Home buyers can have all option to get relief

( Experion Developers Pvt. Ltd. Versus Sushma Ashok Shiroor )

 

SC in a recent case decided on 07.04.2022 takes a very liberal view in favour of home buyers who invested their hard earned money in developers project but does not get possession within stipulated time

No new theory evolved in this case but made it clear that commission has the power to give relief what the home buyer choses. Home buyer is free to make any prayer and commission may grant the same if merits so permit

SC has allowed three fold choices to the home buyer who has not been given possession of dwelling within stipulated time frame

Dr Prem Lata ,Legal Head VOICE

SC has allowed three fold choices to the home buyer who has not been given possession of dwelling within stipulated time frame

1. The power to direct refund of the amount and to compensate a consumer for the deficiency in not delivering the apartment as per the terms of Agreement is within the jurisdiction of the Consumer Courts  A consumer can pray for refund of the money with interest and compensation

2.  The consumer could also ask for possession of the apartment with compensation.

3. The consumer can also make a prayer for both in the alternative.  If a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant

“The freedom to choose the necessary relief is of the Consumer and it is the duty of the Courts to honour it.”

The above order makes the position clear that home buyer can be given compensation in all the situations whether asks for refund with interest& compensation  or possession with delayed compensation

 

Objection raised by builder

The objection raised by developer was that

·         Consumer is entitled for delayed compensation only and since occupation certificate has been applied and shall be obtaining ,he is entiled for compensation for delay to the tune of Rs Rs. 4,54,052/-.

·         42 months period expires on 26-6-2016, “the trigger date for clause 10.1 is 26.12.2012, which is the date of execution of the apartment buyer’s agreement”. The Commission calculated 42 months from this period, which turns out to be 26.06.2016. Further, adding the grace period of 180 days, the time for delivery would expire on 26.12.2016.

·         Occupation Certificate for Phase-I of the project had already been obtained on 06.12.2017, and application for Occupation Certificate for Phase-2, had already been made. In the affidavit of evidence, the Developer contended that it secured the Occupation Certificate on 23.07.2018 and a notice of 3 possession was issued to the Consumer on 24.07.2018. It was claimed that since possession can be handed over, the complaint must be dismissed

NC Orders

The Commission, in its judgment dated 19.06.2019, allowed the complaint after referring to Clause 10 (relating to the project completion period), Clause 11 (relating to the possession and conveyance of the apartment), as well as Clause 13 (relating to delay in possession). The Commission found that the agreement is one-sided, heavily loaded against the allottee and entirely in favour of the Developers. Following the decisions of this Court in Pioneer Urban Land and Infrastructure Ltd. v. Govind Raghvan,5 (“Pioneer”), the Commission directed the Developer to refund the amount of Rs.2,36,15,726/- with interest @ 9% p.a. following  Pioneer Urban Land and Infrastructure Ltd. v. Govindan Raghvan (2019) 5 SCC 725

Both the parties filed appeals against the above order by NC

·         The Developer filed the present Civil Appeal No. 6044/2019. against these findings of payind refund with interst when possession is offered  and the consequential directions of the Commission

·         The Consumer also filed an appeal being Civil Appeal No. 7149/2019, challenging the Commission's judgment to a limited extent for grant of an enhanced interest @ 24% p.a

 

Objections raised against this order before SC by  Developers

·         The decision of this Court in Pioneer has no application to the facts of the present case, as in Pioneer, the Court did not have to deal with Delay Compensation Clause like in the present case.

·         Terms of the Apartment Buyer’s Agreement alone would govern the relations between the parties. No prejudice would be caused to the Consumer if he is asked to take possession of the property.

·         Referring to the provisions of the Real Estate (Regulation and Development) Act, 20166 and particularly to the Regulations made by Haryana Real Estate Regulatory Authority, which were relied on in Pioneer case, Builder submitted that the Consumer has elected to proceed under the Consumer Protection Act, 1986 and therefore the provisions of RERA Act will not apply and the Pioneer cannot be followed as a precedent.

·         The interest granted by the Commission is excessive in both the period of the grant and the rate of interest.

Three issues before the SC

I.  Whether the Commission has the power under the Consumer Protection Act, 1986 to direct refund of the amount deposited by the Consumer with interest when developer ready to give possession

II.  Whether the terms of the Apartment Buyers Agreement amount to an ‘unfair trade practice’ and

III. Whether Commission is justified in referring Pioneer Case which was mainly decided under on RERA Act  

HELD;

A)    Order for interest justified  (Issue -1)

Referred cases

In LDA v. M.K. Gupta, 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 v. Trevor D’Lima, 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. 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.  

B)Unfair contract clause to be struck down  (Issue -2)

 

“In 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(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder.”

 “In view of the above discussion, we have no hesitation in holding that the terms of the apartment buyer’s agreement dated 8-5-2012 were wholly one-sided and unfair to the respondent flat purchaser. The appellant builder could not seek to bind the respondent with such one-sided contractual terms.”

Referred cases

Wing Commander Arifur Rahman Khan and Aleya Sultana & Ors. v. DLF Southern Homes Private Limited (2020) 16 SCC 512

SC held that there is no embargo on the award of compensation beyond the rate stipulated in the Apartment Buyer’s Agreement where handing over the possession of the flat has been delayed. The Court observed that the Consumer Forums must take a robust and a common-sense approach by taking judicial notice of the fact that flat purchasers obtained loans and are required to pay EMIs to financial institutions for subserving their debts. The Delay Compensation Clause provided for Rs. 5 per square foot per month. is clearly one-sided and does not maintain a level platform or even reflect a bargain between the parties. The Court granted additional compensation @ 6% p.a. simple interest to each buyer therein, over and above the Delay Compensation Clause.

 DLF Home Developers Ltd. v. Capital Greens Flat Buyers9. 8 NBCC (India) Ltd. v. Shri Ram Trivedi (2021) 5 SCC 273 9 DLF Home Developers Ltd. v. Capital Greens Flat Buyers Association & Ors. (2021) 5 SCC 537

 “the compensation could be granted even if possession had been delivered.”

IREO Grace Realtech (P) Ltd. V. Abhishek Khanna & Ors. (2021) 3 SCC 241

 A three-judge bench of this Court in noticed the delay compensation clause, which is similar to the clause in the present case, which provided that the Developer would be liable to pay delay compensation @ Rs 7.5 per square foot which works out to approximately 0.9 to 1% p.a. The Court held that this Clause is one-sided and entirely loaded in favour of the Developer and against the allottee. The Court concluded that the powers of the Consumer Court were in no manner constrained to declare a contractual term as unfair and one-sided as an incident of the power to discontinue unfair or restrictive trade practices.

Poineer Case well applicable (Issue -3)

·         Real Estate (Regulation and Development) Act, 2016 - Consumer Protection Act and the RERA Act neither exclude nor contradict each other - They are concurrent remedies operating independently and without primacy. [Referred to Imperia Structures Ltd v. Anil Patni (2020) 10 SCC 783 and IREO Grace Realtech (P) Ltd. V. Abhishek Khanna (2021) 3 SCC 241] (Para 14.1)Hence applicability of Pioneer case is not out of place

·         Remedies available under the provisions of the CP Act are additional remedies over and above the other remedies including those made available under any special statutes; and that the availability of an alternate remedy is no bar in entertaining a complaint under the CP Act.

·         In terms of Section 18 of the RERA Act, if a promoter fails to complete or is unable to give possession of an apartment duly completed by the date specified in the agreement, the promoter would be liable, on demand, to return the amount received by him in respect of that apartment if the allottee wishes to withdraw from the Project. Such right of an allottee is specifically made “without prejudice to any other remedy available to him”. The right so given to the allottee is unqualified and if availed, the money deposited by the allottee has to be refunded with interest at such rate as may be prescribed. The proviso to Section 18(1) contemplates a situation where the allottee does not intend to withdraw from the Project. In that case he is entitled to and must be paid interest for every month of delay till the handing over of the possession. It is up to the allottee to proceed either under Section 18(1) or under proviso to Section 18(1). The case of Himanshu Giri came under the latter category. The RERA Act thus definitely provides a remedy to an allottee who wishes to withdraw from the Project or claim return on his investment. 26. It is, therefore, required to be considered whether the remedy so provided und

·         Interpretation of Statutes - When Statutes provide more than one judicial fora for effectuating a right or to enforce a duty-obligation, it is a feature of remedial choices offered by the State for an effective access to justice. Therefore, while interpreting statutes provisioning plurality of remedies, it is necessary for Courts to harmonise the provisions in a constructive manner

Consumer appeal prayed that: (i) the payment of interest must be from the date of payment of each instalment and (ii) the rate of interest must be 24% p.a.

Court Held-

DLF Homes Panchkula Pvt Ltd v. DS Dhanda and in modification of the direction issued by the Commission, we direct that the interest on the refund shall be payable from the dates of deposit. At the same time, we are of the opinion that the interest of 9 per cent granted by the Commission is fair and just and we find no reason to interfere in the appeal filed by the Consumer for enhancement of interest.

Above is the most balanced judgment  ,well defined and with all justifications giving opportunity to be heard to both the parties with the same ration . This is more important for the reason it defines with total clarity as to what relief Home buyer is entitled to in case of developer defaulting in giving possession in time

By Dr Prem Lata 

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