State Consumer Disputes Redressal Commission
Rakesh Malohotra vs Parsvnath Developers on 29 March, 2012
BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-I, U STATE CONSUMER DISPUTES REDRESSAL COMMISSION, UNION TERRITORY, CHANDIGARH. Complaint Case No. 01 of 2012 Date of institution: 05.01.2012 Date of decision : 29. 03.2012 Rakesh Malohotra son of Sh.S.K.Malhotra, resident of House No.310, Sector-37-A, Chandigarh through Sh.S.K.Malhotra as General Powere of attorney. Complainant Versus 1. Parsvnath Developers Limited, through its Director, SCO No.1, First Floor, Sector-26, Madhya Marg, Chandigarh. 2. The Director, Parsvnath Developers Limited, Registered & Corporate Office, 6th Floor, Arunachal Building, 19, Barakhamba Road, New Delhi -110001. 3. The Chairman, Chandigarh Housing Board, 8 Jan Marg, Sector-9, Chandigarh. Opposite Parties. Complaint U/s 17 of Consumer Protection Act,1986. Present: Sh.Arun Kumar, Advocate, for the complainant. Sh.Aftab Singh, Advocate, proxy for Sh.Ashwani Talwar,Advocate for OP Nos.1&2. Ms.Shalini Bagdi, Advocate for OP No.3. CORAM: Justice Sham Sunder, President Mrs.Neena Sandhu, Member
Per Justice Sham Sunder , President The facts, in brief, are that the complainant applied for a residential unit of two bedrooms of 1700 sq.ft super area(approx) in the project of Opposite Parties No.1 & 2, for his personal use and for the use of his family members. The total price of the flat was Rs.1,18,15,000/-. The complainant deposited a sum of Rs.5,90,000/- alongwith the application form vide cheque No.400948 dated 3.9.2007. The balance price of the flat was to be deposited as per the construction linked payment plan, in instalments. During the draw of lots, held by Opposite Part No.3, the complainant was allotted a residential flat in categoryD, bearing No.303, 3rd floor, Block No.D-2 having approximately 1700 sq.ft of super built area in the project of the Opposite Parties namely Parsvnath Prideasia IT Park, Kishangarh, U.T. Chandigarh. Opposite Parties No.1 & 2 issued allotment letter bearing No.PDL/CHB/07/D50 dated 20.11.2007. Subsequently, on receipt of the letter dated 8.12.2007, from Opposite Parties No.1 & 2, the complainant deposited Rs.17,00,000/-
vide receipt No.CH0000496 dated 2.1.2008 and Rs.3,72,250/- vide receipt No.400495 dated 2.1.2008. A Flat Buyer Agreement dated 15.1.2008, was entered into, amongst the parties. It was stated that according to the Development Agreement dated 6.10.2006, entered into between the developer and the Chandigarh Housing Board, the construction of the residential units, was to be completed within 36 months. It was further stated that the Opposite Parties failed to construct the flats and even the foundation was not laid on the site. It was further stated that when the Opposite Parties failed to deliver possession, as per the terms and conditions of the Agreement, the complainant wrote letter dated 18.12.2009 to the Opposite Parties, seeking refund of the amount, deposited alongwith interest and compensation. Thereafter, another letter dated 15.3.2010, was written to the Opposite Parties seeking refund of the amount, but to no avail. It was further stated that, later on, the complainant changed his mind and wrote letter dated 21.9.2010 to Opposite Party No.3 for withdrawing his request for refund of the amount and requested for handing over possession of the flat.
The complainant also wrote letter to Opposite Parties No.1 & 2 for re-entering his name, in the list of prospective owners. However, the complainant was surprised to receive a letter dated 15.1.2011 from Opposite Party No.3, which instead of acceding to his request, with regard to re-entering his name, in the list of prospective owners, refunded a sum of Rs.9,76,125/- vide demand draft No.234232 dated 27.10.2011, being 30% share of the principal amount. It was also stated, in the said letter, that the balance amount of 70% shall be refunded by Opposite Party No.1. The complainant received the amount under protest and wrote letter dated 17.11.2011 requesting Opposite Party No.3 to pay interest as well as damages for the loss suffered by him.
The complainant also approached Opposite Parties No.1 & 2 requesting them to refund their share of 70% in terms of interim orders passed by the Honble National Consumer Disputes Redressal Commission, New Delhi in some other connected cases, but they apprised him that they were refunding the amount, only to those customers, whose cases had been finally decided by the Consumer Fora. It was further stated that the Opposite Parties were deficient, in rendering service, and also indulged into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 17 of the Consumer Protection Act,1986(hereinafter to be called as the Act only), was filed by him, claiming refund of the deposited amount of Rs.24,54,625/- from Opposite Parties No.1 & 2 alongwith interest @18% p.a.; interest @ 18% on the amount of Rs.9,76,125/- from Opposite Party No.3 and Rs.5 lacs as compensation, for mental agony and physical harassment, besides litigation costs of Rs.50,000/-.
2. Opposite Parties No.1&2, in their written version, admitted the factual matrix of the case, that the complainant applied for the allotment of a flat, in the aforesaid project, at a basic price of Rs.1,18,15,000/-. It was also admitted that the aforesaid flat was allotted to the complainant. It was also admitted that a Flat Buyer Agreement was executed amongst the complainant and the Opposite Parties. It was also admitted that the complainant deposited Rs.32,53,750/-. It was stated that after the execution of the Development Agreement dated 6.10.2006, possession of 123.79 acres of land, claimed to be unencumbered, was handed over to Opposite Party No.1, by the Chandigarh Housing Board. It was further stated that, when Opposite Party No.1, was fencing the land, possession whereof was delivered to it, for the development of project, a dispute arose, as the Haryana Government, claimed ownership, with regard to a part of the same. It was further stated that when that dispute was resolved, an alternative piece of land, in lieu of the disputed portion of land, was given to Opposite Party No.1, but it was discovered to be the land of the Forest Department. It was further stated that a period of 36 months, for the completion of project, could only be counted, from the date of delivery of possession of the entire unencumbered land, and not earlier to the same. It was further stated that the complainant did not deposit all the instalments and, as such, violated the provisions of Clause 5(a) of the aforesaid Agreement. It was further stated that in case of cancellation, Rs.5,90,750/, being 5% of the basic price was to be forfeited. It was further stated that as Opposite Party No.3 had already refunded an amount of Rs.9,76,125/- to the complainant, after deducting Rs.5,90,750/-, being 5% of the basic price, the remaining amount of Rs.16,86,875/- shall be refunded to the complainant, as per the provisions of Clause 5(a) of the Agreement dated 15.1.2008. It was further stated that the dispute between the Opposite Parties, inter-se, had already been referred to the arbitrators, and their decision was awaited and, as such, the jurisdiction of the Consumer Fora was barred. It was denied that Opposite Parties No. 1&2 were deficient, in rendering service, and indulged into unfair trade practice. The remaining averments were denied, being wrong.
3. Opposite Party NO.3, Chandigarh Housing Board, in its reply, stated that the possession of the entire unencumbered land, had been handed over by it, to the developer Opposite Party No.1. It was further stated that the developer was solely responsible, for constructing the residential units, within the stipulated period, and delivering possession of the flat, to the complainant. It was admitted that the construction was to be completed within 36 months from 6.10.2006, the date, when the Development Agreement was executed, between the Opposite Parties . It was further stated that, in view of the Escrow Agreement, executed between the Opposite Parties , in case of refund to the buyers, the liability of the Chandigarh Housing Board was to the extent of 30% share of the principal amount, which had been refunded to the complainant vide draft No.234232 dated 27.10.2011 for Rs.9,76,125/- and the balance 70% share of the deposited amount was to be refunded by Opposite Party No.1. It was denied that Opposite Party NO.3, was deficient, in rendering service, or it indulged into unfair trade practice.
The remaining allegations, were denied, being wrong.
4. The complainant, in support of his case, led evidence by way of affidavit of Sh.S.K.Malhotra, his duly authorized representative alongwith which, a number of documents were attached.
5. Opposite Parties No.1&2, filed the affidavit of Sh.Prehlad Kumar Jain, President, M/s Parsvnath Developers Limited, Parsvnath Metro Tower, Delhi, by way of evidence, and also attached a number of documents therewith.
6. Opposite Party No.3, filed the affidavit of Sh.M.M. Sabharwal, its Secretary, by way of evidence, alongwith certain documents.
7. We have heard the Counsel for the parties, and have gone through the evidence and record of the case, carefully.
8. The Counsel for the complainant, submitted that the complainant , after going through the advertisement of Opposite Parties No.1&2, applied for the allotment of a flat, and he was allotted flat No. 303, Block No.D-2,Third floor in the project of Parsvnath Prideaisa, Rajiv Gandhi Chandigarh Technology Park, Chandigarh.
He further submitted that, as per the Flat Buyer Agreement dated 15.1.2008, the construction of the residential units, was likely to be completed within 36 months of the signing of the Development Agreement R-1/1 dated 6.10.2006, between the developers and the Chandigarh Housing Board. He further submitted that though a sum of Rs.32,53,750/- was deposited by the complainant, towards part payment of the price of flat, yet not even a brick was laid, at the spot, what to speak of construction of flats. He further submitted that there was no breach of the Agreement, on the part of the complainant, yet, he was not given possession of the flat. He further submitted that the complainant, therefore, could not wait for an indefinite period, and was entitled to the refund of amount, deposited by him, with interest, as also compensation for harassment. He further submitted that Opposite Party No.1 could not deduct 5% of the basic price, from the amount, deposited by the complainant, in the event of refund of the same, as the payment was made according to the construction linked plan, and there was no default, in making part payment of the price of the flat. He further submitted that the complainant was also entitled to compensation, as per the terms and conditions of the said Agreement. He further submitted that the Opposite Parties, were certainly deficient, in rendering service, to the complainant, by neither refunding the amount, deposited by him, nor paying him the compensation, and they also indulged into unfair trade practice.
9. On the other hand, the Counsel for Opposite Parties No.1&2, submitted that, no doubt, the Development Agreement R-1/1 dated 6.10.06, was executed between the Opposite Parties , as a result whereof, the possession of entire unencumbered land for the project was to be provided by Opposite Party No.3. He further submitted that since Opposite Party No.3, did not hand over the possession of the entire unencumbered chunk of land, required for the development of project, the construction could not be undertaken. He further submitted that there was, thus, dispute between the parties, as a result whereof, the matter was referred to the arbitrators, and their final decision was still awaited and, as such, this Commission has no jurisdiction to entertain and decide the complaint. He further submitted that, since there was default, on the part of the complainant, in depositing the remaining instalments, towards the price of flat, he was only entitled to the refund of amount, if he applied for the cancellation of allotment, after deduction of 5% of the basic price, as per Clause 5(a) of the Agreement dated 15.1.2008. He further submitted that though a period of 36 months, was provided, under Article 2.2.1 of the Agreement R-1/1 dated 6.10.2006, and under Clause 9(a) of the Agreement dated 15.1.2008, for the completion of construction, yet the same was to commence, only after the possession of entire unencumbered land, had been handed over to Opposite Parties No.1&2 , for the development of project, by Opposite Party NO.3, but it (Opposite Party NO.3) failed to do so. He further submitted that, under these circumstances, Opposite Parties No.1&2, were not at all deficient, in rendering service, nor they were liable to pay any compensation, nor they indulged into unfair trade practice.
10. The Counsel for Opposite Party No.3, submitted that, it was the responsibility of the developer Opposite Party No.1, to complete the construction in 36 months, commencing from 6.10.2006, as per the Agreements R-1/2. He further submitted that the possession of the entire unencumbered land, on which the residential complex, was to be developed, had already been handed over to the developer, according to the Agreement, executed between the Opposite Parties . He further submitted that the construction of residential flats, could certainly be started by Opposite Parties No.1&2, on that land, but they did not do so intentionally. He further submitted that as per the Escrow Agreement, Opposite Party No.3 had already refunded Rs.9,76,125/- vide draft dated 27.10.2011, being 30% of the principal amount and, as such, the remaining amount is to be paid by Opposite Parties No.1 & 2.
11. The first question, that arises for consideration, is, as to within which period, the construction of the residential units, was likely to be completed. There is, no dispute, about the factum, that the complainant applied for the allotment of a flat and he was allotted a flat. He deposited Rs.32,53,750/-, in instalments, towards the price of flat, according to construction linked payment plan, as admitted by the Opposite Parties. Clause 9(a) of the Flat Buyer Agreement dated 15.1.2008 annexure R-1/2, referred to above, which is relevant, for answering the question, posed, at the outset of this paragraph, reads as under ;
Construction of the residential units is likely to be completed within a period of thirty six (36) months of the signing of the Development Agreement i.e. 06.10.2006 between the Developer and CHB and/or as may be extended in terms of the Development Agreement shall be subject to force majeure and circumstances beyond the control of the Developer, and any restrains, restrictions from any Courts/authorities. The delay in grant of environmental clearances beyond 12 months of the signing of the Development Agreement shall not be counted towards the said period of 36 months.
12. The plain reading of Clause 9(a) of the Flat Buyer Agreement, extracted above, clearly goes to reveal, that the construction of the residential units, was to be completed, within a period of thirty six months of the signing of the Development Agreement dated 06.10.2006 annexure R1/1. The time could be extended, in terms of the Development Agreement, dated 6.10.2006, subject to force majeure, and the circumstances beyond the control of the developer. Opposite Parties No1&2 admitted, in their written reply, that, in the first instance, the possession of the entire project land, claimed to be unencumbered, was handed over to them by Opposite Party No.3, and when the fencing was being done, the Haryana Govt. raised a dispute, with regard to the ownership of a portion of the same. It is the case of Opposite Parties No.1&2, that when that dispute was resolved, and, in lieu of the disputed portion of the land, possession of some other land, was given to them, the same was discovered to be that of the Forest Department. No evidence was, however, produced, by Opposite Parties No.1&2, in this regard. Even if, it is assumed for the sake of arguments, that the ownership of a small portion of the land was disputed, that did not mean that the construction of residential units, could not be undertaken, on the remaining land, which constituted the major portion of the project land, and with regard whereto, there was no dispute whatsoever. Therefore, it was not, on account of the circumstances, beyond the control of the developer, that delay was caused, in the construction of residential units.
The developer also could not take shelter of force majeure clause. No document was produced by Opposite Parties No.1&2, that any restriction was imposed by any Court or Authority, upon them, as a result whereof, they could not raise construction of residential units, in time.
Even, it was not proved, that there was delay in the grant of environmental clearance. Opposite Parties No.1&2, without first confirming the clear title of the entire land, over which the project, was to be developed, started booking the flats, and allotting the same, to the prospective buyers, by fleecing them of huge amounts, and making misleading statement, that the construction of residential units, will be completed within 36 months w.e.f. 6.10.2006. Even, long after the expiry of the stipulated period, not even a brick was laid, at the site, what to speak of raising construction. Opposite Parties No.1&2, thus, indulged into unfair trade practice. It is, therefore, held that the construction of the residential units was to be completed within 36 months from 6.10.2006 i.e. by 5.10.2009.
13. The next question, that arises for consideration, is, as to whether the complainant is entitled to the refund of amount, deposited by him, with interest or not ? Clause 9(d) of the Flat Buyer Agreement, which is relevant, to answer this question, reads as under;
9(d) If as a result of any rules or directions of the Government or if any competent authority delays, withholds, denies the grant of necessary approvals for the Project, or if due to any force majeure conditions, the Developer is unable to deliver the unit to the Buyer, the Developer and CHB shall be liable to refund to the Buyer the amounts received from the Buyer with interest at the SBI Term Deposit Rate as applicable on the date of refund.
14. The complainant deposited the amount towards part payment of the price of flat, in the hope of getting its possession, within a period of 36 months from 10.6.2006, but by the end of 2009, not even a single brick, had been laid, at the spot, what to speak of construction of flats, and delivery of possession thereof, to the buyers. In these circumstances, the complainant could not wait for an indefinite period. The only option with the complainant, in such circumstances, was to ask for the refund of the amount. He, thus, wrote letters dated 18.12.2009, 15.3.2010 and 17.11.2011 for the refund of amount with interest, but the Opposite Parties failed to do so. The plain reading of Clause 9(d) extracted above, reveals that if the developer, for, whatever the reasons may be, fails to deliver the possession of residential unit to the buyer, the developer and the Chandigarh Housing Board, shall be liable to refund the amounts, received from the buyer, with interest, at the SBI Term Deposit Rate, as applicable on the date of refund. The Opposite Parties were, thus, deficient, in rendering service, by neither delivering the possession of the flat, within the stipulated time, nor refunding the amount, with interest, as provided under Clause 9(d) of the Agreement, referred to above. The complainant is, thus, held entitled to the refund of amount of Rs.32,53,750/-(minus the amount already deposited by Opposite Party No.3) with interest at the SBI term deposit rate, as per Clause 9(d) of the Agreement, referred to above.
15. Coming to the submission of the Counsel for Opposite Parties No.1&2, that since there was breach of Clause 5(a) of the Flat Buyer Agreement, by the complainant, he was only entitled to the refund of the remaining amount, deposited by him, after deduction of 5% of the basic price of the flat, it may be stated here, that such an argument, advanced by the Counsel for Opposite Parties No.1&2, is misconceived. Clause 5(a) of the aforesaid Agreement dated 15.1.2008, reads as under ;
5(a)Timely payment of the instalments/amounts due shall be of the essence of this Agreement. If payment is not made within the period stipulated and/or the Buyer commits breach of any of the terms and conditions of this Agreement, then this Agreement shall be liable to be cancelled. In the eventuality of cancellation, earnest money being 5% of the basic price would be forfeited and the balance, if any, would be refundable without interest. However, the sellers may allow the revival of the allotment of the unit (subject to its availability) in the name of the Buyer on payment of revival charges amounting to 10% of earnest money.
16. The plain reading of Clause 5(a) extracted above, clearly goes to show that admittedly the payment of instalments/amounts due, shall be the essence of the Agreement, and if the payment, was not made, within the stipulated period or the buyer committed breach of any of the terms and conditions of the Agreement, the Agreement shall be liable to be cancelled and the amount would be refunded, after deduction of 5% of the basic price. The question arises, as to whether, there was default, in the payment of instalments, or of any other term and condition of the Agreement, aforesaid, on the part of the complainant, or not ? It was proved, as also admitted by the Opposite Parties , that the payment of instalments was made by the complainant, from time to time, as and when the same fell due.
There was no delay, in making payment of the part price of flat, through instalments, on the part of the complainant. Since, after the expiry of the period of 36 months from 6.10.2006, not even a single brick, had been laid, the complainant was not required to deposit the amount of remaining instalments. The complainant had, thus, to ask for the refund of amount. There was also no breach of any other term and condition of the Agreement, referred to above, on the part of the complainant. As such, the provisions of Clause 5(a), extracted above, relating to the deduction of 5% amount of the basic price, could not be invoked. The complainant was, thus, entitled to the refund of entire amount, deposited by him, with interest, as held above. The submission of the Counsel for the Opposite Parties ,in this regard, being without merit, must fail, and the same stands rejected.
17. The next question, that arises for consideration, is, as to whether, the complainant is entitled to compensation, for not handing over possession to him, as per the terms and conditions of the Agreement R-1/2 dated 15.1.2008, referred to above, and for causing physical harassment and mental agony, or not ? Clause 9 ( C ) of the Agreement, referred to above, which is relevant for answering the question, 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 Developer compensation @ Rs.107.60 per sq.mtr (Rs.10/- per sq.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 within30 days of offer, the Buyer shall be liable to pay to the Developer holding charges @ 107.60 per sq.mtr. (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.
18. The possession of the flat was not offered, to the buyer, within a period of 36 months from 6.10.2006. As stated above, even till date, not even a single brick, has been laid, at the spot. In these circumstances, as per Clause 9( c) of the aforesaid Agreement, the complainant only became entitled to compensation @107.60 per sq.mtr(Rs.10/- per sq.ft. ) of the super area of the unit, per month. The language of Clause 9(c) is unambiguous and clear. The parties executed the Agreement, aforesaid with eyes wide open, and, thus, they are bound by the terms and conditions of the same. No compensation, beyond the terms and conditions, contained in Clause 9( c) of the aforesaid Agreement, could be claimed by the complainant. It is, thus, held that the complainant is entitled to compensation @ Rs107.60 per sq. mtr (Rs.10/- per sq. ft.) of the super area of the unit per month, from 5.10.2009, the last date of completion of the project, till the actual payment was made to him.
In this view of the matter, the compensation claimed to the tune of Rs.5 lacs for mental agony & physical harassment, cannot be granted to him.
19. Coming to the submission of Counsel for Opposite Parties No.1&2, that since the remedy for settlement of dispute, by way of arbitration, has already been availed of, by the Opposite Parties, in accordance with clause 18 of the Escrow Agreement dated 1.6.2007 Annexure R1/3 executed between them, the complaint under Section 17 of the Consumer Protection Act,1986 was barred, it may be stated here, that the same does not merit acceptance. With a view to appreciate the controversy, in its proper perspective, reference to Section 3 of the Consumer Protection Act,1986, is required to be made, which reads as under ;
3.Act not in derogation of any other law.
The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.
Section 3 of the Act, is worded in widest terms, and leaves no manner of doubt, that the provisions of the Act, shall be in addition to, and not in derogation of any other law, for the time being, in force.
The mere fact that the remedy of arbitration, which was provided, in the Agreement dated 1.6.2007 annexure R1/3, has already been availed of by the Opposite Parties , that would not oust the jurisdiction of the Consumer Fora, in view of Section 3 of the Act. Similar principle of law was laid down in Fair Engg. Pvt. Ltd. & another Vs N.K.Modi (1996)6 SCC385 and C.C.I Chambers Coop. Housing Society Ltd. Vs Development Credit Bank Ltd. (2003) 7 SCC233. In this view of the matter, the submission of the Counsel for Opposite Parties No.1 & 2, being devoid of merit, must fail, and same stands rejected.
20. 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.32,53,750/- deposited by the complainant alongwith interest at the SBI Term Deposit rate, upto 27.10.2011, with effect from the respective dates of deposits, as per Clause 9(d) of the Flat Buyer Agreement .
(ii) The Opposite Parties are held jointly and severally liable to pay interest at the SBI Term Deposit rate, on the amount of Rs.22,77,625/- ( Rs.9,76,125/- out of the principal amount was refunded by Opposite Party No.3 on 27.10.2011) from 28.11.2011 till realization as per Clause 9(d) of the Flat Buyer Agreement.
(iii)Parsvnath Developers Limited shall also pay compensation, for not offering the possession of 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 5.10.2009, the last date of completion of the project, till actual payment to the complainant is made, as provided by Clause 9( C) of the flat buyer Agreement.
(iv)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, from the date of default, on the aforesaid payable amounts.
21. Certified Copies of this order be sent to the parties, free of charge.
22. The file be consigned to record room.
Sd/-
Announced (JUSTICE SHAM SUNDER) March 29,2012 President Sd/-
( NEENA SANDHU) *Js Member *Js STATE COMMISSION Complaint case NO.1/2012 Present: Sh.Arun Kumar, Advocate, for the complainant.
Sh.Aftab Singh, Advocate, proxy for Sh.Ashwani Talwar,Advocate for OP Nos.1&2.
Ms.Shalini Bagdi, Advocate for OP No.3.
Dated the 29th March ,2012 ORDER Vide our detailed order of the even date, recorded separately, this complaint has been partly accepted with costs, in the manner, depicted therein.
(Neena Sandhu) (Justice Sham Sunder) Member President