In a recent legal case, the court delved into the complexities of delayed apartment possession and the imposition of extra charges by a real estate developer. The focus was on analyzing the contract clauses, determining the essence of time in construction agreements, and assessing claims of unfair trade practices. Let’s explore the legal intricacies and the court’s findings in this engaging case.
Facts
- The appellants sought to make payment for the apartments within a period of 10 years.
- Clause 16, 18, and 21(d) of the Apartment Buyer Agreement (ABA) were referred to by the Commission to determine the terms of possession.
- The Commission held that no fixed period of 2 ½ to 3 years was agreed upon for handing over possession of the apartments.
- The construction of the apartments faced delays due to various reasons such as government approvals and changes in specifications.
- The appellants demanded a refund of excess amounts paid and sought compensation for loss of rental income.
- The Commission examined clauses of the ABA and contentions of the appellants regarding unfair trade practices.
- The Commission concluded that the possession was proposed to be delivered within 2 ½ to 3 years, but no fixed period was agreed upon.
- The Commission found no misrepresentation by the respondent in the agreement.
- Delay in handing over possession was not considered an unfair trade practice.
- Extra cost demanded by the respondent was in accordance with the ABA agreed upon by the appellants.
- Some instalments towards the extra cost had been paid by the appellants.
- Details of the extra charges were provided by the respondent, indicating no concealment.
- Cost escalation beyond the contract period was absorbed by the respondent.
- Commission concluded that the appellants did not substantiate the allegation of unfair trade practice regarding extra charges.
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Issue
- The Commission has been tasked with determining if the representation in question is misleading to the buyer.
- The key aspect to consider is whether buyers are informed in advance about the potential delay in possession and increase in cost.
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Arguments
- The respondent imposed extra charges not mentioned in the ABA, constituting an unfair trade practice.
- Appellants were not informed about the extra charges at the time of entering into the ABA.
- The majority of Beverly Park flat buyers have taken possession without complaint.
- Appellants contend that the ABA terms are unconscionable.
- Appellants booked 4 apartments after understanding the ABA implications.
- Details of extra charges were provided only after persistent demands from appellants.
- Appellants were not coerced to enter the ABA according to the defense of the respondent.
- The delay in possession was attributed to late approval of plans and unforeseen reasons.
- Appellants could terminate the contract if aggrieved by possession delay.
- Appellants initially accepted and paid part of the demanded extra charges.
- Appellants protested the demand for further extra costs permitted by the ABA terms.
- No misrepresentation on the part of the respondent regarding the extra charges.
- Appellants claim the demand for extra charges was impermissible due to delayed possession.
- The thrust of the complaint is that the respondent engaged in unfair trade practice for misrepresentation.
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Analysis
- The Court observed that there was no intention from the appellants to insist on time as the essence of the contract.
- No notice was issued by the appellants regarding the delay in handing over possession.
- The Court directed refund of the entire amount deposited by the purchaser due to the builder’s failure to offer possession within a reasonable period.
- No convincing evidence was provided by the appellants to substantiate the claim of unfair trade practice by the respondent.
- Time was not considered the essence of the contract unless specifically mentioned in the construction contract.
- The Court noted that in similar cases, buyers were entitled to compensation for delays beyond a reasonable period attributable to the builder.
- The appellants did not notify the termination of the agreement despite the project delay.
- The undue delay in possession did not necessitate termination of the agreement according to the Court.
- The contract terms did not impose unreasonable conditions on the appellants as claimed.
- The Court emphasized that there was no misrepresentation or unfair trade practice by the respondent in delaying possession.
- Reasonable extension of time for possession was permissible as per the contract clauses.
- Demanding extra charges post-construction without prior information was considered an unfair trade practice by the appellants.
- The extra charges imposed were justified as they were for added facilities and operational costs.
- The cost escalation after a specific date was excluded from the demanded charges.
- The Court highlighted that the demand for possession without additional payments was unwarranted.
- Bangalore Development Authority v. Syndicate Bank was referenced to discuss the essence of time in construction contracts.
- Section 36D of the MRTP Act empowers the Commission to address unfair trade practices.
- The Commission can require the discontinuation or non-repetition of the unfair practice, modify related agreements, and specify the disclosure of information, statements, or advertisements.
- Section 36C was inserted in 1991 for investigation by the Director General before taking further actions.
- Section 36B of the MRTP Act outlines the procedures for conducting inquiries into unfair trade practices.
- Unfair trade practices, defined in Section 36A, involve using unfair or deceptive methods to promote goods or services.
- If the Commission finds a practice to be prejudicial to the public interest or consumers, it can issue directives after examining agreement terms and conditions.
- The Commission must also assess if the Board has engaged in unfair methods or deceptive practices for promoting goods or services.
- An unconscionable term in a contract is void under Section 23 of the Indian Contract Act, 1872.
- The appropriate forum can direct the removal of deficiency in service and discontinuation of unfair trade practices.
- The forum has the power to award compensation for any loss or injuries due to the negligence of the opposite party.
- The definition of ‘unfair trade practice’ under the MRTP Act aims to bring honesty and truth to the relationship between the manufacturer and the consumer.
- Rulings in various cases emphasize the importance of ensuring buyers are not misled by false statements or misleading representations.
- The courts have jurisdiction to award just and reasonable compensation as part of ensuring the removal of service deficiencies.
- The appellants are not entitled to any relief as there was no unfair trade practice proven on the part of the respondent.
- Compensation cannot be granted as per Section 12-B of the MRTP Act, which allows for compensation only in specific cases.
- The respondent is willing to hand over the flats upon payment of the balance amount of Rs.31,52,933 for each flat.
Decision
- After deducting Rs.19,82,422/- paid by the appellants for each apartment, they have to pay Rs.31,52,933/- for each apartment.
- Final relief granted by the Court may not always be a direct consequence of the judgment’s ratio decidendi.
- House tax recoverable is shown as Rs.53,789/-.
- The Company’s decision regarding balance amount payment towards extra charges is final and binding on the Apartment Allottee.
- The appeal is disposed with a direction for appellants to pay Rs.25,00,000/- for each flat within four weeks, and possession to be handed over within a week from the date of payment.
- Maintenance charges till 01.11.2021 calculated at Rs.10,14,281/-.
Case Title: B.B.PATEL . Vs. DLF UNIVERSAL LTD. (2022 INSC 91)
Case Number: C.A. No.-001106-001106 / 2009
