Advantage Consumer

Builder directed to refund the amount along with penal interest, for inordinate delay in handing over possession.

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI

CONSUMER CASE NO. 3236 OF 2017 & 3237-3239 of 2017

HARISH CHAWLA
S/O MR. AMAR CHAND CHAWLA
R/O H-23, FIRST FLOOR, RESIDENCE GREENS, GREENWOODCITY, SECTOR-46
GURGAON. HARYANA-122001 ...........Complainant(s)
Versus
1. PURI CONSTRUCTION PRIVATE LTD. & ANR.
THROUGH ITS MANAGING DIRECTOR HAVING ITS REGISTERED OFFICE AT: 4-7B, GROUND FLOOR, TOLSTOY HOUSE, 15 AND 17 TOLSTOY MARG, NEW DELHI-110001.

2. FLORENTINE ESTATES OF INDIA LTD,
THROUGH ITS MANAGING DIRECTOR HAVING ITS REGISTERED OFFICE AT:4-7B, GROUND FLOOR, TOLSTOY HOUSE,15 AND 17 TOLSTOY MARG, NEW DELHI-110001.

...........Opp.Party(s)

BEFORE:
    HON'BLE MR. JUSTICE R.K. AGRAWAL, PRESIDENT
    HON'BLE MRS. M. SHREESHA, MEMBER

Dated : 22 Apr 2019

ORDER

MRS. M. SHREESHA, MEMBER

These Complaints have been filed under Section 21 (a) (i) of the Consumer Protection Act, 1986 (in short “the Act”) against the Opposite Parties, seeking refund of the Principal amount paid along with simple interest @ 18% p.a. from the date of each payment till the date of realisation together with compensation of ₹20,00,000/- and costs of ₹2,00,000/-.

2.   These four Consumer Complaints are being disposed of by this Common Order. For the sake of convenience, Consumer Complaint No. 3236 of 2017 (Harish Chawla Vs. Puri Construction Pvt. Ltd. & Anr.) is being taken as the lead case.

3.      The brief facts as set out in the Complaint are that the representatives of the first Opposite Party approached the Complainant to buy an Apartment in the upcoming Project of the first Opposite Party, namely, Emerald Bay (hereinafter referred to as “the Project”), in Sector 104, Village Dhanwapur, Gurgaon, Haryana and showed a very impressive, eye catching Brochure to the Complainant. The Complainant was also shown a model flat which was attractively accessorised with high end specifications. The Complainant was also informed that the all the Project approvals and licenses have been obtained by the first Opposite Party in its name and in case the Complainant made the booking immediately, the Complainant could avail the benefit of the initial pre-launch price. The Complainant was offered a construction linked payment plan. Lured by the representations and promises made by the Representatives of the first Opposite Party, the Complainant booked a 2BHK Apartment and paid ₹7,50,000/- vide cheque dated 18.01.2013. The Complainant was allotted Apartment No. 303, having super area of 1700 sq. ft., Third Floor, Tower No. B-2 in the Project Emerald Bay situated in Sector-104, Gurgaon, Haryana by the first Opposite Party vide Provisional Allotment Letter dated 25.02.2013. As per the Provisional Allotment letter, the total sale consideration was ₹1,70,86,2014/-, which included basic price, preferential location charges, development charges, club charges, car parking charges, statutory taxes etc. It is averred that the first Opposite Party demanded 25% of the total sale consideration before signing of the Builder Buyer’s Agreement and the same was duly paid by the Complainant. It is stated that after a delay of six months, the Builder Buyer’s Agreement (hereinafter referred to as “the Agreement”) was executed on 31.07.2013. It is averred that the first Opposite Party unilaterally changed some important clauses in the Agreement as compared to what was stated in the Application From. But, the Complainant was forced to sign the Builder Buyer’s Agreement as he had already paid 25% of the total sale consideration to the first Opposite Party. It is averred that as per Clause 8 of the Builder Buyer’s Agreement, Time was the essence of the Contract and as per Clause 11 (a) the construction was to be completed within 48 months from the date of the Agreement i.e. by 31.07.2017. As per Clause 41 (a) the Complainant is liable to pay interest @ 18% p.a. for any delay in making payment as demanded by the first Opposite Party. It is averred that the Complainant has paid a sum of ₹1,64,26,937/- i.e. 95% of the total sale consideration to the first Opposite Party as per the demand letters issued to the Complainant from time to time.

4.       On 05.09.2017, the Complainant sent an email to the first Opposite Party asking for the date of possession since the last date for completion of construction as per the Agreement was 31.07.2017, but the first Opposite Party failed to give any specific reply and stated that it would follow the terms of the Agreement. The Complainant sent another email to the first Opposite Party on 07.09.2017, stating that it had not replied to his query, but there was no response. The Complainant sent a reminder email on 22.09.2017, but again there was no response. Thereafter, a letter dated 26.09.2017 was received by the Complainant from the first Opposite Party and he was informed that the construction would take another 10 months and it was further stated in the letter that the building plans of the Project was proposed to be revised. In October 2017, the Complainant visited the site of construction and to his shock, found that construction of Tower B-2 was still at the initial stage. The Complainant enquired from the technical staff at the site about the completion and he was informed that the construction of Tower B-2, wherein the Complainant was allotted an Apartment, will take at least two more years to complete. Even the construction of the Club was at very initial stage.

5.       Thereafter, the Complainant visited the registered office of the first Opposite Party, but the employees of the first Opposite Party were unable to give any reliable assurance with respect to completion of construction of the Project and his request of meeting the Managing Director of the first Opposite Party was turned down. On 25.10.2017, the Complainant wrote an email to the first Opposite Party asking for refund of the money paid along with simple interest @ 18% p.a. from the dates of each payment till the date of realisation as he lost interest in the Project of the first Opposite Party due to continuous delays and inability of the first Opposite Party to offer possession. It is pleaded that as per clause 41 (a) of the Agreement the first Opposite Party was liable to charge interest @ 18% p.a. in case of any delay in payment of demands by the first Opposite Party. Therefore equally keeping parity in question, the Opposite Parties are also liable to pay the same interest rate i.e. 18% p.a. on the amount sought to be refunded.

6.       It is stated that the first Opposite Party after collecting 95% of the total sale consideration from most of the Allottees have mortgaged the entire Project without informing the Allottees on first exclusive charge basis in favour of PNB Housing Finance Limited for securing a loan of ₹1,00,00,00,000/-. It is further averred that the first Opposite Party has diverted the money collected from the Allottees of the Project to its other profitable venture as can be seen from their Balance Sheet did 31.03.2016, submitted to the Registrar of Companies. It is stated that the License dated 21.06.2012, issued by the DGTCP, Haryana was in favour of the second Opposite Party and not in favour of the first Opposite Party, therefore the first Opposite Party was not entitled to sell Apartments in the Project and collect money. It is further averred that without any prior Approvals from DGTCP, Haryana the second Opposite Party transferred the whole Project to the first Opposite Party. It is pleaded that Rule 17 of the Rules of 1976 made under the Haryana (Development & Regulation of Urban Areas) Act 1975, prohibits transfer of license, without prior approval of the DGTCP, Haryana. Even the beneficial interest viz. change in Developer, assignment of Joint Developer Rights and marketing rights in a license granted under the Haryana (Development & Regulation of Urban Areas) Act 1975 could not be done without prior Approval. It is further stated that the Apartment was sold to the Complainant on 18.01.2013, without obtaining necessary Approvals from fire department, environmental clearances etc. which were obtained later, which amounts to of unfair trade practice. Vexed with the attitude of the Opposite Parties, the Complainant approached this Commission seeking the afore-noted reliefs.

7.      The Opposite Parties filed their common Written Statement admitting to the allotment, receipt of the amount of ₹1,64,26,937/-, execution of the Builder Buyer’s Agreement dated 31.07.2013 and to Clause 11 (a), wherein the first Opposite Party has agreed to complete the construction within 48 months from the date of execution of the Agreement. It is denied that the Opposite Parties ever committed the completion of the construction and offer of possession by 31.07.2017. It is averred that the possession was to be delivered within 54 months from the date of execution of the Agreement and this Clause was subject to force majeure conditions. It is averred that this Commission has no jurisdiction to entertain the instant Complaint as Clause 57 of the Agreement provides that any dispute between the parties shall be adjudicated under the provision of the Arbitration and Conciliation Act, 1996; that the matter involves complex question of facts and law and required detailed evidence and hence only the civil court has the jurisdiction; that the Complainant is in the business of buying and selling the properties to earn profits and booked the Apartment with an intention to make profit, hence the Complainant is merely an ‘Investor’ and not a ‘Consumer’; that the Complainant was in full knowledge of the facts regarding License No. 68 of 2012 and the second Opposite Party was a party to the Agreement; that the officials for the first Opposite Party never approached the Complainant for booking of an Apartment but the Complainant out of his own volition booked the Apartment; that the Complainant never objected to the Builder Buyer’s Agreement in last four years; that the adequate mechanism for compensation is provided in case of delay in the Agreement; that the Complainant has never visited the site of construction; that the Complainant never visited the registered office of the first Opposite Party and never met officials of the first Opposite Party and that the first Opposite Party was well within his right to raise finance for construction as per Clause 31 of the Agreement. It is further submitted that only an amount of ₹29 crores is outstanding towards PNB Housing Finance Limited. It is stated that the second Opposite Party is the associate company of the first Opposite Party and adequate arrangement were made between the Opposite Parties for the development of the Project and all the requisite information had been submitted to the concerned Authorities including Haryana Real Estate Regulatory Authority (HRERA). It is averred that the construction is in full swing and the first Opposite Party shall be offering possession of the respective Apartments within agreed prescribed timelines subject to force majeure conditions. It is stated that during demonetisation period there was paucity of cash due to which the construction company could not make payment to the labourers; that there was a specific order of the National Green Tribunal to stop all construction activity in NCR; that many of the Allottees defaulted in making the payments and that all the aforenoted reasons lead to delay in construction, which was beyond the control of the Opposite Parties and falls under force majeure conditions and all the other averments made in the Complaint are denied and seek dismissal of the Complaint with costs.

8.       The Complainant filed his Affidavit by way of Evidence and marked Exhibit CW-1/1 (copy of the Brochure), Exhibit CW-1/2 (Copy of Blank Application Form), Exhibit CW-1/3 (copy of Provisional Allotment Letter), Exhibit CW-1/4 (copy of the Builder Buyer’s Agreement dated 31.07.2013), Exhibit CW-1/5 (copy of statement of Account), Exhibit CW-1/6 (colly) (copy of demand notices issued by the Opposite Parties), Exhibit CW-1/7 (copy of emails dated 05.09.2017, 07.09.2017 and 22.09.2017), Exhibit CW-1/8 (colly) (copy of letter dated 26.09.2017 sent by the first Opposite Party to the Complainant), Exhibit CW-1/9 (copy of email dated 25.10.2017), Exhibit CW-1/10 (colly) (copy of the documents submitted to Registrar of Companies by the first Opposite Party), Exhibit CW-1/11 (copy of balance sheet of the first Opposite Party as on 31.03.2016 submitted to the Registrar of Companies), Exhibit CW-1/12 (copy of license dated 21.06.2012 issued by the DGTCP), Exhibit CW-1/13 (True copy of the policy dated 18.02.2015 of the DGTCP), Exhibit CW-1/14 (colly) (True copy of RTI application dated 23.07.2016 and reply dated 16.08.2016) and Exhibit CW-1/5 (copy of calculation chart of interest and principal) on his behalf.

9.       The Opposite Parties filed their Affidavit by way of Evidence and marked Exhibit-OPW-1/1 (copy of Board Resolution of the first Opposite Party), Exhibit-OPW-1/2 (copy of Board Resolution of the second Opposite Party), Exhibit-OPW-1/3 (copy of the letter dated 30.12.2016 submitted by M/s Simplex Infrastructure), Exhibit-OPW-1/4 (colly) (copy of orders of NGT and District Administration), Exhibit-OPW-1/5 (copy of statement of account), Exhibit-OPW-1/6 (copy of the letter dated 26.09.2017 issued by the first Opposite Party), Exhibit-OPW-1/7 (colly) (latest pictures of the project) and Exhibit-OPW-1/8 (copy of communication bestowing the award for best luxury apartment) on their behalf.

10.   The undisputed facts are that the Complainants paid an amount of ₹1,64,26,937/- towards Apartment No. 303 in Tower No. B-2, in the Project ‘Emerald Bay’ situated in Sector-104, Gurgaon, Haryana and that the promised date of completion of construction was 48 months from the date of the Agreement which is 31.07.2013. Clause 11(a) of the Agreement reads as follows:
“The company based on its present plans and estimates and subject to all just exception endeavours to complete construction of the Said Building/ Said Apartment/ Villa within a period of forty eight (48) months from the date of execution of this Agreement unless there shall be delay or failure due to Force Majeure Conditions including but not limited to reasons mentioned in clause 11(b) and 11 (c)or due to failure of the Allottee(s) to pay in time the Total Price and other charges and dues/ payments mentioned in this Agreement or any failure on the part of the Allottee(s) to abive by all or any of the terms and conditions of this Agreement. The Apartment/Villa Allottee agrees and understand that beyond 48 months that the Company shall be entitled to period of an additional one hundred eighty (180) days, for applying and obtaining the occupation certificate in respect of the Group Housing Complex.” (Emphasis supplied)

11. It is the Complainant’s case that the Agreement was dated 31.07.2013 and therefore the promised date of delivery of possession is 31.07.2017. Learned counsel for the Complainant drew our attention to an email dated 22.09.2017, wherein the Complainant has stated that the Opposite Parties was not replying to his communication vide several emails requesting for possession and that the Opposite Party had relied on ‘time is the essence’ when it had demanded payment from the purcahsers but when it came to possession of their homes, the same principle of ‘time is essence’ was not amde applicable. Learned counsel appearing for the Opposite Parties filed undated photos to show the progress of the construction. On a pointed query from the Bench, learned counsel submitted that the photos were taken on 22.02.2019. He further contended that the delay in the project was only because of force majeure conditions like, demonetisation, orders of the National Green Tribunal etc. and that the project was in an advance stage. He further contended that the demand letter was always annexed with the information regarding stages of construction.

12.     A brief perusal of the record shows that the Complaint was filed in November 2017, much after the promised date of completion of construction. The Opposite Parties also filed an application seeking to bring on record some additional documents which included the Occupation Certificate dated 21.11.2018. It is pertinent to mention that on 24.12.2018 a letter was issued by the Opposite Parties to the Complainant with respect to intimation regarding offer of possession at Emerald Bay. It is relevant to place reliance on the said letter and the same is being reproduced as hereunder:
“Dated: 24th December, 2018

Sub: Intimation regarding Offer of Possession at Emrald Bay.

Dear Sir/ Madam,

It gives us immense joy to share with you that post completion of the construction of the project-Emerald Bay, we have received the Occupation Certificate from the competent authorities on 21.11.2018 for the project. WE have made every endeavour to fulfil our commitments, and we assure you that we shall not rest till residents start to enjoy life in the complex.

We have been the pioneers of delivering the luxury apartments on the Dwarka Expressway, Gurugram and our previous project Diplomatic Greens, Sec-111, Gurugram was awarded as the Best Luxury Apartment Project for the year 2017, at NDTV Property Awards. We will make every effort to make the project-Emrald Bay, a notch above the previous project, which is evident from the annexed pictures.
The broad roadmap for the overall handover of apartments of the project-Emrald Bay, Gurugram will be to handover the apartments to their respective owners and co-ordinate a smooth fit out process. We anticipate that this process will take at least 0-6 months.

We hereby request you to come forward for resolution of all pending issues, if any, and take possession of your apartment subject to clearance of all outstanding dues/charges.

Thanking You
For Puri Construction Pvt. Ltd.
Authorized Signatory”

13.     From the aforenoted letter it is clear that though the Occupation Certificate was received from competent authorities on 21.11.2018, intimation regarding offer of possession was made vide this letter dated 24.12.2018 and further it is stated in the said letter that the entire process would take up to six months. The material on record does not evidence any reply given to the Complainant’s email dated 05.09.2017, 07.09.2017 and 22.09.2017, subsequent to which the Complainant had filed this Complaint. In fact it is the Complainant’s case that the Opposite Parties had sent a letter dated 26.09.2017 stating that it hopes to complete the construction in another 10 months. It is evident from this Communication that the Opposite Parties have unilaterally given themselves an additional 10 months to complete the construction. Vexed with the attitude of the Opposite Parties, the Complainant sent an email to the first Opposite Party on 25.10.2017, seeking refund of the amount paid with interest @ 18% p.a. Further it is also the Complainant’s case that no permission was granted to the second Opposite Party to enter into any Collaboration Agreement   with the first Opposite Party in respect of subject license and has also filed the reply to the RTI query dated 22.07.2016. The contention of the learned counsel for the Opposite Parties that demonetisation and orders of the National Green Tribunal (NGT) should be considered as Force Majeure conditions is unsustainable because viewed from any angle orders of NGT and demonetisation do not fall under the term ‘Force Majeure’. The other pleas of the Opposite Parties regarding the Complainant not being a ‘Consumer’ and that he was in the business of buying and selling properties and was an ‘Investor’ is completely unsustainable in the light of the judgement of this Commission in Kavita Ahuja vs. Shipra Estates I (2016) CPJ 31, in which this Commission has laid down the principle that the onus of establishing that the Complainant was dealing in real estate is on the Opposite Parties, which in the instant case they have failed to discharge or file any documentary evidence to prove their case that the Complainant is an ‘Investor’ and not a ‘Consumer’ therefore we are of the considered view that the Complainants are ‘Consumers’ as defined under Section 2 (1)(d) of the Act.

14.     It is and admitted fact that the Complainant has paid 95% of the total sale consideration; that the Opposite Parties did not complete the construction even as on date of filing of the Complaint; that more than 48 months have lapsed since the date of execution of the Agreement; that on the date of collection of the money from the allottees, the Opposite Parties did not have all the relevant licenses and approvals and that the Complainant cannot be made to wait endlessly for seeking possession of a flat for which 95% payment has already been made. We find it a fit case to place reliance on the judgement of the Hon’ble Supreme Court dated 25.03.2019 in Kolkata West International City Pvt. Ltd. Vs. Devasis Rudra (Civil Appeal NO. 3182 of 2019), in which the Hon’ble Supreme Court has observed that the flat purchasers cannot be made to wait for inordinate period of time hoping to seek possession.

15.     This Commission in Emmar MGF Land Ltd. & Ors. vs. Amit Puri [II (2015) CPJ 568 NC], has observed that the waiting period cannot be endless and that in the event of a Developer failing to deliver the possession of the property within a stipulated period, for any reason save and except a force majeure condition agreed to between the contracting parties, the purchaser cannot be compelled to accept the alternative property or to wait endlessly for the possession. As regards the question of award of interest on the amount deposited by the Complainant it was observed that the Complainant was deprived of his hard earned money which was utilized by the Opposite Parties for a substantially long period of time, which amount, had the Complainant invested in some other project or business would have earned him handsome returns. Interest @ 12% p.a. was awarded in the Emmar MGF Land Ltd.(Supra) which has attained finality.

16.     For all the afore-noted reasons, this Complaint is allowed in part directing the Opposite Parties to refund the amount paid by the Complainant with interest @ 12% p.a. from the respective dates of deposit till the date of realisation together with cost of ₹25,000/-. Time for compliance is four weeks from the date of receipt of a copy of this order, failing which the amount shall attract interest @ 14% p.a. for the same period.

	advantageconsumer.com Consumer Protection Council, Rourkela