PARSVNATH DEVELOPERS LTD. versus GAGANDEEP BRAR AND ANOTHER on 13 April 2023

1. Feeling aggrieved and dissatisfied with the impugned commonorder dated 05.02.2020 passed by the National Consumer DisputesRedressal Commission, New Delhi (for short, ‘National Commission’)passed in the respective Appeal Executions dismissing the same, thedeveloper – Parsvnath Developers Limited (hereinafter referred to asthe ’Developer’) has preferred four appeals bearing Civil Appeal Nos.6380/2021, 6383/2021, 6385/2021 & 6384/2021.

1.1 Feeling aggrieved and dissatisfied with the orders dated04.10.2017 passed by the National Commission in I.A. Nos. 14331 &14332 of 2017 (for modification) dismissing the said applications, theChandigarh Housing Board (hereinafter referred to as the ‘CHB’) haspreferred Civil Appeal Nos. 6382 and 6381 of 2021.

2. The facts leading to the present appeals in nutshell are as under:

That the Chandigarh Administration on 01.12.2005 appointed CHBas the nodal agency for development of residential, commercial and otherrelated infrastructure facilities as an integrated project at Rajiv GandhiChandigarh Technological Park in Chandigarh by the name “Pride Asia”.The bid of the appellant – developer was accepted by the CHB.Consequently, CHB and the developer entered into a DevelopmentAgreement dated 06.10.2006 for grant of development rights in respectof land measuring 123 acres. The said land was allotted to the appellant– developer by CHB for constructing residential units, who then advertisedits project for the sale of flats and pent houses in the name and style as“Parsvnath Pride Asia”.

2.1 The respective private respondents applied for allotment ofapartments in the said project. Later, Tripartite Agreements wereexecuted between the Developer, CHB and the private respondents/flatowners/allottees. Clause 9(a) of the said agreement provided that theconstruction of the flats was likely to be completed within 36 months A

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Afrom the date of signing of the Development Agreement between CHBand the appellant, i.e., 06.10.2006. That the appellant could not carriedout the construction as, according to the appellant, the CHB failed tohandover the possession of the unencumbered land to it for raising theconstruction.B2.2 A dispute arose between the appellant – developer and theCHB and in terms of the development agreement, the dispute wasreferred to the arbitrator. A former Judge of this Court was appointed asthe sole arbitrator to adjudicate the dispute between the appellant andthe CHB.C2.3 Pending arbitral proceedings, due to delay in allotment of theflats to the allottees, the allottees filed individual complaints before theDistrict Consumer Disputes Redressal Commission (for short, ‘DistrictForum’), the State Consumer Disputes Redressal Commission (for short,‘State Commission’) and before the National Commission. The DistrictForum and the State Commission allowed a batch of almost 75 complaintsDwhich were impugned before the National Commission by way of FirstAppeal No. 269 of 2012 and other connected appeals and the revisionpetitions, which were disposed of by the National Commission vide itscommon order dated 05.03.2013. The National Commission modifiedthe orders passed by the District Forum and the State Commission toEthe extent that it had directed payment of uniform rate of interest to theallottees, i.e., 9%. Insofar as the payment of compensation under clause9(c) of the Flat Buyer Agreement was concerned, the NationalCommission directed that the payment of compensation be made byway of interim measure, subject to final outcome of the arbitrationproceedings between the appellant and the CHB.F

2.4 Being aggrieved by the common order dated 05.03.2013 passedby the National Commission, the appellant filed Special Leave Petitionbearing S.L.P.(Civil) Nos. 17133-17134 of 2013 and connected matters.This Court vide order dated 10.05.2013 issued notice and stayed theoperation of the judgment and order dated 05.03.2013 of the NationalGCommission in part to the extent of the payment of compensation underclause 9(c) of the Flat Buyer Agreement.

2.5 That finally on 09.01.2015, the learned arbitrator passed anaward in the arbitration proceedings between the appellant and the CHB.In the award, the learned arbitrator also held that any amount payableH

on account of refund of price, interest or compensation (if and whenfinally determined by the National Commission/Supreme Court) wouldbe borne by the appellant and the CHB in the ratio of 70:30.

2.6 That the special leave petitions filed before this Court came tobe disposed of vide order dated 21.04.2015 upholding the order dated05.03.2013 passed by the National Commission, holding that thecompensation under clause 9(c) of the Flat Buyer Agreement is payable.At this stage, it is required to be noted that the award passed by thelearned arbitrator was brought to the notice of this Court and it wassubmitted that in view of the award passed by the learned arbitrator, theperiod that is stipulated in the agreement has been extended from06.10.2006 to 05.02.2008. However, this Court observed that the Courtis not inclined to enter into this controversy and if for any reason, theallottees/buyers file any execution petition for execution of the judgmentand order passed by the Commission, the Developer would be at libertyto take such objections based on award passed by the learned arbitratorand if such objections are raised, it is for the executing court to considerthe same and pass appropriate orders in accordance with law. Withthese observations, this Court disposed of the respective special leavepetitions and civil appeals.

2.7 That thereafter, by order dated 08.05.2015, the NationalCommission disposed of First Appeal No. 352/2014 and connectedappeals in view of the order passed by this Court dated 21.04.2015.

2.8 That thereafter, the respective buyers – original complainantsfiled execution petitions before the State Commission. That the StateCommission passed an order dated 19.01.2016 in E.A. No. 100/2015directing the appellant – Developer – Parsvnath Developers Ltd. onlyto pay compensation to the allottees in terms of clause 9(c) of the FlatBuyer Agreement dated 28.02.2008. Similar orders were passed by theState Commission in other execution applications filed by the respectivebuyers/allottees.

2.9 Aggrieved by order dated 19.01.2016 passed by the StateCommission, the appellant herein filed the present Appeal Executionbefore the National Commission. At this stage, it is required to be notedthat the similar Appeal Execution No. 41/2016 was dismissed by theNational Commission, against which the appellant preferred a specialleave petition before this Court being S.L.P.(Civil) No. 9961/2017.

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AIn a similar matter being Consumer Complaint No. 19/2011, theNational Commission by order dated 11.05.2016 directed the appellantand CHB to pay principal sum with interest @ 10% and compensationto the complainant/buyer/allottee. Both the appellant and CHB weredirected to borne the aforesaid amount in the ratio of 70:30 as mentionedin the award. Challenging the said direction, the CHB filed Civil AppealBNo. 10748 of 2016 before this Court. This Court vide judgment andorder dated 17.12.2019 dismissed the civil appeal filed by the CHB. ThisCourt specifically observed that clause 9(c) is not applicable. This Courtalso observed that the split of 70:30 under the arbitration award must begiven effect, having attained finality.C

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2.10 That thereafter, by the impugned common order, the NationalCommission has dismissed the respective Appeal Executions, which arethe subject matter of the present appeals at the behest of the Developer.

3. Shri Sachin Datta, learned senior counsel has appeared on behalfof the Developer and Mrs. Rachna Joshi Issar along with Ms. HarvinderDChowdhury, learned counsel have appeared on behalf of the ChandigarhHousing Board.

3.1 Shri Sachin Datta, learned senior counsel appearing on behalfof the Developer has vehemently submitted that the impugned orderpassed by the National Commission is just contrary to the decision ofEthis Court in Civil Appeal No. 10748/2016, titled ChandigarhHousing Board v. M/s Parasvanath Developers Pvt. Ltd., decidedon 17.12.2019, wherein this Court had categorically held that clause9(c), i.e., compensation on account of delay in construction is notapplicable.F

3.2 It is submitted that in the present case, it was found that boththe appellant – developer as well as the CHB were responsible for delayand therefore clause 9(c) of the Flat Buyer Agreement shall not beattracted, more particularly when there has been no fulfilment of conditionsin clause 9(a).G3.3 It is further submitted that even the impugned judgment and G3.3 It is further submitted that even the impugned judgment andorder/s is/are inconsistent with other orders passed by the NationalCommission in similar Appeal Executions emanating from the same orderdated 08.05.2015, which was also the subject matter of First Appeals. Itis submitted that even otherwise, in view of the arbitration award dated09.01.2015 which attained finality, it provided that the liability to pay theH

amount to the buyers/allottees including the amount of compensationshall be paid in the ratio of 70:30 and even this Court also while disposedof Civil Appeal No. 10748/2016 specifically observed that split of 70:30under the arbitration award must be given effect, having attained finality.The impugned order passed by the National Commission and even theState Commission directing the appellant-developer to pay the entireamount of compensation is therefore unsustainable.

3.4 Making above submissions, it is prayed to allow the presentappeals preferred by the Developer – Parsvnath Developers Ltd.

4. While opposing the present appeals, learned counsel appearingon behalf of the CHB have vehemently submitted that under the TripartiteAgreement/Flat Buyer Agreement and as per clause 9(c), it is theexclusive liability of the developer to pay the compensation to the buyers/allottees. It is submitted that the plain language of clause 9(c) of the FlatBuyer Agreement/Tripartite Agreement, which is a commercialagreement, is binding upon the parties.

4.1 It is submitted that the liability to pay compensation underclause 9(c) of the Flat Buyer Agreement of the developer has beenaffirmed by this Court in the judgment and order dated 21.04.2015.

4.2 Making above submissions and relying upon the orders passedby this Court dated 21.04.2015 in Special Leave Petition (Civil)Nos.17133-17134/2013 and other allied special leave petitions/civilappeals and the subsequent order passed by this Court on 17.12.2019 inCivil Appeal No. 10748/2016, it is prayed to dismiss the appeals preferredby the developer.

5. We have heard learned counsel for the respective parties atlength.

At the outset, it is required to be noted that the principal amountas well as the interest in terms of the order(s) of the State Commissionhave been paid to the respective complainants/allottees and the onlyissue involved in these appeals is as to whether the compensationawarded by the State Commission in terms of clause 9(c) of the FlatBuyer Agreement is payable solely by the developer – appellant hereinor it is to be shared between the developer and the CHB in the ratio of70:30?

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A6. While considering the aforesaid issue, it is required to be notedthat the learned arbitrator in the award dated 09.01.2015 in a disputebetween the developer and the CHB had specifically directed that anyamount payable on account of refund of price, interest or compensation(if and when finally determined by the National Commission/SupremeCourt) would be borne by the appellant and the CHB in the ratio ofB70:30. The award passed by the learned arbitrator has attained finality.That thereafter, during the hearing of Special Leave Petition (Civil) Nos.17133-17134/2013 and other allied connected matters, when the awardpassed by the learned arbitrator was brought to the notice of this Court,this Court specifically observed in paragraphs 6 & 7 as under:C

“6. Further, it would be pertinent to note that the Commission hasobserved that its order would be subject to the pending arbitrationproceedings between the Developers and the Chandigarh HousingBoard.

7. In this context, Shri Rakesh Dwivedi, learned senior counselDwould state that in view of the award passed by the Arbitrator theperiod that is stipulated in the Agreement has been extended from06.10.2006 to 05.02.2008. We are not inclined to enter into thiscontroversy. If, for any reason, the respondent(s)/buyer(s) fileany execution petition 8 for execution of the judgment(s) andEorder(s) passed by the Commission, the Developer is at liberty totake such objections based on award passed by the Arbitrator. Ifsuch objections are raised, it is for the executing Court to considerthe same and pass appropriate orders in accordance with law.”

Even thereafter when this Court disposed of/dismissed Civil AppealFNo. 10748/2016, it is observed in paragraphs 12 & 13 as under:

“12. We also note that the finding in the arbitration award dated09.01.2015 as to the apportionment of liability between theDeveloper and CHB to pay the principal sum and generalcompensation, must be given effect. To this extent, we find meritGin the argument raised by the learned Senior Counsel forRespondent No. 1 that the prior National Commission order dated05.03.2013 and the subsequent order of this Court dated 21.04.2015both relegate the inter se apportionment of liability between theDeveloper and CHB to the arbitration award. Thus, the split of70:30 under the arbitration award must be given effect, havingHattained finality.

PARSVNATH DEVELOPERS LTD. v. GAGANDEEP BRAR ANDANOTHER [M. R. SHAH, J.]

13. In any case, we find that such division is well-founded as thesale proceeds from the flat buyers were apportioned in the 16same ratio of 70:30 between the Developer and CHB. This issupported by the Escrow Agreement dated 01.06.2007 executedby CHB and the Developer in pursuance of the DevelopmentAgreement dated 06.10.2006. Clause 4(b) of this EscrowAgreement provides that 30% of the sale proceeds in respect ofthe residential units would first be transferred to CHB, and theremaining amount shall then be transferred to the Developer. Inview of this, we find that the amount directed to be paid by theNational Commission in the impugned order must be paid by theDeveloper and CHB in the ratio of 70:30.”

7. In view of the above both, the State Commission as well as theNational Commission have seriously erred in fastening the entire liabilityto pay compensation solely upon the appellant – developer. Thecompensation in terms of clause 9(c) of the Flat Buyer Agreement is tobe shared between the developer and the CHB in the ratio of 70:30 asapportioned/determined by the learned sole arbitrator in the award dated09.01.2015 and thereafter as observed by this Court while disposing of/dismissing Civil Appeal No. 10748/2016.

8. In view of the above, the impugned orders passed by the NationalCommission and that of the State Commission are required to be modifiedto the extent holding the appellant – developer liable to pay compensationunder clause 9(c) of the Flat Buyer Agreement to the extent of 70% and30% liability would be upon the Chandigarh Housing Board. The presentappeals preferred by the appellant – developer are to be allowed to theaforesaid extent and the appeals preferred by the CHB are required tobe disposed of in terms of the above.

9. Accordingly, in view of the above and for the reasons statedabove, the appeals preferred by the Developer – Parsvnath DevelopersLimited are hereby partly allowed. The impugned common judgmentand order dated 05.02.2020 passed by the National Commission in AppealExecution No. 4/2016 and other connected Appeal Executions is herebymodified to the extent holding the appellant – developer liable to paycompensation to the respective allottees/buyers/original complainants tothe extent of 70% and the liability to pay balance 30% of the compensationin terms of clause 9(c) of the Flat Buyer Agreement would be uponChandigarh Housing Board.

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430SUPREME COURT REPORTS

[2023] 3 S.C.R.

A10. In view of the above order passed in the appeals preferred bythe Developer, no further orders are required to be passed in both theappeals preferred by the Chandigarh Housing Board, i.e., Civil AppealNos. 6382/2021 & 6381/2021 except ordering disposal of the said appeals.Ordered accordingly.

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Nidhi Jain

Appeals disposed of.

(Assisted by : Abhishek Pratap Singh, LCRA)

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