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Arun Kapoor & Another v/s M/s. Unitech Limited

    Consumer Case No. 885 of 2017
    Decided On, 14 August 2018
    At, National Consumer Disputes Redressal Commission NCDRC
    For the Complainants: Sudhir Mahajan, Advocate. For the Opposite Parties: Nemo.

Judgment Text

The opposite parties have not filed affidavit of admission / denial of documents and affidavit by way of evidence. The right of the opposite party to file such affidavits therefore stands closed.

2. I have heard the learned counsel for the complainants. No-one is present for the opposite parties.

3. The complainants booked a residential apartment with the opposite parties in a project namely ‘Harmony’, which the opposite parties were to develop in Sector 50 of Gurgaon. Apartment No.0302 in Tower-7 of the aforesaid project was allotted to the complainants for a consideration of Rs.1,75,14,326/-. The parties then executed a sale agreement dated 29.7.2011, incorporating their respective obligations. The possession of the apartment in terms of the aforesaid agreement was to be delivered by fourth quarter of 2011, subject of course to force majeure circumstances. The possession therefore ought to have been delivered by 31.12.2011. Since the possession was not delivered to them, despite they having already paid a sum of Rs.1,73,61,755/- to the opposite parties, the complainants have approached this Commission, seeking possession of the allotted flat along with compensation etc.

4. The opposite parties filed written version, contesting the complainant but have not field affidavit by way of evidence. The complaint was resisted on several grounds. The learned counsel for the complainants states that all those grounds have already been rejected by this Commission in several consumer complaints, including CC/591 of 2017 Krishan Kant Kohli Vs. M/s. Unitech Ltd. & Anr. decided on 28.3.2018. The decision of this Commission in Kishan Kant Kohli (supra), to the extent it is relevant, reads as under:

'7. The learned counsel for the complainant places reliance upon the recent decision of this Commission dated 16.11.2017 in Consumer Complaint No.625 of 2017 – Sudhir K. Gupta Vs. M/s. Unitech Ltd. & Anr., M/s. Gannon Dunkerley & Co. Vs. M/s. Unitech Ltd. & Anr. and the earlier decisions - Consumer complaint No. 760 of 2016 and connected matters, including Consumer Complaint No.2 of 2014 Mohit Chopra Vs. M/s. Unitech Ltd., decided on 30.5.2017, CC No.1088 of 2015, Raja Balasubramanian Vs. M/s. Unitech Ltd., & Anr. Decided on 18.4.2017 and CC No. 368 of 2014 Shweta Kapoor & Anr. Vs. M/s. Unitech Ltd. & Anr. decided on 14.1.2016. Reliance is also placed upon the decision of this Commission in Amit Garg & Anr. Vs. Unitech Ltd. & Anr. CC No. 143 of 2015 & Connected matters decided on 21.06.2016. The decision of this Commission in Amit Garg (supra) to the extent it appears to be relevant, reads as under:

2. The complaints have been resisted by the opposite party primarily on the grounds which this Commission has repeatedly rejected in a number of decisions including CC No. 427 of 2014 Satish Kumar Pandey & Anr. Vs. Unitech Ltd. and connected matters, decided on 08-06-2015 and CC No. 347 of 2014 Swarn Talwar & Ors. Vs. Unitech Ltd., and connected matters decided on 14.08.2015. It is claimed in the reply that in case of any delay in completion of the apartment, for the reasons beyond the control of the developer, he is entitled to an extension of time for delivery of the possession. It is stated that in case of delay the buyer is entitled only to compensation @ Rs. 5 per sq. ft. per month of the super area as stipulated in the Buyer’s Agreement. It is also alleged that Punjab & Haryana High Court had vide order dated 16.07.2012, restrained the usage of ground water for construction purposes and directed use of water from available sewage treatment plants, availability from which was very limited in comparison to the requirement.

3. In Satish Kumar Pandey (supra), this Commission inter-alia observed and held as under:

10. Since the delay in construction of the apartments could not be justified by the OP, it is required to pay compensation to the flat buyers. The contention of the learned counsel for the OP is that such compensation has to be calculated @ ₹5/- per sq. ft. of the super area of the apartment for the period of delay in offering the possession beyond the period indicated in clause 4.a.i of the Buyers Agreement, the complainants having agreed to the aforesaid term while agreeing to purchase the apartments. This was also the contention of the learned counsel for the OP that the terms of the contract are binding on the parties and cannot be altered by a consumer forum.

The learned counsel for the complainant on the other hand, submitted that since they are required to pay interest to the OP @18% p.a. compounding quarterly, in the event of delay in making payment as stipulated in clause 2.c of the Buyers Agreement, there is no reason why the opposite party should not pay interest at the same rate to them, as compensation. The learned counsel for the parties, however, admitted that the current interest of taking housing loans from the banks is about 10% p.a. though it had shot up to 11.5% per annum in last few years. It is also an admitted position that had the complainants deposited their money with a bank in a FDR instead of investing in the project of the OP, they would have earned interest @ about10% p.a.

11. It is an undisputed proposition of law that ordinarily the parties are bound by the terms and conditions of the contract voluntarily agreed by them and it is not for a Consumer Forum or even a Court to revise the said terms. The following view taken by the Hon’ble Supreme Court in this regard in Bharathi Knitting Company Vs. DHL Worldwide Express JT 1996 (6) SC 254 is pertinent:

'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'.

In PUDA Vs. Mrs. Shabnam Virk II (2006) CPJ 1(SC), it was stated in an advertisement issued by PUDA that the price quoted therein was purely tentative based on the then cost of construction and was likely to be revised on the higher side by the time houses were completed. The respondent before the Hon’ble Supreme Court challenged the demand of the additional cost raised by PUDA. The demand however, was upheld noticing the aforesaid clause in the advertisement.

However, a term of a contract, in my view will not be final and binding if it is shown that the consent to the said term was not really voluntary but was given under a sort of compulsion on account of the person giving consent being left with no other choice or if the said term amounts to an unfair trade practice. It was submitted by the learned counsel for the complainants that the term providing for payment of a nominal compensation such as Rs.5/- per square foot of the super area having become the order of the day in the contracts designed by big builders, a person seeking to buy an apartment is left with no option but to sign on the dotted lines since the rejection of such term by him would mean cancellation of the allotment. He further submitted that a person seeking to acquire a built up flat instead of purchasing a plot and then raising construction on it, therefore, is not in a position to protest resist the inclusion of such a term in the Buyer’s Agreement, and has to rely upon the reputation of the builder, particularly if he is a big builder such as Unitech Ltd. He also submitted that the format of the Buyer’s Agreement is never shown to the purchasers at the time of booking the apartment and if he refuses to sign the Buyer’s Agreement on the format provided by the builder, not only will he lose the booking, even the booking amount/earnest money paid by him will be forfeited by the builder. I find merit in the above referred submissions of the learned counsel. A person who, for one reason or the other, either cannot or does not want to buy a plot and raise construction of his own, has to necessarily go in for purchase of the built up flat. It is only natural and logical for him to look for an apartment in a project being developed by a big builder such as the opposite party in these complaints. Since the contracts of all the big builders contain a term for payment of a specified sum as compensation in the event of default on the part of the builder in handing over possession of the flat to the buyer and the flat compensation offered by all big builders is almost a nominal compensation being less than .25% of the estimated cost of construction per month, the flat buyer is left with no option but to sign the Buyer’s Agreement in the format provided by the builder. No sensible person will volunteer to accept compensation constituting about 2-3% of his investment in case of delay on the part of the contractor, when he is made to pay 18% compound interest if there is delay on his part in making payment.

12. It can hardly be disputed that a term of this nature is wholly one sided, unfair and unreasonable. The builder charges compound interest @ 18% per annum in the event of the delay on the part of the buyer in making payment to him but seeks to pay less than 3% per annum of the capital investment, in case he does not honour his part of the contract by defaulting in giving timely possession of the flat to the buyer. Such a term in the Buyer’s Agreement also encourages the builder to divert the funds collected by him for one project, to another project being undertaken by him. He thus, is able to finance a new project at the cost of the buyers of the existing project and that too at a very low cost of finance. If the builder is to take loan from Banks or Financial Institutions, it will have to pay the interest which the Banks and Financial Institutions charge on term loan or cash credit facilities etc. The interest being charged by the Banks and Financial Institutions for financing projects of the builders is many times more than the nominal compensation which the builder would pay to the flat buyers in the form of flat compensation. In fact, the opposite party has not even claimed that the entire amount recovered by it from the flat buyers was spent on this very project. This gives credence to the allegation of the complainants that their money has been used elsewhere. Such a practice, in my view, constitutes unfair trade practice within the meaning of Section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practice for the purpose of selling the product of the builder. Though, such a practice does not specifically fall under any of the Clauses of Section 2(r) (1) of the Act that would be immaterial considering that the unfair trades, methods and practices enumerated in Section 2(r) (1) of the Act are inclusive and not exhaustive, as would be evident from the use of word 'including' before the words 'any of the following practices'.

As regards the stay on extraction of ground water for construction purpose, this Commission observed and held as under in Captain Gurtaj Singh Sahni & Anr. Vs. Unitech Limited & Anr. and connected matters in CC No. 603 of 2015, CC Nos. 958 to 966, 1000, 1007 to 1011, 1408 and 1409 of 2015, decided on 02.05.2016 :

6. The next question which arises for consideration is the quantum of compensation which should be paid to the complainants for the delay in completion of the villas. As far as the prohibition on use of underground water in construction is concerned, the learned counsel for the complainant has drawn my attention to the order dated 21.08.2012 passed by a Divisional Bench of Punjab & Haryana High Court in Civil Writ Petition No. 20032 of 2008 wherein the High Court noted that the public notice issued under Section 5(3) of the Environment Protection Act, 1986 was published in the newspaper on 26.12.2000. It further shows that the said notice had imposed a complete ban upon the use of underground water in the construction without prior approval of the competent authority. It was noted by the High Court that despite publication of the aforesaid notice, the builders continued to use underground water for construction purposes. If there was a complete ban on use of underground water for construction and the said prohibition was notified on 26.12.2000, the opposite party must have taken into account, the impact of the said prohibition while entering into Buyers Agreements with the complainants. Therefore, it is not open to the opposite party to rely upon the said prohibition in order to justify the delay in construction of the villas sold to the complainants. The opposite party knew at the time of entering into agreements with the complainants that it will not be able to use underground water for construction of the villas and therefore, will have to make alternative arrangements from authorized sources for making the water available for the said construction. Therefore, the aforesaid prohibition on use of the underground water for construction purpose does not justify the delay in completion of the construction. In any case, no material has been placed by the opposite party on record to show that efforts were made by it during the relevant period to procure water from alternative sources but it was unable to obtain the water from the said sources. More importantly, in the Buyers Agreement executed between the parties, it was not disclosed to the buyers that since no underground water can be used for construction purpose, the developer will have to arrange water from alternative sources and in case it is not able to arrange water, the construction would be delayed and in that case, it will not be held responsible for the delay in completion of the construction.

4. The opposite party has not been able to establish that the completion of the construction was delayed on account of the reasons beyond its control. Therefore, for the reasons stated in the above referred decisions of this Commission, we hold that the opposite party is required to pay appropriate compensation to the complainants for the delay in delivering possession of th

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e flat allotted to them. 5. If the compensation for the delay in construction is restricted to what is stipulated in the Buyers Agreement, there will be no pressure upon the builder to complete the construction since he will be more than happy to keep on paying paltry compensation of about 3% per annum of the capital investment, instead of arranging funds at much higher cost, to complete the construction'. 5. Since the grounds on which the complaint has been resisted have already been rejected, the same need not be revisited again. 6. The possession of the apartment has already been delivered to the complainants during the pendency of this complaint on 29.8.2017, the possession was offered to the complainants on 24.8.2017. Therefore, the only issue survives for consideration in this complaint is compensation for the period the possession is delayed. The possession certificate as well as the letter, whereby possession was offered to the complainants have been taken on record. 7. The complaint is therefore disposed of with the following directions: (i) The opposite parties shall pay compensation in the form of simple interest @ 8% per annum to the complainants with effect from 01.01.2012 till 24.8.2017. (ii) The payment in terms of this order shall be made within three months from today. (iii) The opposite party shall also pay a sum of Rs.25,000/- as the cost of litigation to the complainants. Later on Mr. Babanjeet Singh Mew, learned counsel for the opposite parties has appeared and he has been apprised of the order, so passed.