NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
R.K. Agrawal, President and Dr. S.M. Kantikar, Member
Sanjay Gopinath and Ors. – Complainants
versus
M/s. Ireo Grace Realtech Pvt. Ltd.
and Ors. – Opp. Parties
Consumer Case No.2236 of 2016, Consumer Case No.1692 of 2017, Consumer Case No.1813 of 2018, Consumer Case No.1814 of 2018, Consumer Case No.2281 of 2017, Consumer Case No.2354 of 2018, Consumer Case No.3195 of 2017, Consumer Case No.3205 of 2017, Consumer Case No.3401 of 2017 and Consumer Case No.3402 of 2017
Decided on 31.8.2021

IMPORTANT POINTS
(1) Principle laid down is that onus of establishing that the Complainant was dealing in real estate, i.e., in purchase and sale of plots/flats in his normal course of business to earn profits shifts to the Opp. Party.
(2) Hon’ble Supreme Court also held that if the Agreement is one-sided and the Opp. Party Developer cannot compel the Apartment Buyer to be bound by one-sided contractual terms contained in the Apartment Buyer’s Agreement.

Headnote:

Consumer Protection Act, 1986 – Section 21(a)(i) [Consumer Protection Act, 2019 – Section 58(1)(a)(i)] – Complaint before the National Commission - Applications invited by Opp. Party/Developer for allotment of flats in their upcoming Project, “The Corridors” - Complainant herein (in lead complaint case) booked a residential flat in the Project by paying a sum of Rs.14 lakh towards booking amt. - Complainant made payment of Rs.1,55,17,716/- on different dates - Developer could not complete the construction work at the Project within stipulated period and failed to deliver the possession of the Unit – Present batch of Complaints relates to category where more than 1 booking has been made by same Allottee - Principle laid down is that onus of establishing that the Complainant was dealing in real estate, i.e. in purchase and sale of plots/flats in his normal course of business to earn profits shifts to the Opp. Party which the Opp. Party failed to do so - Complainants no doubt are consumers under Sec. 2(1)(d) of the Act - Apartment Buyers in Complaint filed before this Commission made prayer for refund of the amt. deposited along with interest @ 20% p.a. - Hon’ble Supreme Court also held that if the Agreement is one-sided and the Opp. Party Developer cannot compel the Apartment Buyer to be bound by one-sided contractual terms contained in the Apartment Buyer’s Agreement - Apartments have not been ready for allotment as on 30.06.2020 per date fixed before RERA (Chart B allottees) - Allottees in Chart B are entitled to refund of the entire amt. deposited by them – Due to Covid-19 pandemic and prevailing market conditions, it is necessary to balance the competing interest of both parties.

Held: The present batch of Consumer Complaints relates to the category where more than one bookings have been made by the same Allottees. All other issues were identical in all the aforesaid Consumer Complaints except the issue of more than one booking by the same Allottee.

The contention of the Learned Counsel for the Opposite Party Developer that the Complainant is not a ‘Consumer’ as the Complainant has booked more than one Apartments for earning profits is completely unsustainable in the light of the judgement of this Commission in Kavita Ahuja vs. Shipra Estates I (2016) CPJ 31, in which the principle laid down is that the onus of establishing that the Complainant was dealing in real estate i.e. in the purchase and sale of plots/flats in his normal course of business to earn profits, shifts to the Opposite Party, which in the instant case they had failed to discharge by filing any documentary evidence to establish their case. Therefore we are of the considered view that the Complainant is a ‘Consumer’ as defined under Section 2 (1)(d) of the Act.

Hon’ble Supreme Court also held that the Agreement is one-sided and the Opposite Party Developer cannot compel the Apartment Buyer to be bound by the one-sided contractual terms contained in the Apartment Buyer’s Agreement by observing as under :-

“We are of the view that the incorporation of such one-sided and unreasonable clauses in the Apartment Buyer’s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act, the powers of the consumer fora were in no manner constrained to declare a contractual term as unfair or one-sided as an incident of the power to discontinue unfair or restrictive trade practices. An ‘unfair contract’ has been defined under the 2019 Act, and powers have been conferred on the State Consumer Fora and the National Commission to declare contractual terms which are unfair, as null and void. This is a statutory recognition of a power which was implicit under the 1986 Act.

In view of the above, we hold that the Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer’s Agreement”

Hon’ble Supreme Court on the issue “Whether the Apartment Buyers are entitled to terminate the Agreement, or refund of the amount deposited with Delay Compensation” held as under:-

“In the present case, the allottees before this Court in the present batch of appeals, can be categorised into two categories:-

i) Apartment Buyers whose allotments fall in Phase 1 of the project comprised in Towers A6 to A10, B1 to B4, and C3 to C7, where the Developer has been granted occupation certificate, and offer of possession has been made, are enlisted in Chart A;

ii) Apartment Buyers whose allotments fall in Phase 2 of the project, where the allotments are in Towers A1 to A5, B5 to B8, C8 to C11, where the Occupation Certificate has not been granted so far, are set out in Chart B below.

………..

Chart A allottees (i) We are of the view that allottees at Serial Nos. 1 and 2 in Chart A are obligated to take possession of the apartments, since the construction was completed, and possession offered on 28.06.2019, after the issuance of Occupation Certificate on 31.05.2019. The Developer is however obligated to pay Delay Compensation for the period of delay which has occurred from 27.11.2018 till the date of offer of possession was made to the allottees.

……..

Chart B allottees

(i) Insofar as the allottees in Chart B are concerned, they have paid part consideration, in most cases up to the 4th instalment till 2017, when they found that there was no progress being made in respect of the Towers in which the apartments had been allotted to them. It is an admitted position that Occupation Certificate for Towers A1, A2, A3, B7, C9 and C11, in which the allotments have been made for this category has not been issued by the Municipal Corporation.

The apartments have not been ready for allotment even as on 30.06.2020, as per the date fixed before the RERA Authority.

(ii) The allottees submitted that they were facing great hardship since they had obtained loans from Banks for purchasing these apartments, and were paying high rates of interest. In 2017, when they realised that there was no construction activity in progress, they were constrained to file consumer complaints before the National Commission, and then discontinued payment of further instalments.

(iii) The Developer made an alternate offer of allotment of apartments in Phase 1 of the project. The allottees are however not bound to accept the same because of the inordinate delay in completing the construction of the Towers where units were allotted to them. The Occupation Certificate is not available even as on date, which clearly amounts to deficiency of service. The allottees cannot be made to wait indefinitely for possession of the apartments allotted to them, nor can they be bound to take the apartments in Phase 1 of the project. The allottees have submitted that they have taken loans, and are paying high rates of interest to the tune of 7.9% etc. to the Banks.

Consequently, we hold that the allottees in Chart B are entitled to refund of the entire amount deposited by them.

(iv) In so far as award of compensation by payment of Interest is concerned, clause 13.4 of the Apartment Buyer’s Agreement provides that the Developer shall be liable to pay the allottee compensation calculated @ Rs. 7.5 per sq. ft. of the Super Area for every month of delay, after the end of the Grace Period. The compensation will be payable only for a period of 12 months.

The Apartment Buyers in their Complaint filed before the National Commission made a prayer for refund of the amount deposited alongwith Interest @ 20% p.a. compounding quarterly till its realisation. The Apartment Buyers, in their submissions have stated that they have obtained home loans on which Interest @ 7.90% p.a. is being paid, even as on date. We have considered the rival submissions made by both the parties. The Delay Compensation specified in the Apartment Buyer’s Agreement of Rs. 7.5 per sq. ft. which translates to 0.9% to 1% p.a. on the amount deposited by the Apartment Buyer cannot be accepted as being adequate compensation for the delay in the construction of the project. At the same time, we cannot accept the claim of the Apartment Buyers for payment of compound interest @ 20% p.a., which has no nexus with the commercial realities of the prevailing market.

We have also taken into consideration that in Subodh Pawar v. IREO Grace, this Court recorded the statement of the Counsel for the Developer that the amount would be refunded with Interest @ 10% p.a. A similar order was passed in the case of IREO v. Surendra Arora. However, the Order in these cases were passed prior to the out-break of the pandemic.

We are cognizant of the prevailing market conditions as a result of Covid–19 Pandemic, which have greatly impacted the construction industry.

In these circumstances, it is necessary to balance the competing interest of both parties. We think it would be in the interests of justice and fairplay that the amounts deposited by the Apartment Buyers is refunded with Interest @ 9% S.I. per annum from 27.11.2018 till the date of payment of the entire amount.

The refund will be paid within a period of three months from the date of this judgment. If there is any further delay, the Developer will be liable to pay default interest @ 12% S.I. p.a. (v) The Developer shall not deduct the Earnest Money of 20% from the principal amount, or any other amount as mentioned in Clause 21.3 of the Agreement, on account of the various defaults committed by the Developer, including the delay of over 7 months in obtaining the Fire NOC.”

In the present Complaint Cases, Apartment Buyers whose allotments fall in Phase 1 of the Project comprised in Towers A6 to A10, B1 to B4 and C3 to C7, where the Opposite Party Developer has been granted Occupation Certificate (O.C.), and offer of possession has been made, are enlisted in following Chart A: (Paras 10, 11 14, 15 & 16)

Result: This Commission directs the Complainants/Allottees enlisted in Chart A to take possession of the Apartments after making payment of outstanding dues. Opp. Party/Developer shall pay Delay Compensation in the form of simple interest@9% p.a. on the deposited amt. for the period of delay. Opp. Party/Developer is directed to refund the entire amt. deposited by Complainants/Allottees enlisted in Chart B, along with interest@9% S.I. p.a. within 3 months from the date of this Order.