Brief facts of the case

The original allottee booked an Apartment for the total consideration of Rs.87,16,800/- OP scheme. By letter of allocation dated 16.08.2012. Apartment No.1102 was assigned on 11 floor in Tower 11 and later on 24.08.2015 the same was endorsed in favor of the plaintiff. The agreement of the flat buyer was signed between the parties on 13.06.2013 given to the original buyer and subsequently endorsed on 24.08.2015 in favor of the claimant. Opposite parties have failed to produce the possession within 42 months with a grace period of 6 months i.e. by 16.02.2016. To date, the plaintiff has paid Rs.75,96,776/- on 05.04.2016 to opposing parties where last instalment was paid. The primary prayers made in the complaint are as follows: –[1]

  1. To direct OP to refund Rs.75,96,776 amount paid to OP with 18% p.a. penal interest.
  2. To direct OP to pay compensation of Rs.5,00,000 & Rs.1,00,000 towards litigation costs.

Issue

  1. Whether OP is liable to pay refund of Rs. 75,96,776 with 18% penal interest or not?
  2. Whether OP is liable to pay compensation of Rs 5,00,000 and Rs, 1,00,000 towards litigation cost or not?

Sections invoked

  1. Section 54 of INDIAN CONTRACT ACT, 1872: – “Effect of default as to that promise which should be performed, in contract consisting of reciprocal promises.—When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract. —When a contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the other has been performed, and the promisor of the promise last mentioned fails to perform it, such promisor cannot claim the performance of the reciprocal promise, and must make compensation to the other party to the contract for any loss which such other party may sustain by the non-performance of the contract.””[2]
  2. SECTION 55 OF INDIAN CONTRACT ACT, 1872: – “Effect of failure to perform at a fixed time, in contract in which time is essential.—When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. —When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.” Effect of such failure when time is not essential.—If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. —If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure.” Effect of acceptance of performance at time other than that agreed upon.—If, in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.1 —If, in case of a contract voidable on account of the promisor’s failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance he gives notice to the promisor of his intention to do so.

Analysis of the case

No breach of agreement by complainants: – Entitled to relief under Sections 54 and 55 of the Indian Contract Act, 1872

Argument with regard to Articles 54 and 55 of the Indian Contract Act , 1872, OPs relied on the Commission’s judgment in DLF Southern Town (P) Ltd. v. Dipu C. Seminal, in which the claimant had deposited only the booking sum and no installments were charged, while in the present case instalment was charged up to a reasonable limit and the payment was stopped without any progress in construction.

Force Majeure: –

OPs cannot take defence of force majeure because there was no construction ban and OPs would have put their money and management expertise to carry water from outside to complete the construction in time.

Joint project: –

Three C Shelters (P ) Ltd. pleaded for force majeure delay conditions and Orris Infrastructure (P) Ltd., on the other hand, pleaded that Three C Shelters was responsible for the delay in construction. Each had signed the “Apartment buyer agreement” and so the Commission claimed that both were responsible for the delay.

Apartment buyer agreement: –

Bench noticed that the OP’s obviously failed to complete the project and to give the possession to the homebuyers in time under the Apartment Buyer Agreement.

Therefore, allottee are entitled to seek compensation due to the unreasonable period that lasted 1 year, the possession was to be issued in 2016.

No forfeiture of earnest money: –

So far as the issue of earnest money forfeiture is concerned, it is seen that the plaintiffs are demanding refund as the project has been delayed excessively. While the RERA, Haryana took a meeting to accelerate the project and Three C Shelters (P) Ltd. decided to complete the project in stages.

Held

The Commission noted that the OPs did not pay the government to EDC and IDC and it seems that the OPs were not serious about completing the project in due time. And there can be no question of serious money forfeiture in these circumstances.

Supreme Court in Haryana Urban Development Authority v. Diwan Singh, (2010) 14 SCC 770, observed that subsequent purchasers are entitled to obtain interest only after the date of approval in their favour.

In view of the above, the Commission ordered Three C Shelters to refund the balance at interest of 9 per cent per year.

In one of the cases, after receiving an occupancy certificate, Orris Infrastructure (P) Ltd. is directed to complete the construction work and move the possession before 30-09-2020, paying interest of 6 percent p.a. On the amount of money deposited.

If the possession is not delivered till 30-09-2020, the complainant shall be at liberty to take refund of the total deposited amount Rs 77,58,581/- along with interest @ 9% p.a. from the date of respective deposits till actual payment.[3]

The opposite party Orris Infrastructure Pvt. Ltd. shall refund the amount of Rs.75,96,776/- in CC 3814/2017, Rs.85,72,435/- along with interest @9% p.a. from the date of respective deposits till actual payment subject to the restriction that no interest shall be payable for the period before 24.08.2015 in CC 3814/2017. The order be complied with within a period of 45 days from the date of receipt of this order. The opposite party Orris Infrastructure Pvt. Ltd. shall also pay Rs. 10,000/- in each complaint case to the complainant(s) as cost of litigation.

References of the government websites

  1. The judgement can be found here: – https://lawsisto.com/uploads/documents/1595787480judgement2020-07-20.pdf
  2. https://www.scconline.com/blog/post/2020/07/27/ncdrc-possession-of-apartments-due-in-2016-not-handed-over-till-date-developers-directed-to-refund-amount-at-an-interest-of-9-per-annum/
  3. https://indiankanoon.org/doc/1648530/

 

This Article is Written by Ayush Garg, 3rd Year Student of Gujarat National Law University

[1]https://lawsisto.com/uploads/documents/1595787480judgement2020-07-20.pdf

[2]https://indiankanoon.org/doc/1648530/

[3]https://lawsisto.com/uploads/documents/1595787480judgement2020-07-20.pdf