State Consumer Disputes Redressal Commission
Rakhi Kaushik vs Parswanath Dev. Ltd on 18 August, 2023
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UP C-1 Vikrant Khand 1 (Near Shaheed Path), Gomti Nagar Lucknow-226010 Complaint Case No. CC/156/2014 ( Date of Filing : 24 Nov 2014 ) 1. Rakhi Kaushik R/0 1/119 Vivek Khand 1 Gomti NagarLucknow ...........Complainant(s) Versus 1. Parswanath Dev. Ltd New Delhi ............Opp.Party(s) BEFORE: HON'BLE MR. Rajendra Singh PRESIDING MEMBER HON'BLE MR. Vikas Saxena JUDICIAL MEMBER PRESENT: Dated : 18 Aug 2023 Final Order / Judgement Reserved State Consumer Disputes Redressal Commission U.P., Lucknow. Complaint Case No.156 of 2014 Mrs. Rakhee Kaushik w/o Sri Vivek Sharma, S/o Sri Jitendra Prakash Kaushik, R/o A-14/3, A Block, SFS Flas, Saket, New Delhi Presently R/o 1, River Court #2311 Nersey City NJ 07310 Through Power of Attorney Holder Ramesh Chandra Sharma s/o Late Sri B.M. Sharma, R/o 1/119, Vivek Khand-1, Gomti Nagar, Lucknow. ...Complainant. Versus 1- Parsvnath Developers Limited, Registered and Corporate Office situated at 6th Floor, Arunachal Building, 19, Barakhamba Road, New Delhi through its Chairman. 2- Parsvnath Developers Limited, (Parsvnath Planet) situated at Plot no.TC-8, TC-9, Vibhuti Khand, Gomti Nagar, Lucknow through its Managing Director. .... Opposite parties. Present:- Hon'ble Mr. Rajendra Singh, Presiding Member. Hon'ble Mr. Vikas Saxena, Member. Mr. Sushil Kumar Sharma, Advocate for Complainant. Mr. Rajesh Chaddha, Advocate for Opposite Parties. Date: 29.11.2023 JUDGMENT
Per Mr. Rajendra Singh, Member: This complaint has been filed by the complainant Mrs. Rakhee Kaushik against the opposite parties Parsvnath Developers Limited & anr. under section 17 of the Consumer Protection Act, 1986.
The brief facts of the complaint case are that, that the opposite parties are limited company which are engaged in the construction activities and in order to provide residential accommodation to the public, charge consideration money, in respect thereof. The opposite parties have launched a project named 'Parswanath Planet' in Gomti Nagar, Lucknow. The opposite parties made advertisement to the effect that they have purchased the land from the Lucknow Development Authority, Lucknow and have taken the possession from the Authority and have started the construction of the apartments. The scheme was issued with attractive benefits and thus, many persons including the complainant applied for a residential accommodation in the scheme. The complainant applied for a plot on the assurance/commitment of the opposite parties to complete the project within a period of 36 months i.e., the project was to be completed till January 2009.
The opposite parties at the time of deposit of the aforementioned booking amount assured the buyers for delivery of the possession of the apartment till January 2009 and reaffirmed their commitment stating that the requisite permission from the authorities to construct the apartment had already been obtained by them after taking the possession of the land from the Lucknow Development Authority, Lucknow. The complainant booked a residential flat no T6-703 of 1775 sq ft in the Parsvanath Planet township project of the opposite party, in plot number 8 and 9, Vibhuti Khand, Gomti Nagar Lucknow. The basic price of the said flat was ₹2,928,750/-. The complainant opted payment plan B; construction linked payment plan for payment of the price of the flat being purchased. The complainant has paid ₹3,137,257/- from 17.09.2005 up to 12.03.2013 to the opposite party as is evident from the customer Ledger provided by the opposite party. A Flat Buyer Agreement dated 09.07.20 07 has been executed between the opposite parties and the complainant pertaining to flat number T6-703. The complainant visited the construction site of the opposite parties where it was discovered that hardly any construction activity had been started on the site for which a protest was lodged with the opposite parties who assured that the possession shall be delivered very soon and directed the complainant to deposit the instalments regularly failing which interest at a rate of 24% shall be charged and the allotment of the complainant shall be cancelled.
Thus the complainant was constrained to deposit the instalments on the due date to avoid the liability of making the payment of penal interest. The complainant claimed the possession of the flat but he was not given the possession of the allotted flat since the construction of the flat was not complete. Thus the complainant has suffered irreparable loss and injury. The complainant again visited the construction site of the opposite parties and discovered that still there was hardly any construction activity started by the opposite parties and the person available on the site told the complainant that the apartments are likely to be constructed by 2015. Even the partial construction done by the opposite parties was defective and did not match the specifications provided in the agreement. The complainant felt shocked on hearing the aforementioned statement and immediately contacted the area manager who told the complainant that there is some delay in the construction of the apartments and the apartments shall be ready shortly. There is continuing cause of action for the complainant and the possession of the aforesaid flat has not been handed over to the complainant.
The complainant had to undergo a lot of mental agony and stress by the attitude of the opposite parties. Since the opposite parties failed to abide with their promise to provide the possession of the aforesaid apartment to the complainant till January 2009 which caused loss of rent for the complainant as well. The daily newspaper disclosed the fraudulent and defective act of the opposite parties when the news of the cancellation of the allotment was published, by means of which it was revealed that the Lucknow Development Authority has threatened the builder/ opposite parties that the allotment of the project shall be cancelled on account of the default committed by the opposite parties. From the aforementioned facts, it is amply clear that the opposite parties have obtained huge sum of money from all the allottees of the scheme and instead of putting the same for the development of the flats misappropriated the same, for which the opposite parties are liable to produce the expenditure and account statement of the scheme before this Hon'ble Commission. The opposite parties have committed serious deficiency in services by not delivering the physical possession of the allotted apartment till January, 2009. Therefore the complainant filed this complaint and prays for the following relief from the Hon'ble commission.
To direct the opposite parties to provide the physical possession of fully finished flat no T6-703 to the complainant having an area of 1725 ft² in the "Parsvanath Planet" township project of the opposite parties in Gomti Nagar Lucknow.
To direct the opposite parties to pay interest at a rate of 24% to the complainant on the amount deposited by the complainant with effect from the respective dates of deposits till the date of possession, along with the dimensions stipulated in the agreement dated 05.07.2007.
To direct the opposite parties to pay a sum of ₹ 5 lakhs to the complainant as damages for committing deficiency in services and for mental and physical harassment.
To direct the opposite parties to pay compensation to the complainant for the loss of rent occasioned by non-allotment of flat to the complainant from the January 2009 at a rate of 25,000/- per month in the date of possession.
To direct the opposite parties to pay the difference in the cost of installation which shall be incurred at the time of the registered sale deed.
To direct the opposite parties to pay ₹ 50,000/- towards cost of the case.
To direct the opposite parties to pay appropriate punitive damages to the complainant.
To direct the opposite parties not to charge any kind of service tax with effect from the year 2009.
Any other order which this Hon'ble commission deems fit and proper in the circumstances of the case may also be passed The opposite parties filed their written statement stating that, that the opposite parties submit that this Hon'ble Commission has vide its order dated 25.02.2015 dispose of 33 complainants filed against the opposite parties by the allottees of the project namely "Parsvanath Planet" which is also in question before this Hon'ble Commission in the captioned complaint. The operative part of the common order and judgement dated 25.02.2015 is reproduced hereinbelow ;
"All the aforesaid complaints are hereby partly allowed for the reliefs as follows:-
(1) The opposite parties shall hand over the possession of the flat to the complainant within this year of 2015.
(2) The opposite parties shall issue the statement of accounts to the complainant individually on his demand and if there is no dues on the particular allottees, the opposite parties shall pay amount of credit vide clause 10 (c) of the agreement credited in the account of the allottee in cash or by way of cheques or draft to the allottee with interest at a rate of 9% P.A from the date it has become due in the payment made.
(3) In complaint case number 18 of 2013 of the complainants Nalin Bhargava and Sanjay Bhargava , the complainants are entitled in addition to get the difference of amount of rent to the tune of ₹ 14,000 per month paid by the complainants and the amount credited by the opposite parties in their account vide clause 10 (c) of the agreement w.e.f October 2012 to June 2014.
(4) In complaint Case no.32 of 2012 of the complainants Ravinder Singh and Ritesh Kumar Singh, are entitled in addition to get the difference of amount of rent to the tune of ₹14,000 paid by the complainant and amount credited by the opposite parties in their account vide clause 10 (c) of the agreement for the month of May 2010 only.
The complainant for the rest of the reliefs sought shall be deemed to have been dismissed. This judgement shall be placed on record of complaint Case no.C/86/2010 with it copy to be laid on the record of other 32 complaints."
In view of the common order and judgement, it is stated that since the captioned complaint also pertains to the same project and apart from the basic facts of the case which differs from allottees to allottees, the broad stand of the opposite parties remains the same as was averred in the complaints already disposed of by the common judgment, the captioned complaint be also dispose of by this Hon'ble Commission in similar manner.
It is submitted that the opposite parties have not, at any point of time, violated or breached the provisions of the Flat Buyer Agreement dated 09.07.2007 (hereinafter referred as "The Flat Buyer Agreement"). No cause of action arose to the complainant. The complainant has prayed for reliefs which otherwise have to be claimed in a suit for damages and recovery of possession, after paying appropriate court fee. The complainant cannot claim reliefs which are beyond the terms and conditions agreed upon by her. It is wrong and denied that the complainant has suffered any damages which will necessitate the payment of any compensation, damages and cost. Physical possession of the flat shall be given by the opposite parties to the complainant as soon as the construction is complete and only upon receipt of all outstanding payments from the side of the complainant and fulfilment of all formalities. As per clause 10 (C) of the Flat Buyer Agreement entered into by both parties, the liability of the opposite parties are limited to ₹ 5 per square ft per month after 42 months had elapsed and subject to other conditions et cetera.
It is submitted that as per the lease deed executed by the Lucknow Development Authority in favour of the opposite parties, the construction is to be raised within five years of the sanction of the map by competent authority, which can further be extended by payment of penalty. It is further submitted that the advertisement about the project was published as per the market practice in compliance with the then existing rules/regulations/laws in force. It is denied that the opposite parties committed that the project would be completed in 2009. In this contest, it is stated that the construction work to be completed within the period of 36 months of commencement of construction of the particular block in which the flat is located with a further grace period of six months as stipulated in clause 10 (a) of the Flat Buyer Agreement. Clause 10(a) of the flat buyer agreement for kind consideration of this Hon'ble commission is extracted below:-
"CLAUSE 10 (a):
Construction of the flat is likely to be completed within a period of 36 months of commencement of construction of the particular block in which the flat is located with a grace period of six months on receipt of sanction of building plans/revised building plans and approvals of all concerned authorities including the Fire Service Department, Civil Aviation Department, Traffic Department, pollution control Department, as may be required for commencing and carrying on construction subject to force majeure, restraints of restrictions from any courts/authorities, nonavailability of building materials, disputes with contractors/workforce et cetera and circumstances beyond the control of the developers and subject to timely payment by the flat buyers is in the scheme. No claim by way of damages/compensation shall lie against the developers in case of delay in handing over submitting application to the concerned authorities for issue of completion/part completion/occupancy/part occupancy certificate of the complex shall be treated as the date of completion of the flat for the purpose of this clause/agreement".
It is submitted that though the global recession which hit economic all over the world including the Indian economy due to which the real estate sector was particularly hit, yet the opposite parties strived hard to keep up with the construction activities to ensure completion of its projects. The opposite parties in this view of the matter has not at any point of time breached the conditions of the Flat Buyer Agreement and the averments averred to the contrary are vehemently denied. It is specifically denied that the complainant visited the site where she was informed that the construction activities at the site are at Halt. It is denied that the payment of the instalments were made by the complainant on its respective due dates. It is submitted that the opposite parties had sent various demand letters/reminder to the complainant regarding timely payment of the instalments. It is denied that the complainant suffered irreparable loss or injury as contended in the paragraph under reply. The delay in delivery of possession of the flat was for reasons beyond the control of the Flat Buyer Agreement. The complainant was at all times informed that for the delay occasioned the complainant shall be duly compensated under clause 10 (c) Of the Flat Buyer Agreement.
It is denied that the part construction which have already completed is defective in any manner or does not match with the specification as alleged by the complainant. It is denied that the complainant suffered mental agony and stress. It is denied that due to delay in delivery of possession, loss of rent was caused to the complainant. It is submitted that the opposite party no 1 have a pan- India presence and the opposite parties have completed work was more than ₹ 1 20 crores at Parsvanath Planet i.e. the present project alone, besides thousands of crores of rupees in the various projects developed by the opposite parties. It is denied that the opposite parties have committed serious deficiency in service or that the opposite parties are accountable for unfair trade practice. It is further submitted that the opposite parties had addressed a letter dated 12.02.2010 to the complainant informing that the construction shall be completed by March 2011. It is submitted that the opposite parties vide its letter dated 12.03.2013 informed the complainant that the opposite parties had applied for the compounding of all Residential Towers and completion for Towers bearing no.1, 2, 9 and 10 has been completed in all respect. It was also informed to the complainant that the opposite parties have credited the account of the complainant with delay compensation till 31.12.2012. It is submitted that the complainant has instituted a false, frivolous and vexatious complaint against the opposite parties and the same is liable to be dismissed at the threshold. Hence it is prayed that the complaint of the complainant may kindly be dismissed with exemplary cost.
We have heard the learned counsel of the complainant Shri Sushil Kumar Sharma and learned counsel of the opposite parties Shri Rajesh Chaddha. We have perused the pleadings evidences and documents on record.
The opposite parties have filed the copy of judgement passed by this commission in several similar complaint cases but it is not binding on this Bench. After the said judgments, several judicial pronouncements have been made by the Hon'ble Supreme Court and Hon'ble NCDRC in respect of payment of interest, payment of damages, payment of rent et cetera et cetera. So we have to see all the facts and circumstances of this case in the light of the judgements of the Hon'ble Supreme Court and Hon'ble NCDRC.
First of all we see the object of the Consumer Protection Act.
The Consumer Protection Act 1986 was enacted to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of Consumers Councils and other authorities for the settlement of consumers' disputes and for matters connected therewith (Preamble).
The Act Inter alia, seeks to promote and protect the rights of consumers such as --
(1) right to be protected against marketing of goods which are hazardous to life and property;
(2) right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices;
(3) right to be assured, wherever possible, access to variety of goods at competitive prices;
(4) right to be heard and to assured that customers' interests will receive due consideration at appropriate forums.
(5) Right to seek redressal against unfair practices or unscrupulous exploitation of consumers; and (6) Right to consumer education The objects are sought to be promoted and protected by the Consumer Protection Councils to be established at the Central and State levels.
The Act applies to all goods and services, except if otherwise provided by the Central Government by Notification. To provide speedy and simple redressal of consumer disputes, a quasi judicial machinery is set up at the District, State and Central levels. The three tier system of quasi judicial bodies will observe the principle of natural justice and are empowered to give relief of a specific nature and to award, wherever appropriate, compensation to consumers. Penalties for non-compliance of the orders given by the quasi judicial bodies have also been provided.
Thus the Consumer Protection Act is to serve the interests of the consumers. Consumer education and redressal of consumers' grievances are the two aspects of the Act. It makes good the loss a consumer suffers and increases the feeling of responsibility of the manufacturer, trader, supplier or businessman.
The provisions of the Act have to be construed in favor of the consumer to achieve the purpose of enactment as it is social benefit oriented legislation. The primary duty of the Court while construing the provisions of such an Act is to adopt a constructive approach subject to that it should not do violence to the language of the provisions and not contrary to attempted objective of the enactment.
Extent of Consumer Protection:
While other legislations may be either punitive or preventive, the Consumer Protection Act compensates the consumer. The provisions of the Act are in addition to and not in derogation of the provisions of any law at the time being in force (Sec 3). In Maine Container Services South Pvt Ltd v Go Garments 1998 (3) SCC 247 it has been held that the Contract Act applies to all litigants before the Commissioner under the Consumers Protection Act. Passengers traveling in train suffering injuries and loss of Jewelry as a result of assault by unruly crowd are eligible for filing of complaint before State Commission is maintainable notwithstanding the provisions of sections 100 and 103 of Railways Act, 1889. The Consumer Protection Act therefore gives the consumer an additional remedy besides those which may be available under other existing laws. Existence of an arbitration clause in the agreement is no bar to the entertainment of complaint by the Redressal Agency as the remedy under the Act is in addition to the provisions of any other law. However, the Consumer Forums under the Act have not taken over the jurisdiction of civil Courts. If the dispute between the parties is pending in Civil Court no Consumer Forum will adjudicate the dispute. Similarly if evidence be laid by the parties to the dispute is voluminous or complicated the parties will be referred to the appropriate Civil Court.
Consumers Protection Act, thus enshrines the rights of a consumer to be informed about the quality, quantity, potency, price etc., of the goods to be protected against unfair trade practices, to seek inexpensive and expeditious redressal of grievances before the Consumer Forums. Consumer Protection Act is a benevolent piece of legislation to protect a large body of consumers from exploitation.
Now we come to the present case and perused the Flat Buyer Agreement. Clause 10 (a) of the flat buyer agreement says , "Construction of the flat is likely to be completed within a period of 36 months of commencement of construction of the particular block in which the flat is located with a grace of six months on receipt of sanction of building plans/revised building plans and approvals of all concerned authorities including the Fire Service Department, Civil Aviation Department, Traffic Department, pollution control Department cat that, as may be required for commencing and carrying on construction subject to force majeure, restraints of restrictions from any courts/authorities, nonavailability of building materials, disputes with contractors/workforce et cetera and circumstances beyond the control of the developers and subject to timely payment by the flat buyers is in the scheme. No claim by way of damages/compensation shall lie against the dollar person in case of delay in handing over submitting application to the concerned authorities for issue of completion/part completion/occupancy/part occupancy certificate of the complex shall be treated as the date of completion of the flat for the purpose of this clause/ agreement".
The opposite parties have stated that they have informed the complainant that the delay was due to some reasons and they have power to extend the date of construction under this clause of 10 (a). Whether a builder has right to extend the date of delivery of possession at his whims. If there was no time limit mentioned in the flat buyer agreement regarding delivery of possession of flat to the allottee, it does not mean that the builder has unlimited time to deliver the possession of the flat to the allottee. In this context the following judgement of the Supreme Court is of worth reading.
Hon'ble Supreme Court in civil appeal number (S) 3533-3534 of 2017, M/s Fortune infrastructure (NOW known as M/S Hicon Infrastructure) & Anr. Vs. Trevor D'Lima & Ors., Judgement 12.03.2018 has held:
"Moreover, a person cannot be made to wait indefinitely for the possession of the flats allotted to them and they are entitled to seek the refund of the amount paid by them, along with compensation. Although we are aware of the fact that when there was no delivery period stipulated in the agreement, a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a time period of 3 years would have been reasonable for completion of the contract i.e., the possession was required to be given by last quarter of 2014. Further there is no dispute as to the fact that until now there is no redevelopment of the property. Hence, in view of the above discussion, which draw us to an irresistible conclusion that there is deficiency of service on the part of the appellants and accordingly the issue is answered. When once this Court comes to the conclusion that, there is deficiency of services, then the question is what compensation the respondents/ complainants is entitled to ?"
Therefore one thing is clear that it is the duty of the builder to provide the delivery of possession of a flat within three years from the date of allotment order or Flat Buyer Agreement. We have perused the present case in which Flat Buyer Agreement has been executed on 9 July 2007. As per Hon'ble Supreme Court the possession was to be delivered by 8 July 2010 and as per the Flat Buyer Agreement the possession of the flat was to be delivered in 42 months that is on or before 8 January 2011. But before offering the delivery of possession the builder must have with him the various No Objection Certificates of Pollution Department, Civil Aviaition Department, Fire Brigade Department et cetera. Except these certificates the most important certificates are Completion Certificate and Occupancy Certificate. Now we have to see about Completion And Occupancy Certificates.
COMPLETION / OCCUPANCY CERTIFICATE When buying a home, it is vital to obtain documents, such as the Occupancy Certificate (OC) and Completion Certificate (CC). These are essential documents that allow you to mortgage or sell your home. Hence, homebuyers are advised to take possession of their flat or property only after these documents have been issued.
According to Vikas Bhasin, CMD, Saya Group, "Completion Certificate and Occupancy Certificate are some of the most important documents for a home buyer. Civic authorities can evict the occupants in case of non-availability of the necessary approvals. Before investing in a property, people must be doubly assured that all the certificates and approvals are in place."
Let us dive a little deeper into the details of these documents and their importance before you make a move to buy your dream home.
Owning a home is the culmination of years of savings, research, and paperwork. After patiently waiting for the construction to be complete, you finally register the property and take possession of your flat. But what if your dream home is declared unauthorised, and you are evicted by the authorities? This is not as far-fetched as it sounds. This nightmare could turn into reality without a crucial link in the property sale process - the Occupancy Certificate (OC).
The majority of apartments in different Indian cities have been occupied by owners without any occupancy certificate. This oversight can turn into a costly mistake, jeopardising the legal status of your dream home. The importance of the occupancy certificate cannot be overstated as it seals the legal status of your property and protects your ownership rights.
Decoding legal documents To understand the importance of an occupancy certificate and other legal documents, let's decode the legal jargon and understand their meaning in simple terms. Here's a ready reckoner of the most important legal documents related to your property:
Occupancy Certificate An OC certifies that the construction of the building has complied with the approved plans. It is issued by local municipal authorities or the building proposal department once the building has been completed and is ready to be occupied. Simply put, without an OC, your building has not been awarded a 'pass certificate'.
Completion Certificate A Completion Certificate (CC) is issued only after the construction meets other building standards like distance from the road, the height of the building, and rainwater harvesting system. A CC alone cannot legalise occupation; the OC is a must.
Commencement Certificate If you are buying an under construction property, make sure you check the Commencement Certificate before signing the agreement. Many builders do not wait for a Commencement Certificate. This is illegal and can create serious problems in obtaining an OC at a subsequent stage.
Why is it unsafe to buy a flat without OC?
In the absence of a valid OC, the local municipal body can initiate serious action against flat owners. In 2014, residents of a well-known building complex in Mumbai's upscale Worli area were hit with a bolt from the blue after their complex was declared unauthorised. At the time of possession, buyers overlooked the issuance of an OC from the builder. It was only after that they were forced to evacuate their flats that the writing on the wall became clear to them.
This is just one instance, and if buyers are not careful about getting the OC, they may face the following repercussions:
• In the absence of a valid OC, your building can be demolished as it can be classified as an unauthorised structure.
• The OC is crucial while applying for a home loan or loan to purchase a resale flat. If you wish to sell or hypothecate the property after a lapse of time, you will not be able to do so without a valid OC.
• The water connection, sanitary connection or electricity supply can be disconnected in the absence of an OC.
How to obtain an OC The OC is obtained from local municipal bodies by submitting an OC application form along with the following documents:
• Commencement Certificate • Completion Certificate • Built and Section plan • NOC for fire and pollution • Area calculation sheet of floor signed by an authorised architect • Photographs of the completed building • Tax assessment with tax paid receipt • Photographs of rain harvesting and solar panels • Copy of the sanctioned plan After submitting the form, authorities inspect the complex and confirm if it has conformed to the approved plan before issuing an OC. Legally and ideally, a builder should submit an application with the municipal commissioner for the OC within 30 days of completion of the property.
How you can apply for an OC As a flat owner, you can also apply for an OC by approaching the local corporation or municipality, and if all approvals are in place, an OC is issued within 30 days of application. You will have to submit the same documents as the builder to procure an OC.
Know your rights If the builder refuses to provide an OC, you should consider exercising your legal rights. You can issue a notice against the builder asking him to apply and hand over the copy of the OC within a month. You can also approach consumer forums and file a writ petition demanding the OC.
Some canny builders simply present the receipt of the OC and dupe gullible customers. But you shouldn't accept anything less than the actual OC as the receipt may be dated.
Landmark legislations like the Real Estate Regulatory Act (RERA) have been passed to regulate the sector, promote transparency and protect consumer rights. However, consumers must be vigilant and understand their rights and responsibilities towards owning a property. Documents like OC are essential and ensure the security of your investment.
Going forward, real estate experts believe that the OC should be made mandatory for the registration of flats and essential services. Until then, buyers must ensure builders get all the necessary approvals before handing over a property.
A Completion Certificate (CC) is an important legal document that certifies that a building is constructed according to the laid down norms and master plan of the city. This document has all the information related to the project, such as the building materials used, building height, and building plan, among other things like provision for green belt.
In a nutshell, this document certifies that the building adheres to all the prevailing rules and has not violated any norms. In fact, this document is to be shown compulsorily to the authorities to obtain electricity and water connection.
Builders are allowed to obtain a provisional Completion Certificate when there are minor works left in the project. Authorities then provide a provisional certificate valid for six months. After the expiry of the six months, the developer is bound to get a final CC.
Who issues a Completion Certificate?
Local authorities issue the Completion Certificate after a thorough inspection of the premises. If the developer violates no rules, authority issues a Completion Certificate.
Why is Completion Certificate important?
Buyers must be aware of the fact that if they are buying or moving into a property that does not have a Completion Certificate, they might be making a risky investment choice. The civic authorities hold the power to slap heavy penalties on the developer, leading to stalling or cancellation of the registered layout of the project. In case the building is already occupied, residents may also have to face eviction in extreme cases.
Difference between Occupancy Certificate and Completion Certificate Occupancy Certificate examines and certifies a property for adherence to bye-laws, civic amenities, electricity, sanitation and other clearances. On the other hand, a Completion Certificate is a document that certifies that a property is fit for possession by the buyers.
Clarifying the difference, Deepak Kapoor, Director, Gulshan Homz, says, "Completion Certificate is just a reaffirmation that the building has been constructed as per the building byelaws and the layout plan has been approved by various concerned authorities. Occupation Certificate signals that there is no violation of building construction norms, and thus, the structure is safe for occupants.
Generally, these documents are not required at the time of registry, and hence, buyers tend to overlook or ignore these. But for their own benefit and peace of mind, it is warranted that buyers of both ready-to-move-in as well as under-construction properties check these documents before taking possession. This would help avoid any unnecessary dispute or confrontation in the future."
Hon'ble Supreme Court in the case of Ireo Grace Realtech Private Limited Vs. Abhishek Khanna & Ors., civil appeal no.5785 of 2019, with other civil appeals, judgment 11.01.2021, has held where the development makes an alternate offer of allotment of apartment, the allottees are however not bound to accept the same because of inordinate delay in completing the construction of the towers or units were allotted to them and if the Occupation Certificate is not available even as on date, clearly amounts to deficiency of service.
Hon'ble Supreme Court on occupancy certificate by the builders.
Supreme Court: The bench of Dr. DY Chandrachud* and AS Bopanna, JJ has held that failure on the part of the builder to provide occupancy certificate is a continuing breach under the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 and amounts to a continuing wrong.
Factual Background The appellant is a co-operative housing society. The respondent constructed Wings 'A' and 'B' and entered into agreements to sell flats with individual purchasers in accordance with the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act 1963 (MOFA). The members of the appellant booked the flats in 1993 and were granted possession in 1997. According to the appellant, the respondent failed to take steps to obtain the occupation certificate from the municipal authorities.
There was an obligation on the respondent to provide the occupancy certificate and pay for the relevant charges till the certificate has been provided, however, the respondent time and again failed to provide the occupancy certificate to the appellant society. For this reason, a complaint was instituted in 1998 by the appellant against the respondent. The NCDRC on 20 August 2014 directed the respondent to obtain the certificate within a period of four months. Further, the NCDRC also imposed a penalty for any the delay in obtaining the occupancy certificate beyond these 4 months. Since 2014 till date, the respondent failed to provide the occupancy certificate.
In the absence of the occupation certificate, individual flat owners were not eligible for electricity and water connections. Due to the efforts of the appellant, temporary water and electricity connections were granted by the authorities. However, the members of the appellant had to pay property tax at a rate 25% higher than the normal rate and water charges at a rate which was 50% higher than the normal charge.
Analysis Obligations of Promoter under MOFA Section 3 of the MOFA imposes certain general obligations on a promoter. These obligations inter alia include making disclosures on the nature of title to the land, encumbrances on the land, fixtures, fittings and amenities to be provided, and to not grant possession of a flat until a completion certificate is given by the local authority. The responsibility to obtain the occupancy certificate from the local authority has also been imposed under the agreement to sell between the members of the appellant and the respondent on the latter.
Sections 3 and 6 of the MOFA indicate that the promoter has an obligation to provide the occupancy certificate to the flat owners. Apart from this, the promoter must make payments of outgoings such as ground rent, municipal taxes, water charges and electricity charges till the time the property is transferred to the flat-owners. Where the promoter fails to pay such charges, the promoter is liable even after the transfer of property.
Limitation In the instant case, the appellant submitted that since the cause of action is founded on a continuing wrong, the complaint is within limitation.
Section 24A of the Consumer Protection Act 1986 provides for the period of limitation period for lodging a complaint. A complaint to a consumer forum has to be filed within two years of the date on which the cause of action has arisen.
Section 22 of the Limitation Act 1963 provides for the computation of limitation in the case of a continuing breach of contract or tort. It provides that in case of a continuing breach of contract, a fresh period of limitation begins to run at every moment of time during which the breach continues A continuing wrong occurs when a party continuously breaches an obligation imposed by law or agreement. The continuous failure to obtain an occupancy certificate is a breach of the obligations imposed on the respondent under the MOFA and amounts to a continuing wrong.
The appellants, therefore, were entitled to damages arising out of this continuing wrong and their complaint is not barred by limitation.
"Rejecting the complaint as being barred by limitation, when the demand for higher taxes is made repeatedly due to the lack of an occupancy certificate, is a narrow view which is not consonance with the welfare objective of the Consumer Protection Act 1986."
Consumer Section 2(1)(d) of the Consumer Protection Act defines a 'consumer' as a person that avails of any service for a consideration. A 'deficiency' is defined under Section 2(1)(g) as the shortcoming or inadequacy in the quality of service that is required to be maintained by law.
In the present case, the NCDRC had held that the appellant is not a 'consumer' under the provisions of the Consumer Protection Act as they have claimed the recovery of higher charges paid to the municipal authorities from the respondent. Extending this further, the NCDRC observed that the respondent is not the service provider for water or electricity and thus, the complaint is not maintainable.
The respondent was responsible for transferring the title to the flats to the society along with the occupancy certificate. The failure of the respondent to obtain the occupation certificate is a deficiency in service for which the respondent is liable. Thus, the members of the appellant society are well within their rights as 'consumers' to pray for compensation as a recompense for the consequent liability (such as payment of higher taxes and water charges by the owners) arising from the lack of an occupancy certificate.
[Samruddhi Co-operative Housing Society Ltd v. Mumbai Mahalaxmi Construction Pvt. Ltd, 2022 SCC OnLine SC 35, decided on 11.01.2022] Now it has become clear that if there is no Occupancy Certificate, delivery of possession is no delivery of possession in the eye of law. In the light of above pronouncements of the Hon'ble Supreme Court and also the matter related to Completion and Occupancy Certificates, the builders have no right to the delivery of possession pending for a long time. The allottee has invested his hard earned money in the hope that he will get the possession of flat within the time period as mentioned by the builder in flat buyer agreement. Consumer Protection Act is for the benefit of the consumer and not for the benefit of the builders. The opposite parties have sent a letter dated 4 January 2016 to the complainant regarding authorisation of carrying out interiors, furnishings et cetera in the complainant flat in advance so as to save time on this account. But the opposite parties have not mentioned the clause of the Flat Buyer Agreement which gives such authorisation to the allottee. From the perusal of the documents we do not find any copy of the Completion/Occupancy Certificates. Further we do not find any NOCs of various departments as mentioned here in above. There is no demand of stamp duty for registering the sale deed. So it is clear that the opposite parties are not in a situation to handover the possession of the flat to the allottee.
Now we have to see that in such cases how much compensation should be paid by the builder to the allottee, what will be rate of interest and what should be the amount of damages in the light of the following Hon'ble Supreme Court and Hon'ble and Hon'ble NCDRC judgments.
In the case of Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra, [Civil Appeal No. 3182 of 2019 @ SLP (C) No(S). 1795 of 2017], the Hon'ble Supreme Court has held:
"This appeal arises from the judgment dated 21 November 2016 of the National Consumer Disputes Redressal Commission. A Buyer's Agreement dated 2 July 2007 was entered into between the appellant and the respondent. The respondent paid an amount of Rs 39,29,280 in 2006 in terms of a letter of allotment dated 20 September 2006. The agreement between the parties envisaged that the appellant would hand over possession of a Row House to the respondent by 31 December 2008 with a grace period of a further six months ending on 30 June 2009.
The respondent filed a consumer complaint before the West Bengal State Consumer Disputes Redressal Commission in 2011 1 "NCDRC" "SCDRC" praying for possession of the Row House and in the alternative for the refund of the amount paid to the developer together with interest at 12% per annum. Compensation of Rs 20 lakhs was also claimed. The SCDRC allowed the complaint by directing the appellant to refund the moneys paid by the respondent together with interest at 12% per annum and compensation of Rs 5 lakhs. The NCDRC has modified this order by reducing the compensation from Rs5 lakhs to Rs2 lakhs. Mr. Ravinder Narain, learned counsel appearing on behalf of the appellant submits that the primary relief which was sought in the consumer complaint was for delivery of possession. According to the appellant, the completion certificate was received on 29 March 2016, which was intimated to the respondent on 11 April 2016.
Moreover, before the SCDRC, in its written submissions, the appellant had offered possession of the Row House to the respondent. It has also been stated that in a complaint which was filed by an association representing the allottees of 161 Row houses, a settlement was arrived on 11 September 2018 before the NCDRC specifying the date on which possession would be handed over together with interest at 6% per annum instead of 4% as mentioned in the Buyers' Agreement. It was urged that the developer having made a substantial investment in terms of the agreement, a direction for refund is not warranted. It has also been urged that the SCDRC in the course of its decision erroneously observed that the developer was unable to fulfill its obligation to complete the construction within the agreed period and it was not certain when the Row house would be handed over. It was urged that this observation by the SCDRC is contrary to the record since before it, a specific offer of possession was made.
It has been urged on behalf of the respondent by Mr. Supriya Bose, learned senior counsel that a consumer complaint was filed in the year 2011. At that stage, the appellant was bonafide ready and willing to accept possession. However, nearly seven years have elapsed after the extended date for the delivery of possession which expired on 30 June 2009. In spite of this, no offer of possession was forthcoming. Learned senior counsel submitted that the letter dated 22 March 2016 of the developer was conditional and despite the subsequent letter dated 11 April 2016, no formal offer of possession was ever made by the appellant. Moreover, it was urged that the interest awarded by the NCDRC at the rate of 12% is just having regard to the economic loss and hardship suffered by the respondent. While considering the rival submissions, we must at the outset advert to the following clause which was contained in the Buyer's Agreement:
"Unless prevented by circumstances beyond the control of the company and subject to Force Majeure, KWIC shall ensure to complete the said unit in all respect within 31st December 2008 only for the Cluster D. Further there will be a grace period of 6 months (up to 30th June, 2009) from the date of completion. In case the possession is not transferred after expiry of the said grace period, KWIC will be liable to pay prevailing 4 saving Bank interest of the State Bank of India for each month of delay on the money given by the allottee as compensation but no compensation will be paid on account of force majeure reasons." It is the above clause which is pressed in aid by the developer. Under the aforesaid clause, any delay beyond 30 June 2009 would result in the developer being required to pay interest at the prevailing savings bank interest of the State Bank of India.
Interestingly, where the buyer is in default, the agreement stipulates that interest at the rate of 18 per cent from the date of default until the date of payment would be charged for a period of two months, failing which the allotment would be cancelled by deducting 5% of the entire value of the property. The agreement was evidently one sided. For a default on the part of the buyer, interest at the rate of 18% was liable to be charged. However, a default on the part of the developer in handing over possession would make him liable to pay interest only at the savings bank rate prescribed by the SBI. There is merit in the submission which has been urged by the buyer that the agreement was one sided.
The clause which has been extracted in the earlier part of this order will not preclude the right and remedy available to the buyer to claim reasonable interest or, as the case may be, compensation. The essential aspect of the case which is required to be analysed is whether the buyer was entitled to seek a refund or was estopped from doing so, having claimed compensation as the primary relief in the consumer complaint.
The Buyer's Agreement is dated 2 July 2007. In terms of the agreement, the date for handing over possession was 31 December 2008, with a grace period of six months. Even in 2011, when the buyer filed a consumer complaint, he was ready and willing to accept possession. It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period.
A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund. In the circumstances, we are of the view that the orders passed by the SCDRC and by the NCDRC for refund of moneys were justified. Having regard to all the facts and circumstances of the case, we modify the order of the NCDRC by directing that the appellant shall pay interest at the rate of 9% per annum to the respondent instead and in place of 12% as directed by the NCDRC. Save and except for the above modification, we affirm the directions of the NCDRC.
The amount outstanding in terms of the directions of this Court shall be released out of the moneys which have been deposited by the appellant. The balance, if any, that remains shall be refunded to the appellant. The appeal is, accordingly, disposed of. There shall be no order as to costs. Pending application(s), if any, shall stand disposed of.
(J. DR. DHANANJAYA Y. CHANDRACHUD) (HEMANT GUPTA) NEW DELHI: MARCH 25, 2019"
In the case of PRIYANKA MITTAL & ANR. V. PARSVNATH DEVELOPERS LTD. & ANR.
"PER JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER These appeals arise out of single order of State Commission, hence, decided by common order. These appeals have been filed appellant against order dated 25.2.2015 in Complainant Nos.18 of 2013- Nalin Bhargava & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 34 of 2013- Jasleen Viswanathan & Anr. Vs. Parsvnath Developers Ltd. & Anr; 58 of 2011- Janmejai Mani Tiwari Vs. Parsvnath Developers Ltd. & Anr; 68 of 2013- Indu Singh Vs. Parsvnath Developers Ltd. & Anr.; 69 of 2013- Poonam Sagar Vs. Parsvnath Developers Ltd. & Anr.; 86 of 2010- Priyanka Mittal & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 101 of 2011- Mohd. Aslam Khan & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 130 of 2012- Dr. Sunil Kr. Singh & Anr. Vs. Parsvnath Developers Ltd. & Anr; 49 of 2012- Neera Mittal & Anr. Vs. Parsvnath Developers Ltd. & Anr; 74 of 2011- Deepak Bhalla Vs. Parsvnath Developers Ltd. & Anr. ; 87 of 2010- Syed Gufran Ali Alvi & Anr. Vs. Parsvnath Developers Ltd. & Anr.; 96 of 2011- Uppasana Malik Vs. Parsvnath Developers Ltd. & Anr.; 175 of 20130- Umesh Chandra Dixit &Anr. Vs. Parsvnath Developers Ltd. & Anr.; 97 of 2011- Pravin Kumar Goel & Anr. Vs. Parsvnath Developers Ltd. & Anr. which complaints were partly allowed. (NCDRC) Brief facts of the cases are that opposite parties/respondents are engaged in the activity of housing construction and accordingly they have launched a project named as Parsvnath Planet situated in Gomti Nagar, Lucknow. The project was demonstrated to be very lucrative and made attractive to the vendees, in order to procure/collect money from the needy persons demonstrating themselves to be excellence in the field of construction activity as compared to other builders and assured the buyers/complainants that it has been duly approved by the Lucknow Development Authority and necessary permission has also been obtained from them. The emphasis was made by the opposite parties that the possession of the Unit shall be given within a scheduled period of 36+6=42 months stipulated in agreements executed in between the parties for the project launched in the year 2006. The complainants/appellants attracted by the promise and assurance of the opposite parties, somehow managed and arranged the money from their personal sources as well as on loan at attractive rate of interest and the hard earned money was paid by them to the opposite parties in a hope that the possession of the units shall be provided to them in the year 2009 and they can leave peacefully in their own houses, since the complainants are living in rented houses. The complainants visited the construction site of the opposite parties after depositing the entire amount, where it was revealed that the construction activities were on halt and the persons available on the site told the complainants that the apartments are likely to be completed till 2015. Even the partial construction done by the opposite parties was defective and did not match the specifications provided in the agreement. The complainants were shocked on hearing it and observing the site. The complainants immediately contacted the Area Manager, who told the complainants that there is some delay in the construction of the apartment and the apartments shall be ready till June, 2010. The complainants have to repay the amount taken on loan alongwith interest without getting the possession of the allotted units causing irreparable loss and injury to them. The complainants have come to know that the opposite parties have invested the funds earmarked for this project into their other projects in other city due to which they have -10- not been able to complete the project in time. Besides this, it has also come to the light that although the opposite parties had collected huge funds from the buyers but in spite of that the opposite parties have miserably failed to pay the dues of Lucknow Development Authority which forced the Lucknow Development Authority to issue coercive measures against the opposite parties for the recovery of their dues. Alleging deficiency on the part of opposite parties/respondents, complainants filed separate complaints before State Commission. Ad aggrieved by the order of Hon'ble State Commission , these appeals preferred befpre Hon'ble National Consumer Disputes Redressal Commission.
Hon'ble NCDRC discussed various case laws and after hearing the parties held, "Learned Counsel for appellants submitted that as complainants have been deprived of possession for a long period beyond agreed period, it amounts to restrictive trade practice under Section 2 (nnn) of Consumer Protection Act and complainants are entitled to get compensation. Section 2 (nnn) runs as under:- means a trade practice which tends to bring about restrictive trade practice manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include- Delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the price; Any trade practice which requires a consumer to buy, hire or avail of any goods, or, as the case may be, services as condition precedent to buying, hiring or availing of other goods or services; Perusal of aforesaid provision reveals that when opposite party delays in delivery of goods which leads to rise in the price of goods meaning thereby, more price is charged from complainant, it amounts to restrictive trade practice. In the case in hand, opposite party on account of delayed delivery of possession is not charging higher rate than the agreed rate for delivery of possession of flat, so, it does not fall within the purview of restrictive trade practice under Section 2(nnn) of Consumer Protection Act. Admittedly, agreements were executed in 2006 and as per agreements, possession of flats was to be delivered within 42 months, meaning thereby, possession was to be given in the year 2009-2010 and possession has not been handed over so far though year 2016 has started. No doubt, complainants are entitled to get penalty amount for delayed delivery of possession as per clause 10 ( c) of the agreement but opposite party cannot be permitted to avail benefit of aforesaid clause for indefinite period. This penalty clause should be allowed for the benefit of parties for a limited period and in the cases in hand, I deem it appropriate to extend applicability of aforesaid clause for a period of one year beyond 42 months and after that, complainants are certainly entitled to compensation. Opposite party cannot be allowed to avail huge funds of complainants by paying merely Rs. 5/- per sq. ft. for example, complainants who have purchased flat measuring 164.901 sq. mtr., they have made payment of about Rs. 31.00 to 32 lakhs and in the garb of clause .
10 (c), opposite party is paying penalty @ approximately Rs. 9,000/- per month against enjoying funds more than Rs. 30.00 lakhs. As complainants have been deprived to shift to their flats for a long period which would not only have given them satisfaction of living in their own house but also have raised their social status and opposite party has enjoyed funds of complainants for a long period, I deem it appropriate to allow compensation @ Rs. 15,000/- p.m. to the complainants who have applied for flats upto 175 sq. mtr and Rs. 20,000/- per month to complainants who have applied for flats above 175 sq. after 54 months of execution of agreement till delivery of possession. Complainants- Nalin Bhargava in and complainant's Complaint No.18 of 2013 Ravindra Singh in , are entitled to get only difference of amount from Complaint No.32 of 2012 -14- the amount already awarded by State Commission which has not been challenged by opposite party. Perusal of record reveals that in Complaint No.987 of 2011, Pravin Kumar Goel Vs. flat area of complainant has been increased and additional Rs.7,99,997/- Parsvnath Developers has been demanded by opposite party from complainant but Learned State Commission has not allowed penalty as per clause 10 (c) for the increased area and complainants are entitled to get penalty as per aforesaid clause on the increased area also. Consequently, appeals filed by appellants are partly allowed and order dated 25.2.2015 passed by Learned State Commission in the aforesaid complaints is modified and opposite party is directed to pay @ Rs.15,000/- p.m. and Rs. 20,000/- to the allottees of flats upto 175 sq. mt. and above 175 sq mtr respectively from beginning of 55 month from the date of execution of flatth buyer agreement till delivery of possession of flat to the complainants and complainants in and are entitled to receive only difference Complaint No.18 of 2013 Complainant No.32 of 2012 of amount as stated above and opposite party is directed to pay penalty to complainant in on the increased area as per clause 10 (c ) of the agreement. Complaint No.97 of 2011 Parties to bear their costs."
Against this judgment, parties went to Hon'ble Supreme Court. The judgment of Hon'ble Supreme Court is:-
In Nalin Bhargava vs. Parsvnath Developers Ltd. CA 6662/2018 @ SLP(C) 7596/2016 etc and other related civil appeals on 13 July, 2018, Hon'ble Supreme Court held:-
"Leave granted in all the special leave petitions.CA 6662/2018 @ SLP(C) 7596/2016 etc. It is submitted by Mr. M.L. Lahoty, learned counsel appearing for the appellants in all the appeals that the possession has been handed over and the deficiencies have been removed and, therefore, he has no grievance. However, Mr. Lahoty would insist that there should be imposition of costs as compensation.
Mr. Sachin Datta, learned senior counsel appearing for the developer has raised objections with regard to imposition of costs.
Having heard learned counsel for the parties, we are of the considered opinion that the cause of justice would be best subserved if each of the appellants in the present appeals are given Rs.1,50,000/- (Rupees one lakh fifty thousand only) per flat, towards costs. When we say "cost", we mean costs alone and nothing else."
The case of Ghaziabad Development Authority v. Balbir Singh, (2004)4 SCC 65 is a landmark decision that laid down certain judicial standards regarding the grounds on which compensation may be awarded, particularly, in matters of allotment of flats/plots by land development authorities. Compensation under consumer protection laws is required to recompense for loss or injury suffered by consumers, and therefore, the quantum of compensation to be awarded would necessarily have to be determined based on the facts and circumstances of each case. This decision set an established precedent on the issue of compensation to be awarded in consumer disputes, and its principles have been relied upon in numerous subsequent cases.
Introduction The consumer protection laws establish a redressal mechanism whereby consumers can claim monetary reliefs for defective goods, deficiency in service, and unfair trade practices. Sections 14 and 22 of the Consumer Protection Act, 1986 empower the District, State, and National Consumer Disputes Redressal Commission to "to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party". Such monetary reliefs i.e., compensation awarded would have to be based on the facts and circumstances of each case, since the loss and injury suffered would vary. Given the absence of a straight-jacket formula for the determination of the amount of compensation to be awarded in each case, it follows that there can be no uniformity in the award of compensation.
It is for the Consumer Forum to grant compensation to the extent it finds it reasonable, fair, and proper in the facts and circumstances of a given case according to the established judicial standards where the claimant can establish his charge.[1] These 'established judicial standards' have been laid down in a plethora of cases. The case of Ghaziabad Development Authority v Balbir Singh[2] is a landmark decision that discussed the grounds on which compensation may be awarded, particularly, in matters of allotment of flats/plots by land development authorities. It set an established precedent on the issue of compensation to be awarded in consumer disputes, and its principles have been relied upon in numerous subsequent cases.
Background and Facts of the Case The present case of Ghaziabad Development Authority v Balbir Singh arose out of an appeal directed against the judgment and award passed by the National Consumer Disputes Redressal Commission (NCDRC) awarding an interest @ 18% per annum. The Commission was considering a bunch of matters, the lead being the case of Haryana Urban Development Authority vs. Darsh Kumar, where it held that in cases of deficiency of service by development authorities, the rate of interest awarded must be 18% per annum. Following this, the Commission disposed of subsequent matters by its preceding award. Numerous appeals were filed before the Supreme Court against the decision of the Commission in various cases, primarily against its award of 18% interest.
Since the Supreme Court was considering a wide number of matters relating to allotment of land by development authorities, the facts of each case vary. In some cases, the scheme had gotten canceled after the payment of monies and allotment of flats/plots. Delivery of possession of the flats was therefore refused to the allottees. In some cases, either possession was offered at an increased rate at a much later date possession or was offered but not taken by the party. Possession was not delivered in some cases despite payment of monies and no refusal to deliver possession. In some cases, the construction was of sub-standard quality or it was incomplete, or the authority demanded extra amounts from the party which was paid only by some. In some cases, allotments were made and possession offered of flats/land which was encumbered or occupied by some other party The appeal in the Supreme Court was filed due to the Commission granting interest at the rate of 18% per annum irrespective of the type of case or amount of delay and without even going into the facts of the case. Complainants had asked for the refund of amounts wrongly collected and in other cases, asked for a refund of the amounts paid.
Issues Involved Whether the grant of interest at the rate of 18% per annum by the National Consumer Disputes Redressal Commission in all cases is justifiable?
Related Provisions Section 14 of the Consumer Protection Act, 1986 Section 22 of the Consumer Protection Act, 1986 Related Cases The Supreme Court relied upon the case of Lucknow Development Authority v. M. K. Gupta[3] which firstly widened the scope of "service" defined under Section 2(1)(o) of the Consumer Protection Act, 1986 to include the housing construction or building activities carried on by private or statutory bodies.
The Court relied upon the English case Geddis v. Proprietors of Bann Reservoir[4] which gave a wide connotation to the word compensation, holding that "Compensation has not been defined in the Act. According to the dictionary, it means, 'compensating or being compensated; thing given as recompense;'. In a legal sense, it may constitute actual loss or expected loss and may extend to physical mental or even emotional suffering, insult or injury or loss."
Judgment The Supreme Court, at the outset, reiterated the position taken in the case of Lucknow Development Authority v. M.K. Gupta, and held that "the Consumer Protection Act has a wide reach and the Commission has jurisdiction even in cases of service rendered by statutory and public authorities". It further held that the power of the NCDRC extends to awarding compensation to consumers for misfeasance in the public office i.e. an act which is oppressive or capricious or arbitrary or negligent provided loss or injury is suffered by a citizen. Therefore, it upheld the appeals filed before it to the extent that it confirmed the jurisdiction of the NCDRC to award compensation in cases of service rendered by statutory & public authorities (the land development authorities in the present case).
As to the issue of whether the grant of interest at the rate of 18% per annum by the NCDRC in all cases is justifiable, the Supreme Court held in the negative. It stated that "the power to and duty to award compensation does not mean that irrespective of facts of the case compensation can be awarded in all matters at a uniform rate of 18% per annum." It held it to be unsustainable. The Court further stated that the "Award of compensation must be under different separate heads and must vary from case to case depending on the facts of each case." The purpose of awarding compensation is to recompense for a loss or injury suffered and such compensation would therefore be proportional to the amount of loss and injury.
While considering the compensation to be awarded to the consumers in cases of deficiency of service by Development Authorities, the Court laid down a range of principles for the determination of the amount of compensation, summarised below:
To award compensation, the Forum or the Commission must determine that service has been deficient and/or misfeasance in public office which has resulted in loss or injury. While no hard and fast rule can be laid down, the Court gave a few instances where the award of compensation would be justifiable, including where possession is not handed over within the intimated period even though allotment is made and the price is paid. In such cases, the loss could be determined based on loss of rent which could have been earned if possession was given. Compensation could also be the scheme has been canceled without any justifiable cause, after the allotment.
Compensation cannot be uniform and to illustrate this, the Court lays down the principle to be followed for the determination of compensation in two cases- - (a) where the delivery of possession is being directed, and (b) where only the monies are directed to be returned or refunded by the Court. In case (a), the compensation for harassment will necessarily have to be less since in a way the aggrieved party is being compensated by an increase in the value of the property he is getting. In case (b) however, the party is suffering a greater loss since he has been deprived of the flat/plot, and his expectation of delivery of possession. He would also be denied the benefit of an increase in the value of land and the compensation thereof. Therefore, the compensation to be awarded in such cases would have to be higher than in case (a).
The Court held that "such compensation has to be worked out after looking into the facts of each case and after determining what is the amount of harassment/loss which has been caused to the consumer."
Compensation would include compensation for physical, mental, or even emotional suffering, insult, or injury or loss.
Awarding of Compensation in the Event of Deficiency in Service Rendered The consumer protection laws have a wide reach and the consumers are entitled to receive compensation for deficiency in services rendered by statutory and public authorities. The Consumer Commissions have been vested with the jurisdiction to award the value of goods or services and compensation. On being satisfied that a complainant is entitled to compensation for loss or injury or harassment or mental agony or oppression, it must direct the authority to pay compensation. A wide discretion has been given to determine the quantum of compensation for any loss or damage suffered by a consumer, to redress any injustice. However, it is a well-established principle that the computation of compensation has to be fair, reasonable, and must reconcile with the loss or injury suffered. The Consumer Forum is cast with the duty to take into account all relevant factors for arriving at the compensation to be paid.
This landmark decision has set a precedent on the matter of compensation to be awarded in matters relating to allotment of land by development authorities and has been relied upon in many subsequent cases of the Supreme Court. In the case of H. P. Housing Board v Varinder Kumar Garg and Haryana Urban Development Authority vs Darsh Kumar[6], the Supreme Court directed the Commission to follow the principles laid down in the case of Ghaziabad Development Authority vs. Balbir Singh in future cases.
Conclusion This landmark decision laid down rudimentary principles and set judicial standards concerning the awarding of compensation and the determination of the quantum of compensation to be awarded. It struck down the mechanical application of a fixed rate of interest at 18% per annum by the National Commission in numerous cases, asserting that there can be no hard and fast rule.
The principles enunciated go a long way in ensuring that consumers are compensated appropriately and proportionally for the loss and injury suffered. This decision has further strengthened the consumer protection laws by bringing clarity to how the consumer is required to award compensation.
References Indian Kanoon https://indiankanoon.org/ Consumer Protection Act, 1986 http://legislative.gov.in/sites/default/files/A1986-68_0.pdf [1] Chief Administrator, H.U.D.A. &Anr. v. Shakuntla Devi, (2017) 2 SCC 301 [2] (2004) 5 SCC 65 [3] (1994) 1 SCC 243 [4] (1878) 3 AC 430 [5] (2005) 9 SCC 430 [6] (2005) 9 SCC 449 In a latest case, on Supreme Court in Petition(s) for Special Leave to Appeal (C) No(s). 24059/2022 (Arising out of impugned final judgment and order dated 19-09-2022 in RP No. 1187/2022 passed by the National Consumers Disputes Redressal Commission, New Delhi) MEERUT DEVELOPMENT AUTHORITY Petitioner(s) VERSUS SURESH CHAND GARG Respondent(s) (FOR ADMISSION and IA No.202401/2022-EXEMPTION FROM FILING O.T. ) Date: 05-01-2023 This petition was called on for hearing today.
Held "We have heard learned counsel for the petitioner and find that the order passed by the Consumer Commission was reasonable and there was no reason of filing appeal/revision against the substantive order passed on the consumer complaint by the District Consumer Commission dated 06.09.2019. Consequently, the present petition is disposed of with a direction, to sum up the litigation which is pending for a long time, that let the order of the District Consumer Commission dated 06.09.2019 shall be complied with and the respondent be refunded the entire deposit with simple interest at the rate of 12% per annum within a further period of 60 days from today, failing which it shall carry interest at the rate of 15% per annum until actual payment."
So the Hon'ble Supreme Court has specifically said that the rate of interest shall be 12% if paid within 60 days from the date of judgment otherwise the rate of interest will be 15% per annum until actual payment. In the present case we have taken the cut of date as 01.07.2015. No we perused the different judgment as mentioned here in above regarding the payment of rent, compensation et cetera, it is clear that the possession has been given to the complainant but in absence of the CC and OC it is not a possession in the of law. Therefore the compensation, damages, interest and other reliefs shall be given to the complainant from cut of date till the date when the copy of Completion Certificate/Occupation Certificate and NOCs from different department be provided to the complainant.
Hon'ble Supreme Court in the case of Haryana Urban Development ..... vs. Darsh Kumar, Etc., Civil Appeal no 5796 of 2002 decided on 28 July, 2004 has held ;
"This Court has, in the case of Ghaziabad Development Authority vs. Balbir Singh reported in (2004) 5 SCC 65, deprecated this practice. This Court has held that interest at the rate of 18% cannot be granted in all cases irrespective of the facts of the case. This Court has held that the Consumer Forums could grant damages/compensation for mental agony/harassment where it finds misfeasance in public office. This Court has held that such compensation is a recompense for the loss or injury and it necessarily has to be based on a finding of loss or injury and must co-relate with the amount of loss or injury. This Court has held that the Forum or the Commission thus had to determine that there was deficiency in service and/or misfeasance in public office and that it has resulted in loss or injury. This Court has also laid down certain other guidelines which the Forum or the Commission has to follow in future cases.
We are informed that in spite of there being no stay, to payment of interest beyond 12% and in spite of clarification given by this Court's order (reported in (2004) 5 SCC 65), the amounts have still not been paid. We feel that for the lapse Appellants must pay interest at the rate of 15% from 17th March, 2004 till payment. Appellants shall also pay costs fixed at Rs.500/- in each case to the Legal Aid Society of the Supreme Court. The Appellants must recover the amount paid towards costs personally from the officer/s, who were responsible for not paying even after clarification by this Court. We clarify that this Order shall not be taken as a precedent in any other matter as the order has been passed taking special features of the case into account. The Forum/Commission will follow the principles laid down by this Court in the case of Ghaziabad Development Authority vs. Balbir Singh (supra) in future cases. The Appeals are disposed off in above terms. There will be no order as to costs."
So in the light of above discussions and keeping in the various judgements of the Supreme Court and Hon'ble NCDRC we decide the reliefs to be given to the complainant. We have seen that the flat was to be delivered to the complainant on before 08.01.2011 but the opposite parties failed to deliver the possession of the flat to the complainant. So in this case the cut off date for calculating the interest, damages, rent et cetera is 08.01.2011 but we take it as 01.02.2011 for the convenience of calculation. So in the circumstances we came to conclude that the complainant is entitled for the following reliefs:-
(a) The complainant is entitled to get the physical possession of the flat and also the registration of the flat alongwith NOCs of Fire Department, pollution control Department that, Civil Aviation Department and also with the copies of Completion and Occupancy Certificates from the competent authority, from the opposite parties jointly and severally within 30 days from the date of judgement of this complaint case otherwise the opposite parties jointly and severally shall pay ₹1 lakh per month to the complainant from 01.02.2011 till delivery of actual possession with all these above-mentioned certificates.
(b) The complainant is entitled to get interest at the rate of 12% on the amount deposited by them to the opposite parties from the respective date of deposits if paid within 30 days from the date of judgment of this complaint case otherwise the rate of interest shall be 15% per annum on the amount deposited by them to the opposite parties from the respective date of deposits till the date of delivery of possession with all the above-mentioned documents.
(c) The complainant is entitle to get ₹ 5 lakhs as damages from the opposite parties jointly and severally with interest at a rate of 12% per annum from 01.02.2011 if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum from 01.02.2011 till the date of actual delivery of possession with all the above-mentioned documents.
(d) The complainant is entitled to get the loss of rent @ ₹ 15,000/- per month from the opposite parties jointly and severally with interest at a rate of 12% per annum from 01.02.2011 if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum from 01.02.2011 till the date of actual delivery of possession with all the above-mentioned documents.
(e) The complainant is entitled to get ₹50,000/- from the opposite parties jointly and severally with interest at a rate of 12% per annum from 01.02.2011 if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum from 01.02.2011 till the date of actual delivery of possession with all the above-mentioned documents.
(f) The complainant will not pay further interest or any other taxes to the opposite parties including the cost of stamp duty meant for registration of the sale deed.
(g) Regarding relief (ix) of the complaint case, the complainant is entitled to get ₹ 20 lakhs from the opposite parties jointly and severally towards mental torture, physical harassment, deficiency of service by the parties, unfair trade practice , with interest at a rate of 12% per annum from 01.02.2011 if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum from 01.02.2011 till the date of actual delivery of possession with all the above-mentioned documents.
(h) The complainant will be at liberty to file execution case against the opposite parties if the order is not complied with within 30 days from the date of judgement of this complaint case.
The complaint case is decided accordingly.
ORDER 1- The opposite parties are directed jointly and severally to deliver the possession of flat no.T6-703, having an area of 1725 ft² situated in the "Parsvanath Planet", Vibhuti Khand, Gomti Nagar, Lucknow alongwith NOCs of Fire Department, Pollution Control Department, Civil Aviation Department and also with the copies of Completion and Occupancy Certificates from the competent authority, within 30 days from the date of judgment of this complaint case otherwise the opposite parties jointly and severally shall pay ₹ 1 lakh per month to the complainant from 01.02.2011 till the delivery of actual possession with all these above-mentioned certificates.
2- The opposite parties are directed jointly and severally to pay interest at the rate of 12% on the amount deposited by complainant with the opposite parties from the respective date of deposits if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum on the amount deposited by them to the opposite parties from the respective date of deposits till the date of delivery of possession with all the above-mentioned documents.
3- The opposite parties are directed jointly and severally to pay to the complainant ₹ 5 lakhs as damages with interest at a rate of 12% per annum from 01.02.2011 if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum from 01.02.2011 till the date of actual delivery of possession with all the above-mentioned documents.
4- The opposite parties are directed jointly and severally to pay rent to the complainant @ ₹ 15,000 per month with interest at a rate of 12% per annum from 01.02.2011 if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum from 01.02.2011 till the date of actual delivery of possession with all the above-mentioned documents.
5- The opposite parties are directed jointly and severally to pay to the complainant cost of the suit ₹ 50,000/ with interest at a rate of 12% per annum from 01.02.2011 if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum from 01.02.2011 till the date of actual delivery of possession with all the above-mentioned documents.
6- The opposite parties are directed jointly and severally not to charge any further interest or any other taxes from the complainant including the cost of stamp duty meant for registration of the sale deed.
7- Regarding relief (ix) of the complaint case, the opposite parties are directed jointly and severally to pay to the complainant ₹ 20 lakhs towards mental torture, physical harassment, deficiency of service, unfair trade practice by the opposite parties, with interest at a rate of 12% per annum from 01.02.2011 if paid within 30 days from the date of judgement of this complaint case otherwise the rate of interest shall be 15% per annum from 01.02.2011 till the date of actual delivery of possession with all the above-mentioned documents.
8- The complainant will be at liberty to file execution case against the opposite parties at their cost if the order is not complied with within 30 days from the date of judgement of this complaint case.
The stenographer is requested to upload this order on the Website of this Commission today itself.
Certified copy of this judgment be provided to the parties as per rules.
(Vikas Saxena)(Rajendra Singh) Judgment dated/typed signed by us and pronounced in the open court.
Consign to the Record Room.
(Vikas Saxena)(Rajendra Singh) Dated 29.11.2023 JafRi, PA I Court 2 [HON'BLE MR. Rajendra Singh] PRESIDING MEMBER [HON'BLE MR. Vikas Saxena] JUDICIAL MEMBER