M/s. Imperia Structures Ltd. Vs. Anil Patni

M/s. Imperia Structures Ltd. Vs. Anil Patni

By:- Lakshay Sharma

In the Supreme Court of India

Name of the Case  M/s. Imperia Structures Ltd. Vs. Anil Patni
CitationCivil Appeal No. 3581-3590 Of 2020
Date of the Case2nd November 2020
AppellantM/s Imperia Structures Ltd.
Respondent(s)Anil Patni & Another
Bench/JudgesUday Umesh Lalit, Vineet Saran
Statutes/Constitution InvolvedConsumer Protection Act, 1986; RERA Act, 2016
Important Sections/ArticlesS. 2(d) of the Consumer Protection Act;S. 18, 79, 88, 89, of the RERA Act.

Abstract

People buying or registering as allottees for their new homes often referred to as homebuyers don’t have many remedies available to them as there is always a loophole in the agreement signed by them which places them in a limbo where they can’t reach where they have to go to get justice or compensation whatsoever, this judgment led to be a milestone for such issues where homebuyers have various right and can also claim additional remedies.

Introduction

This was an appeal filed in the civil appellate jurisdiction of the Supreme Court of India, the center of focus of this appeal was whether the National Consumer Dispute Redressal Commission had any jurisdiction to rule in this case as the project herein was registered under the RERA Act.

Background of the Case

  • M/s Imperia Structures Ltd. launched a Housing Scheme called “The ESFERA” in Sector 13C, Gurgaon, Haryana sometime in 2011. Many homebuyers booked their apartments by paying the booking amounts and thereafter executed the Builder Buyer Agreement with the appellant here.
  • The agreement included some important clauses like clauses 11.4 and 41, clause 11.4 deals with the failure to deliver the possession, if within 3 years of execution of the buyer builder agreement, the company fails to deliver the possession of the said apartment to the respective homebuyer, the company can terminate the agreement and refund of the amounts paid by the allottees with simple interest @ 9% p.a. for the period such amounts were lying with the Company and to pay no other compensation whatsoever. However, the Company may, at its discretion, decide not to terminate this Agreement.
  • Whereas clause 41 states Force Majure, The Company shall not be held responsible for not performing any of its obligations provided for in this Agreement if such performance is prevented, delayed, or hindered by an act of God, fire, flood, explosion, war, or any other cause not within the reasonable control of the Company.
  • Even after 4 years, there was no sign of completion of the apartments, thus the allottees moved to the National Consumer Dispute Redressal Commission on 11th October 2017, and filed Consumer Case No.3011 of 2017. It was submitted that, even after 42 months of agreeing, there is no sign of apartments and upon visiting the site, it was abandoned and the only semi–constructed buildings were standing there.
  • Subsequently, other allottees/consumers moved to the commission as well and filed consumer cases seeking compensation from the company.
  • On 17th November 2017, the Project was registered with Haryana Real Estate Regulatory Authority, Panchkula under the RERA Act, which came into force on 1st May 2016.
  • On 18th January 2018, M/s Imperia Structures Ltd. challenged the jurisdiction of the commission, on the ground that the apartments were booked for commercial purposes, thus the Respondents would not come within the definition of “the consumer” under Section 2(d) of the Consumer Protection Act.
  • On 12th September 2018, the commission allowed the consumer cases and gave its judgment, Concluding that the Appellant was deficient in rendering service, the Commission granted relief of refund of the amounts deposited by each of the Complainants with simple interest @ 9% p.a. from the respective dates of deposits along with Rs.50,000/- towards costs. Also, the amounts were to be deposited within four weeks, failing which the amounts would carry interest @ 12% p.a.
  • One Mr. Himanshu Giri approached authorities under the RERA Act. The order passed in the case of Himanshu Giri directed payment of interest @ 10.75% p.a. without issuing any direction for a refund of money.
  • An instant appeal was filed by the company on 14th March 2019, aggrieved by the order of the commission. Additional documents like, the letter received from the Haryana Authority, which stated registration of the project under the RERA Act and the order of the Himanshu Giri case were affixed.
  • The Company also raised ground in the appeal stating, the Commission didn’t take into account the Policy of Demonetization introduced by the Government of India as an event of Force Majeure resulting to which the Company suffered a shortage of cash ensuing as a result of the Demonetization policy resulted in the stopping of work.

Facts of the Case

  • M/s Imperia Structures Ltd. had launched a housing scheme named, THE ESPERA.
  • Many allottees booked their apartments with the appellant by paying the booking fee and entered into the builder-buyer agreement
  • The Respondent booked Apartment No.1803 on the 18th Floor of Tower No. “C” has a super built-up area of 153.34 Sq. meters (1650 sq. feet approx.) @ Rs.36530.2 per Sq. meter (Rs.3395/- per Sq. foot). The basic price was thus Rs.56,01,750/- to which additional charges were added; the aggregate price being Rs.76,43,000/-.
  • Respondent had turned to the National Consumer Dispute Redressal Commission, for compensation as the company had failed to deliver possession as per the builder–buyer agreement.
  • The commission allowed the case along with other similar cases and ruled against the appellant, awarding the respondents the remedy of refund of the amounts deposited by each of the Complainants with simple interest @ 9% p.a. from the respective dates of deposits along with Rs.50,000/- towards costs,  and the amounts were to be deposited within four weeks, failing which the amounts would carry interest @ 12% p.a.
  • The appellant being aggrieved by the order of the commission challenged the jurisdiction of the commission via the means of the instant appeals filed on 14th March 2019.

Issues Raised

  • Whether all the Complainants were ‘Consumers’ within the meaning of the Act?
  • Whether there is a need for interference by the court in the conclusions drawn by the national law commission.

Arguments of the Petitioner

  • Phase-I of the project was completed in time and Phase-II of the Project that concerned about 437 allottees, out of these 437 allottees, only in 59 cases complaints were filed under the Consumer Protection Act.
  • Alternative accommodation was offered to all the allottees but was rejected by all the Complainants, this was indicative that the apartments were booked for investment purposes.
  • The Complainants were not “Consumers” within the meaning of the Consumer Protection Act as the apartments were booked as an investment for-profit motive.
  • After RERA Act came into force in 2016, issues concerning the Project including those relating to construction and completion would be under the exclusive control of the authorities under the RERA Act, and only they hold jurisdiction in those cases.
  • Mr. Himanshu Giri approached authorities under the RERA Act. Resulting in which the majority of the allottees reposed faith in the Appellant.
  • The order passed in the case of Himanshu Giri directed payment of interest @ 10.75% p.a. without issuing any direction for a refund of money. The approach so adopted would be conducive to the completion of construction and at the same time would balance the interest of the allottees.
  • As per the provisions of the RERA Act, the orders passed by the Commission should be set aside, and instead following the order passed in the Himanshu Giri case, the Complainants be granted interest @ 10.75% p.a. on the amount they deposited; through which the Project can be completed without putting the Appellant under any financial strain and at the same time the relief like investment interest would also be accruable to the allottees.

Arguments by the Respondents

  • The apartments were purchased by the complainants for residential purposes. Thus, the issue concerning the Complainants not being “Consumers” under the provisions of the Consumer Protection Act was rightly decided in favor of the Complainants.
  • No reasonable explanation was provided for the delay due to force majeure.
  • No plea was taken before the Commission regarding the Project being registered under the RERA Act. Thus it would not be open to the Appellant to raise any submissions about the applicability of the RERA Act.
  • As construed by the Court, the remedy awarded by the CP Act would be an additional remedy to a consumer

Related Provisions

S. 2(d) of the Consumer Protection Act:

“consumer” means any person who,—

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii)  [hires or avails of] any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who [hires or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first-mentioned person [but does not include a person who avails of such services for any commercial purpose];

S. 18 of the RERA Act:

If the promoter fails to complete or is unable to give possession of an apartment, plot, or building,—

(a) in accordance with the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or

(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed.

(2) The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land, on which the project is being developed or has been developed, in the manner as provided under this Act, and the claim for compensation under this subsection shall not be barred by limitation provided under any law for the time being in force.

(3) If the promoter fails to discharge any other obligations imposed on him under this Act or the rules or regulations made thereunder or in accordance with the terms and conditions of the agreement for sale, he shall be liable to pay such compensation to the allottees, in the manner as provided under this Act.

S. 79 of the RERA Act:

No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

S. 88 of the RERA Act:

The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.

S. 89 of the RERA Act:

The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force.

Judgment

  • The judgment was passed in favor of the Homebuyers, upholding the decision of the National Consumer Dispute Redressal Commission.
  • It was further held that RERA and Consumer Protection Act are two different legislations and despite ongoing cases at RERA, consumer forum will always have the power to entertain cases wherein the homebuyers qualify as ‘consumers’ within the definition mentioned under the Consumer Protection Act, 1986.
  • This appeal was dismissed and various clarifications regarding the laws associated were made like S. 79 of the RERA Act,  which states merely about the jurisdictional limits to Civil Courts, whereas Consumer forums are not Civil Courts.

Conclusion

This judgment was a breakthrough for one-sided buyer–builder agreements that only favored the builder/developer in any event of incompetency. Also if a project is registered under the RERA Act, 2016 the consumer forum still holds jurisdiction in those cases as homebuyers are consumers too as provided in S. 2(d) of the Consumer Protection Act. The status of Consumers was made clear and the jurisdiction of consumer courts over consumer cases was redefined.

The commission’s order was held binding in this case and the aggrieved were given relief of refund with interest as directed by the commission and the appeal by M/s Imperia Structures Ltd. was dismissed.

References

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