Sahara India Commerical Corpn Ltd vs P Gajendra Chary

WHICH was the opposite party before the District Forum, has filed the present Revision Petition against the order of the Andhra Pradesh Consumer Disputes Redressal Commission, Hyderabad (for short ''the State Commission'') in First Appeal No. 1872/2005 dismissing the appeal of the petitioner thereby upholding the order passed by the District Forum, Rangareddy District in CD. No. 140/2004. By the impugned order, the Fora below had directed the petitioner to pay the sum deposited by the respondent for purchase of the house along with interest at the rate of 12% and costs of Rs. 2,000.

COMPLAINANT/respondent had booked one independent House No. 7/7, Bahar ''B'' at Sahara States with the petitioner company. He paid a sum of Rs. 46,350 as advance by a cheque dated 26.12.2001 to the petitioner. Subsequently, on account of financial difficulties, the respondent cancelled the booking and informed the petitioner and requested for refund of the amount. Respondent had written certain letters seeking refund of the amount paid by him but the petitioner refused to pay the amount. Aggrieved by this, the respondent filed the complaint before the District Forum.

PETITIONER, on being served, filed its reply. It was contended by the petitioner that as per Clause 8 of the terms and conditions of the application, the respondent had committed default and, hence, the amount could be legally forfeited as per the agreement entered into between the parties.

DISTRICT Forum, based on the pleadings and evidence led before it, allowed the complaint in part and directed the petitioner to refund the said amount of Rs. 46,350 along with interest at the rate of 12% per annum from the date of cancellation, i.e., 28.5.2004 till the filing of the complaint, i.e. 15.2.2004 with interest at the rate of 9% from 16.2.2004 till realization along with costs of Rs. 2,000 within two months from the date of the passing of the order.

AGGRIEVED by the order passed by the District Forum, petitioner filed an appeal, which has been dismissed by the impugned order. State Commission held that Clause 8 mentioned in the application form was not merely arbitrary but also unfair trade practice. Clause 8 was held to be unfair and unconscionable. The order of the District Forum was upheld and the appeal was dismissed.

BEING aggrieved by the order passed by the State Commission, petitioner has filed the present Revision Petition.

LEARNED Counsel appearing for the petitioner contends that the Fora below did not have the plenary jurisdiction to declare a clause of agreement to be bad in law. The same could be done either by the Civil Court or by the High Court or by the Supreme Court of India in exercise of their power of judicial review. That the Consumer Fora, being Courts of limited jurisdiction, could not declare the clause of agreement to be unconscionable and bad in law. That Clause 8 of the agreement was a forfeiture clause of the terms and conditions of allotment of residential flat in the housing scheme which provided that in the event allottee wishes to cancel the allotment of the housing unit on his/her own accord, the amount deposited by the allottee would be refundable after deduction of 10% of the total cost of the unit without any interest. That as per the said clause, the petitioner is entitled to receive another sum of Rs. 46,350 as the total value of the allotted residential unit was Rs. 9,27,000, which works out to Rs. 92,700. That the petitioner was put to heavy financial loss due to cancellation of the house by the respondent. He has also relied upon a judgment of the Supreme Court in H.U.D.A. and Anr. v. Kewal Krishan Goel and Ors., II (1996) CLT 377 (SC)=(1996) 4 SCC 249, wherein in similar circumstances, the Court has held as under: "This being the legal position and the allottee having accepted the allotment and having made some payment on instalment basis then made the request to surrender the land, has committed default on his part and, therefore, the competent authority would be fully justified in forfeiting the earnest money which had been deposited and not the 10% of the amount deposited as held by the High Court. The High Court was totally in error in issuing the direction in question on the ground that the respondents were not in a position to deliver the possession of the land to the allottee. It may be stated that in the letter of allotment no period was stipulated within which the possession of the land was to be delivered. The land in question was required to be developed and then to be delivered and in the absence of any period in the letter of allotment, it was required to be delivered, within a reasonable period. In the facts and circumstances, it cannot be said that the reasonability had lapsed particularly when the allottees had not paid up the entire instalment due and merely paid a part, thereof."

(Emphasis supplied)

AS against this, Counsel for the respondent supported the order passed by the Fora below and contended that Clause 8 was arbitrary and unconscionable and, therefore, has rightly been struck down by the Fora below.

CLAUSE 8 of the terms and conditions is a forfeiture clause which provides that in the event the allottee wishes to cancel the allotment of housing unit on his/her own accord, the amount deposited by the allottee would be refundable after deduction of 10% of the total cost of the unit without any interest. This was a contractual obligation. It is not the case of the respondent/complainant that the terms of the contract had not been brought to the notice of the respondent or that he had not understood the terms and conditions of the agreement. He had signed the agreement and would be supposed to be familiar with the terms and conditions of the contract entered into between the parties. The Consumer Fora are Courts of limited jurisdiction and under Section 2(d) of the Consumer Protection Act, the Consumer Fora can entertain the complaint only if there is a deficiency in service or the goods supplied are defective. Persons who purchase goods for commercial purpose are excluded from the definition of the word ''consumer''. Section 2(r) defines unfair trade practice to mean a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the practices mentioned in Clauses (i) to (x). The State Commission, in its order has struck down Clause 8 on the ground of unfair trade practice. It is not the case of the respondent that the petitioner had adopted a trade practice for the purpose of promoting the sale, use or supply of any goods or for provision of any service or had adopted any unfair method or unfair or deceptive practices which are mentioned in Clauses (i) to (x) of Section 2(r). We have gone through the various clauses carefully and Clause 8 does not fall under any of the said clauses.

CONSUMER Fora are not the Courts of plenary jurisdiction having the power either to strike down the provisions of the Act or have the power of judicial review. Consumer Fora have limited jurisdiction and operate in the defined area only. Consumer Fora have to decide the cases in a summary manner which does not require elaborate and lengthy arguments. It would be necessary implication exclude the jurisdiction of either going into the questions regarding the validity or striking down the provisions of the Act or Rules or Clauses of lawful agreement entered into between the parties.

AS per the agreement arrived at between the parties, the petitioner was within its right to forfeit 10% of the amount deposited by the respondent/complainant, if it was less than 10% of the value of the unit. In the present case, value of the unit was Rs. 9,27,000 and 10% of the same would come to Rs. 92,700 whereas the amount which was lying deposited was only Rs. 46,350 which was far below 10% of the value of the unit. The parties are bound by the terms of the contract and Fora below have erred in striking down Clause 8 of the agreement. Clause 8 is a normal forfeiture clause in any contract like the one in question.

OBSERVATIONS made by Hon''ble Supreme Court of India in H.U.D.A. v. Kewal Krishan''s case (supra) would be applicable to the facts of the present case. In the said case, the Supreme Court has held that the builder would be entitled to forfeit the amount paid by way of instalments in a case where the allottee defaults in making the payment of the remaining instalments. That the builder would be fully justified in forfeiting the earnest money deposited by the allottee. In the present case, petitioner having paid the sum of Rs. 46,350 failed to pay the remaining amount by way of instalments and asked for the refund of the amount already deposited. As per Clause 8 of the terms and conditions of allotment, the petitioner was entitled to forfeit the amount.

FOR the reasons stated above, Revision Petition is accepted. Orders passed by the Fora below are set aside and the complaint is ordered to be dismissed with no order as to costs.

IF any amount has been deposited by the petitioner either before this Commission or before the District Forum/State Commission, the same be released, in its favour along with accrued interest. Revision Petition stands disposed of in above terms. Revision Petition allowed.