Case BriefsTribunals/Commissions/Regulatory Bodies

Delhi State Consumer Disputes Redressal Commission (DSCDRC): Coram of Dr Justice Sangita Dhingra Sehgal (President) and Anil Srivastava (Member)ordered the builder to refund the money deposited by the complainant, as a consequence of not being able to deliver the possession of flat on time. However, it was held that the builder was not liable to refund the EMI amount paid by the complainant towards loan sanctioned in favour of the complainant.

 Present consumer complaint was filed under Section 17 of the Consumer Protection Act, 1986 against OP 1 and OP 2.

Complainant had applied for booking of a flat in the OP 1’s project and was allotted a flat for the total sale consideration which was agreed at Rs 44,99,387.

Complainant and OP 1 entered into a Flat Buyers Agreement. It was stated in the agreement that the possession of the flat was to be delivered within 18 months from execution of the agreement along with a grace period of 6 months. Though, OP 1 failed to adhere to the stipulated time for delivery of possession and hence the complainant had to withdraw from the project.

Further, OP 1 informed the complainant regarding the deduction. Adding to this, it was submitted that the service tax paid on the entire transaction would also be forfeited.

Complainant got served a legal notice dated 03-10-2015, upon the OP 1 and sought refund of the amount deducted along with compensation for mental agony and harassment.

Alleging deficiency of service and unfair trade practice on the part of OP 1, the complainant approached this commission.

Analysis, Law and Decision

Territorial and Pecuniary Jurisdiction

Whether this commission has the jurisdiction to adjudicate the present complaint?

Coram on perusal of Section 17 of the Consumer Protection Act lead the Commission to the conclusion that it shall have the pecuniary jurisdiction in cases where the total claim including the compensation is more than twenty lakhs and less than One Crore. Moreover, clause 17(2) of the Act provides the extent of territorial jurisdiction, wherein it has been provided that the state commission shall have the jurisdiction to entertain cases where OP 1 at the time of the institution of the complaint, actually and voluntarily resides or carries on business or has a branch office or personally works for gain or the cause of action arose.

Hence, the commission has pecuniary jurisdiction in the present matter.

To strengthen the above finding, Coram relied on the Rohit Srivastava v. Paramount Villas (P) Ltd., 2017 SCC OnLine NCDRC 1198.

Further, the Coram stated that relying on the above case, this Commission has both territorial and pecuniary jurisdiction.

Deficiency of Service 

The stated expression of Deficiency of Service was dealt with by the Supreme Court in Arifur Rahman Khan v. DLF Southern Homes (P) Ltd., (2020) 16 SCC 512.

In Commission’s opinion, OP 1 was deficient in providing its services to the complainant since it had failed to handover the possession of the flat within the stipulated time period and the complainant was entitled to the refund of the money deposited to OP1.

OP 1’s deduction was not justified as the complainant had sought cancellation of the booking of the flat on account of deficient services provided by OP 1, hence the complainant was entitled to refund of the amount forfeited.

However, the Complainant was not entitled to receive an amount of Rs 6,33,289/- since this amount was paid as EMIs towards the loan sanctioned in favour of the Complainant. The OP 1 has no obligation to pay the EMI amount, since there exists no express agreement pertaining to the payment of EMIs to be done by the OP 1. [Kapila Narula v. Logix City Developers (P) Ltd., Complaint No. 149 of 2016, decided on 16-08-2021]


Advocates before the Court:

Ms. Suchita Sharma, Counsel for the Complainant.

Ms. Arushi Pathak, Counsel for the Opposite Party.

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]

Case BriefsHigh Courts

Bombay High Court: The Division Bench of S.J. Kathawalla and Milind N. Jadhav, JJ., directed the builders who failed to refund the buyers their amount to date to establish that they are virtually paupers not having funds in their bank accounts and their standard of living also bears out the same.

Instant petition was filed by a retired pensioner. It was submitted that the petitioner by registered sale agreement purchased a residential flat for a total consideration of Rs 62, 77,310.

Respondents 6 and 7 were the partners of Respondent 5-Firm.

It was submitted that the possession of the said flat was to be given by 31-05-2015. An amount of Rs 61,58, 136 was paid from time to time to respondent 5 towards the purchase of the said flat. Though the building could not be completed due to several irregularities.

Petitioner filed a statutory complaint with respondent 4 – Maharashtra Real Estate Regulatory Authority seeking withdrawal from the project and refund of monies paid along with interest. Respondent 4 directed respondent 5 to refund the amount collected with the interest of @10.05% p.a.

Petitioner had again approached the respondents 5 to 7 for seeking compliance with the RERA Order, yet the same was neglected. Further, an execution application was filed wherein recovery warrant was issued under Section 40(1) of the RERA Act against respondents 5 to 7 which was forwarded to respondent 2 – Collector for execution and enforcement.

Till 2018, no action took place.

Further, the petitioner apprehended that the respondents 5 to 7 were attempting to avoid and delay the execution of the Recovery Warrant and meanwhile they were disposing of their assets in order to circumvent the due process of law.

In 2021, respondents 5 to 7 approached the petitioner for settlement, however, they committed default in payment of the first installment itself and breached the Memorandum of Understanding.

Petitioner, being aggrieved by the laxity on the part of the Statutory Authorities in execution and enforcement of the Recovery Warrant, approached this Court by the present petition.

Analysis, Law and Decision

Bench noted that respondents 5 to 7 have repeatedly brazenly breached the orders passed by this Court as well as undertakings given to this Court.

The said respondent’s counsel again reiterated in the Court that the respondents do not have any funds and they shall be in a position to pay only a sum of Rs 10 lacs only on 25-08-2021.

In view of the above stated, Court directed the respondents 5 to 7 to give complete disclosure of their movable and immovable, encumbered and unencumbered assets and properties before the next date. They shall also produce their bank statements as well as accounts operated by the firms/s and/ or companies in which they are partners and/or directors; particulars of their standard of living, as indicated through their electricity bills, their credit card statement/ s and the income tax returns that they have failed in the last three years.

Hence, the matter was adjourned to enable the respondent’s advocate to satisfy the Court that they do not have funds whatsoever.

Therefore, respondents 5 to 7 have repeatedly not only taken several flats, purchasers, for a ride, by taking their hard-earned monies and not providing them with their flats on time, nor returning their hard-earned monies, but have also repeatedly taken the Courts for a ride by giving solemn undertaking/s in order to avoid any adverse orders being passed against them, knowing fully well that they have no intention to honour the undertaking/s given by them to the Court. They are also well aware that assignments keep changing from time to time and they can, therefore, endeavour to convince the next Judge taking up the said assignment to grant them further extension of time to make payment, which order would once again be breached with impunity.

In view of the above, the matter was adjourned to 22-07-2021. [Arun Parshuram Veer v. State of Maharashtra, 2021 SCC OnLine Bom 1132, decided on 3-07-2021]


Advocates before the Court:

Mr. Nilesh Gala i/by Law Square for the Petitioner

 Mr. P.G. Sawant, AGP for Respondents 1 to 3 – State

Mr. Ashutosh M. Kulkarni a/w Mr. Akshay Kulkarni for Respondent 4

Mr. Makarand V. Raut a/w Mr. Manoj Nikam for Respondents 5 to 7

Case BriefsTribunals/Commissions/Regulatory Bodies

Maharashtra Real Estate Regulatory Authority, Mumbai: Coram of Dr Vijay Satbir Singh (Member I), while laying out certain significant observations with respect to the provisions of RERA decided the complaint revolving around delayed possession of flat.

Background

By preferring the present complaint, complainants sought directions from the MahaRERA to the respondent to pay the interest for the delayed possession under Section 18 of the Real Estate (Regulation & Development) Act, 2016 (RERA) in respect of booking their respective flats in the respondent’s project.

Respondent failed to hand over the possession of the flat on time. Complainants sought payment of interest for the delayed possession and further stated that even after the respondent sold more than 50% of the units, it failed to form the association of allottees/ society of allottees till date. The respondent has also failed to execute the deed of conveyance with the complainants along with the other allottees of the project.

Further, it was alleged that the respondent was yet to hand over and allot the parking spaces to respective allottees and was demanding permission from the allottees to utilize the additional FSI and construct the additional floors.

Complainants further stated that they have signed the possession letter and have received the possession of their respective flats in the month of December 2019, though respondent was not ready to allot the parking as well as to form the society of the allottees.

Analysis, Law and Decision

Since the respondent did not hand over the possession of the flats to the complainants and violated the provisions of Section 18 of the RERA and the Rules made thereunder.

Bench did not accept the reasons cited by the respondent for the delay in possession of the flat and apparently the respondent promoter wanted to apply convenient clauses in the agreement to take undue benefits after commencement of the RERA.

Formation of Society and Execution of Conveyance Deed

As per Section 11(4)(e) of the RERA, promoter is liable to enable the formation of society within 3 months of the majority of allottees having booked their flats.

In the present matter, more than 51% of the allottees booked their flats and the full occupancy certificate had been obtained for the said project, hence it was statutory duty of respondent promoter to form a society of the allottees and the respondent had no authority to lay down any condition for the same as it was not permissible under RERA.

Construction of Additional 4th Floor

MahaRERA opined that the present project was registered with MahaRERA after commencement of the RERA and hence provisions of RERA would apply for this project.

Hence, as per Section 14 of the RERA, any change or modification in the sanctioned plan required mandatory consent of the allottees and therefore, if respondent wanted to modify plans including the construction of 4th floor, then it had to be obtained through requisite consent of allottees.

Adding to the above, MahaRERA held that the respondent was liable to pay interest for the period of delay in accordance with the terms and conditions of the agreement.

Selling of the Car Parking

 stated that there is an explicit provision under RERA that promoter can sell only covered car parking by charging a certain amount. Open Parking had to be handed over to society, it could not be sold in the open market.

Therefore, complainant allottees and respondent promoter were bound by the said provision.

Following Order was passed:

  • Respondent directed to pay interest to the complainants till the date of occupancy certificate.
  • Respondent promoter was entitled to claim the benefit of “moratorium period”.
  • Since the complainants want to continue in the project, they are entitled to seek interest for the delayed possession under section 18 of the RERA.
  • Respondent/Promoter directed to form a society as per the provision of Section 11(4)(e) of RERA
  • With regard to construction of additional floor, without the consent of the 2/3rd allottees, the same could not be constructed.
  • It was also directed that respondent was entitled to sell only covered car parking and no cash money be demanded from the allottees.

[Deepesh Singh v. Neelkanth Constructions, Complaint No. CC006000000089761, decided on 30-07-2020]


Advocates before the Authority:

Adv. Nilesh Garde appeared for all the complainants. Adv.Khushiram Jadhvani a/w. Adv. Manali Saraf appeared for the respondent.

Case BriefsHigh Courts

Allahabad High Court: The Division Bench of Pankaj Naqvi and Piyush Agrawal, JJ., issued a general mandamus to Competent Authorities under U.P. Apartment Act, 2010 and U.P. Industrial Area Development Act, 1976 or any other cognate enactment to decide the grievances of home buyers within 3 months from the date the grievance is brought to their knowledge.

State of U.P. taking cognizance of the rise in population and demand for space especially for residential purposes enacted U.P. Apartment (Promotion of Construction Ownership and Maintenance) Act, 2010.

It has been stated that the object of the Act is to give primacy to the interest of the owners of the apartments and protection of their rights against arbitrary and profit-oriented actions of the promoters/builders in which a role of an arbiter has been assigned to the competent authority in the Development Authority as held in Designarch Infrastructure Pvt. Ltd. vs. Vice Chairman, Ghaziabad Development Authority, 2013 (9) ADJ 594.

Genesis of the instant petition

Bench has taken judicial notice that a large number of cases have been coming before the Court on behalf of the home-buyers who after having spent their hard-earned life savings, buy an apartment, only to face hostile and arbitrary actions from the promoters/builders/Development Authorities and instead of resolving such disputes, they become mute spectators.

Irregularities highlighted by Home-Buyers

Petitioner by the instant petition has highlighted several irregularities in violation of their agreements on the part of the respondent 3 being the developer co-promoter of the residential project “Shipra Shritsti” which despite several representations to respondent 2 have gone unattended.

High Court deemed it appropriate to issue a general mandamus to the competent authorities to dispose of the grievance of home-buyers within a stipulated period so as to obviate an individual home-buyer or a registered association, as the case may be, from approaching this Court time and again.

Further, the Court added that the benefit of this order shall also be extended to the competent authority envisaged under the U.P. Industrial Area Development Act, 1976 and other cognate enactments.

Court issues directions

Following were the directions issued by the High Court in light of the above discussion:

(i) A general mandamus is issued to the Competent Authorities under U.P. Apartment Act, 2010 & U.P. Industrial Area Development Act, 1976 or any other cognate enactment to decide the grievance of the home- buyers or their associations, positively within 3 months from the date the grievance is brought to their knowledge, by reasoned and speaking order under intimation to the aggrieved persons.

(ii) The Competent Authority shall ensure that before any decision is taken, a right of audience is given to the parties concerned.

(iii) The Competent Authority shall ensure that an officer not below the rank of a Gazetted Officer shall periodically visit the apartment/building at least once in 6 months at a prior notice to the registered association which shall be obliged to circulate it amongst its member so as to give them an opportunity to ventilate their grievance if any. Any reported violation shall be immediately brought to the notice of the Authority concerned which shall immediately take remedial steps.

(iv) Any inaction on the part of Competent Authority shall be construed as a serious dereliction of duty, warranting interference from the State Government.

[Shipra Sristhi Apartment v. State of U.P., 2021 SCC OnLine All 43, decided on 05-01-2021]


Advocate for the Parties:

Counsel for Petitioner: Abhinav Gaur, Anoop Trivedi (Senior Adv.), Vibhu Rai

Counsel for Respondent: C.S.C., Ravi Prakash Pandey, Rohan Gupta, Tarun Agrawal

Case BriefsSupreme Court

Supreme Court: The 3-Judge Bench of Dr Dhananjaya Y Chandrachud, Indu Malhotra and Indira Banerjee, JJ., observed that

“Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement.”

Judgment passed by the National Consumer Disputes Redressal Commission is in Challenge

Appellant-Developer challenged the decision of NCDRC wherein refund of the amounts deposited by the Apartment Buyers was directed on account of inordinate delay in completing the construction and obtaining the Occupation Certificate.

Issues for Consideration:

  • Determination of the date from which the 42 months period for handing over possession is to be calculated under Clause 13.3, 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;
  • Whether the terms of the Apartment Buyer‘s Agreement were one-sided, and the Apartment Buyers would not be bound by the same;
  • Whether the provisions of the Real Estate (Regulation and Development) Act, 2016 must be given primacy over the Consumer Protection Act, 1986;
  • 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.

Analysis

Bench made a pointwise analysis of the instant matter wherein in the first issue, the point of controversy was whether the 42 months’ period is to be calculated from the date when the Fire NOC was granted by the authority concerned as contended by the Developer; or, the date on which the Building Plans were approved as contended by the Apartment Buyers.

In accordance with Section 15 of the Haryana Fire Safety Act, 2009, it is mandatory for a Builder/Developer to obtain the approval of the Fire Fighting Scheme conforming to the National Building Code of India, and obtain a ‘No objection Certificate’ before the commencement of construction.

Clause 13.3 of the Apartment Buyer’s Agreement provides that the 42 months’ period has to be calculated from the date of approval of Building Plans and/or fulfilment of the pre-conditions imposed thereunder.

Bench opined that it was a mandatory requirement under the Haryana Fire Safety Act, 2009 to obtain the Fire NOC before the commencement of construction activity. The said requirement was 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 instant matter, there was a delay of approximately 7 months in obtaining the fire NOC by Developer.

Whether the terms of the Apartment Buyer’s Agreement are one-sided?

Court observed on perusal of the clauses mentioned in the Agreement that the said clauses were wholly one-sided terms of the Agreement Buyer’s Agreement, which were entirely loaded in favour of the Developer and against the allottee at every step.

For the said issue, Court held that the terms of the Apartment Buyer‘s Agreement are oppressive and wholly one-sided, and would constitute an unfair trade practice under the Consumer Protection Act, 1986.

Incorporation of 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.

Whether primacy to be given to RERA over the Consumer Protection Act?

Bench expressed that this Court has upheld the applicability of provisions of Consumer Protection Act as an additional remedy, despite the existence of remedies under special statutes, including the Arbitration and Conciliation Act, 1996.

In the decision of  Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751, it was held that the remedy under the Consumer Protection Act, 1986 is confined to the Complaint filed by a Consumer as defined by the Act, for defects and deficiency caused by the service provider.

In a recent decision of this Court in Imperia Structures Ltd. v. Anil Patni, (2020) 10 SCC 783, 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?

Answering this issue, the Court categorised the buyer/allottees into two categories:

  • Apartment Buyers whose allotments fall in Phase 1 of the project comprised in Towers A6 to A10, B1 to B4, and C3 to C7, where the Developer has been granted occupation certificate, and offer of possession has been made
  • Apartment Buyers whose allotments fall in Phase 2 of the project, where the allotments are in Towers A1 to A5, B5 to B8, C8 to C11, where the Occupation Certificate has not been granted so far.

For category 1, it was held that such allottees (barring an exception) were obligated to take possession of the apartments, since the construction was completed, and possession offered on 28-06-2019, after the issuance of Occupation Certificate on 31-05-2019. The Developer is however obligated to pay Delay Compensation for the period of delay which has occurred from  27-11-2018 till the date of the offer of possession was made to the allottees.

So far category 2 is concerned, it was held that such allottees are entitled to refund of entire amount deposited by them, along with compensation and interest.

In view of the above discussion, civil appeals were disposed of. [Ireo Grace Realtech (P) Ltd. v. Abhishek Khanna, 2021 SCC OnLine SC 14, decided on 11-01-2021]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): V.K. Jain (Presiding Member), held that homebuyers cannot be made to wait indefinitely for the possession of the plots allotted to them and they are entitled to refund of the amount which they paid

Developer Company was selected by Government of Uttar Pradesh for the development of a township in Greater Noida in the name of ‘Sushant-Megapolis’.

No Time Frame

Large number of complainants booked residential plots and executed agreements with the OP. In the agreement, no time frame for delivering possession of the plots to the allottees was incorporated but the complainants were verbally told that the possession would be handed over within 36 months from the execution of the agreement.

Case of the Complainants

Complainants stated that the township has not been developed, hence no possession was offered to them along with other allottees.

Class Action

Therefore complainants approached the commission by way of class action under Section 12(1)(c) of the Consumer Protection Act seeking a refund of the amount paid by the allottees along with compensation.

Vide an order in 2017, Commission granted the permission to the complainants to institute this complaint on behalf of all the allotted who wanted a refund of the amount paid to the OP. Hence, public notice in two newspapers, circulated in Delhi/NCR were published and several allottees were permitted to join the complaint.

Preliminary objection raised by the OP was that the complaint is barred by limitation.

Analysis & Decision

OP having not completed the development and having not offered possession of the allotted plots to the allottees, they had a recurrent cause of action to file the Consumer Complaint, bench relied on the decision of Meerut Development Authority v. Mukesh Kumar Gupta, (2012) CPJ 12 (SC).

Commission found no merit in the above contention.

Farmers’ Protest | Compulsory Acquisition

With regard to delay in development due to the farmer’s protest, bench on perusal of the communication sent by OP noted that there was no dispute with the farmers as the land comprised in the project namely ‘Megapolis’ was concerned, the said land having been purchased by the complainant on market rate with the consent of landowners, the said case is not of compulsory acquisition of land by the State government.

Small Parcels of Land | Patches required to be acquired from State Government

The proposed project was a large land acquired directly from the farmers, though there were some small patches which were to be acquired from the State Government. OP having advertised the project and having executed the agreements for development and sale of plots, it was for them to purchase those small patches of land from the landowners at a negotiated price even if they had to pay a price higher than the price they were willing to pay.

Hence, it could not be said that the non-acquisition of such small parcels of land delayed the project.

Further, the bench stated that even if the plea taken by the OP with respect to non-acquisition of those small parcels of land is accepted on its face value, the allottees cannot be made to suffer for the inability of the OP to acquire those land parcels.

It’s been 12 years since the sale of the said plots started, but till this date, it is not known whether the OP will be able to complete the development work and if so when the said development would be completed.

Class Action

Counsel for the complainant stated that they have settled with eleven allottees other than the original complainants and they are in negotiations with thirteen other allottees.

For the above-stated, Commission stated that even if the above situation prevails, that would not lead to the dismissal of the class action. Once the jurisdiction of this Commission by way of a class action is invoked, the Commission is required to take the matter to its logical conclusion unless the matter is settled with each and every member of the class.

No Specific Time Period

Commission added to its analysis that though no specific time period for completing the development and offering possession to the allottees was indicated in the agreement, that would not entitle the builder to prolong the development work to an indefinite period.

As far as the development of plots is concerned, such a work does not require as much time as required for construction of group housing flats in multistoried buildings.

“…the development work of the plots, even on a large scale, must be completed within a period of three years from the approval of the lay-out plans.”

Bench relied on the Supreme Court decision of Pioneer Urband Land & Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725 and Kolkata West International City (P) Ltd. v. Devasis Rudra II, (2019) CPJ 29 (SC).

In view of the above discussion, Commission held that the allottees of residential plot in the project namely ‘Sushant Megapolis’ cannot be made to wait indefinitely for the possession of the plots allotted to them and they are entitled to refund of the amount which they paid to the OP along with appropriate compensation.

Further, the OP shall refund the entire principal amount received and pay Rs 50,000 as cost of litigation.[Bhrigu Kaushik v. Ansal Hi-Tech Township Ltd., Consumer Case No. 1951 of 2016, decided on 16-10-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC):  A Division Bench of Dr S.M. Kantikar (Presiding Member) and Dinesh Singh (Member) held that, a homebuyer cannot be made to wait indefinitely for possession.

The instant appeal was preferred by the appellant under Section 19 of the Consumer Protection Act, 1986 against the Order passed by the Maharashtra State Consumer Disputes Redressal Commission wherein OP was directed to handover the possession of the subject flat to the respondent — complainant after receiving the balance consideration amount from respondent — complainant.

Advocates for the appellant — Siddhesh Bhole, Royden Fernandes and Deepam Rangwani.

Advocates for the respondent — Sukruta A. Chimalker and S.B. Prabhavalkar.

State Commission held that there was a deficiency on the part of the OP is not handing over possession and not obtaining the necessary certificates for the subject flat.

Opposite Party was directed to handover possession of the flat within three months after receiving the remaining consideration of Rs. 5.50 lakh as well as to provide Occupancy Certificate and Building Completion Certificate to the Complainant.

Aggrieved with the State Commission’s order, OP filed an appeal before the Commission.

Bench noted that the complainant had paid Rs 11 lakhs by cheque to the OP towards consideration for the subject agreement. OP contended that the subject agreement was cancelled by the complainant.

On perusal of the cancellation letter, it was evident that for more than 2 years, there was no construction work/development at the site of the project. Complainant was also paying interest on the amount paid to the Opposite Party builder firm, therefore, the Complainant requested the Opposite Party to return the entire amount paid.

With regard to the delivery of possession, OP contended that the agreement did not mention the date of delivery of possession of the said flat to the Complainant. However, the buyer cannot be made to wait for an indefinite period.

It was OP’s duty itself to mention the date of delivery of possession in the agreement and failure to do so necessarily requires to be read against the OP. In all contingencies, the complainant could not have been made to wait indefinitely for possession.

OP argued that State Commission grossly erred in disregarding the applicability of the relevant provisions of Specific Relief Act, 1963.

In the above regard, the Court noted that the Act 1986 is for better protection of the interests of consumers, to provide speedy and simple redressal to consumer disputes.

Section 3 specifically provides that the provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.

In the year 2003, the complainant requested for refund of the entire amount paid by her but OP did not refund the amount paid with or without interest.

Commission opined that the State Commission’s order was reasoned, hence the instant appeal being misconceived and bereft of merit was dismissed.[Adrian Pereira v. Anita Ronald Lewis, 2020 SCC OnLine NCDRC 466, decided on 16-10-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): A Division Bench of Justice R.K. Agarwal (President) and Dr S.M. Kantikar (Member) decided three complaints in a combined order as the facts were similar.

The complainant had booked three residential flats floated by Opposite Party — Builder Co. Possession of these flats was to be given by the end of the year 2018, however, the builder Co. unilaterally enhanced the period to 42 months.

In the year 2016 itself, the entire loan amount with respect to each flat was disbursed by the Financial Institution concerned to the builder co. Till 2018, the complainant paid about 90% of the total price of the respective flats.

Complainant was aggrieved that the builder Co. failed to fulfil the contractual obligation as there was no remarkable progress at the site in question.

Even though the construction was not completed, Builder Co. was demanding full payment.

Being aggrieved with the above-stated of affairs and attitude and deficiency ins service by the Builder Co., the complainant filed complaints under Section 21(a)(i) of the Consumer Protection Act, 1986 seeking a refund of the entire amount paid to the Builder Co. with 24% per annum interest.

Builder Company also failed to file its written version with the statutory period of 30 days and the extended period of 15 days thereafter as prescribed under Section 13(1)(a) of the Act which expired on 01-01-2020, 04-01-2020 and 16-01-2020 respectively.

Constitution Bench of the Supreme Court in New India Assurance Co. Ltd. v. Hilli Multipurpose Cold Storage (P) Ltd., (2015) 16 SCC 20, held that the Consumer Fora, including this Commission, has no power to condone the delay beyond the period of 45 days from the date of receipt of the notice.

Commission’s Decision

1. Commission firstly addressed whether the purchase of three flats by the complainant would constitute the “COMMERCIAL PURPOSE” within the meaning of Section 2(1)(d) of the Act, 1986?

Bench relied on the decision of Supreme Court in Laxmi Engineering Works v. P.S.G Industrial Institute, (1995) 3 SCC 583, wherein it was held that the,

‘commercial purpose’ is a question of fact to be decided in the facts of each case and it is not the value of the goods that matters but the purpose for which the goods brought are put to. The same would be equally applicable to for hiring or availing service.

In the instant case, Builder Co. failed to show any evidence indicating that the complainant indulged in sale purchase of the properties in question for further sale or for earning benefits, hence the Complainant came under the ambit of Section 2(1)(d) of the Act, 1986 which defines “Consumer”.

2. Were the complaints filed prematurely?

The anxiety and apprehension of the Complainant about the impossibility of the completion of the Project before the agreed date was justified.

Any aggrieved Consumer has a right to approach at any stage the Forum or Commission for the redressal.

3. The refund of the deposited amount with the Builder Co.

Bench stated that for an ordinary common Buyer – Consumer, the two fundamentals, which are significant and material the ‘Cost’ i.e. the total cost, read with the schedule of making payment and the ‘Time’ that the total time period in which possession would be delivered.

Therefore, in the instant case two natural corollaries flow therefrom:

  • Consumer-Complainant has the fundamental option to obtain the possession of the Unit as and when it is offered by the Builder Co. and in addition, seek just and equitable compensation under the Act, 1986 for the delay in offering possession beyond the conveyed and understood period of 42 months if the delay was unreasonable.
  • Consumer-Complainant has the other option to claim a refund of the principal amount; interest thereon; and compensation, if the offer of possession of the Unit is unreasonably delayed beyond 42 months.

In the present matter, the complainant was not interested in taking possession, hence the builder Co. has to refund the entire amount received from the Complainant. 

4. Quantum of Compensation the complainant is entitled to.

Bench stated that indefinite or unreasonable delay with token compensation for delay cannot continue ad nauseam, ad infinitum (such a situation would be absurd).

In view of the line of facts, Bench held that the Complainant availed loan from the Financial Institutions and paid the interest as levied.

Thus, the Complainant is entitled to get a refund of the amount along with the interest which he has deposited with the Bank. The Complainant is also entitled to receive certain interest on the booking amount which he has paid to the Builder Co.

For the above-stated position, Bench relied on the decision of Wg. Cdr. Arifur Rahman Khan and Aleya Sultana v. DLF Southern Homes (P) Ltd., 2020 SCC OnLine SC 667.

While reasoning out it’s decision, Commission stated that any impediments or problems that arise in Planning, Execution and Completion are builder’s responsibility, and not of the Consumer.

Hence, OP is liable to refund the amount which the Complainant paid to them for purchase of the flats in questions, along with appropriate interest on that amount.

However, Commission added that the rate of interest also cannot be arbitrary or whimsical, some reasonable and acceptable rationale has to be evident, subjectivity has to be minimised, a logical correlation has to be established.

Decision Summarised:

  • Refund to the Complainant the entire booking amount deposited by the Complainant till December 2018 alongwith interest @ 8% per annum from the date of deposit till the date of payment.
  • If the Complainant has paid any amount towards the loan account to the Financial Institutions, the same shall be refunded by the Builder Co. with the amount of interest actually paid to the Financial Institutions to the Complainant.
  • Builder Co. shall pay the entire balance loan amount disbursed to it alongwith the agreed rate of interest (Home Loan), as mentioned in the Tripartite Agreement to the Financial Institutions.

[Ankur Goyal v. Rise Project (P) Ltd., 2020 SCC OnLine NCDRC 465, decided on 14-10-2020]

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): A Division bench of Justice R.K. Agrawal (President) and S.M. Kanitkar (Member) directed the developer to refund the principal amount along with compensation in the form of 9% p.a. interest and 25,000 as litigation costs in view of a 4-year delay in giving the possession of the apartment.

Consumer complaint was filed against Pioneer Urban Land and Infrastructure Limited.

Complainants booked an apartment in the Pioneer Group Housing Project called “Araya” for an amount of Rs 30,00,000. Pursuant to the execution of apartment buyer’s agreement, a unit was allotted to the complainants.

Complainants submitted that on visiting the site regularly they were surprised to see no progress in the construction of the project. Entire site seemed to be an abandoned piece of land with semi constructed structure. 

Failed to deliver the possession of Apartment

Till 16.12.2015 complainants had paid a sum of 3,22,18,954 out of the total consideration of 3,45,22,779 i.e. almost 95% of the total Consideration towards the cost of the apartment.

However, the Developer failed to deliver the possession of the Unit, complete in all respect, even after expiry of a long period of approx. five years despite repeated requests and remedies over letters, email, phone calls and personal visits.

Hence, in view of the above, complainants alleged deficiency in service on the developer’s part.

Complainants by the present petition sought more than contractual benefits from the developer.

Natural causes

Developer contended that the delay in completing the project was due to reasons beyond their control. Further, for refund and compensation, the Complainants have to adhere to the provisions made in Clause 11.5 of the Agreement.

Clause 11.5 of the Apartment-Buyer’s Agreement

Bench observed that, with regard to Clause 11.5 of the Agreement upon which the reliance has been placed by the Developer for refund and compensation payable to the Complainants, this Commission in Consumer Complaint No. 2000 of 2016 – Geeta Bansal v. Ireo Grace Realtech (P) Ltd.  – decided on 24-09-2018,  held that such a Clause is wholly one sided and unfair and, therefore, the Complainants would not be bound by the same. If the Developer is unable to justify the delay, this Commission would be competent to direct refund of the amount paid by them to the Developer along with appropriate compensation.

However, Pioneer had approached Supreme Court against the decision taken by Commission in the above Order, but Supreme Court affirmed the finding returned by this Commission and dismissed the Civil Appeals.

Hence, in the present matter, commission referring to the Supreme Court’s decision, allowed the complainant and directed the OP-Developer to refund the principal amount with compensation in form of simple interest @9% p.a. with costs of Rs 25,000 to be pid to the complainants.

Interest was awarded in light of the current market situation and three months times has been granted to the developer to refund the same. [Smita Uban v. Pioneer Urban Land & Infrastructure Ltd., Consumer Case No. 1430 of 2017, decided on 23-07-2020]

Case BriefsHigh Courts

Punjab and Haryana High Court: A Division Bench of Rajan Gupta and Karamjit Singh, JJ. has declared that the construction of the famous multi-brand Ambience Mall in Gurgaon is illegal. The Court has also ordered a CBI inquiry into the prima facie connivance between the builder and the authorities concerned.

Backdrop

The petition was filed in a matter pertaining to the construction raised in approximately 18.98 acres of land adjacent to the Delhi-Jaipur Highway in Gurgaon, comprising of a residential complex, commercial buildings as well as the Ambience Mall.

The builders who constructed the Ambience Lagoon Island Residential Complex along with the Ambience Mall on the said 18.98 acres of land were originally given the license only to develop a residential complex on the entire 18.98 acres of land. The same representations were made to the buyers of apartments in the residential complex and builder-buyer agreements were entered into between the parties. Later, however, a substantial portion of this 18.98 acres, i.e. 8 acres of land was delicensed and the area licensed for the residential complex was reduced to 10.98 acres only. Subsequently, this delicensed 8 acres of land was allocated for commercial projects on which the Ambience Mall has been raised.

Blatant violation of rules and procedure

Omissions, interpolations and tampering with basic document: The builder, HLF Enterprise, identified the land in question and submitted an application for establishing a group housing project thereon. The application was filed under the provisions of Haryana Development and Regulation of Urban Areas Rules, 1976. It was mandatory for the builder to apply as per the format prescribed in the Rules, however, the builder made changes in the prescribed format as per his will. As for instance, in a clever move, the builder managed not to submit the layout plan which was mandatory.

While on this aspect, the High Court observed:

Strangely, this application was accepted by the authorities as such and license was granted. It is inconceivable that authorities concerned failed to notice the stark omissions, interpolations and tampering with the basic document required for purpose of initiation of a project.

Delicensing without authority of law: The High Court asked the counsel for the State to refer to the provisions under which the order of delicensing 8 acres out of 18.98 acres of land originally licensed for residential complex was passed by the authorities. To this, the State counsel candidly admitted that there was no such provision under the Haryana Development and Regulation of Urban Areas Act, 1975 and the rules framed thereunder. The counsel, however, tried to justify the act of authorities by referring to Section 21 of the General Clauses Act that power to grant license contains implied power to delicense as well. As per the Court, the argument was bereft of merit and logic. It was observed:

Reference to Section 21 is only an ex post facto justification and an afterthought. Law is settled on this point that State affidavit/plea cannot augment or add to the orders passed by the authorities. The reasons, if any, have to be contained in the order itself, as same would only be subject to judicial review. No authority by adopting circuitous route can circumvent the settled legal position.

Preconceived plan to raise commercial complex: The Court observed that the authorities “acted more than promptly” while permitting the erection of commercial complex after delicensing 8 acres of land “ignoring all statutory provisions and throwing caution to winds”. The Court had said:

The order granting permission on 8 acres of land to establish a commercial complex out of 18.98 acres of land was passed on 16-10-2001 while the order to delicense the same area was passed on 18-10-2001, i.e. two days before the order of delicensing, showing a preconceived plan for a commercial complex to be raised within the area licensed for residential complex.

Complete ignorance of vested rights of apartment owners: As per the Haryana Apartments Ownership Act, 1983 the undivided interest of each apartment owner in the common area would be in the percentage expressed in the Deed of Declaration which has to have a permanent character and cannot be altered without consent of the apartment owners expressed in an amended declaration duly executed and registered. As per the Court:

By resorting to delicensing and sanction of the commercial project, the authorities completely ignored the vested right of apartment owners and acted in flagrant violation of Section 6(1) and (2) of the Act.

Builder-buyer agreement cannot override the law

The High Court noted that the design to develop the commercial complex was never divulged either by the builder or the State authorities to the innocent buyers at any stage. An ambiguous term was used in the builder-buyer agreement that 8 acres was reserved for “future developments”. The Court said that it is beyond comprehension how the builder himself could reserve a part of the total area for future development. The builder acted in a manner as if he was not governed by any rules. While on this, the Court observed:

[T]he reliance placed by the counsel for the builders repeatedly on builder-buyer agreement is absurd. An agreement between parties cannot override the law laid down to regulate urbanisation and to prevent ill-planned and haphazard development.

Connivance between the builder and authorities

The Court was of the view that the probability of connivance between the builder and the State authorities cannot be ruled out in view of delicensing of area meant for residential purposes and allocating the same to commercial projects. According to the Court:

Entire sequence of events points to a prior meeting of minds between the builder and the officials who dealt with the matter.

Unjust enrichment

The Court was further of the view that there has been undue enrichment of the builder perhaps with the active involvement of the State officials which cannot be ignored. Such enrichment is not just in violation of various enactments but also a loss to public exchequer at the cost of general public, the apartment buyers in particular. However, as per the Court, this aspect needs investigation by an expert agency. Reference was made to various decisions of the Supreme Court including Indian Council for Enviro-Legal Action v. Union of India, (2011) 8 SCC 161; Kerala State Coastal Zone Management Authority v. State of Kerala, (2019) 7 SCC 248 and Rameshwar v. State of Haryana, (2018) 6 SCC 215.

Colourable exercise of power

As regard the action of authorities in ‘delicensing’ the area meant for housing project, the Court termed it as “nothing but colourable exercise of power”. Referring to State of Punjab v. Gurdial Singh, (1980) 2 SCC 471 and Uddar Gagan Properties Ltd. v. Sant Singh, (2016) 11 SCC 378, the Court restated the settled position of law that when a custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested, such exercise amounts to colourable exercise of power.

Decision

As per the High Court there was no justification for delicensing of part of the area meant for housing project for commercial purpose and a huge mall, the Ambience Mall, Gurgaon, having been allowed to be raised thereon. The Court felt that the rights of the residents of the housing project need to be preserved. It refused to countenance the “blatant violation of statutory provisions and erection of buildings, particularly commercial in nature, conceived by a builder for unjust enrichment, at the cost of the general public”. The Court held thus:

(i) The order delicensing 8 acres out of the original 18.98 acres of land was quashed.

(ii) The order granted permission to raise commercial complex on the delicensed area was also quashed.

(iii) The State was directed to take “necessary consequential steps forthwith”.

(iv) It was directed that the CBI would investigate the entire issue after registering a FIR within six weeks of the order. CBI shall make an effort to complete the investigation within six months and submit a status report in sealed cover within three months.

[Amitabha Sen v. Raj Singh Gehlot, 2020 SCC OnLine P&H 920  , decided on 10-7-2020]  

Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Bench of Justice V.K. Jain (Presiding Member) while deciding the issues revolving around purchase of a residential flat, rejected the instant appeal preferred by Magnolia Infrastructure, after being aggrieved by the Order passed by the State Commission to hand over the constructed property to the complainants.

The complainants entered into a MoU with the appellant, for the purchase of a residential flat for a consideration of Rs 40,26,200 by paying an initial amount of Rs 12,45,183. According to the agreement, the area of the flat had to be 1114 sq. feet and the possession was to be handed over by June 2015, with a grace period of six months available to the builder. However, the size of the flat was contested to be smaller than the agreed size by the complainant. The complainant further stated that and the construction of the flat was incomplete, therefore, the complainant went to the State Commission, who found these contestations to be genuine and legible and ordered the builders to pay the compensation for the alleged violation of the agreement. The appellants (builders) were represented by Sanjoy Kumar Ghosh and Barun Prasad, while the respondent (complainant) appeared for himself before the Commission. The counsel for the appellant challenged the State Commission’s Order by contesting the area of the flat to be of the agreed size and the certificate/completion certificate of the flat allotted to the complainant.

Commission decided that the area measurement conducted by the person appointed by the State Commission was correct and that there was actual shortage in the area of the flat as the constructed flat’s size was found to be 997 sq. feet. For the second issue, the Commission observed that the flat was already constructed and lying vacant thereby serving no purpose.

Since, the State Commission is yet to verify that whether Rajarhat Municipal Corporation is competent to issue the occupancy certificate and whether had actually issued the said occupancy certificate dated 21-07-2014, the Commission held that the possession of the residential flat should be handed over to the complainant till this question is decided by the State Commission. [Mangolia Infrastructure Development Ltd. v. Sandipan Santra, FA No. 2084 of 2018, decided on 14-07-2020]

Case BriefsHigh CourtsTaxation

Delhi High Court:  A Division Bench of the Delhi High Court comprising of S.Muralidhar and Vibhu Bakhru, JJ. ruled on whether ‘service tax’ could be charged on a contract regarding ‘construction of a complex’. The petitioners had entered into an agreement with a builder to buy flats being developed in Noida, Uttar Pradesh. The dispute arose when the builder recovered ‘service tax’ from the petitioners in addition to the ‘cost of construction of the complex’.

The issue in contention was apropos the impugned ‘Explanation’ to Section 65(105)(zzz-h) of the Finance Act, 1994. The provision created a legal fiction and expanded the scope of the taxable service by including the ‘construction of the complex’ as a service rendered by the builder to the future buyer.

The petitioners contended that entries related to taxation are present only in Lists 1 and 2 of the Seventh Schedule to the Constitution and, therefore, are mutually exclusive. The Centre is permitted to charge tax on the service component and the States are empowered to charge tax on the transfer of property. As a consequence, in the absence of a service recipient/future buyer, the service rendered by the builder while he is the owner, in the construction of the complex would amount to service to self and cannot be taxed. The petitioners relied on Commissioner Central Excise and Customs, Kerala v. Larsen and Toubro, (2016) 1 SCC 170 to contend that in case ‘construction of a complex’ is a composite contract, the Centre is only authorized to levy tax on the service component of the contract. That being the case, neither the Act, nor the Rules provide for any machinery for ascertaining the service component of a composite contract of the ‘construction of a complex’.

The respondents contended that that development of a project results in substantial value addition on bare land and services such as consulting services, engineering services, management services and architectural services are rendered. And further that only 25% of the base selling price is charged by the builder from the ultimate buyers as service tax.  Therefore, the aforementioned services are subsumed in the composite contract of ‘constructing a complex’ and should be levied with sales tax because a fixed defined amount is levied uniformly on every buyer.

The Court disagreed with the petitioners on the limited point that service tax cannot be charged in a transaction between a developer and a prospective buyer. The Court found that the logic for levying service tax on the prospective buyer of the flat was sound because the activity of construction would be deemed to be a taxable service if the prospective buyer had paid the builder for it in part or full before construction was completed. However, the Court agreed to there being an absence of a statutory mechanism to ascertain the value of the service component in the levy. Thus the challenge to that extent was successful and the impugned ‘Explanation’ to Section 65(105)(zzz-h) was set aside, which brought composite contracts for purchase of units in a building complex within the scope of a taxable service. [Suresh Kumar Bansal v. Union of India, 2016 SCC OnLine Del 3657, decided on June 3, 2016]