Case: CHANDIGARH HOUSING BOARD Vs. M/S. PARASVANATH DEVELOPERS PVT. LTD.

which contributed to the non-performance of the obligations by the developer towards the residential unit buyers. (emphasis supplied) Thus, given that the breach of the Development Agreement is attributable to both, CHB 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. This reading of Clause 9(c) has also been affirmed by this Court in its order dated 21.04.2015, and for the reasons mentioned supra, we do not deem it fit to interfere with the same. 10.2 Secondly, we find that 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, we find that 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). 10.3 Hence, the contention of the learned Counsel for the Appellant that the impugned order is liable to be set aside on the ground that the amount towards mental harassment and litigation costs is in the nature of compensation that is solely payable by the Developer in terms of Clause 9(c) of the Tripartite Agreement, cannot be accepted. 11. We also find that the Appellants reliance on the revocation deed dated 04.02.2015 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 CHB 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 dated 06.10.2006. In our considered opinion, such settlement of rights and obligations cannot be extended in a manner that enables the Developer and CHB to wriggle out of their liability under the Tripartite Agreement with the Complainant. Thus, we find that the revocation deed dated 04.02.2015 cannot be invoked by the Appellant to escape its liability flowing from the Tripartite Agreement and the arbitration award dated 09.01.2015. 12. We also note that the finding in the arbitration award dated 09.01.2015 as to the apportionment of liability between the Developer and CHB to pay the principal sum and general compensation, must be given effect. To this extent, we find merit in the argument raised by the learned Senior Counsel for Respondent No. 1 that the prior National Commission order dated 05.03.2013 and the subsequent order of this Court dated 21.04.2015 both relegate the inter se apportionment of liability between the Developer and CHB to the arbitration award. Thus, the split of 70:30 under the arbitration award must be given effect, having attained finality. 13. In any case, we find that 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 CHB. This is supported by the Escrow Agreement dated 01.06.2007 executed by CHB and the Developer in pursuance of the Development Agreement dated 06.10.2006. 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 CHB, and the remaining amount shall then be transferred to the Developer. In view of this, we find that the amount directed to be paid by the National Commission in the impugned order must be paid by the Developer and CHB in the ratio of 70:30. 14. With respect to the second issue concerning the enhancement of interest rate, Clause 9(d) of the Tripartite Agreement is relevant. As mentioned supra, this Clause requires the Developer and CHB 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. It has been brought to our notice that CHB has already paid 30% of the principal sum at 9% interest p.a. in accordance with the directions of the National Commission in order dated 05.03.2013 passed in a similar matter. Notably, the interest rate was revised to 10% p.a. in the impugned order and has been challenged by the Appellant. We do not find any reason to interfere with the same, as the increase 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). Thus, the contention of the Appellant on this front is liable to be dismissed. 15. In view of the foregoing observations, we find that the National Commission was right in directing the Developer and CHB to pay the principal sum of Rs. 1,03,31,250/- at 10% p.a. to the Complainant herein. Further, it is found that the direction to pay Rs. 2 lakhs in toto towards mental harassment and litigation costs in the ratio of 70:30 between the Developer and CHB, is also correct.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]From the above, it is evident that the Developer and CHB agreed to complete the construction of the residential units within a period of 36 months from the date of signing of the Development Agreement on 06.10.2006. In the event that such construction was not done, Clause 9(c) would come into operation and the Developer would become liable to compensate the buyer at Rs. 107.60 per sq metre of the super area of the unit, per month10. A close reading of Clause 9(c) of the Tripartite Agreement indicates two salient features– first , the liability to pay compensation under this Clause can only be affixed on the Developer if it fails to fulfill the condition under Clause 9(a) and perform its obligations under the Development Agreement, i.e. if it does not hand over the possession of the flat to the buyer within a period of 36 months from the date of signing of the Development Agreement. The second feature of Clause 9(c) is that it envisages a fixed compensation of Rs. 107.60 per sq metre per month to be paid to the flat buyer10.1 When the facts of the instant case are examined in light of these observations, it becomes clear that 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 CHB 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 attractedThus, given that the breach of the Development Agreement is attributable to both, CHB 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. This reading of Clause 9(c) has also been affirmed by this Court in its order dated 21.04.2015, and for the reasons mentioned supra, we do not deem it fit to interfere with the same10.2 Secondly, we find that 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, we find that 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)10.3 Hence, the contention of the learned Counsel for the Appellant that the impugned order is liable to be set aside on the ground that the amount towards mental harassment and litigation costs is in the nature of compensation that is solely payable by the Developer in terms of Clause 9(c) of the Tripartite Agreement, cannot be accepted11. We also find that the Appellants reliance on the revocation deed dated 04.02.2015 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 CHB 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 dated 06.10.2006. In our considered opinion, such settlement of rights and obligations cannot be extended in a manner that enables the Developer and CHB to wriggle out of their liability under the Tripartite Agreement with the Complainant. Thus, we find that the revocation deed dated 04.02.2015 cannot be invoked by the Appellant to escape its liability flowing from the Tripartite Agreement and the arbitration award dated 09.01.201512. We also note that the finding in the arbitration award dated 09.01.2015 as to the apportionment of liability between the Developer and CHB to pay the principal sum and general compensation, must be given effect. To this extent, we find merit in the argument raised by the learned Senior Counsel for Respondent No. 1 that the prior National Commission order dated 05.03.2013 and the subsequent order of this Court dated 21.04.2015 both relegate the inter se apportionment of liability between the Developer and CHB to the arbitration award. Thus, the split of 70:30 under the arbitration award must be given effect, having attained finality13. In any case, we find that 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 CHB. This is supported by the Escrow Agreement dated 01.06.2007 executed by CHB and the Developer in pursuance of the Development Agreement dated 06.10.2006. 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 CHB, and the remaining amount shall then be transferred to the Developer. In view of this, we find that the amount directed to be paid by the National Commission in the impugned order must be paid by the Developer and CHB in the ratio of 70:3014. With respect to the second issue concerning the enhancement of interest rate, Clause 9(d) of the Tripartite Agreement is relevant. As mentioned supra, this Clause requires the Developer and CHB 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. It has been brought to our notice that CHB has already paid 30% of the principal sum at 9% interest p.a. in accordance with the directions of the National Commission in order dated 05.03.2013 passed in a similar matter. Notably, the interest rate was revised to 10% p.a. in the impugned order and has been challenged by the Appellant. We do not find any reason to interfere with the same, as the increase 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). Thus, the contention of the Appellant on this front is liable to be dismissed15. In view of the foregoing observations, we find that the National Commission was right in directing the Developer and CHB to pay the principal sum of Rs. 1,03,31,250/- at 10% p.a. to the Complainant herein. Further, it is found that the direction to pay Rs. 2 lakhs in toto towards mental harassment and litigation costs in the ratio of 70:30 between the Developer and CHB, is also correct.