TaxTMI 
TaxTMI 
2006 (11) TMI 329
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....equivalent to 10 per cent of the agreed price as earnest money at the first instance. The balance payment was to be made in instalments. Clause 17 of the Agreement entitled the allottee to cancel the allotment at any time and take refund of the amount paid by him without interest, but the earnest money was liable to be forfeited in the following terms : "17. In case the allotment is got cancelled by the Allottee himself, he shall be entitled to the refund of the amount paid by him, after deducting the earnest money, but without payment of any interest on the balance amount, paid by him." 5. Clause 8 of the said Agreement reads as under : "8. That the time of payment of instalments as stated in schedule of payments (Annexure II) and applicable stamp duty, registration fee, maintenance charges and other charges payable under this agreement as and when demanded is the essence of this Agreement. It shall be incumbent on the Apartment Allottee to comply with the terms of payment and/or other terms and conditions of sale, failing which he shall forfeit to the Company the entire amount of earnest money and the Agreement of sale shall stand cancelled and the Apartment Allottee sha....
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.... sales department. The cost of the property is Rs. 24,85,428 plus Rs. 2,60,000 towards registration. The figure works out as under : Total amount paid:Rs. 24,96,685 + parking charges Cost of townhouse:Rs. 23,45,428 The amount suits my budget and the balance amount should be refunded to me so that I can get the interiors done and settle down my family. I have been told that the earnest money of Rs. 6,02,221 will not be adjusted against the new property and will be forfeited. Since I am swapping from one property to another I don't see why this amount would not be adjusted against the cost of the townhouse, this townhouse is a backside unit and is lying unsold since it was constructed. The drawback of a backside unit is evident by itself. To add to this, my dream of property an 'A' class unit in Windsor Court is not coming true as I am now settling down for a lesser grade property. If I am told that my earnest money will be forfeited, in spite of the fact that I am swapping from one property to another, I will not be able to pay any further difference and in that case would request you to refund my money of Rs. 18,94,464 immediately so that I can go somewhere else and ....
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....he agreement by retaining the earnest money and making the necessary payment to which the applicants were entitled in law. The applicants sent a legal notice through their Counsel dated 26-3-1999 which also had no effect and the respondent continued to withhold the amount which was allegedly and validly due to the applicants even according to the terms of the agreement. These facts illustrate that the respondent was clearly guilty of unfair and restrictive trade practices causing immense damage to the applicants. In this background, it is neither understood nor appreciated in what context the respondent has made lengthy legal submissions taking shelter of the law which will not apply to the facts and circumstances of the present case. It is unfortunate that the respondent only treated cancellation from 26-2-2004 and claimed recovery from the applicants for a sum of Rs. 33,21,290. This is a preposterous claim and cannot be given any credence. In this background we feel that even the forfeiture of earnest money by the respondent cannot be justified as immense delay in the refund of the amount requested by the applicants as far back as in 1998 was without any just and bona fide reason....
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....004 is as under : On 3-6-1995, appellant made an application to DLF for sale of an apartment and a parking space for a total consideration of Rs. 54,37,664 and paid Rs. 5.48 lakhs as earnest money. In the application form, it was stated that the possession would be given in 4 years. Under clause 9 of the application form, it was stated that the existing fire-fighting safety code/regulations were already covered and extra fire-fighting charges would be levied if further measures are required to be taken due to additional requirements imposed by the authorities. It was also stipulated that DLF would send the buyer an Apartment Buyers' Agreement which the buyer would have to sign. 10. On 8-8-1998, DLF sent appellant an unsigned Apartment Buyers' Agreement for his signatures thereupon. In this Agreement, DLF unilater-ally altered the time period for handing over the possession. It extended the time period by a grace period of 90 days in terms of clause 15 of the application form. It also added several other exclusion clauses on various grounds and limited their liability for delay. However, appellant signed the Agreement and returned it to DLF. 11. On 31-10-1995, DLF sent the ....
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....ertakings and on 5-8-2000 offered to submit the same without the objectionable clauses. DLF gave no reply thereto. It may be mentioned that as of this date appellant had paid all principal amounts. There was no demand for interest outstanding as on that date. On 11-11-2000, appellant invoked clause 18 of the agreement and cancelled his booking. He also exercised his option of taking immediate refund of the full amount in the alternative. As DLF did not act according to clause 18, appellant filed the application before the Commission. 18. The Commission held that appellant was not seeking possession of the apartment but was seeking refund of the money deposited by him along with interest. It stated : "Looking at the totality of facts and circumstances as discussed in the foregoing order, a case of unfair trade practice as defined in section 36A of the MRTP Act, is made out against the respondent. We have, therefore, no hesitation in holding that the applicant is entitled to refund of the amount deposited by him with interest. Although the applicant has claimed interest @20 per cent per annum and he has also cited case law in support of his claim. He has also referred to the....
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....ction 2(u) to mean any practice relating to the carrying on of any trade, and includes- (i)anything done by any person which controls or affects the price charged by, or the method of trading of, any trader or any class of traders, (ii)a single or isolated action of any person in relation to any trade. 23. Section 2(o ) defines 'restrictive trade practice' to mean a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner and in particular,- (i)which tends to obstruct the flow of capital or resources into the stream of production, or (ii)which tends to bring about manipulation of prices, or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified cost or restrictions. 24. The expression 'service' has been defined in section 2(r) in the following terms : "(r) 'service' means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, chit fund, real estate, transport, processing, supply of electrical or o....
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....on under section 12B of the Act would not lie where a complaint is confined to a breach of contract. Purchases on the part of respondent must necessarily relate to one or the other trade practices contemplated under sub-section (1) of section 12B of the Act. 30. The question came up for consideration before this Court in Colgate Palmolive (India) Ltd. v. MRTP Commission [2003] 1 SCC 129^1 and Hindustan Ciba Geigy v. Union of India [2003] 1 SCC 134^2. In Colgate Palmolive (India) Ltd.'s case (supra), it was stated : "16. A bare perusal of the aforementioned provision would clearly indicate that the following five ingredients are necessary to constitute an unfair trade practice: 1. There must be a trade practice [within the meaning of section 2(u ) of the Monopolies and Restrictive Trade Practices Act]. 2. The trade practice must be employed for the purpose of promoting the sale, use or supply of any goods or the provision of any services. 3. The trade practice should fall within the ambit of one or more of the categories enumerated in clauses (1) to (5) of section 366A. 4. The trade practice should cause loss or injury to the consumers of goods or services. 5. T....
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....ther required to make an additional deposit which deposit together with the earnest money already deposited would constitute 25 per cent of the total tentative price. If he fails to accept the allotment within 30 days from the date of receipt of the letter then the authority is entitled to forfeit the earnest money. Further the balance amount could be deposited in instalments. Thus under the allotment in question an allottee was required to deposit 10 per cent of the tentative price of the land as earnest money which is given to bind the contract and the said earnest money could be forfeited by the authority in case the allottee does not communicate the letter of refusal within 30 days from the date of receipt of the allotment order." (p. 253) In the facts of the matter, it was held that the demand was not unreasonable. 35. Yet again in Union of India v. Rampur Distillery & Chemical Co. Ltd. [1973] 1 SCC 649, this Court stated : "3. Only one contention was urged on behalf of the appellants before us: that the security deposit was taken from the respondents in order to ensure the due performance of the contract and respondents having defaulted, the entire amount was liable ....
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.... or failure of the vendee.' In the present case the deposit was made not of a sum of money by the purchaser to be applied towards part payment of the price when the contract was completed and till then as evidencing an intention on the part of the purchaser to buy property or goods. Here the plaintiff had deposited the amounts claimed as security for guaranteeing due performance of the contracts. Such deposits cannot be regarded as earnest money." (p. 557) Referring to section 74 of the Indian Contract Act, it was observed : "There is authority, no doubt coloured by the view which was taken in English cases, that section 74 of the Contract Act has no application to cases of deposit for due performance of a contract which is stipulated to be forfeited for breach, Natesa Aiyar v. Appayu Padayachi [1913] ILR 38 (Mad.) 178, Singer Mfg. Co. v. Raja Prosad [1909] ILR 36 Cal. 960, Manian Pattar v. Madras Railway Company [1906] ILR 19 Mad. 188. But this view is no longer good law in view of the judgment of this Court in Fateh Chand's case (supra). This Court observed at p. 526 'Section 74 of the Indian Contract Act deals with the measure of damages in two classes of cases: (i) ....
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....funded after deducting the earnest amount. DLF, however, did not do so. 37. In Civil Appeal arising out of SLP(C) No. 26795 of 2004, we, therefore, are of the opinion that the interest of justice would be subserved if we, in exercise of our discretionary jurisdiction under article 142 of the Constitution of India keeping in view the facts and circumstances of this case, direct DLF to pay a sum of Rs. 37 lakhs to respondent herein. Such payment should be made within four weeks from date failing which interest at the rate of 9 per cent per annum shall be levied till actual payment is made. The appeal is disposed of accordingly. 38. In Civil Appeal No. 7960 of 2004, the principal contention of appellant was his insistence on the part of the developer not to deposit further amount by way of additional fire-fighting equipments as the same was not necessary. Our attention has further been drawn to the fact that DLF insisted on furnishing of undertakings which is contrary to law. Appellant also questions the levy of holding charges and/or maintenance charges. There had been some delay also in handing over of the possession. DLF, however, appears to have treated all the allottees on ....