R V PRASANNAKUMAAR & ORS. versus MANTRI CASTLES PVT. LTD & ANR. on 11 February 2019

1. The National Consumer Disputes Redressal Commission(“NCDRC”) by its impugned order dated 8 June 2018 disposed of theconsumer complaint filed in a representative capacity under Section12(1)(c) of the Consumer Protection Act, 1986. The NCDRC has cometo the conclusion that though under the terms of the flat purchaseagreement, possession was liable to be handed over to the buyers on 31January 2014, there was a breach on the part of the developer incomplying with its contractual obligations. The NCDRC has noticed thatthe occupation certificate was received only on 10 February 2016 and itwas thereafter that from May 2016, certain letters offering possessionwere issued by the developer. Based on this, the NCDRC awardedcompensation upto 31 July 2016 in the form of interest at the rate of 6per cent per annum.

2. There is a finding in the impugned order that though the flatpurchase agreement contained a stipulation for the payment ofcompensation at the rate of INR 3 per sq. ft. per month for delayed A

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Ahanding over of possession, the amount as stipulated is too meager tofulfil the requirement of just compensation to the purchasers.Accordingly, the following directions have been issued in the impugnedorder; “i) The OPs are directed to handover the possession to theBcomplainants (if not already handed over) within a period of 60days from the date of this order and the complainants are alsodirected to complete all the formalities for taking the possession.

ii) The complainants are entitled to get compensation for delayedpossession from 01.02.2014 till 31.07.2016 as per the agreementCi.e. @ Rs. 3/- per sq. ft. per month. Over and above this amount,the opposite parties shall be liable to pay interest @ 6% p.a. from01.02.2014 till 31.07.2016 on complainants deposited amounts withthe CPs before the due date of possession i.e. 31.01.2014.

iii) OPs are directed to complete the common facilities andDamenities as per the agreement within a period of six monthsfrom the date of this order, failing which the OPs shall paycompensation @ Rs. 1,000/- per month to each of the complainantsunder the present complaint.

iv) The OPs are also directed to pay Rs. 2,000/- (Rupees twoEthousand only) to each of the complainants towards cost of litigationin the present case.

v) All these amounts except compensation for common facilitiesand amenities shall be adjusted against the amount due on thecomplainants, if any, at the time of handing over of the possessionand if no amount is due on the complainants, then the amountFshall be paid by the OPs to the complainants on the date ofpossession.”

3. Two sets of appeals have been filed against the order of theNCDRC. Civil Appeal No. 1232 of 2019 has been instituted by the flatpurchasers while Civil Appeal Nos. 1443-1444 of 2019 is filed by theGdeveloper.

4. The flat purchasers are aggrieved by the order of the NCDRCsince it grants interest only upto 31 July 2016 and not thereafter.

5. Mr. Bishwajit Bhattacharya, learned senior counsel appearingHon behalf of the flat buyers has submitted that the NCDRC was in error R V PRASANNAKUMAAR & ORS. v. MANTRI CASTLES PVT.LTD & ANR. [DR. DHANANJAYA Y. CHANDRACHUD, J.]

in assuming that all flat buyers had been given letters of offer forpossession prior to 31 July 2016 which it has been submitted, is factuallyincorrect.

6. Learned senior counsel submitted that as a matter of fact,possession has not been offered to all the purchasers even as on dateand hence there was no justification on the part of the NCDRC to fastenthe liability to pay interest only upto 31 July 2016 and not thereafter.

7. On the other hand, Mr. P.S. Narasimha, learned senior counselappearing on behalf of the developer has submitted that in view of theconditions contained in the flat purchase agreement allowingcompensation at the rate of Rs. 3 per sq. ft. per month, the award ofinterest of 6 per cent per annum was not justified.

8. We will at the outset deal with the submission of the developerthat the NCDRC was not justified in awarding interest at the rate of 6per cent per annum and that the terms of the flat purchase agreementsmust prevail.

9. We are in agreement with the view of the NCDRC that therate which has been stipulated by the developer, of compensation at therate of 3 per sq. ft. per month does not provide just or reasonablerecompense to a flat buyer who has invested money and has not beenhanded over possession as on the stipulated date of 31 January 2014.To take a simple illustration, a flat buyer with an agreement of a flatadmeasuring a 1000 sq. ft. would receive, under the agreement, notmore than Rs 3000 per month. This in a city such as Bangalore does notprovide just or adequate compensation. The jurisdiction of the NCDRCto award just compensation under the provisions of the ConsumerProtection Act, 1986 cannot in the circumstances be constrained by theterms of the agreement. The agreement in its view is one sided and doesnot provide sufficient recompense to the flat purchasers.

10. The outer date for handing over possession was 31 January2014. The admitted facts indicate that the occupation certificate wasreceived on 10 February 2016. Consequently, there was a delay of atleast two years since possession could not have been handed over priorto obtaining the occupation certificate.

11. In the circumstances, the award of interest at the rate of 6 percent is reasonable and justified. The NCDRC however, came to the A

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Aconclusion that interest should be awarded only for the period from 1February 2014 to 31 July 2016.

12. We find merit in the submission of the flat buyers that theliability to pay interest has been inappropriately confined only upto 31July 2016. We find from the record that the developer, in the affidavit byBway of evidence of its representative before the NCDRC, admitted thatas many as 43 complainants, who had asked for possession were notgiven possession for the simple reason that they had moved the NCDRCin a consumer complaint. The relevant part of the affidavit is extractedbelow:- C“I state that rest of the 43 complaints who have asked forpossession have not been given possession for the reason that ason 29.06.2016, the Opposite parties had received notice of thisHon’ble Commission in respect of filing of the present case. Inthe present dispute, the complainants have sought prayer at paraA to G under different heads. While they sought the relief ofDhanding over possession of their respective flats in para A, atparas B, C, D, E and F, they have also sought certain reliefs ofcompensation by making certain allegations of deficiency inservice, compensation for delay in possession etc., against theopposite parties. Therefore, during the pendency of presentEdispute, the complainants were not given possession in view ofthe reliefs sought in paras B to F and the statement of allegationsmade in the present complaint.”

13. The fact that the flat purchasers had moved the NCDRC in arepresentative capacity for the redressal of their grievances is in ourFview, no justification to deny them possession. The fact that the flatpurchasers had moved the NCDRC would not disentitle them to receivepossession in accordance with the terms of the agreement.

14. When the appeal filed by the developer came up before thisCourt on 1 February 2019, the following order was passed; G“Delay condoned.

Mr. P.S. Narasimha, learned senior counsel, has stated before theCourt that 55 flat purchasers are involved in the building project inquestion. Learned senior counsel states on instructions thatpossession has been handed over to sixteen flat buyers andHpossession to nine flat buyers will be offered and handed over R V PRASANNAKUMAAR & ORS. v. MANTRI CASTLES PVT.LTD & ANR. [DR. DHANANJAYA Y. CHANDRACHUD, J.]

within a period of one week from today. These 25 persons, it hasbeen submitted, have paid the entirety of their dues under the flatpurchase agreement.

In respect of remaining 30 flat buyers, Mr. Narasimha states thatthere are outstanding payments.

Learned senior counsel appearing on behalf of the respondentsdisputes this position. Learned senior counsel for the respondentshas submitted that 95 per cent of the payment has been madewhile the balance 5 per cent is payable at the time of possession.

In view of this controversy, we direct the petitioners to place onrecord an affidavit indicating the amounts which have beenreceived from the remaining 30 flat buyers and the amount whichis due and payable in terms of the agreements with them.

List on 11 February 2019.

In the meantime, no coercive steps shall be taken against thepetitioners in pursuance of the impugned order of the NCDRC.”

15. From the above order it emerges that even according to thedeveloper, out of 55 flat purchasers, possession had been handed over to16 and it was stated that possession to 9 more buyers would be offeredwithin a period of one week.

16. Mr. P.S. Narasimha, learned senior counsel has stated that inaddition to the above 9 flat buyers, the developer will be handing overpossession to 2 more flat buyers immediately. This indicates that asamongst the 55 purchasers, 25 persons have been now offeredpossession and an additional 2 would be offered possession shortlyhereafter.

17. In view of the above position, the NCDRC was not justified inproceeding on the basis that the liability to pay interest would cease tooperate as on 31 July 2016. Since possession has not been handed over,the developer cannot avoid the liability to pay interest at the rate awardedby the NCDRC until the date when possession is actually handed over.

18. Hence, while allowing the appeal, we issue the followingdirections:

(i) The liability of the developer to pay interest at the rate of 6per cent per annum shall continue to operate until the date on A

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828SUPREME COURT REPORTS

Awhich each of the respective flat purchasers is offeredpossession;

(ii) The order passed by the NCDRC confining the award ofinterest for the period from 1 February 2014 to 31 July 2016is modified in terms of the directions issued in clause (i) above; B

(iii) The NCDRC in execution of the impugned order as modifiedby the present order, shall verify with reference to each flatpurchaser the date on which an offer of possession has beenmade. The liability to pay interest at the rate of 6 per cent perannum shall cease on the date when an offer of possessionChas been made to each of the flat purchasers.

19. Accordingly, the appeal filed by the flat purchasers (Civil AppealNo. 1232 of 2019) is allowed and the appeals filed by the developer(Civil Appeal Nos. 1443-1444 of 2019) are dismissed.

20. Pending application(s), if any, shall stand disposed of.

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Nidhi Jain

Appeals disposed of.

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