State Consumer Disputes Redressal Commission
Dr.Anil Goel vs Parsvnath Developers Limited on 12 September, 2014
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, STATE CONSUMER DISPUTES REDRESSAL COMMISSION, U.T., CHANDIGARH Execution Application No. In C.C. No.9 of 2012 : 36 of 2014 Date of Institution : 04.06.2014 Date of Decision : 12/09/2014 1. Dr.Anil Goel s/o Sh.Inder Kumar Goel 2. Dr.Poonam Goel w/o Dr.Anil Kumar Goel Both residents of House No.7, Sector-16-A, Chandigarh. ---DHs/Complainants Versus 1. Parsvnath Developers Limited, Registered & Corporate Office, 6th Floor, Arunachal Building, 19, Barakhamba Road, New Delhi-110001. through its Director Sanjeev Kumar Jain. 2. Parsvnath Developers Limited, Local Office at SCO No.1, 1st Floor, Sector 26, Madhya Marg, Chandigarh through its Director Sanjeev Kumar Jain. 3. Chandigarh Housing Board, Office at 8, Jan Marg, Sector-9, Chandigarh through its Secretary Satya Gopal. ...Judgment Debtors/Opposite Parties. Execution Application under Section 27 of the Consumer Protection Act, 1986. BEFORE: JUSTICE SHAM SUNDER (RETD.), PRESIDENT. DEV RAJ, MEMBER.
PADMA PANDEY, MEMBER Argued by:
Sh.Munish Goel, Advocate for the DHs/Complainants.
Sh.Aftab Singh, Advocate for JDs/Opposite Parties No.1 and 2.
Sh.Karan Sharma, Advocate for JD/Opposite Party No.3 PER PADMA PANDEY, MEMBER This is an Execution Application filed by the complainants for enforcement of the order dated 02.04.2012 passed by this Commission in Consumer Complaint No.9/2012, which was modified vide order dated 5.3.2013 by the Honble National Commission. The operative part of the order dated 02.04.2012 passed by this Commission reads as under:
19. For the reasons, recorded above, the complaint is partly accepted with costs of Rs.5000/- , in the following terms;
(i) Parsvnath Developers Limited and the Chandigarh Housing Board are held liable jointly and severally to refund the amount of Rs.55,12,500/- deposited by the complainants alongwith interest at the SBI Term Deposit rate, as applicable on the date of refund, with effect from the respective dates of deposits, till actual realization, as provided by Clause 9(d) of the Flat Buyer Agreement ;
(ii)Parsvnath Developers Limited shall also pay compensation, for not offering the built up flat within 36 months @ Rs.107.60 per sq. mtr (Rs.10/- per sq.ft) of the super area of the unit, per month, from 6.10.2010 (as claimed by the complainants in the complaint), the last date of completion of the project, till actual payment to the complainants is made, as provided by Clause 9( C) of the Flat Buyer Agreement.
(iii)The aforesaid directions shall be complied with, by the Opposite Parties , within 30 days, from the date of receipt of a copy of the order, failing which they shall be liable to pay penal interest @ 12% p.a, on the aforesaid payable amounts, from the date of default.
2. The operative part of the order dated 5.3.2013 vide which the order of this Commission was modified by the Honble National Commission reads as under:-
To avoid the contradiction in the directions given by the District Forum and the State Commission regarding the payment of interest to the Complainants, we modify the orders passed by the fora below and direct the Developer and the CHB to pay interest at the uniform rate of 9% p.a (payable to the senior citizen on Bank fixed deposit at the relevant time) to the Complaints in the ratio of 70:30 from the respective dates of deposit till the date of deposit of the amount by the Appellants/Petitioners in the Escrow Account.
Adverting to the point of compensation, Ld. Counsel for the Developer has tried to shift the burden on the CHB by stating that the CHB has failed to hand over the possession of the unencumbered land to the Developer to raise the construction. That had the CHB handed over the possession of the unencumbered land to the Developer, the construction of the residential units would have been completed within the stipulated time. As against this, Ld. Counsel appearing for the CHB states that an area of 123.79 acres of land was handed over to the Developer for construction of the residential units. That there was no dispute with regard to the said land and the dispute was regarding the remaining project land which was earmarked for commercial activities. For a dispute between the Developer and the CHB, Complainants cannot be deprived of their legitimate dues which have become payable in terms of clause 9 (c) of the tripartite agreement. The Developer and the CHB cannot be allowed to have the benefit of their own/mutual wrongs. The dispute arising between the Developer and the CHB already stands referred to the Sole Arbitrator appointed by the Honble Supreme Court (Honble Mr. Justice R.V. Raveendran, Retd. Judge of the Supreme Court of India).
In terms of clause 9 (c) of the Flat Buyer Agreement, the Developer is liable to pay the compensation @ Rs.107.60 per Sq. Mt. (Rs.10 per sq. ft.) of the super area of the unit per month in case the possession of the built up area was not offered to the Buyer within a period of 36 months as stipulated in the tripartite agreement. Clause 9 (c) reads as under:-
9(c) In case of possession of the built up area is not offered to the buyer within a period of 36 months or extended period as stipulated in sub clause (a) above the Buyer shall be entitled to receive from the Developer compensation @ Rs.107.60 per sq. mtr. (Rs.10/- per sf. Ft) of the super area of the unit per month and to no other compensation of any kind. In case the Buyer fails to clear his account and take possession of the unit within 30 days of offer, the Buyer shall be liable to pay to the developer holding charges @ 107.60 per sq. mtrs. (Rs.10 per sq. ft) of the super area of the unit per month in addition to the liability to pay interest to the sellers and other consequences of default in payment.
Admittedly, the Developer has failed to construct the residential units and hand over the possession of the same to the Complainants. In terms of clause 9 (c) of the Agreement, Developer is liable to compensate the buyers @ Rs.107.60 per sqr. mtrs. (Rs.10 per Sq.ft) of the super area of the unit per month. By way of interim measure, we direct the Developer to pay the compensation to the Complainants in terms of clause 9 (c) of the agreement @ Rs.107.60 per sqr. mtrs. (Rs.10 per Sq.ft) of the super area of the unit per month which would be subject to the final outcome of the arbitration proceedings.
The orders passed by the State Commission in the original complaints and in the First Appeals arising of the complaint filed before the District Forum stand modified in terms of the directions given above. Any direction either contrary or at variance to these directions stands modified.
The amount of interest and compensation shall be paid by the Developer and the CHB as directed above within a period of three months from today failing which the amount shall carry interest @ 12% p.a. The First Appeals and the Revision Petitions are disposed of in above terms. No order as to costs.
3.
The Counsel for the DHs submitted that the principal amount in the ratio of 70:30 had already been paid to the Decree Holders by the Judgment Debtors No.1 and 2 and Judgment Debtor No.3. He further submitted that since the interest has been paid @ 9% p.a. not @ 12% p.a., the Decree Holders would claim the remaining amount of interest as and when the appeals filed by the Judgment Debtors in the National Commission or the Honble Supreme Court of India are decided. He further submitted that Judgment Debtors No.1 and 2 were also required to pay compensation @ Rs.107.60 per sq. mtr. (Rs.10/- per sq. ft.) of the supra area of the unit, per month, but the same has not been paid. In some of the cases, Judgment Debtors No.1 and 2 have already filed appeals before the National Commission and the Honble Supreme Court of India in which that part of the order has been stayed. He further submitted that the said amount shall also be claimed by the Decree Holders after decision of those appeals. He further submitted that the Judgment Debtors could not deduct the TDS from the interest amount, as the interest awarded by this Commission, is by way of compensation or damages because the Judgment Debtors failed to deliver the possession of the unit within the stipulated period and withholding the amount without any basis. He further submitted that the TDS already deducted on the amount of interest paid to the Decree Holders is required to be refunded to them.
4. On the other hand, both the Counsel for the Judgment Debtors submitted that the payment of principal amount alongwith interest @ 9% p.a. after deducting the TDS amount as per the provisions of Section 194-A of the Income Tax Act, has been made to the Decree Holders. They further submitted that it was the requirement of law and the the Judgment Debtors at the time of making payment of any amount by way of interest to the Decree Holders were legally bound to deduct income tax thereon at the rates in force.
5. The interest as defined in sub Sections 2(28A), 2(28B) and the provisions of Section 194A of the Income Tax Act are not applicable and the Judgment Debtors were clearly wrong in deducting the TDS, from the interest payable/paid to the Decree Holders for the reasons recorded hereunder. The interest as defined in two sub Sections are reproduced as under:-
"2(28A) "interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised".
"2(28B) "interest on securities" means.---
(i) interest on any security of the Central Government or a State Government.
(ii) Interest on debentures or other securities for money issued by or on behalf of a local authority or a company or a corporation established by a Central, State or Provincial Act."
6. The Counsel for the Judgment Debtors have referred to Section 194-A of the Income Tax Act, to contend that the Judgment Debtors were legally bound to deduct Income Tax from the amount of interest payable/paid to the Decree Holders at the rates in force. The relevant part of Section 194-A of the Income Tax Act reads as under:
"194A. Interest other than "Interest on securities"
(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income (by way of interest on securities), shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rates in force".
7. While modifying the order passed by this Commission, the National Commission vide its order dated 05.03.2013 observed that since the developer/Judgment Debtors have failed to construct the residential units and hand over the possession of the same to the complainant(s), they are liable to pay the compensation to the complainants in terms of clause 9 (c) of the agreement @ Rs.107.60 per sqr. mtrs. (Rs.10 per Sq.ft) of the super area of the unit per month which would be subject to the final outcome of the arbitration proceedings and also to pay interest at the uniform rate of 9% p.a (payable to the senior citizen on Bank fixed deposit at the relevant time) to the complainants in the ratio of 70:30 from the respective dates of deposit till the date of deposit of the amount by the Judgment Debtors in the Escrow Account, as mentioned above. The National Commission vide its order, referred to above, further directed that the said amount of interest and compensation shall be paid by the developer and the CHB as directed above within a period of three months from today failing which the amount shall carry interest @ 12% p.a.
8. The word interest used in the order of this Commission /National Commission is not what interest as has been defined in Section 2(28-A) of the Income Tax Act. The interest as mentioned in the above order means compensation or damages for delay in construction of the house or handing over possession of the same causing consequential loss to the Complainant by way of escalation in the price of the property and also on account of distress and disappointment faced by him. Interest in the order has been used merely as a convenient method to calculate the amount of compensation in order to standardise it. The mere use of the nomenclature interest does not fall within the definition of interest as contained in Section 2(28-A) of the Income Tax Act. It is only a measure to for quantifying the compensation for delay in construction, handing over the possession of the dwelling unit which was in the nature of non-taxable capital income.
9. In Revision Petition No.2244/199-GDA Vs. Dr.N.K.Gupta decided vide order dated 18.09.2002 by a four Member Bench of the National Commission, a question fell for discussion, as to whether, the Gaziabad Development Authority, was legally entitled to deduct TDS on the amount of interest, which was awarded by the Consumer Fora, at the time of ordering the refund of the amount deposited by the allottee for the allotment of unit. The National Commission in the aforesaid case held as under :
It would, therefore, appear to us that the provisions of the Land Acquisition Act where interest is payable under Sections 28 and 34 and tax is deducted at source under Section 194-A of the Income Tax Act would not apply in the present case where GDA has been asked to pay interest on the amount refunded to the Complainant because of its failure to construct the promised flat and to provide necessary facilities. The amounts which were paid to the GDA by the Complainant were not paid by way of any deposit or GDA had not borrowed that money. And, as a matter of fact, interest as defined in sub-section (28) of Section 2 of the Income Tax Act is not that interest as was directed to be paid to the Complainant by the GDA. Interest to the Complainant (here Dr.Gupta) has not been awarded on the basis of any deposit made by the Complainant or GDA being the borrower of any money of the Complainant. Here interest payment is by way of damages. Merely describing the damages as by way of interest do not make them as interest under the Income Tax Act.
A similar question arose before the Income Tax Appellate Tribunal in the case of Delhi Development Authority Vs. Income Tax Officer (1995) Vol. 53 Income Tax Tribunal Decisions, page 90 and the Appellate Tribunal held that amounts credited in the accounts of the allottees were not in the nature of interest within the meaning of Section 2(28A) of the Income Tax Act and the Appellate Tribunal quashed the orders of those authorities and directed that what is recovered by the DDA be refunded. The Appellate Tribunal also hoped that DDA will be equally quick in paying back the amounts if recovered from the allottees. It appears to us that the revenue authorities did not challenge this order of the Appellant Tribunal by making reference to the High Court under Section 256 of the Income Tax Act. The Appellate Tribunal held that the amounts paid/credited to allottees by the DDA under SFS (Self Finance Scheme) did not fall under any category in Section 2(28A) of the Income Tax Act, but represented measure for quantifying compensation for delay in construction and handing over possession of dwelling unit which was in nature of non-taxable capital income. In coming to this conclusion the Appellate Tribunal relied on various judgments including that of the Supreme Court in the case of Dr.Shamlal Narula Vs. Commissioner of Income Tax.
It will be interesting to note that DDA filed a writ petition in the Delhi High Court arising out of the aforesaid judgment of the Appellate Tribunal wherein it demanded interest with reference to Sec.244(1A) and 244A of the Income Tax Act. This was on account of the revenue authorities not refunding the amounts in terms of the order of the Appellate Tribunal. The Division Bench of the Delhi High Court consisting of Hon'ble Mr. Justice R.C.Lahoti (as his Lordship then was) and Hon'ble Mr. Justice J.K.Mehra, held in favour of the DDA that Sections 244 and 244A are applicable and directed refund of the amount with interest in view of the order of the Appellate Tribunal.
The word interest used in the order of the State Commission is not what interest is as defined in Section 2(28-A). There in the order of the State Commission interest means compensation or damages for delay in construction of the house or handing over possession of the same causing consequential loss to the Complainant by way of escalation in the price of the property and also on account of distress, disappointment faced by him. Interest in the order has been used merely as a convenient method to calculate the amount of compensation in order to standardise it. Otherwise, each case of the allottee will have to be dealt with differently. Nomenclature does not decide the issue.
In our view, therefore, considering the definition of 'interest' as contained in Section 2(28-A) of the Income Tax Act, provisions of Section 194-A were not applicable and the GDA was clearly wrong in deducting the TDS from the interest payable to the Complainant. Accordingly, the order of the State Commission is upheld and this Revision Petition is dismissed.
10. In view of the foregoing discussion, we are of the considered view that the definition of interest as contained in Section 2(28-A) of the Income Tax Act and the provisions of Section 194-A were not applicable and the Judgment Debtors wrongly deducted the TDS from the interest amount payable/paid to the complainant(s)/Decree Holders. The Opposite Parties/Judgment Debtors are directed to pay the amount of TDS, which they have wrongly deducted from the interest amount to the Decree Holders/complainant(s), which is detailed as under:-
JUDGMENT DEBTORS No.1 & 2-PARSVNATH DEVELOPERS LTD.
Gross Interest TDS deducted (To be paid now) Net Interest Paid Rs.19,65,193/-
Rs.1,96,519/-
Rs.17,68,674/-
JUDGMENT DEBTOR NO.3-CHANDIGARH HOUSING BOARD Gross Interest TDS deducted (To be paid now) Net Interest Paid Rs.6,81,828/-
Rs.68,183/-
Rs.6,13,645/-
Differential amount of Rs.66,467/- payable upto 07.11.2012.
Rs.6647/-
Rs.59,820/-
Rs.74,730/-
Rs.6,73,465/-
11. The Judgment Debtors are also directed not to deduct any TDS from the future payment of interest, if any, payable to the Decree Holders.
12. It will not be out of place to mention here that the compensation, which was awarded by this Commission and upheld by the National Commission has been stayed by the Honble Supreme Court of India in one of the appeals filed by Parasvnath Developers Ltd. Simiarly, in two other execution applications in which this Commission ordered the payment of interest @ 12% p.a., the appeals/revision petitions were filed by M/s Parasvnath Developers Ltd. in which that direction was also stayed.
13. In view of the above, the execution application is partly accepted, with no order as to costs holding that the Judgment Debtors No.1 and 2 and Judgment Debtor No.3 are liable to refund the TDS deducted from the interest amount payable/paid to the Decree Holders as the interest accrued is actually compensation as mentioned in the preceding paras of this order.
14. The said TDS amount be refunded to the Decree Holders by Judgment Debtors No.1 and 2 and Judgment Debtor No.3 by 22.09.2014.
15. However, the Decree Holders shall be at liberty to file a fresh Execution Application as and when the question with regard to the payment or non-payment of interest @ 12% p.a. and compensation is decided by the National Commission and the Honble Supreme Court of India in the appeals, referred to above.
16. Certified copy of this order, be sent to each of the parties, free of charge.
Pronounced.
12.09.2014 sd/-
[JUSTICE SHAM SUNDER (RETD.)] PRESIDENT Sd/-
(DEV RAJ) MEMBER Sd/-
(PADMA PANDEY) MEMBER cmg