Consumer Protection Act, 1986 – s.2(1)(r) – Consumer Protection Act, 2019 – s.2(46) – Complainants booked an apartment with appellant and submitted application money – Apartment Buyer Agreement was entered into between the parties – After completion of construction, appellant offered possession to the complainants – However, the complainants sought cancellation of the allotment and refund of the amount paid – Pursuant thereto, consumer complaint was filed – The NCDRC directed the appellant to deduct only 10% of the BSP i.e. Rs.17,08,140/- only towards cancellation of the complainants’ apartment and refund the balance amount Rs.34,04,170/- alongwith simple interest @ 6% p.a. from date of each payment till the date of refund – Correctness: Held: The respondents had cancelled the deal since there was recession in the market – In the agreement between the parties, the complainants were required to pay earnest money deposit of 20% of the BSP, which undisputedly was paid – As per clause 8.4, on termination on account of buyer’s event of default, the developer was entitled to forfeit the entire earnest money deposit and other dues including interest on delayed payments as specified in the agreement – It will be relevant to consider the reciprocal obligations of the appellant i.e., the developer in case the developer does not comply with the timelines in the agreement – Clauses 4.2 and 4.3 of the agreement consist the obligations of the developer in the event it does not comply with the timelines and a very meagre compensation is provided to the apartment purchaser – It provides that if the developer fails or neglects to issue the possession notice on or before the tentative completion date and/or on such date as may be extended by mutual consent of the parties, the developer shall be liable to pay to the buyer a meagre compensation for such a delay at the rate of Rs.5/- per month per square feet of the super built up area of the apartment – Thus, the agreement was one-sided and totally tilted in favour of the developer – It is settled that the courts will not enforce an unfair and unreasonable contract or an unfair and unreasonable clause in a contract, entered into between parties who are not equal in bargaining power – Further, the contractual terms which are ex facie one-sided, unfair and unreasonable would constitute unfair trade practice u/s. 2(1)(r) of the 1986 Act – The NCDRC, in a series of cases right from the year 2015, has held that 10% of the BSP is a reasonable amount which is liable to be forfeited as earnest money – There is no reason to upset the view consistently taken by the NCDRC – However, in the instant case, the NCDRC was not justified in awarding interest on the amount to be refunded – As the agreement was entered into between the parties in the year 2014, only after the possession was offered by the appellant to the respondents, they sought cancellation of the allotment – There is a possibility that the respondents would have utilised the money which was payable by them to the appellant for purchasing another property at a lower rate – Since, appellant has already refunded an amount of Rs.22,01,215/- to the respondents – Therefore, the appellant directed to pay the balance amount of Rs.12,02,955/[Rs.34,04,170/- minus Rs.22,01,215/-] to the respondents. [Paras 14, 17, 22, 24, 25, 26, 30, 39, 40, 41, 42, 44]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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