J L Sharma S/O Jai Ram Sharma vs Krishna Continental Ltd

SHRI J.L.Sharma, complainant before the State Commission, Delhi in CC No.24 of 2001 had applied for allotment of a flat by the Respondent in Simla. Allegedly, a flat was allotted to him on 24.12.1999, though no letter of allotment was issued. The agreed consideration was Rs.10 lakhs, including Rs.55,000/ - towards EMD. By 9.3.2000, Rs.7.25 lakhs was paid by the complainant. The balance consideration of Rs.2.75 lakhs was demanded by Respondent/OP on 10.7.2000. A little later, complainant issued a legal notice on 29.9.2000 expressing his willingness to pay the balance amount subject to issue of allotment and possession letters. This was followed by filing of a consumer complaint on 24.1.2001 with the following prayer: - "In view of the above, it is, therefore, prayed that the respondent/opposite party be directed to: - a) hand over the possession of flat booked by the complainant at Vista Apartment in Shimla (with car parking facility); or

b) refund Rs.6,75,000/ - to the complainant alongwith interest @ 18% p.a. from the date of deposit; and

c) to pay Rs.1,00,000/ - as damages for mental agony and pain; and

d) award the cost of the proceedings;"

THE State Commission directed refund of the amount of Rs.6.75 lakhs to the Complainant but without interest and cost. While doing so, the Commission has observed: - "7. As will appear condition No.6 of the agreement provides that in case the payment of instalments are delayed, the intending allottee will have to pay interest on the amount due from the rate given in the condition, and even then, if allottee fails to pay the instalments with interest, the OP company shall forfeit the entire amount of earnest money deposited by the allottee, the allotment shall stand cancelled, and the amount if any paid over and above earnest money shall be refunded to the intending allottee without any interest.

It will appear from narration of the above facts that the agreement between the parties was to the effect that if the complainant does not make payments according to the payment of his earnest money will be forfeited and the rest of the money will be refunded without interest. Accordingly the complainant did not make payments according to the agreement. The earnest money Rs.50,000/ - will therefore stand forfeited and the only relief to which the complainant will be entitled, will be return of the paid money which is Rs.6,75,000/ - without any interest.

The complainant is not entitled to any compensation because he has himself committed breach of the contract."

THE order of the State Commission has been challenged by the Complainant, Shri J.L.Sharma, for enhancement of relief granted to him. He has sought delivery of the flat or, in the alternative, refund of the entire amount with 18% interest on the deposit, together with compensation of Rupees one lakh. Respondent OP has not filed any appeal and therefore the impugned order acquired finality qua the Respondent. During the course of pendency of appeal, on 22.11.2013 this Commission directed refund to the Complainant a sum of Rs.6.75 lakhs with interest computed at 9% from the date of the impugned order. Proceedings of 28.1.2014 show that two pay -orders, totalling Rs.838442/ -, have been handed over to the Complainant in compliance with the direction of this Commission. The matter thus, lies in a very narrow compass viz. if any further relief over and above refund with interest at 9% p.a. from the date of the impugned order needs to be awarded in terms of the prayer of the appellant/complainant. We have heard Mr. Vinod Malhotra, Advocate for the Appellant/Complainant and Dr. V. K. Dwivedi with Mr. Abrar Ali, Advocates for the Respondent/Krisna Continental Ltd. The records as submitted by the parties have also been carefully perused.

THE case of the appellant/complainant is that while timely payment was made the essence of the agreement, no time limit was set for delivery of the flat. Admittedly, 72.5% of the agreed consideration was paid but even the letter of allotment had not been issued. In the legal notice of 29.9.2000 to the OP, appellant/complainant had expressed his willingness to pay the balance if OP was willing to hand over possession but there was no response.

RESPONDENT /OP admitted indicating allotment of Flat No 301 -A but denied giving any assurance to hand over the possession by June 2000. In the entire pleadings before the State Commission OP has repeatedly harped upon default in payment in relation to the demand of Rs 2.75 lakhs in the letter of 10.7.2000. But, there is no indication whether there was commensurate physical progress towards completion of construction.

IT is therefore, argued on behalf of the Appellant that he is entitled to award of interest as per clause 6 in the prescribed Application for Allotment. This clause reads as follows: - "The time of payment of instalments is the essence of this agreement. It shall be incumbent on the intending Allottee(s) to company with terms of payment and the other terms and conditions of sale. In case the instalments are delayed, the intending Allottee (s) shall have to pay the interest on the amount due as follows.

i) Upto 1 month''s delay from the due date of outstanding amount @ 18% p.a.

ii) Upto 3 month''s delay from the due date of outstanding amount @ 24 % p.a.

Even then if the intending Allottee (s) fails to pay the instalment with interest, the Company shall forfeit the entire amount of earnest money deposited by him/her and the allotment shall stand cancelled and/she shall be left with no the flat. The amounts if any, paid over and above the earnest money shall be reduced to the intending Allottee (s) without any interest."

On the face of it, the above condition is applicable only to a case of delay or default in payment by the allottee. It is apparent that the State Commission has applied it as such by holding that forfeiture of earnest money was justified.

IN our view, the Commission erred in reading condition no.6 in isolation. It needed to be read and interpreted together with other conditions in the same document. Thus, for example, condition no. 15 gives two options (Plans A and B) for payment of the sale consideration. In Plan -A, 95% is to be paid within one month of booking of the flat. In Plan -B, which is linked to the progress of construction, 95% is payable in ten instalments from booking to possession. But, condition no 9 permits the vendor/OP to register the flat "to execute the sale deed and get it registered in favour of the intending allottee(s) within the reasonable time after the flat has been finally constructed at the site and after receipt from him/her of full sale price and other connected charges, cost of stamp duty and registration charges as applicable". Thus, execution of the sale deed is clearly made dependent upon payment of full consideration and all other charges, in so far as vendee/Complainant is concerned. On the other hand, no time limits are even suggested for the developer/OP for execution of the sale deed. It leaves him free to decide when to commence and when to finish construction. More than that, even after completion of construction, the condition leaves him free to decide what would be reasonable time thereafter for executing the sale deed. With no contemplation of even tentative dates for commencement and completion of construction, condition no.14 makes it obligatory for the vendee/Complainant to pay for any increase in the cost of construction. The only saving clause for the Complainant is in condition no.4 which says that if "for any reason the company is not in a position to allot the flat applied for, the company shall be responsible without any other obligation to consider to allot me an alternative flat or refund the amount deposited with simple interest 10% per annum."

IN short, obligations of the vendee are fully time bound but no time limits are contemplated for the vendor. The imperative need, in a case like this, is to balance the equities. The inequity of a situation which permits the builder to demand full amount of consideration, without even signing an agreement or issuing a letter of allotment, cannot be overlooked.

IN the totality of the situation, we find ourselves in agreement with the order of the State Commission to refund Rs.6.75 lakhs. In other words, we uphold deduction of Rs.50,000/ - towards earnest money. But, we find no justification for denial of interest on the refunded amount to the Appellant/Complainant. Simultaneously, the Complainant also needs to be compensated for a loss resulting from a one sided arrangement. Had possession of the flat been delivered in or around the year 2000 when it was sought, the appellant would have earned the appreciation in it value. As noted earlier in this order, a sum of Rs.8,38,442/ - has already been paid by the Respondent/OP to the Appellant/Complainant. This was in compliance with an interim direction of this Commission to refund Rs.6,75,000 with 9% interest from the date of the order of the State Commission i.e. with effect from. 17.3.2011.

CONSEQUENTLY , the Appeal is partially allowed. Interest at the rate of 9% per annum on refund is directed to be paid for the period falling between issue of legal notice by the Complainant to the Respondent/OP and the impugned order i.e. from 30.9.2000 to 16.3.2011 as well, in addition to the amount already paid under interim order of this Commission. We also allow lump sum compensation of Rs.75,000/ -, which shall be paid by the Respondent/OP to the Appellant/Complainant within a period of three months.