Consumer court can direct refund & compensation in case of delay delivery

Status as on- 16/06/2022

INTRODUCTION

Homebuyers are facing a lot of challenges in relation to the instances of fraud and excessive delays in handing over the property. Therefore, remedies under one legislation are not sufficient to cover all the offenses and problems. So, in case of a dispute home buyers can now approach 3 forums under 3 different acts such as The Consumer Protection Act, 2019 as a consumer, Real Estate (Regulation and Development) Act, 2016 (RERA Act) as an allottee; and Insolvency and Bankruptcy Code, 2016, as a financial creditor. The Consumer Protection Act is a wide-ranging provision and it is not a specific resolution like the Insolvency ad Bankruptcy Code and the remedies are simultaneously and mutually exclusive.

Recently, in the case of EXPERION DEVELOPERS PVT. LTD. VERSUS SUSHMA ASHOK SHIROOR, the Hon’ble Supreme Court of India widening the scope of the consumer courts has held that the Consumer Courts can direct refund and compensation to a consumer for the delay in delivery of the apartment.

FACTS OF THE CASE

The present case is an appeal arising out of the judgment dated 19.06.2016 passed by the National Consumer Dispute Redressal Commission.
The Developer, M/s Experion Developers Private Ltd., is the promoter of apartment units, Windchants, in Sector 112, Gurgaon, Haryana. The Consumer booked an apartment measuring 3525 sq. ft. for a total consideration of Rs. 2,36,15,726/- in the Windchants and agreed to construction linked payment plan, which led to the execution of the Apartment Buyer’s Agreement dated 26.12.2012.
As per the Agreement, possession was to be given within 42 months from the date of approval of the building plan or the date of receipt of the approval of the Ministry of Environment and Forests, Government of India for the Project or date of the execution of the agreement whichever is later.
Clause 13 of the Agreement provided for Delay Compensation. Under this clause, if the Developer did not offer possession within the period stipulated in the Agreement, it shall pay liquidated damages of Rs. 7.50 per square foot per month till possession is offered to the Consumer.
The Consumer approached the National Disputes Redressal Commission by filing an original complaint being, Consumer Case No. 2648/2017, alleging that he has paid a total consideration of Rs. 2,06,41,379/- and possession was not granted even till the filing of the complaint. He, therefore, sought a refund of Rs. 2,06,41,379/- along with interest @ 24% p.a.
The Commission, in its judgment dated 19.06.2019, allowed the complaint after referring to Clause 10 (relating to the project completion period), Clause 11 (relating to the possession and conveyance of the apartment), as well as Clause 13 (relating to delay in possession). The Commission found that the agreement is one-sided, heavily loaded against the allottee, and entirely in favor of the Developers. Following the decisions of the Court in Pioneer Urban Land and Infrastructure Ltd. v. Govind Raghvan,5 (“Pioneer”), the Commission directed the Developer to refund the amount of Rs.2,36,15,726/- with interest @ 9% p.a.
It is against these findings and the consequential directions of the Commission that the Developer filed the present Civil Appeal No. 6044/2019. The Consumer also filed an appeal being Civil Appeal No. 7149/2019, challenging the Commission’s judgment to a limited extent for grant of an enhanced interest @ 24% p.a.

ISSUES RAISED

Whether the terms of the Apartment Buyers Agreement amount to an ‘unfair trade practice’ and whether the Commission is justified in not giving effect to the terms of the Apartment Buyer’s Agreement as laid down in the Pioneer case?
Whether the Commission has the power under the Consumer Protection Act, 1986 to direct refund of the amount deposited by the Consumer with interest?
Whether the relief granted by the Commission require any modification to serve the ends of justice?

DECISION UPHELD

The Court had referred to several judgments such as Pioneer Urban Land and Anr. Union of India, LDA v. M.K. Gupta, Fortune Infrastructure v. Trevor D’Lima, Arifur Rahman Khan v. DLF Southern Homes Pvt. Ltd, NBCC v. Shri Ram Trivedi, IREO Realtech (P) Ltd v. Abhishek Khanna and held that “the incorporation of such one-sided and unreasonable clauses in the apartment buyer’s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act, the powers of the consumer for a were in no manner constrained to declare a contractual term is unfair or one-sided as an incident of the power to discontinue unfair or restrictive trade practices.” In view of the above, it is held that the developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the apartment buyer agreement. Special authorities are created under the RERA Act for the regulation and promotion of the real estate sector and the issues concerning a registered project are specifically entrusted to functionaries under the RERA Act. But for the present purposes, Section 18 of the RERA Act. Since it gives a right “without prejudice to any other remedy available”, in effect, such other remedy is acknowledged and saved subject always to the applicability of Section 79. The Supreme Court is of the opinion that the interest of 9 percent granted by the Commission is fair and just and no reason to interfere in the appeal filed by the Consumer for enhancement of interest. In view of the above, the Civil Appeal No. 6044 of 2019 filed by the Appellant Developer is dismissed and the appeal filed by the Consumer being Civil Appeal No.7149 of 2019 is allowed in part as indicated above.

Conclusion-

The Consumer Protection Act and the RERA Act neither exclude nor contradict each other. In fact, Court has held that they are concurrent remedies operating independently and without primacy. When Statutes provisioning judicial remedies fall for construction, the choice of the interpretative outcomes should also depend on the constitutional duty to create effective judicial remedies in furtherance of access to justice.

Disclaimer- The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinions before relying upon the article. For more information, please contact us.