State Consumer Disputes Redressal Commission
Ratnesh Properties Pvt. Ltd. vs Majestic Properties Pvt. Ltd. on 28 August, 2015
1
BEFORE THE STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, RAJASTHAN,
BENCH NO.3 JAIPUR
ORIGINAL COMPLAINT CASE NO: 30/2012
Ratnesh Properties Pvt. Ltd., Civil Lines,
Jaipur, Rajasthan.
..........Complainant
Vs.
1. Majestic Properties Pvt. Ltd., 1/18B, Asaf Ali
Road, New Delhi.
2. Majestic Properties Pvt. Ltd., Ajmer Road,
Jaipur.
..........Opposite Parties
Date of Order - 28.08.2015
Before:
Hon'ble Mr.Anil Kumar Mishra - Presiding Member
Hon'ble Mr.Kailash Soyal - Member
Mr.Praful Khurana & Mr.Manish Singh . . . . .
Counsels for the complainant.
Mr.Ashok Mehta & Mr.Aditya Mitruka . . . . .
Counsels for the Opposite Parties.
JUDGMENT
PER MR.ANIL KUMAR MISHRA (PRESIDING MEMBER)
1. The present complaint has been filed by Ratnesh Properties Pvt. Ltd., a Company incorporated under the Companies Act, 1956 and is represented by Mr.Arun Dhandhania, 2 one of it's Directors (hereinafter referred to as "the complainant") against the Majestic Property Pvt. Ltd., the opposite parties (OPs) initially on 08.05.2012 and then an amended complaint on 05.11.2012 with an averment that the OP No.1 is a Real Estate Developer & Builder and the OP No.2 is it's Branch Office at Ajmer Road, Jaipur. The OP No.1 published an advertisement in newspapers (Annex.1) about their launching a Residential Group Housing Complex under the name "Melange Jewels", Bhankrota, Jaipur. The complainant booked an apartment No.804 in Tower T-7 on 06.10.2006 (Annex.2) and made a payment of Rs.3,41,000/- (Annex.3) against the booking amount of the said flat. The complainant made further payment of Rs.2,84,808/- on 24.04.2008 (Annex.5) and a Flat Buyers Agreement was executed between the parties on 07.02.2009 (Annex.4). The total sale consideration of the flat was Rs.28,78,750/-. The complainant again made a payment of Rs.2,80,611/- on 27.02.2009 (Annex.6) 3 towards the installment as demanded by the OPs and thus, the complainant had made a payment of Rs.9,06,419/- i.e. almost one third of the sale consideration of the said flat till 27.02.2009.
As per clause 8.1 of the Flat Buyer Agreement, the OPs had to deliver the possession of the flat within 36 months from the date of agreement. Thus, the period of 36 months for handing over possession has already expired on 07.02.2012, but the complainant is shocked and surprised to know that said project is not even close to completion and no intimation or information has ever been sent by the OPs to the complainant on the status of development. A legal notice dated 22.02.2012 (Annex.7) has also been sent to the OPs, but they have neither handed over possession of the flat nor refunded the money and this act and conduct of the OPs amounts to deficiency in service and hence, the complaint be allowed and they be directed to handover the possession of the flat at the agreed 4 sale price of Rs.28,78,750/- or refund the entire amount of Rs.9,06,419/- with 18% interest per annum and Rs.10 Lacs as compensation against mental harassment.
2. The OPs in their reply to the complaint have submitted that the complainant is Director of Ratnesh Properties Pvt. Ltd., which is involved in the business of sale, purchase and other activities of Real Estate Properties and hence, it is involved in commercial activities. The complainant and his associates are involved in the commercial activities and hence, they are not the consumers under the Consumer Protection Act, 1986 (hereinafter referred as "the Act"). The relief prayed for in the complaint can only be granted by a Civil Court and this Commission does not have any jurisdiction to adjudicate the matter. It is true that the OPs launched a Group Housing Complex Scheme in Jaipur and almost 382 persons showed interest in purchase of 3-BHK-Flats and got themselves registered. Out of 382 persons only 18% deposited subsequent 5 installments, rest of the persons did not deposit subsequent installments. The OPs proposed to construct six towers of 86 Flats each of 3-BHK and they were keen to complete the project.
The construction beyond the stage of rafting could not be carried out due to non-payment by the applicants and it was almost impossible to raise towers due to default in payment of subsequent installments. The OPs requested the allottees to make payments as per agreed terms and conditions, but no payment was made by allottees and hence, the construction could not be carried out. An option has been given to the complainant to either opt for refund of the said amount or switch over to 2-BHK-Flats, which the OPs are presently undertaking (Annex.R1). The complaint is barred by limitation. The OPs in para 5 of their reply to the complaint have admitted that the complainant has deposited Rs.3,41,000/- at the time of registration and later on, deposited Rs.2,84,808/- on 6 24.04.2008 and deposited Rs.2,88,611/- on 27.02.2009 vide receipt Annex.6 dated 23.03.2009. The time period for construction is only a tentative period and since the development of 3-BHK-Flats has become impossible, the construction could not be undertaken on account of non- payment of installment by almost 95% of the allottees. Non-construction of 3-BHK- Flats was well within the knowledge of the complainant and the OPs were always ready to refund the amount as the construction could not be carried out, therefore, the complainant is not entitled to any interest and as such there is no deficiency in service on part of the OP and therefore, the complaint be dismissed.
3. The complainant by way of a rejoinder reiterated the facts as mentioned in the complaint and requested for the refund of Rs.9,06,419/- deposited by him with 18% interest along with Rs.20 Lacs as compensation for mental agony.
4. Mr.Arun Dhandhania submitted his affidavit on behalf of the complainant and documents 7 Annex.1-7 in support of the complaint. Mr.Prashant Sharma submitted his affidavit and document Annex.R1 in defence of the complaint.
5. We have heard the arguments of the learned counsels for the complainant and the Opposite Parties and carefully perused the record, documentary evidence and the written submissions of the parties.
6. It is an admitted fact that the complainant booked a 3-BHK-Flat in the OPs project - "Melange Jewels" at Bhankrota on 06.10.2006 by making a payment of Rs.3,41,000/- on 17.11.2006 (Annex.2) and confirmation of allotment of the flat No.804 in tower No.T-7 was communicated to him vide letter 27.02.2008 and a receipt of payment of Rs.3,41,000/- was issued on 26.02.2008 (Annex.3). A Flat Buyers Agreement (hereinafter referred to as "the Agreement") dated 18.02.2008 (Annex.4) was executed between the parties and the complainant deposited Rs.2,84,808/- on 24.04.2008 (Annex.5) and this fact has been admitted by the OPs in para-5 of 8 their reply, but it has been stated that this amount was deposited on 14.05.2008. The complainant further deposited Rs.2,80,611/- on 27.02.2009 vide receipt dated 23.03.2009 (Annex.6). Thus, it is an admitted fact that the complainant had deposited Rs.9,06,419/- till 27.02.2009 against Rs.28,78,750/-, the total cost of the flat. It is also an admitted fact that as per clause 8.1 of the agreement, the possession of the flat was to be delivered by the OPs within 36 months from the date of agreement. Thus, the possession of the flat was to be handed over to the complainant on 07.02.2012.
7. One of the contention of the learned counsel for the OPs is that this Commission does not have territorial and pecuniary jurisdiction to entertain and adjudicate the present complaint. It is true that the registered office of the OPs at New Delhi, but it's Site Office is at Bhankrota, Jaipur. Thus, one of the OPs has it's office within the territorial limits of this Commission and the initial 9 booking amount and two other installments were deposited by the complainant at Jaipur Office of OP No.2. Moreover, the Flat booked by the complainant was to be built at Jaipur and the subject matter of the dispute i.e. the flat, is situated within the local limits of this Commission. Thus, the cause of action has arisen within the local limits of this Commission and hence, as per section 17(2)(b)&(c) of the Act, this Commission has jurisdiction to entertain and adjudicate the present complaint.
8. As regards the pecuniary jurisdiction of this Commission is concerned, it is true that the complainant initially, in his complaint dated 08.05.2012, had prayed for a refund of Rs.9,06,419/- and a damages of Rs.10 Lacs and thus, the total amount was less than Rs.20 Lacs, but the total cost of the subject matter i.e. the flat, is Rs.28,78,750/- and hence, this Commission has pecuniary jurisdiction to entertain the present complaint. Besides this, the complainant by way of amendment vide order 10 dated 30.05.2012 has got an insertion in Para-(a) of the Relief Clause to the effect that the possession of the flat valued at Rs.28,78,750/- be handed over to him. Therefore, the relief prayed for in the complaint pertains to possession of the flat costing Rs.28,78,750/- and grant of compensation of Rs.10 Lacs and thus, the entire amount of the relief prayed for is within the pecuniary jurisdiction of this Commission. So, the aforesaid contentions of the learned counsel of the OPs about the jurisdiction of this Commission do not hold good and are of no avail.
9. Another contention of the learned counsel for the OPs is that there is an Arbitration Clause-25 in the agreement for the settlement of dispute between the parties and so this Commission cannot entertain the present complaint. We are not in agreement with the aforesaid contentions of the learned counsel because as per Sec.3 of the Act, the remedy available for the complainant with regard 11 to the dispute about the plot is a remedy in addition to provisions of any other law for the time being in force i.e. provision for arbitration and therefore, the complainant is at liberty to opt for either of the remedies available. The Hon'ble Supreme Court in 1996 (6) SCC 385 (M/s Fair Air Engineers Pvt. Ltd. Vs. N.K.Modi) has laid down that despite an arbitration clause in the agreement, the parties are at liberty to seek remedy before a Consumer Forum, if there is a consumer dispute and it cannot be compelled to seek remedy only by way of arbitration. Therefore, the aforesaid contention of the learned counsel for the OPs also does not hold good.
10. Another contention of the learned counsel for the OPs is that the complainant in its own name and four other associates have booked five 3-BHK-Flats for investment purpose and they are engaged in the business of Real Estate, which is a commercial activity and hence, they are not consumers under the Act. This 12 contention of the learned counsel for the OPs does not sound good and reasonable for the reasons that mere booking of five flats does not reflect that the purchase was intended for commercial purpose only. We are of the view that a commercial purpose of the premises can be inferred only, when some commercial activities is in fact carried out by the complainant in the aforesaid flats. The present flat has been booked by the complainant in it's own name (i.e. Ratnesh Properties) and one in the name of Arun Dhandhania, one in the name of the Anant Dhandhania and two other flats, one each in the name of Ratnesh Industries Pvt. Ltd., one in the name of Ratnesh Enterprises Pvt. Ltd. It is an admitted fact that Mr.Arun Dhandhania is one of the Directors of the complainant Company and the Company vide it's resolution dated 01.02.2012 (Annex.A) has authorized Mr.Arun Dhandhania to file the present complaint. We are in agreement with the contention of the learned counsel for the complainant that the Director of a 13 Company is an independent person and if the Director has entered in a transaction in his personal capacity, then such transaction would not have any nexus with the Company or any other business of the Company. Thus, a Company is a separate legal entity and identity and is independent of it's Directors and vice versa. The complainant in the present matter has booked the flat in his personal capacity and for his personal use.
11. The Hon'ble National Commission in MANU/CF/0031/2012 (Mahima Real Estate Vs. Radheyshyam Sharma) has laid down that till actual possession is given to the allottee, he will be treated as a consumer. It is only after the possession, if the premises are used for commercial purposes, the allottee cannot claim any damages for subsequent defects or deficiency in service. Thus, it cannot be presumed that the complainant intended to purchase the flat for investment or commercial purpose. Moreover, there is no legal bar that two or more flats cannot be 14 purchased by a person. In fact, number of flats that can be bought or should be bought depends on the need of an individual. In the present matter, even the possession of the flat has not been handed over to the complainant and hence, it cannot be assumed that he intended to purchase the flat/flats for any commercial purpose. Therefore, the case law in IV (2013) CPJ 221 (NC) (Sanjay Bansal Vs. Vipul Ltd. & Ors.), IV (2012) CPJ 327 (Saavi Gupta Vs. Omaxe Azorim Developers Pvt. Ltd.) and consumer complaint No.250/2012 [Singhal Finstock (P) Ltd. Vs. Jaypee Infratech (Ltd) & Ors.] decided on 01.10.2012 by National Commission do not help the OPs.
12. The learned counsel for the OPs also contended that the present matter is of such a nature that it can be decided by Civil Courts only. In this regard, we are in agreement with the arguments of the complainant that where the developer carries on the activity of construction on land and allots the residential apartments 15 and flats or plots after inviting applications from the public, then his act amounts to "service" and when the possession is not handed over to the allotteee within the stipulated period, then the delay amounts to deficiency or denial of service and such dispute is not a civil dispute. The Hon'ble Supreme Court in Lucknow Development Authority Vs. M.K.Gupta, II (1993) CPJ 7 (SC)=Manu/SC/0178/1814 has held that when possession of the property is not delivered within the stipulated period, the delay so caused is denial of service. Such disputes or claims are not in respect of immovable property but amounts to deficiency in rendering service. The Hon'ble National Commission also in I (2008) CPJ 431 (NC) Ghaziabad Development Authority Vs. R.B.Sharma, has followed the aforesaid judgment of the Hon'ble Apex Court and held that the disputes pertaining to the allotment of flat by developers to an allottee is not a civil dispute and Consumer Courts can adjudicate 16 such disputes. Therefore, in the light of the aforesaid judgments, it is also proved that the complainant is a "consumer" and the present dispute is a "consumer dispute" which can be adjudicated by this Commission.
13. Now, we will consider whether the non-
delivery of possession of the flat by the OPs amounts to any deficiency in service or not? It is an admitted fact that the complainant booked a flat No.804 in tower T-7 in the OPs project "Melange Jewels" on 27.09.2006 after making a payment of initial booking amount of Rs.3,41,000/- and an Agreement was executed between the parties on 18.02.2008. As per clause-8 of the terms and conditions of the agreement, the possession of the flat was to be handed over to the complainant within 36 months from the date of agreement. It is an admitted fact that the complainant has deposited Rs.2,84,808/- on 24.04.2008 and Rs.2,80,611/- on 27.02.2009 and thus, a total amount of Rs.9,06,419/- has been deposited by it till 27.02.2009 against 17 the cost of Rs.28,78,750/-. The time is essence of agreement as per clause-8 and the possession was to be given to the allottee within 36 months from the date of agreement. Thus, the possession of the flat had to be handed over to the complainant by 07.02.2012. Thus, the OPs had agreed to provide services to the complainant by way of delivery of a flat after getting consideration for the same. In case the OPs fail to hand over the possession of the constructed flats to the complainant within the scheduled time, then their act and conduct amounts to deficiency in service on their part.
14. It is an admitted fact that the OPs have admitted in para 3, 9, 11 & 15 of reply to the complaint that about 382 persons showed their interest in the purchase of the 3-BHK-Flats, but only 18 persons i.e. around 5% only deposited a few installments after the initial booking and thereafter, they stopped making payment and therefore, the construction beyond the stage of rafting could not be carried out. 18 There was an impossibility to carry out the work under the scheme and developing flats. They further stated that they were always ready to refund the amount to the complainant and hence, he is not entitled to any interest on the amount or any compensation. A notice (Annex.R1) has been sent to the complainant and an option has been given to him either to opt for the refund of the amount or switch over to 2- BHK-Flat. Thus, it is amply clear that the OPs are unable to construct 3-BHK-Flat and deliver the possession to the complainant in near future.
15. The learned counsel for the OPs contended that as per letter dated 07.09.2012 (Annex.R1), the OPs are ready to give possession of a 2-BHK-Flat or give a refund of the amount on the basis of cancellation of the booking at complainant's request. In this regard, clause-21.1 of the agreement provides for forfeiture of earnest money i.e. the booking amount in case of voluntarily cancellation of booking by the allottee. 19 We are in agreement with the contention of the learned counsel for the complainant that the complainant is not willing for voluntary cancellation of the booking as he is ready and willing to deposit the balance amount and get the possession of the flat. Therefore, complainant is entitled to get a refund of the entire amount deposited, as the possession of the flat has not been handed over to the complainant on account of non-fulfilment of promises by the OPs and this conduct of theirs amounts to deficiency on their part. We are in agreement with the contention of the complainant that no amount is liable for forfeiture as the complainant is not at default and it is only the conduct of the OPs, which is responsible for non-delivery of the possession of the flat.
16. The Hon'ble National Commission in II (2015) CPJ 18 (Puneet Malhotra & Ors. Vs. Parshvnath Developoers Ltd.) has held that when the complainant is at default in payment of installment, then he is liable 20 to pay an interest @ 18% p.a., whereas in case of refund to the complainant, the OPs would pay an interest @ 9% p.a. and such conditions in the agreement are arbitrary, illegal and unfair trade practice. The Hon'ble Commission further held that the OP was duty bound to complete the construction irrespective of recession of market, reduction in booking and alleged default on part of some allottees in making timely payments and when the possession was not handed over to the complainant, then the OP is liable to refund the deposited amount with 18% interest per annum. For the aforesaid reasons, the OPs are not entitled to forfeit any amount under the pretext of forfeiture of earnest money for voluntary cancellation of booking because this is not a case of voluntary cancellation of booking or default in payment of installments by the complainant, but it is a case of inability of the OPs in construction of the flats. Similar view has been taken by the National Commission 21 in I (2008) CPJ 431 (Ghaziabad Development Authority Vs. R.B.Sharma) and II (2014) CPJ 719 (Subhash Chandra Mahajan Vs. Parsvnath Developers Ltd.).
17. Thus, it is amply clear that the OPs have failed to construct the flat and handover it's possession to the complainant within the stipulated period of 36 months from the date of agreement and there appears no possibility of completion of the project in near future, then the complainant cannot wait indefinitely for delivery of possession of flat to him. The aforesaid act and conduct of the OPs amounts to deficiency in service on their part. Therefore, the compliant of the complainant deserves to be allowed.
ORDER
18. The present complaint of Ratnesh Properties Pvt. Ltd. is allowed. The Opposite Parties are directed to handover to the complainant, the possession of flat No.804 in tower T-7 of their project 22 "Melange Jewels" within three months from today, after getting balance amount of the cost of the flat. In case, it is not possible to deliver the possession of the flat, then the OPs shall pay to the complainant Rs.9,06,419/- (Rupees Nine Lac Six Thousand Four Hundred Nineteen Only) @ 18% interest p.a. from the date of filing of the complaint. The OPs shall also pay Rs.2,00,000/- (Rupees Two Lacs Only) as compensation for mental agony and Rs.25,000/- (Rupees Twenty Five Thousand Only) to the complainant against cost of proceedings.
(KAILASH SOYAL) (ANIL KUMAR MISHRA) MEMBER PRESIDING MEMBER PINKKY JAIN, UDC