INDU MALHOTRA, J.

1. The present batch of Appeals has been filed by the Appellant-

Developer, to challenge the judgment passed by the National Consumer Disputes Redressal Commission (―National Commission‖) directing refund of the amounts deposited by the Apartment Buyers in the project ―The Corridors‖ developed in Sector 67-A, Gurgaon, Haryana, on account of the inordinate delay in completing the construction and obtaining the Occupation 1 Certificate. Aggrieved by the said Judgment, the Appellant-Developer has filed the present batch of Appeals under Section 23 of the Consumer Protection Act, 1986 (― Consumer Protection Act ‖).

Since common issues have arisen for consideration, they are being decided by a common Judgment.

For the sake of brevity, the facts in Civil Appeal No. 5785 of 2019 are being referred to as the lead matter.

2. The Department of Town and Country Planning granted a license to Respondent No.3 – Precision Realtors Pvt. Ltd. and Respondent No.4 – Blue Planet Infra Developers and Madeira Conbuild Pvt. Ltd. for developing a group housing colony on a vast tract of land admeasuring about 37.5125 acres where multiple towers comprising of 1356 apartments were to be constructed. Subsequently, the license for construction was transferred to the Appellant - Developer.

3. On 23.07.2013, the Building Plans of the project were sanctioned by the Directorate of Town and Country Planning, Haryana. Clause 3 of the sanctioned Plan stipulated that NOC/ Clearance from the Fire Authority shall be submitted within 90 days from the date of issuance of the sanctioned Building Plans.

4. The Developer opened booking for the apartments in 2013. On 07.08.2013, the Respondent No.1- Apartment Buyer was allotted a 2 BHK apartment in Tower-C of the project. Similar allotment letters were issued to various other Apartment Buyers in the housing project. 2

5. On 23/24.10.2013, the Developer applied for issuance of an NOC for the Fire Fighting Scheme of the group housing colony to the Commissioner, Municipal Corporation, Gurgaon.

The Commissioner, Municipal Corporation vide letter dated 30.12.2013 raised 16 objections with respect to the proposed Fire Fighting Scheme submitted by the Developer.

The Developer replied to the said objections vide letter dated 22.01.2014, stating that the objections raised by the Commissioner had been rectified. The Developer sought approval of the Fire Fighting Scheme on priority.

The Municipal Corporation vide letter dated 28.03.2014 informed the Developer that the deficiencies in the application for Fire NOC had not been cured. The Developer was granted 15 days‘ time to cure the defects, failing which, the application would be deemed to be rejected.

Ultimately, on 27.11.2014, the Director, Haryana Fire Service granted approval to the Fire Fighting Scheme subject to the conditions mentioned therein.

6. On 12.12.2013, Respondent No.3 obtained environmental clearance for setting up the group housing project from the State Environment Impact Assessment Authority. Clause 39 of the said clearance stipulated that the project proponent shall submit a copy of the Fire Safety Plan duly approved by the Fire Department before the start of construction. 3 Under Part-B of the General Conditions in Clause (vi), it was stipulated that the project proponent would obtain all other statutory clearances, such as the approval for storage of diesel from the Chief Controller of Explosives, Fire Department, Civil Aviation Department, Forest Conservation Act, 1980 and Wildlife (Protection) Act, 1972, Forest Act, 1927 , PLPA 1900 etc. from the concerned authorities, prior to the construction of the project.

7. The Apartment Buyers vide letter dated 25.03.2014 received a copy of the Apartment Buyer‘s Agreement with a construction linked payment plan, which is extracted hereunder :

8. On 12.05.2014, the Developer executed the Apartment Buyer‘s Agreement in favour of Respondent No.1 – Apartment Buyer for a total consideration of Rs.1,45,22,006/-.

The relevant terms of the Apartment Buyer‘s Agreement are set-out hereinbelow :

21.3 The Allottee understands, agrees and consents that upon such termination, the Company shall be under no obligation save and except to refund the amounts already paid by the Allottee to the Company, without any interest, and after forfeiting and deducting the Earnest Money, interest on delayed payments, brokerage/commission/charges, service tax and other amounts due and payable to it, only after resale of the said Apartment. Upon termination of this Agreement by the Company, save for the right to refund, if any to the extent agreed hereinabove, the Allottee shall have no further right or claim against the Company and/or the Confirming Parties which, if any, shall be deemed to have been waived off by the Allottee and the Allottee hereby expressly consents thereto. The Company shall thenceforth be free to deal with the said Apartment in any manner whatsoever, in its sole and absolute discretion and in the event that the Allottee has taken possession of the said Apartment and everything whatsoever contained therein and in such event, the Allottee and/or any other person/occupant of the said Apartment shall immediately vacate the said Apartment and otherwise be liable to immediate ejectment as an unlawful occupant/trespasser. This is without prejudice to any other rights available to the Company against the Allottee.‖ (emphasis supplied)

9. On 27.12.2017, Respondent No.1 filed a Consumer Complaint being Consumer Case No.3823 of 2017 before the National Commission, wherein it was inter alia prayed that the Developer be directed to refund the amount of Rs.1,44,72,364/- paid by the Apartment Buyer alongwith interest @ 20% per annum compounded quarterly till realization, and compensation towards damages on account of harassment, mental agony and litigation charges. The Apartment Buyer inter alia submitted that the Developer had invited applications from the public for booking flats in the housing complex ―The Corridors‖, by misrepresenting that all necessary approvals/pre-clearances 9 with respect to the and constructions had already been obtained from the office of the Director, Town and Country Planning, Haryana, and other civil authorities. The Developer had misrepresented at the time of booking that the project would have a 90-meters motorable access road approaching the project from Junction 63A to 67A which was shown in the Apartment Buyer‘s Agreement in the layout plan. However, there was no access road of 90- meters to the project, and/or 24-meters in the revised plans. The Apartment Buyers were induced to book apartments on false representations made by the Developer that construction of the project would be completed the project within 42 months from the collection of the initial booking amount.

As per Clause 13.3 of the Agreement, possession was to be handed over within a period of 42 months from the date of approval of the Building Plans, with a Grace Period of 180 days. Despite the aforesaid terms, the Developer had not offered possession to the Apartment Buyers till the date of filing the complaint, even though the ―Commitment Period‖ for handing over possession had expired on 22.01.2017, and also the Grace Period had lapsed on 22.07.2017. The Apartment Buyers had regularly paid instalments as per the demands raised by the Developer. As on December 2016, a total sum of Rs.1,44,72,364/- had been paid by the Respondent No. 1 to the Developer. To date, no offer of possession has been made to Apartment Buyers.

The Apartment Buyers submitted that the Building Plans were revised in 2017, when the entire layout was changed which led to the scrapping of some of the residential towers, so that the same could be converted to commercial towers in the project. It was further mentioned that the office of the District 10 Town Planner (Enforcement), Gurgaon, Haryana, vide a restraint order dated 20.02.2017 issued Memo No.525-526 to the Developer to immediately stop the construction with respect to Tower-A and Tower-B for causing harassment to the buyers.

10. The Developer filed its reply to the Consumer Complaint submitting that there was no delay in offering possession of the flats, since as per Clause 13.3 of the Agreement, possession was to be handed over to the allottees within 42 months from the date of approval of the Building Plans, which included fulfilment of the conditions imposed thereunder. The Building Plan approval had been granted on 23.07.2013, which stipulated compliance with several pre-conditions, including obtaining Fire Safety Scheme approval. This approval was granted only on 27.11.2014. Consequently, the 48 months‘ time period for delivery of possession of the apartment would commence only on 27.11.2014, and expire on 27.11.2018. Consequently, there was no delay in offering possession of the apartments. Hence, the complaint was premature and liable to be dismissed.

11. The National Commission in another case titled as “IREO Grace Realtech Pvt. Ltd. v. Ritu Hasija” being CC No.190 of 2017 and connected matters, decided on 18.09.2018, held that clause 44 of that Agreement was wholly unfair and one-sided, which gave only a limited right to the Apartment Buyers to terminate the agreement, and seek refund of the amount paid by them. Clause 21.3 of the Flat Buyers Agreement read in conjunction with the other Clauses of the Agreement would result in a situation where a flat buyer, despite the failure of the builder to offer possession within the time stipulated, 11 would be practically left remediless for 1½ years from the date of default, with no interest or compensation payable to him, even though the money was utilized by the builder. Even the principal amount would be refunded at an uncertain future point, after the builder had sold the apartment allotted to the complainant. Such a term was wholly unfair and unjust since the Developer had the right to terminate the agreement even if a single default occurred on the part of the Buyers, and forfeit the earnest money, and deduct other charges specified in Clause 21.3 of the Buyers Agreement. Clause 44 postponed the right of the flat buyer to terminate the agreement and seek compensation even after the Grace Period had expired, which was wholly unfair and one-sided. The contract could be terminated after a delay of 12 months, and would be entitled to only delay compensation, without interest.

The Commission held that since the Developer had failed to deliver possession of the allotted flats to the Apartment Buyers, it amounted to deficiency in service, and the complainants were entitled to refund of the amount alongwith appropriate compensation.

The Developer has filed SLP (C) No.40286 of 2019 against this judgment, which has been tagged to the present batch of appeals.

12. This judgment was followed by the National Commission in the case of Subodh Pawar v. IREO Grace Realtech Pvt. Ltd. & Others , decided on 24.09.2018. The SLP filed by the Developer against this judgment, was dismissed by the Supreme Court vide order dated 28.01.2019, on the statement made by the Counsel for the Developer that the amount due and 12 payable as per the order of the National Commission, shall be refunded within a period of four weeks with interest @ 10% p.a. w.e.f. 27.05.2018 till the date of payment.

A similar order was passed by this Court in IREO v. Surendra Arora Civil Appeal (Diary) No. 48101 of 2018 on 28.01.2019.

13. With respect to the same project, an Apartment Buyer filed a complaint under Section 31 of the Real Estate (Regulation & Development) Act, 2016 (― RERA Act ‖) read with Rule 28 of the Haryana Real Estate (Regulation & Development) Rules, 2017 before the Haryana Real Estate Regulatory Authority, Gurugram (―RERA‖). In this case, the Authority vide order dated 12.03.2019 held that since the environment clearance for the project contained a pre-condition for obtaining Fire Safety Plan duly approved by the Fire Department before starting construction, the due date for possession would be required to be computed from the date of Fire Approval granted on 27.11.2014, which would come to 27.11.2018. Since the Developer had failed to fulfil the obligation under Section 11(4)(a) of this Act, the Developer was liable under the proviso to Section 18 to pay interest at the prescribed rate of 10.75% p.a. on the amount deposited by the complainant, upto the date when the possession was offered. However, keeping in view the status of the project, and the interest of other allottees, the Authority was of the view that refund cannot be allowed at this stage. The Developer was directed to handover possession of the apartment by 30.06.2020, as per the Registration Certificate for the project.

14. The present batch of consumer complaints was decided by the National Commission vide judgment and order dated 28.03.2019, which has been impugned herein. The National Commission has allowed the consumer complaints in terms of the earlier order passed in the Subodh Pawar case (supra). The National Commission recorded the statement of the counsel for the complainants that in order to avoid any further litigation, the complainants were restricting their claim for refund of the principal amount paid to the Developer, alongwith compensation @ 10% S.I. p.a. w.e.f. from 10.07.2017, which was awarded by this Court to another allottee in the same project as per Consent Order dated 28.01.2019 passed in Civil Appeal Diary No.48101 of 2018.

15. We have heard the learned Counsel for the parties. The issues which have arisen for consideration are :

sided, and the Apartment Buyers would not be bound by the same;

(iii) Whether the provisions of the Real Estate (Regulation and Development) Act, 2016 must be given primacy over the Consumer Protection Act, 1986 ;

(iv) Whether on account of the inordinate delay in handing over possession, the Apartment Buyers were entitled to terminate the agreement, and claim refund of the amounts deposited with interest.

16. The counsel for the Appellant – Developer inter alia submitted that :

Clause 17(iv) of the Building Plans duly sanctioned on 23.07.2013 issued by the Directorate of Town and Country Planning, stipulated that:-

conditions under the Building Plan, and must be given effect to by any adjudicatory body.

(c) Under Sections 15(2) and (3) of the Haryana Fire Service Act, 2009 , it is the duty of the Authority to grant a provisional NOC within a period of 60 days from the date of submission of the application. The delay/failure of the Authority to grant a provisional NOC cannot be attributed to the Developer.

(d) The Apartment Buyers was not required to pay the entire consideration amount at the commencement of the agreement, in a lump sum amount, since the consideration was linked to the construction plan, and was payable in instalments at various stages of the construction.

The Developer had not taken any instalment prior to 27.11.2014, when the Fire Safety NOC was granted. The first instalment was taken on 27.01.2015, when a demand for casting the lower roof slab was 16 made from the allottees. All substantial payments of the project were based on milestones linked to construction.

(e) It was submitted that in large development projects, where multiple towers are being constructed, delays are inevitable. The Agreement contemplated a reasonable Grace Period of 180 days, which is a standard clause in the construction industry. The Apartment Buyer is not entitled to seek refund unless the Extended Delay Period is over. In any event, the Apartment Buyer is being paid Delay Compensation for the period of delay which has occurred during the course of construction.

(f) The finding recorded by the National Commission that the clauses of the Apartment Buyer‘s Agreement were one-sided and unfair was illegal and without jurisdiction, under the Consumer Protection Act, 1986 . It was only under the Consumer Protection Act, 2019 , which came into effect from 20.07.2020, that the State Consumer Forum and the National Commission were conferred with the power to declare contractual terms that were as unfair to consumers as null and void. Such power did not exist under the 1986 Act.

(g) It was further submitted that the National Commission was not justified in passing the impugned order by directing a full refund of the principal amount with interest @ 10% S.I. p.a. as compensation from 10.07.2017 till the refund was made within four weeks, failing which, 17 interest would be payable from the date of each deposit to the Developer, till the entire amount was refunded.

(h) It was submitted that the Respondents in Civil Appeals No.7615, 7975, 8454, 8480, 8482, 8785-8794, 9139, 9216 and 9638 of 2019; and the Appellant in Civil Appeal No.3064 of 2020, are defaulters since they had paid only between 30 to 40% of the total consideration. These buyers had breached their obligation to make payments as per the construction linked payment plan. Despite this, the Developer had made an alternate offer of similar units in the completed towers in Phase 1 of the project where the Occupation Certificate had been granted, before the expiry of the Extended Delay Period.

(i) It was contended that the decision of the RERA must be given primacy over the National Commission. The impugned judgment passed by the National Commission was in direct conflict with the judgment passed by the RERA, Haryana since the National Commission had assumed the due date for offer of possession as 23.01.2017. The RERA had correctly held that the due date for delivery of possession of apartments under the Agreement was 27.11.2018. RERA had directed the Developer to hand over possession by 30.06.2020, as mentioned in the Registration Certificate filed before the RERA. In view of the conflicting views taken by the two Fora which exercise original jurisdiction, it is the order of RERA which ought to be upheld. Particularly, since RERA is a specialized fact-finding authority with respect to real estate projects, it is the special law which must 18 prevail over the general law. RERA has been established under the Real Estate (Regulation & Development) Act, 2016 (― RERA Act ‖), for regulation and promotion of the real estate sector.

(j) It was submitted that by 21.07.2017, the construction of Phase I of the project had been completed, which comprised of Towers A6 – A10, B1 – B4, and C3 – C7, for which the Occupation Certificate was issued on 31.05.2019, and an offer of possession was made to the apartment buyers.

With respect to the remaining Towers in Cluster-A comprising of buildings A1 to A5; Cluster-B comprising of buildings B5 to B8; and, Cluster-C comprising of buildings C8 to C11, the application for grant of part Occupation Certificate was submitted on 10.09.2019, which is pending approval.

The Developer made an alternate offer to the apartment buyers whose allotments were in Phase-II of the project, where the Occupancy Certificate has yet to be obtained, to transfer their allotment to a ready to move-in apartment in Phase-I of the project, where the Occupation Certificate had been issued.

The construction and development of ―The Corridors‖ group housing project has now been completed, with Occupation Certificate having been issued with respect to 700 apartments, out of a total of 1356 apartments in Towers A6 to A10, B1 to B4, and C3 to C7. 19

(k) The Consent Order passed in IREO Grace Realtech Pvt. Ltd. v.

Surendra Arora could not be relied upon to grant relief in this batch of cases, since it was a Consent Order passed by the Court, and could not be treated as a precedent.

17. In response, the Apartment Buyers have inter alia submitted as under :-

The Developer received the Occupation Certificate for certain Towers of the Project on 31.05.2019. Possession was offered to the Apartment Buyers in Phase I of the project in 2019, after a delay of 1 ½ years.

Assuming that the date for possession would begin from the date of issuance of the Fire NOC i.e. 27.11.2014, the Developer was required to offer possession by 27.11.2018. The Developer offered possession in Phase I of the Project to certain Apartment Buyers only after it received the Occupation Certificate in 2019.

With respect to the majority of the apartment buyers before this Court, their allotments were in Towers which were in Phase II of the project, where O.C. is yet to be obtained even as on date. Consequently, there has been a delay of over 3 ½ years. 20

(b) The grant of Fire NOC was not a pre-condition for commencement of construction work. In fact, the Developer had started the construction before the grant of Fire NOC. Therefore, it could not be contended that the delay in issuance of the Fire Safety clearance had impeded the construction of the units allotted to the respondents.

(c) The Developer had sought payment of the first three instalments prior to receiving the Fire NOC. The third instalment was paid on 18.03.2014, before the grant of Fire NOC.

(d) It was further submitted that neither the Building Plan Approval nor Section 15 of the Haryana Safety Act, 2009 places any restriction on the commencement of construction, which would be evident from the fact that the Developer had started the construction before the grant of the Fire NOC.

(e) The sanctioned Building Plans stipulated that the NOC for Fire Safety (Provisional) was required to be obtained within a period of 90 days from the date of approval of the Building Plans, which expired on 21.10.2013. The Developer applied for the Provisional Fire Approval on 24.10.2013 after the expiry of the mandatory 90 days‘ period got over. The application filed was deficient and casual and did not provide the requisite details. The appellant submitted the corrected sets of drawings as per the NBC-2005 Fire Scheme only on 13.10.2014, which reflected the laxity of the Developer in obtaining the Fire NOC. 21 The approval of the Fire Safety Scheme took more than 16 months from the date of the Building Plan approval i.e. from 23.07.2013 to 27.11.2014. The Builder failed to give any explanation for the inordinate delay in obtaining the Fire NOC.

(f) The Respondents placed reliance on the order passed in the case of IREO Victory Valley Pvt. Ltd. v. Shamshul Hoda Khan,1 wherein the National Commission held that the Fire NOC was not a pre-condition for commencement of the construction work. The Appeal of the Developer was rejected by this Court vide order dated 03.05.2019, and the Review Petition was dismissed on 15.10.2019.

(g) The Agreement contained one-sided clauses, which were not final and binding on the apartment buyers, and would constitute an unfair trade practice. Reliance was placed on the judgment of this Court in Pioneer Urban Land and Infrastructure Ltd v. Govindan Raghavan.2

(h) The respondents submitted that they had availed of loans to pay the instalments, on which interest @ 7.90% was being paid. On account of the inordinate delay which had occurred, they were unable to pay further instalments, and insisted on refund of the amounts paid. 1 Civil Appeal No.4801 of 2019 decided on 03.05.2019. 2 (2019) 5 SCC 725.

22 DISCUSSION & ANALYSIS

18. Determination of the date for handing over Possession The first issue which has been raised by the Appellant - Developer as also the Apartment Buyers, is the relevant date from which the 42 months‘ period is to be calculated for handing over possession. Clause 13.3 of the Agreement states that the Developer proposed to offer possession of the apartment to the allottee within a period of 42 months from the date of approval of the Building Plans and/or fulfilment of the pre-conditions imposed thereunder, referred to as the ―Commitment Period‖. The Company would be entitled to a further ―Grace Period‖ of 180 days‘ after the expiry of the Commitment Period for unforeseen delays beyond the reasonable control of the Company. This would work out to 42 + 6 months i.e. 48 months. 18.1 The point of controversy is whether the 42 months‘ period is to be calculated from the date when the Fire NOC was granted by the concerned authority, as contended by the Developer; or, the date on which the Building Plans were approved, as contended by the Apartment Buyers. 18.2 Section 15 of the Haryana Fire Safety Act, 2009 makes it mandatory for a Builder/Developer to obtain the approval of the Fire Fighting Scheme conforming to the National Building Code of India, and obtain a No Objection Certificate before the commencement of construction. Section 15 is extracted hereinbelow for ready reference:

Explanation. –In case any person proposes to increase the number of floors on any building already constructed in such a manner that it shall qualify for being termed as a high rise building, shall before construction, apply for no objection certificate.

(3) The provisional no objection certificate shall be issued within 60 days of submission of application along with such fee, as may be prescribed, giving all the details of the construction being undertaken as well as the rescue, fire prevention and fire safety details required to be incorporated during the period of construction.

(4) During the process of construction, the inspection of the construction may be conducted and the advice about any additions, deviations, modifications that are required to be carried out from the precaution and prevention point of view, may be tendered. Such advice shall be made on a prescribed proforma and handed over to the party concerned.

(5) On completion of the construction of the high-rise building, a no objection certificate shall be obtained. In the absence of such certificate, the owner shall not occupy, lease or sell the building.‖ (emphasis supplied) 18.3 Clause 13.3 of the Apartment Buyer‘s Agreement provides that the 42 months‘ period has to be calculated from the date of approval of the Building Plans and/or fulfilment of the pre-conditions imposed thereunder. 18.4 The Building Plans sanctioned by the Directorate of Town and Country Planning, Haryana contained the Terms & Conditions of Approval, which included a provision for Fire Safety contained in Clause (3). The Developer was directed to submit Fire Safety Plans indicating the complete Fire Protection Arrangements, and means of escape/access for the proposed building with suitable legend and standard signs. 24 Clause 3 of the Building Plans contained a provision for Fire Safety, which reads :

―17 (iv) That the Developer shall obtain the clearance/NOC as per the provisions of the Notification No. S.O. 1533(E) dated 14.09.2006 issued by Ministry of Environment and Forest, Government of India before starting the construction/execution of development works at site.‖ (emphasis supplied) 18.7 The Environmental Clearance granted by the Ministry of Environment & Forest Government of Haryana on 12.12.2013 required the Developer to 25 submit a copy of the Fire Safety Plan approved by the Fire Department, before commencing construction of the project.

General Condition (vi) under Part B of the Environmental Clearance stipulated that the Developer shall obtain all other statutory clearances, including the approval from the Fire Department, prior to construction of the project.

Clause (vi) provides that :

The Commissioner vide letter dated 30.12.2013 raised 16 objections with respect to the proposed Fire Fighting Plan.

The Developer vide letter dated 22.01.2014 responded to the objections, submitting that the objections had been cured, and requested that the approval of the Fire Fighting Scheme be granted on a priority basis.

The Fire Department informed the Developer vide letter dated 28.03.2014 that the deficiencies in the application for Fire NOC had not been cured. The Developer was granted a further period of 15 days‘ to cure the defects, failing which, its application would be deemed to be rejected.

The Developer submitted revised drawings as per the NBC Fire Scheme alongwith its letter dated 18.08.2014. This letter was received in the office of the Municipal Corporation on 13.10.2014, as per endorsement on the said letter.

18.11 On 27.11.2014, the Director, Haryana Fire Service granted approval to the Fire Fighting Scheme subject to the conditions mentioned therein. The computation of the period for handing over possession would be computed from this date. The Commitment Period of 42 months plus the Grace Period of 6 months from 27.11.2014, would be 27.11.2018, as being the relevant date for offer of possession.

The aforesaid chronology for obtaining Fire NOC would indicate a delay of approximately 7 months in obtaining the Fire NOC by the Developer. 27

19. Whether the terms of the Apartment Buyer’s Agreement are one-sided?

The second issue which has been raised by the Apartment Buyers is that the Agreement in this case, contains wholly one-sided clauses, and would not be bound by its terms.

19.1 We have carefully perused the terms of the Agreement, and an analysis of the same reveals that :

Delay compensation at Rs. 7.5 per sq. ft. works out to approximately 0.9% to 1 % Interest per annum. The price per sq. ft of an apartment under the Apartment Buyer‘s Agreement was Rs. 10,350/- per sq. ft. The compensation payable for delay was Rs. 7.5 per sq. ft. The compensation payable by the Developer for delay in offering possession works out to :

The Delay Compensation would be payable to the allottee only if the termination was ―validly opted‖. The compensation was limited to a fixed period of 12 months only, and that no other claim whatsoever, whether monetary or otherwise, was payable by the Developer.

f) Clause 13.8 of the Agreement provides that the allottee shall be deemed to have waived all its claims in respect of the area, specifications, quality, construction, any other provision in the apartment against the Developer upon taking possession of the apartment.

g) Clause 21 provides for termination of the Agreement and forfeiture of earnest money by the Developer, if the allottee neglects or fails to make timely payments as stipulated in the Agreement, or fails to exercise the options offered by the Developer.

29 Clause 21.3 provides that upon such termination, the Appellant Company shall be under no obligation, except to refund the amounts already paid by the allottee, without any interest, and after forfeiting and deducting the earnest money, interest on delayed payments, brokerage / commission / charges, service tax and other amounts due and payable to it. The principal amount after the aforesaid deductions are made, would be refunded at an uncertain future date i.e. after the Developer had sold the apartment allotted to the complainant.

In contrast, the allottee is given a very limited right to cancel the Agreement solely in the event of the clear and unambiguous failure of the warranties of the Company, which leads to frustration of the Agreement on that account. In such case, the allottee will be entitled to a refund of the instalments actually paid, along with interest @ 8% p.a. within a period of 90 days from the date of determination to this effect. No other claim, whatsoever, monetary or otherwise shall lie against the Company.

19.2 The aforesaid clauses reflect the wholly one-sided terms of the Apartment Buyer‘s Agreement, which are entirely loaded in favour of the Developer, and against the allottee at every step.

The terms of the Apartment Buyer‘s Agreement are oppressive and wholly one-sided, and would constitute an unfair trade practice under the Consumer Protection Act, 1986 .

30 19.3 Section 2(1)(c) of the Consumer Protection Act, 1986 defines a ‗complaint‘ as :

…. ‖ (emphasis supplied) Section 2(1)(g) of the Act defines the expression ―deficiency‖ to include any fault, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained under law, or in pursuance of a contract, or in relation to a ‗service‘.

The term ―service‖ has been defined by S. 2(1)(o) to include a service of any description which is made available to potential users.

S. 2(1)(o) was amended by Act 50 of 1993 w.e.f. from 18.06.1993 to include ―housing construction‖ within the purview of ―service‖. The amended Section 2(1)(o) reads as follows :-

―2. …. A scrutiny of various definitions such as ‗consumer‘, ‗service‘, ‗trader‘, ‗unfair trade practice‘ indicates that legislature has attempted to widen the reach of the Act. Each of these definitions are in two parts, one, explanatory and the other explanatory. The explanatory or the main part itself uses expressions of wide amplitude indicating clearly its wide sweep, then its ambit is widened to such things which otherwise would have been beyond its natural import. Manner of construing an inclusive clause and its widening effect has been explained in Dilworth v. Commissioner of Stamps [1899 AC 99 : 15 TLR 61] as under:

6….. As pointed out earlier the entire purpose of widening the definition is to include in it not only day to day buying and selling activity undertaken by a common man but even such activities which are otherwise not commercial in nature yet they partake of a character in which some benefit is conferred on the consumer. Construction of a house or flat is for the benefit of person for whom it is constructed. He may do it himself or hire services of a builder or contractor. The latter being for consideration is service as defined in the Act. Similarly when a statutory authority develops land or allots a site or constructs a house for the benefit of common man it is as much service as by a builder or contractor. The one is contractual service and other statutory service. If the service is defective or it is not what was represented then it would be unfair trade practice as defined in the Act. Any defect in construction activity would be denial of comfort and service to a consumer. When possession of property is not delivered within stipulated period the delay so caused is denial of service. Such disputes or claims are not in respect of immoveable property as argued but deficiency in rendering of service of particular standard, quality or grade. Such deficiencies or omissions are defined in sub-clause (ii) of clause (r) of Section 2 as unfair trade practice.

A person who applies for allotment of a building site or for a flat constructed by the development authority or enters into an agreement with a builder or a contractor is a potential user and nature of transaction is covered in the expression 'service of any description'. It further indicates that the definition is not exhaustive. The inclusive clause succeeded in widening its scope but 32 not exhausting the services which could be covered in earlier part. So any service except when it is free of charge or under a constraint of personal service is included in it. Since housing activity is a service it was covered in the clause as it stood before 1993.‖ 19.4 Clause 2(1)(r) of the Consumer Protection Act, 1986 defines ―unfair trade practice‖ as follows :-

6.2. The respondent flat purchaser has made out a clear case of deficiency of service on the part of the appellant builder. The respondent flat purchaser was justified in terminating the apartment buyer's agreement by filing the consumer complaint, and cannot be compelled to accept the possession whenever it is offered by the builder. The respondent purchaser was legally entitled to seek refund of the money deposited by him along with appropriate compensation.

6.3 The National Commission in the impugned order dated 23-10-2018 [ Geetu Gidwani Verma v. Pioneer Urban Land and Infrastructure Ltd. , 2018 SCC OnLine NCDRC 1164] held that the clauses relied upon by the builder were wholly one-sided, unfair and unreasonable, and could not be relied upon. The Law Commission of India in its 199th Report, addressed the issue of ―Unfair (Procedural & Substantive) Terms in Contract‖. The Law Commission inter alia recommended that a legislation be enacted to 4 (2019) 5 SCC 725.

33 counter such unfair terms in contracts. In the draft legislation provided in the Report, it was stated that:

2012 are ex facie one-sided, unfair and unreasonable. The incorporation of such one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder.‖ 19.5 In a similar case, this Court in Wg. Cdr. Arifur Rahman Khan & Others v. DLF Southern Homes Pvt. Ltd.,5 affirmed the view taken in Pioneer (supra), and held that the terms of the agreement authored by the Developer does not maintain a level platform between the Developer and the flat purchaser. The stringent terms imposed on the flat purchaser are not in consonance with the obligation of the Developer to meet the timelines for construction and handing over possession, and do not reflect an even bargain. The failure of the Developer to comply with the contractual obligation to provide the flat within the contractually stipulated period, would amount to a deficiency of service. Given the one-sided nature of the Apartment Buyer‘s Agreement, the consumer fora had the jurisdiction to award just and reasonable compensation as an incident of the power to direct removal of deficiency in service.

19.6 Section 14 of the 1986 Act empowers the Consumer Fora to redress the deficiency of service by issuing directions to the Builder, and compensate 5 2020 SCC Online SC 667.

34 the consumer for the loss or injury caused by the opposite party, or discontinue the unfair or restrictive trade practices.

19.7 We are of the view that the incorporation of such one-sided and unreasonable clauses in the Apartment Buyer‘s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act, the powers of the consumer fora were in no manner constrained to declare a contractual term as unfair or one-sided as an incident of the power to discontinue unfair or restrictive trade practices. An ―unfair contract‖ has been defined under the 2019 Act, and powers have been conferred on the State Consumer Fora and the National Commission to declare contractual terms which are unfair, as null and void. This is a statutory recognition of a power which was implicit under the 1986 Act.

In view of the above, we hold that the Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement.

20. Whether primacy to be given to RERA over the Consumer Protection Act 20.1 The Consumer Protection Act, 1986 was enacted to protect the interests of consumers, and provide a remedy for better protection of the interests of consumers, including the right to seek redressal against unfair trade practices or unscrupulous exploitation.

The Statement of Objects and Reasons of the Consumer Protection Bill, 1986 reads as :

(b) the right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices;

(c) the right to be assured, wherever possible, access to an authority of goods at competitive prices;

(d) the right to be heard and to be assured that consumers interests will receive due consideration at appropriate forums;

(e) the right to seek redressal against unfair trade practices or unscrupulous exploitation of consumers; and

(f) right to consumer education.

3. These objects are sought to be promoted and protected by the Consumer Protection Council to be established at the Central and State level.

4. To provide speedy and simple redressal to consumer disputes, a quasi-judicial machinery is sought to be set up at the district, State and Central levels. These quasi-judicial bodies will observe the principles of natural justice and have been empowered to give relief of a specific nature and to award, wherever appropriate, compensation to consumers. Penalties for non-compliance of the orders given by the quasi-judicial bodies have also been provided.‖ (emphasis supplied) 20.2 Section 3 of the Consumer Act provides that the remedies under the Act are in addition to, and not in derogation of any other law applicable. Section 3 reads as :

better protection of the interest of the consumer and for that purpose to provide for better redressal, mechanism through which cheaper, easier, expeditious and effective redressal is made available to consumers. To serve the purpose of the Act, various quasijudicial forums are set up at the district, State and national level with wide range of powers vested in them. These quasi-judicial forums, observing the principles of natural justice, are empowered to give relief of a specific nature and to award, wherever appropriate, compensation to the consumers and to impose penalties for non-compliance with their orders.

12. As per Section 3 of the Act, as already stated above, the provisions of the Act shall be in addition to and not in derogation of any other provisions of any other law for the time being in force. Having due regard to the scheme of the Act and purpose sought to be achieved to protect the interest of the consumers better, the provisions are to be interpreted broadly, positively and purposefully in the context of the present case to give meaning to additional/extended jurisdiction, particularly when Section 3 seeks to provide remedy under 19 the Act in addition to other remedies provided under other Acts unless there is a clear bar.‖ In National Seeds Corporation Limited v. M. Madhusudhan Reddy,7 the jurisdiction of the District Consumer forum was challenged on the ground that there was an arbitration clause in the Agreement between the parties. It was contended that the provisions of the Seeds Act, 1966 would prevail over the Consumer Protection Act . Relevant extracts of the ruling are extracted hereinunder :

62. Since the farmers/growers purchased seeds by paying a price to the appellant, they would certainly fall within the ambit of Section 2(1)(d)(i) of the Consumer Protection Act and there is no reason to deny them the remedies which are available to other consumers of goods and services.‖ ….

64. According to the learned counsel for the appellant, if the growers had applied for arbitration then in terms of Section 8 of the Arbitration and Conciliation Act the dispute arising out of the arbitration clause had to be 23 referred to an appropriate arbitrator and the District Consumer Forums were not entitled to entertain their complaint. This contention represents an extension of the main objection of the appellant that the only remedy available to the farmers and growers who claim to have suffered loss on account of use of defective seeds sold/supplied by the appellant was to file complaints with the Seed Inspectors concerned for taking action under Sections 19 and/or 21 of the Seeds Act .

66. The remedy of arbitration is not the only remedy available to a grower. Rather, it is an optional remedy. He can either seek reference to an arbitrator or file a complaint under the Consumer Protection Act . If the grower opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Protection Act . However, if he chooses to file a complaint in the first instance before the competent Consumer Forum, then he cannot be denied relief by invoking Section 8 of the Arbitration and Conciliation Act, 1996. Moreover, the plain language of Section 3 of the Consumer Protection Act makes it clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force.‖ Subsequently, the judgments in Thirumurugan Cooperative Agricultural Society (Supra) and National Seeds were followed in Virender Jain v. Alaknanda Cooperative Group Housing Society Limited and others.8 20.3 Various judgments of this Court have upheld the applicability of provisions of Consumer Protection Act as an additional remedy, despite the existence of remedies under special statutes, including the Arbitration and Conciliation Act, 1996 . In Emaar MGF Land Ltd. v. Aftab Singh,9 this Court has held that the remedy under the Consumer Protection Act, 1986 is 8 (2013) 9 SCC 383.

(2019) 12 SCC 751.

38 confined to the Complaint filed by a Consumer as defined by the Act, for defects and deficiency caused by the service provider. The existence of an arbitration clause was not a ground to restrain the Consumer Fora from proceeding with the consumer complaint.

20.4 We will now consider the provisions of the RERA Act , which was brought into force on 01.05.2016.

The Statement of Objects and Reasons of the RERA Act, 2016 read as follows :

Section 71 reads as :

Section 79 reads as :

16. The doctrine of election, as commonly understood, would, thus, not be attracted under the Act in view of the express phraseology used in Section 31 of the Act, viz., ―without prejudice to the provisions of Section 29 of this Act‖. While the Corporation cannot simultaneously pursue the two remedies, it is under no disability to take recourse to the rights and remedy available to it under Section 29 of the Act even after an order under Section 31 has been obtained but without executing it and withdrawing from those proceedings at any stage. The use of the expression ―without prejudice to the provisions of Section 29 of the Act‖ in Section 31 cannot be read to mean that the Corporation after obtaining a final order under Section 31 of the Act from a court of competent jurisdiction, is denuded of its rights under Section 29 of the Act. To hold so would render the above-quoted expression redundant in Section 31 of the Act and the courts do not lean in favour of rendering words used by the Legislature in the statutory provisions redundant. The Corporation which has the right to make the choice may make the choice initially whether to proceed under Section 29 of the Act or Section 31 of the Act, but its rights under Section 29 of the Act are not extinguished, if it decides to take recourse to the provisions of Section 31 of the Act. It can abandon the proceedings under Section 31 of the Act at any stage, including the stage of execution, if it finds it more practical, and may initiate proceedings under Section 29 of the Act.‖ The doctrine of election is based on the rule of estoppel. In P.R. Deshpande v. Maruti Balaram Haibatti,11 it was held that :

remedies are available for the same relief, the aggrieved party has the option to elect either of them but not both. Although there are certain exceptions to the same rule but the same has no application in the instant case.

27. The first respondent having chosen the forum under the 1923 Act for the purpose of obtaining compensation against his employer cannot now fall back upon the provisions of the 1988 Act therefor, inasmuch as the procedure laid down under both the Acts are different save and except those which are covered by Section 143 thereof.

33. On the establishment of a Claims Tribunal in terms of Section 165 of the Motor Vehicles Act, 1988, the victim of a motor accident has a right to apply for compensation in terms of Section 166 of that Act before that Tribunal. On the establishment of the Claims Tribunal, the jurisdiction of the civil court to entertain a claim for compensation arising out of a motor accident, stands ousted by Section 175 of that Act. Until the establishment of the Tribunal, the claim had to be enforced through the civil court as a claim in tort. The exclusiveness of the jurisdiction of the Motor Accidents Claims Tribunal is taken away by Section 167 of the Motor Vehicles Act in one instance, when the claim could also fall under the Workmen's Compensation Act, 1923 . That section provides that death or bodily injury arising out of a motor accident which may also give rise to a claim for compensation under the Workmen's Compensation Act , can be enforced through the authorities under that Act, the option in that behalf being with the victim or his representative. But Section 167 makes it clear that a claim could not be maintained under both the Acts. In other words, a claimant who becomes entitled to claim compensation under both the Motor Vehicles Act, 1988 and the Workmen's Compensation Act , because of a motor vehicle accident has the choice of proceeding under either of the Acts before the forum concerned. By confining the claim to the authority or the Tribunal under either of the Acts, the legislature has incorporated the concept of election of remedies, insofar as the claimant is concerned. In other words, he has to elect whether to make his claim under the Motor Vehicles Act, 1988 or under the Workmen's Compensation Act, 1923 . The emphasis in the section that a claim cannot be made under both the enactments, is a further reiteration of the doctrine of election incorporated in the scheme for claiming compensation. The principle ―where, either of the two alternative Tribunals are open to a litigant, each having jurisdiction over the matters in dispute, and he resorts for his remedy to one of such Tribunals in preference to the other, he is precluded, as against his opponent, from any subsequent recourse to the latter‖ (see R. v. Evans [(1854) 3 E & B 363 : 118 ER 1178] ) is fully incorporated in the scheme of Section 167 of the Motor Vehicles Act, precluding the claimant who has invoked the Workmen's Compensation Act from having resort to the provisions of the Motor Vehicles Act , except to the limited extent permitted therein. The claimant having resorted to the Workmen's Compensation Act , is controlled by the provisions of that Act subject only to the exception recognised in Section 167 of the Motor Vehicles Act.‖ (emphasis supplied) 43 In Transcore v. Union of India,13 this Court considered the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (― SARFAESI Act ‖) and the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (―RDDB Act‖), wherein it was held that there are three elements of election viz. existence of two or more remedies, inconsistencies between such remedies, and a choice of one of them. If any one of the three elements is not there, the doctrine will not apply.

The judgment in Transcore was subsequently followed in Mathew Varghese v. M. Amritha Kumar,14 where it was held that :

(2014) 5 SCC 610.

(2020) 10 SCC 783.

44 Section 88 of the RERA Act makes the position clear. Section 18 of the RERA Act specifies that the remedies are ―without prejudice to any other remedy available‖. We place reliance on this judgment, wherein it has been held that :

The factum of delay in completing the construction and making the offer of possession is an undisputed fact in this case. 21.2 In the present case, the allottees before this Court in the present batch of appeals, can be categorised into two categories:- 45

CHART A APARTMENTS WHERE O.C. OBTAINED BY DEVELOPER S. Cause Title & Particulars of Amount Paid Possession of Status No. Civil Appeal No. Allotment by the Flat offered on Apartment Sale Consideration Buyer on the date of filing of Complaint 1 C.A. No.5785/2019 Unit CD-C4-04-402 Rs. Possession 1,44,72,364/- offered on IREO Grace Tower C4 28.06.2019 Realtech Private Ltd. Rs.1,45,22,006/-

APARTMENTS WHERE NO O.C. AVAILABLE EVEN AS ON DATE S. Cause Title & Civil Particulars of Amount Paid by Status of construction No. Appeal No. Allotment the Apartment Buyer on the Sale date of filing of Consideration Complaint

1. C.A. No. 7615/2019 Unit CD-A2-03-301 Rs. 60,60,828/- on After filing the Complaint, the 28.10.2016 4th demand for casting of IREO Grace Realtech Tower A2 Lower Basement Slab was Private Ltd. vs demanded on 1.2.2017.

obligated to take possession of the apartments, since the construction was completed, and possession offered on 28.06.2019, after the issuance of Occupation Certificate on 31.05.2019. The Developer is however obligated to pay Delay Compensation for the period of delay which has occurred from 27.11.2018 till the date of offer of possession was made to the allottees.

(ii) Insofar as the allottee at Serial No.3 in Chart A is concerned, he has filed Civil Appeal No.3064 of 2020 under Section 62 of the Insolvency and Bankruptcy Code, 2016 before this Court. We were informed by the Counsel 50 for the allottee that the Developer had filed an affidavit dated 16.09.2019 before the National Company Law Tribunal (―NCLT‖) stating that it was willing to refund the principal amount of Rs.1,59,29,016/- in four equal instalments, and had produced photocopy of the cheques. The relevant portion of the affidavit filed by the Developer before the NCLT is extracted hereunder :-

A.‖ Despite the said Undertaking given before the NCLT, the Developer has failed to refund even the principal amount so far.

We direct the Developer to refund the amount deposited by the said Appellant within a period 4 weeks from the date of this judgment with interest @ 9% p.a. from 16.09.2019 (date of the affidavit filed by the Developer before the NCLT). If this direction is not complied with, the Developer will be liable to pay Default Interest @12% p.a. on the entire amount. Chart B allottees

(i) Insofar as the allottees in Chart B are concerned, they have paid part consideration, in most cases up to the 4th instalment till 2017, when they found that there was no progress being made in respect of the Towers in which the apartments had been allotted to them. It is an admitted position that Occupation Certificate for Towers A1, A2, A3, B7, C9 and C11, in which the allotments have been made for this category has not been issued by the Municipal Corporation.

The apartments have not been ready for allotment even as on 30.06.2020, as per the date fixed before the RERA Authority.

(ii) The allottees submitted that they were facing great hardship since they had obtained loans from Banks for purchasing these apartments, and were paying high rates of interest. In 2017, when they realised that there was no construction activity in progress, they were constrained to file consumer complaints before the National Commission, and then discontinued payment of further instalments.

(iii) The Developer made an alternate offer of allotment of apartments in Phase 1 of the project. The allottees are however not bound to accept the same because of the inordinate delay in completing the construction of the Towers where units were allotted to them. The Occupation Certificate is not available even as on date, which clearly amounts to deficiency of service. The allottees cannot be made to wait indefinitely for possession of the apartments allotted to them, nor can they be bound to take the apartments in Phase 1 of the project. The allottees have submitted that they have taken loans, and are paying high rates of interest to the tune of 7.9% etc. to the Banks.

Consequently, we hold that the allottees in Chart B are entitled to refund of the entire amount deposited by them.

(iv) In so far as award of compensation by payment of Interest is concerned, clause 13.4 of the Apartment Buyer‘s Agreement provides that the Developer shall be liable to pay the allottee compensation calculated @ Rs. 52 7.5 per sq. ft. of the Super Area for every month of delay, after the end of the Grace Period. The compensation will be payable only for a period of 12 months.

The Apartment Buyers in their Complaint filed before the National Commission made a prayer for refund of the amount deposited alongwith Interest @ 20% p.a. compounding quarterly till its realisation. The Apartment Buyers, in their submissions have stated that they have obtained home loans on which Interest @ 7.90% p.a. is being paid, even as on date.

We have considered the rival submissions made by both the parties. The Delay Compensation specified in the Apartment Buyer‘s Agreement of Rs. 7.5 per sq. ft. which translates to 0.9% to 1% p.a. on the amount deposited by the Apartment Buyer cannot be accepted as being adequate compensation for the delay in the construction of the project. At the same time, we cannot accept the claim of the Apartment Buyers for payment of compound interest @ 20% p.a., which has no nexus with the commercial realities of the prevailing market. We have also taken into consideration that in Subodh Pawar v. IREO Grace , this Court recorded the statement of the Counsel for the Developer that the amount would be refunded with Interest @ 10% p.a. A similar order was passed in the case of IREO v. Surendra Arora . However, the Order in these cases were passed prior to the out-break of the pandemic.

We are cognizant of the prevailing market conditions as a result of Covid–19 Pandemic, which have greatly impacted the construction industry. 53 In these circumstances, it is necessary to balance the competing interest of both parties. We think it would be in the interests of justice and fairplay that the amounts deposited by the Apartment Buyers is refunded with Interest @ 9% S.I. per annum from 27.11.2018 till the date of payment of the entire amount.

The refund will be paid within a period of three months from the date of this judgment. If there is any further delay, the Developer will be liable to pay default interest @ 12% S.I. p.a.

(v) The Developer shall not deduct the Earnest Money of 20% from the principal amount, or any other amount as mentioned in Clause 21.3 of the Agreement, on account of the various defaults committed by the Developer, including the delay of over 7 months in obtaining the Fire NOC.

(vi) In Civil Appeal No.9139 of 2019, we were informed by the learned counsel that the Respondent had made a request for refund of the amount deposited since his wife was critical and required a lung transplant, to meet the huge expenses of hospitalisation. However, the Developer failed to refund the amount. During the pendency of proceedings, the wife has since expired on 08.12.2020, and there are pending hospital bills to the tune of Rs.50 to 60 lakhs to be cleared.

We direct the Developer to refund the entire amount deposited by this respondent alongwith Interest @ 9% S.I. p.a. within a period of 4 weeks from the date of this judgment. The failure to refund the amount within 4 weeks will 54 make the Developer liable for payment of default interest @ 12% S.I. p.a. till the payment is made.

The Civil Appeals are accordingly disposed of, with no order as to costs. All pending applications are disposed of.

Ordered accordingly.

….................................................J. (Dr Dhananjaya Y Chandrachud) ….................................................J. (Indu Malhotra) ….................................................J. (Indira Banerjee) New Delhi;

January 11, 2021 55