Chandigarh Housing Board vs M/s. Parasvanath Developers Pvt. Ltd. & Anr.

1.2 Clause 9(c) is not attracted in the present case at all. First, there has been no fulfilment of the condition under Clause 9(a) for Clause 9(c) to come into operation. This is because the Developer never even began construction at the project site due to the dispute with the Housing Board about the encumbrances on the allotted land. Thus, the question of finishing such construction within the period mentioned under Clause 9(a) does not even arise. Consequently, Clause 9(c), which is concerned with the non-fulfilment of this obligation, is also not attracted. [Para 10.1][165-G-H; 166-A]

1.3 Thus, given that the breach of the Development Agreement is attributable to both, Housing Board and the Developer, the failure to hand over possession of the flat to the buyer cannot be said to be on account of the non-performance of the obligation of the Developer alone. Consequently, Clause 9(c) is not applicable to the present case. [Para 10.1][166-E]

1.4 The amount awarded by the National Commission in the impugned order, i.e. Rs. 1 lakh each towards mental harassment and litigation costs, cannot be read as compensation contemplated under Clause 9(c) of the Tripartite Agreement. Evidently, the litigation costs cannot be construed as compensation. Even with respect to the award of Rs. 1 lakh for mental harassment, such amount is in the nature of a general, lump sum compensation, which falls short of qualifying as compensation under Clause 9(c). This is especially because there is no mention of the stipulated fixed rate of Rs.107.60 per sq metre of the super area of the unit, per month in the impugned order. Thus, the liability of paying a total of Rs. 2 lakhs under those heads cannot be foisted on the Developer alone in terms of Clause 9(c). [Para 10.2][166-F-H]

1.5 The Appellant’s reliance on the revocation deed is misplaced, as para 4 of this deed clearly states that “the parties have accepted the award” and chosen to act in accordance with the same. Thus, it cannot be argued that this revocation deed displaces the arbitration award dated 09.01.2015 and the direction therein for the Developer and the Housing Board to pay compensation (if and when determined) in the ratio of 70:30. In any case, this revocation deed may, at best, arguably settle the rights and obligations or disputes between the parties in respect of the Development Agreement. Such settlement of rights and obligations cannot be extended in a manner that enables the Developer and the Housing Board to wriggle out of their liability under the Tripartite Agreement with the Complainant. Thus, the revocation deed cannot be invoked by the Appellant to escape its liability flowing from the Tripartite Agreement and the arbitration award. [Para 11][167-B-D]

1.6 Such division is well-founded as the sale proceeds from the flat buyers were apportioned in the same ratio of 70:30 between the Developer and the Housing Board. This is supported by the Escrow Agreement dated 01.06.2007 executed by the Housing Board and the Developer in pursuance of the Development Agreement. Clause 4(b) of this Escrow Agreement provides that 30% of the sale proceeds in respect of the residential units would first be transferred to the Housing Board and the remaining amount shall then be transferred to the Developer. In view of this, the amount directed to be paid by the National Commission in the impugned order must be paid by the Developer and the Housing Board in the ratio of 70:30. [Para 13][167-G-H; 168-A]

2.1 Clause 9(d) of the Tripartite Agreement requires the Developer and the Housing Board to refund the amounts received from the buyer with interest, if the Developer is unable to deliver the unit to the buyer due to non-approvals from the competent authorities. Here, under Clause 9(d), the parties are liable to refund the principal sum in the ratio of 70:30 as they had received the sale proceeds in the same ratio. [Para 14][168-BC]

2.2 The increase in the interest rate to 10% was made by the National Commission in exercise of its discretionary power. It is possible that the National Commission chose to enhance the interest rate in view of the fact that it had already imposed lesser compensation than the significantly higher compensation stipulated under Clause 9(c). National Commission was right in directing the Developer and the Housing Board to pay the principal sum of Rs. 1,03,31,250/- at 10% p.a. to the Complainant. Further, it is found that the direction to pay Rs. 2 lakhs in to towards mental harassment and litigation costs in the ratio of 70:30 between the Developer and the Housing Board is also correct. [Para 14, 15][168-C-E]