Shri SUMAN NANDI & ANR. vs M/s UNITECH LIMITED & ANR

By this order, we propose to dispose the above noted consumer complaints involving similar question of law and facts. The complainants detailed above filed consumer complaints alleging that they booked apartments in a development project "Harmony" located in Sector 50 Nirvana Country, Gurgaon undertaken by the opposite parties. In C.C. No. 3 of 2014, the apartment was initially allotted to some other person from whom the complainant purchased the apartment. However, there was no change in the terms of agreement. They entered into individual Buyer''s Agreement with the opposite parties on different dates. The possession of the apartments were agreed to be delivered to the respective complainants within 3036 months from the date of their respective agreements. Grievance of the complainants is that although they have paid huge amounts to the opposite parties towards the consideration of the apartments respectively booked by them, the opposite parties have failed to deliver the possession of the apartments within the stipulated period nor has completed the construction. The complainants, therefore, have raised consumer dispute before this Commission praying for delivery of possession of the apartments agreed to be sold to them besides compensation @ Rs.5/per sq. ft. per month for the period of delay as stipulated in the agreement, compound interest @ 24% p.a. w.e.f. stipulated date of possession. The complainants have also sought compensation for harassment and mental trauma.

The Opposite Parties in their joint written statements have admitted the agreement of sale of apartments with the complainants. It is also admitted that possession of the apartments could not be given within 3036 months of the date of execution of the respective Buyer''s Agreement but justified the delay on account of force majeure clause in the agreement. It is pleaded that the delay in completing the construction has occurred because of following circumstances beyond the control of the opposite parties a. Recession in economy resulting in scarcity of availability of labour and raw material;

b. Commonwealth Games organised in October 2010 resulting in extreme shortage of labour in NCR region;

c. Short of labour due to implementation of social schemes like National Rural Employment Guarantee Act (NREGA) and Jawaharlal Nehru Urban Renewal Mission (JNNURM);

d. Extreme shortage of water in NCR region which was further accentuated due to orders of Punjab and Haryana High Court stopping the use of ground water for construction activities;

e. Shortage of bricks due to restrictions imposed by Ministry of Environment and Forest on brick klins;

f. Shortage of sand due to suspension of mining activity in Aravali Hill Range.

The opposite parties also claimed in the reply that in view of clause 4. c. (ii) of the Buyer''s Agreement, if at all there is a liability of the opposite parties to pay compensation, it is only to the extent of Rs.5/per sq. ft. per month for delay in offering possession. It is also pleaded that since the agreed cost of apartments in question was less than rupees one crore, the complaints could not be maintained only before the State Commission and not before the National Commission whose jurisdiction starts where the value of dispute is more than rupees one crore.

On consideration of the written version filed on behalf of the opposite parties, on 03.01.2014, we directed the responsible directors of opposite parties no.1 & 2 to file affidavits clearly indicating the reasons for delay in completion of project. It was ordered that affidavits shall also disclose the present status of the construction and the date by which the opposite parties expect to deliver possession of the respective apartments to the complainants. The affidavits were also required to disclose how many new projects have been floated by the opposite parties during the past five years as also the status of those projects. Pursuant to the direction, Ajay Chandra s/o Ramesh Chandra on behalf of opposite party no.1 and Sh. Manish Periwal on behalf of opposite party no.2 filed their affidavits highlighting the above noted reasons for delay in possession of the apartments to the complainants and it was averred that construction of the apartments was almost complete and opposite parties are expected to deliver the possession of respective apartments latest by September - December 2014.

Parties have filed affidavit evidence in support of their respective stand. Although, in the affidavits filed in response to the directions dated 30.01.2014, the opposite parties averred that they expect to deliver possession of the apartments to the respondents complainants by September - December 2014, till date no information regarding delivery of apartments have been given. Thus, the question which needs consideration is whether the opposite parties have committed deficiency in service and, if so, what should be the relief to be granted to the complainants?

In order to find answer to the aforesaid question, it would be useful to have a look on relevant clause of the Buyer''s Agreement. Clause 4.a of the aforesaid agreement reads as under: "4.a Delivery of Possession:

i. That the possession of the Apartment is proposed to be delivered by the Developers to the Purchaser (s) within 3036 months (period varies between 3036 months in the complaints) of execution of the present Agreement subject to Force Majeure circumstances and upon registration of Sale Deed provided all amounts due and payable by the Purchaser (s) under this Agreement have been paid to the Developers within the stipulated period. It is, however, understood between the Parties that the possession of various Towers comprised in the Complex shall be ready and completed in phases and handed over accordingly.

ii. It is agreed that the Developers shall also be entitled to reasonable extension in delivery of possession of the Apartment on account of any default or negligence attributable to the Purchaser (s)''s fulfilment of conditions of the Agreement."

On reading of clause 4.a., it is clear that it was agreed between the parties that possession of the subject apartments would be delivered to the complainant within 3036 months from the date of execution of Buyer''s Agreement subject to Force Majeure. The term ''Force Majeure'' is defined under clause 9.b. as under: a. Strike;

b. Slowdown;

c. Civil Commotion;

d. War, enemy action, terrorist action, or act of God; and

e. Any reason or circumstance beyond the control of the developer.

On careful perusal of the evidence, we find that opposite parties have not led any evidence to show any new legislation, regulation or order suspending, stopping or delaying the construction of complex in which the subject apartments were agreed to be sold to the complainants. Neither there is an allegation of strike, slowdown, civil commotion, war, enemy action, terrorist action etc. or any other act of god which might have caused delay in completion of project within time stipulated in the Buyer''s Agreement nor evidence in this regard has been adduced. Learned counsel for the opposite parties have tried to get out of the situation by arguing that expression slowdown in clause 9.b. of the Buyer''s Agreement would also include economic slowdown or recession in real estate sector. We do not find merit in this contention. The economic constraints ordinarily cannot be taken as a defence for noncompliance of the contract. The term ''slow - down'' in clause 9.b. has been used alongwith word ''strike'' and it has to be read ejusdem generis with the aforesaid words and can only mean a slow down resorted by the labourers engaged in the construction of the project in support of their demands.

As regards shortage of labour, but for the bald plea of the opposite parties in their written statement and the affidavits which are more or less reproduction of the written statement, there is no material or convincing evidence on record that despite of making efforts, the opposite parties could not get labours to complete the construction of project within the stipulated time. Therefore, it cannot be accepted that opposite party because of market conditions could not manage to arrange adequate labour for timely completion of project. As regards the alleged shortage of water, bricks and sand in the market, no cogent evidence has been produced by the opposite party to establish that it was unable to procure water, sand and bricks in adequate quantity. No evidence has been adduced to establish that from the date of signing of Buyer''s Agreement from 20062010, there was shortage of those materials in the market. The opposite parties have also taken a plea that there was a notification of government imposing restriction on the production of bricks by brick klins. The aforesaid argument is without any force because the notification relied upon by the opposite party was in force even at the time the opposite party promised possession of the apartments within 30 36 months. The opposite parties having entered into an agreement knowing the aforesaid constraints because of government notification now cannot get rid of its obligation to justify the delay in construction. As regards the scarcity of water, plea of the opposite party is without any basis because the order of High Court stopping use of ground water for construction activity came much later. If the opposite parties actually intended to complete the construction within the stipulated time, they would have completed the super structure which does not take much time within initial 24 months of the date of Buyer''s Agreement.

As regards the plea of shortage of labour etc. due to common wealth game is concerned, that plea is also not acceptable for the reason that Buyer''s Agreement are of the year 2006 to 2010 and if the opposite parties intended to comply with the terms of agreement, they would have raised substantial construction before common wealth games. Had there been truth in the defence taken by the opposite party, the opposite party after the completion of construction activities pertaining to commonwealth games would have completed the project within the period of five years since the common wealth games were held. Till date, the possession of the apartments have not been handed over to the complainants which clearly indicate the deliberate delay and negligence on the part of the opposite party and opposite party cannot be permitted to hide behind a bogus plea of force majeure or exceptions provided in clause 9.b of the Buyer''s Agreement.

In view of the discussion above, it is evident that despite of having promised to deliver possession of the respective apartments to the complainants within 3036 months from the date of execution of Buyer''s Agreement and despite of having received more than 90% of the consideration amount, the opposite party has failed to fulfil their part of promise i.e. to deliver possession of apartments to the respective complainants. This conduct of the opposite party in our view amounts to deficiency in service. Thus, the complainants are entitled to a direction for delivery of possession of respective apartments to them by a stipulated time and also to pay compensation for the delay.

Learned counsel for the opposite party has contended that as per clause 4. a. of the Buyer''s Agreement the opposite party in the event of delay in delivery of possession is liable to pay compensation for delay @ Rs.5/per sq. ft. of the super area per month. It is argued that this contract was voluntarily signed by the complainant. Therefore, if the complainants are entitled to compensation, it cannot be more than as stipulated above. In support of his contention learned counsel has referred to the judgments in Bharti Knitting Company vs. DHL Worldwide Express Courier Division of Airfreight Ltd. JT 1996 (6) SC 254, Secretary Bhubaneswar Development Authority vs. Susanta Kumar Mishra [V (2009) SLT, 242] and PUDA vs. Mrs. Shabnam Virk II (2006) CPJ 1 (SC).

Learned counsel for the complainants on the contrary has contended that the abovenoted term relied upon by the opposite parties is most unfair because in the same contract in the event of any default in payment on the part of the complainant, they are required to pay 18% interest at the defaulted amount compounded on quarterly basis. It is contended that therefore in all fairness the complainants should be awarded 18% interest p.a. on the consideration amount paid by them for the period of delay till the delivery of possession.

We have considered the above arguments and gone through the judgments referred to by the counsel for the opposite parties. It cannot be disputed that ordinarily the parties are bound by the terms and conditions voluntarily agreed by them and the Courts are supposed to implement the contract in letter and spirit and they cannot add or subtract from the contract. The Supreme Court, however, in the matter of Bharathi Knitting Company Vs. DHL Worldwide Express JT 1996 (6) SC 254 has observed thus: "It is seen that when a person signs a document which contains certain contractual terms, as rightly pointed out by Mr. R.F. Nariman, learned senior counsel, that normally parties are bound by such contract; it is for the party to establish exception in a suit. When a party to the contract disputes the binding nature of the signed document, it is for him to prove the terms in the contract or circumstances in which he came to sign the documents need to be established. It is true, as contended by Mr. M.N. Krishnamani, that in an appropriate case the Tribunal without trenching upon acute disputed question of facts may decide the validity of the terms of the contract based upon the fact situation and may grant remedy. But each case depends upon its own facts".

On reading of the above, it is clear that depending upon the facts of the case in exceptional matters, the tribunal may decide validity of the terms and conditions agreed to by the parties and grant remedy.

On perusal of the Buyer''s Agreement and the affidavits filed by the parties it is clear that the complainants had booked the subject apartments on the expressed promise extended by the opposite parties that subject to Force Majeure, the opposite parties would deliver the possession of the apartments complete in all respect within 3036 months, as the case may be, of the execution of the Buyers Agreement and being influenced by the said promise the complainants entered into the contract. No doubt in the Buyer''s Agreement some scope for delay due to unavoidable circumstances was kept in mind for which clause 4.a. for compensating the complainants for delay was incorporated but it does not mean that the intention was that even in the event of inordinate delay in completing the construction and delivering the possession, the complainants would be entitled to meagre compensation of Rs.5/per sq. ft. per month which is much less than the bank rate for loan or fixed deposit. Therefore, in our considered view clause 4. a. was meant for computing compensation in case of a minor delay in delivery of possession. If the argument of the opposite party is to be accepted, it would lead to absurd situation and would give an unfair advantage to the unscrupulous builder who might utilize the consideration amount meant to finance the project by the buyer for his other business venture at nominal interest of 23 per cent as against much higher bank lending rates. This could never be the intention of legislation that if such a proposition is accepted, it would result in defeating the object of Consumer Protection Act.

Looking from a different angle, given the facts of this case the conduct of the opposite party. Section 2 (r) of the Consumer Protection Act, 1986 defines unfair trade practice as under: " Unfair trade practice" means 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 following practices, namely;- (1) the practice of making any statement, whether orally or in writing or by visible representation which,-

(i) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;

(ii) falsely represents that the services are of a particular standard, quality or grade;

(iii) falsely represents any rebuilt, secondhand, reno vated, reconditioned or old goods as new goods;

(iv) represents that the goods or services have sponsor ship, approval, performance, characteristics, accesso ries, uses or benefits which such goods or services do not have;

(v) represents that the seller or the supplier has a spon sorship or approval or affiliation which such seller or supplier does not have;

(vi) makes a false or misleading representation concern ing the need for, or the usefulness of, any goods or services;

(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof;

Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;

(viii)makes to the public a representation in a form that purports to be-

(i) a warranty or guarantee of a product or of any goods or services; or

(ii) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result, if such purported warranty or guarantee or prom ise is materially misleading or if there is no reasonable prospect that such warranty, guaran tee or promise will be carried out;

(ix) materially misleads the public concerning the price at which a product or like products or goods or services, have been or are, ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by sellers or provided by suppliers generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made;

(x) gives false or misleading facts disparaging the goods, services or trade of another person.

Explanation. For the purposes of clause (1), a statement that is-

(a) expressed on an article offered or displayed for sale, or on its wrapper or container; or

(b) expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or

(c) contained in or on anything that is sold, sent, delivered, transmit ted or in any other manner whatsoever made available to a member of the public, shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained;"

On reading of clause 2 (r) (i) (ii) & (vi), it is clear that if a service provider in order to increase his business makes a false representation regarding the standard and quality of the proposed service or its usefulness, it would amount to the unfair trade practice. On careful reading of the Buyer''s Agreement it is clear that in the said agreement, the opposite party service provider has extended a clear promise/representation to the complainants that in the event of their paying consideration amount, they would be given possession of the booked apartments complete in all respect within 3036 months or reasonable period thereof. However, in the abovenoted case, the stipulated period has expired way back and even almost five years have gone by but the possession of the apartments have not been delivered. There is no evidence from the side of the opposite party as to how and where the money paid by the complainants and the other buyers of apartments in the project has been utilised. From this can be safely inferred that the opposite party has diverted the funds and instead of utilising the funds paid by the complainants/buyers for completing the project within the promised period. Therefore, in our considered view, this is a case of soliciting business by the opposite party service provider by making false representation. Therefore, in our view, this is a clear case of unfair trade practice. The opposite party, thus, cannot take shelter of clause 4.a of the contract to avoid its liability to pay reasonable compensation for the delay caused due to its intentional act in not making sincere efforts to complete the construction within a reasonable period.

In view of the above, since the opposite party has utilised the money paid by the complainants against consideration amount, the complainants are entitled to interest on the payment made by them for the period of delay as compensation instead of meagre compensation computed on the basis of clause 4.c. of the Buyer''s Agreement, which is highly unfair. Looking into overall facts and circumstances of the case, we are of the opinion that 12% interest p.a. from the date of default in delivery of the subject apartments would meet the interest of justice.

In view of the discussion above, we allow the consumer complaints and direct as under: a. The Opposite Party shall deliver possession of the respective apartments to the complainants within six months from the date of the pronouncement of this order;

b. The Opposite Party shall pay to the respective complainants compensation @ 12% p.a. w.e.f. 3036 months from the date of their respective agreements with the opposite party, as the case may be, till the possession is delivered to them. The interest till 31.12.2015 shall be paid to the complainants within one month from the date of the order. Thereafter, compensation in the form of interest in terms of the order shall be paid on monthly basis by 10th day of each succeeding month;

c. If the Opposite Party fails to pay compensation or delivery the possession within the stipulated period, the complainants shall be at liberty to initiate proceedings for execution of the order;

d. The Opposite Party shall pay Rs.10,000/( Rupees Ten Thousand only) each to the respective complainants as cost for litigation.

The Consumer Complaints are disposed of accordingly. Copy each of the order be placed in respective files.