State Consumer Disputes Redressal Commission
Vaurn Salwan vs M/S Digvijay Real Estate And Other on 7 March, 2018
2nd Additional Bench
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, CHANDIGARH
Consumer Complaint No. 336 of 2016
Date of Institution : 20.10.2016
Date of Reserve : 26.02.2018
Date of Decision : 07.03.2018
Varun Salwan S/o Sh. Vipan Salwan R/o Near Axis Bank, Tokerian
Wali Gali, Court Road, Amritsar through its Special Power of
Attorney Holder Vipan Salwan S/o Sh. Haweli Ram Salwan,
Resident of Near Axis Bank, Tokerian Wali Gali, Court Road,
Amritsar
....Complainant
Versus
1. M/s Digvijay Real Estate Developers Pvt. Ltd., Suit No. 4-G,
Uppal's M-6 Plaza, Jasola District Centre, Jasola, New Delhi,
through its Managing Director.
2. The New World Buildcon Pvt. Ltd. Tata Motors, One Forbes,
5th Floor, Dr. V.B. Vipps Centre, Masjit Moth, Greator Kailash-II,
New Delhi through its M.D.
3. The Golden Green Towers (P) Ltd., 39, Mall Road, Amritsar
through its M.D.
4. The Alpha G. Corp. Development Pvt. Ltd. 10, Floor Ashoka
Estates, 24, Barakhambha Road, New Delhi through its M.D.
....Opposite parties
Consumer Complaint under Section 17 of
the Consumer Protection Act, 1986.
Consumer Complaint No. 336 of 2016 2
Quorum:-
Shri Gurcharan Singh Saran, Presiding Judicial Member.
Shri Rajinder Kumar Goyal, Member
Present:-
For the complainant : Sh. K.P. Singh, Advocate
For opposite parties No.1,2 & 4:Ex.-parte
For opposite party No. 3 : Sh. Vishal Ahuja, Advocate
GURCHARAN SINGH SARAN, PRESIDING JUDICIAL MEMBER
ORDER
Complainant has filed the present 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 the complainant booked an apartment/flat No. 401, Tower 12-D consisting of super area of 1775 sq. feet on the 4th floor of Golden Greens Project situated at Batala Road, Amritsar vide allotment letter dated 8.12.2011 by Op No. 1. The complainant opted for payment plan 'B' flexi payment plan. The total price of the flat was fixed as Rs. 38,01,330/-, out of which a sum of Rs. 3,54,282/- was paid on 7.12.2011. After sometime, the project was taken over by Op No. 2 and then by Op No. 3 as per the latest information available with the complainant. Various payments have been made by the complainant approximately Rs. 30 Lacs on various dates as per the schedule of the Ops. At the time of execution of the agreement, the Ops had given assurance to the complainant that the flat will be handed over to him on or before January, 2014 but till date neither the possession was offered nor Consumer Complaint No. 336 of 2016 3 handed over. There was a penal clause in the agreement that in case the Ops failed to deliver the possession within the time then they will pay Rs. 3/- per sq. ft. per month to the complainant. Alleging deficiency in services on the part of Ops, the complaint has been filed to refund the amount deposited by the complainant with Ops alongwith interest @ 18%, pay Rs. 15 lacs as compensation, pay Rs. 1 lac as litigation expenses.
2. Op Nos. 1, 2 & 4 did not appear despite service, therefore, they are proceeded ex-parte. However, the complaint has been contested by Op No. 3, who filed its written reply taking preliminary objections that there is no deficiency in service or unfair trade practice on the part of this Op; complaint involved disputed and complicated questions of law and facts, which cannot be adjudicated before this Commission in the summary procedure, therefore, the matter be relegated to the Civil Court; the complainant had purchased the flat for speculative purposes for re-sale, therefore, he is not a consumer as defined under the Act; the complainant has concealed the material facts from the Commission. The complainant had booked 4 flats i.e. Flat No. 12D
- 401, 12D - 402, 5A - 402 and 5A-404. Flat No. 12D 401 was booked in the name of the complainant Varun Salwan, 12D 402 in the name of Rekha Salwan, Flat No. 5A-402 and 5A-404 were booked in the name of Yogita Sarpal & Rajesh Sarpal. Complainant also made payment of Rs. 1,69,572/- in cash on behalf of Rekha Salwan as per the receipt dated 18.10.2011. The payment of Rs. 1,50,000/- was paid by Vipan Salwan by way of cheque No. Consumer Complaint No. 336 of 2016 4 360074 dated 4.10.2011 in respect of flat No. 5A-402 and Flat No. 5A-404. Flat No. 5A-402 and 5A-404 were lateron surrendered by Yogital Sarpal and Rajesh Sarpal and amount paid on their behalf were adjusted in the account of the complainant and that the complaint is barred by limitation because the complainant had entered into an agreement with Op No. 1 on 7.12.2011 whereas the present complaint has been filed on 20.10.2016. On merits, it has been again reiterated that the complainant is not a consumer as defined under Section 2(1)(d)(ii) of the Act; Op is a builder and colonizers. Booking of the flat by the complainant and others as referred above in the preliminary objections is a matter of record and out of that flat No. 5A-402 and 5A-404 have been surrendered by Yogita Sarpal and Rajesh Sarpal. It has been denied that the project was taken over by Op No. 2 from Op No. 1. The project has been taken over by this Op and is being executed. It has also been denied that the project was also taken over by Op No. 4. It has been denied that the payments were made by the complainant as per the payment schedule. The complainant failed to make the payment as per the time plan given in the payment plan. It has been denied that the complainant had paid a sum of Rs. 30 Lacs approximately. Due to non-payment of the installments by the complainant, the project has been delayed. Further Ops had offered 2 BHK flat to the complainant, which was initially accepted but lateron retracted by the complainant. It has been denied that there is any unfair trade practice or deficiency in service on the part of Ops. Complaint is without merit, it be dismissed. Consumer Complaint No. 336 of 2016 5
3. The parties were allowed to lead their respective evidence in support of their complaint. Complainant in his evidence has tendered his affidavit as Ex. CA and documents Exs. C-1 to C-
13. On the other hand, Op No.3 has tendered affidavit of Jagmohan Singh, Director as Ex. Op-3/A and documents Ex. Op- 3/1 to Op-3/7.
4. We have heard the counsel for the parties and have carefully gone through the pleadings of the parties, evidence and documents on the record.
5. Before coming to the merits of the complaint, some preliminary objections have been taken by Op No.3, which need to be redressed. An objection was taken by Op No. 3 that the complainant is not a consumer and that the flat was booked by the complainant for speculative purposes i.e. for resale. It has been stated that the complainant booked 4 flats i.e. flat No. 12-D 401 in the name of the complainant, Flat No. 12-D 402 in the name of Rekha Salwan, Flat Nos. 5A-404 and 5A-404 in the name of Yogital Sarpal and Rajesh Sarpal and both these flats were surrendered by Yogital Sarpal and Rajesh Sarpal. The Ops have failed to make any reference in the written statement or in the evidence what is the relationship of the complainant with Yogital Sarpal and Rajesh Sarpal. Moreover, no allotment letter has been issued by the Ops in favour of Yogital Sarpal and Rajesh Sarpal. No doubt that Flat No. 12D-402 was booked in the name of Rekha Salwan and flat No. 12D-402 in the name of Varun Salwan i.e. the complainant. Rekha Salwan is an independent person, she is Consumer Complaint No. 336 of 2016 6 Major, therefore, in case she has booked her flat for her own use that cannot be taken as a flat booked by the complainant. In this way, the complainant booked only one flat. The Op has not placed on the record any other evidence, which may prove any other property in the name of the complainant in Amritsar. The counsel for the Ops also failed to place on the record that previously the complainant had been trading in the real estate. In case no such evidence has been produced by the Ops that the complainant own any other immovable property in his name in Amritsar or that he had trading in the real estate in the past, therefore, it cannot be said that the flat was booked for resale and for speculative purposes. A reference can be given to the judgment 2017(3) CLT 459 "Pranab Basak versus Suhas Chatterjee". In that case, two flats were booked by the complainant and a plea was taken that the complainant had booked these flats for investment purposes. It was observed by the Hon'ble National Commission that unless it is established that the complainant is dealing in sale and purchase or his real intention in booking the flat was to sell the same on profit, on appreciation of the value of the real estate. Therefore, we do not agree with the plea raised by the counsel for the Ops that the flat was booked for speculative purposes.
6. It has been stated that the complaint is barred by limitation as the buyer's agreement was entered into on 7.12.2011. Basically it is the allotment of an apartment dated 8.12.2011 Ex. C- 5 and according to the flexi payment plan 40% was to be paid within time and remaining 60% was to be paid as per the stage of Consumer Complaint No. 336 of 2016 7 the construction. The complainant has paid a sum of 3,54,282/- on 18.10.2011, Rs. 3,54,281/- at the time of booking on 6.12.2011, on 15.12.2011 another amount of Rs. 6,71,270/- was paid to Op No. 1 and after taking over the project by Op No. 3, a sum of Rs. 7,50,000/- and Rs. 4,00,000/- was paid to Op No. 3 on 2.1.2014. No buyer's agreement was executed by Ops despite provision under Section 6 of the PAPRA. In this way that after receipt of 25% of the cost of the flat, the builder is required to enter into buyer's agreement. Further as per Clause No. 12, the possession was to be delivered within a period of 30 months from the date of start of the construction. No specific date of start of the construction has been given but in case after receiving the booking amount on 6.12.2011, further payment of Rs. 6,71,000/- was taken on 15.12.2011, therefore, this can be taken as a date of start of the construction. In that way, the Ops were to given the possession upto May, 2014 but the construction is not complete. The photographs Ex. C-11, 11 A & 11B show incomplete structure of the project and even the amount so received by the Ops has not been refunded to the complainant. In case neither the possession was offered nor handed over nor the refund was given by the Ops then it will be a recurring cause of action, therefore, we do not agree with the plea raised by the counsel for the Ops that the complaint filed by the complainant is barred by limitation.
7. It has been argued by the counsel for Op No. 3 that complicated questions of law and facts are involved in the matter, which cannot be redressed in summary procedure, therefore, the Consumer Complaint No. 336 of 2016 8 matter be referred to the Civil Court. In case we go through the pleadings of the parties, the complainant had booked one flat with Ops. Apartment Allotment letter dated 8.12.2011 is there but Ops have failed to deliver the possession within the time frame mentioned in the agreement. In Ex. C-5A terms and conditions have been mentioned and it is only the interpretation of terms and conditions and then to see whether there is any deficiency in service on the part of Ops. We do not see that any complicated questions of law and facts are involved, which cannot be adjudicated by this Commission and the matter needs to be referred to the Civil Court. The benches of this Commission are headed by retired High Court Judges/retired District & Session Judges, who have long experience at their back and are fully competent to decide such like matters. In this regard, we are fortified by the judgment of "Dr. J.J. Merchant and others Vs. Shrinath Chaturvedi", 2002(6) SCC 635 wherein it was held that 'the State Commission and District Forum are headed by retired High Court Judges and officers of District Judge level and in our view, this is not such a case which cannot be decided by the 'Consumer Fora' after obtaining evidence and if need be after getting an expert opinion'. Further reference can be made to "Shiv Kumar Agarwal versus Arun Tandon and another", 2007(2) CLT 287, decided by the Hon'ble National Commission. In that case a plea that case involves complicated questions of fact and law and will need expert evidence, which is not possible in the summary proceedings adopted by the Consumer Fora repelled - Consumer Complaint No. 336 of 2016 9 Consumer Forum which is headed by Senior Judicial Officers, are capable of dealing with even complex questions. Therefore, we are of the opinion that this Commission is fully competent to decide this complaint and no cause of action is made out to refer the case to the Civil Court.
8. It is a matter of record that the complainant booked one flat with Op No. 1 and they had issued allotment letter of apartment No. 12D-401, 3 BHK with Servant Room with total area of 1775 sq. ft. @ Rs. 2090/- per sq. ft. with total cost of Rs. 34,49,580/- and after adding PLC, it comes to Rs. 36,09,330/-. In the case of complainant, it is not a PLC facing because no layout plan has been placed on the record by the Ops. As per the payment plan, the complainant had opted for flexi payment plan-B. According to that 10% was the booking amount, which was paid vide receipt Ex. C-6 i.e. sum of Rs. 3,54,282/- and then 30% was to be paid within a period of 45 days and the complainant paid a sum of Rs. 3,54,281/- on 6.12.2011 and Rs. 6,71,270/- on 15.12.2011 i.e. 30% of the BSP and further payments were to be made as per stage of the construction. The relevant payment plan is reproduced as under:-
Flexi Payment Plan - B At the time of Booking 10% of BSP Within 45 days 30% of BSP On Foundation of Block 10% of BSP On casting of Stilt Roof of Block 10% of BSP + 50% PLC + 50% Car Parking On casting of 1st Floor Roof of Block 10% of BSP On casting of 3rd Floor Roof of Block 10% of BSP + 50% PLC + 50% Car Parking Consumer Complaint No. 336 of 2016 10 On casting of 5th Floor Roof of Block 10% of BSP + DC On completion of Masonry & Plaster work 5% of BSP within the apartment At the time of offer letter of possession 5% of BSP + IFMS + Power Backup + Club Membership + Other charges After that the project was taken over by Op No. 3 and it is an admitted fact that as per the pleadings of Op No. 3 that project was taken by Op No. 3 through Op No. 1 and that a sum of Rs. 7,50,000/- was received vide receipt No. 1039 dated 2.1.2014 and a sum of Rs. 4 Lacs vide receipt No. 1040 dated 2.1.2014. A plea has been taken by the counsel for the Ops that no further payments were made by the complainant but as referred above further payments were to be made as per the stage of the construction. The counsel for the Op No. 3 has not placed on the record any letter vide which further stage of the construction was intimated to the complainant but he failed to make the payment, therefore, in case Ops themselves failed to raise the construction then the buck cannot be passed to the complainant that he did not make the payment within time as per the payment schedule. We are of the opinion that there is no default on the part of the complainant to make the payment and the default is on the part of the Ops as Ops failed to raise the construction within time as per the allotment letter. Then there is unfair trade practice on the part of Ops. Ops have not placed on the record any CLU, layout plan, which is required as per Section 3, 4 & 5 of the PAPRA and no developer can raise the project till such sanctions are there. Neither Consumer Complaint No. 336 of 2016 11 Op No. 1 nor Op No. 3 has placed on the record the CLU, sanctioned layout plan in favour of Op no. 1 or Op No. 3. Further as per Section 6(1) of the PAPRA, after receiving 25% of the total sale price, the Ops were required to execute the sale agreement between the parties giving the detailed terms and conditions including the outer date by which the possession is to be delivered. In the terms and conditions in the application, no specific outer date has been given. It is confusing without referring the date of construction, 30 months have been stated from the start of the construction. Op No. 1 received 40% of the amount upto December, 2011 but no agreement was executed by Op No. 1 in favour of the complainant. Even after taking over the project by Op No. 3, no such agreement was offered/executed by Op No. 3 in favour of the complainant, therefore, here is violation of Section 6(1) of the PAPRA by Op No. 1 as well as Op No. 3. In case the project is not developed within the specified date then the complainant has a right to withdraw from the project and seek refund of the amount because if the project is not developed in the time then it amounts to deficiency in services on the part of Ops. In this regard, we are fortified by the judgment of the Hon'ble National Commission 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. 336 of 2016 12 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 bound to pay further payments when the project is not coming at the site and refund alongwith interest order was ordered. It was also reported in 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. Therefore, we are of the opinion that there is deficiency in services on the part of Ops and in case the construction is not completed within the agreed time then the complainant has a right to withdraw from the scheme and to seek the refund.
9. In the written reply, it has been stated that as per the averments made in the application form, in case the Ops fails to deliver the flat within the time then they are liable to pay penalty @ Rs. 3/- per sq. ft. per month but as per Clause No. 8 of the terms and conditions, in case there is delay in payment on the part of the complainant, he is liable to pay interest @ 18% p.a., therefore, there is great difference between the rate of interest to be paid by the complainant in case he delays the payment and the penalty to be paid by the Ops in case they delay the project. This aspect was considered by the Hon'ble National Commission in CC No. 427 of 2014 "Satish Kumar Pandey & Anr. Vs. M/s Unitech Ltd." Consumer Complaint No. 336 of 2016 13 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 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, Consumer Complaint No. 336 of 2016 14 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 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 Consumer Complaint No. 336 of 2016 15 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 has allowed interest @ 12% p.a. and its appeal was dismissed by the State Commission as well as the Hon'ble National Commission Consumer Complaint No. 336 of 2016 16 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."
10. However, it was further observed by the Hon'ble National Commission in another judgment 2017(3) CLT 520 (NC) "Ankur Goswami versus Supertech and another" wherein the Hon'ble National Commission observed 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. 3/- per sq. ft. per month of the super area will not be applicable specifically when terms and conditions between the parties were not settled by way of buyer's agreement.
Consumer Complaint No. 336 of 2016 17
11. What rate of interest is to be paid by the ops to the complainant. Here a reference can be made to Rule 17 i.e. Rate of Interest on refund of advance money upon cancellation of agreement of Punjab Apartment and Property Regulation Rules, 1995, in which 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."
According to this rule, the Ops is liable to pay interest @ 12% in case of refund. We are of the opinion that this rate of interest is quite reasonable rate of interest. In number of similar complaints, we have also 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.
12. No other point was argued.
13. Sequel to the above, we allow the complaint and direct Ops as under:-
Consumer Complaint No. 336 of 2016 18
(i) to refund a sum of Rs. 25,29,833/- to the complainant alongwith interest @ 12% from the various dates of deposit till actual payment;
(ii) Ops are directed to pay a sum of Rs. 1,00,000/- as compensation on account of mental and physical harassment suffered by the complainant.
(iii) 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.
14. The consumer complaint could not be decided within the statutory period due to heavy pendency of Court cases.
15. 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 March 07, 2018.
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