Case BriefsTribunals/Commissions/Regulatory Bodies

Uttar Pradesh Real Estate Appellate Tribunal, Lucknow: The Division Bench of Justice Dr D.K. Arora (Chairman) and Rajiv Misra (Administrative Member) set aside the decision of the Regulatory Authority and held that the developer did not conceal the details of the project including the status of the same.

The appellant preferred the present appeal against the order passed by the Regulatory Authority whereby the appellant had been directed to refund the amount deposited by the respondents.

Factual Background

Respondents booked 4 BHK Flat in the appellant’s project ‘Godrej Nurture Phase-I’ and paid a sum of Rs 17,51,901 in installments to the appellant. The possession of the unit after completion of the project was to be delivered by 31-3-2024. But the appellant increased the rate of the property in question.

In view of the above, respondents lost faith in the developer, hence filed a complaint about the refund of the deposited amount along with interest. Respondent got the refund with interest at the rate of MCLR+1% per annum, within 45 days.

Aggrieved with the above-stated order, the appellant approached this Tribunal.

Appellant stated that it has not made any change/escalation in the price of the apartment. The lease rent is a pass-through charge which is payable to the competent authority in terms of the title document.

Further, the advance charges were only charged at the time of issuance of the possession letter and for the services/maintenance of the unit and the project the charges were to be paid by all the apartment owners.

The appellant had issued another allotment letter to the respondent on 23.04.2019, indicating the cost of the unit as Rs.1,86,29,264.87p. including taxes mentioning the condition at serial no. 4 to the effect that the allotment of the unit is subject to executing/signing and submitting to the developer/appellant the duplicate copy of the duly signed allotment letter within 10 days of the date thereof and if the developer does not receive the duly signed allotment letter from the allottee/respondent within the timeline mentioned therein, then it shall be deemed that the allottee/respondent has accepted the allotment of the unit on the terms and conditions as specified in the application and the allotment letter.

Respondent was aggrieved by the increase of Rs.3,78,237.92p.

Issued framed

(1) Whether the appellant misrepresented the facts regarding promoter/developer of the project to the allottee?

(2) Whether the appellant committed any illegality in correcting the amount of lease rent payable by the allottee/respondent and taxes from Rs.21,10,077.85 to Rs.21,67,775.16p., advance maintenance charge Rs.1,12,421.03 and lease rent from Rs.5,20,359.10p. to Rs.7,28,478.68p. which resulted in enhancement of the cost of the unit from Rs.18,251,026.95p. to Rs. 18,622,264.87p. vide allotment letter dt. 23.04.2019 (page 57 of the paper book)?

(3) Whether the Regulatory Authority committed any illegality while allowing the claim of the respondent vide impugned order dated 19.02.2020?

Analysis and Decision

The Tribunal on examining the provisions of the application form which was addressed to the appellant signed by the respondents, found that the appellant had disclosed the project and the status of the appellant along with status of Godrej Properties Limited as Development Manager for the project in question by the developer/appellant and the Godrej Properties Limited authorized to develop and operate the Project as per the agreements between the Developer and the Development Manager.

Therefore, nothing was concealed or misrepresented.

As per the application form, it was clearly indicated that the allottees agreed to the cost of the property as mentioned in Schedule III towards purchase of the Unit. However, the Cost of Property shall be exclusive of all charges, fees, taxes, impositions as may be levied by the Competent Authority, such as, lease rent, GST, Cess, property tax, land under construction tax or any future increase thereof or imposition of any fresh incidence of tax levied by Competent Authority; (“Statutory Charges”) in respect of the Unit and Club Membership Charges, recovery or payments towards maintenance and operation of common areas and facilities, stamp duty, registration charges, any future increase thereof and all other costs, charges and expenses incidental thereto in connection with any of the documents to be executed for the sale of the Unit, as per the provisions of applicable laws.

On examining the two allotment letters, it was found that the appellant corrected the amount of taxes, lease rent and mentioned advance maintenance charges. After correction of the same the amount of the unit became Rs.1,86,29,264.87p. from Rs.1,82,51,096.95p. and resulted in the increase of cost of Rs.3,78,167.92p.

Tribunal found no illegality in correcting the amounts in the second allotment letter.

In the opinion of the Tribunal, the appellant had disclosed each and every aspect and details of the project including status of the developer and development manager.

In view of the above discussion, the impugned order was set aside. [Bick Rise Developer (P) Ltd. v. Antaryami Kumar, Appeal No. 472 of 2020, decided on 22-3-2022]


Advocates Before the Tribunal:

Kapil Madan, Counsel for the Appellant

Shiv Prakash Pandey, counsel for the Respondents

Case BriefsSupreme Court

Supreme Court: The Bench of Uday Umesh Lalit, Hemant Gupta and S. Ravindra Bhat, JJ., while giving major relief to homebuyers, held that rights of purchasers are the same as that of original allottees.

Appellant (builder) was aggrieved by the order of the National Consumer Disputes Redressal Commission (NCDRC).

Respondent (Purchaser) sought a direction against the builder, for a refund of the consideration amount of Rs 1,93,70, 883 received by the latter as consideration for the sale of a flat along with interest from the date different instalments were paid as well as compensation and costs.

Factual Matrix

As per the allotment letter, the possession of the flat was to be handed over within 36 months. The original allottee made payment to the tune of ₹1,55,89,329/-, for the first seven instalments as demanded by the builder.

After noticing the slow pace of construction, the original allottee decided to sell the flat. The purchaser who was in search of a residential flat was approached by her through a broker. He was assured that the possession of the flat would be delivered on time, and he agreed to purchase the flat and paid an amount of 1,00,000/- as advance towards the total sale consideration of ₹1,55,89,329/.

Further, it was submitted that the purchaser alleged that possession was not delivered in October, 2015 as promised (in the allotment letter).

Purchaser decided to wait for the possession and not to make any payment towards the sale; however, the original allottee insisted upon the execution of an agreement to sell and demanded payment of instalments, which she had made to the builder, stating that she could not wait for any further and she would forfeit the earnest money and cancel the deal.

The purchaser alleged that he made enquiries from the officials of the builder, who assured that the possession would be delivered by June 2016. Therefore, the purchaser, on 17.02.2016, entered into an agreement of sale with the original allottee, and paid an amount of ₹1,85,00,000/-.

Later, original allottee requested the builder to transfer the flat in favor of the respondent. Purchaser visited the site to acquaint himself with the extent of construction but he was denied entry by the builder’s employees citing security reasons and was informed that the possession would be delivered shortly.

But till the end of the year 2017, possession of the said flat was not delivered.

In view of the above-stated facts, the purchaser sought a refund of the amount, but was in vain. Purchaser expressed his shock on receiving the demand letter for the 11th instalment. But on refusal for the same, builder’s officials threatened the purchaser of cancellation and forfeiture of the amounts paid.

Hence, the appellant had approached the NCDRC for a direction to the builder to refund the entire amount with interest at the rate of 24%.

NCDRC ordered the following:

“…we direct the Developer to refund the amount deposited with the developer.”

Analysis, Law and Decision

Bench noted that the builder’s principal argument was that the rights of a purchaser were not the same as the original allottee.

Supreme Court expressed that the builder did not deny that upon issuance of the endorsement letter, the purchaser not only stepped into the shoes of the original allottee but also became entitled to receive possession of the flat.

Whether a subsequent purchaser is not entitled to similar treatment as the original allottee, and can be denied relief which otherwise the original allottee would have been entitled to, had she or he continued with the arrangement?

Purchasers step into the shoes of Original Allottees

An individual such as the original allottee, enters into an agreement to purchase the flat in an ongoing project where delivery is promised.

The terms of the agreement as well as the assurance by the builder are that the flat would be made available within a time- frame.

It is commonplace that in a large number of such transactions, allottees are not able to finance the flat but seek advances and funds from banks or financial institutions, to which they mortgage the property. The mortgage pay-outs start initially after an agreed period, commencing in a span of about 15 to 24 months after the agreement. This would mean that in most cases, allottees start repaying the bank or financial institutions with instalments (mostly equated monthly instalments) towards the principal and the interest spread over a period of time, even before the flats are ready.

Bench in view of the above-stated expressed that,

“…prolongation of the project would involve serious economic repercussions upon such original allottees who are on the one hand compelled to pay instalments and, in addition, quite often -if she or he is in want of a house -also pay monthly rents. Such burdens become almost intolerable.”

 Hence, allottees cannot indefinitely wait and prefer to find purchasers who might step into their shoes.

Conclusion

Supreme Court on perusal of the facts and circumstances of the case decided that the nature and extent of relief, to which a subsequent purchaser can be entitled to, would be fact dependent.

Adding to the above, Court elaborated that, it cannot be said that a subsequent purchaser who steps into the shoes of an original allottee of a housing project in which the builder has not honoured its commitment to deliver the flat within a stipulated time, cannot expect any – even reasonable time, for the performance of the builder’s obligation. Such a conclusion would be arbitrary, given that there may be a large number- possibly thousands of flat buyers, waiting for their promised flats or residences; they surely would be entitled to all reliefs under the Act.

Since the purchaser agreed to buy the flat with a reasonable expectation that delivery of possession would be in accordance within the bounds of the delayed timeline that he had knowledge of, at the time of purchase of the flat.

Therefore, in the event the purchaser claims refund, on an assessment that he too can (like the original allottee) no longer wait, and face intolerable burdens, the equities would have to be moulded. Hence, it would be unfair to assume that the purchaser had knowledge of the delay.

The equities, in the opinion of this court, can properly be moulded by directing refund of the principal amounts, with interest @ 9% per annum from the date the builder acquired knowledge of the transfer, or acknowledged it.

In view of the above discussion, the order of the NCDRC was modified. [Laureate Buildwell (P) Ltd. v. Charanjeet Singh, 2021 SCC OnLine SC 479, decided on 22-07-2021]

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Deepa Sharma (Presiding Member) addressed a matter wherein a consumer was subjected to the agony of delayed possession of a flat by being duped and coerced by the project owner.

Factual Matrix

Complainant 3 had booked a flat in Garden Isels project of the OP and the possession was to be handed over within 42 months, i.e. 3 and a half year, for which he had taken a home loan and had paid an EMI.

OP duped the complainant when he complained of the delay in construction, when OP suggested the complainant of buying another flat. Afterwhich, complainants had bought a flat in the project Imperial Courts and in 2015, an allotment letter was issued, and OP promised to hand over the possession within 24 months.

Further, it was contended that in one month of October, 2015, the Complainant as per the plan and advice of OP sought cancellation of the purchased unit in Garden Isels and requested for the transfer of the amount in the account of Imperial Courts flat.  It was stated that due to the transfer of the said amount, complainant lost home loan monthly EMI paid for over 25 months, 5% deduction on cancellation of the unit and the late payment amount of 2 to 4 Lakhs calculated @ 12% p.a. on the late payment of the installments and this amount comes to approximately 14 to 16 Lakhs and it is recoverable from the Opposite Party along with compensation for harassment and mental agony.

OP was paid total sale consideration amount and as per the possession letter, the flat was to be handed over within 45 days, i.e. by 15th February, 2017. However, series of unfortunate events took place. It was submitted that OP informed the complainants about the shortage of material and therefore informed them that it would take a long time for them to install 7 ACs one Jacuzzi, well-furnished modular kitchen and wardrobes in all four bedrooms.

On the advice of the OP, the Complainants under duress decided to give up all the materials like installation 7 ACs, one Jacuzzi, well-furnished modular kitchen and wardrobes in all four bedrooms and for that purpose, the Opposite Party had given a discount of 4,72,900, while the actual cost of all those articles were more than 15 Lakhs.

It was submitted that the OP had done nothing to ensure the handing over of the possession of the Imperial Courts flat.

The agreement between the parties was biased and contrary to the settled principle of law and public policy, hence, the agreement could not be implemented in the present form. The Complainants were induced to enter into this agreement which OP now sought to enforce.

OP was forcing the complainants to take possession of a flat that was not proposed and the overall condition of the project was not what was represented. Therefore, the agreement stood breached and deserved to be cancelled.

Analysis, Law and Decision 

Crux of the problem was that the flat was to be handed over within 42 months plus 6 months of a grace period, i.e. within 4 years. Before the expiry of 4 years, the complainant had booked a flat at the other project of OP for which the allotment letter was handed over and possession was promised within 24 months.

Coram stated that it is a settled proposition of law that if somebody complaints inducement, force or coercion it is his duty to plead the facts which led to said inducement, coercion or force and thereafter, prove those facts.

It was noted by the Commission that the complainants acted voluntarily and during the existence of an allotment of their flat in Garden Isles project, they booked another flat in Imperial Courts and finding difficult in paying installments towards Imperial Courts flat, they sought cancellation of the allotment of the flat in Garden Isles even before the period within which the possession of the said flat was to be handed over to them and requested for transfer of the money paid against the said flat in the account of Imperial Courts.

When can possession of a flat not be refused?

Commission while referring to the decision of the Supreme Court in Ireo Grace Realtech (P) Ltd. v. Abhishek Khanna, (2021) 3 SCC 241 expressed that where the offer of possession is made along with Occupation Certificate, even if there is a delay in the said offer, the allottees cannot refuse to take the possession.

In light of the above facts and contentions of the matter, Coram held that there was no delay in the offer of possession and complainants since failed to give any valid reason and there existed no valid reason for the complainants to refuse to take possession and terminate the contract, the refusal to take possession is hence not justifiable.

Therefore, Complainants have failed to prove any fact on record to show that the OP had adopted an unfair trade practice or that the agreement was biased or one-sided. [Sudha v. Jaiprakash Associates Ltd., 2021 SCC OnLine NCDRC 166, decided on 29-04-2021]


Advocates before the Commission:

For the Complainant: Nakul Singh Pathania, Advocate

For the Opp.Party: Sukumar Pattjoshi, Sr. Advocate With Sumeet Sharma, Advocate

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Disputes Redressal Commission (NCDRC): C. Viswanath (Presiding Member) addressed an issue wherein an allottee after the purchase of the Shed could not get electricity connected due to pending dues of the previous allottee.

The instant revision was filed against the Order passed by the State Consumer Disputes Redressal Commission, Gujarat.

Complainant had applied for allotment of shed pursuant to the advertisement of OP 1. The Complainant paid an amount of Rs 1,76,000 towards the allotment of the shed as initial payment and was informed that he would get electricity connection from the Gujarat Electricity Board in due course.

Further, OP-3 informed the complainant that the previous allottee of the shed was due Rs 1,26,479 to the Gujarat Electricity Board towards electricity charges. The Complainant intimated OP-2 that dues were also pending towards municipal tax of Surat Municipal Corporation. OP 1 requested the Complainant to clear both the outstanding dues and issue clear title of the Shed.

On no action being taken by the OP 1 and 2, Complainant filed a complaint before the District Forum.

Following was the District Forum’s Order:

OP No.1 and OP No.2 herein jointly and /or severally should pay to the complainant in the present case, with reference to the industrial shed in question the amount of Rs.1,76,000/-(Rupees one lakh seventy-six thousand only) paid to the opponent along with simple interest at the rate of 9% per annum on the said amount from the date of complaint till its realization.

State Commission set aside the District Forum’s Order stating that it did not discuss the agreement for sale.

Analysis and Decision

Commission on going through the allotment letter and the agreement found that there was no express provision which mentioned that the purchaser of the premises had to pay the electricity dues of the previous allottee.

Therefore in the absence of there being any specific statutory provision or clause in the Sale Agreement, the allottee could not have been compelled to clear the dues of the previous allottee.

Hence, dues relating to electricity charges cannot be enforced against the next allottee.

Commission cited the Supreme Court decision in Haryana State Electricity Board v. Hamuman Rice Mills Dhanauri, Civil Appeal No. 6817 of 2010, decided on 20-08-2010, held that “electricity arrears do not constitute a charge over the property. Therefore in general law, a transferee of a premises cannot be made liable for the dues of the previous owner/ occupier. Where the statutory rules or terms and conditions of supply which are statutory in character, authorize the supplier of electricity, to demand from the purchaser of a property claiming re-connection or fresh connection of electricity, the arrears due by the previous owner/occupier in regard to supply of electricity to such premises, the supplier can recover the arrears from a purchaser.”

In view of the above discussion, State Commission’s Order was set aside and District Forum’s decision was upheld. [Madhuben Rameshchandra Shah v. Gujarat Industrial Development Corpn., 2021 SCC OnLine NCDRC 17, decided on 28-01-2021]


Advocates for the parties:

Petitioner: Varshal Pancholi, Advocate

Respondents: R1 and R1: Chirag M. Shroff, Advocate

Respondent 3: Jesal Wahi, Advocate

Respondent 4: Ex-parte