State Consumer Disputes Redressal Commission
Bharat Malhotra vs Jalandhar Improvement Trust & Ors. on 10 August, 2022
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
PUNJAB, CHANDIGARH.
Consumer Complaint No.226 of 2020
Date of Institution:30.09.2020
Reserved on : 29.07.2022
Date of decision :10.08.2022
Bharat Malhotra S/o Sh. Ravinder Mohan Malhotra, Resident of 34,
Green Avenue, Model Town, Jalandhar City, Punjab.
Phone No. 9878390060
Email :- [email protected]
.....Complainant
Versus
1. Jalandhar Improvement Trust, G.T. Road, Jalandhar, Punjab
144001, through its Chairman/Administrator/Estate Officer/
Authorized Signatory.
2. Jalandhar Improvement Trust, Near Circuit House, Opposite
Gymkhana Club, Lajpat Nagar, Jalandhar, through its
Chairman/Administrator/Estate Officer/Authorized Signatory.
3. Daljit Singh Ahluwalia, Chairman of Jalandhar Improvement
Trust, Near Circuit House, Opposite Gymkhana Club, Lajpat
Nagar, Jalandhar.
4. Jatinder Singh, Executive Officer of Jalandhar Improvement
Trust, Near Circuit House, Opposite Gymkhana Club, Lajpat
Nagar, Jalandhar.
Phone 0181-2459824, 0181-2459821, 0181-2456707
Email: [email protected]
....Opposite Parties
And
2) Consumer Complaint No.228 of 2020
Date of Institution:07.10.2020
Reserved on : 29.07.2022
Date of decision :10.08.2022
Vikramjit Singh Khera S/o Sh. Amir Chand Khera, R/o H.No.8371,
C.C. No.226 of 2020 2
Kotakpura Road, Opp. HDFC Bank, Muktsar.
Phone No. 9814086123
Email :- [email protected]
.....Complainant
Versus
1. Jalandhar Improvement Trust, G.T. Road, Jalandhar, Punjab
144001, through its Chairman/Administrator/Estate Officer/
Authorized Signatory.
2. Jalandhar Improvement Trust, Near Circuit House, Opposite
Gymkhana Club, Lajpat Nagar, Jalandhar, through its
Chairman/Administrator/Estate Officer/Authorized Signatory.
3. Daljit Singh Ahluwalia, Chairman of Jalandhar Improvement
Trust, Near Circuit House, Opposite Gymkhana Club, Lajpat
Nagar, Jalandhar.
4. Jatinder Singh, Executive Officer of Jalandhar Improvement
Trust, Near Circuit House, Opposite Gymkhana Club, Lajpat
Nagar, Jalandhar.
Phone 0181-2459824, 0181-2459821, 0181-2456707
Email: [email protected]
....Opposite Parties
Consumer Complaints under Section 47 read
with Section 49(2) of the Consumer
Protection Act, 2019.
Quorum:-
Hon'ble Mrs. Justice Daya Chaudhary, President
Mrs. Urvashi Agnihotri, Member
1) Whether Reporters of the Newspapers may be allowed to see the Judgment? Yes/No
2) To be referred to the Reporters or not? Yes/No
3) Whether judgment should be reported in the Digest? Yes/No Argued by:-
For the complainant : Sh. Munish Goel, Advocate For the opposite parties : Sh. Rajeev Sharma, Advocate for Sh. K.S. Sodhi, Advocate C.C. No.226 of 2020 3 JUSTICE DAYA CHAUDHARY, PRESIDENT:
By this order of ours two complaints bearing Consumer Complaint Nos.226 of 2020 titled as "Bharat Malhotra Vs. Jalandhar Improvement Trust & others" and 228 of 2020 titled as "Vikramjit Singh Khera Vs. Jalandhar Improvement Trust & others", shall be disposed of as common questions of law and facts are involved therein.
However, the facts are being extracted from Consumer Complaint No.226 of 2020 titled as "Bharat Malhotra Vs. Jalandhar Improvement Trust & others".
CONSUMER COMPLAINT NO.226 OF 2020
2. Complainant-Bharat Malhotra has filed the present complaint under Section 47 read with Section 49(2) of the Consumer Protection Act, 2019 (in short the "Act") against the opposite parties (in short "OPs") for setting aside the unfair terms and conditions of the allotment letter dated 23.12.2011 issued by OPs and to declare the terms of the contract as null and void being a unfair contract.
3. Briefly the facts of the case as made out by the complainant while filing the present complaint before this Commission are that OP No.1 and 2 (Jalandhar Improvement Trust) launched its 94.97 acre development scheme adjoining to the earlier developed colony known as Surya Enclave, situated at Jalandhar. The present scheme is named as "Surya Enclave Extension, Jalandhar".
4. The complainant being interested in purchasing a plot, filled up an application form for allotment of 200 square yard plot under the said scheme on 06.09.2011. Said application was submitted alongwith C.C. No.226 of 2020 4 earnest money of Rs.3,40,000/- for which a proper receipt of said amount was issued, which is enclosed as Ex.C-1.
5. It has further mentioned that the complainant took loan from the Punjab Gramin Bank for making the said payment to the OPs. Said loan amount was repaid and a certificate dated 14.01.2012 was issued in favour of OPs by showing that the complainant has adjusted his loan and said bank also asked the OPs to vacate the lien against the said plot. It has further been mentioned that the complainant has paid interest of Rs.18,700/- to the Bank for taking the loan. The complainant remained successful in the draw of lots and thereafter allotment letter dated 23.12.2011 was issued of residential plot No.163-D (200 square yards) to him.
6. As per the terms and conditions of the allotment letter, the amount was to be deposited by the complainant in total 7 installments starting from 06.09.2011 upto 11.06.2014, vide Ex.C1, C-4 to C-9. The total amount was Rs.39,19,450/-. As per Clause 7 of the allotment letter, the said plot was to be made available to the complainant alongwith all the development and promised facilities on paying all the instalments towards the price. The possession of the plot was to be delivered upto 23.06.2014 but still the possession was not delivered.
7. The OPs failed to provide promised facilities as well as development of the area. The act of OP has been stated to be of 'unfair trade practice' and detrimental to the interest of the complainant. It has also been alleged that the action of the OPs is not only unfair but contrary to terms and conditions of the allotment letter. The OPs have C.C. No.226 of 2020 5 failed to offer the possession of the allotted plot till date. The OPs have not completed the basic amenities at the site and had not obtained the occupation and completion certificate from the competent authority till date.
8. The prayer in the complaint is to set aside the allotment letter and to declare the allotment as illegal on account being 'unfair contract' OPs be directed to deliver the actual and physical possession of plot No.163-D (200 square yards) alongwith all facilities of developed colony as projected with occupation and completion certificate and also to pay interest @18% on the deposited amount from 23.06.2014 till handing over the actual physical possession of the allotted plot. In alternative to refund the total deposited amount of Rs.39,19,450/- alongwith interest @18% p.a. from the date of deposit till actual realization and also to pay Rs.5,00,000/- as compensation for causing mental tension, harassment and mental agony and to pay Rs.55,000/- towards litigation. The complaint was supported by an affidavit of the complainant alongwith documents.
9. In response to notice, reply has been filed by of OPs No.1, 2 and 3. Certain preliminary objections have been raised in written statement that this Commission has no jurisdiction to adjudicate the complaint as no case is made out of 'deficiency in service' as the averments made in the complaint are frivolous, false as certain material facts have been suppressed and the complainant has not approached this Commission with clean hands.
10. On merits also the averments made in the complaint have C.C. No.226 of 2020 6 specifically been denied by the OPs.
11. Rejoinder to the written statement has been filed by the complainant by way of filing affidavit wherein it has been stated that the written statements filed by the OPs are wrong and are specifically denied.
12. During the pendency of the complaint, an application bearing M.A. No.11 of 2021 was filed by giving consent for mediation on behalf of the complainant. The complaint remained pending on a number of dates for proposed settlement between the parties. Statement of the complainant was also recorded on 18.02.2021 whereby complainant gave his consent for settlement of dispute through mediation. The complainant agreed for principal amount of Rs.39,40,450/- alongwith interest @12% as well as compensation of Rs.1,00,000/- and counsel fee of Rs.50,000/-. Even he authorized his counsel to settle the matter and to negotiate on his behalf. From the side of OPs Officer namely Sh. Jaswant Singh, XEN, Jalandhar Improvement Trust also made a statement which was separately recorded. Inspite of making efforts from both the sides as well as by the Court a settlement could not be arrived and finally the case was fixed for arguments on merits.
13. Learned counsel for the complainant has submitted that in the allotment letter there were total 14 terms and conditions but still nothing was done as the possession was not handed over within the specified period and required facilities were also not made available. The OPs failed to offer and handover the actual possession upto C.C. No.226 of 2020 7 23.06.2014 whereas as per Clause 7 of the allotment letter even no amount was paid on account of delay occurred at the instance of the OPs. The terms and conditions were not only unreasonable but unilateral also and same were against the interest of complainant but in favour of the OPs. Learned counsel further submits that it was a case of 'unfair contract' as has been defined under Section 2 of the 46 of the Act. As per the terms and conditions as provided in Clause 2 in case the amount was not deposited as per the schedule, then OPs were to charge interest @11% for the first month, 12% for the second month, 13% for the 3rd month and 14% for the 4th month and thereafter 15% for the 5th month and 16% for the 6th months. Learned counsel also submits that conditions were favouring the OPs but still the possession was not handed over within a period of two and half years as per Clause 7 of the allotment letter. There is no Clause mentioning the penalty to be payable by OPs to the complainant for not handing over the actual and physical possession of the allotted plot on completion of all development activities at the site. It has further been mentioned that the penalty Clause has been inserted unilaterally without having consent of the complainant at the time of issuance of allotment letter. Further, the construction was required to be completed at the allotted plot within a period of three years from the date of allotment letter. In absence of handing over the physical possession of the plot there was no reason to complete the construction within a period of next six months. At the end, learned counsel for the complainant submits that the complainant cannot wait for indefinite period for handing over the possession of the C.C. No.226 of 2020 8 plot to him. In absence of possession he is entitled for refund of the amount so deposited by him alongwith compensation as well as the terms and conditions of the agreement which are one sided cannot be held to be binding upon the complainant and other buyers and in such a situation when OPs have failed to deliver the possession of the plot even after a period of more than 10 years from the date of issuance of allotment letter.
14. Learned counsel for the OPs has opposed the submissions made by learned counsel for the complainant. Reply has been filed by the OPs but no written submissions have been filed.
15. Heard the arguments raised by learned counsel for both the parties. We have also carefully perused the terms and conditions of the allotment letter as well as other documents available on the file.
16. The complainant remained successful in the draw of lots and he was issued allotment letter dated 23.12.2011 of plot No.163-D, measuring 200 square yards area, Surya Enclave Extension Jalandhar. The complainant also deposited an amount of Rs.39,19,450/- with the OPs. The receipt thereof are enclosed with the complaint Ex.C-1, C-4 to C-9. Thereafter, the OPs made an Agreement to Sell dated 20.01.2012 which is enclosed as Ex.C-10. As per Clause 7 of said allotment letter Ex.C-3 the OPs was to handover the physical possession to the complainant alongwith all facilities in the areas on making payment of all the installments towards the price. The OPs were required to give possession of the allotted plot upto 23.06.2014. A penalty clause was mentioned in the Agreement which was to be imposed on the C.C. No.226 of 2020 9 complainant for breach of Contract. A number of letters were written but still OPs failed to handover the actual and physical possession of the plot till the date of filing of the complaint after providing basic amenities at the site like electricity, water, sewerage, roads, etc. etc. Even the occupation/completion certificate was not provided to the complainant which was to be issued by the competent authority as per Clause 7 of the allotment letter. No amount regarding delay in handing over the possession of the plot was paid to the complainant. The penalty Clause was imposed upon the complainant without having any consent at the time of issuance of allotment letter. As per condition No.3 in case there was a delay in depositing the 6 monthly installments on the due date the allotted plot was to be confiscated by the OPs and in case it was to be restored the OP was to charge penal interest within a period of 3 months as per the instructions of the Government, 20% restoration charges and 6% penalty. Only on doing so, the plot was to be restored.
17. On perusal of other terms and conditions of the Agreement no penalty clause was mentioned in case the OPs failed to perform their part to provide the undertaken facilities. Nowhere it has been mentioned in the terms and conditions in case the undertaken developments for handing over the physical possession of the plot as well as the necessary facilities which were undertaken to be provided are not done. The complainant could have claim compensation, interest or other charges. Meaning thereby the terms and conditions of the allotment letter are one sided and have been framed unilaterally by considering the interest of OPs but against the complainant and the same are C.C. No.226 of 2020 10 illegal.
18. As per Clause 11 of the allotment letter in case the construction is not completed within a period of 3 years from the issuance of allotment letter, then the OPs would confiscate the said plot and also impound the amount deposited by the complainant. The action/inaction and attitude of the OPs on receiving the amount towards price of the plot but without providing amenities as mentioned above to deliver the plot till date is not only one sided but contrary to the interest of the complainant. Moreover the buyer like the complainant cannot wait for indefinite period for seeking possession of the property as the hard earned money has been deposited but still the OPs have not performed their role which amounts to detrimental to the interest of the complainant. The action of the OPs is not only unjust but unfair also.
19. Same issue was there before the Hon'ble Supreme Court in case "Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna and Ors." Civil Appeal No.5785 of 2019 decided on 11.01.2021, wherein the Hon'ble Supreme Court has relied upon the judgment of case "Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. v. DLF Southern Homes Ltd." 2020 (3) RCR (Civil) 544, wherein Hon'ble Supreme Court has held that the Consumer Commissions at State and National level has the power to declare such contracts as null and void. The relevant portion is being reproduced herein below:-
"19.2 The aforesaid clauses reflect the wholly one-sided terms of the Apartment Buyer's Agreement, which are entirely loaded in favour of the Developer, and against the allottee at every step.
The terms of the Apartment Buyer's Agreement are C.C. No.226 of 2020 11 oppressive and wholly one-sided, and would constitute an unfair trade practice under the Consumer Protection Act, 1986. .....
19.4 Clause 2(1)(r) of the Consumer Protection Act, 1986 defines "unfair trade practice" as follows :-
"2(1)(r) "unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:- ... .... ... " (emphasis supplied) The said definition is an inclusive one, as held by this Court in Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725 wherein this Court speaking through one of us (J. Indu Malhotra) held :-
"6.1 .... The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service. In Fortune Infrastructure v. Trevor D'Lima [Fortune Infrastructure v. Trevor D'Lima, (2018) 5 SCC 442 : (2018) 3 SCC (Civ) 1] , this Court held that a person cannot be made to wait indefinitely for possession of the flat allotted to him, and is entitled to seek refund of the amount paid by him, along with compensation.
6.2. The respondent flat purchaser has made out a clear case of deficiency of service on the part of the appellant builder. The respondent flat purchaser was justified in terminating the apartment buyer's agreement by filing the consumer complaint, and cannot be compelled to accept the possession whenever it is offered by the builder. The respondent purchaser was legally entitled to seek refund of the money deposited by him along with appropriate compensation.
6.3 The National Commission in the impugned order dated 23-10-2018 [GeetuGidwani Verma v. Pioneer Urban Land and Infrastructure Ltd., 2018 SCC OnLine NCDRC 1164] held that the clauses relied upon by the builder were wholly one-sided, unfair and unreasonable, and could not be relied upon. The Law Commission of India in its 199th Report, addressed the issue of "Unfair (Procedural & Substantive) Terms C.C. No.226 of 2020 12 in Contract". The Law Commission inter alia recommended that a legislation be enacted to counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that:
"a contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties."
6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the agreement dated 8-5- 2012 are ex facie one-sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder."
19.5 In a similar case, this Court in Wg. Cdr.Arifur Rahman Khan & Others v. DLF Southern Homes Pvt. Ltd., 2020 SCC Online SC 667 affirmed the view taken in Pioneer (supra), and held that the terms of the agreement authored by the Developer does not maintain a level platform between the Developer and the flat purchaser. The stringent terms imposed on the flat purchaser are not in consonance with the obligation of the Developer to meet the timelines for construction and handing over possession, and do not reflect an even bargain. The failure of the Developer to comply with the contractual obligation to provide the flat within the contractually stipulated period, would amount to a deficiency of service. Given the one-sided nature of the Apartment Buyer's Agreement, the consumer fora had the jurisdiction to award just and reasonable compensation as an incident of the power to direct removal of deficiency in service.
19.6 Section 14 of the 1986 Act empowers the Consumer Fora to redress the deficiency of service by issuing directions to the Builder, and compensate the consumer for the loss or injury caused by the opposite party, or discontinue the unfair or restrictive trade practices.
19.7 We are of the view that the incorporation of such one- sided and unreasonable clauses in the Apartment Buyer's C.C. No.226 of 2020 13 Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act, the powers of the consumer fora were in no manner constrained to declare a contractual term as unfair or one- sided as an incident of the power to discontinue unfair or restrictive trade practices. An "unfair contract" has been defined under the 2019 Act, and powers have been conferred on the State Consumer Fora and the National Commission to declare contractual terms which are unfair, as null and void. This is a statutory recognition of a power which was implicit under the 1986 Act.
In view of the above, we hold that the Developer cannot compel the apartment buyers to be bound by the one- sided contractual terms contained in the Apartment Buyer's Agreement."
20. Section 47 (1)(ii) of the Act, 2019 is relevant and same is reproduced as:
47. Jurisdiction of the State Commission.-
(1) Subject to the other provisions of this Act, the State Commission shall have jurisdiction--
(a) to entertain--
(ii) complaints against unfair contracts, where the value of goods or services paid as consideration does not exceed ten crore rupees;
21. In the present complaint, the complainant has challenged the unfair terms and conditions of the contract and has also sought to declare that contract null and void. As per Section 47(1)(ii) of the Act reproduced above, it is specifically mentioned that the complaint can be entertained by the State Commission against unfair contracts where the value of goods or services paid as consideration does not exceed Rs.10 Crore. In this Section, minimum value of the goods or services paid has not been laid down, but maximum value of goods or services paid has been mentioned as not exceeding Rs.10 Crore. Thus, the State Commission, under section 47(1)(a)(ii) read with section 49 (2) of the C.C. No.226 of 2020 14 Act, has pecuniary jurisdiction to entertain and determine the issue of unfair contract and can declare any term of the contract, which is unfair, as null and void. The Act gives power to the State Commission and the Hon'ble National Commission to examine the unfair terms of the Contract. This power has not been conferred upon the District Commissions under the Act, 2019.
22. In view of ratio of law laid down by the Hon'ble Supreme Court and the Hon'ble National Commission in above referred judgments and above detailed discussion, we are of the considered view that the terms and conditions are not fair and in view of illegal terms and conditions, we declare that the allotment letter is 'unfair contract' and also declare the terms and conditions as null and void. Moreover, the OPs have not produced on record any completion certificate that and any other documents to prove that they fulfilled the terms and conditions of allotment letter.
23. In view of above discussion, we held that the terms and conditions of the contracts i.e. allotment letter and Agreement are unfair and are held to be null and void so in these circumstances we have no option but to direct OPs to refund the amount with interest on account of financial loss suffered by the complainant by depriving him of the utilization of the said amount during the period it remained with the OPs and to pay interest at the rate of 9% per annum from the respective dates of deposit till realization. Besides this, the complainant is also entitled to suitable compensation for the mental agony and harassment etc. suffered by him due to the 'deficiency in service' and 'unfair C.C. No.226 of 2020 15 trade practice' on the part of the OPs including litigation costs and other expenses.
24. Accordingly, the complaint filed by the complainant is partly allowed and following directions are issued to the OPs:
i) to refund the entire amount deposited by the complainant, i.e. Rs.39,19,450/- along with interest at the rate of 9% per annum from the respective dates of deposit till its realization on account of financial loss suffered by the complainant for depriving him of the utilization of the said amount during the period it remained with the OPs; and
ii) to pay Rs.30,000/- as compensation for causing mental harassment, agony and pain suffered by the complainant, including litigation costs of Rs.20,000/-.
CONSUMER COMPLAINT NO.228 of 2020
25. In view of order passed in Consumer Complaint No.226 of 2020 "Bharat Malhotra Vs. Jalandhar Improvement Trust & others"
the present complaint is also partly allowed in the same terms and following directions are issued to the OPs:
i) to refund the entire amount deposited by the complainant, i.e. Rs.19,60,750/- along with interest at the rate of 9% per annum from the respective dates of deposit till realization on account of financial loss suffered by the complainant for depriving him of the utilization of the said amount during the period it remained with the opposite parties; and
ii) to pay Rs.30,000/- as compensation for causing mental C.C. No.226 of 2020 16 harassment, agony and pain suffered by the complainant, including litigation costs of Rs.20,000/-
26. The compliance of this order shall be made by the OPs within a period of 30 days of the receipt of certified copy of the order.
27. The complaints could not be decided within the stipulated period due to heavy pendency of Court cases and due to pandemic of Covid-19.
(JUSTICE DAYA CHAUDHARY) PRESIDENT (URVASHI AGNIHOTRI) MEMBER August 10, 2022.
MM