Allahabad High Court
M/S Ansal Landmark Township (Pvt) vs State Of U.P. And 2 Others on 15 October, 2019
Equivalent citations: AIRONLINE 2019 ALL 1700, (2019) 10 ADJ 756 (ALL), (2020) 1 ALL WC 651, 2020 (206) AIC (SOC) 21 (ALL)
Author: Yashwant Varma
Bench: Yashwant Varma
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Reserved on 26.09.2019 Delivered on 15.10.2019 Court No. - 6 Case :- WRIT - C No. - 28520 of 2019 Petitioner :- M/S Ansal Landmark Township (Pvt) Respondent :- State Of U.P. And 2 Others Counsel for Petitioner: - Prashant Shukla Counsel for Respondent: - C.S.C., Rohan Gupta Hon'ble Yashwant Varma, J.
This petition, which constitutes the second foray of the petitioner before this Court, challenges the awards pronounced by the Permanent Lok Adalat, Ghaziabad. On an earlier occasion the award dated 13 February 2019 [hereinafter to be referred as the "original award"] rendered by the Permanent Lok Adalat was set aside by a learned Judge of the Court in terms of his judgment dated 23 April 2019 rendered on Writ C No. 13895 of 2019. The original award was set aside since the same had come to be pronounced and made only by two members of the Permanent Lok Adalat and in the absence of the Chairman.
The present petition impugns the awards dated 28 and 29 June 2019 passed by the Permanent Lok Adalat, Ghaziabad in Case No. PLA/2016. The awards rendered by the Permanent Lok Adalat bear two separate dates since the Chairman delivered his decision on 28 June 2019 whereas the Members thereof pronounced their opinion on 29 June 2019. The significant question that arises for consideration is whether the two separate awards pronounced by the constituents of the Permanent Lok Adalat are legally sustainable. The claim that was instituted before the Permanent Lok Adalat essentially challenged the validity of the levy of penal interest and holding charges by the petitioner [a developer of an integrated township] upon the third respondent [the allottee] on an alleged failure to take possession of a residential plot and complete construction thereon.
However before proceeding further, the following salient facts would merit notice. The respondent No. 3 is an allottee of a residential plot situate in an integrated township being developed by the petitioner. That township, known as "Sushant Aquapolis", comprises of residential plots, high-rise towers, commercial facilities and other supportive and attendant amenities. The plot was initially allotted to one Ms. Anita Uppal who transferred the same to Sumit Pal Singh. Sumit Pal Singh is stated to have transferred the residential plot to the third respondent on 14 November 2008. Although there is no dispute with respect to the fact that the principal consideration for the residential plot has been duly paid and liabilities in respect thereof discharged, it may only to be noted that 70% of the total consideration had been paid by 6 April 2009 and thereafter further payments made on 16 April 2009.
Admittedly although the integrated township which was described to be a "high rise lake front township" had been launched in 2007, as per the petitioner itself at least till 2009 the same had not been fully developed. On 23 April 2009, the third respondent is stated to have addressed a communication to the petitioner bringing to its attention news reports that a waste dump was proposed to be established by the Municipal Corporation adjacent to the project site. It was asserted that the establishment of that waste dump would render the project uninhabitable and consequently called upon the petitioner to respond to the veracity of the news reports that had appeared. This issue is stated to have been raised yet again in terms of the communications of the third respondent dated 12 March and 28 July 2010. On 13 August 2010, the petitioner issued a letter offering possession to the third respondent and called upon him to pay the balance consideration in respect of the plot in question. Although the third respondent reiterated his request for the petitioner clarifying the position with respect to establishment of the proposed waste dump in his communications of 1 February 2011, those communications were not responded to. On 3 September 2011, the petitioner apprised the third respondent of a dispute with respect to the establishment of the waste dump pending in Court but assured the allottee that the project would not be adversely affected. While this exchange of correspondence ensued, it has come on record that the project was not completed even though five years had expired from the date of allotment. The third respondent is stated to have ultimately cleared all outstanding dues in respect of the plot in question in 2012 and receipt of such payments were issued by the petitioner on 14 April 2012. It becomes significant to note that the third respondent asserts to have cleared and liquidated the remaining dues as demanded by the petitioner subject to the condition that no penal interest or holding charges would be levied. However, on that very date a demand for penal interest and holding charges was raised by the petitioner against the third respondent. It is this demand that led to the dispute traveling to the Permanent Lok Adalat. Before this Court also parties were ad idem that the only issue that survives is with respect to the levy of penal interest and holding charges.
When the petition was initially heard, the Court noticed that two awards appeared to have been pronounced by the Permanent Lok Adalat. This in light of the fact that while the Chairman delivered his decision on 28 June 2019, the two Members pronounced their order on 29 June 2019. Drawing the attention of learned counsels to the provisions made in Section 22E of the Legal Services Authorities Act 19871 which clearly provided that in case of a difference of opinion between the Members constituting the Permanent Lok Adalat award was liable to be declared by majority, it was pointed out that the impugned orders were rendered unsustainable on this short ground alone. The counsels were accordingly apprised of the prima facie opinion of the Court that the award could not be sustained in light of the unambiguous provisions made in Section 22E (3) of the 1987 Act. However, in order to lay the controversy at rest and since the dispute itself stood narrowed down only to the demand of penal interest and holding charges, learned counsels were granted an opportunity to explore the possibility of arriving at a settlement. The parties, however, could not come to any settlement.
On a failure on the part of respective parties to arrive at a settlement and bearing in mind the fact that the dispute inter partes had been lingering since 2010, proceedings initiated before the Lok Adalat in 2016 and already remanded back once on an earlier occasion, the Court expressed its view to learned counsels that it would be inexpedient to remit the matter to the Permanent Lok Adalat once again and that it would be in the interest of justice that the matter be heard on merits and the dispute lent a quietus at this stage itself. On that note, learned counsels consented for the petition being heard and disposed of on merits. It is in the above background that the petition was ultimately set down for hearing.
Sri Prashant Shukla, leaned counsel appearing in support of this petition, took the Court in detail through the award pronounced by the Chairman to contend that the demand of penal interest and holding charges was in accord with the agreement which governed the transaction and that consequently the dispute as raised by the petitioner was clearly untenable. He submitted that although the petitioner had offered possession as far back in 2010 it is the third respondent who refused to take possession of the residential plot and thus became liable to pay penal interest and holding charges. It was submitted that the waste dump did not come to be established and therefore the objection as taken by the third respondent was untenable. Sri Shukla contended that no conciliation preceded the award being pronounced and submitted that consequently the orders passed by the Permanent Lok Adalat were liable to be set aside on this ground alone. In support of this submission, Sri Shukla placed reliance upon the decision rendered by the Supreme Court in Bar Council of India Vs. Union of India2 and more particularly to the observations entered therein emphasizing the obligation of the Permanent Lok Adalat to initiate and undertake a process of settlement and conciliation. Insofar as the issue of the establishment of the waste dump is concerned, Sri Shukla submitted that the aforesaid project came to be stalled pursuant to the injunction issued by the National Green Tribunal [hereinafter to be referred to as the "NGT"] in 2016 and the project itself ultimately dropped. It is pertinent to note that the petitioner refers to the injunction of the NGT issued in December 2016 and the project itself being shelved by the Municipal Corporation, Ghaziabad in 2018. It was further asserted that as many as 150 allottees had accepted possession by payment of charges and completion of all formalities. It was also asserted that these allottees have been living in the project since 2010. Though it is admitted by the petitioner that there was delay in construction and completion of the project, the same is explained to be on account of circumstances beyond the control of the petitioner. It is consequently contended that no deficiency of service or negligence can be attributed to it.
The Court called upon Sri Shukla to clarify whether the agreement specified any rate at which holding charges were liable to be levied. To this it was fairly conceded that no specific charge or rate at which holding charges were liable to be demanded stood stipulated in the agreement.
Refuting the submissions urged on behalf of the petitioner, Sri Rohan Gupta, learned counsel appearing for the third respondent, submitted that the record clearly reflected that despite repeated communications being addressed, the issue of establishment of the waste dump was never clarified by the petitioner at least till 2011. According to Sri Gupta, even in the communication of the petitioner of 2011 only an assurance was proffered and no details with respect to any decision taken by the Municipal Corporation to shift the proposed waste dumb referred to. According to Sri Gupta, the admitted facts established that the waste dump was proposed to be set up adjacent to the township itself and it was in that backdrop that the NGT issued the injunction in December 2016. Sri Gupta contends that as per the petitioner's own assertion in the writ petition the project was ultimately shelved by the Municipal Corporation, Ghaziabad only in 2018. This, according to Sri Gupta, is clearly indicative of the fact that at least till 2018 there was no clarity whether the waste dump would or would not be established next to the residential township. Sri Gupta contended that the proposed establishment of the waste dump directly impacted the viability of the respondent No. 3 and other allottees constructing residential premises in its immediate vicinity. Sri Gupta highlighted the fact that the project itself was touted to be a "Lake Facing Integrated Township" and that the entire underlying concept of such a township would have been placed in jeopardy in case a waste dump came to be established adjacent thereto. He submitted that it was in that background that the third respondent persisted in seeking clarifications from the petitioner before taking possession. According to him, in case the third respondent was compelled to take possession, it would have resulted in him facing a fait accompli in case the waste dump had ultimately come to be established.
Sri Gupta then referred to the Commissioner's report filed before the Permanent Lok Adalat which according to him clearly established that the project was incomplete, construction work was ongoing and that basic amenities and supportive infrastructure had not been established. Sri Gupta referred to the report of the Commissioner in extenso to contend that the conditions as obtaining at the site rendered construction impossible and conditions uninhabitable. From this report of inspection undertaken in 2017, it was also highlighted that neither the proposed hospital nor nursing home had been constructed. Referring to that report it was pointed out that under construction towers were not barricaded and even safety netting as mandated in terms of environmental norms not placed around them. It was submitted that on account of ongoing construction work, the environment in the township rendered conditions unlivable and that the main road for ingress and egress was being used day and night by trucks and dumpers carrying construction material and waste. He also referred to the fact that a mixing plant continued to function in the township which was proof of the fact that construction activities were continuing therein.
Sri Gupta then assailed the validity of the provisions in the agreement pertaining to penal interest and holding charges and submitted that they were clearly unconscionable since the third respondent was compelled to sign on the dotted line and accept the terms and conditions as imposed by the petitioner. Sri Gupta taking the Court through the terms of the agreement submitted that it was clearly one sided and an outcome of the unfair bargaining position in which the allottee stood placed. It was contended that since there was an admitted failure on the part of the petitioner to fulfill its own obligations under the agreement, the provisions in respect of penal interest and holding charges could not be enforced. According to Sri Gupta, the third respondent had bargained for a residential plot in an integrated township. He referred to the fact that the petitioner itself had advertised the project to be a self-sufficient residential oasis. However and since the reality at the ground level was in stark contrast to what had been proposed and promised, Sri Gupta contended that the levy of penal interest and holding charges was clearly illegal, unfair and unjust.
Sri Shukla, learned counsel for the petitioner, was granted an opportunity to respond to the submissions addressed on behalf of the third respondent who assailed the validity of the agreement on the ground of being unconscionable and thus unenforceable. Learned counsel, however, chose not to proffer any legal justification in that respect. It is the rival submissions recorded above that now fall for determination.
For the sake of clarity and ease of reference this would perhaps be an appropriate stage to identify the core questions that arise in the background of the facts noticed above and the rival submissions advanced. The Court finds that the following three principal issues arise for consideration: -
A. The validity of two separate awards pronounced by the Permanent Lok Adalat in respect of a singular cause B. The legality of the levy of penal interest and holding charges, and C. The validity of the stipulations contained in the agreement executed between the parties, which are assailed on the ground of being unconscionable and thus unenforceable.
The Court firstly proposes to dispose of the peripheral issue and contention addressed on behalf of the petitioner that no conciliation proceedings were undertaken by the Permanent Lok Adalat before rendering award. It becomes pertinent to note that the original award in unambiguous terms records that a conciliation process was undertaken and the matter placed for disposal on merits only once such efforts did not bear fruit. In Paragraph -20 of the writ petition it is however asserted that this recital as appearing in the original award is incorrect. The aforesaid assertion is affirmed on the personal knowledge of the deponent to the writ petition, who is stated to be the Manager (Land) of the petitioner. This deponent, however, does not disclose as to how he derives personal knowledge of this fact. He also does not assert to have been present before the Permanent Lok Adalat when hearings were held nor does he state that he was continually associated with the proceedings that were undertaken by the Permanent Lok Adalat. On a more fundamental plane the Court notes that the petitioner is not stated to have made any application to the Permanent Lok Adalat assailing or disputing the recordal of conciliation proceedings having been undertaken and seeking rectification of the record in that respect. It is well settled that recitals appearing in an order or decision of a Tribunal cannot be assailed or questioned unless a procedure for rectification duly initiated before that Tribunal or Authority itself. While this would have been sufficient to negative the contention in this regard as canvassed, the Court further notes that in the earlier round of litigation that ensued between parties and travelled to this Court also no such allegation or contention appears to have been urged. Sri Shukla despite liberty being granted in this regard was unable to either place for the perusal of the Court either a copy of the earlier writ petition nor was he able to otherwise establish that this objection was taken to the award that was originally rendered. In any case, as this Court reads the judgment rendered by the learned Judge on the earlier writ petition, it is manifest that the only ground which appears to have been orally urged in challenge to the award was that it had come to be passed by two Members and in the absence of the Chairman. In view thereof, the Court finds itself unable to accept the submission that the Permanent Lok Adalat proceeded to render award without undertaking requisite conciliatory measures.
Having disposed of this issue, the Court then proceeds to deal with the principal questions that arise.
A. The validity of two separate awards rendered by the Permanent Lok Adalat in respect of a singular cause The Court deems it apposite to firstly deal with the legality of the procedure as adopted by the Permanent Lok Adalat which has resulted in two separate and distinct awards coming into existence. The Court is constrained to observe that the Chairman of the Permanent Lok Adalat clearly records in his order that the two members had duly apprised him of not being in agreement with the view proposed to be taken by him, that they were inclined to follow a separate line of reasoning and arrive at a decision contrary to what he proposed to make. Despite that being the admitted position, the Chairman proceeded to pronounce his decision on 28 June 2019. It is also relevant to note that the dissenting members did not simultaneously and in any case on that date pronounce their decision. They proceeded to declare their decision on the next day, namely, 29 June 2019. The Court bears in mind the provisions made in Section 22E of the 1987 Act which prescribes in unambiguous terms that the award made by the Permanent Lok Adalat shall be by a majority of persons constituting the Tribunal. It is also pertinent to note that Section 22E confers on the award rendered by the Permanent Lok Adalat the same status as that of a decree of the Civil Court. Section 22E, which is the key to the answer to this issue, reads as follows:
"22E. Award of Permanent Lok Adalat to be final.- (1) Every award of the Permanent Lok Adalat under this Act made either on merit or in terms of a settlement agreement shall be final and binding on all the parties thereto and on persons claiming under them.
(2) Every award of the Permanent Lok Adalat under this Act shall be deemed to be a decree of a civil court.
(3) The award made by the Permanent Lok Adalat under this Act shall be by a majority of the persons constituting the Permanent Lok Adalat.
(4) Every award made by the Permanent Lok Adalat under this Act shall be final and shall not be called in question in any original suit, application or execution proceeding.
(5) The Permanent Lok Adalat may transmit any award made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by that court".
It is manifest from a plain reading of Section 22E that the 1987 Act does not envisage two separate awards being rendered. This, undisputedly, since there cannot be two decrees in respect of one claim. While dissent and difference of opinion can be envisaged and is always a possibility in the case of a multi-member Tribunal, such situations are and would be clearly governed by Section 22E (3). In case of a difference of opinion, it is open to the members of a multi-member Tribunal to record independent and separate opinions. It is also possible for some of the members to join together and render a decision thus constituting the majority view. If the majority proceeds to draw up a separate opinion, the remaining member of the Tribunal can always record dissent. However, the pronouncement of the award must necessarily be simultaneous on the part of both the majority and the member constituting the minority. Both the majority and the minority would be entitled to render separate opinions where after operative directions would have to be necessarily framed in tune and consistent with the view and the decision ultimately arrived at by the majority. The operative directions would have to be drawn by the Tribunal reflecting and comprising the majority view which prevailed and the claim would consequently have to be recognized as having been disposed of in terms of those operative directions. This procedure and practice, which is well settled and must be recognised as the solitary course liable to be adopted was evidently not followed.
As a consequence of the procedure adopted by the Permanent Lok Adalat in the present case, two awards have come into being in respect of a singular claim. The correct approach on the part of the Chairman of the Permanent Lok Adalat upon being informed by the other members that they were desirous of taking and adopting a stand contrary to that proposed by him would have been to desist from pronouncing award on 28 June 2019. The correct, nay, the only course which should have been adopted was for the Permanent Lok Adalat to pronounce opinions together and on the same date. After declaration of separate opinions it would have been incumbent upon the Permanent Lok Adalat to draw up operative directions consistent with the view taken by the majority. However and since this course was not adopted by the Permanent Lok Adalat, it has resulted in the coming into existence of two separate and inconsistent decrees. Undisputedly there cannot possibly be two separate decrees in respect of one claim. As observed earlier, while there may be separate views and opinions pronounced in a matter, the decree must necessarily be only one and that which reflects and embodies the majority view that prevailed. Both the orders of 28 and 29 June 2019 consequently are liable to be quashed and set aside on this ground alone.
B. The legality of the levy of penal interest and holding charges by the petitioner upon the third respondent The Court then proceeds to deal with the substance of the dispute which led to the institution of proceedings before the Permanent Lok Adalat. In order to appreciate the nature of the contract between the parties it would be apposite to notice some of the salient clauses of that agreement. The relevant provisions of the agreement are extracted herein below:
"1. That the BUYER has applied for a plot and the DEVELOPER has with the consent of the BUYER allotted the Plot No. 0032 in Block A admeasuring 251 Sq. meters (approx 300 Sq. Yards) @ Approx Rs.10,458/- per sq. meter (Rs. 8750/- per sq. yard) in Acquapolis Ghaziabad subject to the following terms and conditions:
2. That the above agreed price of the residential plot covers development of internal service such as laying of roads, development of parks and landscapes, laying of water lines laying of sewer lines, laying of electrical HT/LT lines, street lights, laying of storm water drain lines and erection of electrical sub-stations and to develop necessary civil services essential for a convenient living. The payments is to be made in installments as prescribed in Schedule-1/ Schedule-1A annexed to this Agreement. The applicable schedule shall form and be read as part of this Agreement.
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11. That the timely payment of installments as stated in Schedule-1/Schedule-1A of the Agreement and applicable stamp duty, registration fee and other charges payable under this Agreement is the essence of this contract. In the absence of any notice of demand issued by the DEVELOPER, it shall be incumbent on the BUYER to strictly comply with the terms of timely payment and the other terms and conditions on this Agreement, failing which allotment shall stand cancelled and the entire amount of Earnest Money deposited by him shall be forfeited and the BUYER shall be left with no right or lien on the plot. The amount(s), if any, paid over and above the Earnest Money shall be refunded to the BUYER without any interest. In exceptional circumstances, the DEVELOPER may at its sole absolute discretion condone the delay in payment by charging an interest @ 18% p.a. on the amount outstanding. In the event of the DEVELOPER waiving the right of forfeiture and accepting payment on that account, no right, whatsoever, would accrue to any other defaulting BUYER (Buyer/Purchaser).
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14. That the BUYER agrees that the sale of the units is subject to force majeure clause which inter alia include delay on account of non-availability of steel, cement or any other building materials, or water supply or electric power or, slow down, strike or due to a dispute with the construction agency employed by the DEVELOPER, civil commotion or by reason of war, or enemy action or earthquake or any act of God, delay in certain decisions/ clearances from statutory body(ies) or if non-delivery of possession is as a result of any notice, order rules or notification of the Government and / or any other public or Competent Authority or for any other reason beyond the control of the DEVELOPER and any of the aforesaid event, the DEVELOPER shall be entitled to a reasonable corresponding extension of the time of delivery of possession of the said plot on account of force majeure circumstances and in such eventuality the BUYER will not claim any amount of money by way of damages/ compensation from the DEVELOPER.
15. That the booking/ allotment, once made, cannot be cancelled by the BUYER. However, the discretion absolutely rests with the DEVELOPER to allow cancellation subject to forfeiture of Earnest Money. The amount, if any, paid over and above the Earnest Money shall be refunded to the BUYER without any interest.
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17. That the BUYER shall be bound to start construction of the house with due sanction of Competent Authority with in a period of 3 years from the date of intimation to take possession is sent by the DEVELOPER, failing which DEVELOPER will be entitled to resume the plot without any compensation and to allot the same to intending another BUYER and sale price of the plot received by DEVELOPER shall be refunded to the BUYER without any interest. Alternatively, it shall be at the sole discretion of the DEVELOPER to extend the period of construction, but in that event, the BUYER shall be liable to pay holding charges for the plot area to the DEVELOPER for the extended period as decided by the DEVELOPER."
The essence of the complaint which was laid before the Permanent Lok Adalat manifests from the following averments as contained in the petition filed by the third petitioner:-
"1.That Defendant launched a plan for integrated township popularly known as Aquapolis a at Dundahara. Ghaziabad in 2007. This township includes the multistory flats, Commercial Complex and other institutions. In his agreement letter Ansal called it highrise Lake Front Township. The copy of sale plan and advertisement brochure is enclosed herewith as Annexure-
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6. That On dt 16 April, 2009 Complainant had further paid Rs. 2,69,063/- being 10% of the plot and requested to Defendant to inform the possession for the property. At this time 80% of the payment of plot has been made to the Defendant.
Complainant has also enquired in this letter from Defendant that there is great rumor and news about dump yard of Govt. Local Body is coming in Aquapolis project or nearby and expressed his fear if such yard comes in this project and vicinity/neighbourhood of the project then nobody will be able to have their residential house in such non-living condition. Complainant requested Defendant to inform the date of possession and clarify the status of dumping yard. This letter was received in Defendant office on 23th April, 2009 and places here as Annexure 4.
No reply was given by Defendant to Complainant of this letter.
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13. On 29 Nov 2011 Complainant issued a letter to Defendant to reminding them dumping yard issue and asked for the layout map of the project indicating the position of plot and dumping yard and distance between the them, but Defendant neither gave any reply nor any details in this regards till date.
Complainant also stated that since the project is not clear even after approx. 5 years from the allotment than how the possession can be made to consumer.
However, to buy peace of mind which is also disturbed due to their demand letters and without prejudice to his rights, Complainant has made the balance payment of Rs.5,30,051 towards 100% cost of plot and Rs.60,000/- for the water connection, electric connection and infrastructure development charges.
As per the discussion with Defendant, it was agreed that accepting these payment interest mentioned in demand letter is totally waived and Defendant will not be entitled for any interest, damage etc. In future also. This fact was mentioned in our letter also through which the abvoe such payment has been made. The Defendant has accepted the payment and issued the official receipts on 14.04.2012 the for above said cost and charges. This letter and receipts are at Annexure-11.
14. On dt. 14.04.2012 again Defendant issued for the penal interest and holding charges. This letter is at Annuxure-12.
15. Complainant again replied to the Defendant that we have made all payments to them and nothing is due and asked them to clarify again dumping yard issue, layout map of the project and dumping yard. Complainant has also informed to the Defendant that no sewer line is present at site and reiterated that they have taken a plot for residential in a mini town ship where all the committed commercial center and other facilities were shown on paper. But does not exist all at site Just merely cutting the lands into plot you cannot enforce the customer to take the possession whereas the whole other site is under construction.
As on that date also the construction material is scattered at the site and dumper with dust and other building materials are moving all round for the constructions of the project. The condition of the site is such that possibility of living with the family is not possible at all at the site. This letter is at Annexure- 13.
16. That the defendant has issued the statement of account for the demand of interest for Rs.2,20,266/- and holding charges for Rs.3,00,639/- up to April 20, 2015, which are totally unwarranted. This letter is at Annexure-14.
17. The Defendant has never replied / given any details on the issue of dumping yard. Even in one of the letter of Defendant has admitted that land title was not clear. His project for mini township is far behind the its committed and even at present their does not seem any such situation on the site which was committed by Defendant and shown on its catalogue and broacher at the time of selling of plot. It is a case of fraud against the small and innocent buyer. On one side the Defendant is not able to deliver, which was committed by them and on the other side there are enjoying the 100% payment collected from the buyers.
Now they want to collect the undue charges like panel interest, holding charges etc. by threating and not giving the possession without these payments. Till date the dumping yard issue is there, and the project is also incomplete then how the Defendant can ask the holding charges and interest. In such situation, Complainant are entitled for interest for other payments as the project is not delivered by Defendant, and they should also be penalized for their deficiency in services."
The Court also deems it relevant to refer to the following facts as recorded in the report submitted by the Commissioner before the Permanent Lok Adalat.
^^eSus fujh{k.k fd;k rks ik;k fd ml le; fefDlax IykUV cUn gS ysfdu vkl ikl dbZ cgq eaftys v/kZ fufeZr Vkojksa esa dqN fuekZ.k dk;Z py jgk gSA lEiw.kZ Vkmuf'ki eq[;r% nks fgLlksa esa cVh gqbZ gSA if'pe nf{k.k dh vksj Hkw[k.M gS o mRrj&iwoZ dh vksj vf/kdka'kr% cgqeaftys Vkoj gSaA valy yS.MekdZ ds izfrfuf/k }kjk crk;k x;k fd Hkw[k.Mksa dh la[;k 250 gSA ;g Hkh crk;k x;k fd dqy Hkw[k.Mkas ds yxHkx 90 izfr'kr Lokfe;ksa dks vf/kiR; fn;k tk pqdk gS rFkk vc rd yxHkx nl Hkouksa dk fuek.kZ iw.kZ gks pqdk gS o pkj ikap fuek.kkZ/khu gSA eS vf/kdka'kr% fookfnr Hkw[k.M ls fn[kkbZ ns jgs FksA dqy cgqeaftys Vkojksa dh la[;k rsbZl crk;h x;h ftuesa ls 13 ds Structure dk fuekZ.k fd;k x;k gS vkSj 04 Vkojksa ds fo"k; esa occupancy certificate izkIr dj pqdk gSA lEiw.kZ Vkmuf'ki esa pkj Ldwy izLrkfor gS ftuesa ls nks dk fuekZ.k fd;k tk pqdk gSA Vkmuf'ki esa vHkh rd fpfdRlk lqfo/kk lqfo/kk gS dksbZ vLirky o uflZax gkse ugh cuk;k x;k gS] Fkkus dk fuekZ.k Hkh ugh fd;k x;k gSA eSus fujh{k.k esa ik;k fd fefDlax IykUV vkSj fuek.kkZ/khu Vkojksa o Vkmuf'ki ds Hkw[k.M okys Hkkx ftlesa lM+d ikdZ vkfn dh lqfo/kk miyC/k gS mls lqj{kk o iznw"k.k ls cpkus dh n`f"V ls csjhdsfVax yxkdj i`Fkd ugh fd;k x;k gSA fuek.kZk/khu Vkojksa dks ,u0 th0 Vh0 ds vkns'k ds ckotwn tkyh ls ugh Vkmuf'ki es Hkw[k.Mksa o Vkojksa dh vksj tkus dk eq[; ekxZ ,d gh gSA Jh foosd xqIrk }kjk crk;k x;k fd blh ekxZ ls flesaV vkfn vU; fuekZ.k lkexzh ds Vªd o MEij vkfn xqtjrs gS rks dkQh /kwy o flesUV vkfn okrkoj.k esa mMrk gSA eSus Lo;a ns[kk fd fefDlax IykUV dk tks igqap ekxZ gS og vHkh dCtk gS rFkk fuf'pr #i ls ml ij fuek.kZ lkexzh ds Vªd ds MEij vkfn ds pyus o fefDlax IykUV pyus ls dkQh iznw"k.k vo'; mRiUu gksxkA mDr Jh foosd xqIrk }kjk eq>s ;g crk;k x;k fd fuekZ.kk/khu Vkojksa ds tks etnwj gS] csjhdsfVax u gksus ds dkj.k muls o Vªdksa vkSj MEijksa ds dkj.k iwjk {ks= jkf= ds le; fo'ks"k #i ls vlqjf{kr gSA^^ At the very outset it would be pertinent to briefly elucidate and explain the concept and key elements of what is commonly understood as an "integrated township". An allottee in an "integrated township" envisages and visualizes a consolidated and unified project complete and self sufficient in all respects. An integrated township, which may comprise of condominiums and residential plots, is understood and expected to comprise of an amalgam of various elements which together would make it self-sufficient and enhance the quality of life within it. Apart from making provision for roads, street lighting, sewer lines and waste treatment measures therein, it would also be expected to include supportive and shared facilities attendant to the basic infrastructural amenities referred to above. These may extend to establishment of supportive facilities that may be promised by the developer such as a commercial center, medical center, recreational facilities and security to name a few. These "gated communities", as we have come to commonly describe such projects, are secured communes which not merely provide a residence to its occupants but also provide to them shared and concomitant facilities within the premises itself so as to make it self-sustaining, convenient and thus enhancing the over all experience of residing therein.
Undisputedly, the residential plot in question was situate in the integrated township that the petitioner proposed to develop. The integrated township was described by the petitioner itself as comprising of residential plots, high rise towers, commercial facilities and other supportive infrastructural amenities. The petitioner chose to describe the township as a high-rise lake front township. It was with the aforesaid project concept in mind that the third respondent entered into a contract with the petitioner. From the contents of the Commissioner report which was submitted before the Permanent Lok Adalat, however, it comes to light that out of a total of twenty three towers which were proposed to be constructed, occupancy certificates had been granted only in respect of four. The Commissioner further noted the assertion of the petitioner that 90% of the allottees had been supposedly granted possession. The inherent and manifest inconsistency between this assertion and the recordal of fact that occupancy certificates had been granted only in respect of four towers out of a total of twenty three which were proposed could not be explained by the petitioner. The Commissioner further notes that the proposed medical facility and Nursing Home had neither been constructed nor established. He further records in his report that the construction work within the township was ongoing and that none of the constructions had been either barricaded or secured by netting so as to control dust and pollutants generated in the course of construction activity. He also notices in his report the existence of a Cement Mixing Plant being operated as well as the continuous movement of dumpers and trucks within the township, as a result of which a large quantity of dust and other particulates shrouded the entire project site. The Commissioner also records that as per the statement of the third respondent the movement of trucks and heavy dumpers in the night on common access roads rendered the project site wholly unsafe. From the facts as recorded by the Commissioner in his report and those extracted hereinbefore, it is evident that the project site was incomplete and construction activity ongoing even in December 2017 when it was inspected on the directions of the Permanent Lok Adalat.
The petitioner, however, challenges the recordal of facts by the Commissioner on the strength of the provisions made in Schedule -I to the Agreement and contends that since the payment of instalments was linked to different stages of development, it must be presumed that all infrastructural work had been completed. Sri Shukla in his submissions also laid emphasis on this aspect and urged the Court to accept as a fact that all civil and infrastructural work had been completed since payments were demanded in accordance with the provisions of Schedule 1. It was on this basis that it was principally urged that the facts to the contrary as recorded by the Commissioner must be ignored. This Court however finds itself unable to accept this submission in light of the unambiguous position of facts obtaining at the ground level as encapsulated in the report of the Commissioner. The report of the Commissioner as accepted by the Permanent Lok Adalat and the recordal of facts therein cannot be ignored merely on the basis of the provisions made in Schedule 1 of the agreement. In any case the stage of development of a project is a question which for obvious reasons cannot be left to be adjudged or ascertained on the tenuous thread of a presumption. It is essentially a question of fact to be established on the basis of evidence of respective parties. It is only the evidence which is placed on the record that is liable to be evaluated in order to ascertain the veracity of the rival claims. The petitioner in the present case has been unable to assail the findings recorded by the Commissioner on the strength of any cogent or reliable evidence that may have convinced this Court to reject that report. The submission as addressed at the behest of the petitioner in this respect is liable to be and is consequently rejected.
It is also pertinent to note that while the petitioner in Paragraph -31 of the writ petition avers that 150 allottees accepted possession and have been living in the project since 2010, this fact is sought to be established on the strength of particulars set out in a chart appended at Annexure -12 of the writ petition. Annexure -12 to the writ petition makes interesting reading. It establishes that none of the 158 allottees whose particulars find mention therein were granted possession in Sushant Aquapolis, the project in question. In fact Annexure 12 to the writ petition clearly evidences all the 158 allottees mentioned therein having been adjusted in different projects of the petitioner. It is evident therefore that the petitioner has made a statement on affidavit which if not incorrect is at least misleading.
That takes the Court then to the issue of the waste facility that was proposed to be established by the Municipal Corporation, Ghaziabad adjacent to the project site and appears to have been the main bone of contention between the parties. As per the disclosures made by the petitioner itself, the construction of the proposed waste treatment facility was stayed by the N.G.T. as late as in December 2016. As per the admitted case of the petitioner, the proposal of the waste site was dropped by the Municipal Corporation, Ghaziabad only in 2018. From these disclosures as made by the petitioner it is evident that the specter of the proposed waste facility continued to hover upon the project right up to 2016 when the NGT intervened and issued an order of restraint. It is pertinent to note that the petitioner does not refer to any other decision of the local body that may have indicated that the proposal had been shelved at any time prior to 2016. In fact the petitioner has itself disclosed that the project was dropped only in 2018. The petitioner was compelling the petitioner to take possession and commence construction in 2010 when at that time a waste-dumping site was proposed to be established adjacent to the project. In case the waste facility was to be established, it would have, undeniably, adversely impacted the viability of a residential house being established in its immediate vicinity. It would have undisputedly created a wholly pernicious environment. Significantly, though the allotment was transferred to the petitioner in 2008, the project had not been completed even in 2017. The petitioner also candidly admits to the delay in completion of the project in paragraphs 34, 35, 36 and 37 of the writ petition. In the considered view of the Court, it is in the aforesaid factual backdrop that the claim for penal interest and holding charges is liable to be evaluated.
In the present case it has come on record that while the petitioner had held out and promised the establishment of a commercial center, a medical center and hospital within the integrated township, none of these promised amenities had been established even in 2017 when the Commissioner visited the project site. In fact his report as submitted before the Permanent Lok Adalat clearly proves that the residential towers were being built and construction activity ongoing. If the environment at the project site were such as described and captured in the report of the Commissioner, it would be wholly unfair and inequitable to hold the allottee to be bound to take possession and commence construction. Where conditions within the integrated township are established to be uninhabitable or unlivable, the developer cannot compel the allottee to commence occupation of a residence. It would amount to compelling the allottee to live and breathe in an incomplete concrete labyrinth. In the present case, the third respondent was constrained to enter into a standard form contract desirous of constructing a residential house in what was touted to be a lake-facing oasis. It has, however, been established from the record that this ultimately turned out to be a misleading mirage. Additionally the Court notes that the petitioner itself admits to the delay in the completion of the project. It has also failed to establish that the report of the Commissioner was patently incorrect or was liable to be debunked. As per the material placed by the petitioner itself all 158 allottees of the project were adjusted in different projects. Viewed in that backdrop the Court finds that the demand of penal interest and holding charges is rendered unsustainable.
C. The validity of the stipulations contained in the agreement executed between the parties which are assailed on the ground of being unconscionable and thus unenforceable.
Coming then to the validity of the individual clauses of the agreement, the Court notices that they were unilaterally loaded and framed in favour of the petitioner. The payment schedule forming part of the agreement required the allottee to pay all moneys by the time possession was offered. In terms of clause 11 the timely payment of instalments was described to be the essence of the contract. It also entitled the petitioner to levy interest @ 18% on the defaulted amount in case it chose not to cancel the allotment and forfeit the moneys paid. Clause 14 of the agreement denuded the buyer from the right to claim damages or compensation in case of delay in completion of the project on account of a force majeure. This clause itself is framed in expansive terms relieving the developer completely from being held accountable for delays and disruptions in implementation of the project. The force majeure events extended from a non-availability of building material to disputes that the developer may have with the construction agency engaged by it. The buyer was deprived of the right to seek cancellation of allotment with absolute discretion in this respect vesting in the developer. Clause 17, which deals with the levy of holding charges, mandates the levy of that charge in case the allottee fails to commence construction within 3 years of allotment and where the lapse in that respect is condoned by the developer. Significantly this clause neither stipulates the rate nor does it prescribe the manner in which holding charges would be computed. Sri Shukla, learned counsel for the petitioner, even in the course of his oral submissions could not explain the basis on which the holding charges had been computed.
More fundamentally the Court is of the firm view that the petitioner cannot be legally permitted to enforce the terms of the contract in a manner that is patently one sided and unfair. A developer cannot be permitted to assert that while a failure on its part to abide by contractual obligations are liable to be condoned, those operating upon the allottee must be strictly enforced. In such situations where the stage of development of the project is such that it is rendered unsuitable for living, an allottee cannot be required to fulfill his/her part of the bargain. The developer cannot be legally permitted to enforce the terms of the contract in such a partisan fashion.
In law, for a contract to be held as valid, it must be informed by the essential attributes of reciprocity. An agreement which is constructed on the basis of mutual and reciprocal obligations cannot be interpreted so as to permit one party to completely renege from its obligations while holding the other party bound inviolably to discharge its burden. The Court is of the considered view that this aspect assumes added significance when it finds that the position of parties places one in an unfair bargaining position. As noted above, the third respondent had no option but to accept the terms and conditions embodied in the standard form contract. The stipulations contained therein left that respondent with no leverage or negotiating space. While the project remained incomplete and conditions on site inhabitable, the petitioners expected the third respondent to complete construction and occupy the plot. The issue of the proposed waste treatment facility hovered ominously over the entire project. That issue attained quietus only in 2018 when the project was ultimately shelved by the Municipal Corporation, Ghaziabad. Viewed in that background the Court is of the firm view that the imposition of penalty and holding charges cannot be legally enforced against the third respondent. It would be wholly inequitable to recognise the petitioner as being entitled to enforce these clauses of the agreement in light of a manifest failure on its part to fulfill its obligations under the agreement. More importantly those clauses are clearly unconscionable having been imposed upon the third respondent under a standard form contract leaving him no option but to accept the conditions as imposed by the petitioner.
Dealing with an identical issue, the Supreme Court in a recent decision rendered in the matter of Pioneer Urban Land And Infrastructure Limited Vs. Govindan Raghvan3 held thus: -
"6.1. In the present case, admittedly the appellant builder obtained the occupancy certificate almost 2 years after the date stipulated in the apartment buyer's agreement. As a consequence, there was a failure to hand over 14 possession of the flat to the respondent flat purchaser within a reasonable period. The occupancy certificate was obtained after a delay of more than 2 years on 28-08-2018 during the pendency of the proceedings before the National Commission. In LDA v. M.K.Gupta [(1994) 1 SCC 243], this Court held that when a person hires the services of a builder, or a contractor, for the construction of a house or a flat, and the same is for a consideration, it is a "service" as defined by Section 2 (1)(o) of the Consumer Protection Act, 1986. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service. In Fortune Infrastructure v. Trevor D'Lima [(2018) 5 SCC 442] 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.
...
6.7 In Central Inland Water Transport Corporation Limited and Ors. v. Brojo Nath Ganguly [(1986) 3 SCC 156], this Court held that :
"89. ... Our judges are bound by their oath to "uphold the Constitution and the laws". The Constitution was enacted to secure to all the citizens of this country social and economic justice. Article 14 of the Constitution guarantees to all persons equality before the law and equal protection of the laws. .... This principle is that the courts will not enforce and will, when called upon to do so, strike down an unfair and unreasonable contract, or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power. It is difficult to give an exhaustive list of all bargains of this type. No court can visualize the different situations which can arise in the affairs of men. One can only attempt to give some illustrations. For instance, the above principle will apply where the inequality of bargaining power is the result of the great disparity in the economic strength of the contracting parties. It will apply where the inequality is the result of circumstances, whether of the creation of the parties or not. It will apply to situations in which the weaker party is in a position in which he can obtain goods or services or means of livelihood only upon the terms imposed by the stronger party or go without them. It will also apply where a man has no choice, or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept a set of rules as part of the contract, however unfair, unreasonable and unconscionable a clause in that contract or form or rules may be. This principle, however, will not apply where the bargaining power of the contracting parties is equal or almost equal. This principle may not apply where both parties are businessmen and the contract is a commercial transaction. ... ... These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances."
(emphasis supplied) 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 08-05-2012 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.
7. In view of the above discussion, we have no hesitation in holding that the terms of the apartment buyer's agreement dated 08-05-2012 were wholly one-sided and unfair to the respondent flat purchaser. The appellant builder could not seek to bind the respondent with such one-sided contractual terms."
Viewed in light of the principles enunciated in Pioneer Urban the Court finds itself unable to sustain the impugned levy of penal interest and holding charges. The third respondent is consequentially found and held entitled to the possession of the allotted plot without penal interest and holding charges being charged or levied.
Accordingly and for the reasons afore noted, the writ petition shall stand disposed of in the following terms. While the impugned awards rendered by the Permanent Lok Adalat on 28 and 29 June 2019 for reasons assigned in this judgment shall stand quashed, the third respondent is held entitled to the possession of the plot in dispute. The demand towards penal interest and holding charges as raised by the petitioner is held to be unenforceable.
In order to avoid the specter of separate and inconsistent awards being rendered in the future, the Court requests the Registrar General of the Court to forward a copy of this judgment to the Secretary, State Legal Services Authority to be circulated amongst all the Permanent Lok Adalats established in the State for future guidance.
Order Date: - 15.10.2019 LA, Arun/-
(Yashwant Varma, J.)