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2018 (3) TMI 197

use 11 of the collaboration agreement is categorical that the “entire amount required or payable for carrying out construction, development, completion” was wholly on account of the builder. This Clause can have only one interpretation. The amount required or payable for carrying out the construction includes the VAT. The VAT amount would be covered clearly under the terminology “statutory and other fees” as contained in Clause 11. Thus, the demand for VAT charges from the owner cannot be on the basis of the collaboration agreement. The builder undertook the construction for his own benefit and not the owner’s benefit. The acquiring of ownership rights by undertaking construction shows that the collaboration agreement was not a contract for .....

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) and the Respondent/Plaintiff (hereinafter builder ). The collaboration agreement was in respect of property bearing no. D-49 situated at Greater Kailash, Enclave-II, New Delhi measuring 408.33 sq. yds (hereinafter, suit property ).. 2. The relevant clauses of the Collaboration agreement are set out herein below: 1………… 2. That the Builder shall demolish the existing structure on the said plot of land and develop, construct and build a building consisting of Basement, Stilt, Ground Floor, First Floor, Second Floor and Third Floor with terrace, at its own costs and expense, after getting the building plans and architectural drawings sanctioned from the authorities concerned. 3…………10 11 .....

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Floor, Third Floor, terrace over and above the Third Floor, along with stilt area, servant quarter, common area, etc. was to fall in the share of the owner. The entire First Floor, a servant quarter along with use of common area was to fall in the share of builder. The owner would therefore have 77.5% of the undivided indivisible ownership rights in the plot and the remaining 22.5% was to vest with the builder. In addition to the ownership of the First Floor, the builder was to pay to the owner a sum of ₹ 2.25 crores as consideration against the rights in the property. 4. The owner handed over vacant possession of the property to the builder, on 13th October, 2012. Eighteen months period was stipulated for completing the building. Th .....

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agreement. The said decree was passed on 5th November, 2015. Thereafter, the owner filed an application under Order XXXVII Rule 4 seeking setting aside of the decree which was heard and decided by the order dated 15th February, 2017. 7. Counsel for the Appellant/owner submits that this is a case where liability has been fastened on the owner incorrectly, inasmuch as, under the collaboration agreement, the owner was not liable to make any payment of VAT. The construction that was done by the builder was as per the collaboration agreement and as per the said agreement, the liability of statutory dues is of the builder. It is further submitted that there is no proof placed on record to show that the amount was actually deposited with the auth .....

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o demolish the entire existing structure and develop, construct and build the entire building. In lieu of carrying out the construction and upon payment of ₹ 2.25 crores, the builder was to acquire ownership rights in the First Floor of the property. Thus, the builder s role in this case was not that of a service provider' but that of an owner. The builder was undertaking the construction activity, not on behalf of the owner but on his own behalf. As per clause 11, the cost of construction and other costs were to be borne purely by the builder. As per clauses 21 all taxes including house tax, property tax, water and electricity charges and other dues and demands from the date of handling over the vacant possession and during the c .....

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dly, the VAT charges which have been claimed relate to the period of construction and not thereafter. The transaction for which the VAT is being demanded from the owner is, as per the invoice, for the period January, 2013 which is during the period of construction. This was clearly not the responsibility of the owner. 13. The conduct of the builder has also not been bona fide, inasmuch as, the sale deed for the First Floor was entered into on 15th January, 2014. In the said sale deed, the entire cost of construction and the TDS etc., have been taken into account. Until then, there was no demand for the VAT charges and the invoice is claimed to have been raised for the first time only on 31stOctober, 2014. The invoice has clearly been raised .....

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