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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.
Commission orders possession, compensation, and costs for delayed flat delivery
The Commission held in favor of the complainants, directing the opposite party to deliver possession of the flats by revised dates, pay compensation at 12% per annum for delay, bear the increased service tax, and cover litigation costs. The Commission rejected arguments on jurisdiction, limitation period, and the applicability of an arbitration clause, emphasizing consumer rights and the continuous nature of the wrong. Commercial intent in purchasing the flats was not deemed relevant, with the focus on timely possession and compensation for the delay.
Delay in delivery of possession - compensation for delay - unfair trade practice - binding effect of contractual terms subject to unconscionability - ejusdem generis construction of 'slow down' - continuous wrong and limitation - jurisdiction of the National Consumer Disputes Redressal Commission based on pecuniary value - arbitration clause not ousting consumer forum jurisdiction - distinction between original allottees and subsequent purchasers for entitlement to relief - allocation of increased service taxDelay in delivery of possession - compensation for delay - Opposite party liable to pay compensation for delay in delivering possession and quantum/rate of such compensation - HELD THAT: - The complainants were not interested in refund and sought possession; thus the remaining question was compensation until possession. The Buyers Agreement provided for possession within 36 months subject to specified exceptions. The developer failed to prove any exception under clause 4.a.ii and therefore cannot rely on those grounds to escape liability. The contract term limiting compensation to Rs.5/- per sq.ft. was examined and found to be unconscionable in context. The Commission awarded compensation in the form of simple interest at 12% per annum from the date of expiry of 36 months under the initial agreement until actual delivery of possession for original allottees and those who repurchased within one year of initial allotment. For those who repurchased more than one year after initial allotment, interest at 12% per annum is payable from 36 months after the date of repurchase, with Rs.5/- per sq.ft. payable for the interim period between 36 months from initial allotment and 36 months from repurchase. The decision declines to award compounded interest at 18% claimed by complainants, holding compensation should correspond to actual financial loss and not produce windfall. [Paras 13, 14, 19, 20, 23]Opposite party to deliver possession by dates in its letter dated 27.05.2015 and to pay simple interest at 12% p.a. as compensation in the manner and for the periods specified; compounded 18% claim rejectedUnfair trade practice - binding effect of contractual terms subject to unconscionability - Whether clause fixing nominal compensation at Rs.5/- per sq.ft. is enforceable or constitutes an unfair trade practice permitting revision by the forum - HELD THAT: - Although parties are ordinarily bound by freely agreed contractual terms, a term will not be enforced if consent was not voluntary or the term is unfair. The Commission found that standard buyer agreements offered by large builders, providing nominal delay compensation while charging high compound interest on buyers, operate in a take it or leave it context and are one sided and unreasonable. That practice facilitates diversion of funds and constitutes an unfair trade practice under the Consumer Protection Act. Complainants had pleaded these aspects, so the clause limiting compensation to Rs.5/- per sq.ft. was not treated as inviolable and the forum reallocated a fairer rate of compensation. [Paras 11, 12, 13]Clause limiting compensation to Rs.5/- per sq.ft. is unconscionable/unfair and the forum may award adequate compensation insteadEjusdem generis construction of 'slow down' - Meaning of 'slow down' in clause 4.a.ii and whether economic recession qualifies as 'slow down' excusing delay - HELD THAT: - The word 'slow down' appears alongside 'lock out' and 'strike' and must be read ejusdem generis, referring to labour or site slowdowns rather than a general economic recession. The developer produced no evidence that labour or material shortages were proven despite efforts (such as tenders/contracting evidence). Notifications relied upon were old and in force when the 36 month promise was made. Commonwealth Games and other broad contentions were held irrelevant on facts. Consequently, the OP could not invoke clause 4.a.ii to excuse the delay. [Paras 7, 8, 9]'Slow down' construed as site/labour slowdown; developer failed to establish any exception under clause 4.a.ii and cannot avoid liability for delayContinuous wrong and limitation - Whether complaints are barred by limitation under Section 24A of the Consumer Protection Act - HELD THAT: - Failure to deliver possession is a continuous wrong and constitutes a recurrent cause of action so long as possession is not delivered. Time for limitation would begin only if the seller unequivocally refused to deliver possession. Here, the developer never refused possession; hence complaints are not barred by limitation. [Paras 17]Complaints are maintainable and not barred by limitation as the cause of action continued until delivery of possessionArbitration clause not ousting consumer forum jurisdiction - Whether existence of an arbitration clause renders consumer complaint maintainable before consumer forum inapproriate - HELD THAT: - Section 3 of the Consumer Protection Act renders remedies under the Act additional to other remedies. Reliance on Supreme Court authority and precedents shows that an arbitration clause does not oust consumer fora jurisdiction where allegations of deficiency of service or unfair trade practice are made. Hence arbitration clause in the agreement does not preclude maintainability of these complaints. [Paras 18]Arbitration clause does not bar complainants from approaching the consumer forum; complaint maintainableJurisdiction of the National Consumer Disputes Redressal Commission based on pecuniary value - Whether this Commission has pecuniary jurisdiction to entertain the complaints - HELD THAT: - Although the sale consideration paid by complainants was less than Rs.1 crore, complainants claimed and the record showed current market value of the flats exceeded Rs.10,000 per sq.ft., putting the pecuniary value of relief (including direction to hand over possession) above Rs.1 crore. Accordingly, the NCDRC has jurisdiction to entertain these complaints. [Paras 16]This Commission has jurisdiction as the pecuniary value of relief sought exceeds Rs.1,00,00,000/- in each caseDistinction between original allottees and subsequent purchasers for entitlement to relief - Whether purchasers who acquired allotment within one year of initial allotment are entitled to same compensation as original allottees and treatment of purchasers after one year - HELD THAT: - Following principle in Haryana Urban Development Authority v. Raje Ram, purchasers who acquired allotments within one year of initial allotment are to be treated at par with original allottees and awarded interest from 36 months of initial agreement. Purchasers who acquired resales more than one year after initial allotment are deemed to have foreseen possible delay; they are entitled to interest at 12% only from 36 months after the date of their repurchase, and for the interim period (36 months from initial allotment to 36 months from repurchase) compensation at Rs.5/- per sq.ft. is payable in terms of the agreement. [Paras 19, 23]Purchasers within one year of initial allotment treated like original allottees with interest from 36 months of initial agreement; later purchasers get interest from 36 months after repurchase and limited interim compensationBinding effect of contractual terms subject to unconscionability - Whether complainants are entitled to claim consumer status where flats may be intended for future occupation or temporary letting (commercial purpose argument) - HELD THAT: - The expression 'commercial purpose' must be given its ordinary meaning. Purchase of a house as an investment or for future residential occupation does not ipso facto make it a commercial purchase. Mere intention to let the flat temporarily until a later date (e.g., retirement) does not make the acquisition a commercial purpose excluding consumer protection. Absent proof of trading in properties as a business, purchasers remain consumers under the Act. [Paras 15]Purchasers are consumers; mere postponement of occupation or letting out in the interim does not convert purpose into commercial purposeAllocation of increased service tax - Whether increase in service tax effective from 01.06.2015 is to be borne by developer or purchasers - HELD THAT: - Had possession been delivered in time the complainants would have paid service tax at the earlier rate. The Commission holds that increase in service tax effective 01.06.2015 must be borne by the developer. [Paras 21]Increase in service tax from 01.06.2015 shall be borne by the opposite partyCompensation for further delay - Rate of compensation if the developer fails to honour its revised schedule of possession dated 27.05.2015 - HELD THAT: - To ensure compliance with the revised delivery schedule, the Commission directed that if possession is not delivered by the last dates in the developer's letter dated 27.05.2015, the developer shall pay simple interest at 18% per annum for the period of delay beyond those dates. [Paras 22, 23]If revised dates are not honoured, developer to pay simple interest at 18% p.a. for delay beyond the stipulated revised datesFinal Conclusion: Complaints allowed in part: opposite party directed to deliver possession by dates in its letter dated 27.05.2015; to pay specified compensation (simple interest at 12% p.a. in the differentiated manner set out, Rs.5/- per sq.ft. for limited interim periods where applicable), bear increased service tax from 01.06.2015, pay higher interest of 18% p.a. if revised dates are missed, and pay litigation costs of Rs.5,000/- in each complaint