| CUSTOMER CASE NO. | 263 of 2015 |
| DATE OF JUDGEMENT | 11 May 2016 |
| COURT | National Consumer Disputes Redressal |
| PLAINTIFF | Aditya Laroia |
| DEFENDANT | Parsvanath Developers ltd. |
| BENCH | J V.K. Jain, J Anup K Thakur |
INTRODUCTION-
The Case ‘Aditya Laroia v. Parsvnath Developers Limited, Through Its Managing Director, 2016 SCC Online’ is majorly a compensation suit filed by the complainant for the breach of contract by the opposite party.
A flat was booked by the complainant in the residential project of the opposite party by paying a sum of Rs. 10 lakhs and it was agreed that the possession of the flat will be delivered within next 36 months from the date of initiation of construction of the particular block where the flat is to be built. But Parsvanath Developers Ltd. were not able to fulfil the conditions of agreement and didn’t deliver the possession way past the deadline.
This case carries quite importance as there are many more instances seen like this. Against the opposite party only many cases were registered and not only this but it sets a precedent for others too because in this progressive such negligence or irresponsibility can not be entertained. Inflation and market prices tend to change every day and this case was of years’ delay. This judgement surely influences the upcoming similar proceedings and provides for certain legal principles.
FACTS OF THE CASE-
- A flat was booked by the plaintiff in the residential project “Parsvanath Privilege” to be developed in Greater Noida.
- A Flat Buyer Agreement was signed between the parties on 17.07.2007.
- The booking of the flat was confirmed on 01.05.2006 on the payment of 10 lakh rupees.
- There were certain terms and conditions one of them being the delivery of possession within 36 months when the construction of that particular block would be started after getting all the approvals, sanctions and environment clearances etc. from the respective authorities.
- When the plaintiff visited the construction site, not only the construction wasn’t near completion also there were no workers around the place.
- Being aggrieved, the complainant demanded refund of his payment and also compound interest at the rate of 24% per annum and some other defined compensation.
- The petitioner demanded refund of Rs. 42,37,575.28/- plus Rs. 80,74,423/- as interest and pendent lite also future interest @24%per annum until whole amount is recovered. Compensation of Rs. 5,50,000/- (@5rs per sq. ft.) and Rs. 10,00,000/- for mental agony and litigation expenses and buyer is now not interested in getting the possession of flat because of the delay.
ISSUES RAISED-
- Whether Parsvanath Developers Ltd. breached the conditions of the agreement
- Whether Aditya Laroia was entitled get compensation and principal amount (alomg with interest) refunded
CONTENTIONS OF THE COMPLAINANT-
- The foremost point put forward by the petitioner is that when the opposite party was not able to deliver possession within 36 months or after any reasonable stipulated time and even now construction is far from completion, they should get compensated for the same.
- As per the clause of agreement, the seller would be taking interest at the rate of 24% per annum in case of any default on account of the buyer; similarly, the buyer should also be entitled for the same rate of interest when the seller was unable to comply with the conditions of the agreement and shouldn’t be allowed for any unfair advantage over the former.
- Another contention is that if the seller wouldn’t have agreed to the Flat Buyer Agreement, the buyer would have searched for some alternative option instead of paying them because they were in need of a residential flat. Because it is quite obvious that in the span of 7-8 years in a place like Greater Noida the market prices have increased and it is somehow impossible now to get accommodation at the same rates.
- They contend that not only they have lost their interest or amount but also an opportunity to own a flat in that place within time. If there was any delay because of default from the side of some other buyers, it is the duty of the opposite party to arrange it from some other source, it is not the burden on the plaintiff.
- They referred to a case i.e. Subhash Chander Mahajan vs Parsvanath Developers Ltd. The commission asked the defendants to pay interest @18% along with compensation and litigation expenses as they failed to complete construction and to comply with the due time limit.
- They refused to take the possession in the present scenario even if the opposite party offers the same as they had already changed schedule in 2010 then in 2012 which shows no sincerity on their part and can’t be trusted again.
Because of this unreasonable delay, complainants were unable to get shelter for themselves even after including the interest to be paid.
CONTENTIONS OF THE OPPOSITE PARTY-
- Defendant claimed that the delay which occurred in the construction was because of recession in the Real Estate business, downfall in number of bookings and also because of default of payment by some of the allotees.
- They contended that the petitioner is demanding refund with exorbitant interest rates which is not realistic.
- As per the Flat Buyer Agreement, specifically Clause 10(c), the buyer in only entitled to get refund of the principal amount and as per Clause 10(a), Rs. 53.82/- per square meter or @5rs per sq. ft. in case of delay in construction subject to conditions stipulated.
- They referred to a case i.e. Ghaziabad Development Authority vs Balbir Singh in which the Hon’ble SC stated that the Commission can’t direct for uniform @18% p.a. compensation in every case without getting into facts and the Court also gave certain guidelines to be followed regarding the same.
- Another point they mentioned that was the basic value of the project was less than 1 crore, so this platform doesn’t have jurisdiction to entertain the same.
- They submitted that they will be able to deliver possession of the flat by December 2016.
JUDGEMENT-
After taking every fact into account and after considering each contention of both the parties, the complaint made by the buyer is disposed of with following instructions to the defendant that they have to refund all the amount they have taken till date with compensation in form of 18% simple interest per annum starting from the date of each payment till whole amount isn’t paid along with the interest.
This has to be completed within 3 months from the date of the judgement and in case of non-compliance the complainant is free to approach for executing it as per the law.
ANALYSIS-
- Flat Buyer Agreement– This was the agreement between buyer and seller from which the duty of the company to complete the construction within stipulated time was established and which gave the complainant the right to demand refund and compensation in case of non-compliance.
- Compensation– the main bone of contention was about how much interest is to be paid to the complainant as they were demanding hefty sums along with other charges which set the liability towards the opposite party.
- No transfer of possession– as the Parsvanath Developers were unable to deliver the possession within the reasonable time, and also after changing schedules 2 times earlier, they were unable to deliver the same due to which the buyer lost the faith and trust from the former and denied to take possession in future and only demanded compensation.
- High rates– in present scenario where the world is developing at a rapid pace, any market is not expected to stay stable and same for 7-8 years, and this is real estate and that too in Greater Noida, that’s why the interest rates were quite expected to be high as this was about losing great chance of having accommodation.
CONCLUSION-
In short, it can be said that this case establishes a crucial legal precedent in the field of real estate business agreements. It clarifies the rights and duties of both the parties and establishes the surety that if there would be default by one party the other will get definite compensation.
When the complainant rejected the company’s offer to get the possession of the flat, a bench presided by J. V.K. Jain asked the builder to pay around 42 lakh rupees along with the interest because as per the bench the refusal by the complainant is justified in the given circumstances.
So, in brief this is the guarantee which assures and maintains the trust of people with business contracts otherwise it might become difficult for them to enter into any of them. And it also keeps private business persons away from exploiting those who are under their influence due to less power.
REFERENCES-
- https://indiankanoon.org/
- m.economictimes.com
This Article is written by Devanshi Goyal, student of Faculty of law, JNVU, Jodhpur; Intern at Legal Vidhiya.
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