Last Updated on October 10, 2021 by Satish Mishra
Post Covers Consumer Complaint Shivalik Infrastructure and Developers Pvt. Ltd. wherein possession not delivered within 1 year. Refund granted by court plus compensation.
The excerpts taken from Case Title- Kiran Singh vs Shivalik Infrastructure and Developers Private Ltd.
In CC/395/2017 decided on 16.3.2018.
Introduction- Version of Complainant
Complainant has filed this complaint against the opposite parties under Section 17 of the Consumer Protection Act, 1986 (for Consumer Complaint No. 395 of 2017 2 short the Act), on the averments that opposite parties floated a mega housing project in Shivalik City, Sector 127, SAS Nagar, Mohali, in the name and style of M/s Shivalik Infrastructure & Development Pvt. Ltd. and introduced Paradise apartments. Accordingly, the complainant applied for one of the flat. As per Flat Buyer’s Agreement, Flat No.76 at 5th Floor, Bloc-A, Paradise Apartments, Sector 127, Kharar-Landran Road, SAS Nagar, Mohali was allotted for a fixed price of Rs.28,00,000/-. The area of the flat is 1225 sq. ft. and the covered area 1025 sq. ft. The opposite parties had tentative layout plan and final layout plan is yet to be approved by the competent authority. They further assured that within 12 months from the execution of the buyer’s agreement, the opposite parties were required to complete the construction and to deliver the possession of the flat. Against Rs.28,00,000/- the complainant has already paid the sum of Rs.26,86,020/- with the opposite parties within the time frame but opposite parties failed to deliver the possession of the flat to the complainant.
Also Read- Shiwalik Group Website Address
The payment was made as under:- Sr.No. Date of Receipt Receipt No. Amount in Rs. 1 06.08.2011 1472 5,22,500.00 2 01.09.2011 1483 12,25,001.00 3 19.10.2011 1520 5,38,519.00 4 09.09.2013 RTGS 1,00,000.00 5 11.10.2013 RTGS 2,00,000.00 6 16.12.2013 RTGS 1,00,000.00 Total 26,86,020.00 Consumer Complaint No. 395 of 2017 3 2. Although, they were to deliver the possession by 30.08.2012 to deliver the possession but opposite parties failed to complete the construction of the flat. The complainant visited the site on 02.04.2017 and had taken certain photographs and found that the construction is totally incomplete. It has been further stated that the opposite parties did not have the requisite permission from the competent authority to construct these flats. They did not have the final layout plan and they did not have the completion/occupancy certificates from the competent authority, environment clearance etc. Complainant again visited the site on 25.07.2013 and 18.08.2013 but no further progress at the site. Complainant had sent the mail to the opposite parties with the request to the opposite parties to complete the construction at the earliest. Another mail was sent on 11.09.2013 which was acknowledged by them. Complainant visited the site in the year 2014, 2015, 2016 and 2017 and still it is incomplete.
Prayers- Alleging deficiency in service and unfair trade practice on the part of the opposite parties, this complaint has been filed by the complainant seeking following directions against the opposite parties:- i) to refund amount of Rs.26,86,020/- deposited by the complainant with the opposite party alongwith interest at the rate of 20% per annum from the date of deposit till realization; ii) to pay compensation to the tune of Rs.10 lacs on account of mental agony and harassment caused to the complainant by the opposite party; Consumer Complaint No. 395 of 2017 4 iii) to pay litigation expenses to the tune of Rs.80,000/-. iv) Any other relief which this Hon’ble Court may deem fit under the facts and circumstances of the case be granted to the complainant in the interest of justice. 3.
Also Read- Shivalik Infrastructure And … vs Deshbir Singh
Builder Version-Upon notice, opposite parties have appeared and filed the written version taking preliminary objections that this Commission does not have the jurisdiction to entertain this complaint. There are contractual liabilities and the matter be referred to the Civil Court. The complaint is totally unwarranted and uncalled for as the opposite parties are ready to deliver the possession of the flat to the complainant, subject to clearance of all the dues and paper formalities as the same are to be done by the complainant and that complainant never came forward to take the possession at the spot and for execution of the sale deed. The complainant is not a consumer as the investment was made with the purpose of selling the property to earn the profits and that the rates of the property have fallen down, therefore, the complainant is seeking the refund of money. On merits, execution of the buyer’s agreement between the parties is matter of record but still some amount is due towards the complainant and the complainant after payment of the balance amount was to get the sale deed executed after paying the registration charges and to pay service tax and maintenance charges but he did not come forward to complete those formalities.
Complaint is without merit, it be dismissed. OP No.2 was proceeded ex-parte vide order dated 01.08.2017. Consumer Complaint No. 395 of 2017 5 4. In support of their contentions, complainant tendered into evidence the affidavit as Ex.C-A, copy of buyers agreement of January 2011 dated Ex.C-1, copies of receipts as Ex.2A to Ex.2E, 10 photographs dated 02.04.2017 as Ex.C3 (colly), copy of email dated 11.09.2013 as Ex.C-4, copy of email dated 22.11.2013 as Ex.C-5, copy of email dated 22.06.2014 as Ex.C-6, copy of email dated 15.07.2014 as Ex.C-7, copy of legal notice dated 01.04.2017 as Ex.C-8, 8 photographs dated 18.09.2017 as Ex.C-9 (colly) whereas opposite parties No. 1 & 3 filed the affidavit of Ghansham Sharma, MD of Shivalik Infrastructure and Development Pvt. Ltd. as Ex.OP-A, copy of resolution dated 19.04.2016.
Also Read- Harjinder Kaur vs Shiwalik Planners Pvt. Ltd. on 8 March, 2019
View of the Court- (Jurisdiction) We have heard the counsel for the complainant and have carefully gone through the averments as alleged in the complaint, evidence, written reply and documents filed by the parties. 6. An objection has been taken by the counsel for the opposite parties that this Commission does not have the jurisdiction and to try the present complaint as it is a contractual liability, therefore, the matter be referred to the Civil Court. The definition of the consumer has been defined under Section 2(1)(d)(ii) of the Act as if the complainant is availing any services for consideration he is a consumer and service has been defined under Section 2(1)(o) of the Act, which includes construction services. In this case, the complainant has paid a sum of Rs.26,86,020/- to the opposite Consumer Complaint No. 395 of 2017 6 parties and availed construction services from the opposite parties and opposite parties are to deliver the possession after receiving the agreed payment. However, after receiving the major portion of the payment they are not coming forward to deliver the possession. Therefore, there is deficiency in service for which consumer complaint is maintainable. Therefore, we do not agree with the plea that this Commission does not have the jurisdiction to entertain the complaint.
(Investment Purpose) -It is further contended by the counsel for the opposite party that the flat was booked for investment purpose because after its completion he was to sell it on profit but the complainant in his complaint specifically mentioned that the flat was booked for residential purpose. No evidence has been brought on record by the counsel for the opposite party that the complainant has any other property in the area of Mohali from where we can raise some presumption that the complainant booked the flat just for investment purpose. There is no documentary evidence on the record proved by the opposite parties that the complainant had been trading in real estate business. In case, it is not so then we cannot say that the complainant had booked the flat for investment purposes only. We are fortified by the judgment of 2017(3) CLT 459 “Pranab Basak versus Suhas Chatterjee”. In that case, two flats were booked by the complainant and a plea was taken that the complainant had booked these flats for investment purposes. It was observed by the Hon’ble National Commission that unless it is established that the complainant is dealing in sale and purchase or Consumer Complaint No. 395 of 2017 7 his real intention in booking the flat was to sell the same on profit, on appreciation of the value of the real estate. In another judgment “Kavita Ahuja versus Shipra Real Estate Ltd.” and Jai Krishna Estate Developer Pvt. Ltd.”, 2016 (1) CPJ 31 it was held by the Hon’ble National Commission that buyers of the residential unit would be termed as consumer unless it is proved that he/she had booked the same for commercial purposes. Therefore, in the absence of any specific evidence on the record, it cannot be said that the complainant had booked these flats for investment purposes only, therefore, we do not agree with the plea raised by the counsel for the Ops that the flat booked for investment purposes.
Also Read- Shivalik Buildtech Pvt Ltd (SBPL) Website
Possession Not Delivered- 8. It is a matter of record that Buyer’s agreement was executed between the parties, the same is exhibited as C-1. According to the complainant, a sum of Rs.26,86,020/- was paid to the opposite parties as referred in para No.4 of the complaint and in reply this fact has been admitted. Even otherwise, receipt Nos.1472, 1483 & 1520 as Ex.C-2A to Ex.C-2C and three payments have been made through RTGS, which have not been denied by the opposite parties, therefore, the payment of Rs.26,86,020/- has been admitted paid by the complainant to the opposite parties. He has further referred to Clause No.10.1 of the agreement that the possession was to be delivered within 12 months from the date of execution of the agreement subject to clause No.11.1 to 11.3 i.e. the reason beyond the control of the company, due to the Government Rules, Orders and Notifications Consumer Complaint No. 395 of 2017 8 etc. In case the flats are not ready and its possession was not offered then question of any other impediment on the part of the opposite parties does not arise. In case 12 months are to be taken from the date of agreement i.e. 30.08.2011 then the possession was to be delivered on 30.08.2012.
Now, we are in 2018 and till date the project is not completed. Counsel for the complainant has placed on record the chart of photographs, Ex.C-3 and Ex.C-9, which shows incomplete nature of flats of the project. In case, flats are not complete and possession is not delivered in time, it amounts in deficiency in service. It has been so held by the Hon’ble National Commission reported in II (2014) CPJ 131 “PUDA Versus Kanwalpreet Singh” that in case there is delay in handing over the possession, it amounts to deficiency in service and refund order can be passed. A reference has also been made to I (2017) CPJ 513 (NC) “Neha Suri versus Unitech Reliable Project Pvt. Ltd.” In that case, the possession of the flat was not given as agreed. It amounts to deficiency in service. Amount deposited alongwith interest was ordered to be refunded. Similar order was passed in I (2017) CPJ 113 “Vishal Issar Versus Park Wood Developers Pvt. Ltd.”. These judgments have not been rebutted by the counsel for the opposite party.
Penal Interest- 9. Another point was raised by the counsel for the complainant that in case there was delay on the part of the opposite party then the opposite party shall pay the penalty as per the agreement i.e. Clause No.10.3 of the agreement but at the same time, in case there is delay on the part of the complainant to Consumer Complaint No. 395 of 2017 9 make the payment @ 15% per annum for the first 90 days and beyond 90 days penal interest @ 20% per annum (total interest 17% per annum only).
Also Read- Sushma Swaraj v M/s. Shivalik Infrastructure and Developers
Therefore, there is a big difference between the penal charges to be charged by the opposite party and penal charges to be paid by the opposite party to the complainant. Therefore, it seems to be one side claim. This preposition was considered by the Hon’ble National Commission in CC No. 427 of 2014 “Satish Kumar Pandey & Anr. Vs. M/s Unitech Ltd.” decided on 8.6.2015 wherein the Hon’ble National Commission observed as under:- “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 Consumer Complaint No. 395 of 2017 10 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.
Rate of Interest- 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. 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% Consumer Complaint No. 395 of 2017 11 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.
Also Read- M/S. SHIVALIK INFRASTRUCTURE & DEVELOPERS PVT. LTD. & ANR v. MONIKA RANDHAWA
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”. Consumer Complaint No. 395 of 2017 12 The same view was upheld by the Hon’ble National Commission in CC No. 347 of 2014, “Swarn Talwar & Ors. Vs. Unitech Ltd.” decided on 14.8.2015. A reference has also been made to the judgment of the Hon’ble Supreme Court in “K.A. Nagmani Vs. Housing Commissioner, Karnataka Housing Board”, C.A. No. 6730-6731, decided on 19.9.2012. In that case, the District Forum has allowed interest @ 12% p.a. and its appeal was dismissed by the State Commission as well as the Hon’ble National Commission and after relying upon the judgment of “Ghaziabad Development Authority Vs. Balbir Singh”, (2004) 5 SCC 65, the interest @ 18% per annum on the deposited amount was allowed alongwith Rs. 50,000/- as compensation. Against the judgment of the Hon’ble National Commission in “Swarn Talwar & Ors. Vs. Unitech Ltd.”, C.C. No. 347 of 2014 (supra), Op preferred the appeal before the Hon’ble Supreme Court i.e. Civil Appeal No. 35562 of 2015, decided on 11.12.2015 and passed the order as under:- “We have heard learned counsel for the appellant and perused the record. We do not see any cogent reason to entertain the appeal. The judgment does not warrant any interference. The Civil Appeal is dismissed.” 10.
Rate of Interest as per PAPRA- Further, it has been held in judgment that in the case of refund then penal interest will not be applicable. In case penal charges as per the agreement are not paid then what should be the rate of interest in the case of refund? It has been referred in Rule 17 of the PAPRA, 1995 i.e. Rate of Interest on refund of advance Consumer Complaint No. 395 of 2017 13 money upon cancellation of agreement, in which it has been provided as under:- “17. Rate of Interest on refund of advance money upon cancellation of agreement. – The promoter shall refund full amount collected from the prospective buyers under subsection (1) of section 6 together with interest thereon at the rate of twelve per cent per annum payable from the date of receipt of amount so collected till the date of re-payment.” Accordingly, in the case of refund, the opposite party is required to pay refund alongwith interest at the rate of 12% per annum. 11.
No other point has been raised by the counsel for the parties. 12. Sequel to the above, we are of the opinion that there is deficiency in service on the part of the opposite party as opposite party failed to deliver the possession of the flat to the complainant within the agreed time after receiving the major amount as demanded by the opposite party from time to time. In case, the flat has not been constructed or possession was not delivered within the agreed time then the complainant has a right to withdraw from the scheme and seek refund.
Order of the Court- Accordingly, opposite parties are directed as under:- (i) to refund a sum of Rs.26,86,020/- alongwith interest at the rate of 12% p.a. from the respective dates of deposit till realization as per Rule 17 of the PAPRA; Consumer Complaint No. 395 of 2017 14 (ii) pay Rs.1,00,000/- as compensation for mental agony and harassment; and (iii) pay Rs.21,000/- as litigation expenses. 13. Ops are directed to comply with the above directions within 45 days from the receipt of copy of the order, failing which the compensation amount shall canny interest @ 12% p.a. from the date of order till realization. 14. The complaint could not be decided within the statutory period due to heavy pendency of court cases. 15. Order be communicated to the parties as per rules.
Also Read- Cheenu vs Shivalik Infrastructure and Developers Private Ltd. (CC/498/2017)
This post written by Advocate Satish Mishra.
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