State Consumer Disputes Redressal Commission
Neeraj Gauba And Ors. vs Bestech India Pvt. Ltd. on 21 November, 2023
C. NO. 193/2016 D.O.D.: 21.11.2023
MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
IN THE DELHI STATE CONSUMER DISPUTES REDRESSAL
COMMISSION
Date of institution: 26.02.2016
Date of hearing: 01.05.2023
Date of Decision: 21.11.2023
COMPLAINT CASE NO.- 193/2016
IN THE MATTER OF
1. MR. NEERAJ GAUBA,
S/O MR. M.L. GAUBA,
R/O FLAT NO. 84,
MANAV VIHAR APARTMENTS,
SECTOR- 15, ROHINI,
DELHI - 110089.
2. MR. SANJAY BANSAL,
S/O MR. R.K. BANSAL,
R/O A-14, SHANKER GARDEN,
NEW DELHI - 110018.
(THROUGH: MR. GAURAV KAKAR, ADVOCATE)
...COMPLAINANTS
VERSUS
1. BESTECH INDIA PVT. LTD.,
(THROUGH ITS DIRECTOR/AUTHORIZED
REPRESENTATIVE)
HAVING ITS REGISTERED OFFICE AT:
UNIT NO. 5D, 5TH FLOOR,
ASSETS AREA- 4,
DELHI AEROCITY HOSPITALITY,
NEW DELHI-110037.
(Through: Manish Sharma, Pranay Raj
Singh And Chandi Mehra, Advocates)
2. M/S SAFFRON REALTY,
PARTLY ALLOWED PAGE 1 OF 15
C. NO. 193/2016 D.O.D.: 21.11.2023
MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
THROUGH ITS AUTHORISED
REPRESENTATIVE,
4/24, 1ST FLOOR, ASAF ALI ROAD,
NEW DELHI.
...Opposite Parties
CORAM:
HON'BLE JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
HON'BLE MS. PINKI, MEMBER (JUDICIAL)
HON'BLE MR. J.P. AGRAWAL, MEMBER (GENERAL)
Present: Mr. Harsh Jaiswal & Mr. Gaurav Kakar, counsel for the
Complainants.
Mr. Jigyasa Sharma, Counsel for the OP.
PER: HON'BLE JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
JUDGMENT
1. The present complaint has been filed by the Complainants before this Commission alleging deficiency of service by the Opposite Party and has prayed the following reliefs:
A. Direct the Direct the Opposite Parties No. 1 to 3 to return the amount of Rs. 40,00,000/- (Rupees Forty Lakhs Only) fraudulently taken by the complainant along with interest at the rate of 24% per annum from the date of receipt of the payments till realization.
AND/OR B. Direct the Respondents to pay to the Complainant a sum of Rs. 5,00,000/- towards mental agony and harassment caused to the Complainant along with litigation expenses of Rs. 1,00,000/- incurred by the complainant.
AND /OR C. To discontinue the unfair trade practice adopted by the Opposite Parties no. 1 to 3 in the manner as the Hon'ble Commission may deem fit and proper in the facts and circumstances of the case.
PARTLY ALLOWED PAGE 2 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023
MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
AND /OR D. Pass such other and further reliefs as the Hon'ble Commission may deem fit and proper in accordance with the facts and circumstances of the case.
2. The brief facts necessary for the adjudication of the present complaint are as that the Complainants booked a unit bearing number A-1102 with the Opposite Parties in the project called "Park View Sanskruti," situated in Sector 91, Gurgaon, Haryana. The Complainants also paid a booking amount of Rs. 10,00,000 towards the said unit, which was duly acknowledged by Opposite Party No. 1. Subsequently, the Complainants approached Opposite Party No. 1 for the execution of legal documents regarding the said booking, but Opposite Party No. 1 provided only false assurances. Instead of executing legal documents, the Opposite Party kept sending demand letters, which were duly paid by the Complainants out of fear of losing their hard-earned money.
After almost one year and after taking almost Rs. 40,00,000 from the Complainants, an application form was executed between them in October 2013. However, at the time of execution, this application form was a blank/unfilled document without any particulars or details about the booking and payments. Thereafter, following numerous persuasions to Opposite Party No. 1, an agreement was sent to the Complainants in January 2014, thereby delaying the promised possession date from 2015 to the year 2017. The Complainants also made various communications regarding the inordinate delay in completing the construction of the project, even after taking Rs. 40,00,000 from them. The Opposite Party also levied Rs. 8,50,000 for preferential location charges, despite various assurances that it would be adjusted. Aggrieved by the actions of the Opposite Party in making inordinate delays in completing the construction of the said project, the Complainants sent an email dated 17.01.2015 for the cancellation of the booking. However, the PARTLY ALLOWED PAGE 3 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
Complainants were shocked to receive an email dated 20.11.2013, which mentioned that Rs. 31,00,000 had been deducted from the total amount paid by the Complainants.
The Complainants also sent a notice dated 18.01.2016 to Opposite Party No. 1 and a notice dated 18.02.2016 to the Opposite Party, mentioning their grievances and requesting a refund of the total amount deposited by them, but to no avail
3. The Opposite Party no. 1 has contested the present case and raised preliminary objections as to the maintainability of the complaint case. The counsel of the Opposite Party no.1 submitted that the Complainants are not consumer under the Consumer Protection Act, 1986 as they invested the money to earn profit, which amounts to commercial purpose. The counsel of the Opposite Party no. 1 further submitted that this commission does not have the territorial jurisdiction to try and entertain the present complaint, only courts at Gurgaon will have the jurisdiction to adjudicate the present complaint. He further submitted that the complainant defaulted in making timely payments as per the payment schedule. Pressing the aforesaid objections, the counsel appearing on behalf of the Opposite Party no.1 prayed that the complaint be dismissed.
4. The Complainants have filed the Rejoinder rebutting the written statement filed by the Opposite Party. Both the parties have filed their Evidence by way of affidavit in order to prove their averments on record & written arguments during the course of proceedings.
5. We have perused the material available on record and heard the counsel appeared for both the parties.
6. The fact that the Complainant had booked a unit with the Opposite Party no. 1 is evident from the Apartment Buyer's Agreement dated 02.01.2014 (Annexed-A4). Payment to the extent of Rs.40,00,000/- by the Complainants for the said unit is evident from the receipts issued by the PARTLY ALLOWED PAGE 4 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
Opposite Party no. 1. (Annexure-A-1(colly))
7. The first question for consideration is whether complainant falls in the category of 'consumer' under the consumer protection act, 1986?
8. The first question for consideration before us is whether the Complainants fall under the category of 'consumer' defined under the Consumer Protection Act, 1986. To comment on this issue, we deem it appropriate to refer to Section 2(1)(d) of the Consumer Protection Act, 1986, which provides as under:
"(d) "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 .................................................."
9. The above statutory provision makes it clear that a person who buys goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment is a consumer. It is evident from the Apartment Buyer's Agreement dated 02.01.2014 (Annexed at Pg. 31-65 of the complaint) that the Complainants had booked unit in said project and the Opposite Party no.1 had also taken Rs. 40,00,000/- from the Complainants for the said unit.
PARTLY ALLOWED PAGE 5 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023
MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
10. In view of the aforesaid, it is clear that the Complainants had bought unit from the Opposite Party no.1 by paying part-consideration of Rs. 40,00,000/- and therefore, the Complainants falls under the category of 'consumer' provided by the Consumer Protection Act, 1986.
11. It is imperative to refer to the dicta of the Hon'ble National Commission in CC-1122/2018 titled Narinder Kumar Bairwal and Ors. vs. Ramprastha Promoters and Developers Pvt. Ltd. and Ors. decided on 01.11.2019, wherein, the Hon'ble National Commission has held as under:
"19. The contention of the Learned Counsel that the said Flats were purchased for commercial purpose is not supported by any documentary evidence as the onus shifts to the Opposite Parties to establish that the Complainant have purchased the same to indulge in 'purchase and sale of flats' as was held by this Commission in Kavit Ahuja vs. Shipra Estates I (2016) CPJ 31. The Opposite Parties failed to discharge their onus and we hence hold that the Complainant are 'Consumers' as defined under Section 2(1)(d) of the Act."
12. From the aforesaid dicta of the Hon'ble National Commission, it flows that it is for the Opposite Party no.1 to prove that the unit purchased was for commercial purpose, by way of some documentary proof and a mere bald statement is not sufficient to raise adverse inference against the Complainants.
13. In the present case, the Opposite Party no.1 has merely made a statement that the Complainants purchased the unit for commercial purpose and on perusal of the record before us, we fail to find any material which shows that the Complainants are engaged in the business of purchasing and selling houses and/or plots on a regular basis, solely with a view to make profit by sale of such unit. Mere allegation, that the purchase of the property is for commercial purpose, cannot be the ground to reject the present consumer complaint. Consequently, the objection raised on PARTLY ALLOWED PAGE 6 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
behalf of the Opposite Party no. 1 is answered in the negative.
14. The second question for consideration is whether this commission has the territorial jurisdiction to adjudicate this complaint?
15. The next question for consideration is whether this commission has the jurisdiction to adjudicate the present complaint. We deem it appropriate to refer to Section 17(2) of the Consumer Protection Act, 1986 which provides as under:
"(2) A complaint shall be instituted in a State Commission within the limits of whose jurisdiction-
(a) the opposite party or each of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides or carries on business or has a branch office or personally works for gain; or
(b) any of the opposite parties, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides, or carries on business or has a branch office or personally works for gain, provided that in such case either the permission of the State Commission is given or the opposite parties who do not reside or carry on business or have a branch office or personally works for gain, as the case may be, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises."
16. Analysis of Section 17 of the Consumer Protection Act, 1986 leads us to the conclusion that clause 17(2) of the Act provides the extent of territorial jurisdiction, wherein it has been provided that the state commission shall have the jurisdiction to entertain cases where opposite party at the time of the institution of the complaint, actually and voluntarily resides or carries on business or has a branch office or personally works for gain or the cause of action arose.
17. Having discussed the statutory position, the facts of the present case reflect the registered office of the Opposite Party no.1 is at Unit No. 5d, 5th Floor, Assets Area- 4, Delhi Aerocity Hospitality, New Delhi-
PARTLY ALLOWED PAGE 7 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023
MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
110037. Since the registered office falls within the territory of Delhi, this commission has the territorial jurisdiction to adjudicate the case. To strength the aforesaid findings, we tend to rely on Rohit Srivastava v. Paramount Villas Pvt. Ltd. reported at 2017 SCC OnLine NCDRC 1198, wherein it has been held as under:
"It is not in dispute that the Registered Office of Opposite Party No. 1 Company is situated in Delhi, i.e., within the territorial jurisdiction of the State Commission at Delhi and therefore, in the light of clear provision contained in Section 17(2)(a), which stipulates that a Complaint can be instituted in a State Commission, within the limits of whose jurisdiction, the Opposite Party actually carries on business. In view of the said provision, we have no hesitation in coming to the conclusion that since the Registered Office of the first Opposite Party is situated in Delhi, the State Commission did have the territorial jurisdiction to entertain the Complaint."
18. Relying on the above settled law, we are of the view that this commission has the territorial jurisdiction to adjudicate the present complaint.
19. Having discussed the preliminary objections raised on behalf of the Opposite Party, the last issue which arises is whether the Opposite Party no.1 was actually deficient in providing its services to the Complainants. The expression deficiency of services is defined in Section 2 (1) (g) of the Consumer Protection Act, 1986 as:
(g) "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.
18. The expression 'service' in Section 2(1)(o) of the Consumer Protection PARTLY ALLOWED PAGE 8 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
Act, 1986 is defined as:
(o)"service" means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service"
20. The Opposite Party No.1 contended that the Complainant failed to make the payments prescribed as per the time linked payment plan opted, despite service of various call notice dated 01.06.2013, 20.08.2014, 15.01.2015, 16.04.2015, 24.06.2015 and 21.10.2015 towards the outstanding dues. However, the Complainant failed to comply with the payment plan. Therefore, the Opposite Party No. 1 vide letter dated 24.05.2013, cancelled the allotment of the said space and forfeited the earnest money, accumulated interest and brokerage paid (if any).
21. The Opposite Party no.1 submitted that the Complainants were at default in making payment towards the total sale price of the said unit and several calls & reminders were sent to the Complainants to clear outstanding dues.
22. On perusal of record, it is clear that the Opposite Party no.1 sent a call notice dated 01.06.2013, 20.08.2014, 15.01.2015, 16.04.2015, 24.06.2015 and 21.10.2015. However, instead of making payments, the Complainants sent email dated 06.04.2015 (Annexure R16) stating their inability to comply with the payment schedule and requesting cancellation of the said allotment along with refund. The relevant content PARTLY ALLOWED PAGE 9 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
of the said email is reproduced below:
".... Due to unavoidable circumstances, we are unable to pay the installments of the said property, so you are requested to cancel my flat and refund my money."
19. Therefore, it is clear from the above letter that the Complainants themselves admitted they were unbale to pay further payment and wanted refund of amount deposited by them. Consequently, it becomes clear that Complainants have not paid subsequent instalments in spite of repeated reminders and has committed default in making payments of the instalment in accordance with the payment plan, Opposite Party No.1 had every right to terminate the allotment of the Complainants and forfeit amount of earnest money deposited by Complainants.
20. The last question that arises, as to what constitutes to earnest money.
The expression 'earnest money' has been dealt with in the Consumer Case No. 438 of 2019 titled as 'Ramesh Malhotra & 2 Ors. Vs EMAAR MGF Limited & Anr.' decided on 29.06.2020, wherein the Hon'ble National Commission quoted the following Hon'ble Supreme Court's case titled as 'Maula Bux Vs. Union of India' - 1969 (2) SCC 554, wherein, the Hon'ble Supreme Court quoted the following observations made by the Judicial Committee in Kunwar Chiranjit Singh Vs. Har Swarup - AIR 1926 PC 1-
"Earnest Money is part of the purchase price when the transaction goes forward; it is forfeited when the transaction falls through, by reason of the fault or failure of the vendee"
In Shree Hanuman Cotton Mills & Ors. Vs. Tata Air Craft Ltd. - 1969 (3) SCC 522, the Hon'ble Supreme Court quoted the following characteristics of the earnest money -
PARTLY ALLOWED PAGE 10 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023
MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
"15. Borrows, in Words & Phrases, Vol. II, gives the characteristics of "earnest". According to the author, "An earnest must be a tangible thing. That thing must be given at the moment at which the contract is concluded, because it is something given to bind the contract, and, therefore, it must come into existence at the making or conclusion of the contract. The thing given in that way must be given by the contracting party who gives it, as an earnest or token of good faith, and as a guarantee that he will fulfil his contract, and subject to the terms that if, owing to his default, the contract goes off, it will be forfeited. If, on the other hand, the contract is fulfilled, an earnest may still serve a further purpose and operate by way of part payment."
After considering several decisions on the subject, the following principles were laid down by the Hon'ble Supreme Court regarding 'earnest':
(1) It must be given at the moment at which the contract is concluded.
(2) It represents a guarantee that the contract will be fulfilled or, in other words, 'earnest' is given to bind the contract.
(3) It is part of the purchase price when the transaction is carried out.
(4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.
(5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest".
The above referred principles were reiterated in Satish Batra Vs. Sudhir Rawal - (2013) 1 SCC 345. It would, thus, be seen that only that amount would constitute earnest PARTLY ALLOWED PAGE 11 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
money which is paid at the time of contract is concluded between the parties. Any payment made after the contract is concluded, cannot be said to be part of the earnest money. In the case before us, admittedly, only a sum of Rs.63,469/- was paid to the Petitioner Company at the time the deal was concluded between the parties. Therefore, in view of the above said referred authoritative pronouncements of the Hon'ble Supreme Court, only the aforesaid forfeited amount can constitute earnest money.
********** It would thus be seen that only a 'reasonable amount' can be forfeited as earnest money in the event of default on the part of the purchaser and it is not permissible in law to forfeit any amount beyond a reasonable amount, unless it is shown that the person forfeiting the said amount had actually suffered loss to the extent of the amount forfeited by him. In our opinion, 20% of the sale price cannot be said to be a reasonable amount which the Petitioner Company could have forfeited on account of default on the part of the complainant unless it can show it had only suffered loss to the extent the amount was forfeited by it. In our opinion, in absence of evidence of actual loss, forfeiture of any amount exceeding 10% of the sale price cannot be said to be a reasonable amount.
**********
13. For the reasons stated herein above, we hold that (i) an amount exceeding 10% of the total price cannot be forfeited by the seller, since forfeiture beyond 10% of the sale price would be unreasonable and (ii) only the amount, which is paid at the time of concluding the contract can be said to be the earnest money. The Petitioner Company, therefore, was entitled to forfeit only the sum of Rs.63,469/-, which the complainant had deposited with them at the time of booking of the apartment. We, therefore, direct the Petitioner PARTLY ALLOWED PAGE 12 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
Company to pay the balance amount of Rs.81,534/- to the complainant within 4 weeks from today, failing which, the said amount shall carry interest @ 12% p.a. from the date of this order till payment. However, in the facts and circumstances of the case, we find no justification for grant of any compensation or cost of litigation to the complainant. The orders passed by District Forum and State Commission stand modified accordingly."
21. In the light of the above discussion, it becomes clear that only a 'reasonable amount' can be forfeited as earnest money. It is clear that any amount exceeding 10% of the total price cannot be forfeited by the builder.
22. Further, the default on the part of the Complainants happened when the third instalment payable for on 'casting of basement floor roof slab', was not paid. The Opposite Party No.1 was entitled to cancel the allotment on account of the aforesaid default. If the Opposite Party did not cancel the allotment despite the default on the part of the Complainants, it must necessarily pay interest on the amount which was required to refund to the Complainant with effect from the date on which the very first default committed by the Complainants, there would have been no occasion for demanding any interest on the delayed payments. Once the default had happened, it ought to have cancelled the allotment, forfeited the permissible earnest money and refunded the balance amount to the Complainants. Therefore, the Opposite Party No.1 is not entitled to any interest on the delayed payments. The brokerage/commission charges will have to be borne by the Opposite Party No.1 out of the earnest money which it is permitted to forfeit.
23. Keeping in view the facts of the present case and the extensive law as discussed above, we direct the Opposite Party No.1 to refund an PARTLY ALLOWED PAGE 13 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
amount of Rs.26,19,388/- [After deduction of 10% of the total price of the unit and service tax] along with interest as per the following arrangement:
A. An interest @ 6% p.a. calculated from the date on which the allotment was cancelled by the Opposite Party No.1 (06.01.2016) till 21.11.2023 (being the date of the present judgment);
B. The rate of interest payable as per the aforesaid clause (A) is subject to the condition that the Opposite Party No.1 pays the entire amount on or before 21.01.2024; C. Being guided by the principles as discussed above, in case the Opposite Party No.1 fails to refund the amount as per the aforesaid clause (A) on or before 21.01.2024, the entire amount is to be refunded along with an interest @ 9% p.a. calculated from the date on which the allotment was cancelled by the Opposite Party No.1 till the actual realization of the amount.
24. In addition to the aforesaid and taking into consideration the facts of the present case, the Opposite Party is directed to pay a sum of:
A. Rs. 2,00,000/- as cost for mental agony and harassment to the complainants; and B. The litigation cost to the extent of Rs. 50,000/-.
25. Applications pending, if any, stand disposed of in terms of the aforesaid judgment.
26. The judgment be uploaded forthwith on the website of the commission for the perusal of the parties as well as forwarded to the corresponding E-mail addresses available on the record PARTLY ALLOWED PAGE 14 OF 15 C. NO. 193/2016 D.O.D.: 21.11.2023 MR. NEERAJ GAUBA AND ANR. VS. BESTECH INDIA PVT. LTD.
i.e.,[email protected] (Complainant) and [email protected] (Opposite Party).
27. File be consigned to record room along with a copy of this Judgment.
(JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (PINKI) MEMBER (JUDICIAL) (J.P. AGRAWAL) MEMBER (GENERAL) Pronounced On: 21.11.2023 PARTLY ALLOWED PAGE 15 OF 15