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National Consumer Disputes Redressal Commission (NCDRC): Anup K. Thakur (Presiding Member) addressed a consumer complaint alleging unfair trade practice and deficiency of service.

As per the complaint, small contagious plots of different landowners were developed by the OP. On the said plots, multi-storied buildings consisting of composite flats were constructed as per duly approved and sanctioned by the Kolkata Municipal Authority.

Complainants purchased their respective flats paying full consideration as per the market rate and executing and registering the conveyance deed.

After several complaints, the OPs failed to provide the amenities and facilities assured by them. OPs also failed to provide a Completion Certificate which a statutory requirement as per the KMC rules.

Unfair Trade Practices

Complainants sought from the OPs common amenities and facilities. Later the complainants discovered that the playground promised belonged to a local club and the pond contiguous to the complex was described by OPs as their own and shown as a beautified lake in the brochure advertisement.

Analysis & Decision

On perusal of the facts and contentions, the bench stated that the complainants have not been able to establish their complaint. Though the OPs may have indulged in unfair trade practice yet this does not help the complainant’s case.

Maintainability of the complaint

  • The complainants do not constitute a uniform group rather they own flats on different floors in different blocks and premises.

Complainants chose to come together in the present consumer complaint on some basis undoubtedly but it is not clear what the basis might have been.

In an earlier order, the Commission stated that the consumer complaint listed certain facilities that were to be provided as a common one, hence the issue of maintainability of joint complaint stood settled.

Common Facilities

  • Complainant’s stated that with the payment of the full consideration for the flat all common facilities were also automatically paid for.

Whereas OPs stated that some common facilities such as stairs, etc. indeed included in the consideration but other than these extra facilities had to be paid for.

Even the AdvocateCommisisoner’s report on the behest of the State Commission stated that some extra common facilities had already been provided and more facilities could be provided if the complainants were willing to pay for the same.

Brochure and Newspaper Advertisement

  • Bench observed that a lot was promised to the complainants by way of amenities, undoubtedly to attract customers. The fact that some of the amenities promised were not part of the deal was not disclosed by the OP.

Further, the said act was misleading and therefore an unfair trade practice.

The fact that the brochure and the advertisement differed with respect to the amenities offered and further the descriptions of the said amenities and facilities in the Agreement for Sale and the Conveyance Deed also differed does give the impression that OPs were far too casual in the present matter.

In view of the above, OPs are guilty of unfair trade practice within the meaning of Section 2(1)(r) of the Consumer Protection Act, 1986.

But the bench on noting that the complainants themselves agreed to purchase their respective flats on payment of consideration and on due execution and registration of the conveyance deed, stated that the complainants ought to have known what they were purchasing.

Why is their a joint complaint?

Commission finds suspicion with regard to filing a joint complaint and states that this may be only to pressurize the OPs into paying some compensation and/or not insisting upon extra payments for the extra facilities and amenities.

No deficiency of service can be attributed to the OP

A reading of Section 403 of the KMC Act, 1980 makes it clear that it was incumbent on both the OP as well as the complainant to not occupy the premises in the absence of a completion certificate, in view of the said, complainant and the OP are in violation of the law.

Commission dismissed the consumer complaint as the complainants failed to establish their case as the Agreement of Sale as provided by the OP also clearly stated that common facilities mentioned were under the scope of “extra facilities and amenities” and the complainant/purchaser had to pay and extra sum for that.

Hence, the complainants should have been aware of the factum of extra payment for extra facilities.

Complainants in response to the brochure saw the flat, checked the price and bought the flat which appears to be an outright sale of flats.

In view of the above, no question of deficiency of service or unfair trade practice as it would be simply a case of buyer purchasing a falt on ‘as is’ basis, if not then the complainants ought to have known what they were purchasing

Therefore, the consumer complaint was dismissed. [Debashis Sinha v. R.N.R Enterprise, 2020 SCC OnLine NCDRC 429, decided on 21-08-2020]


Counsel for the complainants: Varun Dev Mishra, Advocate with Mrinmoi Chatterjee Advocate

Counsel for the OPs: Shiva Shankar Banerjee, Advocate with Madhurima Ghosh, Advocate with Sankar Sarkar, in person

Case BriefsSupreme Court

“Flat purchasers suffer agony and harassment as a result of the default of the developer. Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These legitimate expectations are belied when the developer as in the present case is guilty of a delay of years in the fulfilment of a contractual obligation.”

Supreme Court: In the case where 339 flat buyers has complained against delayed handing over of possession, the Bench of Dr. DY Chndrachud and KM Joseph, JJ held that the flat buyers are entitled to compensation for delayed handing over of possession and for the failure of the developer to fulfil the representations made to flat buyers in regard to the provision of amenities.

“A failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within a contractually stipulated period amounts to a deficiency. There is a fault, shortcoming or inadequacy in the nature and manner of performance which has been undertaken to be performed in pursuance of the contract in relation to the service.”

Brief Background

The complainants had booked residential flats in a project called Westend Heights at New Town, DLF, BTM Extension at Begu, Bengaluru. However, the obligation to handover possession within a period of thirty-six months was not fulfilled. National Consumer Disputes Redressal Commission (NCDRC) dismissed a consumer complaint filed by 339 flat buyers, accepting the defence of DLF Southern Homes Pvt. Ltd. and Annabel Builders and Developers Pvt. Ltd. that there was no deficiency of service on their part in complying with their contractual obligations and, that despite a delay in handing over the possession of the residential flats, the purchasers were not entitled to compensation in excess of what was stipulated in the Apartment Buyers Agreement (ABA).

On ABA being one-sided

Where a flat purchaser pays the installments that are due in terms of the agreement with a delay, clause 39(a) stipulates that the developer would “at its sole option and discretion” waive a breach by the allottee of failing to make payments in accordance with the schedule, subject to the condition that the allottee would be charged interest at the rate of 15 per cent per month for the first ninety days and thereafter at an additional penal interest of 3 per cent per annum.

On the other hand, where a developer delays in handing over possession the flat buyer is restricted to receiving interest at Rs 5 per square foot per month under clause 14. The agreement stipulates thirty-six months as the date for the handing over of possession.

“Evidently, the terms of the agreement have been drafted by the developer. They do not maintain a level platform as between the developer and purchaser. The stringency of the terms which bind the purchaser are not mirrored by the obligations for meeting times lines by the developer. The agreement does not reflect an even bargain.”

On argument that flat buyers are constrained by the stipulation contained in ABA providing compensation for delay at the rate of Rs 5 per square feet per month

The court must take a robust and common-sense based approach by taking judicial notice of the fact that flat purchasers obtain loans and are required to pay EMIs to financial institutions for servicing their debt. Delays on the part of the developer in handing over possession postpone the date on which purchasers will obtain a home. Besides servicing their loans, purchasers have to finance the expenses of living elsewhere. To postulate that a clause in the agreement confining the right of the purchaser to receive compensation at the rate of Rs 5 per square foot per month (Rs 7,500 per month for a flat of 1500 square feet) precludes any other claim would be a manifestly unreasonable construction of the rights and obligations of the parties.

“Where there is a delay of the nature that has taken place in the present case ranging between periods of two years and four years, the jurisdiction of the consumer forum to award reasonable compensation cannot be foreclosed by a term of the agreement.”

Further, the expression “service‟ in Section 2 (1) (o) means a service of any description which is made available to potential users including the provision of facilities in connection with (among other things) housing construction. Under Section 14(1)(e), the jurisdiction of the consumer forum extends to directing the opposite party inter alia to remove the deficiency in the service in question. Intrinsic to the jurisdiction which has been conferred to direct the removal of a deficiency in service is the provision of compensation as a measure of restitution to a flat buyer for the delay which has been occasioned by the developer beyond the period within which possession was to be handed over to the purchaser.

Hence, to uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate irrespective of the nature or extent of delay would result in a miscarriage of justice.

Directions

  • Except for eleven appellants who entered into specific settlements with the developer and three appellants who have sold their right, title and interest under the ABA, the respondents shall, as a measure of compensation, pay an amount calculated at the rate of 6 per cent simple interest per annum to each of the appellants. The amount shall be computed on the total amounts paid towards the purchase of the respective flats with effect from the date of expiry of thirty-six months from the execution of the respective ABAs until the date of the offer of possession after the receipt of the occupation certificate;
  • The above amount shall be in addition to the amounts which have been paid over or credited by the developer at the rate of Rs 5 per square foot per month at the time of the drawing of final accounts; and
  • The amounts due and payable in terms of directions (i) and (ii) above shall be paid over within a period of one month from the date of this judgment failing which they shall carry interest at the rate of 9 per cent per annum until payment.

[Wg. Cdr. Arifur Rahman Kan and Aleya Sultana v. DLF Southern Homes Pvt Ltd, 2020 SCC OnLine SC 667, decided on 24.08.2020]