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SUPREME COURT OF INDIA
MOHAN M. SHANTANAGOUDAR, R. SUBHASH REDDY, JJ.
Chandigarh Housing Board – Appellant
Versus
M/s. Parasvanath Developers Pvt. Ltd. & Anr – Respondents
Civil Appeal No. 10748 of 2016
Decided On : 17-12-2019
(a) Contract - Tripartite agreement between Housing Board, Developer and flat buyer - Clause 9(a) and (c) - Refund and compensation to flat buyer - Sub clause (a) stipulating handing over of flat within 36 months of signing of the Development Agreement - This period would be exclusive of delays in development clearances - Sub clause (c) stipulating compensation from Developer on breach of sub clause (a) - Instantly Developer could not commence development due to dispute with the Housing Board - Developer and Housing Board both responsible for delay - Therefore sub clause (c) does not get attracted and the liability cannot be affixed on Developer alone. (Para 10)
(b) Contract - Tripartite agreement between Housing Board, Developer and flat buyer - Clause 9(c) - On breach of sub clause 9(a) entitlement of buyer to receive compensation from the developer @ Rs.107.60 per Sq. Mtrs. (Rs. 10/-per Sq. Ft.) of the super area of the unit per month, and to no other compensation of any kind - National Commission awarding compensation towards mental harassment and litigation costs - Cannot be construed as compensation under sub clause (c) of clause 9 - Developer not liable for such amounts alone. (Para 10)
(c) Contract - Tripartite agreement between Housing Board, Developer and flat buyer - Arbitrator and National Commission both directing payment of compensation to flat buyer by Developer and Housing Board in ratio of 70:30 - Sale proceeds from the flat buyers apportioned by Develpoer and Housing Board in the same ratio of 70:30 - No error. (Para 13)
(d) Contract - Tripartite agreement between Housing Board, Developer and flat buyer - Clause 9(d) - National Commission enhancing rate of interest awarded by arbitrator to 10% in its discretionary jurisdiction - No interference warranted. (Para 14)
Facts of the case:
The Appellant herein, Chandigarh Housing Board and the Developer entered into a Development Agreement dated 06.10.2006 for the grant of development rights in respect of land measuring 123 acres. The said land was allotted to the Developer by CHB for constructing residential units, who then advertised its project for the sale of flats and pent houses as “Parsvanath Pride Asia”.
Respondent No. 2 herein (‘the Complainant’) applied for the allotment of a five-bedroom apartment in this project and paid a sum of Rs.1,03,31,250/-towards the total tentative price of Rs. 3,93,25,000/-. Later, a tripartite flat buyer agreement was executed between the Developer, CHB, and the Complainant on 23.04.2008. Clause 9(a) of this agreement stated that the construction of the flat was likely to be completed within a period of 36 months from the signing of the Development Agreement between CHB and the Developer, i.e., 06.10.2006.
The Complainant inquired and found between September-October 2009 that construction had not been commenced at the project site. Consequently, he sought a refund of the deposit amount of Rs.1,03,31,250 with interest at 20% p.a. When the refund was not made, the Complainant approached the National Commission on 24.02.2011.
Before the National Commission, it was the case of the Developer that the construction could not be carried out in time, as CHB had failed to hand over the possession of unencumbered land to it for raising the construction. On the contrary, CHB argued that disputes only existed for land earmarked for commercial activities, and there was no dispute with respect to the 123 acres of land handed over to the Developer for the construction of residential units. Therefore, it was contended by CHB that the Developer was liable to satisfy the claim of the flat buyer and the complaint was bad as against CHB for misjoinder of party. The dispute between the Developer and the CHB with respect to the Development Agreement was referred to arbitration.
The award passed by the arbitrator on 09.01.2015 specifically noted that since the flat buyers were not party to the arbitration, the award would only bind CHB and the Developer, and the entitlement of the residential flat buyers would have to be decided based on the facts of each case in independent proceedings. However, with respect to the liability to refund the advances collected from the residential unit buyers, the arbitrator found that the non-completion of the project was a result of breaches committed by both, the Developer and CHB. Therefore, he directed that any amount payable on account of refund of price, interest, or compensation (if and when finally determined by the National Commission or the Supreme Court) would be borne by the Developer and CHB in the ratio of 70:30.
Meanwhile, an order was passed by a 3-judge Bench of Supreme Court on 21.04.2015, taking note of the arbitration award dated 09.01.2015 observed that Clause 9(c) of the Tripartite Agreement, which stipulates the payment of compensation, would only be applicable as against the Developer if it is not in a position to offer a flat to the buyer after the expiry of 36 months as stated in Clause 9(a) of the Tripartite Agreement.
On 11.05.2016, the National Commission directed CHB and the Developer to pay the principal sum of Rs. 1,03,31,250/-to the Complainant at 10% p.a. from the date of deposit till realization. Further, Rs. 1 lakh was awarded for mental harassment and another Rs. 1 lakh was awarded towards litigation charges. Both of these were directed to be borne by the Developer and CHB in the ratio of 70:30.
Finding of the Court:
Impugned judgment does nitb warrant any interference.
Result: Appeal dismissed.
JUDGMENT :
MOHAN M. SHANTANAGOUDAR, J.
1. Delay condoned in filing appeal.
2. This appeal arises out of the final order dated 11.05.2016 passed by the National Consumer Disputes Redressal Commission at New Delhi (hereinafter ‘National Commission’) in Consumer Complaint (C.C.) No. 19 of 2011, vide which the Respondent No.1 and Appellant herein were directed to pay Respondent No. 2 herein a principal sum of Rs. 1,03,31,250/-with interest @ 10% p.a., Rs.1,00,000 for mental harassment and agony, and Rs.1,00,000 towards litigation costs in the ratio of 70:30.
3. The factual background to this appeal is as follows:
3.1 The Appellant herein, Chandigarh Housing Board (hereinafter ‘CHB’) invited bids to implement an integrated project with residential, commercial, and other related infrastructure facilities at the Rajiv Gandhi Chandigarh Technological Park in Chandigarh. The bid sent by Respondent No. 1 herein, M/s. Parasvanath Developers Ltd. (hereinafter ‘Developer’) was accepted by CHB. Consequently, CHB and the Developer entered into a Development Agreement dated 06.10.2006 for the grant of development rights in respect of land measuring 123 acres. The said land was allotted to the Developer by CHB for constructing residential units, who then advertised its project for the sale of flats and pent houses as “Parsvanath Pride Asia”.
3.2 Respondent No. 2 herein (hereinafter ‘the Complainant’) applied for the allotment of a five-bedroom apartment in this project and paid a sum of Rs.1,03,31,250/-towards the total tentative price of Rs. 3,93,25,000/-. Later, a tripartite flat buyer agreement (hereinafter ‘Tripartite Agreement’) was executed between the Developer, CHB, and the Complainant on 23.04.2008. Clause 9(a) of this agreement stated that the construction of the flat was likely to be completed within a period of 36 months from the signing of the Development Agreement between CHB and the Developer, i.e., 06.10.2006.
3.3 Having received no intimation from the Developer about the status of the project, between September-October 2009, the Complainant inquired and found that construction had not been commenced at the project site. Consequently, he sought a refund of the deposit amount of Rs.1,03,31,250 with interest at 20% p.a. When the refund was not made, the Complainant approached the National Commission on 24.02.2011. It is crucial to note here that similar complaints were filed by other flat buyers before the State Commission and the National Commission.
3.4 Before the National Commission, it was the case of the Developer that the construction could not be carried out in time, as CHB had failed to hand over the possession of unencumbered land to it for raising the construction. On the contrary, CHB argued that disputes only existed for land earmarked for commercial activities, and there was no dispute with respect to the 123 acres of land handed over to the Developer for the construction of residential units. Therefore, it was contended by CHB that the Developer was liable to satisfy the claim of the flat buyer and the complaint was bad as against CHB for misjoinder of party. Notably, the dispute between the Developer and the CHB with respect to the Development Agreement was referred to arbitration.
3.5 Pending the arbitration proceedings, the National Commission passed an order in a similar matter on 05.03.2013, noting that the flat buyers could not be deprived of their legitimate claims due to an intersedispute between CHB and the Developer. Observing that the Developer had failed to construct the residential units and hand over possession in time, the National Commission passed an interim order directing the Developer to pay compensation to the flat buyer in terms of Clause 9(c) of the Tripartite Agreement at Rs. 107.60 per sq metre, subject to the final outcome of the arbitration proceedings. Further, in terms of Clause 9(d) of the Tripartite Agreement, the Developer and CHB were directed to pay interest at the uniform rate of 9% p.a.
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