PUNJAB STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHANDIGARH.
Paramjeet Singh Dhaliwal, President; Mr. Rajinder Kumar Goyal, Member
Rajinder Sharma – Complainant
Versus
Aeropolis Infrastructure Pvt. Ltd
& Ors. – Opposite Parties
Consumer Complaint No.239 of 2020
Decided on 08.06.2021

IMPORTANT POINTS
(1) Incorporation of one-sided and unreasonable clauses in the Apartment Buyer’s Agreement constitutes an unfair trade practice under Section 2(1)(r).
(2) Commission is competent to entertain and decide the present complaint and the provisions of RERA do not bar the jurisdiction of the Consumer Commission.

Headnote:

Consumer Protection Act, 2019 – Section 47 read with Section 49(2) – Complaint – Complainant is retired serviceman – Opp. Parties No.1 to 4 misrepresented to have obtained all requisite approvals/clearances from Govt. and that possession would be delivered within 2 to 2½ yrs. from date of issuance of the allotment letter – Complainant had booked industrial plot measuring 500 sq. yds. in Opp. Parties No.1 to 4’s project, vide allotment ltr. dt. 13.10.2011, Complainant was allotted IT/industrial plot measuring 500 sq.yds. in Mohali – Sec. 47(i) & Sec. 47(1)(ii) - Jurisdiction of State Commission - Complainant has challenged unfair terms of contract and had sought to declare that contract null and void – Sec. 49 – Procedure applicable to State Commission – State Commission under Sec. 47(1)(a)(ii) read with Sec. 49(2) of the Act, has pecuniary jurisdiction to entertain and determine issue of unfair contract, can declare any term of the contract which is unfair, as null and void – Commission has pecuniary jurisdiction to hear present complaint, though value of goods or services paid as consideration is Rs. 16,95,000/-; as under Sec. 47(1 (ii) of the Act, no min. value of goods or services paid as consideration has been fixed – Sec. 47(iv) – Territorial jurisdiction – In view of Section 47 (iv) (a), (b) and (c) of the Act, Commission has territorial jurisdiction – Sec. 2(46) – Unfair contract – Incorporation of one-sided and unreasonable clauses in Apartment Buyer’s Agreement constitutes an unfair trade practice under Sec. 2(1)(r) – Opp. Parties 1 to 4 committed violation of Sec. 6 (1) of PAPRA, by not entering into written Agreement for Sale of plot with Complainant and failed to get it regd. – Amounts to unfair trade practice and deficiency in service – Delay in getting Completion/Occupation Certificate has been held to be ‘deficiency in service’ by Hon’ble Supreme Court – Commission is competent to entertain, decide present complaint and provisions of RERA do not bar the jurisdiction of the Consumer Commission – Conduct of Opp. Parties No.1 to 4, regarding firstly giving consent for settlement of dispute through mediation, then issuance of cheques in favour of Complainant which bounced also to be taken into account while awarding compensation.

Held: The legal issues of substantial public importance pertaining to Court’s territorial and pecuniary jurisdiction concerning consumer complaints filed under Chapter IV of the Consumer Protection Act, 2019 has been raised in this consumer complaint. It is an undisputed fact that complainant had booked an industrial plot measuring 500 sq.yds. in the aforesaid project of opposite parties No.1 to 4. Vide allotment letter dated 13.10.2011, Ex.C/2, he was allotted an IT/industrial plot measuring 500 sq.yds. at Sector 66-A, Mohali at the basic sale price of Rs. 33,00,000/-. The property in question is situated in the territorial jurisdiction of Punjab and the complainant had paid Rs. 16,95,000/- to opposite parties No.1 to 4 towards the sale price of the plot.

It would be appropriate to reproduce the Section 47 of the Act, which reads as under:

47. Jurisdiction of the State Commission.-

(1) Subject to the other provisions of this Act, the State Commission shall have jurisdiction –

(a) to entertain –

(i) complaints where the value of the goods or services paid as consideration, exceeds rupees one crore, but does not exceed rupees ten crore:

Provided that where the Central Government deems it necessary so to do, it may prescribe such other value, as it deems fit;

(ii) complaints against unfair contracts, where the value of goods or services paid as consideration does not exceed ten crore rupees;

(iii) appeals against the orders of any District Commission within the State; and

(b) to call for the records and pass appropriate orders in any consumer dispute which is pending before or has been decided by any District Commission within the State, where it appears to the State Commission that such District Commission has exercised a jurisdiction not vested in it by law, or has failed to exercise a jurisdiction so vested or has acted in exercise of its jurisdiction illegally or with material irregularity.

(2) The jurisdiction, powers and authority of the State Commission may be exercised by Benches thereof, and a Bench may be constituted by the President with one or more members as the President may deem fit:

Provided that the senior-most member shall preside over the Bench.

(3) Where the members of a Bench differ in opinion on any point, the points shall be decided according to the opinion of the majority, if there is a majority, but if the members are equally divided, they shall state the point or points on which they differ, and make a reference to the President who shall either hear the point or points himself or refer the case for hearing on such point or points by one or more of the other members and such point or points shall be decided according to the opinion of the majority of the members who have heard the case, including those who first heard it:

Provided that the President or the other members, as the case may be, shall give opinion on the point or points so referred within a period of one month from the date of such reference.

(4) A complaint shall be instituted in a State Commission within the limits of whose jurisdiction, –

(a) the opposite party or each of the OPs, where there are more than one, at the time of the institution of the complaint, ordinarily resides or carries on business or has a branch office or personally works for gain; or

(b) any of the OPs, where there are more than one, at the time of the institution of the complaint, actually and voluntarily resides, or carries on business or has a branch office or personally works for gain, provided in such case, the permission of the State Commission is given; or

(c) the cause of action, wholly or in part, arises; or

(d) the complainant resides or personally works for gain.

Now, we proceed to examine the issue of pecuniary jurisdiction of this Commission. In the present complaint, the complainant has challenged the unfair terms of the contract and had sought to declare that contract null and void. It is true that that under section 47(1)(i) of the Act, for the complaint with the value of goods or services paid as consideration exceeds Rupees One Crore but did not exceed Rupees Ten Crore, the State Commission has pecuniary jurisdiction to entertain complaint. As per Section 47(1)(ii) of the Act reproduced above, it is specifically mentioned that the complaint can be entertained by the State Commission against unfair contracts where the value of goods or services paid as consideration does not exceed Rs. 10 Crore. In this Section, minimum value of the goods or services paid has not been laid down, but maximum value of goods or services paid has been mentioned as not exceeding Rs. 10 Crore.

Furthermore, it would be appropriate to refer to Section 49 of the Act; which reads as under:

“49. Procedure applicable to State Commission. –

(1) The provisions relating to complaints under sections 35, 36, 37, 38 and 39 shall, with such modifications as may be necessary, be applicable to the disposal of complaints by the State Commission.

(2) Without prejudice to the provisions of sub-section (1), the State Commission may also declare any terms of contract, which is unfair to any consumer, to be null and void.”

38. The plot, in question, is situated in 66-A, Mohali, Punjab and the opposite parties No.1 to 4 are also having their offices in District Mohali. Therefore, in view of Section 47 (4) (a), (b) and (c) of the Act, this Commission has territorial jurisdiction to entertain, try and decide this consumer complaint.

The main contention of the learned counsel for the complainant is that terms of the allotment letter dated 13.10.2011 including Payment Schedule, Ex.C/2, are unfair. Section 2(46) of the Act defines “unfair contract” and it reads as under:

“Section 2 (46): “unfair contract” means a contract between a manufacturer or trader or service provider on one hand, and a consumer on the other, having such terms which cause significant change in the rights of such consumer, including the following, namely: –

(i) requiring manifestly excessive security deposits to be given by a consumer for the performance of contractual obligations; or

(ii) imposing any penalty on the consumer, for the breach of contract thereof which is wholly disproportionate to the loss occurred due to such breach to the other party to the contract; or

(iii) refusing to accept early repayment of debts on payment of applicable penalty; or

(iv) entitling a party to the contract to terminate such contract unilaterally, without reasonable cause; or

(v) permitting or has the effect of permitting one party to assign the contract to the detriment of the other party who is a consumer, without his consent; or

(vi) imposing on the consumer any unreasonable charge, obligation or condition which puts such consumer to disadvantage.”

The Hon’ble Supreme Court in case Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna and Ors. Civil Appeal No.5785 of 2019 decided on 11.01.2021, relying upon the judgments rendered in cases of Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. v. DLF Southern Homes Ltd. 2020 (3) RCR (Civil) 544, has upheld the power of the Consumer Commissions at State and National level to declare such contracts as null and void. The relevant portion is being reproduced herein below:-

“….19. Whether the terms of the Apartment Buyer’s Agreement are one-sided? The second issue which has been raised by the Apartment Buyers is that the Agreement in this case, contains wholly one-sided clauses, and would not be bound by its terms.

19.1 We have carefully perused the terms of the Agreement, and an analysis of the same reveals that :

a) Under the construction-linked plan, Clause 6 provided that the apartment buyers would be required to deposit 20% of the sale consideration within 45 days of booking of the apartment.

b) Clause 7.4 of the Agreement provides that if there is a delay in payment of an instalment, the apartment buyer would be required to pay Interest on every delayed payment of such instalment @ 20% S.I. p.a.

c) Clause 13.2 of the Agreement provides that if the allottee fails, ignores or neglects to take possession of the said Apartment in accordance with the Notice of Possession, the allottee shall be liable to pay “Holding Charges” on the super area @ Rs.7.5 per sq. ft. per month.

d) In contrast, Clause 13.3 of the Agreement provides that if the Company fails to offer possession by the end of the Grace Period i.e. 42+6 months, it would be liable to pay Delay Compensation @ Rs.7.5 per sq. ft. of the super area for every month of delay. Delay compensation at Rs. 7.5 per sq. ft. works out to approximately 0.9% to 1 % Interest per annum. The price per sq. ft of an apartment under the Apartment Buyer’s Agreement was Rs. 10,350/- per sq. ft. The compensation payable for delay was Rs. 7.5 per sq. ft. The compensation payable by the Developer for delay in offering possession works out to : 7.5/10,350 x 100 x 12 = 0.9 % to 1% p.a.

e) Clause 13.5 provides that the allottee may opt for termination, only after 42 months from the date of issuance of Fire NOC + 6 months’ Grace Period, plus a further period of 12 months.

The Delay Compensation would be payable to the allottee only if the termination was “validly opted”. The compensation was limited to a fixed period of 12 months only, and that no other claim whatsoever, whether monetary or otherwise, was payable by the Developer.

f) Clause 13.8 of the Agreement provides that the allottee shall be deemed to have waived all its claims in respect of the area, specifications, quality, construction, any other provision in the apartment against the Developer upon taking possession of the apartment.

g) Clause 21 provides for termination of the Agreement and forfeiture of earnest money by the Developer, if the allottee neglects or fails to make timely payments as stipulated in the Agreement, or fails to exercise the options offered by the Developer.

Clause 21.3 provides that upon such termination, the Appellant Company shall be under no obligation, except to refund the amounts already paid by the allottee, without any interest, and after forfeiting and deducting the earnest money, interest on delayed payments, brokerage / commission / charges, service tax and other amounts due and payable to it. The principal amount after the aforesaid deductions are made, would be refunded at an uncertain future date i.e. after the Developer had sold the apartment allotted to the complainant.

In contrast, the allottee is given a very limited right to cancel the Agreement solely in the event of the clear and unambiguous failure of the warranties of the Company, which leads to frustration of the Agreement on that account. In such case, the allottee will be entitled to a refund of the instalments actually paid, along with interest @ 8% p.a. within a period of 90 days from the date of determination to this effect. No other claim, whatsoever, monetary or otherwise shall lie against the Company.

19.2 The aforesaid clauses reflect the wholly one-sided terms of the Apartment Buyer’s Agreement, which are entirely loaded in favour of the Developer, and against the allottee at every step.

The terms of the Apartment Buyer’s Agreement are oppressive and wholly one-sided, and would constitute an unfair trade practice under the Consumer Protection Act, 1986.

…..

19.4 Clause 2(1)(r) of the Consumer Protection Act, 1986 defines “unfair trade practice” as follows :- “2(1)(r) “unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:- … …. … “ (emphasis supplied)

The said definition is an inclusive one, as held by this Court in Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725 wherein this Court speaking through one of us (J. Indu Malhotra) held:-

“ 6.1 …. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service. In Fortune Infrastructure v. Trevor D’Lima [Fortune Infrastructure v. Trevor D’Lima, (2018) 5 SCC 442 : (2018) 3 SCC (Civ) 1] , this Court held that a person cannot be made to wait indefinitely for possession of the flat allotted to him, and is entitled to seek refund of the amount paid by him, along with compensation.

6.2. The respondent flat purchaser has made out a clear case of deficiency of service on the part of the appellant builder. The respondent flat purchaser was justified in terminating the apartment buyer’s agreement by filing the consumer complaint, and cannot be compelled to accept the possession whenever it is offered by the builder. The respondent purchaser was legally entitled to seek refund of the money deposited by him along with appropriate compensation.

6.3 The National Commission in the impugned order dated 23-10-2018 [GeetuGidwani Verma v. Pioneer Urban Land and Infrastructure Ltd., 2018 SCC OnLine NCDRC 1164] held that the clauses relied upon by the builder were wholly one-sided, unfair and unreasonable, and could not be relied upon. The Law Commission of India in its 199th Report, addressed the issue of “Unfair (Procedural & Substantive) Terms in Contract”. The Law Commission inter alia recommended that a legislation be enacted to counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that:

“a contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties.”

6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the agreement dated 8-5- 2012 are ex facie one-sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder.”

19.5 In a similar case, this Court in Wg. Cdr.Arifur Rahman Khan & Others v. DLF Southern Homes Pvt. Ltd., 2020 SCC Online SC 667 affirmed the view taken in Pioneer (supra), and held that the terms of the agreement authored by the Developer does not maintain a level platform between the Developer and the flat purchaser. The stringent terms imposed on the flat purchaser are not in consonance with the obligation of the Developer to meet the timelines for construction and handing over possession, and do not reflect an even bargain. The failure of the Developer to comply with the contractual obligation to provide the flat within the contractually stipulated period, would amount to a deficiency of service. Given the one-sided nature of the Apartment Buyer’s Agreement, the consumer fora had the jurisdiction to award just and reasonable compensation as an incident of the power to direct removal of deficiency in service.

19.6 Section 14 of the 1986 Act empowers the Consumer Fora to redress the deficiency of service by issuing directions to the Builder, and compensate the consumer for the loss or injury caused by the opposite party, or discontinue the unfair or restrictive trade practices.

19.7 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 onesided contractual terms contained in the Apartment Buyer’s Agreement.”

Perusal of above reproduced Section 6 (1) of PAPRA shows that before accepting 25% of the sale price, the builder/developer shall enter into a Written Agreement for sale of the property with the buyer. However, opposite parties No.1 to 4 failed to enter into Written Agreement for sale of the plot, in question, with the complainant, despite receipt of about 50% of the sale price of the plot etc. Thus, they committed violation of Section 6 (1) of PAPRA, by not entering into written Agreement for Sale of the plot with the complainant and failed to get it registered. This also amounts to unfair trade practice and deficiency in service.

Completion and Occupation Certificates

No documents have been placed on record by opposite parties No.1 to 4, to show that they have communicated the status of the completion of the project/project report, along with proof of development to the complainant at any point of time. Merely demands were being raised by them without any proof as to the status of development of the project. The complainant has already paid the substantial amount towards sale price and other charges. Opposite parties No.1 to 4 have further failed to prove, by placing any document on record, that the development of the project was completed within the stipulated timeframe. No time limit has been fixed in the allotment letter for delivery of possession. However, it is a matter of common knowledge that possession of a property/plot/flat is to be delivered within a reasonable period of three years from the date of issuance/execution of allotment letter/agreement. Since no agreement has been executed in this case, so we infer that possession of the plot was to be delivered within three years from the date of issuance of allotment letter (13.10.2011) Ex.C/2, i.e. up to 12.10.2014. The plea of opposite parties No.1 to 4 that as per norms of RERA, they have time till March, 2022 to complete the project is not tenable, as there is already huge delay in completion of the project and delivery of possession of the unit and no evidence has been led by them to prove any kind of development at the site even after about ten years of booking. There is no whisper of offer of possession from the side of opposite parties No.1 to 4. No Completion and Occupation Certificate have been produced by opposite parties No.1 to 4 on record to prove that the project/plot, in question, are complete in all respects, along with basic amenities. The delay in getting Completion/Occupation Certificate has been held to be ‘deficiency in service’ by the Hon’ble Supreme Court in Govindan Raghavan’s case (supra). It was held that the Flat/Plot Purchaser cannot be made to take possession, whenever the Builder offered the possession after a substantial delay from the stipulated date. The relevant portion of the case is being reproduced here:-

“....

6. We have heard the learned Counsel for both the parties, and perused the pleadings, and written submissions filed.

6.1. In the present case, admittedly the Appellant Builder obtained the Occupancy Certificate almost 2 years after the date stipulated in the Apartment Buyers Agreement. As a consequence, there was a failure to hand over possession of the flat to the Respondent-Flat Purchaser within a reasonable period. The Occupancy Certificate was obtained after a delay of more than 2 years on 28.08.2018 during the pendency of the proceedings before the National Commission.

In Lucknow Development Authority v. M.K. Gupta, (1994) 1 SCC 243 this Court held that when a person hires the services of a builder, or a contractor, for the construction of a house or a flat, and the same is for a consideration, it is a service as defined by Section 2 (o) of the Consumer Protection Act, 1986. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service. In Fortune Infrastructure & Anr. v. Trevor DLima & Ors., (2018) 5 SCC 442 this Court held that a person cannot be made to wait indefinitely for possession of the flat allotted to him, and is entitled to seek refund of the amount paid by him, along with compensation.

6.2. The Respondent-Flat Purchaser has made out a clear case of deficiency of service on the part of the Appellant Builder. The Respondent Flat Purchaser was justified in terminating the Apartment Buyers Agreement by filing the Consumer Complaint, and cannot be compelled to accept the possession whenever it is offered by the Builder. The Respondent Purchaser was legally entitled to seek refund of the money deposited by him along with appropriate compensation.”

In view of law laid down by the Hon’ble Supreme Court in the above noted authority, it is held that this Commission is competent to entertain and decide the present complaint and the provisions of RERA do not bar the jurisdiction of the Consumer Commission. Accordingly, the aforesaid plea raised by opposite parties No.1 to 4 is rejected. Plea of OPs that the complaint is not maintainable under summary proceedings

In view of our above discussion, since we have already held that the terms of the contract, i.e. allotment letter Ex.C/2, are unfair and go to the root of the contracts, which have been held to be null and void, so in these circumstances we have no option but to order for refund of the entire amount deposited by the complainant with opposite parties No.1 to 4 towards the price of the plot, in question, etc. along with compensation, on account of financial loss suffered by the complainant for depriving him of the utilization of the said amount during the period it remained with opposite parties No.1 to 4, calculated at the rate of 12% per annum from the respective dates of deposit till realization. Besides this, the complainant is also entitled to suitable compensation for the mental agony and harassment etc. suffered by him due to the deficiency in service and unfair trade practice adopted by opposite parties No.1 to 4, including litigation costs and other expenses. The aforesaid conduct of opposite parties No.1 to 4, regarding firstly giving consent for settlement of the dispute through mediation and then issuance of aforesaid cheques in favour of the complainant and their subsequent bouncing, is also to be taken into account while awarding compensation.(Paras 33, 34, 35, 38, 41, 44, 49, 50, 53 & 59)

Result: Complaint allowed partly. Opp. parties No.1 to 4 directed to refund entire amt. deposited by the complainant, i.e., Rs. 16,95,000/-, Rs. 1,50,000/- as compensation, Opp. parties No. 5 & 6 directed not to revise layout plan submitted by Opp. Parties No.1 to 4.