In this post we will discuss about an alternate remedy which is available to home buyers under The Consumer Protection Act for delay in possession by the builder.
CONSUMER PROTECTION ACT 1986
Today we are going to discuss the new Consumer Protection Act, 2019 came into force on 20th July 2020 and it will empower consumers and help them in protecting their rights through its various notified rules and provisions.
The new act will be swift and less time consuming compared to the older Consumer Protection Act, 1986 in which single-point access tojustice was given making it a time-consuming exercise.
The old act provided for a three-tier consumer dispute redressal machinery at the National (National Consumer Disputes Redressal Commission), State and District levels.
FACTS:
under Section 17 of the Consumer Protection Act, 1986 (for short the Act) on the averments that the applications are joint allottees of the flat No. 901, Tower Daffodil, 3 BHK having 1885 sq. fts. at Wave Gardens of the Ops with a basic sale price of Rs. 70,68,750/-, PLC @ Rs. 187.5/- sq. ft. total Rs. 3,53,438/-, car parking covered Rs. 1,50,000/-, club membership charges Rs. 75,000/-, IFMS Rs. 50/- sq. ft. Rs. 94,250/-, total Rs. 77,41,438/-. It has been further stated in the complaint that a sum of Rs. 5 Lac was paid as a booking amount and thereafter an earnest money of 15% of BSP, sum of Rs. 5 Lacs was paid on 17.5.2012 and further a sum of Rs. 5,93,077/- and Rs. 7,29,718/- were paid on 23.7.2012 and 25.8.2012. After payment of Rs. 18,22,795/- by August, 2012 and after a gap of one year on 17.7.2013, allotment letter of flat referred above was received. On the same date, Buyer’s agreement was executed between the parties wherein it was mentioned that Ops shall hand over the possession of the allotted flat to the complainants within 30 months, which could further be extended upto 6 months from the date of execution of the agreement i.e. 17.7.2013. Consequently, Ops were bound to give the complete possession of the flat by July, 2016 with a grace period of 6 months. In order to make further payment, the complainant had to take a loan from financial institution and as such, he applied for a loan of Rs. 50 Lacs from HDFC, which was approved vide letter dated 4.7.2013 on interest @ 10.40% p.a. on a variable rate for a period of 15 years and it was required to be repaid in equated 180 EMIs @ Rs. 54,961/- per-EMI. However, the complainant have opted for subvention linked plan and for that tripartite agreement was executed between the complainant, Op Nos. 1 & 2 and Op No. 3 under which Op Nos. 1 & 2 had taken the liability to pay pre- EMI interest for a period of 24 months. The complainants had made the payment of Rs. 43,64,885/- by 26.9.2014. However, there was huge delay in execution of the project on the part of Ops. The complainants take up the issue with Ops but they did not give any proper reply. In their letter dated 27.1.2015, it was mentioned that there was no progress/development at the site and due to that reason they had extended the subvention scheme upto 31.12.2016. According to the loan agreement, 80% of the basic sale price was to be disbursed by the Bank and rest 20% alongwith PLC/service/club charges were to be paid by the complainants. The payments were to be made according to the stage of construction. Since there was no progress at the site, complainants were compelled to withheld the further payments. However, the Ops kept on sending the reminders/letters demanding arrears of further payments without referring to the stage of construction and also kept on extending the pre-EMI interest unilaterally, which has been extended upto June, 2018. Alleging deficiency in services on the part of Ops, the complaint has been filed by the complainants against the Ops for refund of Rs. 18,22,795/- paid by the complainants to Op Nos. 1 & 2, a sum of Rs. 28,80,000/- paid by Op No. 3 to Op No. 1, a sum of Rs. 2,67,240/- paid by the complainant towards interest alongwith interest @ 21% p.a., mental agony and harassment Rs. 10 Lacs, expenses incurred in process of matter alongwith counsel fee Rs. 5 Lacs or any other direction which may deem fit to the Commission.
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Upon notice, Ops Nos. 1 & 2 appeared and filed their written replies through their authorized representative Mr. Raghav Sharma taking preliminary submission that the complaint is not maintainable as the complainants do not fall under the definition of the consumer as defined under Section 2(1)(d)(ii) of the Act because they are settled, working and residing in Patiala at House No. 1, Jyoti Enclave Front Mahindra College, Patiala and that the present plot was booked for investment purposes; the complaint is not maintainable in view of the Arbitration Clause No. 13 in the apartment allottee arrangement, therefore, the matter be referred to the Arbitrator. There was delay in making the payment by the complainants and another amount of Rs. 22,63,238.72 is outstanding against the complainants and various letters were sent to the complainants by the Ops from time to time to make this payment despite the fact that under the subvention scheme, pre- Emi interest payment period was extended from 29.8.2015 to 30.6.2018 and a sum of Rs. 3,93,124/- has been paid by the Ops No. 1 and 2 to Op No. 3 on behalf of the complainants; there was no fixed period to complete the possession of the flat, according to Clause 5.1, it was mentioned that every endeavour will be made to deliver the possession within a period of 30 months with an extended period of 6 months and in case it is not given thenaccording to Clause 5.5, compensation is to be paid to the complainant @ Rs. 5/- per sq. ft. of per month for the delayed period; the flat could not be completed as the Ops have entered into Memorandum of Agreement dated 3.2.2006 with the State of Punjab and according to Clause 5(e) of the memorandum of agreement, the State Government shall acquire land under the provisions of the Land Acquisition Act, 1984 and transfer the same to the Ops. The approved plan of the entire project also shows critical areas i.e. land, which is not in possession of the Ops and due to the failure of the State Government in acquiring the same, the land which is not available to the Ops equal to10% of the total land required for the entire project. They requested the State Government to acquire 23.21 acres of land, which fall within the master plan of the project. Further GMADA was to provide external access roads to the project upon execution of land use agreements with the local farmers, which the GMADA has failed. However, Op No. 1 entered into a land use agreement with local farmers from whose land an access road has been laid for proper access to the project. Therefore, the delay, if any, in completion of the apartment of the complainant is due to the reasons which are beyond the control of Ops; the complainants have prayed for the refund, which is not maintainable as per the agreement as the complainants themselves are the defaulters; the Hon’ble Commission does not have the pecuniary jurisdiction to entertain and decide the present complaint as total value of the apartment in question is Rs. 77,41,438/- and complainants have further claimed more than Rs. 36.90 Lacs as interest (approximately) and further prayed for Rs. 10 lacs as compensation and Rs. 5 Lacs as litigation expenses and the total comes to Rs. 1,29,31,438/-, which is beyond the pecuniary jurisdiction of this Commission; there is no deficiency in service on the part of Ops, therefore, there is no cause of action for the complainants to file this complaint. In parawise reply, averments stated in the preliminary objections were reiterated. Booking of the flat and payments made by the complainants are a matter of record, however, the complainants are defaulters for not making the payment as demanded by the Ops. No doubt that there is some delay in completing the project for which subvention period has been extended by the Ops. The reasons for delay have been specified in the preliminary submissions. Since there is no deficiency in service on the part of Ops, therefore, the complaint filed by the complainant is not maintainable.
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ISSUES:
preliminary objections that in the complaint grievance of the complainants are against Op Nos. 1 & 2 and there is no allegation of deficiency in services against Op No. 3. Therefore, complaint against Op No. 3 is not maintainable. In reply on merits, it has been admitted that a loan of Rs. 50 Lacs was sanctioned in favour of the complainants and tripartite agreement has executed between the complainant, Op Nos. 1 & 2 and this Op. It was to be repaid in 180 EMIs @ Rs. 54,961/-. Out of the sanctioned amount, a sum of Rs. 28,80,000/- has been disbursed to Op Nos. 1 & 2. Other averments in the complaint do not pertain to this Op. This Op reserves its preferential right to get the amount disbursed by it alongwith interest in case any claim is allowed in favour of the complainants.
To support his contentions, the parties led their respective evidence.
The complainant in his evidence has tendered affidavit of Anil K. Gupta as Ex. C-A and documents Exs. C-1 to C-13. On the other hand, Op Nos. 1 & 2 had tendered affidavit of Sh. Amarjit Singh, Authorised Signatory as Ex. Op-1/A and documents Exs. Op1/1 to Ex. Op-1/26. Op No. 3 had tendered affidavit of Nandan Singh Rawat, Manager as Ex. Op-3/A and documents Op-3/1 to Op-3/4.
We have heard the counsel for the parties and have carefully gone through the averments made in the complaint, written reply filed by the Ops and evidence and documents on the record.
CITE JUDGEMENT QUOTED ON SETTLED LAW :
Learned counsel for complainants, on instructions, states that complainants want to withdraw the complaint since there is a technical defect that the complaint has not been signed by all the complainants and liberty be given to file a fresh complaint on the same cause of action.
In view of the above statement made by the learned counsel for complainants, the complaint stands dismissed as withdrawn. Liberty, as prayed for, is granted.
Statutory deposit of Rs.5,000/- be refunded to the complainants
Ruhi Seth versus IREO Grace Realtech Pvt. Ltd.” Consumer Complaint No. 1464 of 2017, decided on 13.11.2017. In that case, the complainant had booked the apartment with Ops for a total consideration of Rs. 1,84,44,568/- but paid a sum of Rs. 33,56,942/-. The complaint was filed before the State Commission, returned the complaint to file it before the appropriate authority after relying upon the judgment
‘Consumer’ as given in Section 2(1)(d) of the Act, which includes the phrase partly paid and partly promised and this judgment is silent on the issue of goods and services in case of refund. He has referred to another judgment “Naveen Sharma versus M/s Shree Vardhman Group” Consumer Case No. 2259 of 2017, decided on 12.12.2017. In that case, the apartment having total sale consideration of Rs. 1,06,00,000/- was booked out of which a sum of Rs. 52,85,144/- was paid but the apartment was not delivered within the agreed time and accordingly, complaint was filed for the refund of the amount alongwith interest and compensation and taking the similar view the same bench stated that the recoverable amount is less than Rs. 1 Crore, therefore, this Commission does not have the pecuniary jurisdiction to entertain the complaint. The counsel for the complainant has referred to another judgment “Bishwa Mohan Kumar Singh versus M/s Orris Infrastructure Pvt. Ltd. & 3 Ors.”, Consumer Complaint No. 2889 of 2017, decided on 16.11.2017. In that case, apartment was booked with the Ops for total sale consideration of Rs. 99,61,800/- out of which payment of Rs. 26,68,677/- was paid and case was filed for refund of the same. Complaint was filed before the Hon’ble National Commission and the same bench after making the observations referred above returned the complaint for want of pecuniary jurisdiction to be filed before the State commission.
Ariisto Developers Pvt. Ltd. versus ChandrakantNagji Patel” is to be followed and in case these judgments are to be followed then total value of the goods or services is to be taken for the purpose of pecuniary jurisdiction plus compensation, if any. In case we take the total sale consideration of the apartment, it is Rs. 77,41,438/- and the complainant has claimed a sum of Rs. 33,93,288/- as interest and Rs. 10 Lacs as compensation and in case this amount is added together, it crosses more than Rs. 1 crore. Therefore, we are of the opinion that this complaint does not fall within the pecuniary jurisdiction of this Commission. Once the complaint does not fall within the pecuniary jurisdiction of this Commission then we are not supposed to give findings on other aspects of the complaint.
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FINDINGS OF THE COURT:
Where we have two sets of judgments i.e. larger Bench of the Hon’ble National Commission is of the view that for the purpose of pecuniary jurisdiction, total value of the goods or services is to be taken for which in refund case, separate parameters cannot be taken into consideration. Whereas the Single Bench of the Hon’ble National Commission in the case of refund, cost of the amount paid is to be taken as value of the goods or services in view of the definition given under Section 2(1)(d) of the Act but at the same time Section 17(1)(a) has referred above is also to be taken into consideration. In case there is specific provision under the Act that for the purpose of pecuniary jurisdiction value of the goods or services is to be taken, in that situation, this Commission is following the Larger Bench’s decision of the Hon’ble National Commission, therefore, we are of the opinion that the Larger Bench’s decision of the Hon’ble National Commission in “Ambrish Kumar Shukla and others v. Ferrous Infrastructure Pvt. Ltd.” (supra) and “Ariisto Developers Pvt. Ltd. versus Chandrakant Nagji Patel” is to be followed and in case these judgments are to be followed then total value of the goods or services is to be taken for the purpose of pecuniary jurisdiction plus compensation, if any. In case we take the total sale consideration of the apartment, it is Rs. 77,41,438/- and the complainant has claimed a sum of Rs. 33,93,288/- as interest and Rs. 10 Lacs as compensation and in case this amount is added together, it crosses more than Rs. 1 crore. Therefore, we are of the opinion that this complaint does not fall within the pecuniary jurisdiction of this Commission. Once the complaint does not fall within the pecuniary jurisdiction of this Commission then we are not supposed to give findings on other aspects of the complaint.
CONCLUSION:
Various rights, responsibilities and reliefs have been given to the consumers under the Consumer Protection Act, 1986 and a lot of initiatives are taken by the government for the betterment of the consumers still there are many lacunas in the act and it is not able to exactly serve the purpose for which it was created. One of the major aims of enacting this act was to protect the interest of the consumer and provide them speedy remedy but it has not been fully achieved due to various reasons like illiteracy, corruption, etc. there are thousands of pending cases in the consumer courts all over the country. After 30 years of enacting the act still the consumers are not aware of their rights and duties and no effective step has been taken by the government to make sure that the consumer get educated about various rights and responsibilities they have as consumers. The main aim of this act is to protect the interest of the consumers and it is possible only when some effective steps are taken educating the consumers and all the lacunas in the exiting act are removed.
This post was written by Pranothi Rana.
For Case Specific Advice, One can connect with TOP/BEST/EXPERT State Consumer Disputes Redressal Commission RERA PROPERTY Punjab, Chandigarh, Haryana Advocate Lawyer.
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