Unitech Ltd.", C.C. No. 347 of 2014 (supra), Op preferred the appeal before the Hon'ble Supreme Court i.e. Civil Appeal No. 35562 of 2015, decided on 11.12.2015 and passed the order as under:-
"We have heard learned counsel for the appellant and perused the record. We do not see any cogent reason to entertain the appeal. The judgment does not warrant any interference.
The Civil Appeal is dismissed."
13. It was further observed by the Hon'ble National Commission in another judgment 2017(3) CLT 520 (NC) "Ankur Goswami versus Supertech and another" that this clause in the allotment letter would be applied to the case where allottee is seeking possession of the flat and where allottee is not seeking refund of the amount. However, in the present case, the allottee is seeking the refund, therefore, the penalty @ Rs. 5/- per sq. ft. will not be applicable. Further under Rule 17 i.e. Rate of Interest on refund of advance money upon cancellation of agreement of Consumer Complaint No. 429 of 2017 15 Punjab Apartment and Property Regulation Rules, 1995, it has been provided as under:-
"17. Rate of Interest on refund of advance money upon cancellation of agreement. - The promoter shall refund full amount collected from the prospective buyers under sub- section (1) of section 6 together with interest thereon at the rate of twelve per cent per annum payable from the date of receipt of amount so collected till the date of re-payment."
In the above rule it has been observed to refund the amount alongwith interest @ 12% p.a. In number of similar complaints, we have allowed the interest @ 12% p.a. i.e. Consumer Complaint No. 386 of 2016 "Meenakshi Puri versus Country Colonizers Pvt. Ltd. & Ors.", decided on 28.11.2017 and 'Consumer Complaint No. 3 of 2017 "Lt. Gurnur Singh Mahiwal & Anr. Versus M/s Country Colonisers Pvt. Ltd. & Ors.", decided on 4.1.2018. Therefore, to be just and reasonable, the complainant will be entitled to interest @ 12% on the deposited amount.
14. No other point was argued.
15. Sequel to the above, we allow the complaint and direct Ops to pay the amounts jointly and severally as under:-
(i) to refund a sum of Rs. 12,96,000/- to the complainant alongwith interest @ 12% p.a. from the various dates of deposit till actual payment;
Consumer Complaint No. 429 of 2017 16
(ii) Ops are directed to pay a sum of Rs. 50,000/- as compensation on account of mental and physical harassment suffered by the complainant.
(iii) Ops pay Rs. 21,000/- towards litigation expenses. The above directions be complied by the Ops within a period of 45 days from the date of receiving of the copy of the order, failing which the complainant shall be at liberty to execute the order by filing application under Sections 25 & 27 of the CP Act against the Ops.
16. The consumer complaint could not be decided within the statutory period due to heavy pendency of Court cases.
17. The counsel for the parties / concerned parties are directed to collect free certified copy of the order from the office of the Commission within a period of 15 days from the date of pronouncement.
(GURCHARAN SINGH SARAN) PRESIDING JUDICIAL MEMBER (RAJINDER KUMAR GOYAL) MEMBER April 04, 2018.
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