2021 (9) TMI 1154 - SC - Indian Laws

Court rules possession starts from Fire NOC, not building plan sanction

Ireo Grace Realtech Pvt. Ltd. Versus Abhishek Khanna and Ors.

The court determined that the 42-month period for possession commencement should start from the date of Fire NOC issuance, not building plan sanction. The ... Refund of the amounts deposited by the Apartment Buyers - inordinate delay in completing the construction and obtaining the Occupation Certificate - determination of the date from which the 42 months period for handing over possession is to be calculated - whether it would be from the date of issuance of the Fire NOC as contended by the Developer or, from the date of sanction of the Building Plans, as contended by the Apartment Buyers? - terms of the Apartment Buyer's Agreement were one-sided - applicability of such terms on the Apartment Buyers - Real Estate (Regulation and Development) Act, 2016 having primacy over the Consumer Protection Act, 1986 or not - termination of agreement on account of the inordinate delay in handing over possession. Determination of the date for handing over Possession - whether the 42 months' period is to be calculated from the date when the Fire NOC was granted by the concerned authority, as contended by the Developer or, the date on which the Building Plans were approved, as contended by the Apartment Buyers? - HELD THAT:- It was a mandatory requirement under the Haryana Fire Safety Act, 2009 to obtain the Fire NOC before commencement of construction activity. This requirement is stipulated in the sanctioned Building Plans, as also in the Environment Clearance. The 42 months' period in Clause 13.3. of the Agreement for handing over possession of the apartments would be required to be computed from the date on which Fire NOC was issued, and not from the date of the Building Plans being sanctioned - In the present case, the Developer obtained approval of the Building Plans from the Directorate, Town and Country Planning, Haryana, on 23.07.2013. The Developer applied for issuance of Fire NOC for the Fire Fighting Scheme of the Group Housing Colony within the 90 days period before the Director, Fire Service, Panchkula. On 27.11.2014, the Director, Haryana Fire Service granted approval to the Fire Fighting Scheme subject to the conditions mentioned therein. The computation of the period for handing over possession would be computed from this date. The Commitment Period of 42 months plus the Grace Period of 6 months from 27.11.2014, would be 27.11.2018, as being the relevant date for offer of possession - thus, there is a delay of approximately 7 months in obtaining the Fire NOC by the Developer. Whether the terms of the Apartment Buyer's Agreement are one-sided? - the Agreement in this case, contains wholly one-sided clauses or not - HELD 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 - the Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer's Agreement. Whether primacy to be given to RERA over the Consumer Protection Act? - HELD THAT:- In a recent judgment delivered by this Court in IMPERIA STRUCTURES LTD. VERSUS ANIL PATNI AND OTHERS [2020 (11) TMI 189 - SUPREME COURT], it was held that remedies under the Consumer Protection Act were in addition to the remedies available under special statutes. The absence of a bar Under Section 79 of the RERA Act to the initiation of proceedings before a fora which is not a civil court, read with Section 88 of the RERA Act makes the position clear. Section 18 of the RERA Act specifies that the remedies are 'without prejudice to any other remedy available'. Whether the Apartment Buyers are entitled to terminate the Agreement, or refund of the amount deposited with Delay Compensation? - HELD THAT:- The factum of delay in completing the construction and making the offer of possession is an undisputed fact in this case - the Developer is directed to refund the entire amount deposited by this Respondent alongwith Interest @ 9% S.I. p.a. within a period of 4 weeks from the date of this judgment. The failure to refund the amount within 4 weeks will make the Developer liable for payment of default interest @ 12% S.I. p.a. till the payment is made. Appeal disposed off. Issues Involved:1. Determination of the date from which the 42 months period for handing over possession is to be calculated.2. Whether the terms of the Apartment Buyer’s Agreement were one-sided.3. Whether the provisions of the Real Estate (Regulation and Development) Act, 2016 must be given primacy over the Consumer Protection Act, 1986.4. Whether on account of the inordinate delay in handing over possession, the Apartment Buyers were entitled to terminate the agreement and claim a refund of the amounts deposited with interest.Detailed Analysis:1. Determination of the date from which the 42 months period for handing over possession is to be calculated:The court examined whether the 42 months period should be calculated from the date of issuance of the Fire NOC or from the date of sanction of the Building Plans. The court held that it was mandatory under the Haryana Fire Safety Act, 2009 to obtain the Fire NOC before commencing construction. The 42 months period in Clause 13.3 of the Agreement for handing over possession of the apartments would be required to be computed from the date on which Fire NOC was issued, not from the date of the Building Plans being sanctioned. The Fire NOC was obtained on 27.11.2014, thus the Commitment Period of 42 months plus the Grace Period of 6 months would end on 27.11.2018.2. Whether the terms of the Apartment Buyer’s Agreement were one-sided:The court found that the terms of the Agreement were wholly one-sided and loaded in favor of the Developer. Clauses such as Clause 7.4 requiring buyers to pay interest at 20% per annum on delayed payments, Clause 13.2 imposing “Holding Charges” on buyers who delayed taking possession, and Clause 13.5 limiting compensation for delay to 12 months only, were highlighted as particularly unfair. The court held that these terms constituted an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act, 1986, and were not binding on the apartment buyers.3. Whether the provisions of the Real Estate (Regulation and Development) Act, 2016 must be given primacy over the Consumer Protection Act, 1986:The court held that the remedies under the Consumer Protection Act, 1986 are in addition to, and not in derogation of, any other law applicable, including the RERA Act. The court emphasized that Section 88 of the RERA Act states that its provisions are in addition to and not in derogation of other laws. The court also noted that the Consumer Protection Act provides a remedy for better protection of the interests of consumers, including the right to seek redressal against unfair trade practices. Therefore, the Consumer Protection Act and the RERA Act could coexist, and consumers could choose their remedy.4. Whether on account of the inordinate delay in handing over possession, the Apartment Buyers were entitled to terminate the agreement and claim a refund of the amounts deposited with interest:The court categorized the allottees into two groups: those in Phase 1, where possession was offered after the issuance of the Occupation Certificate, and those in Phase 2, where the Occupation Certificate had not been issued. For Phase 1 allottees, the court held that they were obligated to take possession but were entitled to Delay Compensation for the period of delay. For Phase 2 allottees, the court held that they were entitled to a refund of the entire amount deposited due to the inordinate delay and the absence of an Occupation Certificate. The court directed the Developer to refund the amounts with interest at 9% per annum from 27.11.2018 till the date of payment, and in some cases, within a specified period, failing which a higher rate of interest would apply.Conclusion:The court concluded that the Developer could not compel the apartment buyers to be bound by the one-sided contractual terms and that the remedies under the Consumer Protection Act were available in addition to the RERA Act. The court provided specific directions for refunds and compensation based on the categorization of the allottees.