DATE OF JUDGMENT:
25th January 2022
JUDGES:
Justice L. Nageswara Rao
Justice B.R. Gavai
Justice B.R Nagarathna
PARTIES:
Appellant/Petitioner: B.B. Patel & Ors.
Respondent: DLF Universal Ltd.
SUBJECT
In the present case, an appeal was filed in the Supreme Court of India against the order of Monopolies and Restrictive Trade Practices Commission (MRTP), New Delhi which denied the allegations of unfair trade practices on behalf of the respondent for the delay in handing over the possession of the apartments.
OVERVIEW
1. The facts of the matter are such that the respondents issued advertisements for the sale of group housing apartments/flats namely, “Beverly Park-I” at Qutab Enclave Complex” in Gurgaon, Haryana under different payment schemes. One of the schemes proposed that possession of the flats/apartments was to be handed over on payment of 40% of the cost of the flat within 2 (two and a half) years and the balance amount was to be paid within equated instalments over the next seven and half years.
2. The appellants applied for the allotment of 4 apartments under the aforementioned scheme and sought to make payment under the stipulated 10-year time. The Apartment Buyer Agreement (hereinafter referred to as “ABA”) was executed on 23rd March 1993.
3. The construction of the project began only in June 1996 when the respondents were supposed to hand over the possession to appellants in January 1996, however, the appellants continued to make payments as devised under the ABA. An amount of Rs.14,62,552/- was paid till 14.4.1997 for each flat.
4. The respondent on 02.06.1997 sent a demand letter to the appellants about the extra charge Rs. 8,78,905/- on each flat due to an increase in the area by 9.236 sq. meters, escalation charges on material and labor, external electrification costs including 24 hours back-up power, sub-station DG sets, etc.
5. After the completion of the project, the respondent on 26.06.1998 notified the appellants that the apartments were ready for occupation and use. A Statement of Account was also sent by the respondent according to which an amount of Rs.19,88,242/- was already paid and the balance due of Rs.7,46,919/- was due for the appellants.
6. Responding to the notification, the appellants sent a letter dated 12.08.1998 stating that the appellants had already paid money over what was due and sought a refund of the excess amount paid. However, on 19.01.1999, the respondent cancelled the ABA as the outstanding amount was not paid.
7. The appellants in 1997 filed a complaint in Monopolies and Restrictive Trade Practises Commission (MRTP), New Delhi under Sections 10(a)(i) IV, 36A, 36B(a) and (d), 36D and 36E read with Sections 2(i) and 2(o) of the MRTP Act. The relief sought by the appellants:
a) An inquiry by the commission of various restrictive/unfair/monopolistic trade practices by the respondent and an appropriate cease and desist order for restraining the respondent from indulging in similar restrictive/unfair/monopolistic trade practices in the future.
b) A challenge to the cancellation of allotment of apartments at “Beverly Park-I” at Qutab Enclave Complex.
c) Setting aside the extra charges levied by the respondent by letter dated 02.6.1997.
d) Payment of interest @ 24% per annum on the installments paid by the appellants from the date of payment to the date of handing over of the possession of the apartments along with compensation of Rs. 10,00,000/-.
8. The preliminary objection was that the complaint flows from an agreement and its breach can only be a subject matter of the civil suit, and therefore, this complaint of unfair trade practice cannot be entertained was rejected by the commission citing Sections 36-A and 37(1) of the MRTP Act.
9. The Commission rejected the contention of unfair trade practices raised by the appellants. The Commission also held that no fixed period of 2 1/2 to 3 (two and a half to three) years was agreed upon between the parties for handing over possession of the apartments under the clauses 16, 18, and 21(d) of the ABA. The Commission stated that perusal of the ABA makes it clear that the construction and development would be in accordance with the building plan as may be approved by the Director, Town and Country Planning, Government of Haryana and the possession of the premises only to be delivered within 2 1/2 to 3 years after such approval. The Commission also upheld the right of respondent for extension of delivery of possession under clause 16 of the ABA. The Commission concluded that since there was no misrepresentation made by the respondent and there was no material produced by the appellants to show that they agreed under duress or fraudulent representation, delay in handing over possession of the apartments to the appellants did not amount to an unfair trade practice. Aggrieved by the order, the appellants preferred this appeal in the Supreme Court.
10. The learned counsel appearing for the appellants argued that according to the advertisement, the possession of the apartments had to be delivered within 2 1/2 to 3 years from the date of signing of ABA. The remaining amount had to be paid in the remaining 7 ½ years, however, the construction didn't even commence until 1996 for lack of approval. Hence, respondents are liable for misrepresentation and unfair trade practices. The counsel for the appellants further submitted that extra charges by the respondent were impermissible as nothing of such sort was specified in the ABA.
11. The learned counsel appearing for the respondents argued that appellants were not coerced to enter into ABA and entered onto their own free will after understanding all the conditions. There was no fixed time specified in the ABA as it was subject to approvals from the government. Moreover, it was open to the appellants to terminate the contract if they were aggrieved by the delay in handing over possession of the apartments. The extra cost demanded by the respondents was also permissible under the ABA.
LEGAL PROVISIONS
The Monopolies and restrictive Trade practices Act, 1969:
- Section 36a- Definition of unfair trade practice.
ISSUES
- Whether the respondents are liable for unfair trade practices w.r.t delay in handing over the possession of the apartments and the charge of extra costs?
JUDGMENT
1. Dealing with the question of unfair trade with reference to delay in handing over the possession of the premises to the apartment allottee as a licensee on a monthly license basis on completion of payment of 40% of the sale price and other charges as per clause 21(d), the Court referred to multiple clauses of ABA:
a) Clause 16 states that the company is entitled to a reasonable extension of time for delivery of possession of the premises, in case, possession could not be delivered within 21/2 to 3 (two and a half to three) years from the date of booking.
b) Clause 18 permits the allottee to terminate the ABA by giving notice if the company fails to deliver the possession of the premises within the period specified in clause 16.
c) According to clause 21(d), the company shall endeavour to hand over the possession of premises to the apartment allottee as a licensee on a monthly license basis on completion of payment of 40% of the sale price and other charges as per clause 21(d).
2. Keeping the clauses of the ABA in mind the Court noted that the appellants did not issue any notice for termination of the agreement, moreover, the appellants did not, at any point in time, make a grievance relating to delay in handing over possession of the apartment.
3. The Court referred to the judgment in the case of Bangalore Development Authority V. Syndicate Bank where it was held that in a contract involving construction, time is not the essence of the contract unless specified. The Court, therefore, concluded that it cannot be said that time was made the essence of the contract as a reasonable extension of time for delivery was permissible as per clause 16 as there was no intention on the part of the appellants to insist on time being the essence of the contract as they did not terminate the ABA due to delay in handing over possession of the apartments which they could have in accordance with clause 18 of the ABA.
4. The Court referred to the judgment in the case of Colgate Palmolive (India) Ltd. v. MRTP Commission & Ors. which elucidated 5 ingredients to constitute an offense of unfair trade practice:
a) There must be a trade practice (within the meaning of section 2(u) of the Monopolies and Restrictive Trade Practices Act);
b) The trade practice must be employed for the purpose of promoting the sale, use, or supply of any goods or the provision of any services;
c) The trade practice should fall within the ambit of one or more of the categories enumerated in clauses (1) to (5) of Section 36A;
d) The trade practice should cause loss or injury to the consumers of goods or services;
e) The trade practice under clause (1) should involve making a "statement" orally or in writing or by visible representation.”
5. The Court concluded that none of the above ingredients constituting an offense of unfair trade practice have been substantiated by the appellants. Hence, there was no misrepresentation made by the respondent amounting to an unfair trade practice for the delay in handing over possession of the apartments.
6. The Court denied the contention of the appellants that the imposition of extra charges was a calculated and pre-planned design of the respondent as the same was incurred due to the introduction of the third lift in each tower, space is provided for laundry facility in the basement and larger entrance lobbies in each tower. The Court, therefore, rejected the contention of unfair trade practices.
7. Concluding the judgment, the Court noted that the compensation sought by the appellants cannot be granted by the Commission as Section 12-B of MRTP Act empowers the Commission to grant compensation only when any loss or damage is caused to a consumer as a result of a monopolistic, restrictive or unfair trade practice and the appellants have failed to prove unfair trade practice on the part of the respondent, therefore, they are not entitled to any compensation.
CONCLUSION
The Court in the present case aptly described the significance of contract clauses and their relevance with respect to other legislations. The Court also referred to the jurisdiction of Monopolies and Restrictive Trade Practises Commission (MRTP) to conclude that MRTP only has jurisdiction to grant compensation only when any loss or damage is caused to a consumer as a result of a monopolistic, restrictive, or unfair trade practice.
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