2015 (6) TMI 330 - Commission - Indian Laws

Delay in possession of flats - Seeking delivery of flats or alternative payment of current Market value - Compensation on account of loss of rental income - Compensation @ ₹ 5/- per sq. ft. as per the agreement & compounded interest @ 18% p.a - Compensation on account of their mental torture, agony etc.- Increase in service tax with effect from 01.6.2015 - Held that - It is an undisputed proposition of law that ordinarily the parties are bound by the terms and conditions of the contract voluntarily agreed by them and it is not for a Consumer Forum or even a Court to revise the said terms. 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. 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% 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.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. The cost of the borrowing for individual home buyers is about 10% per annum though it had gone upto 11.5% in last few years. In my view, if the opposite party, pays simple interest @ 12% per annum to the complainants, that would not only take care of the additional financial burden on them but also give some monetary compensation to them for their sufferings on account of the delay in handing over possession of the flat purchased by them. I am of the considered view that the opposite party should handover possession of the apartments booked by the complainants on or before the last date stipulated in the letter of the opposite party dated 27-05-2015. In the cases of those complainants who are the initial allottees of the apartments or who acquired the same within one year of the initial allotment, the opposite party should also pay compensation to them in the form of simple interest at the rate of 12% per annum with effect from the date of possession stipulated in the agreement till the date on which the possession is actually handed over to them. The persons who purchased the flats within one year of the initial allotment, ought to be treated at par with the initial allottees, because atleast two more years being still available to the opposite party at the time of purchase by them, they could not have anticipated that the builder will not be able to honour its commitment, as regards the stipulated date of delivery of possession. No separate compensation for the mental agony, harassment and suffering needs to be paid by the opposite party to the complainants. However, in the case of those complainants who acquire the flats by way of resale more than one year after the initial allotment, the opposite party should pay compensation in the form of simple interest at the rate of 12% per annum with effect from three years from the date of the repurchase till the date on which the possession is delivered to them. Also increase in service tax with effect from 01.6.2015 should be borne by the opposite party.If the opposite party fails to deliver possession by the last date stipulated in its letter dated 27.05.2015, it shall pay compensation to all the complainants in the form of simple interest at the rate of 18% per annum, for each day there is delay, beyond the date stipulated in the said letter dated 27.05.2015, in delivering possession to the complainants.

Summary

Issues Involved:
1. Delay in possession of apartments.
2. Compensation for delay.
3. Jurisdiction of the Commission.
4. Limitation period for filing complaints.
5. Arbitration clause in the agreement.
6. Commercial purpose of purchasing the flats.
7. Increase in service tax.

Detailed Analysis:

1. Delay in Possession of Apartments:
The complainants booked apartments with the opposite party in a complex and entered into individual "Buyers Agreement" with the opposite party. The possession of the apartments was agreed to be delivered within 36 months from the date of their respective agreements. The grievance of the complainants is that neither the possession of the apartments has been given to them nor is the construction complete, despite the stipulated date having expired more than two years ago.

2. Compensation for Delay:
The opposite party admitted the agreement for sale but cited several reasons for the delay, including economic recession, shortage of labor and materials, and other factors beyond their control. However, the Commission found no merit in these contentions, noting that no evidence was provided to substantiate these claims and that the exceptional circumstances outlined in the Buyers Agreement did not apply. The Commission held that the opposite party should pay compensation to the complainants. The compensation was set at simple interest of 12% per annum from the stipulated date of possession until the actual date of possession. Additionally, if the opposite party fails to deliver possession by the revised dates, the compensation rate would increase to 18% per annum.

3. Jurisdiction of the Commission:
The opposite party contended that since the cost of the flats was less than Rs. 1 crore, the complaint should be maintainable only before the State Commission. The Commission rejected this contention, stating that the current market value of the apartments exceeds Rs. 1 crore, thus falling within the jurisdiction of the National Commission.

4. Limitation Period for Filing Complaints:
The opposite party argued that the complaints were barred by the limitation period prescribed in Section 24A of the Consumer Protection Act. The Commission held that failure to deliver possession constitutes a continuous wrong, providing a recurrent cause of action. Therefore, the complaints were not time-barred.

5. Arbitration Clause in the Agreement:
The opposite party argued that the arbitration clause in the agreement made arbitration the appropriate remedy. The Commission rejected this argument, citing Section 3 of the Consumer Protection Act, which states that the provisions of the Act are in addition to other remedies available to a consumer. The availability of arbitration does not debar a consumer from approaching a consumer forum.

6. Commercial Purpose of Purchasing the Flats:
The opposite party contended that some complainants intended to let out the flats, implying a commercial purpose. The Commission found no merit in this contention, stating that the purchase of a flat for future residence does not constitute a commercial purpose, even if the flat is let out temporarily.

7. Increase in Service Tax:
The Commission held that the increase in service tax effective from 01.06.2015 should be borne by the opposite party, as the delay in possession led to the higher tax rate being applicable.

Conclusion:
The complaints were disposed of with the following directions:
- The opposite party must deliver possession of the flats by the revised dates stipulated in their letter dated 27.05.2015.
- Compensation in the form of simple interest at 12% per annum is to be paid from the stipulated date of possession until the actual date of possession.
- For those who acquired flats more than one year after the initial allotment, compensation is to be paid at 12% per annum from three years after the repurchase date, with additional compensation at Rs. 5 per sq. ft. for the interim period.
- The increase in service tax from 01.06.2015 is to be borne by the opposite party.
- If possession is not delivered by the revised dates, compensation will increase to 18% per annum.
- The opposite party is to pay Rs. 5,000 as the cost of litigation in each complaint.