Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors.

on 20 December, 2007

National Consumer Disputes Redressal

Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors. on 20 December, 2007
Equivalent citations: I (2008) CPJ 309 NC
Bench: K G Member, P Shenoy, S Naik
ORDER P.D. Shenoy, Member

1. M/s. Maligo Estate Pvt. Ltd. had floated a scheme by purchasing land in village Tikri, Fatehpur
Tehsil, District Gurgaon, Haryana with a view to develop a residential colony to be known as 'Malibu
Towne' under the Haryana Development and Regulation of Urban Area Act 1975 in which
residential multi-storeyed housing complex known as 'Malibu Condominiums' was also to be built.
Complainant Tarun Kumar Ghai entered into two agreements with the opposite parties and
accordingly the complainant was allotted apartment No. 301 in Tower No. 6 having super area
150.04 sq. metres at the rate of Rs. 13,939 per s.m. Total price of flat was estimated at Rs. 22,43,478.
First instalment was paid on 17.2.1995. The complainant had paid Rs. 21,22,347 to the opposite
party leaving balance sum of Rs. 1,20,597 to be paid at the time of possession of flat. As per
agreement C-2 the complainant took a second flat in the same tower with apartment No. 503 having
super area of 147.40 s.m. at the same rate with the total price of flat estimated at Rs. 21,23,444. The
complainant had already paid Rs. 20,10,392 leaving balance sum of Rs. 1,13,003 to be paid at the
time of possession of flat.

2. As per agreement, the opposite parties were to deliver the apartment to the complainant within
three and a half years from the date of booking. As apartment was booked in February, 1995 it was
to be given latest by August, 1998. Complainant had visited the site and had come to know that
opposite parties have not done any development work and have not constructed any flats on the
proposed site. Complainant sent several communications insisting that he should be allotted the
flats booked by him. In reply the opposite parties stated that they were offering some other flats in
some other tower to the complainant which he had not booked. In this connection complainant
pointed that he booked the flats after seeing the sites and had paid a sum of Rs. 80,806 as
preferential location charges. Complainant was not interested to swap the flats with any other flats.
Complainant has alleged in paras 10 to 13 of his complaint that the acts of the builder amount to
deficiency in service and also to be an unfair trade practice falling under Clauses (1) to (5) of 36A of
the MRTP Act, 1969, as made applicable to the Consumer Protection Act, 1986 by Section 2(1)(r) of
the said Act.

3. As the opposite parties did not hand over possession of the booked flats he approached the
National Commission with the following prayers:

(a) To direct the opposite parties to hand over the possession of the flats.

(b) In case the opposite parties fail to do so, the entire amount paid by the complainant i.e. sum of
Rs. 42,13,367 should be refunded back to him along with 18% interest per annum.

(c) In view of peculiar facts and circumstances of the case and mental agony and harassment caused
by the opposite parties to the complainant special costs and compensation of Rs. 10,00,000 also be

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 Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors. on 20 December, 2007

given to the complainant in the interest of justice.

4. This complaint was supported by the affidavit of complainant Tarun Kumar Ghai.

Case of the opposite parties

5. This was contested by the opposite parties by filing an affidavit in reply. They submitted in the
written version that one of the notable factors which had greatly contributed in not picking up the
colony is non-existence of infrastructure facilities like schools, hospitals, community centres and
other community buildings on the land (sites) set apart for this purpose in the layout plan of the
colony. General recession in property market have caused stagnation and in some cases reduction in
prices of the properties which in turn has resulted in slow habitation of the colony and non-payment
of timely instalments of sale prices by the purchasers of the properties. Opposite party No. 1 had
planned and intended to erect multi-storeyed buildings which are to be named as 'Malibu
Condominiums' reserved for Group Housing Complex in the layout plan to be given to the intending
purchaser on ownership basis. Opposite party No. 1 started construction of 5 tower buildings on the
site No. 4 which are almost complete and construction on one building No. 6 was abandoned due to
dispute with construction agency. They have not disputed the payment of the same by the
complainant for two flats. Opposite party No. 1 had informed the complainant telephonically as well
as personally whenever he visited their office that the completion of tower buildin No. 6 has been
delayed due to dispute with construction agency and offered him alternative apartments in other
tower buildings, similar in size and all other particulars in lieu of booked apartment in tower
building No. 6. Letters were exchanged between the parties on the subject. Instead of conveying his
option for alternative apartments the complainant served a legal notice dated 20.4.2002 through his
Counsel for refund of the amount with 18% interest along with Rs. 10,00,000 as compensation.
Legal notice was replied explaining the whole position. They submitted in his written version that a
balance of Rs. 4,84,95,986 is due and payable by 217 apartment buyers who have booked the flats in
the said tower buildings which are in total 292 apartments. They submitted that these were beyond
his control and there was specific clause in the agreement which protected him. Clauses 17 and 19 of
the apartment buyers agreement with regard to delivery of the possession of the flat read as under:

17. That the possession of the said premises is proposed to be delivered by the Company to the
Apartment Allottee within three and three and half years from the date of booking of the Apartment.
The company shall not incur any liability if it is unable to deliver possession of the said premises by
the time aforementioned, if the completion of the building(s) is delayed by reason of non-availability
of steel and/or cement or other building materials, or water supply or electric power or slow down
strike or due to a dispute with the construction agency employed by the Company, civil commotion
or by reason of war, or enemy action, or earthquake or any Act of God, or if non-delivery of
possession is as a result of any act, notice, order, rule or notification of the Government and/or any
other public or Competent Authority or for any reason beyond the control of the Company and in
any of the aforesaid events the Company shall be entitled to a reasonable extension of time for
delivery of possession of the said premises.

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 Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors. on 20 December, 2007

In the event of any such contingency arising/happening, the Company shall have right to alter or
vary the terms and conditions of allotment, or if the circumstances, beyond the control of the
Company so warrant, the Company may suspend the Scheme for such period as it may consider
expedient and no compensation of any nature whatsoever can be claimed by the Apartment Allottee
for the period of suspension of the Scheme.

If for the aforesaid or other reasons, the Company is forced to abandon the whole or part of the
Scheme, then and in such case, the Company's liability shall be limited to the refund of the amount
paid by the Apartment Allottee without any interest or any other compensation whatsoever.

19. That if for any reason, whether within or outside the control of the Company, the Company is
unable or fails to deliver possession of the said premises to the Apartment Allottee within the time
specified in Clause No. 17 above, or within any further period or periods as agreed to by and between
the parties hereto, then in such case, the Apartment Allottee shall be entitled to give notice to the
Company terminating the Agreement in which event the Company shall be at liberty to sell and
dispose of the said premises to any person at such price and upon such terms and conditions as the
Company may deem fit. The Company shall, within a reasonable time from the date of receipt of
such notice and sale of the said premises, refund to the Apartment Allottee the aforesaid amount of
earnest money and the further amount that may have been received by the Company from the
Apartment Allottee as part payment(s) in respect of the said premises. Neither party shall have any
other claim against the other in respect of the said premises or arising out of this Agreement.

6. Some apartment allottees of tower building No. 6 have in their wisdom accepted alternate
apartment floor in building No. 5 or in personal floor scheme which option was not exercised by the
complainant. It is specifically denied that case explained in paras 10 to 13 of the complaint amounts
to deficiency in service and also amounts to unfair trade practice. Opposite parties requested that
the complaint is liable to be dismissed with cost.

Interim orders of National Commission and High Court of Delhi

7. When the matter was being heard by this Commission on 2.3.2005 the learned Counsel for the
opposite parties stated that an amount of Rs. 41,32,000 deposited by the complainant would be paid
within four weeks. The Commission ordered thus: "This payment is without prejudice to the rights
of the parties to agitate the question of interest payable on the said amount by the opposite parties".

8. When the matter came up for hearing on 5.10.2005, the Commission observed as follows:

Heard the proxy Counsel for the opposite party and the complainant in person. Admittedly, opposite
party has refunded the amount of Rs. 41,33,137 by cheque dated 28.3.2005. It is pointed out that the
said amount was paid by the complainant to the opposite party in February 1995. It is also pointed
out that construction of the Block for which the complainant has booked flats, is abandoned for one
reason or the other, and the complainant had not accepted the alternative offer of the flats made by
the opposite party. That offer was made only in March/July 2001.

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 Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors. on 20 December, 2007

The complainant, who is appearing in person, pointed out that there was an tripartite agreement
between the complainant, the opposite party and the CITI Bank with regard to the loan amount
taken by the complainant for the CITI Bank. That amount was taken by paying interest at the rate of
17% per annum.

Considering this aspect, for the time-being, and without prejudice to the rights of the complainant
and the opposite party, we direct the opposite party to pay interest at the rate of 10% per annum
from 1.8.1995 till 1.5.2005 within a period of four weeks from today.

9. The opposite party challenged the order dated 5.10.2005 by filing writ petition before the Delhi
High Court. By the order dated 28.4.2006, the writ petition was disposed of with direction that the
amount covered by said date 5.10.2005 be deposited before this Commission within four weeks and
same be invested in FDR and this deposit shall be subject to final decision in the complaint. The
cheque of Rs. 36,08,435 covering interest upto 1.5.2005 was deposited by the opposite party with
this Commission on 24.5.2006. This amount was directed to be invested by the Registry in fixed
deposit immediately.

10. The aforesaid order was passed on 26.4.2007.The above interim orders indicate that the dispute
falls in a narrow compass and it pertains only to the liability of the builder to pay interest. Two
issues which are important--(1) whether any interest is to be paid? and (2) if so, at what rate?

Submission of the learned Counsel for the complainant

11. He read the prayer clause of the complaint wherein he has pleaded that complainant had
demanded 18% interest on the amount paid along with Rs. 10,00,000 as compensation. He
submitted that he had borrowed loan @ 17% from the Citi Bank under a tripartite agreement hence
the opposite party is liable to pay him atleast 17% interest. The builder had not built the flats for
three and a half years, so he was keen to get the refund of the amount. He was not interested in
alternate flats because he was keen on the flots booked due to preferential location etc. Submission
of the learned Counsel for the opposite party

12. Due to dispute between the builder and the contractor he could not complete the flats booked by
the complainant. Accordingly, he offered identical flats in tower B which was refused by the
complainant. He quoted a clause of the agreement wherein it is stated (quoted supra) "If for the
aforesaid or other reasons, the Company is forced to abandon the whole or part of the Scheme, then
and in such case, the Company's liability shall be limited to the refund of the amount paid by the
Apartment Allottee without any interest or any other compensation whatsoever". Accordingly he is
not liable to pay any interest. He further submitted that as per the judgment of the Supreme Court
in Ghazibad Development Authority v. Balbir Singh 10% interest is reasonable. He also pointed out
that the complainant had repaid the loan taken from Citi Bank on 14.10.1998 with 17% interest and
after that he did not have any liability. He also pointed out the case of Bangalore Development
Authority v. Syndicate Bank, , wherein it is held that "where an alternative site is offered or
delivered (at the agreed price) in view of its inability to deliver the earlier allotted plot/flat/house, or
where the delay in delivering possession of the allotted plot/flat/house is for justifiable reasons,

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 Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors. on 20 December, 2007

ordinarily the allottee will not be entitled to any interest of compensation. This is because the buyer
has the benefit of appreciation in value". "The quantum of compensation to be awarded, if it is to be
awarded, will depend on the facts of each case, nature of harassment, the period of harassment and
the nature of arbitrary or capricious or negligent action of the authority which led to such
harassment".

Findings:

13. It is not in dispute that for allotment of apartment No. 301 in Tower No. 6 the complainant had
paid Rs. 21,22,347 to the builder leaving a balance of small sum of Rs. 1,20,597. Similarly, as per
agreement No. C-2 in the same tower for apartment No. 503 the complainant had paid Rs.
20,10,392 leaving a balance of Rs. 1,13,003 to be paid at the time of possession of the flat. As the
apartments were booked in February, 1995 possession of the built apartment should have been
given at least by August, 1998. Despite several visits and correspondence with the builder the
booked flats were not given. On the other hand builder insisted that they should swap the flats with
other flats in other towers which was not agreed to by the complainant as he had paid Rs. 80,806 as
preferential location charges. Accordingly, the complainant filed a complaint before this
Commission praying for direction to the opposite party to handover possession of the flats and in
the alternative to refund Rs. 42,13,367 along with 18% interest per annum with Rs. 10,00,000
special cost and compensation.

14. The respondent gave several reasons for non-completion of the flats like non-existence of
infrastructural facilities; several other allottees of flat had not paid the amount and dispute with
construction agency etc. Though the first instalment was paid way back on 17.2.1995 and subsequent
instalments shortly thereafter, for 10 years the builder did not refund a single paise. On 2.3.2005
this Commission directed the opposite party to refund Rs. 41,32,000 within four weeks without
prejudice to the rights of the parties to agitate the question of interest payable on the said amount by
the opposite parties. On 5.10.2005 when the case came up for hearing complainant submitted that
he had taken a loan from Citi Bank by paying interest @ 17% per annum. Considering this aspect
and observing that as the builder had abandoned the construction of booked flats for one reason or
the other and made an offer for an alternate flat only in March/July 2001 this Commission ordered
that without prejudice to either parties, the opposite party was directed to pay interest @ 10% per
annum from 1.8.1995 till 1.5.2005 within a period of four weeks. This was challenged by filing Writ
Petition before the Delhi High Court which disposed of the petition with direction to deposit the
amount with this Commission which to be invested in FDR and this deposit shall be subject to final
decision in the complaint. Accordingly, the amount of Rs. 36,08,435 was deposited in this
Commission on 24.5.2006 to be invested by the Registry in FD.

15. It is not disputed that first instalment was paid as long back as on 17.2.1995 and subsequent
instalments were paid shortly thereafter. It is also not in dispute for more than a decade the builder
did not refund any amount to the consumer, which means that builder has utilised this money,
which would naturally carry interest as an opportune cost. So the builder cannot be absolved of the
responsibility to pay interest to the purchaser. Accordingly, the first issue is answered in the positive
i.e. the builder is liable to pay interest.

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 Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors. on 20 December, 2007

16. The second issue to be answered is rate of interest payable as the principal amount has already
been paid to the complainant. Complainant has demanded @ 18% interest along with Rs. 10,00,000
as compensation. There is a tripartite agreement between Malibu Estates-the builder, Tarun
Ghai-complainant and the Citi Bank signed by all the parties of the year 1995 which clearly mentions
that the complainant borrowed Rs. 14,77,000 which carried interest @ 17%.

Clause 17 page-17 of the agreement signed between the builder and the complainant says if for
certain reasons, the Company is forced to abandon the whole or part of the Scheme, then and in
such a case, the Company's liability shall be limited to the refund of the amount paid by the
apartment allottee without any interest or any other compensation whatsoever. As against this,
there is another clause in the agreement wherein it is stipulated in the event of default which is as
follows:

10. That without prejudice to the Company's rights under this Agreement and/or law the
Apartments Allottee shall be liable to pay to the Company interest at the rate of 20% per annum on
all amounts due and payable by the Apartment Allottee under this Agreement for the period of delay
in making such payments. This discretion for termination of the agreement or acceptance of the
delayed payment with interest at the rate of 20% per annum shall exclusively vest with the
Company. In the event of the Company waiving its right to cancel the allotment and forfeit the
earnest money and accepting payment with interest in its place, no right whatsoever would accrue to
any other defaulting Apartment Allottee on that account.

17. As per this agreement if the builder abandons whole or part of the scheme the builder's liability is
only limited to the refund of the amount paid by the apartment allottee without any interest or
compensation whatsoever. On the other hand, if there is any delay in making payments of the
instalments by the apartment allottee he is liable to pay 20% interest on all amounts due. Hence,
this agreement is inequitable.

18. The builder has withheld re-payment of money deposited by the complainant for 10 long years
and enjoyed the usufructs of this deposit. So, he cannot compel the allottees to pay 20% interest if
there was default or delay on their part and at the same time not pay any interest to the allottees
when he had illegally withheld their money without giving them the flat booked despite written
agreements. He is aware of the fact that the complainant had borrowed money to partly finance
these two flats from the Citi Bank @ 17% interest.

19. In this connection, it is worthwhile to go through the judgment of Hon'ble Apex Court in
Ghaziabad Development Authority v. Balbir Singh as follows:

8. However, the power and duty to award compensation does not mean that irrespective of facts of
the case compensation can be awarded in all matters at a uniform rate of 18% per annum. As seen
above, what is being awarded is compensation i.e. a recompense for the loss or injury. It therefore
necessarily has to be based on a finding of loss or injury and has to correlate with the amount of loss
or injury. Thus the Forum or the Commission must determine that there has been deficiency in
service and/or misfeasance in public office which has resulted in loss or injury. No hard and fast rule

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 Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors. on 20 December, 2007

can be laid down, however, a few examples would be where an allotment is made, price is
received/paid but possession is not given within the period set out in the brochure. The
Commission/Forum would then need to determine the loss. Loss could be determined on basis of
loss of rent which could have been earned if possession was given and the premises let out or if the
consumer has/had to stay in rented premises then on basis of rent actually paid by him. Along with
recompensing the loss the Commission/Forum may also compensate for harassment/ injury, both
mental and physical. Similarly, compensation can be given if after allotment is made there has been
cancellation of scheme without any justifiable cause.

9. That compensation cannot be uniform and can best be illustrated by considering cases where
possession is being directed to be delivered and cases where only monies are directed to be returned.
In cases where possession is being directed to be delivered the compensation for harassment will
necessarily have to be less because in a way that party is being compensated by increase in the value
of the property he is getting. But in cases where monies are being simply returned then the party is
suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. He is
being deprived of that flat/plot. He has been deprived of the benefit of escalation of the price of that
flat/plot. Therefore the compensation in such cases would necessarily have to be higher. Further if
the construction is not of good quality or not complete, the compensation would be the cost of
putting it in good shape or completing it along with some compensation for harassment. Similarly, if
at the time of giving possession a higher price or other amounts are collected unjustifiably and
without there being any provision for the same the direction would be to refund it with a reasonable
rate of interest. If possession is refused or not given because the consumer has refused to pay the
amount, then on the finding that the demand was unjustified the consumer can be compensated for
harassment and a direction to deliver possession can be given. If a party who has paid the amount is
told by the authority that they are not in a position to ascertain whether he has paid the amount and
that party is made to run from pillar to post in order to show that he has paid the amount, there
would be deficiency of service for which compensation for harassment must be awarded depending
on the extent of harassment. Similarly, if after delivery of possession, the sale deeds or title deeds
are not executed without any justifiable reasons, the compensation would depend on the amount of
harassment suffered. We clarify that the above are mere examples. They are not exhaustive. The
above shows that compensation cannot be the same in all cases irrespective of the types of loss or
injury suffered by the consumer.

20. The case quoted by the respondent i.e. Bangalore Development Authority (EDA) v. Syndicate
Bank (supra), is distinguishable from the case on hand. The BDA does not construct buildings and
offers flats to the buyers. BDA develops land and allot plots. BDA is a public authority constituted
under the statue with the no profit motive and even at the time of allotment of a plot the price of the
plot/land is generally offered less than the market price. The allottees get high appreciation and
value in subsequent years for the plots which they get from the BDA and the case relates to such
allotment where delay was there for justifiable reasons. In the case on hands, the respondent wanted
to develop residential complex with the profit motive and there was no justifiable reason for delay in
allotting it. In fact they did not allot the booked flat at all which was in preferential locality for which
higher price was obtained. On the other hand they offered, alternative flats in other sites/ towers
which was not booked by the complainant. Further they unjustifiably withheld the amount paid by

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 Tarun Kumar Ghai vs Malibu Estate Pvt. Ltd. And Ors. on 20 December, 2007

the complainant. The principal amount was paid to the complainant only after several years of
deposit in pursuance of the orders passed by this Commission. Hence, respondent cannot get
support from the case quoted (supra) by them.

21. Accordingly, it is absolutely clear that the compensation varies from case to case depending upon
the facts and circumstances of the case. No uniform rates can be fixed. Compensation cannot be
same in all cases irrespective of the type of loss or injury suffered by the same. The complainant has
claimed only 18% interest hence we will not apply the rate of interest which is mentioned in the
bipartite agreement for the defaulters i.e. @ 20%. Considering the fact that flat was not handed over
for 10 long years and only alternate flats in an alternate building which was located in a less
preferential area was offered which was not acceptable to the complainant and the money deposited
was illegally withheld by the builder enjoying the usufructs of that and also looking into the fact that
17% was the rate of interest charged by the Citi Bank for the loan obtained by the
complainant/borrower with the knowledge of the builder as it was a tripartite agreement, we deem
it fit to award 17% interest from the date of deposit till the date of payment.

22. Amount deposited as per our order i.e. Rs. 36,08,435 along with the accrued interest is directed
to be released in favour of the complainant in the meantime. Balance amount of interest will be paid
within six weeks by the opposite parties to the complainant.

23. In the facts and circumstances of case, we deem it fit to award a cost of Rs. 30,000 Complaint is
disposed of in above terms.

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