# IREO GRACE REALTECH PVT. LTD v. ABHISHEK KHANNA & OTHERS

- **Citation:** [2021] 2 S.C.R. 1
- **Court:** Supreme Court of India
- **Decided:** 2021-01-11
- **Case number:** Civil Appeal No. 5785 of 2019
- **Bench:** Dr. Dhananjaya Y Chandrachud, Indu Malhotra, Indira Banerjee
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ireo-grace-realtech-pvt-ltd-v-abhishek-khanna-others-34828
- **Pages:** 58

## Headnote

Consumer Protection - Apartment Buyer's Agreement - Unfair
trade practice - Oppressive and one sided contractual terms - Held:
The Developer cannot compel the apartment buyers to be bound by
the one-sided contractual terms contained in the Apartment Buyer's
Agreement - Incorporation of one-sided and unreasonable clauses
in the Apartment Buyer's Agreement constitutes an unfair trade
practice u/s.2(1)(r) of CP Act, 1986 - Even under the CP Act of
1986, the powers of the consumer fora were in no manner
constrained to declare a contractual term as unfair or one-sided as
an incident of the power to discontinue unfair or restrictive trade
practices - An "unfair contract" has been defined under the
Consumer Protection Act, 2019, and powers have been conferred
on the State Consumer Fora and the National Commission to declare
contractual terms which are unfair, as null and void - This is a
statutory recognition of a power which was implicit under the
Consumer Protection Act, 1986.
Consumer Protection - Applicability of provisions of
Consumer Protection Act as an additional remedy, despite existence
of remedies under special statutes - Whether primacy to be given to
RERA Act over the Consumer Protection Act - Held: Remedies under
the Consumer Protection Act are in addition to remedies available
under special statutes - Absence of a bar u/s.79 of RERA Act to
initiation of proceedings before a fora which is not a civil court,
read with s.88 of the RERA Act makes the position clear - s.18 of
the RERA Act specifies that remedies are "without prejudice to any
other remedy available" - Real Estate (Regulation & Development)
Act, 2016 (RERA Act)
Consumer Protection - Apartment Buyer's Agreement -
Determination of the date for handing over Possession - Discussed,
with reference to the facts and circumstances of the case.
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[2021] 2 S.C.R.
Consumer Protection - Apartment Buyer's Agreement -
Entitlement of the Apartment Buyers to refund of the amount deposited
with Delay Compensation - Discussed, with reference to the facts
and circumstances of the case.
Disposing of the appeals, the Court
HELD: 1.1 The first issue which has been raised by the
Appellant-Developer as also the Apartment Buyers, is the
relevant date from which the 42 months' period is to be calculated
for handing over possession. Clause 13.3 of the Agreement states
that the Developer proposed to offer possession of the apartment
to the allottee within a period of 42 months from the date of
approval of the Building Plans and/or fulfilment of the preconditions imposed thereunder, referred to as the "Commitment
Period". The Company would be entitled to a further "Grace
Period" of 180 days' after the expiry of the Commitment Period
for unforeseen delays beyond the reasonable control of the
Company. This would work out to 42+6 months i.e. 48 months.
[Para 18][29-C-E]
1.2 The point of controversy is whether the 42 months'
period is to be calculated from the date when the Fire NOC was
granted by the concerned authority, as contended by the
Developer; or, the date on which the Building Plans were
approved, as contended by the Apartment Buyers. Section 15
of the Haryana Fire Safety Act, 2009 makes it mandatory for a
Builder/Developer to obtain the approval of the Fire Fighting
Scheme conforming to the National Building Code of India, and
obtain a No Objection Certificate before the commencement of
construction. Clause 13.3 of the Apartment Buyer's Agreement
provides that the 42 months' period has to be calculated from
the date of approval of the Building Plans and/or fulfilment of the
pre-conditions imposed thereunder. The Building Plans
sanctioned by the Directorate of Town and Country Planning,
Haryana contained the Terms & Conditions of Approval, which
included a provision for Fire Safety contained in Clause (3). The
Developer was directed to submit Fire Safety Plans indicating
the complete Fire Protection Arrangements, and means of escape/
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 [2021] 2 S.C.R. 1
1
IREO GRACE REALTECH PVT. LTD.
v.
ABHISHEK KHANNA & OTHERS
(Civil Appeal No. 5785 of 2019)
JANUARY 11, 2021
[DR. DHANANJAYA Y CHANDRACHUD,
INDU MALHOTRA AND INDIRA BANERJEE, JJ.]
Consumer Protection - Apartment Buyer's Agreement - Unfair
trade practice - Oppressive and one sided contractual terms - Held:
The Developer cannot compel the apartment buyers to be bound by
the one-sided contractual terms contained in the Apartment Buyer's
Agreement - Incorporation of one-sided and unreasonable clauses
in the Apartment Buyer's Agreement constitutes an unfair trade
practice u/s.2(1)(r) of CP Act, 1986 - Even under the CP Act of
1986, the powers of the consumer fora were in no manner
constrained to declare a contractual term as unfair or one-sided as
an incident of the power to discontinue unfair or restrictive trade
practices - An "unfair contract" has been defined under the
Consumer Protection Act, 2019, and powers have been conferred
on the State Consumer Fora and the National Commission to declare
contractual terms which are unfair, as null and void - This is a
statutory recognition of a power which was implicit under the
Consumer Protection Act, 1986.
Consumer Protection - Applicability of provisions of
Consumer Protection Act as an additional remedy, despite existence
of remedies under special statutes - Whether primacy to be given to
RERA Act over the Consumer Protection Act - Held: Remedies under
the Consumer Protection Act are in addition to remedies available
under special statutes - Absence of a bar u/s.79 of RERA Act to
initiation of proceedings before a fora which is not a civil court,
read with s.88 of the RERA Act makes the position clear - s.18 of
the RERA Act specifies that remedies are "without prejudice to any
other remedy available" - Real Estate (Regulation & Development)
Act, 2016 (RERA Act)
Consumer Protection - Apartment Buyer's Agreement -
Determination of the date for handing over Possession - Discussed,
with reference to the facts and circumstances of the case.
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Consumer Protection - Apartment Buyer's Agreement -
Entitlement of the Apartment Buyers to refund of the amount deposited
with Delay Compensation - Discussed, with reference to the facts
and circumstances of the case.
Disposing of the appeals, the Court
HELD: 1.1 The first issue which has been raised by the
Appellant-Developer as also the Apartment Buyers, is the
relevant date from which the 42 months' period is to be calculated
for handing over possession. Clause 13.3 of the Agreement states
that the Developer proposed to offer possession of the apartment
to the allottee within a period of 42 months from the date of
approval of the Building Plans and/or fulfilment of the preconditions imposed thereunder, referred to as the "Commitment
Period". The Company would be entitled to a further "Grace
Period" of 180 days' after the expiry of the Commitment Period
for unforeseen delays beyond the reasonable control of the
Company. This would work out to 42+6 months i.e. 48 months.
[Para 18][29-C-E]
1.2 The point of controversy is whether the 42 months'
period is to be calculated from the date when the Fire NOC was
granted by the concerned authority, as contended by the
Developer; or, the date on which the Building Plans were
approved, as contended by the Apartment Buyers. Section 15
of the Haryana Fire Safety Act, 2009 makes it mandatory for a
Builder/Developer to obtain the approval of the Fire Fighting
Scheme conforming to the National Building Code of India, and
obtain a No Objection Certificate before the commencement of
construction. Clause 13.3 of the Apartment Buyer's Agreement
provides that the 42 months' period has to be calculated from
the date of approval of the Building Plans and/or fulfilment of the
pre-conditions imposed thereunder. The Building Plans
sanctioned by the Directorate of Town and Country Planning,
Haryana contained the Terms & Conditions of Approval, which
included a provision for Fire Safety contained in Clause (3). The
Developer was directed to submit Fire Safety Plans indicating
the complete Fire Protection Arrangements, and means of escape/
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IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA
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access for the proposed building with suitable legend and standard
signs. On receipt of the Fire Plans, the Commissioner, Municipal
Corporation, Gurgaon, after satisfying himself with the entire fire
protection measures as in conformity with the National Building
Code, 2005 and the Fire Safety Bye-Laws, would issue an NOC
for Fire Safety. This NOC/Clearance was required to be submitted
before the Municipal Corporation, within a period of 90 days'from
the issuance of the sanctioned Building Plans. Clause 17(iv) of
the sanctioned Plan stipulated that the Developer shall obtain an
NOC from the Ministry of Environment & Forests, before starting
the construction/execution of development works at site. The
Environmental Clearance granted by the Ministry of Environment
& Forest Government of Haryana on 12.12.2013 required the
Developer to submit a copy of the Fire Safety Plan approved by
the Fire Department, before commencing construction of the
project. General Condition (vi) under Part B of the Environmental
Clearance stipulated that the Developer shall obtain all other
statutory clearances, including the approval from the Fire
Department, prior to construction of the project. Thus, it was a
mandatory requirement under the Haryana Fire Safety Act, 2009
to obtain the Fire NOC before commencement of construction
activity. This requirement is stipulated in the sanctioned Building
Plans, as also in the Environment Clearance. The 42 months'
period in Clause 13.3 of the Agreement for handing over
possession of the apartments would be required to be computed
from the date on which Fire NOC was issued, and not from the
date of the Building Plans being sanctioned. In the present case,
the Developer obtained approval of the Building Plans from the
Directorate, Town and Country Planning, Haryana, on 23.07.2013.
The Developer applied for issuance of Fire NOC for the Fire
Fighting Scheme of the Group Housing Colony within the 90 days
period before the Director, Fire Service, Panchkula. [Paras 18.118.10][29-E-G; 30-G-H; 31-A-H; 32-A-H]
1.3 The Commissioner vide letter dated 30.12.2013 raised
16 objections with respect to the proposed Fire Fighting Plan.
The Developer vide letter dated 22.01.2014 responded to the
objections, submitting that the objections had been cured, and
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requested that the approval of the Fire Fighting Scheme be
granted on a priority basis. The Fire Department informed the
Developer vide letter dated 28.03.2014 that the deficiencies in
the application for Fire NOC had not been cured. The Developer
was granted a further period of 15 days' to cure the defects, failing
which, its application would be deemed to be rejected. The
Developer submitted revised drawings as per the NBC Fire
Scheme alongwith its letter dated 18.08.2014. This letter was
received in the office of the Municipal Corporation on 13.10.2014,
as per endorsement on the said letter. [Para 18.10][33-A-D]
1.4 On 27.11.2014, the Director, Haryana Fire Service
granted approval to the Fire Fighting Scheme subject to the
conditions mentioned therein. The computation of the period for
handing over possession would be computed from this date. The
Commitment Period of 42 months plus the Grace Period of 6
months from 27.11.2014, would be 27.11.2018, as being the
relevant date for offer of possession. The aforesaid chronology
for obtaining Fire NOC would indicate a delay of approximately 7
months in obtaining the Fire NOC by the Developer. [Para
18.11][33-D-F]
2.1 Under the construction-linked plan, Clause 6 provided
that the apartment buyers would be required to deposit 20% of
the sale consideration within 45 days of booking of the apartment.
Clause 7.4 of the Agreement provides that if there is a delay in
payment of an instalment, the apartment buyer would be required
to pay Interest on every delayed payment of such instalment @
20% S.I. p.a. Clause 13.2 of the Agreement provides that if the
allottee fails, ignores or neglects to take possession of the said
Apartment in accordance with the Notice of Possession, the
allottee shall be liable to pay "Holding Charges" on the super
area @ Rs.7.5 per sq. ft. per month. In contrast, Clause 13.3 of
the Agreement provides that if the Company fails to offer
possession by the end of the Grace Period i.e. 42+6 months, it
would be liable to pay Delay Compensation@ Rs.7.5 per sq. ft. of
the super area for every month of delay. [Para 19.1][33-G-H;
34-B-D]
2.2 Delay compensation at Rs. 7.5 per sq. ft. works out to
approximately 0.9% to 1 % Interest per annum.The price per
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sq. ft of an apartment under the Apartment Buyer's Agreement
was Rs. 10,350/- per sq. ft. Clause 13.5 provides that the allottee
may opt for termination, only after 42 months from the date of
issuance of Fire NOC + 6 months' Grace Period, plus a further
period of 12 months. The Delay Compensation would be payable
to the allottee only if the termination was "validly opted". The
compensation was limited to a fixed period of 12 months only,
and that no other claim whatsoever, whether monetary or
otherwise, was payable by the Developer. Clause 13.8 of the
Agreement provides that the allottee shall be deemed to have
waived all its claims in respect of the area, specifications, quality,
construction, any other provision in the apartment against the
Developer upon taking possession of the apartment. Clause 21
provides for termination of the Agreement and forfeiture of
earnest money by the Developer, if the allottee neglects or fails
to make timely payments as stipulated in the Agreement, or fails
to exercise the options offered by the Developer. [Para 19.1]
[34-D-H; 35-A-B]
2.3 Clause 21.3 provides that upon such termination, the
Appellant Company shall be under no obligation, except to refund
the amounts already paid by the allottee, without any interest,
and after forfeiting and deducting the earnest money, interest on
delayed payments, brokerage / commission / charges, service
tax and other amounts due and payable to it. The principal amount
after the aforesaid deductions are made, would be refunded at an
uncertain future date i.e. after the Developer had sold the
apartment allotted to the complainant. In contrast, the allottee is
given a very limited right to cancel the Agreement solely in the
event of the clear and unambiguous failure of the warranties of
the Company, which leads to frustration of the Agreement on
that account. In such case, the allottee will be entitled to a refund
of the instalments actually paid, along with interest @ 8% p.a.
within a period of 90 days from the date of determination to this
effect. No other claim, whatsoever, monetary or otherwise shall
lie against the Company. [Para 19.1][35-B-E]
2.4 The aforesaid clauses reflect the wholly one-sided terms
of the Apartment Buyer's Agreement, which are entirely loaded
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in favour of the Developer, and against the allottee at every step.
The terms of the Apartment Buyer's Agreement are oppressive
and wholly one-sided, and would constitute an unfair trade practice
under the Consumer Protection Act, 1986. Section 2(1)(g) of the
Act defines the expression "deficiency" to include any fault,
shortcoming or inadequacy in the quality, nature and manner of
performance which is required to be maintained under law, or in
pursuance of a contract, or in relation to a 'service'. The term
"service" has been defined by S. 2(1)(o) to include a service of
any description which is made available to potential users. S.
2(1)(o) was amended by Act 50 of 1993 w.e.f. from 18.06.1993 to
include "housing construction" within the purview of "service".
[Paras 19.2, 19.3][35-E-H; 36-A-D]
Lucknow Development Authority v. M.K. Gupta (1994)
1 SCC 243 : [1993] 3 Suppl. SCR 615; Pioneer Urban
Land and Infrastructure Ltd v. Govindan Raghavan
(2019) 5 SCC 725 : [2019] 5 SCR 1169; Wg. Cdr. Arifur
Rahman Khan & Others v. DLF Southern Homes Pvt.
Ltd., 2020 SCC Online SC 667 - relied on
2.5 Section 14 of the 1986 Act empowers the Consumer
Fora to redress the deficiency of service by issuing directions to
the Builder, and compensate the consumer for the loss or injury
caused by the opposite party, or discontinue the unfair or
restrictive trade practices. The incorporation of such one-sided
and unreasonable clauses in the Apartment Buyer's Agreement
constitutes an unfair trade practice under Section 2(1)(r) of the
Consumer Protection Act. Even under the 1986 Act, the powers
of the consumer fora were in no manner constrained to declare a
contractual term as unfair or one-sided as an incident of the power
to discontinue unfair or restrictive trade practices. An "unfair
contract" has been defined under the 2019 Act, and powers have
been conferred on the State Consumer Fora and the National
Commission to declare contractual terms which are unfair, as null
and void. This is a statutory recognition of a power which was
implicit under the 1986 Act. The Developer cannot compel the
apartment buyers to be bound by the one-sided contractual terms
contained in the Apartment Buyer's Agreement. [Paras 19.6,
19.7][40-B-F]
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3.1 The Consumer Protection Act, 1986 was enacted to
protect the interests of consumers, and provide a remedy for
better protection of the interests of consumers, including the
right to seek redressal against unfair trade practices or
unscrupulous exploitation. Section 3 of the Consumer Act
provides that the remedies under the Act are in addition to, and
not in derogation of any other law applicable. [Paras 20.1, 20.2]
[40-F-G; 41-G-H]
Secretary, Thirumurugan Cooperative Agricultural
Credit Society v. M. Lalitha (dead) through LRs and
others (2004) 1 SCC 305 : [2003] 6 Suppl. SCR 659
- referred to
National Seeds Corporation
Limited v. M.
Madhusudhan Reddy (2012) 2 SCC 506 : [2012]
2 SCR 1065; Virender Jain v. Alaknanda Cooperative
Group Housing Society Limited and others (2013) 9 SCC
383 : [2013] 2 SCR 1058; Emaar MGF Land Ltd. v.
Aftab Singh, (2019) 12 SCC 751 : [2018] 14 SCR 791
- relied on.
3.2 Section 18 of the RERA Act, 2016 provides the remedy
of refund with interest and compensation to allottees, when a
Developer fails to complete the construction or give possession
as per the Agreement of Sale. The remedies under Section 18
are "without prejudice to any other remedy available". Section 71
of the RERA Act empowers the RERA Authority to determine
compensation payable under Sections 12, 14, 18 and 19 of the
Act. The proviso to Section 71 provides that a consumer has the
right to withdraw its complaint before the consumer fora in respect
of matters covered under Sections 12, 14, 18 and 19 of the Act,
and file the same before the RERA. [Paras 20.5, 20.6][45-E-G]
3.2 Section 79 of the RERA Act bars the jurisdiction only
of civil courts in respect of matters which an authority constituted
under the RERA Act is empowered to adjudicate on. Section 88
of the RERA Actis akin to Section 3 of the Consumer Protection
Act, and provides that the provisions of the RERA Act shall apply
in addition to and not in derogation of other applicable laws. [Paras
20.7, 20.8][46-D-F]
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3.3 An allottee may elect or opt for one out of the remedies
provided by law for redressal of its injury or grievance. An election
of remedies arises when two concurrent remedies are available,
and the aggrieved party chooses to exercise one, in which event
he loses the right to simultaneously exercise the other for the
same cause of action. [Para 20.9][46-G-H]
A.P. State Financial Corporation v. M/s GAR Re-rolling
Corporation (1994) 2 SCC 647 : [1994] 1 SCR 857;
P.R. Deshpande v. Maruti Balaram Haibatti (1998) 6
SCC 507 : [1998] 3 SCR 1079; National Insurance Co.
Ltd. v. Mastan & Ors. (2006) 2 SCC 641 : [2005]
5 Suppl. SCR 704 - referred to
Transcore v. Union of India (2008) 1 SCC 125 : [2006]
9 Suppl. SCR 785; Mathew Varghese v. M. Amritha
Kumar (2014) 5 SCC 610 : [2014] 2 SCR 736; M/s
Imperia Structures Ltd. v. Anil Patni and Anr (2020) 10
SCC 783 - relied on
3.4 The absence of a bar under Section 79 of the RERA Act
to the initiation of proceedings before a fora which is not a civil
court, read with Section 88 of the RERA Act makes the position
clear. Section 18 of the RERA Act specifies that the remedies
are "without prejudice to any other remedy available". [Para
20.11][51-D-E]
4.1 The Apartment Buyers in their Complaint filed before
the National Commission made a prayer for refund of the amount
deposited alongwith Interest @ 20% p.a. compounding quarterly
till its realisation. The Apartment Buyers, in their submissions
have stated that they have obtained home loans on which Interest
@ 7.90% p.a. is being paid, even as on date. The Delay
Compensation specified in the Apartment Buyer's Agreement of
Rs. 7.5 per sq. ft. which translates to 0.9% to 1% p.a. on the
amount deposited by the Apartment Buyer cannot be accepted
as adequate compensation for the delay in the construction of
the project. At the same time, the claim of the Apartment Buyers
for payment of compound interest @ 20% p.a., cannot be accepted
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as it has no nexus with the commercial realities of the prevailing
market. [Para 21.2][57-E-G]
4.2 Covid-19 Pandemic has greatly impacted the
construction industry. In these circumstances, it is necessary to
balance the competing interest of both parties. In the interests
of justice and fairplay, the amounts deposited by the Apartment
Buyers is refunded with Interest @ 9% S.I. per annum from
27.11.2018 till the date of payment of the entire amount. The
refund will be paid within a period of three months from the date
of this judgment. If there is any further delay, the Developer will
be liable to pay default interest @ 12% S.I. p.a. The Developer
shall not deduct the Earnest Money of 20% from the principal
amount, or any other amount as mentioned in Clause 21.3 of the
Agreement, on account of the various defaults committed by the
Developer, including the delay of over 7 months in obtaining the
Fire NOC. [Para 21.2][58-A-D]
Case Law Reference
[2019] 5 SCR 1169
relied on
Para 17
[1993] 3 Suppl. SCR 615
relied on
Para 19.3
[2003] 6 Suppl. SCR 659
relied on
Para 20.2
[2012] 2 SCR 1065
relied on
Para 20.2
[2013] 2 SCR 1058
relied on
Para 20.2
[2018] 14 SCR 791
relied on
Para 20.3
[1994] 1 SCR 857
relied on
Para 20.10
[1998] 3 SCR 1079
referred to
Para 20.10
[2005] 5 Suppl. SCR 704
referred to
Para 20.10
[2006] 9 Suppl. SCR 785
relied on
Para 20.10
[2014] 2 SCR 736
relied on
Para 20.10
(2020) 10 SCC 783
relied on
Para 20.11
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CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5785
of 2019.
From the Judgment and Order dated 28.03.2019 of the National
Consumer Disputes Redressal Commission, New Delhi in Consumer
Complaint No. 3873 of 2017.
With
Civil Appeal NoS. 7615, 7975, 8454, 8480, 8482, 8785-94, 9139,
9216, 9638 of 2019 and Civil Appeal No. 3064 of 2020.
Anil Grover ,Sr. AAG Haryana, Chander Uday Singh, Sr. Adv.,
Mahesh Agarwal, Rishi Agrawala, Abhimanyu Bhandari, Anshuman
Srivastava, Sameer Chaudhary, Divyang Chandiramani, Shaishir Divatia,
Aarush Bhatia for Mr. E. C. Agrawala, Piyush Singh, Aditya Parolia,
Akshay Srivastava, Nithin Chandran, Prateek Vats, Rajesh Kumar, Gaurav
Goel, A.R.Takkar, Amarjeet Kumar, Ms. Shriya Takkar, A. Venayagam
Balan, Deepak Kumar Khushalani, Santosh Kumar Pandey, Yashraj Singh
Deora, Ms. Sonal Mashankar, Ms. Shivangi Sud, Shyam Agarwal,
Abhishek Birthray, Adeem Ahmed, Sumit R Sharma, Rajiv Raheja, Gopal
Jha, Ms. Noopur Singhal, Rahul Khurana, Satish Kumar, Subas Ray,
Sanjay Kumar Visen, Advs. for the appearing parties.
The Judgment of the Court was delivered by
INDU MALHOTRA, J.
1. The present batch of Appeals has been filed by the AppellantDeveloper, to challenge the judgment passed by the National Consumer
Disputes Redressal Commission ("National Commission") directing refund
of the amounts deposited by the Apartment Buyers in the project "The
Corridors" developed in Sector 67-A, Gurgaon, Haryana, on account of
the inordinate delay in completing the construction and obtaining the
Occupation Certificate. Aggrieved by the said Judgment, the AppellantDeveloper has filed the present batch of Appeals under Section 23 of
the Consumer Protection Act, 1986 ("Consumer Protection Act").
Since common issues have arisen for consideration, they are being
decided by a common Judgment.
For the sake of brevity, the facts in Civil Appeal No. 5785 of 2019
are being referred to as the lead matter.
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2. The Department of Town and Country Planning granted a
license to Respondent No.3 - Precision Realtors Pvt. Ltd. and
Respondent No.4 - Blue Planet Infra Developers and Madeira Conbuild
Pvt. Ltd. for developing a group housing colony on a vast tract of land
admeasuring about 37.5125 acres where multiple towers comprising of
1356 apartments were to be constructed. Subsequently, the license for
construction was transferred to the Appellant- Developer.
3. On 23.07.2013, the Building Plans of the project were sanctioned
by the Directorate of Town and Country Planning, Haryana. Clause 3 of
the sanctioned Plan stipulated that NOC/ Clearance from the Fire
Authority shall be submitted within 90 days from the date of issuance of
the sanctioned Building Plans.
4.The Developeropened booking for the apartments in 2013. On
07.08.2013, the Respondent No.1- Apartment Buyer was allotted a 2
BHK apartment in Tower-C of the project. Similar allotment letters were
issued to various other Apartment Buyers in the housing project.
5. On 23/24.10.2013, the Developer applied for issuance of an
NOC for the Fire Fighting Scheme of the group housing colony to the
Commissioner, Municipal Corporation, Gurgaon.
The Commissioner, Municipal Corporation vide letter dated
30.12.2013 raised 16 objections with respect to the proposed Fire Fighting
Scheme submitted by the Developer.
The Developer replied to the said objections vide letter dated
22.01.2014, stating that the objections raised by the Commissioner had
been rectified. The Developer sought approval of the Fire Fighting
Scheme on priority.
The Municipal Corporation vide letter dated 28.03.2014 informed
the Developer that the deficiencies in the application for Fire NOC had
not been cured.The Developer was granted 15 days' time to cure the
defects, failing which, the application would be deemed to be rejected.
Ultimately, on 27.11.2014, the Director, Haryana Fire Service
granted approval to the Fire Fighting Scheme subject to the conditions
mentioned therein.
6. On 12.12.2013, Respondent No.3 obtained environmental
clearance for setting up the group housing project from the State
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA
& OTHERS [INDU MALHOTRA, J.]
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Environment Impact Assessment Authority. Clause 39 of the said
clearance stipulated that the project proponent shall submit a copy of the
Fire Safety Plan duly approved by the Fire Department before the start
of construction.
Under Part-B of the General Conditions in Clause (vi), it was
stipulated that the project proponent would obtain all other statutory
clearances, such as the approval for storage of diesel from the Chief
Controller of Explosives, Fire Department, Civil Aviation Department,
Forest Conservation Act, 1980 and Wildlife (Protection) Act, 1972, Forest
Act, 1927, PLPA 1900 etc. from the concerned authorities, prior to the
construction of the project.
7. The Apartment Buyers vide letter dated 25.03.2014 received a
copy of the Apartment Buyer's Agreement with a construction linked
payment plan, which is extracted hereunder :
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8. On 12.05.2014, the Developer executed the Apartment Buyer's
Agreement in favour of Respondent No.1 - Apartment Buyer for a total
consideration of Rs.1,45,22,006/-.
The relevant terms of the Apartment Buyer's Agreement are setout hereinbelow :
Clause 6 pertains to payment of Earnest Money, and reads as :
"6. EARNEST MONEY
The Company and the Allottee hereby agree that 20% (Twenty
percent) of the Sale Consideration of the Apartment shall be
deemed to constitute the "Earnest Money"."
(emphasis supplied)
Clause 7 pertains to payment of instalments, and provides that :
"7. PAYMENT OF INSTALLMENTS
7.1 The Allottee has opted for the Payment Plan annexed herewith
as Annexure-IV. The Allottee understands that it shall always
remain responsible for making timely payments in accordance
with the Payment Plan Annexure-IV. Only in the case of a
construction linked Payment Plan, the Company shall be obliged
to send demand notices for installments on or about the completion
of the respective stages of construction. The demand notices shall
be sent by registered post/courier and shall be deemed to have
been received by the Allottee within 05 (five) days of dispatch by
the Company or receipt thereof, whichever is earlier.
7.2 It shall not be obligatory on the part of the Company to send
any reminders for any payments whatsoever. Although the
Company shall not be obliged to send demand notices other than
for the construction linked Payment Plan, or any reminders
whatsoever for payments of the instalment, in the event that any
such notices or reminders are sent by the Company to the Allottee,
as a gesture of courtesy, these shall not, under any circumstances,
be construed or deemed to be a waiver of the obligations and
responsibility of the Allottee to itself make timely payments in
accordance with the Payment Plan or in response to such demand
notices in the case of a construction linked Payment Plan.
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA
& OTHERS [INDU MALHOTRA, J.]
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7.3 If the Allottee prepays any installments(s) or part thereof to
the Company before it falls due for payment, the Allottee shall be
entitled to pre-payment rebate on such prepaid amounts at the
interest rate declared by the Company for this purpose from time
to time. The interest on such prepaid installment(s) shall be
calculated from the date of prepayment uptill the date when such
amount would actually have become due. The credit due to the
Allottee on account of such pre-payment rebate shall however be
adjusted/paid only at the time of final instalment for the said
Apartment.
7.4 The Allottee shall be liable to pay simple interest on every
delayed payment, at the rate of 20% per annum from the date
that it is due for payment till the date of actual payment thereof.In
case the Allottee defaults in making payment of the due installment
(including partial default) beyond a period of 90 days from the
due date, the Company shall be entitled, though not obliged, to
cancel the Allotment and terminate this Agreement at any time
thereafter in accordance herewith. However, the Company may
alternatively, in its sole discretion, instead decide to enforce the
payment of all its dues from the Allottee by seeking Specific
Performance of this Agreement. Further, in every such case of
delayed payment, irrespective of the type of Payment Plan, the
subsequent credit of such delayed installments(s)/payments along
with delayed interest in the account of the Company shall not
however constitute waiver of the right of termination reserved
herein and shall always be without prejudice to the rights of the
Company to terminate this Agreement in the manner provided
herein.
7.5 Save and except in the case of any bank, financial institution
or company with whom a tripartite agreement has been separately
executed for financing the said Apartment, or where the Company
has given its permission to mortgage to any bank, financial institution
or company for extending a loan to the Allottee against the said
Apartment, the Company shall not be responsible towards any
other third party, who has made payments or remittances to the
Company on behalf of the Allottee and any such third party shall
not have any right against the said Apartment or under this
Agreement whatsoever. The Company shall issue the payment
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receipts only in favour of the Allottee. Notwithstanding the above,
the Allottee is and shall remain solely and absolutely responsible
for ensuring and making all the payments due under this Agreement
on time.
7.6 The Allottee may obtain finance/loan from any financial
institution, bank or any other source, but the Allottee's obligation
to purchase the said Apartment pursuant to this Agreement shall
not be contingent on the Allottee's ability or competency to obtain
such finance. The Allottee would remain bound under this
Agreement whether or not it has been able to obtain finance for
the purchase of the said Apartment. The Allottee agrees and has
fully understood that the Company shall not be under any obligation
whatsoever to make any arrangement for the finance/loan facilities
to the Allottee from any bank/financial institution. The Allottee
shall not omit, ignore, delay, withhold, or fail to make timely
payments due to the Company in accordance with the Payment
Plan opted by the Allottee in terms of this Agreement on the grounds
of the non-availability of bank loan or finance from any bank/
financial institution for any reason whatsoever and if the Allottee
fails to make the due payment to the Company within the time
agreed herein, then the Company shall have right to terminate this
Agreement in accordance herewith.
7.7 Furthermore, in every case where the Allottee has obtained a
loan/finance from a bank, financial institution or any other source
and for which a tripartite agreement has also been executed by
the Company, it is agreed by the Allottee that any default by the
Allottee of the terms and conditions of such loan/finance, shall
also be deemed to constitute a default by the Allottee of this
Agreement, whereupon or at the written request of such bank,
financial institution or person from whom such loan has been
obtained the Company shall be entitled to terminate this
Agreement."
(emphasis supplied)
Clause 13 of the Agreement provides for handing over possession
of the Apartments and reads as :
"13. POSSESSION AND HOLDING CHARGES
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA
& OTHERS [INDU MALHOTRA, J.]
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13.1. Upon receipt of the Occupation Certificate under the Act
pertaining to the said Apartment, the Company shall notify the
Allotee in writing to come and take over the possession of the
said Apartment ("Notice of Possession"). In the event the Allottee
fails to accept and take the possession of the said Apartment
within the time indicated in the said Notice of Possession, the
Allottee shall be deemed to have become the custodian of the
said Apartment from the date indicated in the Notice of Possession
and the said Apartment shall thenceforth remain at the sole risk
and cost of the Allottee itself.
13.2. Notwithstanding any other provisions of this Agreement, the
Allottee agrees that if it fails, ignores or neglects to take the
possession of the said Apartment in accordance with the Notice
of Possession sent by the Company, the Allottee shall be liable to
pay additional charges equivalent to Rs.7.5 (Rupees Seven &
Half only) per sq. ft. on the Super Area per month of the said
Apartment ("Holding Charges"). The Holding Charges shall be a
distinct charge in addition to the maintenance charges and not
related to any other charges/consideration as provided in this
Agreement.
13.3 Subject to Force Majeure, as defined herein and further
subject to the Allottee having complied with all its obligations under
the terms and conditions of this Agreement and not having
defaulted under any provision(s) of this Agreement including but
not limited to the timely payment of all dues and charges including
the total Sale Consideration, registration charges, stamp duty and
other charges and also subject to the Allottee having complied
with all formalities or documentation as prescribed by the Company,
the Company proposes to offer the possession of the said
Apartment to the Allottee within a period of 42 (Forty Two) months
from the date of approval of the Building Plans and/or fulfilment
of the preconditions imposed thereunder ("Commitment Period").
The Allottee further agrees and understands that the Company
shall additionally be entitled to a period of 180 days ("Grace
Period"), after the expiry of the said Commitment Period to allow
for unforeseen delays beyond the reasonable control of the
Company.
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13.4. Subject to Clause 13.3, if the Company fails to offer
possession of the said Apartment to the Allottee by the end of the
Grace Period, it shall be liable to pay to the Allottee compensation
calculated at the rate of Rs.7.5 (Rupees Seven & Half only) per
sq. ft. of the Super Area ("Delay Compensation") for every month
of delay until the actual date fixed by the Company for offering
possession of the said Apartment to the Allottee. The Allottee
shall be entitled to payment/adjustment against such 'Delay
Compensation' only at the time of 'Notice of Possession' or at
the time of payment of the final installment, whichever is earlier.
13.5. Subject to Clause 13.3, in the event of delay by the Company
in offering the possession of the said Apartment beyond a period
of 12 months from the end of the Grace Period (such 12 month
period hereinafter referred to as the "Extended Delay Period"),
then the Allottee shall become entitled to opt for termination of
the Allotment/Agreement and refund of the actual paid up
installment(s) paid by it against the said Apartment after adjusting
the interest on delayed payments along with Delay Compensation
for 12 months. Such refund shall be made by the Company within
90 days of receipt of intimation to this effect from the Allottee,
without any interest thereon. For the removal of doubt, it is clarified
that the Delay Compensation payable to the Allotee who is validly
opting for termination, shall be limited to and calculated for the
fixed period of 12 months only irrespective of the date on which
the Allottee actually exercised the option for termination. This
option may be exercised by the Allottee only up till dispatch of the
Notice of Possession by the Company to the Allottee whereupon
the said option shall be deemed to have irrevocably lapsed. No
other claim, whatsoever, monetary or otherwise shall lie against
the Company and/or the Confirming Parties nor be raised otherwise
or in any other manner by the Allottee.
13.6. If, however, the completion of the said Apartment is delayed
due to Force Majeure as defined herein, the Commitment Period
and/or the Grace Period and/or the Extended Delay Period, as
the case may be, shall stand extended automatically to the extent
of the delay caused under the Force Majeure circumstances. The
Allottee shall not be entitled to any compensation whatsoever,
including Delay Compensation for the period of such delay.
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA
& OTHERS [INDU MALHOTRA, J.]
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13.7. Under no circumstances shall the possession of the said
Apartment be given to the Allottee and the Allottee shall not be
entitled to the possession of the said Apartment unless and until
the full payment of the Sale Consideration and any other dues
payable under the Agreement have been remitted to the Company
and all other obligations imposed under this Agreement have been
fulfilled by the Allottee to the complete satisfaction of the
Company.
13.8. The Allottee hereby agrees and affirms that upon taking
possession of the said Apartment, the Allottee shall be deemed to
have waived all claims against the Company/Confirming Parties,
if any, in respect of the area, specifications, quality, construction
and/or any item, amenity or provision in the said Apartment or
The Corridors Project."
 (emphasis supplied)
Clause 21.3 reads as under:
"21. TIME IS OF ESSENCE; TERMINATION AND
FORFEITURE OF EARNEST MONEY
21.1 Not with standing anything contained in this Agreement, timely
performance by the Allottee of all its obligations under this
Agreement or exercise of any options wherever and wherever
and whenever indicated herein this Agreement including without
limitation its obligations to make timely payments of the Sale
Consideration, maintenance charges and other deposits and
amounts, including any interest, in accordance with this Agreement
shall be of essence under this Agreement. If the Allottee neglects,
omits, ignores, or fails in the timely performance of its obligations
agreed or stipulated herein for any reason whatsoever or acts in
any manner contrary to any undertaking assured herein or fails to
exercise the options offered by the Company within the stipulated
period or to pay in time to the Company any of the instalments or
other amounts and charges due and payable by the Allottee as
described in Clause 7.7 herein, the Company shall be entitled to
cancel the allotment and terminate this Agreement in the manner
described hereunder.
21.1.1 In case any failure or breach committed by the Allotee is
incapable or rectification or is in the opinion of the Company
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unlikely to be rectified by the Allottee or where the Allottee is a
repetitive defaulter or such failure or default is continuing despite
the Allottee being given an opportunity to rectify the same, then
this Agreement may be cancelled by the Company with immediate
effect at its sole option by written notice ("Notice of Termination")
to the Allottee intimating to the Allottee the decision of the
Company to terminate the Agreement and the grounds on which
such action has been taken.
.....
21.3 The Allottee understands, agrees and consents that upon such
termination, the Company shall be under no obligation save and
except to refund the amounts already paid by the Allottee to the
Company, without any interest, and after forfeiting and deducting
the Earnest Money, interest on delayed payments, brokerage/
commission/charges, service tax and other amounts due and
payable to it, only after resale of the said Apartment. Upon
termination of this Agreement by the Company, save for the right
to refund, if any to the extent agreed hereinabove, the Allottee
shall have no further right or claim against the Company and/or
the Confirming Parties which, if any, shall be deemed to have
been waived off by the Allottee and the Allottee hereby expressly
consents thereto. The Company shall thenceforth be free to deal
with the said Apartment in any manner whatsoever, in its sole and
absolute discretion and in the event that the Allottee has taken
possession of the said Apartment and everything whatsoever
contained therein and in such event, the Allottee and/or any other
person/occupant of the said Apartment shall immediately vacate
the said Apartment and otherwise be liable to immediate ejectment
as an unlawful occupant/trespasser. This is without prejudice to
any other rights available to the Company against the Allottee."
 (emphasis supplied)
9.