Full Text
Civil Appeal No 274 of 2020
NBCC (India) Limited .... Appellant(s)
JUDGMENT
1 Admit.
2 This appeal arises from a judgment of the National Consumer Disputes Redressal Commission[1] dated 20 September 2019.
3 In 2012, the appellant floated a group housing project at Sector 89, Gurgaon. An advertisement was issued, inviting prospective flat buyers. The respondent submitted an application on 14 March 2012 for the allotment of a dwelling unit in the project described as “NBCC Heights”. The terms and conditions for allotment were set out in a standard form. Instalments towards the purchase price were payable under a time-linked plan. An allotment letter was issued to the respondent on 30 June 2012 for dwelling unit F-402 in the project. The terms of allotment envisaged that the appellant would “endeavour” to hand over 1 “NCDRC” possession within two and a half years from the date of allotment. Clause 20 provides as follows: “20. Subject to the terms of this Application and the Agreement including but not limited to timely payment of the Total Price, stamp duty and other charges due and payable according to the payment plan applicable to the Applicant or as per demand raised by NBCC and the Applicant complying with all the terms and conditions of the Application, NBCC shall endeavor to complete the construction of the Dwelling Unit within 2 ½ (two years and six months) from the date of allotment letter. NBCC on obtaining certificate of occupation and / or use from the competent authorizes shall offer the Dwelling Unit to the Applicant for his / her occupation & use and subject to the applicant having complied with all the terms and conditions of the agreements. In the event of the Applicant failure to clear all the outstanding dues including interest, if any and / or takeover / occupy the Dwelling Unit within 30 days from the date of intimation in writing by NBCC, then the same shall lie at the Applicant's risk and cost and the Applicant shall be liable to pay a compensation to NBCC (for maintaining the complex) @ Rs. 2/-per sq. ft. of the super area per month for the entire period of such delay. This compensation shall be in addition to the other dues / claims of interest etc. as per terms of sale / allotment. The applicant agrees that if however the completion of the said Complex is delayed due to force majeure (such as acts of god or the public enemy, expropriation, compliance with any order or request of government authorizes, act of war, rebellions, sabotage, fire, floods illegal strikes, or riots etc.) then NBCC shall be entitled to extension of time for delivery of possession of the Dwelling Unit. NBCC agrees to pay to the allottee and subject to the applicant not being in default under any terms of this Application/ agreement Compensation @ Rs. 2/- per sq ft of the use super area of the Dwelling Unit per month for the period of such delay beyond One year (plus valid extend period due to force majeure reasons) from the stipulated date of completion of the complex. Thus the compensation, if any shall be payable only after four years plus valid extension due to force majeure reasons from date of alIotment. The adjustment of such compensation shall be done only at the time of execution of conveyance deed of the Dwelling Unit.” (emphasis supplied)
4 In January 2017, the respondent instituted a consumer complaint before the NCDRC[2] since possession of the unit had not been handed over. The appellant obtained an occupation certificate from the Town and Country Planning Department of Haryana on 19 July 2017. Upon receiving the occupation certificate, the appellant issued a notice to allottees on the same day, informing them of the receipt of the occupation certificate and requesting them to clear all their dues before taking possession. A letter of possession was issued to the respondent on 9 February 2018. The respondent made part payment towards the fifth and sixth instalments on 28 February 2018 and the balance payment on 6 March 2018. Possession was eventually handed over to the respondent on 26 July 2018 against an indemnity, as directed by the NCDRC in its order dated 6 June 2018. The NCDRC, in its impugned order dated 20 September 2018, directed the appellant to pay compensation computed at 10% per annum on the amount deposited by the respondent from June 2015 till the actual date of possession. In addition to this, the respondent was awarded an amount of Rs 2,00,000 towards loss of rent and costs of Rs 25,000. Time for payment was fixed at four weeks from the date of receipt of a copy of the order, failing which interest was to be payable at 12%.
5 The submissions which have been urged on behalf of the appellant are that:
(i) The respondent had been allotted a residential unit under a time-linked plan which envisaged the making of payments in accordance with a prescribed schedule. While the first four instalments were paid on time, there was a delay in paying the fifth instalment which was due on September 30 2014, while the final instalment was payable on the
2 Consumer Case No 84 of 2017 issuance of the letter of possession;
(ii) Since the respondent had delayed in the payment of the fifth instalment, there was no reason or justification to award interest;
(iii) The appellant committed that it would “endeavour” to complete the project within two and a half years of the date of allotment and there was no unconditional commitment for delivery by a specific date;
(iv) Clause 20 stipulated compensation at the rate of Rs 2 per sq ft of the super area; and
(v) The appellant was entitled to the benefit of supervening force majeure conditions.
6 The NCDRC rejected the submission that the appellant had only agreed to “endeavour” to provide possession within two and a half years of the date of allotment. It held that even if time is not the essence of the contract, substantial reasons have to be furnished by the developer for not handing over possession in terms of the date agreed in the letter of allotment. The NCDRC computed the period of two and a half years from the month of June 2012 when the letter of allotment was issued and, thus, concluded that possession ought to have been delivered by December 2014. Giving the appellant a further grace period of six months, it directed the payment of interest at 10% per annum from July 2015 till the actual date on which possession was handed over. The correctness of the decision falls for determination in the backdrop of the submissions recorded earlier.
7 Clause 20 of the letter of allotment provides that the appellant shall “endeavour” to complete the construction of the dwelling unit within two and a half years from the date of the letter of allotment. The expression ‘endeavour’ meant that the appellant would make an earnest effort to hand over possession by that date. Even if the expression does not mean an absolute commitment to hand over possession on or before a specified date, this expression has to be read in the context of the entirety of the clause. To construe the expression as leaving the date for handing over possession indefinite and at the absolute discretion of the developer would leave the purchaser at the mercy of the builder. Clause 20 must be construed to require the builder to make all reasonable efforts to comply with the duty to hand over possession by the stipulated date. The burden would lie on the developer to explain the steps taken to comply with the contractual stipulation. Clause 20 envisages that, save and except for delay on account of force majeure, the appellant would pay compensation at the rate of Rs 2 per sq ft of the super area of the dwelling unit per month for the period of delay beyond one year from the stipulated date. It stipulates that compensation would be payable after four years (plus a valid extension due to force majeure) from the date of allotment. The above condition would indicate that beyond a period of one year, from the expiry of two and a half years, which was envisaged under Clause 20, the appellant agreed to pay compensation to the flat buyer. The latter stipulation of four years is incongruous, because previously, a period of one year beyond the stipulated period of 2.[5] years is fixed, beyond which compensation becomes payable. This indicates that three and a half years was by all accounts the period for handing over possession beyond which the purchaser was entitled to compensation.
8 The NCDRC held that the condition in the allotment of payment of compensation at the rate of Rs 2 per sq ft is one-sided and constitutes an unfair trade practice. In Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan[3], a two-judge bench of this Court considered a similar agreement where there was a delay on the part of the Builder. This Court upheld the NCDRC’s award of compensation at the rate of 10 per cent per annum, instead of the contractually stipulated rate by holding the following: “6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the agreement dated 8-5-2012 are ex facie one-sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder.” A two judge bench of this Court in Wg. Cdr. Arifur Rahman Khan and Aleya Sultana & Ors. v. DLF Southern Homes Pvt Ltd (now known as Begur OMR Homes Pvt Ltd)4 followed the decision in Pioneer Urban in interpreting an Apartment Buyers’ Agreement that was, inter alia, breached by the Developer on the ground of a gross delay. This Court noted:
9 As the facts of the present case indicate, the period of two and a half years, which was stipulated under Clause 20 of the letter of allotment, came to an end at the end of December 2014. Allowing thereafter for an additional period of one year, the extended period would come to an end by the end of December 2015. The NCDRC granted interest at the rate of 10% with effect from July 2015. In our view, while the NCDRC is justified in directing the payment of interest, the direction should be modified in two respects, firstly, as regards the date from which interest would become payable and, secondly, as regards the rate of interest. As regards, the date on which interest would become payable, having regard to the one year period which is stipulated, beyond two and a half years from the original period under Clause 20, interest would become payable from 1 January 2016. Secondly, insofar as the rate of interest is concerned, the interest should be fixed at 7% per annum instead and in place of 10% which has been awarded by the NCDRC. Interest at the rate of 10% is excessive, in light of prevailing market conditions.[5]
5 Central Bank of India v Ravindra, (2002) 1 SCC 367 para 39 10 The NCDRC has, in addition to the award of interest, granted compensation of Rs 2,00,000 for loss of rent. Once the NCDRC awarded interest for the delayed handing over of possession, there would be no justification to award an additional amount of Rs 2,00,000.
11 The submission of the appellant that there was a delay on the part of the respondent in paying the fifth instalment does not merit acceptance. The fifth instalment was payable in the month of September 2014, while the final instalment, as learned counsel submitted, was payable at the time of the issuance of the letter of possession. This was to take place in December 2014. In the present case, it is evident that the appellant itself was not in a position to hand over possession of the dwelling unit by the end of December 2014. Hence, the requirement of paying the penultimate instalment in September 2014 must be looked at from that perspective. Admittedly, as the NCDRC has noticed, the appellant has paid an amount of over Rs one crore, out of the total sale consideration of Rs 1,00,54,478.
12 Similarly, there is absolutely no substance in the force majeure defense. The appellant has alleged that a dispute with the contractor over termination and a boundary wall dispute with neighbouring landowners constituted a force majeure condition under Clause 20 of the allotment letter. We find no merit in this argument as the appellant, being an experienced developer, must be conscious of routine delays caused by business exigencies. This would not frustrate the contract or absolve the appellant of the obligations assumed under the terms of the agreement. Similar delays were rejected as force majeure grounds by a three-judge bench of this Court in DLF Home Developers Ltd v. Capital Greens Flat Buyers Association[6] where the Court noted:
6 Civil Appeal Nos 3864-3889 of 2020
13 We accordingly uphold the principal findings of the NCDRC in regard to the entitlement of the respondent to receive compensation for the delayed handing over of possession. The force majeure defense raised by the appellant was justifiably rejected by the NCDRC. The respondent was entitled to be compensated for the delay of the appellant for which an appropriate direction for interest is necessary. However, as indicated above, the order of the NCDRC in regard to the rate of interest and the date from which it becomes payable has to be modified. For this purpose, we allow the appeal partially in the following terms:
(i) Instead and in substitution of the direction issued by the NCDRC, the appellant shall pay simple interest to the respondent at the rate of 7% per annum from 1 January 2016 until 26 July 2018 which is the date on which possession was handed over to the respondent;
(ii) The direction in regard to the payment of an amount of Rs 2,00,000 towards loss of rent shall stand set aside having regard to the compensation which has been granted to the respondent in terms of (i) above; and
(iii) The appellant shall cooperate in completing all necessary formalities for completing the documentation (including formalities for registration) in respect of the dwelling unit which has been sold to the respondent, if not already completed, within a period of one month from the date of receipt of a certified copy of this order. The payment of interest in terms of (i) above shall also be effected within one month.
14 The appeal is disposed of in the above terms. No order as to costs.
15 Pending application, if any, stands disposed of. ……………...…...….......……………… ........ J. [Dr Dhananjaya Y Chandrachud]..……...…....…........……………….… ........ J. [M R Shah] New Delhi; March 08, 2021 -S-