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2015 (6) TMI 330 - NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI

2015 (6) TMI 330 - NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI - TMI - Delay in possession of flats - Seeking delivery of flats or alternative payment of current Market value - Compensation on account of loss of rental income - Compensation @ ₹ 5/- per sq. ft. as per the agreement & compounded interest @ 18% p.a - Compensation on account of their mental torture, agony etc.- Increase in service tax with effect from 01.6.2015 - Held that:- It is an undisputed proposition of law .....

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e.

The builder charges compound interest @ 18% per annum in the event of the delay on the part of the buyer in making payment to him but seeks to pay less than 3% per annum of the capital investment, in case he does not honour his part of the contract by defaulting in giving timely possession of the flat to the buyer. Such a term in the Buyer’s Agreement also encourages the builder to divert the funds collected by him for one project, to another project being undertaken by him.Such a .....

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al financial burden on them but also give some monetary compensation to them for their sufferings on account of the delay in handing over possession of the flat purchased by them.

I am of the considered view that the opposite party should handover possession of the apartments booked by the complainants on or before the last date stipulated in the letter of the opposite party dated 27-05-2015. In the cases of those complainants who are the initial allottees of the apartments or who acq .....

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the opposite party at the time of purchase by them, they could not have anticipated that the builder will not be able to honour its commitment, as regards the stipulated date of delivery of possession. No separate compensation for the mental agony, harassment and suffering needs to be paid by the opposite party to the complainants.

However, in the case of those complainants who acquire the flats by way of resale more than one year after the initial allotment, the opposite party shou .....

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18% per annum, for each day there is delay, beyond the date stipulated in the said letter dated 27.05.2015, in delivering possession to the complainants. - CONSUMER CASE NO. 427 OF 2014, 428 OF 2014, 430 OF 2014, 432 OF 2014, to 440 OF 2014, 453 OF 2014 to 456 OF 2014, 465 OF 2014 to 468 OF 2014, 474 OF 2014, 475 OF 2014 490 OF 2014, 502 OF 2014 - Dated:- 8-6-2015 - MR. V.K. JAIN, J. For the Appellant : Mr. Sushil Kaushik, Advocate For the Respondent : Mr. Sandeep Sharma, Advocate, Mr. Mohinder .....

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ents. In CC No. 433/2014, 434/2014, 466/2014, 474/2014, 475/2014 and 502/2014, the apartments were initially allotted to some other persons, from whom they were later purchased by the concerned complainants. However, there was no change in the date stipulated in the Buyers Agreement for delivery of possession of the flat. The grievance of the complainants is that neither the possession of the apartments has been given to them nor is the construction complete though the last date stipulated in th .....

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sation @Rs. 5/- per sq. ft. as per the agreement entered between the parties and compound interest @18% p.a. with effect from the stipulated date of possession. The complainants are also seeking compensation on account of their mental torture, agony etc. 2. The complaints have been resisted by the OP on several grounds though it has admitted the agreement for sale of apartments to them. It is also stated in the reply that though the possession of the apartments was proposed to be delivered to th .....

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mmon-wealth games organised in October 2010 resulted in extreme shortage of labour in the NCR region. (d) There was shortage of labour due to implementation of social schemes like National Rural Employment Guarantee Act (NREGA) and Jawaharlal Nehru Urban Renewal Mission (JNNURM). (e) There was extreme shortage of water in NCR region, which was further accentuated due to orders of Punjab and Haryana High Court stopping of use of ground water for construction activities. (f) There was shortage of .....

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omplaint is maintainable only before the concerned State Commission and not before this Commission. 4. During the course of hearing, the learned counsel for the opposite party placed on record a letter dated 27.05.2015 offering possession as per the following schedule:- Block Completion of construction & application of OC Offer of possession of apartments A-9 to A-11 31st Dec-15 28th Feb-16 A-1 to A-4 31st May-16 31st Jul-16 A-5 to A-8 30th Sep.-16 30th Nov-16 B-1 to B-5 31st Dec-16 28th Feb .....

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oresaid letter that if possession is delayed beyond the above-mentioned time limits, revised penalty shall be ₹ 13/- per sq. ft. per month. 5. During the course of hearing, the learned counsel for the complainants stated, on instructions, that the complainants are not interested in taking refund of the money paid by them to the opposite party and they want to have possession of their respective flats even if the said possession is to be delivered in terms of the revised date of possession .....

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other requirements as indicated by the Developer, the Developer proposes to offer possession of the Apartment within a period of 36 months from the date of signing of this agreement and upon execution and registration of Conveyance Deed in favour of the Apartment Allottee (s). It is understood by the Allottee that the possession of various Towers/ Blocks comprised in the complex shall be ready and shall be completed by the Developer in phases and handed over to the allottees of the completed To .....

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or enemy action or terrorist action or earthquake or by any act of GOD or due to any reasons or circumstances beyond the control of the Developer. If consequent upon any new legislation or amendment of existing rules, regulations or orders issued by the Government or any statutory authority the construction of the complex and the Apartment is suspended or stopped or delayed. Clause 4.c.ii) of the aforesaid Agreement reads as under:- (ii) Similarly, the Developer shall be liable to pay compensati .....

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n case the delay is occasioned in offering possession by the developer, the developer shall be liable to pay. 7. It would thus be seen that but for the exceptional circumstances mentioned in Clause 4.a.ii, the opposite party was required to hand over the possession of the apartment to the flat buyers within 36 months from the date of signing the agreement with them. The exceptional circumstances which could justify delay in hand over the possession of the apartments were:- (a) Lock-out (b) Strik .....

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pping suspending or delaying the construction of the complex in which apartments were agreed to be sold to the complainants. There is no allegation of any lock-out or strike by the labour at the site of the project. There is no allegation of any slow-down having been resorted to by the labourers of the opposite party or the contractors engaged by it at the site of the project. There was no civil commotion, war, enemy action, terrorist action, earthquake or any act of God which could have delayed .....

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construction of the project. 9. As regards, alleged shortage of labour, I find that no material has been placed on record by the OP that despite trying, it could not be get labourers to complete the construction of the project within the time stipulated in the Buyers Agreement. It was submitted by the learned counsel for the complainants that ordinarily big builders such as the OP in these cases, are contracting/sub-contracting the construction work to the contractors engaged by them, instead o .....

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vailable in the market. Therefore, it cannot be accepted that the opposite party could not have arranged adequate labour, either directly or through contractors/sub-contractors, for timely completion of the project. As regards the alleged shortage of water, bricks and sand in the market, I find that there is no evidence filed by the OP, to prove that it was unable to procure water, sand and brick in adequate quantity. This is also their case that the notification of the Government, being relied .....

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rlier, there is no evidence of the opposite party having invited tenders after awarding the work of project in question to the contractors/sub-contractors and there being no response to such tenders. Therefore, I find no merit in the plea that the completion of the project was delayed due to non-availability of water, sand and bricks in adequate quantity. As regards common-wealth games projects work, on those projects was complete before the games were held in October 2010. The project in questi .....

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nstruction of the apartments cannot be attributed to any of the reasons mentioned in clause 4.a.ii of the Buyers Agreement. 10. Since the delay in construction of the apartments could not be justified by the OP, it is required to pay compensation to the flat buyers. The contention of the learned counsel for the OP is that such compensation has to be calculated @ ₹ 5/- per sq. ft. of the super area of the apartment for the period of delay in offering the possession beyond the period indicat .....

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as stipulated in clause 2.c of the Buyers Agreement, there is no reason why the opposite party should not pay interest at the same rate to them, as compensation. The learned counsel for the parties, however, admitted that the current interest of taking housing loans from the banks is about 10% p.a. though it had shot up to 11.5% per annum in last few years. It is also an admitted position that had the complainants deposited their money with a bank in a FDR instead of investing in the project of .....

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ains certain contractual terms, as rightly pointed out by Mr. R.F. Nariman, learned senior counsel, that normally parties are bound by such contract; it is for the party to establish exception in a suit. When a party to the contract disputes the binding nature of the signed document, it is for him to prove the terms in the contract or circumstances in which he came to sign the documents need to be established. It is true, as contended by Mr. M.N. Krishnamani, that in an appropriate case the Trib .....

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ore the Hon ble Supreme Court challenged the demand of the additional cost raised by PUDA. The demand however, was upheld noticing the aforesaid clause in the advertisement. However, a term of a contract, in my view will not be final and binding if it is shown that the consent to the said term was not really voluntary but was given under a sort of compulsion on account of the person giving consent being left with no other choice or if the said term amounts to an unfair trade practice. It was sub .....

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purchasing a plot and then raising construction on it, therefore, is not in a position to protest resist the inclusion of such a term in the Buyer s Agreement, and has to rely upon the reputation of the builder, particularly if he is a big builder such as Unitech Ltd. He also submitted that the format of the Buyer s Agreement is never shown to the purchasers at the time of booking the apartment and if he refuses to sign the Buyer s Agreement on the format provided by the builder, not only will h .....

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ese complaints. Since the contracts of all the big builders contain a term for payment of a specified sum as compensation in the event of default on the part of the builder in handing over possession of the flat to the buyer and the flat compensation offered by all big builders is almost a nominal compensation being less than .25% of the estimated cost of construction per month, the flat buyer is left with no option but to sign the Buyer s Agreement in the format provided by the builder. No sens .....

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annum of the capital investment, in case he does not honour his part of the contract by defaulting in giving timely possession of the flat to the buyer. Such a term in the Buyer s Agreement also encourages the builder to divert the funds collected by him for one project, to another project being undertaken by him. He thus, is able to finance a new project at the cost of the buyers of the existing project and that too at a very low cost of finance. If the builder is to take loan from Banks or Fi .....

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ent on this very project. This gives credence to the allegation of the complainants that their money has been used elsewhere. Such a practice, in my view, constitutes unfair trade practice within the meaning of Section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the product of the builder. Though, such a practice does not specifically fall under any of the Clauses of Section 2(r) (1) of the Act that would be immaterial consideri .....

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s to unfair trade practice or not. In support of his contention he relies upon the following observations made by the Hon ble Supreme Court in Secretary, Bhubneshwar Development Authority Vs. Susanta Kumar Mishra, (2009) 4 SCC 684: Further, any fora under the Consumer Protection Act, 1986 ( the Act , for short) before granting any relief to a complainant, should be satisfied that the complaint relates to any of the matters specified in Section 2(1)(c) of the Act, and that the complainant has all .....

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he clauses in the Buyer s Agreement were one side and they were made to sign already prepared documents. It is also alleged that some of the clauses contained in the Buyer s Agreement are totally unreasonable and in favour of the opposite party only. It is further alleged that the clause providing for compensation at the nominal rate at ₹ 5/- per square foot of the super area is unjust and exploits the complainants. It is also alleged that the opposite party has been utilizing the money of .....

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on account of the delay in construction of the flat but will also give some compensation to them for the harassment and mental agony which they have suffered all along and are likely to suffer atleast for some more time on account of the opposite party having not delivered the possession of the flat to them by the date stipulated in the Buyer s Agreement. 14. As noted earlier, the cost of the borrowing for individual home buyers is about 10% per annum though it had gone upto 11.5% in last few ye .....

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hereby that right now they do not need a flat for their personal residence and they will let out the flat on taking possession from the opposite party. The contention is that that purchase of the flat by such persons would be for a commercial purpose and, therefore, they are not consumers within the meaning of Section 2(1)(d) of the Consumer Protection Act. I, however, find no merit in this contention. The expression commercial purpose used in Section 2(1)(d) of the Act came up for consideration .....

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er s Twentieth Century Dictionary); it means connected with, or engaged in commerce; mercantile, having profit as the main aim (Collins English Dictionary) whereas the word commerce means financial transactions especially buying and selling of merchandise on a large scale (Concise Oxford Dictionary) . 6. Going by the Dictionary meaning of the expression Commerce as far as hiring or availing services are concerned, a person can be said to have hired or availed services only if they are connected .....

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nstruct for the purchaser, the purchase can be said to be for a commercial purpose only where it is shown that the purchaser is engaged in the business of purchasing and selling houses and / or plots on a regular basis, solely with a view to make profit by sale of such houses. If however, a house to be constructed by the service provider is purchased by him purely as an investment and he is not undertaking the trading of houses on a regular basis and in the normal course of the business professi .....

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osed to be constructed by the service provider, in the hope that he would get better return on his investment by selling the said house(s) on a future date when the market value of such house (s) is higher than the price paid or agreed to be paid by him. That by itself would not mean that he was engaged in the commerce or business of purchasing and selling the house (s). 7. Generating profit by way of trading, in my view is altogether different from earning capital gains on account of appreciati .....

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a commercial purpose. The objective behind acquiring accommodation is to live in it, though on a future date. Mere postponement of the date on which the purchaser has to shift to the residential accommodation does not convert the purpose for which accommodation is acquired to a commercial purpose. I, therefore, find no merit in the contention. 16. It was next contended by the learned counsel for the opposite party that since the sale consideration paid by the complainants was less than ₹ .....

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osite party to handover possession of the flat to the complainants. For the purpose of this relief, the current market value of the flat would be the pecuniary value of the service and since the said value is more than ₹ 1,00,00,000/- in each case, it cannot be disputed that only this Commission has the jurisdiction to entertain this complaint. 17. It was next contended by the learned counsel for the complainant that since the last date stipulated in the buyers agreement for giving possess .....

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prescribed in Section 24A of the Consumer Protection Act would began to run. In that case the complaint has to be filed within two years from the date on which the seller refuses to deliver possession to the buyer. However, in the present cases the opposite party did not refuse possession of the flats to the complainants at any point of time and, therefore, the cause of action continues to subsist in favour of the complainants. Reliance in this regard may be place upon the decision of the Hon bl .....

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ontention. As provided in Section 3 of the Consumer Protection Act, the provision of this Act are in addition to the other remedies available to a consumer. Therefore, the availability of arbitration as a remedy does not debar the complainant from approaching a consumer forum in a case of deficiency in the services rendered to him by the service provider or adoption of unfair trade practices by him. This issue came up for consideration of the Hon ble Supreme Court in National Seeds Corporation V .....

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umer fora would be maintainable despite their being an arbitration clause in the agreement to refer the dispute to the Arbitrator. In view of the above referred authoritative pronouncement of the Hon ble Supreme Court which was later followed by a Three Members Bench of this Commission in DLF Ltd. Vs. Mridul Estate Pvt. Ltd., R.P. No.412 of 2011 decided on 13-05-2013, the aforesaid contention advanced by the learned counsel for the opposite party is liable to be rejected. 19. For the reasons sta .....

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ith effect from the date of possession stipulated in the agreement till the date on which the possession is actually handed over to them. The persons who purchased the flats within one year of the initial allotment, ought to be treated at par with the initial allottees, because atleast two more years being still available to the opposite party at the time of purchase by them, they could not have anticipated that the builder will not be able to honour its commitment, as regards the stipulated dat .....

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vered to them. As in other cases no compensation would be payable for the first three years from the date of initial allotment of the flat. For the interregnum i.e. between three years from the date of initial allotment and three years from the date of repurchase by them, compensation shall be paid by the opposite party at the rate of ₹ 5/- per sq. ft. of the super area in terms of clause 4.c of the buyers agreement. I am awarding lesser compensation to those purchased the flat from the in .....

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he respondent the allotment was transferred in favour of the respondent. Since HUDA failed to deliver possession of the plot within the stipulated time, the respondent approached the concerned District Forum expressing grievance against non-delivery of the possession within the stipulate time. HUDA then offered possession of the plot to him and the District Forum disposed of the complaint with a direction to HUDA to pay interest to the respondent at the rate of 18% per annum from the date of dep .....

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ime of purchase that the time for performance was not stipulated as the essence of the contract and the original allottee had accepted the delay. It was, therefore, held that the respondents were not entitled to interest on the amount deposited by them. The persons who purchased flats more than one year after the date of initial allotment, could foresee that the builder will not be able to deliver the possession of the flat by the stipulated date. This is not their case that when they acquired t .....

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e awarded compound interest at the rate of 18% per annum, which was the rate at which they were to pay interest to the builder, in the event of default on their part in making timely payment. I however, find no merit in the contention. The opposite parties admittedly did not agree to pay compounded interest to the complainants @ 18% per annum in case they were not able to hand over possession of the apartments within the time stipulated in the agreement. In such a case, the complainants would be .....

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the opposite party in rendering services to him can seek and recover a just and fair compensation but cannot seek to earn profit like in a commercial venture. 21. It transpired during the course of arguments that the service tax has increased with effect from 01.06.015. Had the opposite party delivered possession in time, the complainants would have paid service tax at the pre-revised rate. I therefore, hold that the increase in service tax with effect from 01.6.2015 should be borne by the oppo .....

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ats of the complainants to them on or before the last date stipulated in its letter dated 27.05.2015; (b) The opposite party shall pay to (i) the original allottees and (ii) to those who acquired the allotment by way of repurchase, within one year of the date of the initial Agreement of their respective flats, compensation in the form of simple interest at the rate of 12% per annum with effect from 36 months from the date of the initial Agreement till the date possession is delivered to them. Th .....

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