NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
 
CONSUMER CASE NO. 237 OF 2015
1. RAM SARUP KANDA & ANR.
of Sh. Krishan Dev Kanda Resident of 13, Hill Field, Oadby Leicester
UK. LE 24RW
...........Complainant(s)
Versus 
1. PARSHAVNATH DEVELOPERS LTD. & ORS.
Through its authorized Signatory, 6th Floor, Arunachal Building 19, Barakhamba Road,
NEW DELHI - 110 001.
2. SANJEEV JAIN,
Managing Director, Parshavnath Developers Limited, Through ITs authorized Signatory, 6th Floor, Arunachal Building 19, Barakhamba Road,
NEW DELHI - 110001.
3. CHANDIGARH HOUSEING BOARD,
Through Its Secretary, Sector 9-D,
CHANDIGARH.
...........Opp.Party(s)

BEFORE: 
 HON'BLE MR. JUSTICE A. P. SAHI,PRESIDENT
 HON'BLE DR. SADHNA SHANKER,MEMBER

FOR THE COMPLAINANT :
MR. DEVMANI BANSAL, ADVOCATE
FOR THE OPP. PARTY :
FOR THE OPPOSITE PARTIES 1&2
FOR THE OPPOSITE PARTY NO.3 :
: MR. PRABHAKAR TIWARI AND
MS. DEEPSHIKHA MISHRA, ADVOCATE
MS. RACHNA JOSHI ISSAR, ADVOCATE

Dated : 06 September 2023
ORDER

A.P. SAHI, J., PRESIDENT

  1. This dispute arose out of a Flat Buyer Agreement under which the premises could not be constructed as the land located could not be subjected to any further development resulting in the scrapping of the Project.  The land was to be provided by the Chandigarh Housing Board and the development for the premises was to be made by the Opposite Party No. 1. 

 

  1. As a result of the aforesaid position emerging, similar complaints were filed before the District Forum and the State Commission contending therein that there was a tripartite agreement entered into between the Complainant with the Developer, i.e., M/s. Parshavnath Developers Ltd. and Chandigarh Housing Board and not having fulfilled the promises, the deficiency in service was writ large hence refund was claimed. 

 

  1. These Complaints in the shape of various litigations ultimately culminated in the Order dated 11.03.2013 passed by the National Commission.  Under the said Order, refund of the amount together with interest at the uniform rate of 9% p.a. was directed.  The same was to be shared by the Developer and the Chandigarh Housing Board in the ratio 70:30.  The Order of the National Commission which is relevant for the present controversy is extracted herein below:-

“To avoid the contradiction in the directions given by the District Forum and the State Commission regarding the payment of interest to the Complainants, we modify the orders passed by the fora below and direct the Developer and the CHB to pay interest at the uniform rate of 9% p.a (payable to the senior citizen on Bank fixed deposit at the relevant time) to the Complaints in the ratio of 70:30 from the respective dates of deposit till the date of deposit of the amount by the Appellants/Petitionersin the Escrow Account.

 

Adverting to the point of compensation, Ld. Counsel for the Developer has tried to shift the burden on the CHB by stating that the CHB has failed to hand over the possession of the unencumbered land to the Developer to raise the construction.That had the CHB handed over the possession of the unencumbered land to the Developer, the construction of the residential units would have been completed within the stipulated time. As against this, Ld. Counsel appearing for the CHB states that an area of 123.79 acres of land was handed over to the Developer for construction of the residential units.That there was no dispute with regard to the said land and the dispute was regarding the remaining project land which was earmarked for commercial activities.For a dispute between the Developer and the CHB, Complainants cannot be deprived of their legitimate dues which have become payable in terms of clause 9 (c) of the tripartite agreement. The Developer and the CHB cannot be allowed to have the benefit of their own/mutual wrongs. The dispute arising between the Developer and the CHB already stands referred to the Sole Arbitrator appointed by the Supreme Court (Hon’ble Mr. Justice R.V. Raveendran, Retd. Judge of the Supreme Court of India).

 

In terms of clause 9 (c) of the Flat Buyer Agreement, the Developer is liable to pay the compensation @ Rs.107.60 per Sq. Mt. (Rs.10 per sq. ft.) of the super area of the unit per month in case the possession of the built up area was not offered to the Buyer within a period of 36 months as stipulated in the tripartite agreement. Clause 9 (c) reads as under:-

 

“9(c) In case of possession of the built up area is not offered to the buyer within a period of 36 months or extended period as stipulated in sub clause (a) above the Buyer shall be entitled to receive from the Developer compensation @ Rs.107.60 per sq. mtr. (Rs.10/- per sf. Ft) of the super area of the unit per month and to no other compensation of any kind.In case the Buyer fails to clear his account and take possession of the unit within 30 days of offer, the Buyer shall be liable to pay to the developer holding charges @ 107.60 per sq. mtrs. (Rs.10 per sq. ft) of the super area of the unit per month in addition to the liability to pay interest to the sellers and other consequences of default in payment.”

 

 

Admittedly, the Developer has failed to construct the residential units and hand over the possession of the same to the Complainants.In terms of clause 9 (c) of the Agreement, Developer is liable to compensate the buyers @ Rs.107.60 per sqr. mtrs. (Rs.10 per Sq.ft) of the super area of the unit per month. By way ofinterim measure, we direct the Developer to pay the compensation to the Complainants in terms of clause 9 (c) of the agreement @ Rs.107.60 per sqr. mtrs. (Rs.10 per Sq.ft) of the super area of the unit per month which would be subject to the final outcome of the arbitration proceedings.

 

The orders passed by the State Commission in the original complaints and in the First Appeals arising of the complaint filed before the District Forum stand modified in terms of the directions given above.Any direction either contrary or at variance to these directions stands modified.

 

The amount of interest and compensation shall be paid by the Developer and the CHB as directed above within a period of three months from today failing which the amount shall carry interest @ 12% p.a.

 

The First Appeals and the Revision Petitions are disposed of in above terms.No order as to costs.”

 

  1. It may be pointed out that between the Developer and the Housing Board, there was a dispute with regard to the handing over of the entire land that also contributed towards the failure of performance.  The stand taken by the Housing Board was that it had handed over the land to the Developer for construction and, therefore, the Developer ought to have proceeded with it against which the Developer indicated that unencumbered land was handed over as a result whereof, the Project could not be continued as planned.  This led to the appointment of an Arbitrator by the Supreme Court and on 09.1.2015, an award was passed keeping in view the Provisions of Clause 9(c).  Another modified order was passed by the Arbitrator on 09.03.2015 on an application for carrying out certain corrections, which was rejected.   The Order passed by the Arbitrator regarding payment of compensation reads as follows:-
    “292. When clause 9(c) is read with clause 9(a), the following position emerges:-
     
    (i) The liability to pay compensation at ₹10/- per sq. ft. per month would arise, only if (a) the residential flat buyer had paid the full price with all taxes and other dues as per the Flat Buyer Agreement; and (b) the developer (claimant) does not offer possession of the unit within a period of thirty six months or extended period as stipulated in sub-clause (a) of clause 9. 
     
    (ii) Clause 9(a) makes it clear that period of completion is 36 months from 06.10.2006 or as may be extended in terms of DA (subject to force majeure and circumstances beyond the control of the developer and delay in obtaining Environmental clearance)”
     
    293. I have already held that the development period of 36 months is to be reckoned from 5.2.2008 and not 06.10.2006.  The DA stood terminated on 31.01.2010, long before the expiry of 5.2.2011 (that is the end of the development period of thirty six months calculated from 5.2.2008).  The order of National Commission does not say from what date to what date compensation should be paid to the residential unit buyers, but merely says that it will be payable as per clause 9(c) of the Flat Buyer Agreement.  Apparently, the Complaints were filed from the year 2010 onwards.  In the circumstances, whether any compensation would be payable at all and if so, how much, would depend upon the facts of each case.
     
    ……..
     
    Counter Claim No. (7) : For a direction to claimant to refund to the residential unit buyers all advances collected from them and bear the liability for payment of any damages/compensation to the said unit buyers, in respect of any non-performance of its obligations.
     
    Decision :-  The claimant and respondent are directed to bear the liability towards residential unit buyers, for refund of advances (payment of sale price or part thereof), interest and compensation as awarded by any consumer fora or any court, in the ratio of 70:30 respectively.  For this purpose, the parties may take note of the payments, if any, already made by them, and pay the balance so that the ratio of liability is maintained at 70:30.” 

 

  1. Challenging the Order of the National Commission dated 05.03.2013, reproduced hereinabove, the Developer M/s. Parshavnath Developers, approached the Apex Court where the Order of the National Commission was upheld vide Judgment dated 21.04.2015 and while commenting on Clause 9(c) and (d) of the Agreement, observed as follows:-

“We have carefully perused Clauses 9(c) and 9(d) of the Agreement between the parties. In our view, Clause 9(d) pertains to refund with interest if, for any reason, the Developer is not in a position to offer the flat to the buyers after the expiry of Thirty Six months/extended period. A reading of Clause 9(c) would show that the said clause also envisages a payment of compensation to the buyer at a particular rate. This clause would be applicable against the developers only if they are not in a position to offer flat to the buyer after the expiry of Thirty Six Months/extended period as stipulated under Clause 9(a) of the Agreement.

 

Therefore, in view of the above, we are of the considered opinion that the Commission has not committed any mistake.

 

Further, it would be pertinent to note that the Commission has observed that its order would be subject to the pending arbitration proceedings between the Developers and the Chandigarh Housing Board.”

 

  1. The present Complaint was filed on 06.04.2015 claiming the compensation together with other ancillary reliefs on account of the deficiency in service and non-fulfilment of the terms and conditions of the allotment of the Villa as also other liabilities related thereto.

 

  1. It is in this background that the present Consumer Complaint was entertained and the following order was passed on 27.04.2015:-

“The learned counsel for the complainants states that he has calculated the interest as per the SBI deposit rates upto 04.03.2015 and the same come to Rs.98,71,461/-.

 

Admitted, subject to just exceptions.

 

Issue notice to the opposite party returnable on 02.07.2015.

 

  1. The matter was again taken up on 17.07.2015:-

“Learned counsel appearing for opposite party No.1, namely, the Builder, states that the amount of interest as well as compensation in terms of Clause 9(c) of the Flat Buyers’ Agreement, as directed in other connected matters, shall be paid to the complainants within four weeks from today.In view of the statement, for the present, we are not directing the opposite parties to file comprehensive written version to the complaint.Instead, we direct it to file an affidavit giving details of the payments, which were required to be made in terms of our order dated 8.5.2013.The requisite affidavit shall be filed within four weeks with an advance copy to counsel for the complainant.We permit the complainant to respond to the said affidavit, if so advised.

 

In so far as Opposite Party No.3, namely, Chandigarh Housing Board is concerned, learned counsel appearing for the complainants submits that in so far as the interest part is concerned, they have already received the same from the Chandigarh Housing Board.However, they are not in a position to state as to how the amount of compensation payable in terms of clause 9(c) of Flat Buyers’ Agreement is to be shared between the Developer and the Housing Board.

 

In view of the statement, we permit the Chandigarh Housing Board to file its written version to the complaint, clearly stating their stand on the question of payment of compensation in terms of the said clause.The written version shall be filed within four weeks with advance copy to counsel for the complainants as well as to Opposite Party No.1.

 

 

List for further directions on 23rd September 2015 

 

  1. Since the Developer had not made full payment as per the Directions in the proceedings before the National Commission as well as the Arbitrator the amounts were directed to be calculated with a direction to make payments within two weeks.  The Order dated 23.09.2015 is extracted herein below:-

"A letter praying for adjournment has been circulated by counsel for Opposite Party No.3, namely, Chandigarh Housing Board.  Further time is also sought to file written version in terms of our order dated 17.7.2015.

 

Without prejudice to the rights of the Complainant on the question of extension of time for filing the written version beyond the period stipulated in the Consumer Protection Act, 1986, we permit the said Opposite Party to file its written version within two weeks.

 

At this stage, it is pointed out by learned counsel appearing for the Complainants that Opposite Parties No.1 and 2 have not made full payment, as undertaken on their behalf and recorded in our order dated 17.7.2015.However, learned counsel submits that in so far as the Chandigarh Housing Board is concerned, the amounts due to be paid by them towards the principal amount and the interest have been received and the only amount due is compensation in terms of Clause 9(c) of the Flat Buyers Agreement.

 

Learned counsel appearing for Opposite Parties No.1 and 2 submits that since the said Opposite Parties were awaiting response of the Complainant on the affidavit dated 18.8.2015, particularly on Para-6 thereof, some amount towards interest and compensation still remains to be paid to them.On being pointed out by learned counsel for the Complainants, learned counsel concedes that the amounts computed as payable by the said Opposite Parties towards interest as also the compensation, have been calculated keeping in view only the share of 70% of the said Opposite Parties.  He states that the full amount due to the Complainants towards interest and compensation, as already directed, shall be paid within two weeks from today.  Ordered accordingly.

 

List for further directions on 20th October 2015.

 

  1. The Complaint was again heard, when it was brought to the notice of this Commission that 8 cheques had been handed over relating to the  payment of interest on the 70% liability on the Developer and the following Order was passed on 20.10.2015:-

“8 cheques (7 post-dated) in the total sum of Rs.78,42,207/- have been handed over to learned Counsel appearing for the Complainants before us today.According to learned Counsel appearing for Opposite Parties No. 1 and 2, i.e. the Developers, these cheques are towards interest @ 9% per annum on Rs.1,08,82,725/- from the dates of deposit of the amounts by the Complainants till 14.02.2015, amounting to Rs.71,72,395/-, after deducting the income tax at source, and towards 70% of the liability towards compensation computed at Rs.29,09,760/-.It is stated by learned Counsel for the Developers that a sum of ₹22,05,682/- has been deducted as tax at source on the interest.He states that on deposit of the said amount in the Government treasury, a certificate along with the copies of the receipted challan(s) shall be furnished to the Complainants forthwith.Learned Counsel for the Developers has assured us that the post-dated cheques shall be honoured on presentation.

Though it is submitted by learned Counsel appearing for the Complainants that there is still a shortfall in the amount due to the Complainants but, for the present, we are not entering into the said controversy.The plea shall be considered at the time of final hearing.

It is also pointed out by learned Counsel for the Complainants that the last post-dated cheque is dated 19.05.2016 and, therefore, according to him, the Complainants are entitled to interest on the deferment of the payment of interest for almost 8 months.  We find substance in the submission.We, accordingly, direct that after accounting for the amount due to the Complainants as compensation (Rs.29,09,760/-), the Developers shall pay interest on the amount of interest, which would remain unpaid on each date of post-dated cheque, from time to time till 19.05.2016 @ 9% per annum.  The entire amount of interest shall be paid on or before 19.05.2016.  It will, however, be open to the Developers to replace the post-dated cheques with the current cheques and in that event they will not be liable to pay interest on the amount of the cheques so replaced.

Insofar as the question of payment of the balance 30% of compensation by the Chandigarh Housing Board, in terms of Clause 9(c) of the Flat Buyers Agreement, is concerned, it is the stand of the Housing Board that it is liable to pay the compensation to the Complainants.In view of the submission, the issue needs to be adjudicated on trial.

Learned Counsel appearing for the Housing Board states that the short reply filed on its behalf may be treated as the written version.In view of the submission, learned Counsel for the Complainants prays for some time to file rejoinder affidavit to the said written version.Let him do so within six weeks from today.

Admit.

The parties shall file their respective evidence by way of affidavits within eight weeks.

List on 18.02.2016 before the Registrar for exhibiting the documents.Thereafter, the case will be listed for final hearing in due course.”

 

  1. The said Order was corrected in relation to the Housing Board to read that the Housing Board was not liable to pay the compensation to the Complainant.
  2. Since the post-dated 7 cheques that had been tendered by the Developer could not be honoured, the same was noticed and the Developer brought seven Demand Drafts in respect of the value of the cheques that had been issued up to a particular date that had not been honoured.  The following Order was passed on 01.04.2016:-

"When the application came up for consideration yesterday, it was pointed out by Learned counsel appearing for the complainants that the post-dated cheques issued by the Opposite Parties No.1 & 2, i.e., the developer, in terms of our order dated 20.10.2015 had been returned unpaid by the Bank on the ground of insufficient balance.  Since an assurance was given to this Commission by the counsel appearing for the Opposite Party, on instructions, that all the post-dated cheques will be honoured on presentation, Learned counsel had sought adjournment to this date to seek instructions in the matter.

Learned counsel appearing for the Opposite Parties state that he has brought 7 Demand Drafts favouring the complainants towards the value of the cheques issued up to 19.3.2016.The same have since been handed over to Learned counsel for the complainants.Learned counsel further states that as per his instructions the respondent has decided to issue Demand Drafts for the post-dated cheques falling due for presentation on 19th April and 19th May 2016, a week in advance from the due date.All the post-dated dishonoured cheques shall be handed over by Learned counsel for the complainants to Learned counsel for the Opposite Parties.

In view of the said assurance, the applications stands disposed of.

CC/237/2015

Complainants shall file their evidence by way of affidavits within 8 weeks.The Opposite Parties shall file their affidavit of evidence within 8 weeks thereafter.

 

List before the Registrar for admission/denial of documents on 27th July 2016.

 

  1. The matter proceeded thereafter without any orders and adjournments were granted for the parties to complete their pleadings.  The matter remained pending during the Pandemic. 

 

  1. On 31.08.2022, this Commission was informed that the Complainant No. 1 Ram Sarup Kanda has passed away and time was sought to bring the legal representatives of the Complainant No. 1, on record.  It has been stated by the learned Counsel for the Complainants at the time of hearing that for the purpose of this litigation the co-claimant, namely, Saroj Devi Kanda is the widow of Complainant No. 1, about which there is no dispute and she being the Legal Representative of Complainant No. 1 can continue this litigation.  We are satisfied that the aforesaid submission appears to be correct inasmuch there is no dispute with regard to the fact that the Complainant No. 2 being one of the LRs of the Complainant No. 1, for the purpose of the present litigation which is now very limited in nature, any processing of bringing all LRs of the Complainant No. 1 on record will not be necessary.

 

  1. We have heard Ms. Rachna Joshi Issar, learned Counsel appearing on behalf of the Chandigarh Housing Board and keeping in view the stand taken as well as the clauses 9(c) and 9(d) as well as the Orders passed from time to time and the judicial pronouncement referred to above, liability as against the Housing Board as claimed does not survive and, therefore, the Claim Petition for compensation in so far as Housing Board cannot succeed. 

16.     It is to be noted that the opposite party tendered a sum of Rs.1,08,82,725/- through cheque dated 10.02.2015, which was the principal amount of the 70% of the liability of the opposite party no. 1.

17.     Coming to the defence of the opposite party developer, the judgment dated 21.04.2015 mentions about the liability of the developer if any to pay compensation as per clause 9 (c) of the agreement. The present complaint was filed on 06.04.2015 and admitted on 27.04.2015. Notices were issued and the learned counsel for the opposite party no. 1 stated before the Commission on 17.07.2015 that compensation and interest would be paid as in other similar cases that stands recorded in the order dated quoted in paragraph 8 hereinabove. Since the payments fell short of the promise and time-line, the Commission recorded and the order dated 23.09.2015 and 20.10.2015 quoted in paragraph 9 and 10 above. The cheques issued by the opposite party no. 1 were not honored, another order dated 01.04.2016, quoted in paragraph 12 hereinabove was passed whereby 7 bank drafts were tendered  that were received by the counsel for the complainant and two bank drafts were promised to be tendered one week in advance in lieu of the 2 post-dated cheques of 19.04.2016 and 19.05.2016, thereby clearing the principal amount and interest that was payable against the 70% liability of the developer.

17.     The only dispute that now needs consideration is regarding payment of compensation and interest thereon.

18.     at this stage a reference is made to the judgment of the Apex Court in the case of “Chandigarh Housing Board Vs. Parsvnath Developers (P) Limited, 2020, Volume 14 SCC page 559”. This judgment went on to hold that in view of the non-fulfillment of the conditions under clause 9 (a) and clause 9 (c)  would not come into operation because the developer did not begin the construction at the project site due to the dispute with the Chandigarh Housing Board about encumbrances on the allotted land. The breach being both on the Chandigarh Housing Board and the developer, it was held that clause 9 (c) would not be attracted. Paragraph 10, 10.1 and 10.2 of the said judgment are extracted hereunder:

“10. A close reading of Clause 9(c) of the Tripartite Agreement indicates two salient features– first, the liability to pay compensation under this Clause can only be affixed on the Developer if it fails to fulfill the condition under Clause 9(a) and perform its obligations under the Development Agreement, i.e. if it does not hand over the possession of the flat to the buyer within a period of 36 months from the date of signing of the Development Agreement. The second feature of Clause 9(c) is that it envisages a fixed compensation of Rs. 107.60 per square metre per month to be paid to the flat buyer.

10.1 When the facts of the instant case are examined in light of these observations, it becomes clear that Clause 9(c) is not attracted in the present case at all. First, there has been no fulfilment of the condition under Clause 9(a) for Clause 9(c) to come into operation. This is because the Developer never even began construction at the project site due to the dispute with CHB about the encumbrances on the allotted land. Thus, the question of finishing such construction within the period mentioned under Clause 9(a) does not even arise. Consequently, Clause 9(c), which is concerned with the non- fulfilment of this obligation, is also not attracted. It is notable that the arbitrator has also arrived at a finding to this effect in his award dated 09.01.2015 as follows:

“296. Consequently, if any amount is payable on account of refund of price, interest, or compensation (if and when finally determined), respondent is liable to bear and pay 30% thereof, the balance of 70% being payable by the claimant (PDL). Article 14.2.5 no doubt makes the developer solely and exclusively responsible to residential unit buyers, but that is only in regard to non-performance of its obligations. The said provision does not make claimant responsible for the breaches committed by the respondent, nor absolve the respondent from liability for the  consequences of its defaults/breaches, which contributed to the non-performance of the obligations by the developer towards the residential unit buyers.”                        (emphasis supplied)

10.2 Thus, given that the breach of the Development Agreement is attributable to both, CHB and the Developer, the failure to hand over possession of the flat to the buyer cannot be said to be on account of the non-performance of the obligation of the Developer alone. Consequently, Clause 9(c) is not applicable to the present case. This reading of Clause 9(c) has also been affirmed by this Court in its order dated 21.04.2015, and for the reasons mentioned supra, we do not deem it fit to interfere with the same.”

19.     A perusal thereof leaves no room for doubt if the same principle is applied to award any compensation in terms of clause 9 (c) may not arise but at the same time the facts narrated above in the present case are clearly indicative of the fact that the developer himself has admitted the default and has also complied with the directions issued from time to time on its own undertaking as is evident from the orders passed in the present complaint.

20.     It is thus evident that the developer otherwise is liable to compensate the complainants as the payments which were extended by the complainants were utilized by the developer for one purpose or the other regarding the projects floated by it. These payments were apart from any accrual of interest thereon were also for the benefit of the developer and in such circumstances compensation needs to be awarded together with interest thereon.

21.     Apart from this, the order passed by the Apex Court on 21.04.2015 categorically indicates in paragraph 4 as follows: “a reading of clause 9 (c) would show that the said clause also envisages a payment of compensation to the buyer at a particular rate, this clause would be applicable against the developers only if they are not in a position to offer flat to the buyer after the expiry of 36 months/ extended period as stipulated in clause 9 (c) of the agreement.” This therefore pins the liability of the developer only and in such circumstances to that extent the Claim Petition deserves to be allowed. The compensation for default due to delay has been claimed to the extent of Rs.41,56,800/- which figure is stated in paragraph 4 of the complaint. From the order dated 20.10.2015 passed in this complaint it is evident that compensation to the extent of Rs.29,09,760 has been paid through the demand drafts referred to herein earlier. This amount therefore is to be deducted from Rs.41,56,800/- which comes to Rs.12,47,040/-.

22.     Consequently, the claim petition is allowed for a sum of Rs.12,47,040/- with 9% interest to be calculated from 01.04.2016 as the balance of amount as deducted above has been paid together with interest till 31.03.2016. Time for compliance is three months from today. In the event of any default this rate of interest shall stands enhanced to 12% per annum.

 
.........................J
A. P. SAHI
PRESIDENT
 
 
.............................................
DR. SADHNA SHANKER
MEMBER