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2019 (4) TMI 231

awarded by the National Commission with Interest - discharge of loan amount - Tripartite Loan Agreement - Held that:- 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 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. - 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. - 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 co .....

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upancy Certificate as per the stipulations in the Agreement. 3.3. The Respondent - Flat Purchaser filed a Consumer Complaint before the National Commission on 27.01.2017 alleging deficiency of service on the part of the Appellant - Builder for failure to obtain the Occupancy Certificate, and hand over possession of the flat. The Respondent prayed inter-alia for :- • Refund of the entire amount deposited being ₹ 4,48,43,026/-, along with Interest @18% p.a.; and • Compensation of ₹ 10,00,000/- for mental agony, harassment, discomfort and undue hardship; and • Refund of the wrongfully charged taxes including Service Tax, and other charges along with Interest @18% p.a.; and • Litigation Costs of ₹ 1,00,000/-. 3.4. On 06.02.2017, the National Commission passed an ex-parte Interim Order restraining the Appellant - Builder from cancelling the allotment made in favour of the Respondent - Flat Purchaser during the pendency of the Consumer Case. 3.5. During the pendency of the proceedings before the National Commission, the Appellant - Builder obtained the Occupancy Certificate on 23.07.2018, and issued a Possession Letter to the Respondent - Flat Purcha .....

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omoter shall return the entire amount with interest as well as the compensation payable. The rate of interest payable by the promoter to the allottee or by the allottee to the promoter, as the case may be, shall be the State Bank of India highest marginal cost of lending rate plus two percent. … (emphasis supplied) However, for the period when the Interim Order dated 06.02.2017 was in operation, which restrained the Appellant - Builder from cancelling the Respondent s allotment, no Interest was awarded. The National Commission ordered payment of Interest from the date of each installment till 05.02.2017; and from the date of the Order passed by the Commission till the date on which the amount would be refunded. 3.9. Aggrieved by the Order dated 23.10.2018 passed by the National Commission, the Appellant - Builder preferred the present statutory Appeal under Section 23 of the Consumer Protection Act, 1986. 4. Mr. C.A. Sundaram, Senior Counsel appeared for the Appellant - Builder, and drew our attention to the following Clauses in the Apartment Buyer s Agreement dated 08.05.2012 viz. Clause 11.5 (ii), (iv) and (v) along with Clause 20 which read as under : 11.5. (ii) In the ev .....

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wise shall lie against the Developer nor shall be raised otherwise or in any manner whatsoever by the Allottee. Save and except to this limited extent, the Allottee shall not have any right to cancel this Agreement on any ground whatsoever. (emphasis supplied) 4.1. It was submitted that the Respondent - Flat Purchaser was not entitled to refund of the amount deposited, since the Apartment Buyer s Agreement was not terminated by the Respondent - Flat Purchaser in accordance with Clause 11.5 (ii) of the Agreement, which stipulates that the allottee has to terminate the Agreement by giving a Termination Notice of 90 days to the Developer. Since the Respondent - Flat Purchaser had not terminated the Agreement by a written notice as per Clause 11.5, the Builder could not sell the apartment, and refund the money to the Respondent - Flat Purchaser. On the contrary, the Respondent filed a Consumer Complaint and obtained an ex-parte Interim Order dated 06.02.2017 restraining the Builder from cancelling the allotment made in favour of the Respondent. 4.2. It was further submitted that if the filing of the Consumer Complaint is considered as an act of termination of the Agreement, then the sa .....

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urther submitted that the Clauses of the Agreement were one-sided. As per Clause 6.4 (ii) of the Apartment Buyer s Agreement, the Appellant Builder could charge Interest @18% p.a. for delayed payments. However, the Appellant - Builder was not required to pay equivalent Interest to the Respondent - Flat Purchaser for delay in handing over possession of the flat. On the contrary, as per Clause 11.5 (iv) of the Agreement, in case of delay on the part of the Appellant - Builder in handing over possession of the flat, the Respondent - Flat Purchaser was entitled to Interest @9% p.a. only. 5.3. The Respondent further submitted that the National Commission had ordered payment of Interest as per the statutory Rules i.e. Rule 15 of the Haryana Real Estate (Regulation and Development) Rules, 2017 @10.7% S.I. p.a. The Respondent - Flat Purchaser submitted that he had obtained a loan for ₹ 3,30,00,000/- from Standard Chartered Bank to purchase the flat in question, and had entered into a Tripartite Loan Agreement with the Bank and the Builder. The Respondent - Flat Purchaser had to pay Interest @10% p.a. for servicing the loan for the entire period. Hence, Interest @10.7% S.I. p.a. award .....

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Clauses relied upon by the Builder were wholly one-sided, unfair and unreasonable, and could not be relied upon. The Law Commission of India in its 199th Report, addressed the issue of Unfair (Procedural & Substantive) Terms in Contract . The Law Commission inter-alia recommended that a legislation be enacted to counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that : A contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties. 6.4. A perusal of the Apartment Buyer s Agreement dated 08.05.2012 reveals stark incongruities between the remedies available to both the parties. For instance, Clause 6.4 (ii) of the Agreement entitles the Appellant - Builder to charge Interest @18% p.a. on account of any delay in payment of installments from the Respondent - Flat Purchaser. Clause 6.4 (iii) of the Agreement entitles the Appellant - Builder to cancel the allotment and terminate the Agreement, if any installment remains in arrears for more than 30 days. On the other hand, as per Clause 11.5 of the Agreement, if the Appellant - Builder .....

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e 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 contrac .....

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cancellation of the allotment was passed; and thereafter, from the date of the Commission s final Order till the date on which the amount is refunded with Interest. 9. We see no illegality in the Impugned Order dated 23.10.2018 passed by the National Commission. The Appellant - Builder failed to fulfill his contractual obligation of obtaining the Occupancy Certificate and offering possession of the flat to the Respondent - Purchaser within the time stipulated in the Agreement, or within a reasonable time thereafter. The Respondent - Flat Purchaser could not be compelled to take possession of the flat, even though it was offered almost 2 years after the grace period under the Agreement expired. During this period, the Respondent - Flat Purchaser had to service a loan that he had obtained for purchasing the flat, by paying Interest @10% to the Bank. In the meanwhile, the Respondent - Flat Purchaser also located an alternate property in Gurugram. In these circumstances, the Respondent - Flat Purchaser was entitled to be granted the relief prayed for i.e. refund of the entire amount deposited by him with Interest. 10. The Civil Appeals are accordingly dismissed, and the Final Judgment .....

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