When Interest is awarded by way of damages awarding additional compensation is unjustified: NCDRC

Suncity Projects Pvt. Ltd. Vs Sandeep Kumar Goel (National Consumer Disputes Redressal Commission)

Conclusion: The National Commission modified the Order of State Commission by reducing the rate of interest from 12% to 9% in the matter of delayed possession of Apartment and further it was held that since the compensation in the form of interest @9% p.a. has already been awarded, the Complainant shall not be entitled for any other compensation.

Facts: In present case, the present Appeal has been filed against the Order dated 05.10.2021 passed by the State Consumer Disputes Redressal Commission whereby the Complaint filed by the Complainants was allowed and the Opposite Party “the builder” was directed to waive off the holding charges as well as charges of interest 24% p.a. on the delayed payment and to handover the physical possession of the Apartment, complete in all respects, to the Complainants and to pay interest @12% p.a. on the total amount paid by the Complainants from the tentative date of delivery of possession, i.e., 19.07.2013 till realization. The Appellant Builder was also directed to refund service tax amount which was deposited by the Complainants alongwith interest @6% from the date of deposit till the date of refund. The Appellant Builder was further directed to pay compensation of 22,00,000/- towards mental agony suffered by the Complainants alongwith cost of 250,000/- within 45 days failing which the Complainants would be entitled to get the interest @15% per annum for the defaulting period.

Brief facts of the case were that Apartment Buyer Agreement was executed between the Parties on 19.07.2010. The Complainants deposited a sum of Rs. 53,82,806/- with the Appellant Builder as per schedule but deposited the instalment of 25,12,925/- on 29.11.2016 vide cheque No. 536571. As per clause 25 of the Apartment Buyers Agreement, the Appellant Builder was bound to deliver the possession of the Flat within 36 months from the date of the execution of the Agreement. It was alleged by the Complainants that despite having received substantial amount from them the Appellant Builder offered the possession of the Flat on 25.01.2016, i.e., delay of about 21/2 years from 19.07.2013, i.e., the expected/proposed date of delivery of the possession. After receiving the letter of offer of possession dated 25.01.2016, the Complainants visited the site and found that the Project was still incomplete.

Vide letter dated 04.10.2016, the Appellant Builder demanded interest @24% on the outstanding dues whereas as per previous letter dated 25.01.2016, the previous outstanding amount was reflected as 22,53,207/- and the compensation amount on delayed possession as adjusted by the Appellant Builder was 24,95,800/-. Thus, reflecting net amount of 22,42,593/- which was payable to the Complainants by the Appellant Builder yet vide letter dated 04.10.2016 Appellant Builder sought interest @24% p.a. on the outstanding dues, which is illegal. The Complainants made representation to the Appellant Builder on 13.12.2016 but in vain. Alleging deficiency in service on the part of the Appellant Builder, the Complainants filed a consumer Complaint before the State Commission.

The National Commission after taking submissions of both sides into consideration observed that the physical possession of the Apartment has been received by the Respondents/Complainants on 19.03.2022. Undisputedly, the flat was booked in the year 2010, the expected date of delivery of the possession of the Flat was 19.07.2013 but the possession of the Flat was offered on 25.01.2016 relying upon letter dated 18.01.2016 treating it to be completion certificate and Occupation Certificate from the Directorate of Town and Country Planning (DTCP), Haryana. Perusal of the said letter showed that vide said letter the DTCP has granted permission to occupy subject to payment of Rs. 22,71,012/- and with certain other conditions. It was observed that as rightly held by the State Commission, without compliance of the conditions mentioned in the letter dated 18.01.2016, it cannot have been treated and use by the Appellant Builder as Occupation Certificate free from conditions. The Appellant Builder failed to place on record any evidence for compliance of those conditions mentioned in the letter dated 18.01.2016 and in specific about connection of water, electricity, sewerage and storm water. Therefore, when the Appellant offered the possession on 25.01.2016, the Flat was not in a habitable condition in the absence of basic amenities. The actual possession of the Flat was handed over to the Respondents/Complainants on 19.03.2022. There was inordinate delay of about 8 years and 8 months in handing over of the possession of the Flat, for which the Appellant Builder is liable to pay delay compensation in the form of simple interest.

By relying upon the Judgment of Ireo Grace Realtech Pvt. Ltd. vs. Abhishek Khanna & Ors.” [Civil Appeal No. 5785 / 2019 & other connected Appeals decided on 11.01.2021]‘, it was observed that the Appellant Builder is directed to pay delay compensation in the form of simple interest @9% p.a. on the amount deposited by the Respondents/Complainants w.e.f. the expected date of delivery of the flat, i.e., 19.07.2013 till the actual date of possession, i.e., 19.03.2022. Since the Flat was not in a habitable condition at the time of offer of possession and the offered possession was simply a paper possession, the Appellant Builder shall not be entitled for any Holding Charges.

Further, it was observed that since the compensation in the form of interest @9% p.a. has already been awarded, the Complainant shall not be entitled for any other compensation, in view of the Judgment passed by the Hon’ble Supreme Court in “DLF Homes Panchkula Pvt. Ltd Vs. D.S. Dhanda, II (2019) CPJ 117 (SC)“, wherein it is observed that when interest is awarded by way of damages awarding additional compensation is unjustified.

Accordingly, the Order of State Commission was modified.

FULL TEXT OF THE JUDGMENT/ORDER OF NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

1. The present Appeal has been filed against the Order dated 05.10.2021 passed by the State Consumer Disputes Redressal Commission Haryana, Panchkula (hereinafter referred to as State Commission), whereby the Complaint filed by the Complainants was allowed and the Opposite Party Suncity Projects Pvt. Ltd. (hereinafter referred to as the Appellant Builder) was directed to waive off the holding charges as well as charges of interest 24% p.a. on the delayed payment and to handover the physical possession of the Apartment, complete in all respects, to the Complainants and to pay interest @12% p.a. on the total amount paid by the Complainants from the tentative date of delivery of possession, i.e., 19.07.2013 till realization. The Appellant Builder was also directed to refund service tax amount which was deposited by the Complainants alongwith interest @6% from the date of deposit till the date of refund. The Appellant Builder was further directed to pay compensation of 22,00,000/- towards mental agony suffered by the Complainants alongwith cost of 250,000/- within 45 days failing which the Complainants would be entitled to get the interest @15% per annum for the defaulting period.

2. Brief facts of the case are that the Appellant Builder launched a housing Project in the name and style “Parikarma Housing Project” located at Sector — 20, Panchkula and the Complainants/Respondents booked an Apartment No. 1203, Tower No. 5A, having super area of 1850 sq. ft. at a basic sale price of 255,05,600/- and 23,00,000/- towards car parking. Apartment Buyer Agreement was executed between the Parties on 19.07.2010. The Complainants deposited a sum of 253,82,806/- with the Appellant Builder as per schedule but deposited the installment of 25,12,925/- on 29.11.2016 vide cheque No. 536571. As per clause 25 of the Apartment Buyers Agreement, the Appellant Builder was bound to deliver the possession of the Flat within 36 months from the date of the execution of the Agreement. It was alleged by the Complainants that despite having received substantial amount from them the Appellant Builder offered the possession of the Flat on 25.01.2016, i.e., delay of about 21/2 years from 19.07.2013, i.e., the expected/proposed date of delivery of the possession. After receiving the letter of offer of possession dated 25.01.2016, the Complainants visited the site and found that the Project was still incomplete.

Construction work was going on. The basic amenities like water, sewerage, electricity wood work flooring etc. as shown in the sample flat, had not been completed by the Appellant Builder. Vide letter dated 04.10.2016, the Appellant Builder demanded interest @24% on the outstanding dues whereas as per previous letter dated 25.01.2016, the previous outstanding amount was reflected as 22,53,207/- and the compensation amount on delayed possession as adjusted by the Appellant Builder was 24,95,800/-. Thus, reflecting net amount of 22,42,593/- which was payable to the Complainants by the Appellant Builder yet vide letter dated 04.10.2016 Appellant Builder sought interest @24% p.a. on the outstanding dues, which is illegal. The Complainants made representation to the Appellant Builder on 13.12.2016 but in vain. Alleging deficiency in service on the part of the Appellant Builder, the Complainants filed a consumer Complaint before the State Commission seeking waiver of illegal excessive interest @24% on the delayed payment; possession of the flat alongwith delay compensation by way of interest @12% p.a. on the amount deposited by them and compensation of Z3 lakh towards mental harassment alongwith litigation cost of 250,000/-.

3. The Complaint was contested by the Appellant Builder before the State Commission by denying all the allegations made by the Complainant and it was submitted that as on 15.02.2017, the Complainants had deposited a sum of 258,95,731/- with them and there was outstanding dues of 27,49,292/- on the Complainants. It was further submitted that as per Clause 25 of the Agreement, the possession of the Flat was to be delivered within 3 years from the date of execution of this agreement OR approval of all services plans whichever is later. The service plans were approved on 27.12.2013. Occupation certificate was granted for tower in question on 18.01.2016 and possession offered to the Complainants on 25.01.2016 i.e. well within the period of three years from approval of service plans set out in the Agreement. The possession had been offered to the complainant only upon completion of all amenities including water, sewerage, electricity and completion of wood work flooring etc. The construction was to be completed as per provisional specifications set out under the agreement. All demands including interest raised on 04.10.2016 were strictly in accordance with clauses 6, 26 and 33 of the Apartment Buyer’s Agreement. The interest on the delayed payments has been demanded in accordance with the terms of the agreement. As a goodwill gesture vide letter dated 20.04.2016, they offered a one-time amnesty scheme wherein it was decided to waive 50% of interest accrued on delayed payments subject to payment of outstanding amounts before 20.05.2016, however, the complainants failed to take advantage of such scheme and did not deposit any payments. It was submitted that amounts under every head were explicitly mentioned in the possession offer letter dated 25.01.2016. It was submitted that there was no deficiency in service or unfair trade practice on their part and it was prayed that the Complaint be dismissed.

4. After hearing both the Parties and perusal of material on record, the State Commission partly allowed the Complaint in above terms by observing as under:-

“14. OP floated the project in the year 2010, the flats were booked in the year 2010, Apartment Buyers Agreement was executed on 19.07.2010, while the service plans were approved on 27.12.2013, original period agreed in the agreement was three years, certainly while floating the tower, the builder had no such permission nor the service plan had been approved by the authorities. The fact that the service plan was approved on 27.12.2013 clearly indicates that it was an unfair trade practice. The agreement was executed on 19.07.2010, the amount was received and even installments were received between the year 2010 to 2013 without builder having anything in this project and not even service plans and therefore the builder clandestinely introduced the words, after the words “three years from the date of agreement or after the approval of service plans “, this was an uncertain date. Hon’ble Supreme Court in case titled as Pioneer Urban Land and Infrastructure Ltd. Vs. Govindan Raghavan and another (2019) CPJ 34, similar case has observed as under:-

“It is the matter of fact that the opposite parties have already received the sale consideration for the said plot in excess but have not provided the complainants with the definite allotment letter and hence, the possession at the same, Pertinently, the opposite parties were not having all the required sanctions from the competent authorities when they took the initial amount from the complainants. It is evident from Annexure C-1 the sale agreement that hard earned money of the complainants is in the possession of the opposite parties since year 2012.It is settled law by Hon ‘ble National Commission, New Delhi in First Appeals bearing No.557 and 683 of 2003 titled as ” Kamal Sood Vs. DLF Universal Ltd” decided on 20.04.2007 has observed: ” It would be unfair trade practice, if the builder, without any planning and without obtaining any effective permission to construct building/apartments, invites offers and collects money from the buyers. The Hon ‘ble National Consumer disputes Redressal commission, New Delhi in First Appeal bearing NO.342 of 2014 titled as “Emaar MGF Land Ltd. & Anr. Vs. Karnali Singh & anr. ” Decided on 25.07.2014 has observed: ” The appellants should have given firm date of handing over the possession at the time of taking the booking amount itself By not indicating the true picture with regard to their project to the respondents, the appellants induced them to part with their hard earned money, which also amounts to unfair trade practice.”

Hence, the act of opposite parties to collect the money before getting all the necessary approvals for the project and not giving the confirm date of handing over possession of the plot in question certainly proves deficiency in service and their indulgence in unfair trade practice.”

15. OP has relied upon documents Ex.C-6 dated 04.10.2016 and Ex.C-7 dated 09.12.2016,which were purported to have been sent through courier. The entire correspondence has been sent by OPs through registered post except letters dated Ex. C-6 dated 04.10.2016 and Ex. C-7 dated 09.12.2016, which were purported to have been sent through courier.No proof of delivery has been annexed therewith. Certainly, the courier agency are on the pay rolls and may have issued the receipts or the OPs may have procured the receiptsfrom courier agency, as had that been actually issued to complainant, there must have been proof of delivery also. Thus certainly these documents without there being any proof of delivery cannot be relied upon.

16. Further one time amnesty scheme floated by the opposite party is nothing but a coercive method to arm-twist the complainants to make payment quickly as per the design of the OPs. It is also extremely ridiculous to believe that the complainants were in default of payment as they had already paid an amount of Rs.57,67,965/- against a total cost of Rs.60,46,180/- (The OPs admitted in the written arguments that complainant paid Rs.59,92,444/- to the OPs). As such all the questions are answered in the affirmative.

17. In the light of the above observations, we are of the considered view that the opposite party is found deficient in rendering proper service to the complainants and have indulged in unfair trade practice. Hence, the present complaint of the complainants deserves to succeed against the opposite parties. Accordingly, the complaint stands allowed with directions to the OPs to waive off the holding charges as well as charges of interest @ 24% p.a. on the delayed payment and all other charges levied on the complainants and OPs are also directed to handover the physical possession of the apartment in question complete in all respects and to pay interest @ 12% p.a. on the total amount paid by the complainants from the tentative date for delivery of possession i.e. 19.07.2013 till realization. The opposite parties are also directed to refund service tax amount, which was deposited by the complainant alongwith interest @ 6% from the date of deposit till the date of refund. The OPs are also directed to pay compensation of Rs.2,00,000/-(Two lacs only) on account of deficiency in service, harassment and mental agony suffered by the complainants by the acts of the OPs alongwith Rs.50,000/- as litigation expenses. In case, there is a breach in making payment within the stipulated period of 45 days, in that eventuality, the complainants would further be entitled to get the interest @ 15% per annum, for the defaulting period. It is also made clear that for non-compliance, the provisions enshrined under section 72 of the C.P. Act would also be attracted.”

5. Aggrieved by the Order dated 05.10.2021 passed by the State Commission, the Appellant Builder has filed the present Appeal before this Commission.

6. Mr. Pravin Bahadur, learned Counsel appearing on behalf of the Appellant Builder submitted that the State Commission has failed to appreciate that the Occupation Certificate dated 18.01.2016 issued by the DTCP Haryana has reference of Office Memo No. 14770 dated 18.11.2015 issued by Chief Administrator, HUDA by which it was verified that the Development Works have been completed by the Builder and the external services such as water supply, sewerage, roads, street lighting are available at the site and are operational. Thus, the finding of the State Commission that the Occupation Certificate was issued without basic amenities in the Project and possession offered was incomplete, is erroneous and it should be set aside.

7. It was further submitted that the State Commission failed to understand that there is difference between letter of offering possession and letter of handing over of the possession. By letter of offering possession, possession has been offered and outstanding dues are demanded and once all the due / outstanding payments are cleared, after that letter of handing over of possession has been issued for handing over the possession. In the present case, the Respondent was offered possession vide letter of offering of possession on 25.10.2016 and date of handing over of possession is 19.03.2022.

8. It was further submitted that the State Commission erred in directing them to pay the interest @12% p.a. from 19.07.2013 till realization, whereas they have offered the possession to the Complainants/Respondents on 25.01.2016. However, the Respondents/Complainants chose not to clear the outstanding amount and take possession. Relying upon Judgment passed by the Hon’ble Supreme Court in the case of Wg. Cdr. Arifur Rehman Khan and Areya Sultan & Ors. Vs. DLF Southern Homes Pvt. Ltd.’ Civil Appeal No. 6239 of 2019, it was submitted that the delay compensation @6% p.a. should be directed to be paid till the date of offer of possession, i.e., 25.01.2016.

9. It was further submitted that the State Commission has erred in directing the Appellants to refund Service Tax alongwith interest @6% p.a. in view of the Judgment of “Suresh Kumar Bansal vs. Union of India & Ors. [WP (C) No. 2235 / 2011 decided on 03.06.2016], which was pronounced in the light of legal provisions prevailing for the period prior to 01.07.2012. The Hon’ble Punjab & Haryana High Court in the case of `G.S. Promoters vs. UOI 2011 (21) STR 100 (P&H), had upheld the constitutional validity of the subject explanation. Therefore, the Hon’ble Punjab & Haryana High Court decision shall be applicable for the Projects running in the State of Haryana.

10. The State Commission has erred in awarding interest @12% p.a. or default rate of 15% p.a. which is on extreme high side in view of the current situation and that too when they have already compensated the Respondents as per terms of the Agreement.

11. It was further submitted that after adjustment of all the amounts paid by the Respondents till date, the outstanding charges payable by the Respondents/Complainants can be tabulated as under:-

It was submitted that the Respondents/Complainants are liable to pay the above outstanding charges as per terms of the Agreement.

Relying upon the Judgment passed by the Hon’ble Supreme Court in “DLF Homes Panchkula Pvt. Ltd Vs. D.S. Dhanda, II (2019) CPJ 117 (SC)” it was submitted that the State Commission has erred in awarding compensation of 22,00,000/- in addition to delay compensation in the form of interest @12% p.a. It was prayed that the Impugned Order dated 05.10.2021 passed by the State Commission be set aside.

14. Per contra, Mr. Sandeep Kumar Goel, Respondent/Complainant, who appeared in person, has supported the Order passed by the State Commission as according to him the State Commission has passed a well-reasoned order which is based on a correct and rightful appreciation of evidence and material available on record and does not call for any interference.

15. I have heard Mr. Pravin Bahadur, learned Counsel appearing on behalf of the Appellant Builder, Mr. Sandeep Kumar Goel, Respondent/Complainant, who appeared in person, perused the material available on record and have given a thoughtful consideration to the various pleas raised by both the Parties.

16. During the course of proceedings, the physical possession of the Apartment has been received by the Respondents/Complainants on 19.03.2022.

17. Undisputedly, the flat was booked in the year 2010, the expected date of delivery of the possession of the Flat was 19.07.2013 but the possession of the Flat was offered on 25.01.2016 relying upon letter dated 18.01.2016 treating it to be completion certificate and Occupation Certificate from the Directorate of Town and Country Planning (DTCP), Haryana. Perusal of the said letter shows that vide said letter the DTCP has granted permission to occupy subject to payment of 222,71,012/- and with certain other conditions. As rightly held by the State Commission, without compliance of the conditions mentioned in the letter dated 18.01.2016, it cannot have been treated and use by the Appellant Builder as Occupation Certificate free from conditions. The Appellant Builder failed to place on record any evidence for compliance of those conditions mentioned in the letter dated 18.01.2016 and in specific about connection of water, electricity, sewerage and storm water. Meaning thereby that when the Appellant offered the possession on 25.01.2016, the Flat was not in a habitable condition in the absence of basic amenities. The actual possession of the Flat was handed over to the Respondents/Complainants on 19.03.2022. There was inordinate delay of about 8 years and 8 months in handing over of the possession of the Flat, for which the Appellant Builder is liable to pay delay compensation in the form of simple interest. The State Commission has awarded delay compensation @12% which is on the higher side in view of the catena Judgments passed by the Hon’ble Supreme Court, recently being in Ireo Grace Realtech Pvt. Ltd. vs. Abhishek Khanna & Ors.” [Civil Appeal No. 5785 / 2019 & other connected Appeals decided on 11.01.2021]’ wherein the Hon’ble Apex Court has awarded delay compensation in the form of simple interest @9% p.a. on the amount deposited by the Complainants.

18. In view of above discussions, the Appellant Builder is directed to pay delay compensation in the form of simple interest @9% p.a. on the amount deposited by the Respondents/Complainants w.e.f. the expected date of delivery of the flat, i.e., 19.07.2013 till the actual date of possession, i.e., 19.03.2022. Since the Flat was not in a habitable condition at the time of offer of possession and the offered possession was simply a paper possession, the Appellant Builder shall not be entitled for any Holding Charges.

19. So far as the Service Tax is concerned, in view of the Judgment passed by the Hon’ble Punjab & Haryana High Court in the case of `G.S. Promoters vs. UOI 2011 (21) STR 100 (P&H), the Respondents/Complainants shall be liable to pay the Service Tax.

20. As far as the Maintenance Charges is concerned, the Respondents/Complainants shall be liable to pay the Maintenance Charges with effect from the actual date of physical possession of the Flat, i.e., 19.03.2022 only.

21. As per Clause 6 of the Agreement the Appellant Builder is entitled to charge delay interest @ 24% from the Complainants/Respondents whereas as per Clause 25, in case of delay in Project, the Complainants/Respondents are entitled to receive delay compensation only Z10/- per sq. ft. of the super area of the flat, which ex-facie one sided, unfair and unreasonable and not binding on the Respondents/ Complainants and constitutes an unfair trade practice as per Section 2(r) of the Consumer Protection Act, 1986 as has been held by the Hon’ble Supreme Court in the case of ‘Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, II (2019) CPJ 34 (SC)’. Since the delay compensation has been awarded in the form of interest @9% p.a., the ends of the Justice would be met, if the Appellant Builder is also allowed to charge delay interest at the same rate, i.e., @9% p.a.

22. Since the compensation in the form of interest @9% p.a. has already been awarded, the Complainant shall not be entitled for any other compensation, in view of the Judgment passed by the Hon’ble Supreme Court in “DLF Homes Panchkula Pvt. Ltd Vs. D.S. Dhanda, II (2019) CPJ 117 (SC)“, wherein it is observed that when interest is awarded by way of damages awarding additional compensation is unjustified.

22. For the reasons stated hereinabove, the Impugned Order dated 05.10.2021 passed by the State Commission is modified to the following extent:

22. (i) The Appellant Builder shall pay the delay compensation in the form of simple interest @9% p.a. on the amount deposited by the Complainants from the expected date of delivery of the Possession, i.e., 10.07.2013 till the actual date of possession, i.e., 19.03.2022.

(ii) The Appellant Builder shall not be entitled for any holding charges.

(iii) The Appellant Builder shall be entitled for Maintenance Charges from the Respondents/Complainants with effect from the actual date of physical possession of the Flat, i.e., 19.03.2022 only.

(iv) The Respondents/Complainants shall pay the outstanding/balance Basic Sale Price of 24,66,270/- and 229,530/- towards Taxes alongwith delay interest @9% p.a. with effect from the date of demand till realisation.

(v) The Appellant Builder shall also be liable to pay cost of litigation of 250,000/-.

(vi) The Appellant Builder shall work out the Compensation in terms of this Order, after making adjustment of the outstanding charges payable by the Respondents/Complainants in terms of this Order and make payment of the balance compensation amount, if any, to the Respondents/Complainants within four weeks from today.

(vii) After adjusting the delay compensation, if any amount remains payable by the Respondents/Complainants, they will make the payment of the shortfall to the Appellant Builder within four weeks from today.

1. The First Appeal stands disposed off in above terms.