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A medical practitioner is not to be held liable simply because things went wrong from mischance or misadventure or through an error of judgment in choosing one reasonable course of treatment in preference to another

SUPREME COURT OF INDIA

DIVISION BENCH

DR. (MRS.) CHANDA RANI AKHOURI AND OTHERS — Appellant

Vs.

DR. M.A. METHUSETHUPATHI AND OTHERS — Respondent

( Before : Ajay Rastogi and Abhay S. Oka, JJ. )

Civil Appeal No(s). 6507 of 2009

Decided on : 20-04-2022

Medical Negligence – Merely because doctors could not save the patient, that could not be considered to be a case of post operative medical negligence – A medical practitioner is not to be held liable simply because things went wrong from mischance or misadventure or through an error of judgment in choosing one reasonable course of treatment in preference to another – In the practice of medicine, there could be varying approaches of treatment – There could be a genuine difference of opinion – However, while adopting a course of treatment, the duty cast upon the medical practitioner is that he must ensure that the medical protocol being followed by him is to the best of his skill and with competence at his command. At the given time, medical practitioner would be liable only where his conduct fell below that of the standards of a reasonably competent practitioner in his field – Commission has not committed any manifest error in arriving to a conclusion that in post operative medical negligence or follow up care, there was no negligence being committed by the respondents which may be a foundation for entertaining the complaint filed by the appellants – Judgment of the Commission does not call for any interference by this Court.

Counsel for Appearing Parties

Mr. M.S. Ganesh, Sr.Advocate, K.Seshachary, Advocate, Mr. Siddharth Vasudev, Advocate, Ms. Gayatri Gulati, Advocate, Mr. T. V. S. Raghavendra Sreyas, Advocate, for the Appellant; Ms. Nalini Chidambaram, Sr. Advocate, Mr. A. Nair, Advocate, Mr. Vikas Mehta, Advocate, Mr. Vipin Nair, Advocate, Mr. P. B. Suresh, Advocate, Mr. Arindam Ghosh, Advocate, Mr. Anshuman Bahadur, Advocate, Mr. Karthik Jayashankar, Advocate, Mr. Prakash Baghel, Advocate, Mr. K. K. Mani, Advocate, Ms. T.Archana, Advocate, for the Respondent.

Cases Referred

Dr. Harish Kumar Khurana v. Joginder Singh and Others, (2021) 10 SCC 291
Jacob Mathew v. State of Punjab and Another, (2005) 6 SCC 1
Kusum Sharma and Others v. Batra Hospital and Medical Research Centre and Others, (2010) 3 SCC 480

JUDGMENT

Rastogi, J. – The sad demise of husband of appellant no.l after his long illness on 3^rd February, 1996 has resulted in initiation of the legal proceedings at the instance of appellant no. 1 along with her children on a bona fide belief that the cause of death of her late husband was post operative medical negligence and follow-up care.

2. The National Consumer Disputes Redressal Commission (hereinafter “the Commission”), after appreciating the material on record, including the evidence led by the parties, arrived to a conclusion that it was not a case of post operative medical negligence as being alleged by the appellants and dismissed the complaint by the judgment impugned dated 21^st July, 2009 which is the subject matter of appeal filed at the instance of the appellants under Section 23 of the Consumer Protection Act, 1986.

3. In order to appreciate the issue involved in the instant appeal, it may be necessary to cull out the facts relevant for the purpose. Complainant no.l, the widow and complainant nos. 2 and 3, the minor children of deceased Naveen Kant, jointly filed a complaint, inter alia, alleging that in the first instance in April, 1990, Naveen Kant developed hypertension and was under the treatment of Dr. P.D. Gulati, Nephrologist, but when no positive changes had come forward, Dr. Gulati advised him for renal transplantation and since then, Naveen Kant was under regular dialysis at the hospital in Delhi under the supervision of Dr. Gulati. When some of his well-wishers informed him about a reputed Nephrologist, Dr. M.A. Muthusethupathi, OP No.l who is performing kidney transplant surgery at Madras and after going through the entire medical record and seeking opinion of OP No.l and after completion of all legal formalities as being contemplated under the provisions of the Transplantation of Human Organs and Tissues Act, 1994 (hereinafter “the Act 1994”) and taking into consideration the fact that dialysis twice a week may not have been possible for longevity and for better life span of the patient Naveen Kant, the family took a decision to undergo for kidney transplantation and on the advice of OP No. 1, the patient Naveen Kant was admitted to OP No.6 (Aswini Soundra Nursing Home), which is registered under the Act 1994 and a kidney transplant surgery was successfully performed on 12^th November, 1995 by a team of 12 experts headed by OP Nos. 1, 2 and 5, who are admittedly well qualified and experts with wide knowledge and experience in their respective fields and after the medical condition of Naveen Kant was reviewed by OP No. 1, he was discharged from OP No.6 hospital on 24^th November, 1995. It may be relevant to note that the doctors who had conducted kidney transplant of the patient have conducted more than 900-1000 renal transplants with good results, but there are cases where patient died even after successful kidney transplant for various reasons which cannot be even under the control of the doctors.

4. It reveals from the record that despite all post operative medical treatment and follow up care of the patient under the supervision of medical experts, still the destiny could not save him and he finally died on 3^rd February, 1996.

5. The complaint of the appellants was that while Naveen Kant was discharged from OP No.6 hospital on 24^th November, 1995, he was asked to attend as an outdoor patient for dressing of the wound at the place of incision, but his complaint throughout was that while he was in ICU, he had a pain in his left forearm where intravenous drugs were injected and at the given time, he was assured that the pain would subside in due course of time and as and when OP No. 1 came for review, it was the consistent complaint of Naveen Kant of pain in the left forearm since he was operated and the day he was discharged on 24^th November, 1995 and within a short period of 7 days on 30^thNovember, 1995, OP No.l noticed the onset of cellulitis in Naveen Kant’s left forearm and there was a recurrence of abscess at other points, but still the doctors did not take it seriously and conducted investigations into the cause of pain and later on 16^th December, 1995, Naveen Kant developed severe headache coupled with loss of proper vision in the right eye and also started vomiting. OP No.l pointed out these problems to the doctor dialysis in-charge of OP No.6 hospital, who used to administer necessary I.V. injections and do the dressing.

6. However, on 21^st December, 1995, on the advice of OP No.l, Naveen Kant was again admitted to OP No.4 hospital and he was administered anti convulsion injection. Although attended by OP Nos.l, 3 and 5, headache, fever and pus in his left forearm still persisted. OP No.5 made a long incision in the left forearm to drain off the pus, but because OP No.l was unavailable on 30^th December, 1995, OP No.2 was called upon to take care of the patient.

7. Later, more complications crept in and because of complications, there developed abscess in pancreas and liver and the X-ray showed some abnormal developments in the lung and that later converted into Septicemia. Ultimately, the required potency of antibiotics administered or the quality of these antibiotics also failed to respond. He was later moved to ICU on instructions of OP No.3 and in the morning of 31^st January, 1996, OP No.l also visited Naveen Kant, who was at that time in unconscious stage, even after that, his condition continuously deteriorated and the fact is that no one attended to the complaint made by Naveen Kant and finally he could not be saved and left for heavenly abode on 3^rd February, 1996. This, according to the appellants was the cause of post-operative negligence and follow up care on the part of the doctors and the nursing staff of the hospital who had not provided proper medical care to Naveen Kant and attributed negligence on the part of the treating doctors and the hospital and claimed special damages/ general damages for a total sum of Rs. 95,16,174.33/-.

8. The respondents contested the complaint by filing reply affidavits, wherein it was stated that respondent No.l who was a treating doctor(OP No.l) is a Senior Nephrologist who did M.D. (General Medicines) at Stanley Medical College in 1968 and after doing his D.M. in 1977 from PGI Chandigarh, he exclusively worked and performed kidney transplantation in Government hospitals and also disclosed his professional skill which he has developed, particularly in the field of kidney transplantation and so also, the other doctors, OP No.2 Dr. S. Shivakumar and OP No.5 Dr. P.S. Venkateswaran were also the expert doctors in performing kidney transplantation and have a rich professional experience and as regards OP No.6 hospital, where kidney transplantation was performed, it was duly registered hospital under the Act, 1994 and is a fully equipped hospital for transplantation and patient Naveen Kant after successful surgery of the kidney transplantation and after 12 days in ICU with all medical protocols followed and taking into consideration his overall health, discharged on 24^th November, 1995.

9. It is further stated that the hospital records for the period 10^thNovember to 24^th November, 1995, the sequence of events relating to the immediate post Transplantation Surgery period revealed that the surgery was successfully performed on 12^th November, 1995 and later on 13^th November, 1995, the patient developed low grade fever for a few hours in the morning and there was no other evidence of any bacterial infection and Injection Reflin was administered to him and after all tests were undertaken on 14^th November, 1995, and taking into consideration the positive response of the patient, he was discharged on 24^th November, 1995 and till the date of discharge, the patient was subjected to periodical and routine visits by the Specialist Surgeons, Nephrologists and was under a constant medical observation. The medical observation of the patient as seen from the case sheet is extracted hereunder:

“Afebre – No Fever.

Lungs clear

CVS SI S2 – Normal Sound (Cardio Vascular System)

Abdomen – Soft-Mild distention.

NAD – Nothing abnormal detected.

No Oedema – No swelling throughout the body.”

10. On 17^th November 1995, the Urinary catherer tip grew klebsiella on culture for which Ciprofloracin was started. On 24^th November, 1995, the patient was discharged after remaining under post operative care for 12 days. Although complaints are made by the patient of its own kind, but he was always attended and taken care of and when the patient was called upon to continue to attend as an outdoor patient, all medical assistance possible at the command of the respondents was extended to him. It is unfortunate that the patient could not be saved despite the best medical assistance being extended to him by the experts of the field.

11. On behalf of the complainant, evidence was led by Mrs. Vimla Akhori, relative of appellant no.l, Dr.(Mrs.) Minii Rani Datta, sister of appellant no. 1, Col. Dr. Ashok Chopra, MBBS General Surgery and Dr.(Mrs.) Sophia Ahmed, as medical experts who are undisputedly not the Nephrologists. So far as the first two witnesses (relatives of appellant no. 1) are concerned, they have just narrated the statement of fact which was narrated to them by the appellants being their relative and both the witnesses Dr. Ashok Chopra and Dr. Sophia Ahmed was neither expert of kidney transplantation nor a qualified Nephrologist.

12. So far as the so-called expert evidence adduced by the appellants before the Commission is concerned, Dr. Ashok Chopra, who was a Consultant Surgeon in the BSES Global Hospital at Andheri (West), Mumbai, admittedly passed out his MBBS examination in the year 1974 and only performed general surgery during his tenure in the Army and later left the Army and served as Surgeon in Bareilly and later became a Surgeon in BSES Hospital, Andheri (West), Mumbai, although stated in his affidavit obviously based on the case sheet of the patient that the respondents have not taken post operative care of the patient and have failed to control and treat infection that has manifested itself in the form of persistent pain in the left forearm of the patient at the place where a needle had been inserted for injection of drugs in the OCU of OP No. 6. Timely and adequate medical intervention was absent in post operative medical treatment to the patient and also opinion was expressed by him regarding the drugs administered to the patient and also stated about the time the patient was discharged after 12 days of his surgery and rehospitalization of the patient in OP No.4 hospital on 21^st December, 1995 which was not a registered hospital under the Act, 1994 and the patient should have been admitted in OP No. 6 hospital which was registered where the kidney transplantation was performed and on this account, OP No.l has failed to perform his duty towards the patient by allowing him to be lodged in an unregistered hospital i.e. OP No.4. Although it has been admitted by him that the operation was successful, but because of the lackadaisical attitude and post operative care not being properly administered to the patient, it created abscess and went into septicemia, which could easily have been retrieved out of the dangerous infection leading to multi organ failure and in this way has expressed his opinion that there was a post operative negligence on the part of the respondents.

13. The second expert witness appeared on behalf of the appellants was Dr. Sophia Ahmed. She took MBBS from Patna Medical College and later did internship in Internal Medicines at Queens Hospital, Central New York and remained as a resident in Neurology at University Hospitals and Clinics at USA for almost three years and has a Fellowship in Clinical Neurophysiology and Epilepsy. With no expert knowledge of the subject based on the medical reports made a statement of a medical negligence being performed by the respondents and expressed her opinion that in the post transplant phase, patient manifested clear symptoms of infection while in the ICU and the patient was not recovered adequately for nosocomial infection and his manifest problems and indicators were not addressed by the attending doctors with seriousness and urgency and at critical junctures, the retained nephrologist displayed complete lack of professional concern for the patient and this according to her was a post operative medical negligence being committed by the respondents and only because of their lackadaisical attitude, they lost their patient.

14. On the other hand, the respondents who indeed were themselves qualified Nephrologists and experts in the field of kidney transplant operations and this fact is not disputed by the appellants as well in support thereof have produced two expert witnesses, Dr. S. Sundar and Dr. Arun Kumar, who are qualified Nephrologists.

15. Dr. S. Sundar, Director and Chief Nephrologist of Karnataka Nephrology and Transplant Institute, Bangalore stated that out of his long experience in having performed more than thousand kidney transplantation surgeries in the past 22 years and based on the evidence of literature relating to kidney transplantation, increase in total count (leucocytes) is a common phenomenon in most of the renal transplant recipients, who have been administrated Corticosteroids. Sometimes, rise in total counts does not per se mean infection but there is no reason to conclude that the patient ought not to have been discharged after 12^th day of surgery. It is also stated that leucocyte count will not rise in the post transplant period in absence of any infection that only proves lack of experience and medical knowledge of renal transplant. The witness has further stated that on 30^th November 1995, when the patient was diagnosed cellulitis/abscess, injection Reflin was administered by OP No.l which was the best medicine for cellulitis and it is a common practice to use this drug in such a situation. It was further stated by him that medical science is not an exact science like mathematics and in medical science experience of doctor treating the patient is important. It has been further averred by him that most transplant patients having fever are treated with drugs like Amikacin and Ciprofloxacin to cover a broader spectrum of organisms in the absence of definitive evidence of organism causing fever. It has been further stated by him that in the field of kidney transplantation and Nephrology, it is very difficult to diagnose and manage any infection in a Kidney Transplant patient and the reasons are many. These are:

(a) Cultures of body fluids (blood, urine, pus, etc.) are often negative.

(b) Even if an organism is isolated, it is not always possible to be certain that the particular organism is the actual cause of fever.

(c) Many of the antibiotics have deleterious effects on the transplanted kidney, thereby necessitating great care in drug selection and dosage.

(d) Un-related donor transplantation need more immune-suppression for the kidney to survive and therefore is more prone to infection.

16. Dr. Arun Kumar, who was also produced on behalf of the respondents, was also a Professor of Surgery, Head of the Department of Surgery, Coimbatore Medical College, Tamil Nadu also stated in his affidavit that he has been a kidney transplant surgeon since 1986 and has performed over 1140 renal transplantations. In clinical practice, positive findings, if any, are always noted in the case records and after going through the record history of the patient, it was stated by him that he did not find any evidence of infection at the time of discharge of the patient from OP No. 6.

17. The Commission, after taking into consideration the pleadings so also the evidence on record arrived to a conclusion that the patient Naveen Kant was under the hands of the expert team of doctors and possible medical care at the command of the doctors was fully administered to him and after being discharged from the hospital on 24^th November, 1995, still thereafter he was continued to be under treatment and merely because the expert team of doctors could not save him after his prolonged illness and he died on 3^rd February, 1996 that in itself could not be considered to be a case of post operative medical negligence and in consequence thereto dismissed the complaint filed at the instance of the appellants under judgment impugned dated 21^st July, 2009.

18. It is not disputed by counsel for the appellants that the kidney transplantation of the patient on 12^th November, 1995 was successful and they had complained but the complaint is only in reference to post operational medical negligence as the respondents have failed to discharge their statutory duty of care and medical protocols subsumed thereunder, including follow up care and that according to the appellants is a medical negligence on the part of the respondents in extending treatment to the patient Naveen Kant and being the case of post operative negligence, they have lost their patient on 3^rd February, 1996.

19. Counsel for the appellants further submitted that the patient was consistently complaining after he being successfully operated on 12^th November, 1995 and shifted to the ICU for pain in the left forearm where intravenous drugs were injected to him and when the patient was attended by OP No. l for review, he reiterated his complaint of pain in the left forearm and still he was discharged from the hospital on 24^th November, 1995. Later, the patient noticed the onset of cellulitis and recurrence of abscess being at other points, still the doctors have not taken his complaint seriously and conducted investigations into the cause of pain and later he developed severe headache, coupled with loss of proper vision in the right eye and started vomiting. These facts can be supported by the prescription chart of the patient and that was the reason for which the patient was again admitted in the hospital of OP No. 4 on 21^stDecember, 1995 and fever and pus in his left forearm still persisted. At that stage, OP No. 5 made a long incision in the left forearm to drain out the pus, but since OP No. 1 was not available, his condition deteriorated and finally left for heavenly abode on 3^rd February, 1996 and this fact has been established from the evidence placed on record of the complainant and other witnesses including the two doctors, who as an expert appeared and recorded a deposition in support of kind of post operative medical negligence committed by the respondents. The Commission, according to the counsel, although noticed these facts but has not at all appreciated the evidence on record and thus, after reproduction of the facts adduced by the parties, dismissed the complaint in a cavalier manner under the impugned judgment dated 21^st July, 2009, which needs to be revisited by this Court at least to examine as to whether it was a case of post operative medical negligence, the reason for which appellant no. 1 has lost her husband.

20. Per contra, counsel for the respondents, while supporting the findings recorded by the Commission under the impugned judgment, submits that it is not the case of the appellants that there was any slackness on the part of the team of the doctors while the patient was being operated/underwent kidney transplant on 12^th November, 1995 which was admittedly successfully performed by the qualified team of doctors headed by OP No. l and OP No. 5 and thereafter the patient was shifted to ICU for post operative treatment and even thereafter he was completely under medical supervision and got discharged on 24^th November, 1995 with further instructions that he should remain as an outdoor patient until the doctors advise him to leave the city and the reason was that as an outdoor patient, dressing of wounds at the place of incision is always to be taken proper care.

So far as the complaint of pain in the left forearm is concerned, these are some complaints which the patients normally make but it is always taken care of and the time heals complaints of the patient, but still all medical assistance which was possible under the command of the qualified doctors was extended to him. It is true that unfortunately, appellant no. l has lost her husband but this all is destiny.

21. The doctors can provide their best medical assistance available at their command but merely because they could not save the patient, that could not be considered to be a case of post operative medical negligence despite the fact that medical protocol administered by them was duly supported by the two medical experts of the field who appeared on behalf of the respondents, Dr. S. Sundar and Dr. Arun Kumar, and nothing elicits from the cross-examination made by the appellants. In the given circumstances, the findings which has been returned by the Commission needs no further interference by this Court.

22. We have heard learned counsel for both the parties and with their assistance perused the material placed on record. In order to appreciate the opinion of the Commission, it will be apposite to take note of the legal principles which would apply in the case of medical negligence.

23. In the case of medical negligence, this Court in Jacob Mathew v. State of Punjab and Another, (2005) 6 SCC 1 dealt with the law of medical negligence in respect of professionals professing some special skills. Thus, any individual approaching such a skilled person would have a reasonable expectation under the duty of care and caution but there could be no assurance of the result. No doctor would assure a full recovery in every case. At the relevant time, only assurance given by implication is that he possessed the requisite skills in the branch of the profession and while undertaking the performance of his task, he would exercise his skills to the best of his ability and with reasonable competence. Thus, the liability would only come if (a) either a person (doctor) did not possess the requisite skills which he professed to have possessed; or (b) he did not exercise with reasonable competence in given case the skill which he did possess. It was held to be necessary for every professional to possess the highest level of expertise in that branch in which he practices. It was held that simple lack of care, an error of judgment or an accident, is not proof of negligence on the part of the medical professional. This Court held as under:

“48. We sum up our conclusions as under:

(1) Negligence is the breach of a duty caused by omission to do something which a reasonable man guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do. The definition of negligence as given in Law of Torts, Ratanlal & Dhirajlal (edited by Justice G.P. Singh), referred to hereinabove, holds good. Negligence becomes actionable on account of injury resulting from the act or omission amounting to negligence attributable to the person sued. The essential components of negligence are three: “duty”, “breach” and “resulting damage”.

(2) Negligence in the context of the medical profession necessarily calls for a treatment with a difference. To infer rashness or negligence on the part of a professional, in particular a doctor, additional considerations apply. A case of occupational negligence is different from one of professional negligence. A simple lack of care, an error of judgment or an accident, is not proof of negligence on the part of a medical professional. So long as a doctor follows a practice acceptable to the medical profession of that day, he cannot be held liable for negligence merely because a better alternative course or method of treatment was also available or simply because a more skilled doctor would not have chosen to follow or resort to that practice or procedure which the accused followed. When it comes to the failure of taking precautions, what has to be seen is whether those precautions were taken which the ordinary experience of men has found to be sufficient; a failure to use special or extraordinary precautions which might have prevented the particular happening cannot be the standard for judging the alleged negligence. So also, the standard of care, while assessing the practice as adopted, is judged in the light of knowledge available at the time of the incident, and not at the date of trial. Similarly, when the charge of negligence arises out of failure to use some particular equipment, the charge would fail if the equipment was not generally available at that particular time (that is, the time of the incident) at which it is suggested it should have been used.

xxx xxx xxx

(4) The test for determining medical negligence as laid down in Bolam case [(1957) 2 All ER 118 (QBD), WLR at p. 586] holds good in its applicability in India,

xxx xxx xxx

(8) Res ipsa loquitur is only a rule of evidence and operates in the domain of civil law, specially in cases of torts and helps in determining the onus of proof in actions relating to negligence. It cannot be pressed in service for determining per se the liability for negligence within the domain of criminal law. Res ipsa loquitur has, if at all, a limited application in trial on a charge of criminal negligence.”

24. The term “negligence” has been defined in Halsbury Laws of England (Fourth Edition) para 34 and as settled in Kusum Sharma and Others v. Batra Hospital and Medical Research Centre and Others, (2010) 3 SCC 480 as under:

“45. According to Halsbury’s Laws of England, 4th Edn., Vol. 26 pp. 17-18, the definition of negligence is as under:

“22. Negligence.-Duties owed to patient. A person who holds himself out as ready to give medical advice or treatment impliedly undertakes that he is possessed of skill and knowledge for the purpose. Such a person, whether he is a registered medical practitioner or not, who is consulted by a patient, owes him certain duties, namely, a duty of care in deciding whether to undertake the case; a duty of care in deciding what treatment to give; and a duty of care in his administration of that treatment. A breach of any of these duties will support an action for negligence by the patient.”

25. In para 89 of the judgment in Kusum Sharma (supra), the tests of medical negligence while deciding whether the medical professional is guilty of medical negligence, varied tested principles have to be kept in view, this Court held as under:

“89. On scrutiny of the leading cases of medical negligence both in our country and other countries specially the United Kingdom, some basic principles emerge in dealing with the cases of medical negligence. While deciding whether the medical professional is guilty of medical negligence following well-known principles must be kept in view:

I. Negligence is the breach of a duty exercised by omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something which a prudent and reasonable man would not do.

II. Negligence is an essential ingredient of the offence. The negligence to be established by the prosecution must be culpable or gross and not the negligence merely based upon an error of judgment.

III. The medical professional is expected to bring a reasonable degree of skill and knowledge and must exercise a reasonable degree of care. Neither the very highest nor a very low degree of care and competence judged in the light of the particular circumstances of each case is what the law requires.

IV. A medical practitioner would be liable only where his conduct fell below that of the standards of a reasonably competent practitioner in his field.

V. In the realm of diagnosis and treatment there is scope for genuine difference of opinion and one professional doctor is clearly not negligent merely because his conclusion differs from that of other professional doctor.

VI. The medical professional is often called upon to adopt a procedure which involves higher element of risk, but which he honestly believes as providing greater chances of success for the patient rather than a procedure involving lesser risk but higher chances of failure. Just because a professional looking to the gravity of illness has taken higher element of risk to redeem the patient out of his/her suffering which did not yield the desired result may not amount to negligence.

VII. Negligence cannot be attributed to a doctor so long as he performs his duties with reasonable skill and competence. Merely because the doctor chooses one course of action in preference to the other one available, he would not be liable if the course of action chosen by him was acceptable to the medical profession.

VIII. It would not be conducive to the efficiency of the medical profession if no doctor could administer medicine without a halter round his neck.

IX. It is our bounden duty and obligation of the civil society to ensure that the medical professionals are not unnecessarily harassed or humiliated so that they can perform their professional duties without fear and apprehension.

X. The medical practitioners at times also have to be saved from such a class of complainants who use criminal process as a tool for pressurising the medical professionals/hospitals, particularly private hospitals or clinics for extracting uncalled for compensation. Such malicious proceedings deserve to be discarded against the medical practitioners.

XI. The medical professionals are entitled to get protection so long as they perform their duties with reasonable skill and competence and in the interest of the patients. The interest and welfare of the patients have to be paramount for the medical professionals.”

26. In a recent judgment in Dr. Harish Kumar Khurana v. Joginder Singh and Others, (2021) 10 SCC 291, this Court held that the hospital and doctors are required to exercise sufficient care in treating the patients in all circumstances. However, in an unfortunate case death may occur. It will be necessary that sufficient material on medical evidence should be available before the adjudicating authority to arrive at a conclusion that the death is due to medical negligence. Even death of a patient cannot, on the face of it, be considered to be medical negligence.

27. It clearly emerges from the exposition of law that a medical practitioner is not to be held liable simply because things went wrong from mischance or misadventure or through an error of judgment in choosing one reasonable course of treatment in preference to another. In the practice of medicine, there could be varying approaches of treatment. There could be a genuine difference of opinion. However, while adopting a course of treatment, the duty cast upon the medical practitioner is that he must ensure that the medical protocol being followed by him is to the best of his skill and with competence at his command. At the given time, medical practitioner would be liable only where his conduct fell below that of the standards of a reasonably competent practitioner in his field.

28. The term “negligence” has no defined boundaries and if any medical negligence is there, whether it is pre or post-operative medical care or in the follow-up care, at any point of time by the treating doctors or anyone else, it is always open to be considered by the Courts/Commission taking note of the exposition of law laid down by this Court of which a detailed reference has been made and each case has to be examined on its own merits in accordance with law.

29. Adverting to the facts of the instant case, the treating doctors, OP Nos. 1, 2 and 5 all are academically sound and experts in the field of kidney transplantation. Respondent nos. l, 2 and 5 had disclosed their qualifications of which a detailed discussion is not required and their medical expertise in the field of nephrology and surgery in kidney transplantation has not been doubted by the appellants. It is also not the case of the appellants that the patient was not medically treated by the well-qualified doctors at the time when kidney transplant surgery was undertaken on 12^th November, 1995 by the team of doctors including OP Nos. l, 2 and 5 in the OP No. 6 hospital which is a registered hospital under the Act 1994.

30. Complaints have been made with regard to the post-operative assistance / follow up care, but from the deposition of two witnesses which has come on record, there was a complaint made by the patient of pain in his left forearm while he was being discharged on 24^thNovember, 1995 after remaining in ICU for 12 days, but he was called upon to continue as outdoor patient and on all the later occasions, even as per the case sheet of the patient, doctors have treated the patient to the best of their medical knowledge and administered the best medical care which was possible. Although the complaint of the patient which remained persistent could not be ruled out despite medically approved drugs being administered to him and if the patient could not be finally saved, that in itself could not be considered to be a case of post operative medical negligence, as is being tried to be projected by the appellants on the basis of the material placed on record.

31. The doctors are expected to take reasonable care, but no professional can assure that the patient will come back home after overcoming the crisis. At the same time, no evidence has come on record at the behest of the appellants which, in any manner, could demonstrate that it was a case of post-operative medical negligence or follow up care on the part of treating doctors and both the doctors who have recorded their statements on behalf of the appellants, Dr. Ashok Chopra and Dr. Sophia Ahmed, are not expert doctors in the field of kidney transplantation. Merely because they are doctors by profession, what is being expressed by both of them in the affidavits filed before the Commission would not be considered to be an opinion of experts.

32. On the contrary, the two experts who have deposed on behalf of the respondents, Dr. S. Sundar and Dr. Arun Kumar are admittedly experts of the field. At the same time, the respondents – OP Nos. l, 2 and 5 are indeed expert doctors and qualified Nephrologists and this fact has been admitted by the appellants that the patient was under treatment of the best medical professionals and qualified Nephrologists, but those treating doctors could not save the patient Naveen Kant, that in itself could not be considered to be a case of post operative medical negligence which was the main grievance of the appellants before the Commission.

33. After going through the findings which have been returned by the Commission in the order impugned, we see no reason to differ with the view expressed by the Commission keeping in mind the tests enunciated above. Taking note of the fact that treating doctors, OP Nos. l, 2 and 5 are medical experts in the field of nephrology and so far as OP No. 6 hospital where the patient was admitted for transplantation was duly registered under the Act, 1994 and all post operative medical care protocol available at the command of the respondents was administered to the patient, still his physical condition deteriorated and finally he could not be saved, which is really unfortunate, but there cannot be a legal recourse to what is being acceptable to the destiny.

34. In our opinion, the Commission has not committed any manifest error in arriving to a conclusion that in post operative medical negligence or follow up care, there was no negligence being committed by the respondents which may be a foundation for entertaining the complaint filed by the appellants. In consequence thereof, the judgment of the Commission does not call for any interference by this Court.

35. Counsel for the appellants submitted that the nursing home/hospital where the patient was admitted for post-operative care, was not registered under the provisions of the Act 1994. With the assistance of the counsel for the parties, we have gone through the Scheme of the Act 1994 and the Rules made thereunder. The hospitals where the procedure of transplantation is undertaken are to be registered in terms of Section 14 of the Act 1994, but for postoperative care, particularly after the patient being discharged from the hospital where the procedure of transplantation has taken place, we have not come across any provision under the Act, 1994 where such hospitals are required to be registered under the Act 1994.

36. Before parting, we would like to observe that when the matter was finally heard and concluded, appellant no. 1 was present in Court and we made a request as to whether she is still interested to get the final judicial verdict on the issue which has been raised at her instance at one stage by instituting a complaint before the Commission. The appellant made a very candid statement before the Court that she wants now to sum up the matter and what she has lost is, in no manner, recoverable and compensation even if awarded by this Court is not going to be of any solace to her at this point of time. We realize the pain of losing her husband and the trauma she has suffered, but that cannot translate into a legal remedy.

37. Accordingly, we do not find any fault in the reasoning of the Commission, as a result, the appeal is without substance and deserves to be dismissed.

38. The appeal is accordingly dismissed. No costs.

39. All pending application(s) shall stand disposed of.

Posted on 2nd March 2022 by rajatbindal5gmailcom — Leave a comment

Availing overdraft facility to expand business is a commercial activity – Consumer forum does not have jurisdiction

DIVISION BENCH

SHRIKANT G. MANTRI — Appellant

Vs.

PUNJAB NATIONAL BANK — Respondent

( Before : L. Nageswara Rao and B.R. Gavai, JJ. )

Civil Appeal No. 11397 of 2016

Decided on : 22-02-2022

Consumer Protection Act, 1986 – Section 2(1)(d) – Consumer Complaint – Order passed by the National Consumer Disputes Redressal Commission complainant was not a consumer as envisaged under Section 2(1)(d) of The Consumer Protection Act, 1986 – Appeal against same – Relations between the appellant and the respondent is purely “business to business” relationship – As such, the transactions would clearly come within the ambit of ‘commercial purpose’. It cannot be said that the services were availed “exclusively for the purposes of earning his livelihood” “by means of self-employment” – If the interpretation as sought to be placed by the appellant is to be accepted, then the ‘business to business’ disputes would also have to be construed as consumer disputes, thereby defeating the very purpose of providing speedy and simple redressal to consumer disputes – No error with the findings of the Commission – Appeal dismissed.

Cases Referred

CBI, AHD, Patna vs. Braj Bhushan Prasad and others, (2001) 9 SCC 432
Cheema Engineering Services vs. Rajan Singh, (1997) 1 SCC 131
Internet and Mobile Association of India vs. Reserve Bank of India, (2020) 10 SCC 274
Kalpavruksha Charitable Trust vs. Toshniwal Brothers (Bombay) Pvt. Ltd. and another, (2000) 1 SCC 512
Laxmi Engineering Works vs. P.S.G. Industrial Institute, (1995) 3 SCC 583
Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers and others, (2020) 2 SCC 265
Paramount Digital Colour Lab and others vs. AGFA India Private Limited and others, (2018) 14 SCC 81
Sunil Kohli and another vs. Purearth Infrastructure Limited, (2020) 12 SCC 235

JUDGMENT

B.R. Gavai, J. – The present appeal filed by the appellant- complainant challenges the judgment and order dated 1^stJune, 2016, passed by the National Consumer Disputes Redressal Commission, New Delhi (hereinafter referred to as “the Commission”) in Consumer Complaint No. 55 of 2006, thereby holding that the appellant-complainant was not a consumer as envisaged under Section 2(1)(d) of The Consumer Protection Act, 1986 (hereinafter referred to as “the said Act”). As such, by the impugned judgment and order, the complaint of the appellant has been dismissed being not maintainable.

2. The facts in the present case are not in dispute. The bare necessary facts for adjudication of the present appeal are as under:

3. The appellant-complainant had opened an account with erstwhile Nedungadi Bank Limited (hereinafter referred to as “the erstwhile Bank”) in the year 1998. The appellant is a stock-broker by profession. The appellant had applied for an overdraft facility on 25^th April, 1998, in connection with his day-to-day share and stock transactions. It is not in dispute that the said overdraft facility was sanctioned by the erstwhile Bank to the appellant-complainant initially for an amount of Rs.1 crore, for which the appellant-complainant had pledged certain shares worth more than Rs.1 crore, as security as per the margin requirements specified by the erstwhile Bank. Subsequently, in the year 1999, the appellant-complainant applied for enhancement of the said overdraft facility. The said overdraft facility was enhanced by the erstwhile Bank from Rs. 1 crore to Rs. 5 crore, vide its letter dated 13^th December, 1999.

4. Again, in March 2001, the appellant-complainant approached the erstwhile Bank for temporary increase in the overdraft limit. The erstwhile Bank, vide its letter dated 17^thMarch, 2001, granted the request of the appellant and temporarily enhanced the overdraft facility from Rs.5 crore to Rs.6 crore, for a period of one week.

5. It appears that due to steep fall in the share market, the erstwhile Bank, vide its letters dated 16^th and 17^th March, 2001, called upon the appellant-complainant to pledge additional shares to regularize the overdraft account. As an additional security, the appellant-complainant pledged 37,50,000 equity shares of face value of Rs.10/- of unlisted company Ansal Hotels Ltd. (hereinafter referred to as “the said shares”) towards the dues of the Bank, vide his letter dated 30^th March, 2001. It is not in dispute that subsequently, consequent to the merger of Ansal Hotels Ltd. with ITC Ltd., and the bonus and splitting of ITC shares, the aforesaid 37,50,000 equity shares of Ansal Hotels Ltd. became equivalent to 3,75,000 shares of ITC Ltd.

6. It appears that during 2001, the overdraft account of the appellant-complainant became irregular and as such, the erstwhile Bank called upon the appellant-complainant to regularise the overdraft account. As the appellant-complainant was unable to regularise the overdraft account, the erstwhile Bank, vide letter dated 14^th September, 2001, called upon the appellant-complainant to pay a sum of Rs.600.61 lakhs along with interest thereon.

7. It is the case of the appellant-complainant that though he had advised the erstwhile Bank to sell the pledged shares in December, 2001, so as to close overdraft account, the erstwhile Bank chose not to sell the said shares at that point of time. It is the case of the appellant-complainant that the said shares were sold by the erstwhile Bank in November 2002, when the market value of the said pledged shares was at the lowest, which resulted in huge loss to the appellant-complainant.

8. After selling a part of the pledged shares for a sum of Rs. 2,69,66,215.79, the respondent Bank, the successor-in-interest of the erstwhile Bank, filed a Recovery Petition before the Debts Recovery Tribunal, Mumbai against the appellant-complainant for recovery of the balance amount due as on 26^th December, 2002. The said petition was decreed by the Debts Recovery Tribunal, Mumbai, vide order dated 26^th May, 2004. However, the matter was settled between the parties and a ‘One Time Settlement’ (“OTS” for short) was reached between them on payment of Rs. 2 crore. As such, the respondent-Bank issued a ‘No Dues Certificate’ dated 14^thMay, 2005, certifying that no dues were left outstanding against the overdraft account of the appellant. After the OTS, the respondent-Bank withdrew the recovery proceedings filed against the appellant.

9. It is the case of the appellant that since the respondent-Bank failed to return the said shares to the appellant, he sent a notice on 14^th June, 2005 to the respondent-Bank, seeking release of the said shares.

10. It appears that the appellant was also working as a stock-broker of the respondent-Bank. With regard to the transactions with the appellant in the capacity as a stockbroker, the respondent-Bank had initiated arbitration proceedings against the appellant before the Arbitration forum of the Bombay Stock Exchange (‘BSE” for short). According to the appellant, the respondent-Bank failed in the said arbitration proceedings, which have attained finality.

11. In this background, the appellant filed a complaint before the Commission, alleging deficiency in services on the part of the respondent-Bank. The main relief claimed in the said complaint was for a direction to the respondent-Bank to return 3,75,000 shares of ITC Ltd. (earlier 37,50,000 shares of Ansal Hotel Ltd.) along with dividend and all accretions thereon.

12. In the said proceedings, on being served with the notice, the respondent-Bank raised a preliminary objection with regard to maintainability of the said complaint, on the ground that the appellant-complainant was not a consumer as envisaged under Section 2(1)(d) of the said Act. The Commission, by the impugned order, held that the appellant had availed the services of the respondent-Bank for ‘commercial purpose’ and as such, he was not a consumer as envisaged under Section 2(1)(d) of the said Act.

13. Being aggrieved thereby, the appellant-complainant has approached this Court by way of the present appeal.

14. We have heard Shri Shyam Divan, learned Senior Counsel appearing on behalf of the appellant and Shri Dushyant Dave, learned Senior Counsel appearing on behalf of the respondent.

15. Shri Shyam Divan, learned Senior Counsel appearing on behalf of the appellant-complainant, submitted that the appellant had a dual relationship with the respondent-Bank. In the first capacity, as a consumer, he had taken the overdraft facility from the respondent-Bank for the purposes of his self-employment. In the second capacity, he was working as the stock-broker for the respondent-Bank. The learned Senior Counsel submitted that with regard to the said relationship, though there were certain disputes, the claim of the respondent-Bank before the Arbitration Forum of BSE has been rejected by the BSE Arbitral Tribunal, which has attained finality.

16. Shri Divan further submits that it is undisputed that the said shares were pledged with the respondent-Bank only as a security towards the overdraft facility. He submits that from the letter of the respondent-Bank dated 14^th May, 2005, it is clear that there were no dues outstanding in the overdraft account of the appellant-complainant, which stood fully and finally settled through compromise/OTS. He submitted that once the dues of the respondent-Bank towards the said overdraft facility stood cleared, there was no reason for the respondent-Bank to have withheld the said shares. He submitted that though the arbitration proceedings between the parties had reached finality, the respondent-Bank had illegally withheld the said shares of the appellant. He submitted that in spite of repeated requests for return of the said shares, the same were not returned and as such, the appellant had no option but to file the complaint under the said Act.

17. Shri Divan submitted that though Section 2(1)(d)(ii) of the said Act, excludes a person who avails of such services for ‘any commercial purpose’, the Explanation thereto, which could be construed as proviso to proviso, would include even such a person if it is shown that the services availed by him were exclusively for the purposes of earning his livelihood by means of self-employment. He submitted that the services of the overdraft facility were taken by the appellant from the respondent-Bank for the purposes of his business as a stockbroker. He submitted that since the appellant was engaged in the profession of stock-broker and since the services of the said overdraft facility were taken for the appellant’s profession as a stock-broker, the services rendered by the respondent-Bank were exclusively for the purposes of earning his livelihood. Learned Senior Counsel submits that the appellant was self-employed as a stock-broker and as such, the services availed were exclusively for the purpose of earning his livelihood by means of self-employment. He relies on the dictionary meaning of the word livelihood’ as provided in Black’s Law Dictionary, Ninth Edition. He submits that the Commission has grossly erred in giving restricted meaning to the term ‘earning his livelihood by means of self-employment’. Learned Senior Counsel submits that merely because a person has availed the services of the Bank for expanding his business, that cannot be a ground to give a restricted meaning to the said term. Relying on the judgment of this Court in the case of Internet and Mobile Association of India vs. Reserve Bank of India, (2020) 10 SCC 274, he submits that the services of the Bank provide lifeline for any business, trade or profession. He submits that in the present era, it is unable for any person to survive without availing the services of a Bank. Learned Senior Counsel submits that the Commission has erred in holding that the appellant is not a consumer within the meaning of Section 2(1)(d)(ii) of the said Act. In support of his submissions, he relied on the following judgments of this Court:

(i) Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers and others, (2020) 2 SCC 265;

(ii) Paramount Digital Colour Lab and others vs. AGFA India Private Limited and others, (2018) 14 SCC 81;

(iii) Sunil Kohli and another vs. Purearth Infrastructure Limited, (2020) 12 SCC 235;

(iv) CBI, AHD, Patna vs. Braj Bhushan Prasad and others, (2001) 9 SCC 432.

18. Shri Dushyant Dave, learned Senior Counsel appearing on behalf of the respondent-Bank, on the contrary, submits that the said Act is a special statute enacted with the purpose of providing a speedy and simple redressal to consumer disputes. Shri Dave submits that the said Act provides a summary procedure so that the consumer disputes are settled without undue delay. He submitted that if the definition of the word ‘consumer’ is expanded, so as to include in it a person who avails of such services for any commercial purpose, the very purpose of the said Act would be defeated. He submits that if any commercial dispute between the service provider and the availer/recipient of the service is included in the definition of the word ‘consumer’, it will give rise to floodgates of complaints. It is submitted that if such an interpretation is accepted, apart from the same being inconsistent with the provisions of Section 2(1)(d)(ii) of the said Act, it will defeat the very purpose of providing speedy justice to the consumers. He, therefore, submits that no interference is warranted in the finding of the Commission and the appeal deserves to be dismissed.

19. For appreciating the rival submissions, it will be necessary to refer to Section 2(1)(d) of the said Act, as it exists today, which is as follows:

“2. Definition.- (1) In this Act, unless the context otherwise requires,-

(a)……………………………………………………

(d) “consumer” means any person who,-

(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or

(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose;

Explanation.For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;”

20. The short question, therefore, that would have to be answered in the present case is, as to whether the services availed by the appellant from the respondent-Bank would fall within the term ‘commercial purpose’. The other question that would also have to be answered is, as to whether such services are exclusively availed by the appellant for the purposes of earning his livelihood by means of self-employment.

21. For considering the said issues, we will also have to examine the object while enacting the said Act as well as the legislative history as to how Section 2(1)(d) has come in its present form. The legislature found that though there were various provisions contained in various enactments to protect the consumers and provide relief to them, yet it became necessary to protect the consumers from the exploitation and to save them from adulterated and sub-standard goods and services and to safe guard the interests of the consumers. In order to provide for better protection of the interests of the consumer, the Consumer Protection Bill was introduced in the Parliament.

22. Perusal of the ‘Statement of Objects and Reasons’ of the said Act would show that the said Act seeks to provide for better protection of the interests of consumers and for that purpose, to make provision for the establishment of Consumer Councils and other authorities for the settlement of consumer disputes and for matters connected therewith. One of the objects for enacting the said Act was the right to be heard and to be assured that consumers’ interests will receive due consideration at appropriate forums. To provide speedy and simple redressal to consumer disputes, a quasi-judicial machinery was sought to be set up at the district, State and Central levels. It will be apposite to refer to the preamble of the said Act, which reads thus:

“An Act to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of consumer councils and other authorities for the settlement of consumers’ disputes and for matters connected therewith.”

23. The definition of the term ‘consumer’ as contained in Section 2(1)(d) of the said Act, as it existed in the original enactment of 1986, reads thus:

“(d) “consumer” means any person who,

(ii) hires any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person”

24. It could thus be seen that Section 2(1)(d) of the said Act is in two parts. Section 2(1)(d)(i) of the said Act deals with buying of goods. A person who buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment would be a consumer within the meaning of Section 2(1)(d)(i) of the said Act. It also includes any user of such goods other than the person who buys such goods for a consideration, which has been paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the approval of such person. However, Section 2(1)(d)(i) of the said Act excludes a person who obtains such goods for resale or for any commercial purpose.

25. Section 2(1)(d)(ii) of the said Act is with respect to hiring of services. According to it, the term ‘consumer’ means any person who hires any services for a consideration, which has been paid or promised or partly paid and partly promised, or under any system of deferred payment. It also included any beneficiary of such services other than the person who hires the services as is provided under Section 2(1)(d)(i) of the said Act.

26. It could thus be seen that as per the definition of the term ‘consumer’, under Section 2(1)(d)(ii) of the said Act, as enacted originally, even if a person who hires any services for any commercial purpose, he could still be included in the definition of the term ‘consumer’. It is relevant to note that Section 2(1)(d)(i) of the said Act clearly kept a person who obtains such goods for resale or for any commercial purpose, out of the ambit of definition of the term ‘consumer’. However, insofar as hiring of services is concerned, no such provision was made in the original enactment.

27. The legislature noticed various deficiencies and inadequacies in the said Act. Therefore, in order to plug these loopholes and enlarge the scope of areas covered, the legislature brought certain amendments to the said Act by the Consumer Protection (Amendment) Act, 1993 (hereinafter referred to as “1993 Amendment Act”). One of the objects of the said Act was to enable the consumers, who are self-employed, to file complaints before the redressal agencies, where goods bought by them exclusively for earning their livelihood, suffer from any defect. By sub-section (5) of Section 2 of the 1993 Amendment Act, the following amendments were effected to the definition of the term ‘consumer’:

“(5) in clause (d),-

(A) in sub-clause (ii), for the word “hires”, in both the places where it occurs, the words “hires or avails of shall be substituted;

(B) after sub-clause (ii), the following Explanation shall be inserted at the end, namely:-

‘Explanation.- For the purposes of sub-clause (i), “commercial purpose” does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self-employment’;”

28. It could thus be seen that by the 1993 Amendment Act, insofar as services are concerned, wherever the word “hires” was used, the same was substituted by the words “hires or avails of”. By the said 1993 Amendment Act, insofar as Section 2(1)(d)(i) is concerned, an Explanation was provided to the effect that ‘commercial purpose’ does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood by means of self-employment. It could thus be seen that though the original Act of 1986 excluded a person from the ambit of definition of the term ‘consumer’ whenever such purchases were made for commercial purpose; by the Explanation, which is an exception to an exception, even if a person made purchases for ‘commercial purpose’, he was included in the definition of the term ‘consumer’, if such a person bought and used such goods exclusively for earning his livelihood by means of self-employment. The legislative intent is clear, that though the purchases for commercial purposes are out of the ambit of the definition of the term ‘consumer’ in the said Act, if a person buys and uses such goods exclusively for earning his livelihood by way of self-employment, he would still be entitled to protection under the said Act.

29. The legislature further noticed several bottlenecks and shortcomings in the implementation of various provisions of the said Act and with a view to achieve quicker disposal of consumer complaints, and to make the said Act more effective by removing various lacunae, the legislature amended the said Act by the Consumer Protection (Amendment) Act, 2002 (hereinafter referred to as “the 2002 Amendment Act”). One of the objects for bringing out the 2002 Amendment Act was “exclusion of services availed for commercial purposes from the purview of the consumer disputes redressal agencies”. It could thus be seen that the legislature noticed the mischief, that though Section 2(1)(d)(i) of the said Act kept out of its purview the goods purchased for commercial purpose, the said restriction was not found in Section 2(1)(d)(ii) of the said Act. As such, in order to bring Section 2(1)(d)(ii) at par with Section 2(1)(d)(i), the following amendment was effected to in clause (d):

“(c) in clause (d),-

(i) in sub-clause (ii), the following words shall be inserted at the end, namely:-

“but does not include a person who avails of such services for any commercial purpose”;

(ii) for the Explanation, the following Explanation shall be substituted, namely:-

‘Explanation.For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment’;”

30. It could thus be seen that by the 2002 Amendment Act, the legislature clearly provided that a person, who avails of such services for any commercial purpose would be beyond the ambit of definition of the term ‘consumer’. The Explanation, which is an exception to an exception, which earlier excluded a person from the term ‘commercial purpose’, if goods were purchased by such a person for the purposes of earning his livelihood by means of self-employment, was substituted and the Explanation was made applicable to both clauses (i) and (ii). It can thus clearly be seen that by the 2002 Amendment Act, though the legislature provided that whenever a person avails of services for commercial purposes, he would not be a consumer; it further clarified that the ‘commercial purpose’ does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.

31. It is thus clear that by the 2002 Amendment Act, the legislature has done two things. Firstly, it has kept the commercial transactions, insofar as the services are concerned, beyond the ambit of the term ‘consumer’ and brought it in parity with Section 2(1)(d)(i), wherein a person, who bought such goods for resale or for any commercial purpose, was already out of the ambit of the term ‘consumer’. The second thing that the legislature did was that even if a person availed of the commercial services, if the services availed by him were exclusively for the purposes of earning his livelihood by means of self-employment, he would still be a ‘consumer’ for the purposes of the said Act. Thus, a person who availed of services for commercial purpose exclusively for the purposes of earning his livelihood by means of self-employment was kept out of the term ‘commercial purpose’ and brought into the ambit of ‘consumer’, by bringing him on par with similarly circumstanced person, who bought and used goods exclusively for the purposes of earning his livelihood by means of self-employment. It could thus be seen that the legislature’s intent is clear. If a person buys goods for commercial purpose or avails services for commercial purpose, though ordinarily, he would have been out of the ambit of the term ‘consumer’, by virtue of Explanation, which is now common to both Sections 2(1)(d)(i) and 2(1)(d)(ii), he would still come within the ambit of the term ‘consumer’, if purchase of such goods or availing of such services was exclusively for the purposes of earning his livelihood by means of self-employment. With this legislative history in background, we will have to consider the present case.

32. The purpose of the said Act has been succinctly described by this Court in the case of Laxmi Engineering Works vs. P.S.G. Industrial Institute, (1995) 3 SCC 583, which is as under:

“10. A review of the provisions of the Act discloses that the quasi-judicial bodies/authorities/agencies created by the Act known as District Forums, State Commissions and the National Commission are not courts though invested with some of the powers of a civil court. They are quasi-judicial tribunals brought into existence to render inexpensive and speedy remedies to consumers. It is equally clear that these forums/commissions were not supposed to supplant but supplement the existing judicial system. The idea was to provide an additional forum providing inexpensive and speedy resolution of disputes arising between consumers and suppliers of goods and services. The forum so created is uninhibited by the requirement of court fee or the formal procedures of a court. Any consumer can go and file a complaint. Complaint need not necessarily be filed by the complainant himself; any recognized consumers’ association can espouse his cause. Where a large number of consumers have a similar complaint, one or more can file a complaint on behalf of all. Even the Central Government and State Governments can act on his/their behalf. The idea was to help the consumers get justice and fair treatment in the matter of goods and services purchased and availed by them in a market dominated by large trading and manufacturing bodies. Indeed, the entire Act revolves round the consumer and is designed to protect his interest. The Act provides for “business-to-consumer” disputes and not for “business-to-business” disputes. This scheme of the Act, in our opinion, is relevant to and helps in interpreting the words that fall for consideration in this appeal.”

33. It could thus be seen that this Court has clearly held that the idea of enacting the said Act was to help the consumers get justice and fair treatment in the matter of goods and services purchased and availed by them in a market dominated by large trading and manufacturing bodies. It has been held that the entire Act revolves round the consumer and is designed to protect his interest. It provides for “business-to-consumer” disputes and not for “business-to-business” disputes. It has been held that forums/commissions provided by the said Act are not supposed to supplant but supplement the existing judicial system. The idea was to provide an additional forum providing inexpensive and speedy resolution of disputes arising between consumers and suppliers of goods and services.

34. In the case of Laxmi Engineering Works (supra), this Court, while considering the scope of the definition of the expression ‘consumer’ with relation to Section 2(1)(d)(i) of the said Act and the Explanation added by 1993 Amendment Act, observed thus:

“11. Now coming back to the definition of the expression ‘consumer’ in Section 2(d), a consumer means insofar as is relevant for the purpose of this appeal, (i) a person who buys any goods for consideration; it is immaterial whether the consideration is paid or promised, or partly paid and partly promised, or whether the payment of consideration is deferred; (ii) a person who uses such goods with the approval of the person who buys such goods for consideration; (iii) but does not include a person who buys such goods for resale or for any commercial purpose. The expression ‘resale’ is clear enough. Controversy has, however, arisen with respect to meaning of the expression “commercial purpose”. It is also not defined in the Act. In the absence of a definition, we have to go by its ordinary meaning. ‘Commercial’ denotes “pertaining to commerce” (Chamber’s Twentieth Century Dictionary); it means “connected with, or engaged in commerce; mercantile; having profit as the main aim” (Collins English Dictionary) whereas the word ‘commerce’ means “financial transactions especially buying and selling of merchandise, on a large scale” (Concise Oxford Dictionary). The National Commission appears to have been taking a consistent view that where a person purchases goods “with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit” he will not be a ‘consumer’ within the meaning of Section 2(d)(i) of the Act. Broadly affirming the said view and more particularly with a view to obviate any confusion the expression “large scale” is not a very precise expression Parliament stepped in and added the explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993. The explanation excludes certain purposes from the purview of the expression “commercial purpose” a case of exception to an exception. Let us elaborate:

a person who buys a typewriter or a car and uses them for his personal use is certainly a consumer but a person who buys a typewriter or a car for typing others’ work for consideration or for plying the car as a taxi can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for “commercial purpose” would not yet take the purchaser out of the definition of expression ‘consumer’. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a ‘consumer’. In the illustration given above, if the purchaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e., by self-employment, for earning his livelihood, it would not be treated as a “commercial purpose” and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a “commercial purpose”, to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., “uses them by himself”, “exclusively for the purpose of earning his livelihood” and “by means of self-employment” make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood. A few more illustrations would serve to emphasise what we say. A person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer. A person who purchases a lathe machine or other machine to operate it himself for earning his livelihood would be a consumer. (In the above illustrations, if such buyer takes the assistance of one or two persons to assist/help him in operating the vehicle or machinery, he does not cease to be a consumer.) As against this a person who purchases an auto-rickshaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a consumer. This is the necessary limitation flowing from the expressions “used by him”, and “by means of self-employment” in the explanation. The ambiguity in the meaning of the words “for the purpose of earning his livelihood” is explained and clarified by the other two sets of words.” [Emphasis supplied]

35. It can thus be seen that this Court observed that the National Commission was taking a consistent view that where a person purchases goods “with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit” he will not be a ‘consumer’ within the meaning of Section 2(d)(i) of the Act. This Court observed that in order to obviate any confusion that the expression “large scale” was not a very precise expression, the Parliament stepped in and added the explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993. It has been held that that the explanation excludes certain purposes from the purview of the expression “commercial purpose”. Various examples have been given by this Court as to what would come within the term of ‘self-employment’.

36. One instance given is that a person who purchases a typewriter and works on the typewriter himself, the purchase would be for the purposes of earning his livelihood by means of self-employment and he would not cease to be a ‘consumer’ for the purposes of the said Act. Another example given is that, if a person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood, he would still be a consumer too. This Court held that the question as to whether the transaction is for the ‘commercial purpose’ or for ‘earning his livelihood by means of self-employment’ is a question of fact that has to be decided in the facts of each case. It has been held that it is not the value of the goods that matters but the purpose to which the goods so bought, are put to. It has been held that several words used in the explanation, viz., “uses them by himself”, “exclusively for the purpose of earning his livelihood” and “by means of self-employment” make the intention of the Parliament abundantly clear, that the goods bought must be used by the buyer himself, for earning his livelihood.

37. In the case of Cheema Engineering Services vs. Rajan Singh, (1997) 1 SCC 131, this Court held that the manufacture and sale of bricks in a commercial way may also be to earn livelihood.

As such, the question as to whether the complainant used the machinery for the manufacture of bricks alone or with members of his family and as to whether the same was for earning his livelihood, were the questions of fact to be decided on the basis of evidence.

38. In the case of Kalpavruksha Charitable Trust vs. Toshniwal Brothers (Bombay) Pvt. Ltd. and another, (2000) 1 SCC 512, this Court considered the question as to whether the machines purchased by the Charitable Trust for use in the Diagnostic Centre were meant for ‘commercial purpose’ or not. It was sought to be urged on behalf of the Trust that the Trust was not carrying out a profit-making activity and as such, the purchase of diagnostic machines would not come within the ambit of the term ‘commercial purpose’. It was, therefore, sought to be urged that it would fall within the definition of the term ‘consumer’. This Court held that the finding of the National Commission that the machinery was installed for commercial purpose and as such, the Trust was not a ‘consumer’ within the meaning of the said Act, required no interference.

39. In the case of Paramount Digital Colour Lab (supra), this Court was considering the case of unemployed graduates, who had started a business of photography in partnership for self-employment and for their livelihood. For the said purpose, they had purchased an advanced photo processing, developing and printing machine. It was the case of the appellants therein that the respondents, despite having the knowledge that the machine was not working properly, had unfairly and carelessly sold the same to the appellants. As such, the appellants were required to file a complaint under the said Act. The State Commission had allowed the complaint. In appeal, the National Commission held that the appellants were not the consumers as envisaged under Section 2(1)(d) of the said Act, since the purchase of the machine was for commercial purpose. Reversing the view taken by the National Commission and upholding the view taken by the State Commission, this Court observed thus:

“12. In this case, since the appellants have purchased the machine, Section 2(1)(d) of the Act is applicable. “Consumer” as defined under Section 2(1)(d) of the Act does not include a person who obtains goods for a “commercial purpose”. The Explanation supplied to Section 2(1)(d) clarifies that “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of “self-employment”. If both these provisions are read together, it leads to the conclusion that if a person purchased the goods for consideration not for any commercial purpose, but exclusively for the purposes of earning his livelihood by means of “self-employment”, such purchaser will come within the definition of “consumer”. If a person purchases the goods for a “commercial purpose” and not for the purposes of earning his livelihood by means of “self-employment”, such purchaser will not come within the definition of “consumer”. It is therefore clear, that despite “commercial activity”, whether a person would fall within the definition of “consumer” or not would be a question of fact in every case. Such question of fact ought to be decided in the facts and circumstances of each case.

13. “Self-employment” necessarily includes earning for self. Without earning generally there cannot be “self-employment”. Thus, if a person buys and uses the machine exclusively for the purposes of earning his livelihood by means of “self-employment”, he definitely comes within the definition of “consumer”. In the matter on hand, the quality of ultimate production by the user of the machine would depend upon the skill of the person who uses the machine. In case of exigencies, if a person trains another person to operate the machine so as to produce the final product based on skill and effort in the matter of photography and development, the same cannot take such person out of the definition of “consumer”.”

40. This Court, on facts in the said case, found that the appellants therein were unemployed graduates and had bought the said machine for their own utility, personal handling and for their small venture, which they had embarked upon to make a livelihood. This Court further found that this was distinct from large-scale manufacturing or processing activity carried on for huge profits. It was, therefore, held that the appellants therein would be consumers within the meaning of Section 2(1)(d) of the said Act.

41. Shri Shyam Divan, learned Senior Counsel appearing on behalf of the appellant, strongly relied on the judgment of this Court in the case of Lilavati Kirtilal Mehta Medical Trust (supra), wherein this Court after considering the earlier judgments held thus:

“19. To summarise from the above discussion, though a strait jacket formula cannot be adopted in every case, the following broad principles can be culled out for determining whether an activity or transaction is “for a commercial purpose”:

19.1. The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, “commercial purpose” is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities.

19.2. The purchase of the good or service should have a close and direct nexus with a profit-generating activity.

19.3. The identity of the person making the purchase or the value of the transaction is not conclusive to the question of whether it is for a commercial purpose. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and/or their beneficiary.

19.4. If it is found that the dominant purpose behind purchasing the good or service was for the personal use and consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, the question of whether such a purchase was for the purpose of “generating livelihood by means of self-employment” need not be looked into.”

42. It is thus clear, that this Court has held that the question, as to whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, “commercial purpose” is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities; that the purchase of the good or service should have a close and direct nexus with a profit-generating activity; that the identity of the person making the purchase or the value of the transaction is not conclusive for determining the question as to whether it is for a commercial purpose or not. What is relevant is the dominant intention or dominant purpose for the transaction and as to whether the same was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. It has further been held that if the dominant purpose behind purchasing the good or service was for the personal use and the consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, then the question of whether such a purchase was for the purpose of “generating livelihood by means of self-employment” need not be looked into.

43. On facts, it was held that the purchase of flats by the appellant therein had no direct nexus with the profit generating activities. The flats were not occupied for undertaking any medical/diagnostic facilities within the hospital but for accommodating the nurses employed by the hospital. It was further held that the flats are being provided to the nurses without any rent and that the appellant therein was not generating any surplus from occupying the flats or engaging in buying and selling of flats.

44. Insofar as the judgment of this Court in the case of Sunil Kohli (supra), relied upon by the appellant, is concerned, this Court on the basis of the evidence, clearly found that the complainants wanted to dispose of property in Denmark and wanted to come down to Delhi to start a business. It has further been found that for this purpose, the premises in question were booked. As such, the said case was a case wherein the commercial premises were booked by the appellants therein, who had left their employment in Denmark and purchased the premises only for the purposes of starting their business for earning their livelihood by way of self-employment. Therefore, the said case was a case wherein the appellants therein had availed of the services exclusively for earning their livelihood by means of self-employment.

45. It could thus be seen, that when a person avails a service for a commercial purpose, to come within the meaning of ‘consumer’ as defined in the said Act, he will have to establish that the services were availed exclusively for the purposes of earning his livelihood by means of self-employment. There cannot be any straitjacket formula and such a question will have to be decided in the facts of each case, depending upon the evidence placed on record.

46. In the present matter, it is not in dispute that the appellant was already engaged in the profession of stockbroker, much before he availed of service of the overdraft facility from the respondent-Bank. It is also not in dispute that he was also acting as a stock-broker for the respondent-Bank. It is also not in dispute that the appellant took the overdraft facility and also sought enhancement of the same from time to time in furtherance of his business as a stockbroker and for the purpose of enhancing the profits therein.

As already held by this Court in the case of Laxmi Engineering Works (supra), the terms “services availed by him”, “exclusively for the purpose of earning his livelihood” and “by means of self-employment” will have to be given its meaning, as intended by the legislature. The said terms will have to be construed in context with the purpose for which the said Act is enacted. We have elaborately discussed the legislative history as to how Section 2(1)(d) of the said Act has come in its present form from the original form. The amendments incorporated by the 1993 Amendment Act as well as by the 2002 Amendment Act would clearly show that the legislative intent is to keep the commercial transactions out of the purview of the said Act and at the same time, to give benefit of the said Act to a person who enters into such commercial transactions, when he uses such goods or avails such services exclusively for the purposes of earning his livelihood by means of self-employment.

47. In the present case, the Commission has come to a finding that the appellant had opened an account with the respondent-Bank, took overdraft facility to expand his business profits, and subsequently from time to time the overdraft facility was enhanced so as to further expand his business and increase his profits. The relations between the appellant and the respondent is purely “business to business” relationship. As such, the transactions would clearly come within the ambit of ‘commercial purpose’. It cannot be said that the services were availed “exclusively for the purposes of earning his livelihood” “by means of self-employment”. If the interpretation as sought to be placed by the appellant is to be accepted, then the ‘business to business’ disputes would also have to be construed as consumer disputes, thereby defeating the very purpose of providing speedy and simple redressal to consumer disputes.

48. We, therefore, find no error with the findings of the Commission. In any case, the Commission has already granted liberty to the appellant to avail of his remedy by approaching the appropriate forum, having jurisdiction.

49. In the result, the appeal is dismissed. There shall be no order as to costs. All pending applications, if any, shall stand disposed of.

Posted on 2nd December 20213rd December 2021 by rajatbindal5gmailcom — Leave a comment

No Operation theatre was available at the sudden reach of accidental patient. No medical negligence

Rated 5 out of 5

SUPREME COURT OF INDIA

DIVISION BENCH

BOMBAY HOSPITAL & MEDICAL RESEARCH CENTRE — Appellant

Vs.

ASHA JAISWAL AND OTHERS — Respondent

( Before : Hemant Gupta and V. Ramasubramanian, JJ. )

Civil Appeal No. 1658 of 2010 with Civil Appeal No. 2322 of 2010

Decided on : 30-11-2021

A. Medical negligence – No fault can be attached to the Hospital if the operation theatres were occupied when the patient was taken for surgery. Operation theatres cannot be presumed to be available at all times – Therefore, non-availability of an emergency operation theatre during the period when surgeries were being performed on other patients is not a valid ground to hold the Hospital negligent in any manner.

B. Medical negligence – Mere fact that the Doctor had gone abroad cannot lead to an inference of medical negligence as the patient was admitted in a hospital having specialists in multi-faculties.

C. Medical negligence – Where the patient was in serious condition impending gangrene even before admission to the Hospital but even after surgery and re-exploration, if the patient does not survive, the fault cannot be fastened on the doctors as a case of medical negligence – It is too much to expect from a doctor to remain on the bed side of the patient throughout his stay in the hospital which was being expected by the complainant here. A doctor is expected to provide reasonable care which is not proved to be lacking in any manner in the present case.

D. Medical negligence – If the operation theatres were occupied at the time when the operation of the patient was contemplated, it cannot be said that there is a negligence on the part of the Hospital – A team of specialist doctors was available and also have attended to the patient but unfortunately nature had the last word and the patient breathed his last – Family may not have coped with the loss of their loved one, but the Hospital and the Doctor cannot be blamed as they provided the requisite care at all given times – No doctor can assure life to his patient but can only attempt to treat his patient to the best of his ability which was being done in the present case as well – Findings recorded by the Commission holding the Hospital and the Doctor guilty of medical negligence are not sustainable in law.

Counsel for Appearing Parties

Ms. Bina Madhavan, Advocate, Ms. Rao Vishwaja, Advocate, for M/S. Lawyer S Knit & Co, Advocate, Ms. Nandini Gore, Advocate, Mr. Karanveer Singh Anand, Advocate, Ms. Pracheta Kar, Advocate, Mr. Aditya Sidhra, Advocate, Mr. Nadeem Afroz, Advocate, for M/s. Karanjawala & Co., Mr. Anil Kumar, Advocate, Mr. Kamal Mohan Gupta, Advocate, Mr. Ashwani Kumar, Advocate, Counsel for the Parties.

Cases Referred

Arun Kumar Mangliky. Chirayu Health and Medicare Private Limited and Anr., (2019) 7 SCC 401
Barkway v. South Wales Transport Co. [(1950) 1 All ER 392, 399]
Burke v. Manchester, Sheffield & Lincolnshire Rail Co. [(1870) 22 LJ 442]
C.P. Sreekumar (Dr.), MS (Ortho) v. S. Ramanujam, (2009) 7 SCC 130
Cream v. Smith [(1961) 8 AER 349]
Dr. Harish Kumar Khurana v. Joginder Singh & Others, (2021) SCC Online SC 673
Iffco Tokio General Insurance Company Limited v. Pearl Beverages Limited, (2021) 7 SCC 704
Jacob Mathew v. State of Punjab and Anr., (2005) 6 SCC 1
Kusum Sharma and Others v. Batra Hospital and Medical Research Centre and Others, (2010) 3 SCC 480
Martin F. D ‘Souza v. Mohd. Ishfaq, (2009) 3 SCC 1
Moore v. R. Fox & Sons [(1956) 1 QB 596 : (1956) 1 All ER 182]
Richley v. Faull [(1965) 1 WLR 1454 : (1965) 3 All ER 109]
Russel v. London & South Western Railway Co, (1908) 24 TLR 548
Syad Akbar v. State of Karnataka, (1980) 1 SCC 30
Whitehouse v. Jordan and Anr, [1981] 1 Weekly Law Reports 246

JUDGMENT

Hemant Gupta, J. – The present appeals are directed against an order passed by the National Consumer Disputes Redressal Commission[1] on 06.01.2010 against the appellants i.e., Bombay Hospital & Medical Research Centre[2] and Dr. C. Anand Somaya[3], directing to pay a sum of Rs. 14,18,491/- along with interest @ 9% p.a. from the date of filing of the complaint till the date of payment.

[1] For short, the ‘Commission’

]2] For short, the ‘Hospital’

[3] For short, the ‘Doctor’

2. The complaint was filed before the Commission by the legal heirs[4] of the deceased – patient Dinesh Jaiswal[5], alleging medical negligence on the part of the Hospital and the Doctor in treating the patient. The patient was admitted to the Hospital on 22.04.1998 and breathed his last on 12.06.1998. The Hospital charged a sum of Rs. 4,08,800/- for the treatment of the patient during the period of his admission in the Hospital. The said amount is included in and is part of the amount of compensation awarded against the appellants herein.

[4] For short, the ‘Complainant’

[5] For short, the ‘patient’

3. The patient was taking treatment since 1990 for having difficulties in walking due to the pain and discomfort in legs. For his complaint of inability to walk, a Colour Doppler Test was conducted on 13.04.1998 at Khemuka X-Ray & Ultrasound Clinic, Nagpur which detected the following:

“Aneurismal dilatation of the lower abdominal aorta just above bifurcation is seen. The aneurism measures 5.4 x 2.6 in its maximum dimensions.

Irregular thrombus is seen within the aneurism on colour flow studies.

Prostate is normal in echo – pattern and measures 4 x 3 x 3 cms. Prostatic capsule is intact. Urinary bladder is normal in capacity and contour. Post void residual urine is not significant.

Impression: Mild hepatomegaly with aneurism of lower abdominal aorta just above the bifurcation.”

4. Dr. K.G. Deshpande Memorial Center, Nagpur was consulted by the patient on 15.04.1998 and Dr. Deshpande diagnosed the following:

“A case of Abd Aortic Aneurysum

Involvement on left side

with Left PVB (Embolism)

H/O Trauma 1983,

Pain Left LL 1990 S/O Embolism

Vascular Duplex Seen S/O Large Abd. A. Aneurysum

6*3*5.1 cm

Adv- Urgent Surgical repair of the aneurysum”

5. After diagnosis, Dr. Deshpande referred the patient to the appellant-Doctor who is a Vascular Surgeon. The patient consulted the appellant-Doctor on 21.4.1998. The Doctor ordered the admission of the patient as an urgent case of aorta aneurysum. On 22.4.1998, the Doctor advised urgent DSA/CAT Scan [Digital Sub-Traction Angiography and Computerized Axial Tomography] and surgery after noticing the following physical conditions:

“A 42 years old male with aorta pain left lower limb and right leg below knee. Gradual Claudication

BP – 100/80

Ischaemic changes both lower limbs. Seen with impending Gangrene

Both legs left muscles are tested.

………………………..”

6. The Doctor after examining the patient recorded that there were ischemic changes in both lower limbs and also noted an impending gangrene. Subsequent to the pre-operative preparations, surgery was conducted on 23.04.1998 by a team of surgeons including Dr. Partha and Dr. Bindra, led by the appellant-Doctor. The operation notes read as thus:

“On inspection there was a huge aneurysum on the latral aspect on left side arising infra renal.

It was densely adherent to the surrounding structure. The aneurysum was directed out. The tape was passed around the left Renal artery/vein for retraction. A tape was passed around the aorta just below the renal artery and above the aneurysum. Both the common iliac arteries were exposed. Tapes were passed around both the iliac arteries.

After achieving proper exposure/slinging around all the vessels. The aorta was iron clamped just infra-renally. The aneurysum opened out. The aorta transected and both illiacs transected. (A PTFE ‘Y’ Limb Graft) was sutured in place. The short main limb to the aorta using continuous prolure and both the limbs of the graft were sutured to the common iliacs end to end anastomosis on right side. After checking the flow in the graft after suture the upper end the lower anastomosis were done.

On the left side, the side of the graft was sutured the end of the common iliac. The limb of the graft further brought down through a tunnel to the femoral artery and the end of the graft sutured to the side of the femoral artery.

After achieving proper haemostasis and checking the pulsation.

Intra-operatively, the abdomen closed using drainage tubes.

The patient was later shifted to recovery room on ventilator with stable vital signs.”

7. It is the case of the complainant that on 24.4.1998 at about 4 am, that is the night after surgery, the nurse who was attending the patient observed that the pulsation of the patient had become feeble and body temperature was low and the lower limbs had gone cold. The relatives were informed at about 7 a.m. that the patient was unconscious, legs were cold with no pulsation. The complainant further alleged that the nurse had informed the Doctor at 4 am but he came only at 9.30 a.m. The patient upon assessment by the Doctor was directed to get second DSA test but DSA machine was out of order. Hence, the Doctor advised angiography but the patient was made to wait for both DSA test as well as for angiography. One Dr. B.K. Goyal examined the patient and reported that the patient had probably developed block of abdominal aorta.

8. The angiography conducted at 12.30 pm on 24.4.1998 showed a block (clot) at the graft due to which the blood supply to the lower limbs had totally stopped. The complainant contended that the earlier surgery was not performed correctly and there was negligence in conducting the same. A decision was taken to re-explore the earlier surgery done at about 3:30 pm but since all the four operation theatres were occupied, he could only be taken to the operation theatre for re-grafting at 5.30 p.m. As there was no pulsation in the graft and there was clot in the graft extending into both limbs of the graft, a fresh graft was sutured and the patient was shifted to recovery room and put on ventilator.

9. It was contended by the Hospital that the patient was in the care of qualified doctors such as Dr. Nemish Shah, Dr. J. A. Pachore, Dr. A.L. Kripalani, Dr. Partha, Dr. H.S. Bindra and many others throughout his course of admission and no stone was left unturned to ascertain the complications and treat the same. Various specialist doctors were treating the patient and medicines/treatment was timely regulated and changed as and when required on a daily basis. Regular daily dialysis, dressing of wounds etc. were also done. However, unfortunately, despite the best efforts of the qualified doctors, the patient did not respond to the treatment and passed away on 12.06.1998.

10. The complainant in the complaint enumerated the facts suggesting negligence and deficiency of service on the part of the appellants. The averments made by the complainant and the corresponding reply by the Doctor is extracted herein under:

“34. In all cases of grafting the patient is kept under close observation to find out whether blood is flowing normally. In case there is stoppage or lack of flow immediate action is taken to control the situation because lack of blood is certain to rupture and deaden the muscles. The tissues cannot survive without blood flow. But in this case after the patient was taken to recovery room he was not examined by any doctor. The attending nurse observed at 4.30 a.m. on 24.4.98 that lower limbs had become cold and did inform the doctors. The doctors were called in writing at 8 a.m. but Dr. Somaya came at 9.30 a.m. This time gap was enough to rupture the muscles. The process is irreversible. It cannot be corrected. Timely medical care could have saved the life of the complainant.	“16. Without prejudice to the above and with reference to para 34 of the complaint under reply, I deny the allegations made therein are false. With further reference to the said para it is substantially correct to state that in all cases of grafting patient is kept under closer observations to find out whether blood is flowing normally. In case there is stoppage or lack of flow immediate action is taken to control the situation because lack of blood is certain to rupture and deaden the muscles. I say and submit that even while treating the said deceased, utmost care was taken by the opp. party in post operative period. In this connection I say and submit that patient was kept in Cardio Vascular Incentive Care Unit CVICU which is considered to be finest in India. The patient was continuously monitored by efficient and trained nursing staff and was also monitored for 24 hours by resident doctor. With further reference to the said para I deny that at about 4.30 a.m. on 24-4-1998 the attending nurse observed that lower limbs had become cold as alleged or at all. I deny that, doctors were summoned and that I came to the said unit, only at 9.30 a.m. as alleged or at all. I deny that, because of the so called delay on my part further complications took place in the case of the said deceased as alleged or at all. I say and submit that immediately after I received message from the resident doctor attached to the opp. party no.1 attended the said patient at about 9.00 a.m. and not at 9.30 a.m. as sought to be suggested by the complainant.
35. That in spite of the critical condition of the complainant on 24.4.98, he was made to stand in queue for DSA test for more than 3 hours. This delay further worsened the condition of the complaint it appears that Bombay Hospital had no medical ethics. 36. The situation turned darker because after waiting for 3 hours the complainant was informed that the machine was dis-functional.	17. With reference to paras 35 and 36 of the complaint under reply, I deny that in spite of critical condition of the complainant on 24.4.1998 he was deliberately made to stand in queue for DSA test for more than 3 hours. I deny that the said delay was deliberate and due to the said delay the condition of the said patient, further worsened as alleged or at all. I say and submit that to the best to my knowledge immediately I suggested DSA test on 24.4.1998, the staff of the opp. party no.1 took the said deceased for DSA test but unfortunately during the relevant time the equipment was not functioning properly and as soon as the defects were located the said test was conducted to enable the opp parties to give further treatment to the said deceased. I say and submit that on perusal of the case papers on record, it is crystal clear that the best possible treatment and due care was given to the said deceased under circumstances. I say and submit that during the relevant time the condition of the said deceased was critical and therefore it was not possible to shift the said patient to any other hospital in nearby vicinity for any test including DSA. It is also significant, to note here that during the relevant time DSA test machinery was available only in Jaslok Hospital, Hinduja Hospital and Breach Candy Hospital. However, it was not possible to shift the said patient for the said test considering the patient condition. In any event I dispute the allegations made by the complainant as the complainant’s failed to substantiate the said allegations by producing any independent material on that behalf. Besides this the said allegations are not based or supported on the basis of the independent expert’s opinion.
37. That on the same day at 12.30 p.m. (8 hours after it was discovered that blood supply has stopped) angiography was performed. But again the report was given at 3.30 p.m. a further delay of 3 hours which were crucial to the life of the complainant.	18. With reference to para 37 of the complaint under reply, it is substantially correct to state that on the same day at about 12.30 p.m. angiography was performed. However, I deny that report was made available only at 3.30 p.m. as alleged or at all. I deny that further delay of 3 hours which were crucial to the life of the deceased, contributed towards further complications as alleged or at all.
38. That on receipt of the report the surgeon decided to reopen the abdomen to make correctness. Again the operation could not be done immediately because the hospital did not have a vacant operation theatre. The hospital did not have emergency operation theatre. The hospital did not even try to operate the patient in an outside operation theatre. This caused another delay of 3 hours. 39. The sequence of event shows that for various causes wholly attributable to the Bombay Hospital that treatment was delayed by 12 hours while the muscles cannot survive lack of blood supply for more than two hours.	19. With reference to paras 38 and 39 of the complaint under reply, it is substantially correct to state that the surgeon decided to reopen abdomen to make correctness after perusing the angiography report. However, I deny that operation was postponed or delayed as theatre was not available. I say and submit that the said delay was not at all deliberate. During the relevant time, the operation theatres of opp. party no.1 were occupied as other patients were under treatment. 20. With further reference to the said para the allegations made therein are not only baseless but the same are made with ulterior motive and malafide intention. I say and submit that to my personal knowledge and the opp. party no.1 is one of the most well equipped hospital in Asia. I say and submit that there are 4 operation theatres available for CU surgery only which is a rear phenomenon in city of Mumbai and therefore the allegations made by the complainants that the hospital did not have emergency operation is totally baseless.
40. There was a finding of impending gangrene in the DSA report dated 22.4.98 by Dr. Somaya himself but no heed was paid to it. 41. That Dr. Somaya being the Senior most surgeon of the team was duty bound to keep the patient in constant observation, but after the patient was shifted to recovery room, he came to examine the patient after nearly 16 hours. Had he seen the patient one or two hours after he was shifted, he could have observed that no blood was flowing through the graft. The surgeons negligence caused the patient his life.	21. With reference to paras 40 and 41 of the complaint under reply, I deny the allegation made therein as false. I say and submit that on perusal of the case papers maintained by the opp. party no.1 it is abundantly clear that I was constantly monitoring the said deceased therefore allegations that I examined the said patient nearly after 16 hours from the surgery is totally false, frivolous and vexatious and the said allegations appears to have been made with ulterior motive and malafide intention to some how make out case of medical negligence against me with an intention to knock out hand sum ransom from me and opp. party no.1. I say and submit that I treated the said patient with best of my ability and with due and diligent care and therefore, I am pained to hear such allegations from the family members of the deceased, that too, after 18 months from the said treatment. It is significant to note here that if the complainants were really convinced about the so called negligence on the part of the opp. parties, surely the complainants or other relatives of the said deceased would have lodged complaint with local police station or insisted for post-mortem of the said deceased and/or would have approached the Court against the hospital as well as against me. The very fact that present complaint has been filed on 10.7.1999 without sending any proper notice thereby railing upon the opp. parties to explain the so called negligence also supports my case that present complaint is filed with ulterior motive with an intention to knock out hand sum ransom from the opp. parties.
42. That leaving the patient fighting for his life in the care of inexperienced junior doctors viz. Dr. Partha and Bindra, Dr. Somaya went abroad for vacationing. He was not available even for advice for more than 30 days.	22. With reference to para 42 of the complaint under reply, I deny that during the relevant time I went abroad for vacation thereby leaving the patient fighting for his life in the care of inexperienced junior doctors viz. Dr. Partha and Dr. Bindra as alleged or at all. I say and submit that aforementioned allegations are not only false but the said allegations are made with an intention to cause prejudice in the mind of the Hon’ble Members of National Commission. In this connection, I say and submit that during the relevant time i.e. between 9th May 1998 to 7.6.1998, I had to China, England and USA to attend medical conferences and both the said conferences were fixed well in advance. Similarly the allegations of the complainants that Dr. Partha and Dr. Bindra are inexperienced junior doctors is also baseless for the simple reasons that both the aforementioned doctors are postgraduate and experienced in their respective field and both are having adequate experience in the aforementioned field. Besides this the said deceased was being treated by senior specialist at the opp. party no.1 hospital and in case of any emergency opp. party no.1 could have arranged senior experts and therefore merely because I was away from India that too in connection with my professional activities, the complainants should not be permitted to make capital out of it.
43. That Dr. Kripalani a neurologist when called to examine the patient remarked that “both the legs are gone and it is a gone case. Your doctor should tell each and everything”. But Dr. Somaya continued to conceal the health prognosis from the complainant and his relatives and continued to delay in taking vital decisions. Had he taken a decision to amputate the legs at the right time he could have saved the life of the complainant.	23. With reference to para 43 of the complaint under reply, I say and submit that Dr. Kripalani is a Nephrologists. I deny that Dr. Kripalani remarked that both the legs are gone and it is a gone case. I deny that Dr. Kripalani further observed that doctors deliberately suppressed the said fact from you as alleged or at all. I say and submit that though the said allegations are made by the complainant in the name of Dr. Kripalani, the complainants have miserably failed to substantiate the said allegation by filing affidavit of Dr. Kripalani. I say and submit that after perusing the aforementioned allegations I have consulted Dr. Kripalani and Dr. Kripalani has confirmed that he had no such occasion to make any such observations to the relatives of the said complainant. I am filing the affidavit of Dr. Kripalani to substantiate my contention.
44. It is clear to even a novice medical student that dead muscles invite septicemia and gangrene. So what was required was a timely action to prevent further damage. But Dr. Somaya refrained from adopting the requisite procedure. The patients legs were amputated only when all the consultants opined that it was the only procedure for saving life. Yet his negligence in taking timely action killed the only chance which the patient had. 45. That it is apparent from the series of events that there has been lack of diligence and an established case of negligence on the part of opposite party in providing services to the complainants as a result of which the complainant died on 12.6.1998 at 9.30 p.m.”	24. With reference to paras 44 and 45 of the complaint under reply, I deny the allegations made therein as false save and except the factual position that the said deceased died on 12.6.1998 at 9.30 p.m. I say and submit that though it is unfortunate that the said deceased died prematurely at the age of 43, even then the complainants have no right of whatsoever nature to make allegations against the opp. parties. I say and submit that my sympathies are with the complainant and other family members and relatives of the said deceased. I say and submit that the said deceased died due to medical, mishap and not due to any negligence either on my part or on the part of the staff of the opp. party no.1.”

11. The affidavit of the complainant is on the same lines as the averments made in the complaint before the Commission.

12. The grievance of the complainant against the appellants can be summarized under the following heads:

(a) The Doctor had not examined the patient after surgery;

(b) The patient was made to stand in queue for DSA test despite his critical condition whereafter the machine was found to be dysfunctional;

(d) The Hospital delayed treatment by 12 hours as no operation theatre was available;

(e) The Doctor did not attend the patient and left him in the care of inexperienced doctors;

(f) Doctor failed to amputate legs on time on account of gangrene and did not try to treat the gangrene; and

(g) The reliance on the principle of res ipsa loquitor to support the finding that it is a case of medical negligence.

13. Learned Commission while analyzing the evidence observed that the complainant had filed evidence affidavits but the Hospital and the Doctor, though have filed their written versions, but have not filed evidence by way of affidavits except an affidavit of Dr. Kripalani. We however find at the outset that such primary observation is itself erroneous. The Hospital and the Doctor had filed their written version by way of affidavit dated 7.1.2000 i.e., the same date on which Dr. Kripalani had filed an affidavit. The Commission has overlooked the fact that written version is by way of an affidavit. Later, the Hospital had also filed evidence affidavit on 13.07.2009 whereas the Doctor had filed a short affidavit on 30.8.2009 reiterating and confirming the statements, averments and the contentions raised in the written version filed on 7.1.2000. Thus, there is factual error in the order of the Commission.

14. The Commission had commented adversely against the Doctor that he had not seen or attended the patient for several days before his departure for his tour to U.S.A and U.K for about a month and had not even indicated the name of any super specialist in his field who should look after the patient in his absence. The Commission mentioned that the Doctor observed at the first instance within a couple of days of admission at the Hospital that there was impending gangrene and that Dr. Partha and Dr. Bindra did not take timely decision for amputation of legs and by the time Dr. Pachore was consulted, it was too late. Moreover, it was also noted that Dr. Pachore had scolded Dr. Partha for the delay in consulting him as even if the amputation was done at such belated occasion, nothing could be said about the survival of the patient.

15. The Commission opined that considering the conditions in India, it is very difficult to secure the presence of an expert doctor to file an affidavit against another expert doctor and thus it would be a case of res ipsa loquitor. It was mentioned that though the Doctor was present at Mumbai from 29.4.1998 to 9.5.1998, he did not give advice for amputation of the legs and thereafter from 9.5.1998 to 7.6.1998, he went to U.S.A and U.K to attend medical conferences. He had visited the patient only on 8.6.1998 after several days of amputation. The Commission relied upon judgment in Whitehouse v. Jordan and Anr, [1981] 1 Weekly Law Reports 246 to apply the principle of res ipsa loquitor. A reference was also made to an article “Repair of Infraneral Abdominal Aortic Aneurysms (AAAs): Introduction” to say that the mortality associated with repair of AAAs has been greatly reduced by improvements in preoperative evaluation and perioperative care. Another text book by Robert B. Rutherford was referred to note that paraplegia was a rare complication in the case of Aneurysms whereas in the present matter, paraplegia occurred instantaneously.

16. Learned counsel for the appellants herein argued that the Hospital is a renowned hospital having four operation theatres and advance machines including DSA. Three other hospitals in Mumbai such as Jaslok Hospital, Hinduja Hospital and Breach Candy Hospital alone had DSA machines at the relevant time. The Hospital in its affidavit had inter alia mentioned that the DSA test is not a bed side test. The patient has to be carefully shifted to the cardiac cauterization department where the DSA machine was installed. The patient hence had to be stabilized before he was shifted to DSA department. Since the patient was put on ventilator and on several support medications, it was not possible to immediately undergo the DSA test. But when the patient was taken for DSA test, the machine developed certain technical problem. Since the DSA machine was not working, angiography was thought to be the best possible test and was thus conducted. The Hospital had specialized staff in all branches of medicine and the medical assistance as was required from time to time including nephrology, orthopedics etc. was provided to the patient. It was argued that the professional competence of Doctor has not been doubted even by the Commission but two factors have been taken against the Doctor for holding him negligent; first, that he did not visit the patient soon after the surgery till 9/9.30 a.m. on the next day to verify the blood flow after the surgery, and second, he did not visit the patient from 29.4.1998 to 9.5.1998 when he was in Mumbai and from 9.5.1998 to 7.6.1998 when he went abroad for attending medical conferences.

17. We do not find that the basis of finding the Doctor negligent in providing medical care is sustainable as there are both legal and factual errors in the findings recorded by the Commission.

18. Dr. K.G. Deshpande had referred the patient to the Doctor on 15.4.1998 with advice of urgent surgical repair of Aneurysum. The patient had taken another six days to consult Doctor at Mumbai and it was only on 21.4.1998 that the patient was examined by the Doctor and was advised immediate Aneurysmectomy in view of the impending gangrene. Therefore, gangrene was not found to be impending after few days of admission to the Hospital but even before the patient was admitted. The patient was in critical condition when the Doctor was consulted on 21.4.1998 and surgery was thereafter performed within two days.

19. Further, the non-working of the DSA machine and consequent delay in performing the test cannot be said to be negligence on the part of the Doctor or the Hospital. The DSA machine is a large, expensive and complicated machine which unfortunately developed certain technical problem at the time when patient had to be tested. Any machine can become non-functional because of innumerable factors beyond the human control as the machines involve various mechanical, electrical and electronic components. The DSA test was conducted in the Hospital on 22.4.1998 and hence DSA machine cannot be said to be dysfunctional for a long time. The alternative process to determine the blood flow was carried out by angiography and the decision for re-exploration was taken at 12.30 p.m. No fault can be attached to the Hospital if the operation theatres were occupied when the patient was taken for surgery. Operation theatres cannot be presumed to be available at all times. Therefore, non-availability of an emergency operation theatre during the period when surgeries were being performed on other patients is not a valid ground to hold the Hospital negligent in any manner.

20. The re-exploration of operative notes dated 24.4.1998 shows that a fresh graft was sutured in place after establishing the flow. The patient was then put on ventilator and shifted to recovery room. On 25.4.1998, a note by Dr. Bindra indicated that the patient was seen by Dr. Shruti. It was noted that there was no movement in both the legs but had pin prick sensation and below mid-thigh, sensation was present on the lower limbs. Further, legs were warm till the ankles and the feet were cold. On 27.4.1998, Dr. H.S. Bindra had sought consultation from Dr. Khadilkar giving case history that limbs were warm and that the patient had pain in the lumber region and was also feeling tightness in both the lower limbs. Dr. Khadilkar noted his impressions that it was very likely lower spinal cord/conus syndrome and thereafter advised MRI of the lower cervical spine and till then to continue with the medicine pentosiflin and lomodex and for muscle ischemia – high CK and Myoglobulin. Dr. Khadilkar suggested the same treatment to continue on 28.4.98. On 29.4.1998, Dr. Khadilkar had reported the sensory level dropped to upper l/3^rd of the thigh and that there was no power in limbs. No changes were however seen in the MRI report. It was also reported that probably myonecrosis was playing more significant role in the weakness. The patient was put on dialysis thereafter.

21. The patient was examined by Dr. Kripalani or his unit from 1.5.1998 and thereafter for many days till 23.5.1998. The dialysis was being conducted in the meantime as well. The patient was being monitored by Dr. Bindra throughout. Subsequently, the patient was referred to Dr. Amarapurkar on 12.5.1998 when it was noted that Ischemic Injury to liver needed no treatment on 13.5.1998. The patient was then referred to Dr. Amin for enternal nuirisim on 16.5.1998.

22. It was further noted on 18.05.1998 from Colour Flow Imaging of limb arteries that both common femoral, superficial femoral and popliteal arteries were patent. The flow in both posterior tibial arteries was of low velocity and of venous type, suggesting refilled flow. Dr. Pachore also examined the patient on 27.5.1998 and observed that the patient had wet gangrene below knee and was thus advised amputation. On 29.5.1998, the patient was operated for amputation below the knee at the level of tibial tuberosity for treatment of wet gangrene and the Bilateral Guillatine Amputation was carried out. On 30.05.1998, it was noted that the acute renal failure was improving. Further septicemia was diagnosed on 30.05.1998. Later, on 12.06.1998, the patient was put on ventilator and he subsequently passed away at 9.30 pm due to septicemic shock.

23. It is to be noted that it is not the case of the complainant that Doctor was not possessed of requisite skill in carrying out the operation. In fact, the patient was referred to him by Dr. Deshpande keeping in view the expertise of the Doctor in vascular surgery. There is no proof that there was any negligence in performing the surgery on 23.4.1998 or in the process of re-exploration on 24.4.1998. The allegation is of failure of the Doctor to take the follow-up action after surgery on 23.4.1998, a delayed decision to amputate the leg subsequent to re-exploration on 24.4.1998, and the alleged undue foreign visit of the Doctor.

24. In respect to such contention of the Doctor being on a foreign visit, it is well known a medical professional has to upgrade himself with the latest development in his field which may require him to attend conferences held both in and outside the country. Mere fact that the Doctor had gone abroad cannot lead to an inference of medical negligence as the patient was admitted in a hospital having specialists in multi-faculties. Two doctors from the unit of the Doctor namely Dr. Bindra and Dr. Partha, both post graduates, were present to attend to the patient. Moreover, as per the stand of the Hospital and the Doctor, the patient was kept in Cardio Vascular Intensive Care Unit after the surgery and was continuously being monitored by qualified post-graduate doctors including Dr. Nemish Shah, Head of Cardio Vascular Surgery. The patient was even attended by other specialist doctors as well which is evident from the brief summary of treatment given to the patient. The experts in the other fields have been consulted from time to time and the treatment was modulated accordingly. In spite of the treatment, if the patient had not survived, the doctors cannot be blamed as even the doctors with the best of their abilities cannot prevent the inevitable.

25. The blood was flowing properly soon after the surgery but later the formation of clot was confirmed after the angiography test was conducted at 12.30 p.m. An immediate decision was taken for re-exploration at 3.30 p.m. The allegation of delay in treatment after the surgery seems to be baseless as the patient was being administered antibiotics like Metrogyl 400 and Piperacillin Injection which are used for treatment in gangrene. Dr. Kripalani in his affidavit denied the allegation leveled by the complainant. Dr. Kripalani had treated patient continuously including carrying out the dialysis. In respect of the allegation that doctors failed to amputate legs on time, efforts were being made to save the limbs as amputation is considered as the last resort. The amputation was done as per the advice of Dr. Pachore. In the present era of super-specialization, one doctor is not a solution for all problems of a patient. Each problem is dealt with by an expert in the concerned field and that is what is apparent from the medical record. The stand of the complainant is that since surgery was performed by a doctor, he alone would be responsible for different aspects of the treatment required and given to the patient. However, it is an incorrect assumption to be made.

26. It is a case where the patient was in serious condition impending gangrene even before admission to the Hospital but even after surgery and re-exploration, if the patient does not survive, the fault cannot be fastened on the doctors as a case of medical negligence. It is too much to expect from a doctor to remain on the bed side of the patient throughout his stay in the hospital which was being expected by the complainant here. A doctor is expected to provide reasonable care which is not proved to be lacking in any manner in the present case.

27. The sole basis of finding of negligence against the Hospital is of res ipsa loquitor. It is to be noted that res ipsa loquitor is a rule of evidence. This Court in a judgment reported as Syad Akbar v. State of Karnataka, (1980) 1 SCC 30 explained the principle in a criminal trial as under:

“19. As a rule, mere proof that an event has happened or an accident has occurred, the cause of which is unknown, is not evidence of negligence. But the peculiar circumstances constituting the event or accident, in a particular case, may themselves proclaim in concordant, clear and unambiguous voices the negligence of somebody as the cause of the event or accident. It is to such cases that the maxim res ipsa loquitur may apply, if the cause of the accident is unknown and no reasonable explanation as to the cause is coming forth from the defendant. To emphasise the point, it may be reiterated that in such cases, the event or accident must be of a kind which does not happen in the ordinary course of things if those who have the management and control use due care. But, according to some decisions, satisfaction of this condition alone is not sufficient for res ipsa to come into play and it has to be further satisfied that the event which caused the accident was within the defendant’s control. The reason for this second requirement is that where the defendant has control of the thing which caused the injury, he is in a better position than the plaintiff to explain how the accident occurred. Instances of such special kind of accidents which “tell their own story” of being off springs of negligence, are furnished by cases, such as where a motor vehicle mounts or projects over a pavement and hurts somebody there or travelling in the vehicle; one car ramming another from behind, or even a head-on collision on the wrong side of the road. (See per Lord Nor-mand in Barkway v. South Wales Transport Co. [(1950) 1 All ER 392, 399]; Cream v. Smith [(1961) 8 AER 349]; Richley v. Faull [(1965) 1 WLR 1454 : (1965) 3 All ER 109])

20. Thus, for the application of the maxim res ipsa loquitur “no less important a requirement is that the res must not only bespeak negligence, but pin it on the defendant”.

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26. From the above conspectus, two lines of approach in regard to the application and effect of the maxim res ipsa loquitur are discernible. According to the first, where the maxim applies, it operates as an exception to the general rule that the burden of proof of the alleged negligence is, in the first instance, on the plaintiff. In this view, if the nature of an accident is such that the mere happening of it is evidence of negligence, such as, where a motor vehicle without apparent cause leaves the highway, or overturns or in fair visibility runs into an obstacle; or brushes the branches of an overhanging tree, resulting in injury, or where there is a duty on the defendant to exercise care, and the circumstances in which the injury complained of happened are such that with the exercise of the requisite care no risk would in the ordinary course ensue, the burden shifts or is in the first instance on the defendant to disprove his liability. Such shifting or casting of the burden on the defendant is on account of a presumption of law and fact arising against the defendant from the constituent circumstances of the accident itself, which bespeak negligence of the defendant. This is the view taken in several decisions of English courts. [For instance, see Burke v. Manchester, Sheffield & Lincolnshire Rail Co. [(1870) 22 LJ 442]; Moore v. R. Fox & Sons [(1956) 1 QB 596 : (1956) 1 All ER 182]. Also see paras 70, 79 and 80 of Halsbury’s Laws of England, Third Edn., Vol. 28, and the rulings mentioned in the footnotes thereunder.]

27. According to the other line of approach, res ipsa loquitur is not a special rule of substantive law; that functionally, it is only an aid in the evaluation of evidence, “an application of the general method of inferring one or more facts in issue from circumstances proved in evidence”. In this view, the maxim res ipsa loquitur does not require the raising of any presumption of law which must shift the onus on the defendant. It only, when applied appropriately, allows the drawing of a permissive inference of fact, as distinguished from a mandatory presumption properly so-called, having regard to the totality of the circumstances and probabilities of the case. Res ipsa is only a means of estimating logical probability from the circumstances of the accident. Looked at from this angle, the phrase (as Lord Justice Kennedy put it [Russel v. London & South Western Railway Co, (1908) 24 TLR 548]) only means, “that there is, in the circumstances of the particular case, some evidence which, viewed not as a matter of conjecture, but of reasonable argument, makes it more probable that there was some negligence, upon the facts as shown and undisputed, than that the occurrence took place without negligence …. It means that the circumstances are, so to speak, eloquent of the negligence of somebody who brought about the state of things which is complained of.”

28. Recently, a three Judge Bench in a judgment reported as Iffco Tokio General Insurance Company Limited v. Pearl Beverages Limited, (2021) 7 SCC 704 approved the aforesaid judgment in a case of medical negligence being examined by the consumer fora. It was held as under:

“86. Thus, it is used in cases of tort and where the facts without anything more clearly and unerringly point to negligence. The principle of res ipsa loquitur, as such, appears to be inapposite, when, what is in question, is whether driver was under the influence of alcohol. It may be another matter that though the principle as such is inapplicable, the manner in which the accident occurred may along with other circumstances point to the driver being under the influence of alcohol.”

29. In Martin F. D’Souza v. Mohd. Ishfaq, (2009) 3 SCC 1, this court observed that the doctor cannot be held liable for medical negligence by applying the doctrine of res ipsa loquitur for the reason that a patient has not favourably responded to a treatment given by a doctor or a surgery has failed. There is a tendency to blame the doctor when a patient dies or suffers some mishap. This is an intolerant conduct of the family members to not accept the death in such cases. The increased cases of manhandling of medical professionals who worked day and night without their comfort has been very well seen in this pandemic. This Court held as under:-

“40. Simply because a patient has not favourably responded to a treatment given by a doctor or a surgery has failed, the doctor cannot be held straightaway liable for medical negligence by applying the doctrine of res ipsa loquitur. No sensible professional would intentionally commit an act or omission which would result in harm or injury to the patient since the professional reputation of the professional would be at stake. A single failure may cost him dear in his lapse.

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42. When a patient dies or suffers some mishap, there is a tendency to blame the doctor for this. Things have gone wrong and, therefore, somebody must be punished for it. However, it is well known that even the best professionals, what to say of the average professional, sometimes have failures. A lawyer cannot win every case in his professional career but surely he cannot be penalised for losing a case provided he appeared in it and made his submissions.”

30. In case of medical negligence, this Court in a celebrated judgment reported as Jacob Mathew v. State of Punjab and Anr., (2005) 6 SCC 1 held that simple lack of care, an error of judgment or an accident, is not a proof of negligence on the part of a medical professional. The Court held as under:

“48. We sum up our conclusions as under:

(I) Negligence is the breach of a duty caused by omission to do something which a reasonable man guided by those considerations which ordinarily regulate the conduct of human affairs would do, or doing something which a prudent and reasonable man would not do. The definition of negligence as given in Law of Torts, Ratanlal & Dhirajlal (edited by Justice G.P. Singh), referred to hereinabove, holds good. Negligence becomes actionable on account of injury resulting from the act or omission amounting to negligence attributable to the person sued. The essential components of negligence are three: “duty”, “breach” and “resulting damage”.

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(4) The test for determining medical negligence as laid down in Bolam case [(1957) 1 WLR 582 : (1957) 2 All ER 118 (QBD)] , WLR at p. 586 [ [Ed.: Also at All ER p. 121 D-F and set out in para 19, p. 19 herein.]] holds good in its applicability in India.

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(5) Res ipsa loquitur is only a rule of evidence and operates in the domain of civil law, specially in cases of torts and helps in determining the onus of proof in actions relating to negligence. It cannot be pressed in service for determining per se the liability for negligence within the domain of criminal law. Res ipsa loquitur has, if at all, a limited application in trial on a charge of criminal negligence.”

31. In another judgment reported as Arun Kumar Mangliky. Chirayu Health and Medicare Private Limited and Anr., (2019) 7 SCC 401, this Court held that the standard of care as enunciated in Bolam case must evolve in consonance with its subsequent interpretation by English and Indian Courts. The threshold to prove unreasonableness is set with due regard to the risks associated with medical treatment and the conditions under which medical professionals’ function. The Court held as under:

“45. In the practice of medicine, there could be varying approaches to treatment. There can be a genuine difference of opinion. However, while adopting a course of treatment, the medical professional must ensure that it is not unreasonable. The threshold to prove unreasonableness is set with due regard to the risks associated with medical treatment and the conditions under which medical professionals function. This is to avoid a situation where doctors resort to “defensive medicine” to avoid claims of negligence, often to the detriment of the patient. Hence, in a specific case where unreasonableness in professional conduct has been proven with regard to the circumstances of that case, a professional cannot escape liability for medical evidence merely by relying on a body of professional opinion.”

32. In C.P. Sreekumar (Dr.), MS (Ortho) v. S. Ramanujam, (2009) 7 SCC 130, this Court held that the Commission ought not to presume that the allegations in the complaint are inviolable truth even though they remained unsupported by any evidence. This Court held as under:

“37. We find from a reading of the order of the Commission that it proceeded on the basis that whatever had been alleged in the complaint by the respondent was in fact the inviolable truth even though it remained unsupported by any evidence. As already observed in Jacob Mathew case [(2005) 6 SCC 1 : 2005 SCC (Cri) 1369] the onus to prove medical negligence lies largely on the claimant and that this onus can be discharged by leading cogent evidence. A mere averment in a complaint which is denied by the other side can, by no stretch of imagination, be said to be evidence by which the case of the complainant can be said to be proved. It is the obligation of the complainant to provide the facta probanda as well as the facta probantia.”

33. In another judgment reported as Kusum Sharma and Others v. Batra Hospital and Medical Research Centre and Others, (2010) 3 SCC 480, a complaint was filed attributing medical negligence to a doctor who performed the surgery but while performing surgery, the tumour was found to be malignant. The patient died later on after prolonged treatment in different hospitals. This Court held as under:

“47. Medical science has conferred great benefits on mankind, but these benefits are attended by considerable risks. Every surgical operation is attended by risks. We cannot take the benefits without taking risks. Every advancement in technique is also attended by risks.

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72. The ratio of Bolam case [(1957) 1 WLR 582 : (1957) 2 All ER 118] is that it is enough for the defendant to show that the standard of care and the skill attained was that of the ordinary competent medical practitioner exercising an ordinary degree of professional skill. The fact that the respondent charged with negligence acted in accordance with the general and approved practice is enough to clear him of the charge. Two things are pertinent to be noted. Firstly, the standard of care, when assessing the practice as adopted, is judged in the light of knowledge available at the time (of the incident), and not at the date of trial. Secondly, when the charge of negligence arises out of failure to use some particular equipment, the charge would fail if the equipment was not generally available at that point of time on which it is suggested as should have been used.

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78. It is a matter of common knowledge that after happening of some unfortunate event, there is a marked tendency to look for a human factor to blame for an untoward event, a tendency which is closely linked with the desire to punish. Things have gone wrong and, therefore, somebody must be found to answer for it. A professional deserves total protection. The Penal Code, 1860 has taken care to ensure that people who act in good faith should not be punished. Sections 88, 92 and 370 of the Penal Code give adequate protection to the professionals and particularly medical professionals.”

34. Recently, this Court in a judgment reported as Dr. Harish Kumar Khurana v. Joginder Singh & Others, (2021) SCC Online SC 673 held that hospital and the doctors are required to exercise sufficient care in treating the patient in all circumstances. However, in an unfortunate case, death may occur. It is necessary that sufficient material or medical evidence should be available before the adjudicating authority to arrive at the conclusion that death is due to medical negligence. Every death of a patient cannot on the face of it be considered to be medical negligence. The Court held as under:

“11……… Ordinarily an accident means an unintended and unforeseen injurious occurrence, something that does not occur in the usual course of events or that could not be reasonably anticipated. The learned counsel has also referred to the decision in Martin F.D ‘Souza v. Mohd. Ishfaq, (2009) 3 SCC 1 wherein it is stated that simply because the patient has not favourably responded to a treatment given by doctor or a surgery has failed, the doctor cannot be held straight away liable for medical negligence by applying the doctrine of Res Ipsa Loquitor. It is further observed therein that sometimes despite best efforts the treatment of a doctor fails and the same does not mean that the doctor or the surgeon must be held guilty of medical negligence unless there is some strong evidence to suggest that the doctor is negligent.

xxx xxx xxx

14. Having noted the decisions relied upon by the learned counsel for the parties, it is clear that in every case where the treatment is not successful or the patient dies during surgery, it cannot be automatically assumed that the medical professional was negligent. To indicate negligence there should be material available on record or else appropriate medical evidence should be tendered. The negligence alleged should be so glaring, in which event the principle of res ipsa loquitur could be made applicable and not based on perception. In the instant case, apart from the allegations made by the claimants before the NCDRC both in the complaint and in the affidavit filed in the proceedings, there is no other medical evidence tendered by the complainant to indicate negligence on the part of the doctors who, on their own behalf had explained their position relating to the medical process in their affidavit to explain there was no negligence……………….”

35. It may be mentioned here that the complainant had led no evidence of experts to prove the alleged medical negligence except their own affidavits. The experts could have proved if any of the doctors in the Hospital providing treatment to the patient were deficient or negligent in service. A perusal of the medical record produced does not show any omission in the manner of treatment. The experts of different specialities and super-specialities of medicine were available to treat and guide the course of treatment of the patient. The doctors are expected to take reasonable care but none of the professionals can assure that the patient would overcome the surgical procedures. Dr. Kripalani has been attributed to have informed the complainant that the patient’s legs were not working but Dr. Kripalani denied all the averments by filing of an affidavit.

36. As discussed above, the sole basis of finding the appellants negligent was res ipsa loquitor which would not be applicable herein keeping in view the treatment record produced by the Hospital and/or the Doctor. There was never a stage when the patient was left unattended. The patient was in a critical condition and if he could not survive even after surgery, the blame cannot be passed on to the Hospital and the Doctor who provided all possible treatment within their means and capacity. The DSA test was conducted by the Hospital itself on 22.4.1998. However, since it became dysfunctional on 24.4.1998 and considering the critical condition of the patient, an alternative angiography test was advised and conducted and the re-exploration was thus planned. It is only a matter of chance that all the four operation theatres of the Hospital were occupied when the patient was to undergo surgery. We do not find that the expectation of the patient to have an emergency operation theatre is reasonable as the hospital can provide only as many operation theatres as the patient load warrants. If the operation theatres were occupied at the time when the operation of the patient was contemplated, it cannot be said that there is a negligence on the part of the Hospital. A team of specialist doctors was available and also have attended to the patient but unfortunately nature had the last word and the patient breathed his last. The family may not have coped with the loss of their loved one, but the Hospital and the Doctor cannot be blamed as they provided the requisite care at all given times. No doctor can assure life to his patient but can only attempt to treat his patient to the best of his ability which was being done in the present case as well.

37. Therefore, we find that the findings recorded by the Commission holding the Hospital and the Doctor guilty of medical negligence are not sustainable in law. Consequently, the present appeals are allowed. The order passed by the Commission is set aside and the complaint is dismissed.

38. By virtue of an interim order passed by this Court on 8.3.2010, a sum of Rs. 5 lakhs was disbursed to the complainant. The said amount is ordered to be treated as ex gratia payment to the complainant and not to be recovered back by either the Hospital or the Doctor.

Posted on 8th November 20218th November 2021 by rajatbindal5gmailcom — Leave a comment

Builder default cases can be filed in either Consumer forum or in RERA – No restriction in RERA Act.

2021) AIR(SC) 437 : (2021) 1 ApexCourtJudgments(SC) 738 : (2021) 1 CivCC 533 : (2021) 1 CPJ 60 : (2021) 1 DNJ 1 : (2021) 2 HimLR 1239 : (2021) 1 JT 323 : (2021) 1 MadWN 277 : (2021) 1 RCR(Civil) 574 : (2021) 1 SCALE 439 : (2021) 3 SCC 241 : (2021) 1 SimLC 567

SUPREME COURT OF INDIA

FULL BENCH

IREO GRACE REALTECH PVT. LTD — Appellant

Vs.

ABHISHEK KHANNA AND OTHERS — Respondent

( Before : Dr Dhananjaya Y Chandrachud, Indu Malhotra and Indira Banerjee, JJ. )

Civil Appeal No. 5785 of 2019 with Civil Appeal No. 7615 of 2019; Civil Appeal No. 7975 of 2019; Civil Appeal No. 8454 of 2019; Civil Appeal No. 8480 of 2019; Civil Appeal No. 8482 of 2019; Civil Appeal No. 8785-94 of 2019; Civil Appeal No. 9139 of 2019; Civil Appeal No. 9216 of 2019; Civil Appeal No. 9638 of 2019 and Civil Appeal No. 3064 of 2020

Decided on : 11-01-2021

A. Consumer Protection Act, 1986 – Section 2(1)(r) – Apartment Buyer’s Agreement – Unfair trade practice – 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 – Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer’s Agreement.

B. Consumer Protection Act, 1986 – Section 23 – Delay in completing the construction and obtaining the Occupation Certificate – Issue which now arises is whether the apartment buyers are bound to accept the offer of possession made by the Developer where the Occupation Certificate has been issued, along with the payment of Delay Compensation, or are entitled to terminate the Agreement – Factum of delay in completing the construction and making the offer of possession is an undisputed fact in this case.

C. Real Estate (Regulation and Development) Act, 2016 – Sections 88, 71(1) and 79 – Consumer Protection Act, 1986 – Section 12(2) – Proviso to Section 71(1) of the RERA Act entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or Commission and file an appropriate application before the adjudicating officer under the RERA Act – Proviso thus gives a right or an option to the complainant concerned but does not statutorily force him to withdraw such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act. As against that the mandate in Section 12(4) of the CP Act to the contrary is quite significant – Again, insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation – Absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a civil court and express saving under Section 88 of the RERA Act, make the position quite clear – Further, Section 18 itself specifies that the remedy under the said section is -without prejudice to any other remedy available. Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act.

Cases Referred

A.P. State Financial Corporation v. M/s GAR Re-rolling Corporation, (1994) 2 SCC 647
CIT v. Taj Mahal Hotel, Secunderabad, (1971) 3 SCC 550
Dilworth v. Commissioner of Stamps, 1899 AC 99 : 15 TLR 61
Emaar MGF Land Ltd. v. Aftab Singh, (2019) 12 SCC 751
Fortune Infrastructure v. Trevor D’Lima, (2018) 5 SCC 442 : (2018) 3 SCC (Civ) 1
Geetu Gidwani Verma v. Pioneer Urban Land and Infrastructure Ltd., 2018 SCC OnLine NCDRC 1164
Gujarat State Financial Corpn. v. Naatson Mfg. Co. P. Ltd., (1979) 1 SCC 193, 198 : AIR 1978 SC 1765
Lucknow Development Authority v. M.K. Gupta, (1994)1 SCC 243.
M/s Imperia Structures Ltd. v. Anil Patni and Anr, (2020) 10 SCC 783
Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610
National Insurance Co. Ltd. vs. Mastan & Ors., (2006) 2 SCC 641
National Seeds Corporation Limited v. M. Madhusudhan Reddy, (2012) 2 SCC 506
P.R. Deshpande v. Maruti Balaram Haibatti, (1998) 6 SCC 507
Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725.
R. v. Evans, (1854) 3 E & B 363 : 118 ER 11781)
Regional Director, Employees’ State Insurance Corpn. v. High Land Coffee Works of P.F.X. Saldanha and Sons, (1991) 3 SCC 617
Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (dead) through LRs and others, (2004) 1 SCC 305.
State of Bombay v. Hospital Mazdoor Sabha, AIR 1960 SC 610 : (1960) 2 SCR 866 : (1960) 1 LLJ 251
Transcore v. Union of India, (2008)1 SCC 125
Virender Jain v. Alaknanda Cooperative Group Housing Society Limited and others, (2013) 9 SCC 383
Wg. Cdr. Arifur Rahman Khan & Others v. DLF Southern Homes Pvt. Ltd., 2020 SCC Online SC 667.

JUDGMENT

Indu Malhotra, J. – 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 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.

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.

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:

INSTALLMENT PAYMENT PLAN
S. No.	LINKED STAGES	%	TOTAL
1	AT THE TIME OF BOOKING	10% OF BASIC	1727851.60
2	WITHIN 45 DAYS OF BOOKING	10% OF BASIC	1727851.60
3	COMMENCEMENT OF EXCAVATION	10%OFBASIC+50% OF DEVELOPMENT CHARGES	2029223.85
4	CASTING OF LOWER BASEMENT ROOF SLAB	10%OFBASIC+50% OF DEVELOPMENT CHARGES	2029223.85
5	CASTING OF 2^NUFLOOR ROOF SLAB	10% OF BASIC	1727851.60
6	CASTING OF 5′^MFLOOR ROOF SLAB	10% OF BASIC	1727851.60
7	CASTING OF 8′^MFLOOR ROOF SLAB	10%OFBASIC+50% OF CLUB MEMBERSHIP	1852851.60
8	CASTING OF 11 ^mFLOOR ROOF SLAB	10% OF BASIC	1727851.60
9	CASTING OF TOP FLOOR ROOF SLAB	10% OF BASIC	1727851.60
10	ON COMPLETION OF STONE/TILE FLOORING IN APARTMENT	50% OF BASIC+50% OF CLUB MEMBERSHIP	988925.80
11	ON OFFER OF POSSESSION	50%OFBASIC+100% OFIFMS+100%OF IBRF	1139646.80
	TOTAL		18406981.50

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 :

Clause 6 pertains to payment of Earnest Money, and reads as :

“6. EARNEST MONEY

The Company and the Allottee hereby agree that 20% (Twenty percent) of the Sale Consideration of the Apartment shall be deemed to constitute the “Earnest Money”.” (emphasis supplied)

Clause 7 pertains to payment of instalments, and provides that:

“7. PAYMENT OF INSTALLMENTS

7.1 The Allottee has opted for the Payment Plan annexed herewith as Annexure-IV. The Allottee understands that it shall always remain responsible for making timely payments in accordance with the Payment Plan Annexure-IV. Only in the case of a construction linked Payment Plan, the Company shall be obliged to send demand notices for installments on or about the completion of the respective stages of construction. The demand notices shall be sent by registered post/courier and shall be deemed to have been received by the Allottee within 05 (five) days of dispatch by the Company or receipt thereof, whichever is earlier.

7.2 It shall not be obligatory on the part of the Company to send any reminders for any payments whatsoever. Although the Company shall not be obliged to send demand notices other than for the construction linked Payment Plan, or any reminders whatsoever for payments of the instalment, in the event that any such notices or reminders are sent by the Company to the Allottee, as a gesture of courtesy, these shall not, under any circumstances, be construed or deemed to be a waiver of the obligations and responsibility of the Allottee to itself make timely payments in accordance with the Payment Plan or in response to such demand notices in the case of a construction linked Payment Plan.

7.3 If the Allottee prepays any installments(s) or part thereof to the Company before it falls due for payment, the Allottee shall be entitled to pre-payment rebate on such prepaid amounts at the interest rate declared by the Company for this purpose from time to time. The interest on such prepaid installment(s) shall be calculated from the date of prepayment uptill the date when such amount would actually have become due. The credit due to the Allottee on account of such pre-payment rebate shall however be adjusted/paid only at the time of final instalment for the said Apartment.

7.4 The Allottee shall be liable to pay simple interest on every delayed payment, at the rate of 20% per annum from the date that it is due for payment till the date of actual payment thereof. In case the Allottee defaults in making payment of the due installment (including partial default) beyond a period of 90 days from the due date, the Company shall be entitled, though not obliged, to cancel the Allotment and terminate this Agreement at any time thereafter in accordance herewith. However, the Company may alternatively, in its sole discretion, instead decide to enforce the payment of all its dues from the Allottee by seeking Specific Performance of this Agreement. Further, in every such case of delayed payment, irrespective of the type of Payment Plan, the subseguent credit of such delayed installments(s)/payments along with delayed interest in the account of the Company shall not however constitute waiver of the right of termination reserved herein and shall always be without prejudice to the rights of the Company to terminate this Agreement in the manner provided herein.

7.5 Save and except in the case of any bank, financial institution or company with whom a tripartite agreement has been separately executed for financing the said Apartment, or where the Company has given its permission to mortgage to any bank, financial institution or company for extending a loan to the Allottee against the said Apartment, the Company shall not be responsible towards any other third party, who has made payments or remittances to the Company on behalf of the Allottee and any such third party shall not have any right against the said Apartment or under this Agreement whatsoever. The Company shall issue the payment receipts only in favour of the Allottee. Notwithstanding the above, the Allottee is and shall remain solely and absolutely responsible for ensuring and making all the payments due under this Agreement on time.

7.6 The Allottee may obtain finance/loan from any financial institution, bank or any other source, but the Allottee’s obligation to purchase the said Apartment pursuant to this Agreement shall not be contingent on the Allottee’s ability or competency to obtain such finance. The Allottee would remain bound under this Agreement whether or not it has been able to obtain finance for the purchase of the said Apartment. The Allottee agrees and has fully understood that the Company shall not be under any obligation whatsoever to make any arrangement for the finance/loan facilities to the Allottee from any bank/financial institution. The Allottee shall not omit, ignore, delay, withhold, or fail to make timely payments due to the Company in accordance with the Payment Plan opted by the Allottee in terms of this Agreement on the grounds of the non-availability of bank loan or finance from any bank/financial institution for any reason whatsoever and if the Allottee fails to make the due payment to the Company within the time agreed herein, then the Company shall have right to terminate this Agreement in accordance herewith.

7.7 Furthermore, in every case where the Allottee has obtained a loan/finance from a bank, financial institution or any other source and for which a tripartite agreement has also been executed by the Company, it is agreed by the Allottee that any default by the Allottee of the terms and conditions of such loan/finance, shall also be deemed to constitute a default by the Allottee of this Agreement, whereupon or at the written request of such bank, financial institution or person from whom such loan has been obtained the Company shall be entitled to terminate this Agreement.” (emphasis supplied)

Clause 13 of the Agreement provides for handing over possession of the Apartments and reads as :

“13. POSSESSION AND HOLDING CHARGES

13.1. Upon receipt of the Occupation Certificate under the Act pertaining to the said Apartment, the Company shall notify the Allotee in writing to come and take over the possession of the said Apartment (“Notice of Possession”). In the event the Allottee fails to accept and take the possession of the said Apartment within the time indicated in the said Notice of Possession, the Allottee shall be deemed to have become the custodian of the said Apartment from the date indicated in the Notice of Possession and the said Apartment shall thenceforth remain at the sole risk and cost of the Allottee itself.

13.2. Notwithstanding any other provisions of this Agreement, the Allottee agrees that if it fails, ignores or neglects to take the possession of the said Apartment in accordance with the Notice of Possession sent by the Company, the Allottee shall be liable to pay additional charges equivalent to Rs. 7.5 (Rupees Seven & Half only) per sg. ft. on the Super Area per month of the said Apartment (“Holding Charges”). The Holding Charges shall be a distinct charge in addition to the maintenance charges and not related to any other charges/consideration as provided in this Agreement.

13.3 Subject to Force Majeure, as defined herein and further subject to the Allottee having complied with all its obligations under the terms and conditions of this Agreement and not having defaulted under any provision(s) of this Agreement including but not limited to the timely payment of all dues and charges including the total Sale Consideration, registration charges, stamp duty and other charges and also subject to the Allottee having complied with all formalities or documentation as prescribed by the Company, the Company proposes to offer the possession of the said Apartment to the Allottee within a period of 42 (Forty Two) months from the date of approval of the Building Plans and/or fulfilment of the preconditions imposed thereunder (“Commitment Period”). The Allottee further agrees and understands that the Company shall additionally be entitled to a period of 180 days (“Grace Period”), after the expiry of the said Commitment Period to allow for unforeseen delays beyond the reasonable control of the Company.

13.4. Subject to Clause 13.3, if the Company fails to offer possession of the said Apartment to the Allottee by the end of the Grace Period, it shall be liable to pay to the Allottee compensation calculated at the rate of Rs. 7.5 (Rupees Seven & Half only) per sq. ft. of the Super Area (“Delay Compensation”) for every month of delay until the actual date fixed by the Company for offering possession of the said Apartment to the Allottee. The Allottee shall be entitled to payment/adjustment against such ‘Delay Compensation’ only at the time of ‘Notice of Possession’ or at the time of payment of the final installment, whichever is earlier.

13.5. Subject to Clause 13.3, in the event of delay by the Company in offering the possession of the said Apartment beyond a period of 12 months from the end of the Grace Period (such 12 month period hereinafter referred to as the “Extended Delay Period”), then the Allottee shall become entitled to opt for termination of the Allotment/Agreement and refund of the actual paid up installment(s) paid by it against the said Apartment after adjusting the interest on delayed payments along with Delay Compensation for 12 months. Such refund shall be made by the Company within 90 days of receipt of intimation to this effect from the Allottee, without any interest thereon. For the removal of doubt, it is clarified that the Delay Compensation payable to the Allotee who is validly opting for termination, shall be limited to and calculated for the fixed period of 12 months only irrespective of the date on which the Allottee actually exercised the option for termination. This option may be exercised by the Allottee only up till dispatch of the Notice of Possession by the Company to the Allottee whereupon the said option shall be deemed to have irrevocably lapsed. No other claim, whatsoever, monetary or otherwise shall lie against the Company and/or the Confirming Parties nor be raised otherwise or in any other manner by the Allottee.

13.6. If, however, the completion of the said Apartment is delayed due to Force Majeure as defined herein, the Commitment Period and/or the Grace Period and/or the Extended Delay Period, as the case may be, shall stand extended automatically to the extent of the delay caused under the Force Majeure circumstances. The Allottee shall not be entitled to any compensation whatsoever, including Delay Compensation for the period of such delay.

13.7. Under no circumstances shall the possession of the said Apartment be given to the Allottee and the Allottee shall not be entitled to the possession of the said Apartment unless and until the full payment of the Sale Consideration and any other dues payable under the Agreement have been remitted to the Company and all other obligations imposed under this Agreement have been fulfilled by the Allottee to the complete satisfaction of the Company.

13.8. The Allottee hereby agrees and affirms that upon taking possession of the said Apartment, the Allottee shall be deemed to have waived all claims against the Company/Confirming Parties, if any, in respect of the area, specifications, quality, construction and/or any item, amenity or provision in the said Apartment or The Corridors Project.” (emphasis supplied)

Clause 21.3 reads as under:

“21. TIME IS OF ESSENCE; TERMINATION AND FORFEITURE OF EARNEST MONEY

21.1 Notwithstanding anything contained in this Agreement, timely performance by the Allottee of all its obligations under this Agreement or exercise of any options wherever and wherever and whenever indicated herein this Agreement including without limitation its obligations to make timely payments of the Sale Consideration, maintenance charges and other deposits and amounts, including any interest, in accordance with this Agreement shall be of essence under this Agreement. If the Allottee neglects, omits, ignores, or fails in the timely performance of its obligations agreed or stipulated herein for any reason whatsoever or acts in any manner contrary to any undertaking assured herein or fails to exercise the options offered by the Company within the stipulated period or to pay in time to the Company any of the instalments or other amounts and charges due and payable by the Allottee as described in Clause 7.7 herein, the Company shall be entitled to cancel the allotment and terminate this Agreement in the manner described hereunder.

21.1.1 In case any failure or breach committed by the Allotee is incapable or rectification or is in the opinion of the Company unlikely to be rectified by the Allottee or where the Allottee is a repetitive defaulter or such failure or default is continuing despite the Allottee being given an opportunity to rectify the same, then this Agreement may be cancelled by the Company with immediate effect at its sole option by written notice (“Notice of Termination”) to the Allottee intimating to the Allottee the decision of the Company to terminate the Agreement and the grounds on which such action has been taken.

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 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 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, would be practically left remediless for 1^1/2 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 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 :

(i) Determination of the date from which the 42 months period for handing over possession is to be calculated under Clause 13.3, whether it would be from the date of issuance of the Fire NOC as contended by the Developer; or, from the date of sanction of the Building Plans, as contended by the Apartment Buyers;

(ii) Whether the terms of the Apartment Buyer’s Agreement were one-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:

(a) On the first issue, it was submitted that the period of 42 months for handing over possession would commence only after the conditions mentioned in the Building Plans were fulfilled. The Apartment Buyer’s Agreement in Clause 13.3 provides that the 42 months period would commence from “the date of approval of the Buildings plans and/or fulfilment of the pre-conditions imposed thereunder”.

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

“17(iv). That the Coloniser shall obtain the clearance/NOC as per the provisions of the Notification No. SO 1533(E) dated 14.09.2006 issued by the Ministry of Environment & Forests, Government of India before starting the construction/execution of development works at site.” (emphasis supplied)

This stipulation has been affirmed by the RERA, a specialised fact-finding authority in respect of real estate projects, while interpreting the starting point of the 42 months period from the date of fire safety approval. Since the fire safety approval was obtained on 27.11.2014, the period of 42 months would commence from this date. The due date for handing over possession of apartments must be taken to be 27.11.2018 i.e. 42 months from the date of obtaining the Fire Safety NOC on 27.11.2014, and a Grace Period of 6 months. In this view of the matter, the complaint filed before the National Commission was premature and liable to rejected.

(b) The Apartment Buyers were bound by the terms of the Apartment Buyer’s Agreement, which clearly states that the “Commitment Period” would start only after fulfilment of the preconditions 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 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, 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 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.(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 :-

(a) The building plans were approved on 23.07.2013, and the Developer was required to hand over possession of the apartments within a period of 42 months from the date of approval, which expired on 22.01.2017. If the Grace Period of 6 months under Clause 13.3 was added, the Developer was required to give possession by 22.07.2017. 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 1^1/2 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 3^1/2 years.

(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. 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.

[1] Civil Appeal No.4801 of 2019 decided on 03.05.2019.

(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, (2019) 5 SCC 725.

(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.

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:

“15. Approval of Fire Fighting Scheme and issue of no objection certificate.-(1) Any person proposing to construct a building to be used for any purpose other than residential purpose or a building proposed to be used for residential purpose of more than 15 meters in height, such as group housing, multi-storeyed flats, walk-up apartments, etc. before the commencement of the construction, shall apply for the approval of Fire Fighting Scheme conforming to National Building Code of India, the Disaster Management Act, 2005 (53 of 2005), the Factories Act, 1948 (Act 63 of 1948) and the Punjab Factory Rules, 1952, and issue of no objection certificate on such form, alongwith such field as may be prescribed.

(2) The Director or any officer duly authorised by him in this behalf, may take cognizance of any application and issue such instructions and orders regarding the building plan and for construction by issuing a provisional no objection certificate before the construction is taken up.

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 reguired 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.

Clause 3 of the Building Plans contained a provision for Fire Safety, which reads :

“3. FIRE SAFETY

On receipt of the above request the Commissioner, Municipal Corporation, Gurgaon after satisfying himself that the entire fire protection measures proposed for the above buildings are as per NBC and other Fire Safety Bye Laws, and would issue a NOC from Fire safety and means of escape/access point of view. This clearance/NOC from Fire Authority shall be submitted in this office along with a set of plans duty signed by the Commissioner, Municipal Corporation, Gurgaon within a period of 90 days from the date of issuance of sanction of building plans. Further, it is also made clear that no permission for occupancy of the building shall be issued by Commissioner, Municipal Corporation, Gurgaon unless he is satisfied that adequate fire fighting measures have been installed by you and suitable external fire fighting infrastructure has been created at Gurgaon, by Municipal Corporation, Gurgaon. A clearance to this effect shall be obtained from the Commissioner, Municipal Corporation, Gurgaon before grant of occupation certificate by the Director General.”

18.5 On receipt of the Fire Plans, the Commissioner, Municipal Corporation, Gurgaon, after satisfying himself with the entire fire protection measures as in conformity with the National Building Code, 2005 (“NBC”) and the Fire Safety Bye-Laws, would issue an NOC for Fire Safety. This NOC/Clearance was required to be submitted before the Municipal Corporation, within a period of 90 days’ from the issuance of the sanctioned Building Plans.

18.6 Clause 17(iv) of the sanctioned Plan stipulated that the Developer shall obtain an NOC from the Ministry of Environment & Forests, before starting the construction/execution of development works at site.

“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 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:

“(vi) All other statutory clearance such as the approvals for storage of diesel from Chief Controller of Explosive, Fire Department, Civil Aviation Department, Forest Conservation Act, 1980 and Wildlife (Protection) Act, 1972, Forest Act, 1927, PLPA 1900 etc. shall be obtained as applicable by project proponents from the respective authorities prior to construction of the project.” (emphasis supplied)

18.8 We are of the view that it was a mandatory requirement under the Haryana Fire Safety Act, 2009 to obtain the Fire NOC before commencement of construction activity. This requirement is stipulated in the sanctioned Building Plans, as also in the Environment Clearance.

18.9 The 42 months’ period in Clause 13.3. of the Agreement for handing over possession of the apartments would be required to be computed from the date on which Fire NOC was issued, and not from the date of the Building Plans being sanctioned.

18.10 In the present case, the Developer obtained approval of the Building Plans from the Directorate, Town and Country Planning, Haryana, on 23.07.2013. The Developer applied for issuance of Fire NOC for the Fire Fighting Scheme of the Group Housing Colony within the 90 days period before the Director, Fire Service, Panchkula.

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.

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:

a) Under the construction-linked plan, Clause 6 provided that the apartment buyers would be required to deposit 20% of the sale consideration within 45 days of booking of the apartment.

b) Clause 7.4 of the Agreement provides that if there is a delay in payment of an instalment, the apartment buyer would be required to pay Interest on every delayed payment of such instalment @ 20% S.I. p.a.

c) Clause 13.2 of the Agreement provides that if the allottee fails, ignores or neglects to take possession of the said Apartment in accordance with the Notice of Possession, the allottee shall be liable to pay “Holding Charges” on the super area @ Rs.7.5 per sq. ft. per month.

d) In contrast, Clause 13.3 of the Agreement provides that if the Company fails to offer possession by the end of the Grace Period i.e. 42+6 months, it would be liable to pay Delay Compensation @ Rs.7.5 per sq. ft. of the super area for every month of delay.

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 :

7.5	x 100 x 12 = 0.9 % to 1% p.a.
10,350

e) Clause 13.5 provides that the allottee may opt for termination, only after 42 months from the date of issuance of Fire NOC + 6 months’ Grace Period, plus a further period of 12 months.

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.

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, 1986.19.3 Section 2(1)(c) of the Consumer Protection Act, 1986 defines a ‘complaint’ as :

“2.(1)(c) “complaint” means any allegation in writing made by a complainant that-

(i) any unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider;

(ii) the goods bought by him or agreed to be bought by him suffer from one or more defects.

.” (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(1)(o) “service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;” (emphasis supplied)

In Lucknow Development Authority v. M.K. Gupta, (1994)1 SCC 243. this Court discussed the legislative intent of including “housing construction” within the ambit of ‘service’ as :

“2….. A scrutiny of various definitions such as ‘consumer¹, ‘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:

“‘include’ is very generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute, and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural, import, but also those things which the definition clause declares that they shall include.”

It has been approved by this Court in Regional Director, Employees’ State Insurance Corpn. v. High Land Coffee Works of P.F.X. Saldanha and Sons [(1991) 3 SCC 617] ; CIT v. Taj Mahal Hotel, Secunderabad [(1971) 3 SCC 550] and State of Bombay v. Hospital Mazdoor Sabha [AIR 1960 SC 610 : (1960) 2 SCR 866 : (1960) 1 LLJ 251] . The provisions of the Act thus have to be construed in favour of the consumer to achieve the purpose of enactment as it is a social benefit oriented legislation. The primary duty of the court while construing the provisions of such an Act is to adopt a constructive approach subject to that it should not do violence to the language of the provisions and is not contrary to the attempted objective of the enactment.

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 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 :-

“2(1)(r) “unfair trade practice” means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely:-

(emphasis supplied)

The said definition is an inclusive one, as held by this Court in Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725. wherein this Court speaking through one of us (J. Indu Malhotra) held :-

“6.1 …. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service. In Fortune Infrastructure v. Trevor D’Lima [Fortune Infrastructure v. Trevor D’Lima, (2018) 5 SCC 442 : (2018) 3 SCC (Civ) 1] , this Court held that a person cannot be made to wait indefinitely for possession of the flat allotted to him, and is entitled to seek refund of the amount paid by him, along with compensation.

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

“… a contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties.”

6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the agreement dated 8-5-2012 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., 2020 SCC Online SC 667. 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 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 :

“STATEMENT OF OBJECTS AND REASONS

The Consumer Protection Bill, 1986 seeks to provide for better protection of the interests of consumers and for the purpose, to make provision for the establishment of Consumer councils and other authorities for the settlement of consumer disputes and for matter connected therewith.

2. It seeks, inter alia, to promote and protect the rights of consumers such as:-

(a) the right to be protected against marketing of goods which are hazardous to life and property;

(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;

(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 :

“3. Act not in derogation of any other law.-The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.”

In Secretary, Thirumurugan Cooperative Agricultural Credit Society v. M. Lalitha (dead) through LRs and others, (2004) 1 SCC 305. this Court held that:

“11. From the Statement of Objects and Reasons and the scheme of the 1986 Act, it is apparent that the main objective of the Act is to provide for 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, (2012) 2 SCC 506, 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:

“57. It can thus be said that in the context of farmers/growers and other consumers of seeds, the Seeds Act is a special legislation insofar as the provisions contained therein ensure that those engaged in agriculture and horticulture get quality seeds and any person who violates the provisions of the Act and/or the Rules is brought before the law and punished. However, there is no provision in that Act and the Rules framed thereunder for compensating the farmers, etc. who may suffer adversely due to loss of crop or deficient yield on account of defective seeds supplied by a person authorised to sell the seeds. That apart, there is nothing in the Seeds Act and the Rules which may give an indication that the provisions of the Consumer Protection Act are not available to the farmers who are otherwise covered by the wide definition of “consumer” under Section 2(1 )(d) of the Consumer Protection Act. As a matter of fact, any attempt to exclude the farmers from the ambit of the Consumer Protection Act by implication will make that Act vulnerable to an attack of unconstitutionality on the ground of discrimination and there is no reason why the provisions of the Consumer Protection Act should be so interpreted.

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, (2013) 9 SCC 383

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, (2019) 12 SCC 751 this Court has held that the remedy under the Consumer Protection Act, 1986 is 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 :

“THE STATEMENT OF OBJECTS AND REASONS

The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardisation and lack of adequate consumer protection. Though the Consumer Protection Act, 1986 is available as a forum to the buyers in the real estate market, the recourse is only curative and is not adequate to address all the concerns of buyers and promoters in that sector. The lack of standardisation has been a constraint to the healthy and orderly growth of industry. Therefore, the need for regulating the sector has been emphasised in various forums.

In view of the above, it becomes necessary to have a Central legislation, namely, the Real Estate (Regulation and Development) Bill, 2013 in the interests of effective consumer protection, uniformity and standardisation of business practices and the transactions in the real estate sector. The proposed Bill provides for the establishment of the Real Estate Regulatory Authority (the Authority) for regulation and promotion of real estate sector and to ensure sale of plot, apartment or building, as the case may be, in an efficient and transparent manner and to protect the interest of consumers in real estate sector and establish the Real Estate Appellate Tribunal to hear appeals from the decisions, directions or orders of the Authority. (emphasis supplied)

20.5 Section 18 of the RERA Act, 2016 provides the remedy of refund with interest and compensation to allottees, when a Developer fails to complete the construction or give possession as per the Agreement of Sale. The remedies under Section 18 are “without prejudice to any other remedy available”.

20.6 Section 71 of the RERA Act empowers the RERA Authority to determine compensation payable under Sections 12, 14, 18 and 19 of the Act. The proviso to Section 71 provides that a consumer has the right to withdraw its complaint before the consumer fora in respect of matters covered under Sections 12, 14, 18 and 19 of the Act, and file the same before the RERA.

Section 71 reads as :

“71. Power to adjudicate. – (1) For the purpose of adjudging compensation under sections 12, 14, 18 and section 19, the Authority shall appoint, in consultation with the appropriate Government, one or more judicial officer as deemed necessary, who is or has been a District Judge to be an adjudicating officer for holding an inquiry in the prescribed manner, after giving any person concerned a reasonable opportunity of being heard:

Provided that any person whose complaint in respect of matters covered under sections 12, 14, 18 and section 19 is pending before the Consumer Disputes Redressal Forum or the Consumer Disputes Redressal Commission or the National Consumer Redressal Commission, established under section 9 of the Consumer Protection Act, 1986 (68 of 1986), on or before the commencement of this Act, he may, with the permission of such Forum or Commission, as the case may be, withdraw the complaint pending before it and file an application before the adjudicating officer under this Act”.

20.7 Section 79 of the RERA Act bars the jurisdiction only of civil courts in respect of matters which an authority constituted under the RERA Act is empowered to adjudicate on.

Section 79 reads as :

“79. Bar of jurisdiction: No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.”

20.8 Section 88 of the RERA Act is akin to Section 3 of the Consumer Protection Act, and provides that the provisions of the RERA Act shall apply in addition to and not in derogation of other applicable laws. Section 88 reads as :

“88. Application of other law not barred: The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.”

20.9 An allottee may elect or opt for one out of the remedies provided by law for redressal of its injury or grievance. An election of remedies arises when two concurrent remedies are available, and the aggrieved party chooses to exercise one, in which event he loses the right to simultaneously exercise the other for the same cause of action.

20.10 The doctrine of election was discussed in A.P. State Financial Corporation v. M/s GAR Re-rolling Corporation, (1994) 2 SCC 647, in the following words :

“15. The Doctrine of Election clearly suggests that when two remedies are available for the same relief, the party to whom the said remedies are available has the option to elect either of them but that doctrine would not apply to cases where the ambit and scope of the two remedies is essentially different. To hold otherwise may lead to injustice and inconsistent results…..Since, the Corporation must be held entitled and given full protection by the Court to recover its dues it cannot be bound down to adopt only one of the two remedies provided under the Act. In our opinion the Corporation can initially take recourse to Section 31 of the Act but withdraw or abandon it at any stage and take recourse to the provisions of Section 29 of the Act, which section deals with not only the rights but also provides a self-contained remedy to the Corporation for recovery of its dues. If the Corporation chooses to take recourse to the remedy available under Section 31 of the Act and pursues the same to the logical conclusion and obtains an order or decree, it may thereafter execute the order or decree, in the manner provided by Section 32(7) and (8) of the Act. The Corporation, however, may withdraw or abandon the proceedings at that stage and take recourse to the provisions of Section 29 of the Act. A ‘decree’ under Section 31 of the Act not being a money decree or a decree for realisation of the dues of the Corporation, as held in Gujarat State Financial Corpn. v. Naatson Mfg. Co. P. Ltd. [(1979) 1 SCC 193, 198 : AIR 1978 SC 1765, 1768] recourse to it cannot debar the Corporation from taking recourse to the provisions of Section 29 of the Act by not persuing the decree or order under Section 31 of the Act, in which event the order made under Section 31 of the Act would serve in aid of the relief available under Section 29 of the Act

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, (1998) 6 SCC 507, it was held that:

“8. The doctrine of election is based on the rule of estoppel – the principle that one cannot approbate and reprobate inheres in it. The doctrine of estoppel by election is one of the species of estoppel in pais (or equitable estoppel) which is a rule in equity. By that rule, a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had. (vide Black’s Law Dictionary, 5th Edn.)”

In National Insurance Co. Ltd. vs. Mastan & Ors., (2006) 2 SCC 641 claims for compensation were filed both under the Workmen’s Compensation Act, 1923 and the Motor Vehicles Act, 1988. This Court held that the doctrine of election was incorporated in Section 167 of the Motor Vehicles Act. The relevant extract from the judgment reads as follows :

’23. The “doctrine of election” is a branch of “rule of estoppel”, in terms whereof a person may be precluded by his actions or conduct or silence when it is his duty to speak, from asserting a right which he otherwise would have had. The doctrine of election postulates that when two 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 11781) 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)

In Transcore v. Union of India, (2008)1 SCC 125, 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, (2014) 5 SCC 610, where it was held that:

“46. A reading of Section 37 discloses that the application of the SARFAESI Act will be in addition to and not in derogation of the provisions of the RDDB Act. In other words, it will not in any way nullify or annul or impair the effect of the provisions of the RDDB Act. We are also fortified by our above statement of law as the heading of the said section also makes the position clear that application of other laws are not barred. The effect of Section 37 would, therefore, be that in addition to the provisions contained under the Sarfaesi Act, in respect of proceedings initiated under the said Act, it will be in order for a party to fall back upon the provisions of the other Acts mentioned in Section 37, namely, the Companies Act, 1956, the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, or any other law for the time being in force.”

20.11 In a recent judgment delivered by this Court in M/s Imperia Structures Ltd. v. Anil Patni and Anr, (2020) 10 SCC 783, it was held that remedies under the Consumer Protection Act were in addition to the remedies available under special statutes. The absence of a bar under Section 79 of the RERA Act to the initiation of proceedings before a fora which is not a civil court, read with 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:

“31. Proviso to Section 71(1) of the RERA Act entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or Commission and file an appropriate application before the adjudicating officer under the RERA Act. The proviso thus gives a right or an option to the complainant concerned but does not statutorily force him to withdraw such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act. As against that the mandate in Section 12(4) of the CP Act to the contrary is quite significant.

32. Again, insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. The absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a civil court and express saving under Section 88 of the RERA Act, make the position quite clear. Further, Section 18 itself specifies that the remedy under the said section is “without prejudice to any other remedy available”. Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act.”

21. Whether the Apartment Buyers are entitled to terminate the Agreement, or refund of the amount deposited with Delay Compensation.

21.1 The issue which now arises is whether the apartment buyers are bound to accept the offer of possession made by the Developer where the Occupation Certificate has been issued, along with the payment of Delay Compensation, or are entitled to terminate the Agreement.

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:-

i) Apartment Buyers whose allotments fall in Phase 1 of the project comprised in Towers A6 to A10, B1 to B4, and C3 to C7, where the Developer has been granted occupation certificate, and offer of possession has been made, are enlisted in Chart A;

ii) Apartment Buyers whose allotments fall in Phase 2 of the project, where the allotments are in Towers A1 to A5, B5 to B8, C8 to C11, where the Occupation Certificate has not been granted so far, are set out in Chart B below.

CHART A

APARTMENTS WHERE O.C. OBTAINED BY DEVELOPER

No.

Cause Title & Civil Appeal No.

Particulars of Allotment

Sale Consideration

Amount Paid by the Apartment Buyer on the date of filing of Complaint

Possession of Flat offered on

Status

C.A. No.5785/2019

IREO Grace Realtech Private Ltd. v. Abhishek Khanna

Unit CD-C4-04-402 Tower C4 Rs. 1,45,22,006/-

Rs. 1,44,72,364/-

Possession offered on 28.06.2019

C.A. No.8480/2019

IREO Grace Realtech Private Ltd. v. Promila Kashyap & Another

Unit CD-B3-09-904 Tower B3 Rs. 1,73,06,088.42/-

Rs. 1,70,32,041/-

Possession offered on 28.06.2019.

C.A. No.3064/2020

Parvesh Maggoo v. IREO Grace Realtech Pvt. Ltd.

Unit CD-A6-02-203 Tower A6 Rs. 1,70,08,0261.56/-

Rs. 1,59,29,016/-

Possession offered on 14.06.2019

An Affidavit dt.16.09.2019 was filed by the Developer before the National Company Law Tribunal undertaking to refund the principal amount of Rs.1,59,29,016/ to the Apartment Buyer.

However, the Developer has not refunded the amount so far.

CHART B

APARTMENTS WHERE NO O.C. AVAILABLE EVEN AS ON DATE

S. No.	Cause Title & Civil Appeal No.	Particulars of Allotment Sale Consideration	Amount Paid by the Apartment Buyer on the date of filing of Complaint	Status of construction
1.	C.A. No. 7615/2019 IREO Grace Realtech Private Ltd. vs Daraksha Khan	Unit CD-A2-03-301 Tower A2 Rs. 1,96,01,772/-	Rs. 60,60,828/- on 28.10.2016	After filing the Complaint, the 4^th demand for casting of Lower Basement Slab was demanded on 1.2.2017. No O.C. even on date.
2.	C.A. No.8482/2019 IREO Grace Realtech Private Ltd. v. Gunish Chawla	Unit CD-C9-03-303 Tower C9 Rs. 1,55,72,177/-	Rs. 1,43,07,009/-on 28.02.2017.	No O.C. even on date.
3.	C.A. No.7975/2019 IREO Grace Realtech Private Ltd. v. Am it Arora	Unit CD-A3-06-603 Tower A3 Rs. 1,92,17,760/-	Rs. 1,80,50,068/-on 10.03.2017	Instalment No. 10 for casting of Top Floor Roof Slab was raised on 07.03.2017 No O.C. even on date.
4.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Pradeep Kumar Gupta	UnitCD-A1-06-601 Tower A1 Rs. 1,99,20,649/-	Rs. 61,22,733/-on 20.01.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
5.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Monica Khuller	UnitCD-A2-11-1102 Tower A2 Rs. 2,01,86,365/-	Rs. 62,05,441 as on 24.01.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
6.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Neelam Mittal	UnitCD-A1-08-802 Tower A1 Rs. 1,99,20,649/-	Rs. 61,22,738/-	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
7.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Shiladitya Gangopadhya	Unit CD-A1-04-401 Tower A1 Rs. 2,02,71,389/-	Rs. 62,09,828/-On 24.01.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
8.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Kartik Ahuja	Unit CD-A2-03-302 Tower A2 Rs. 2,01,86,365/-	Rs. 62,05,440/-On 23.02.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
9.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Gagan Preet Singh	UnitCD-A1-12-1201 Tower A1 Rs. 2,02,92,883/-	Rs. 62,38,594/-On 23.02.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
10.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Raman Narula	Unit CD-A2-09-903 Tower A2 Rs. 1,89,41,277/-	Rs. 58,55,695/-On 23.02.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
11.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Priyanka Gupta	Unit CD-A2-05-501 Tower A2 Rs. 1,84,06,981/-	Rs. 56,88,308/-On 23.02.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
12.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Raj Sethi	Unit CD-A2-03-303 Tower A2 Rs. 1,89,41,277/-	Rs. 58,55,696/-On 23.02.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
13.	C.A. 8785-8794/2019 IREO Grace Realtech Private Ltd. v. Kunal Wadhwa	UnitCD-A1-11-1102 Tower A1 Rs. 2,02,92,883/-	Rs. 62,38,595/-On 23.02.2017	The 4^th demand for casting of Lower Basement Slab was raised on 10.01.2017. No O.C. even on date.
14.	C.A. 8454/2019 IREO Grace Realtech Private Ltd. v. Vishal Dua	Unit CD-B7-07-704 Tower B7 Rs. 1,38,83,798.04/-	Rs. 1,16,87,089/-	No O.C. even on date.
15.	C.A. 9139/2019 IREO Grace Realtech Private Ltd. v. Mukesh Makkar	UnitCD-C11-06-602 Tower C11 Rs. 1,56,79,491.91/-	Rs. 1,44,87,344/-	No O.C. even on date.
16.	C.A. 9216/2019 IREO Grace Realtech Private Ltd. v. Ritu Hasija	UnitCD-A1-01-102 Tower A1 Rs. 2,02,71,389.77 /-	Rs. 63,29,440/-	No O.C. even on date.
17.	C.A. 9638/2019 IREO Grace Realtech Private Ltd. v. Prabhat Kumar Swami	Unit CD-A2-06-601 Tower A2 Rs. 1,84,06,981.50 /-	Rs. 57,09,566/-	After filing of complaint, the 4^thinstalment for casting of lower basement slab was demanded on 01.02.2017. No O.C. even on date.

Chart A allottees

(i) We are of the view that allottees at Serial Nos. 1 and 2 in Chart A are 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 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 :-

“3. Without prejudice to contentions and averments raised during the course of arguments by the Corporate Debtor, the Corporate Debtor explored the possibility of the settlement with the Petitioner and had offered to pay the entire principal amount i.e. 1,59,29,016/- in a time bound manner by way of 4 equal instalments, wherein 1^st instalment starting from 16.09.2019. Copy of the Cheques by the Corporate Debtor for payment of the principal amount in full is annexed herewith and marked as Annexure-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 4^th 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.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. 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 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.

Posted on 1st October 2020 by rajatbindal5gmailcom — Leave a comment

Airfare refund – If a passenger has booked a ticket during the lockdown period (from 25th March, 2020 to 24th May, 2020) for travel during lockdown period and the airline has received payment for booking of air ticket for travel during the same period, for both domestic and international air travel and the refund is sought by the passenger against that booking being cancelled, the airline shall refund the full amount collected without any cancellation charges – Refund shall be made within a period of three weeks from the date of cancellation.

SUPREME COURT OF INDIA

FULL BENCH

PRAVASI LEGAL CELL AND OTHERS — Appellant

Vs.

UNION OF INDIA AND OTHERS — Respondent

( Before : Ashok Bhushan, R. Subhash Reddy and M.R. Shah, JJ. )

Writ Petition (C) No…….of 2020 [Diary No. 10966 of 2020] with Writ Petition (C) No.570, 595 and 952 of 2020

Decided on : 01-10-2020

A. Airfare refund – Passengers who booked tickets at any period of time but for travel after 24th May, 2020 – refund of fares to the passengers covered under this category shall be governed by the provisions of Civil Aviation Requirements (CAR).

B. Airfare refund – If a passenger has booked a ticket during the lockdown period (from 25th March, 2020 to 24th May, 2020) for travel during lockdown period and the airline has received payment for booking of air ticket for travel during the same period, for both domestic and international air travel and the refund is sought by the passenger against that booking being cancelled, the airline shall refund the full amount collected without any cancellation charges – Refund shall be made within a period of three weeks from the date of cancellation.

C. Airfare refund – If the tickets have been booked during the lockdown period through a travel agent for a travel within the lockdown period, in all such cases full refund shall be given by the airlines immediately – On such refund, the amount shall be passed on immediately by the agent to the passengers.

D. Airfare refund – Even for international travel, when the tickets have been booked on an Indian carrier and the booking is exIndia, if the tickets have been booked during the lockdown period for travel within the lockdown period, immediate refund shall be made.

E. Airfare refund – If the tickets are booked for international travel on a foreign carrier and the booking is exIndia during the lockdown period for travel within the lockdown period, full refund shall be given by the airlines and said amount shall be passed on immediately by the agent to the passengers, wherever such tickets are booked through agents – In all other cases airline shall refund the collected amount to the passenger within a period of three weeks.

F. Airfare refund – In all other cases, the airlines shall make all endeavours to refund the collected amount to the passenger within 15 days – If on account of financial distress, any airline/airlines are not able to do so, they shall provide credit shell, equal to the amount of fare collected, in the name of passenger when the booking is done either directly by the passenger or through travel agent so as to consume the same on or before 31st March, 2021 – It is open to the passenger either to utilize such credit shell upto 31st March, 2021 on any route of his choice or the passenger can transfer the credit shell to any person including the travel agent through whom he/she has booked the ticket and the airlines shall honour such a transfer.

G. Airfare refund – The credit shell issued in the name of the passenger shall be transferable which can be utilized upto 31st March, 2021 and the concerned airline shall honour such a transfer by devising a mechanism to facilitate such a transfer – It is also made clear that such credit shell can be utilized by the concerned agent through whom the ticket is booked, for third party use – It is also made clear that even in cases where credit shell is transferred to third party, same is to be utilized only through the agent who has booked the ticket at the first instance.

H. Airfare refund – In cases where passengers have purchased the ticket through an agent, and credit shell is issued in the name of passenger, such credit shell is to be utilized only through the agent who has booked the ticket – In cases where tickets are booked through agent, credit shell as issued in the name of the passenger which is not utilized by 31st March, 2021, refund of the fare collected shall be made to the same account from which account amount was received by the airline.

I. Airfare refund – In all cases where credit shell is issued there shall be an incentive to compensate the passenger from the date of cancellation upto 30th June, 2020 in which event the credit shell shall be enhanced by 0.5% of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and 30th June, 2020 – Thereafter the value of the credit shell shall be enhanced by 0.75% of the face value per month upto 31st March, 2021.

J. Airfare refund – Credit scheme – Where tickets are purchased by tour operator, who has paid the money to the airline for purchasing the ticket for the client but the client is yet to pay that money to the agent, then on cancellation of ticket and converting it into a credit shell, the ticket will remain in the name of passenger and in case passenger utilises the credit shell he will have to pay to the agent and not to the airline – However, in case the passenger does not utilise the credit shell till 31st March 2021, then airline will have to refund the amount as per proposed formulation and money will go back to the same account of the agent from which the ticket amount was paid to the airline – It is also clarified that in case passenger in whose name the ticket is booked does not utilise the credit shell till 31st March 2021, then the airline will have to refund with interest prescribed in the formulation to the agent from whose account the ticket was booked.

JUDGMENT

R. Subhash Reddy, J. – Background facts, and relief sought for, in this batch of cases is similar, as such all these cases are heard together and are being disposed of by this common judgment.

2. The pandemic situation of COVID-19, has adversely affected the economy globally, in several sectors. Our country -India – and civil aviation sector is not an exception to the same. To contain the pandemic situation of COVID-19, first lockdown was imposed by the Government of India, from 25^th March 2020 to 14^th April 2020. In view of such lockdown, a ban on operation of all domestic and international flights was imposed. The lockdown period was further extended upto 03^rd May 2020, with the ban continuing on operation of all domestic and international flights. There was an issue of refund of air fare during the lockdown period, when domestic and international flights’ operation was suspended. The Ministry of Civil Aviation (MoCA), while acknowledging the unusual situation that has arisen due to the lockdown imposed, to contain further spread of COVID-19 and its consequential effect on the air passengers and airlines, by examining the grievances received from various quarters, issued an advisory to all stake holders in civil aviation sector in the shape of Office Memorandum dated 16^th April 2020. The advisory issued read as under:

“3………….

(i) If a passenger has booked a ticket during the first lockdown period (from 25^th of March to 14 of April, 2020) and the airline has received payment for booking of the air ticket during the first lockdown period for travel during the same period, for both domestic and international air travel and refund is sought by the passenger against that booking being cancelled, the Airline shall refund the full amount collected without levy of cancellation charge. The refund shall be made within a period of three weeks from the date of request of cancellation.

(ii) If a passenger has booked a ticket during the first lockdown period and the airline has received the payment for booking of air ticket during first lockdown period (from 25^th of March to 14^th of April 2020) for travel during the second lockdown period (from 15^th of April to 3^rd of May, 2020) for both domestic and international air travel and the passenger seeks refund on cancellation of the ticket, the Airline shall refund the full amount collected without levy of cancellation charge. The refund shall be made within a period of three weeks from the date of request of cancellation.”

In the same Memorandum, Government has issued directions to Directorate General of Civil Aviation to monitor the compliance of such advisories referred above.

3. Writ Petition(C) being Diary No. 10966 of 2020 is filed by a society registered under Societies Registration Act, 1860 by way of public interest litigation, to declare the action on the part of the respondent-airlines, operating domestic as well as international flights in India, in not refunding the full amount collected for the tickets, due to the cancellation of flights in the wake of restrictions imposed by the Government of India to contain COVID-19 as arbitrary and in violation of Civil Aviation Requirements, issued by the Directorate General of Civil Aviation. A consequential relief is sought to direct the respondents to refund the full amount upon such cancellations.

4. In this writ petition, it is the allegation of the petitioners that though it is obligatory on the part of the respondent-airlines, operating domestic as well as international flights, to refund the full amount collected for the tickets which are not utilised in view of the cancellation of flights in the wake of restrictions imposed by Government of India to contain COVID-19, respondents are providing a credit shell with the validity of one year, which is contrary to Civil Aviation Requirements (CAR) of May 2008. It is alleged that as per the CAR, the option of holding refund amount in credit shell by the airlines shall be prerogative of the passenger and not a default practice of the airline. While referring to O.M. dated 16.04.2020 issued by the MoCA, it is alleged that the said Memorandum deals only with the refund for the tickets that were booked during the lockdown period and leaves out the majority of passengers who had booked tickets before the flights were banned. It is the case of the petitioners that by issuing O.M. dated 16.04.2020, the Government has indirectly approved the practice of airlines for providing Credit Shell for the tickets booked before the lockdown was declared and the same is in violation of CAR. By further alleging that the time lines for refund as mentioned in the O.M. dated 16.04.2020runs contrary to CAR, petitioners have sought relief by way of directions to the respondents to refund full amount collected for the tickets booked, any time for travel.

5. W.P.(C)No.570 of 2020 is filed by Air Passengers Association of India, which is also in the nature of public interest litigation under Article 32 of the Constitution of India, seeking directions to various airlines operating both – domestic and international flights – to refund the ticket amounts collected from the passengers of the flights which are cancelled on account of lockdown, with a consequential direction to the respondents to refund the same without levying any charges on account of cancellation etc. In this writ petition also, it is the allegation of the petitioner-Association that, the CARs have been issued in exercise of powers under provisions of Aircrafts Act, 1934, to implement the Convention relating to International Civil Aviation standards and recommended practices but same is not being followed to refund the fare amount in view of the cancellation of flights. By further detailing the dates of lockdown declared by the Government, it is alleged that the action on the part of the airlines in providing ‘Credit Shell’ instead of refunding the full amount collected for the tickets cancelled on account of cancellation of flights, is in clear violation of CARs. The petitioner also alleges that the option of holding the refund amount in ‘Credit Shell’ by the airline shall be the prerogative of passenger not a default practice of the airline. While referring to the representation filed by it on 24.05.2020, and various complaints received from the numerous passengers regarding the actions of the airlines in not refunding the amounts spent by them on air tickets, it is alleged that the action of the respondents in withholding the amounts spent by them on air tickets is illegal and contrary to CAR. In this writ petition it is alleged that the several airlines are not acting as per the O.M. dated 16.04.2020 in refunding the amounts as directed and issuing ‘Credit Shell’ instead of refund. With the aforesaid allegations, petitioner also seeks directions by way of declaration that the actions on the part of the airlines, which are operating domestic as well as international flights, in not refunding the full amount for the tickets due to cancellation of flights in the wake of restrictions imposed by the Government of India to contain COVID-19 is arbitrary and illegal with a consequential direction to refund the same.

6. W.P.(C)No.952 of 2020 is filed by Col. Ashok Prehar (Retd.) and another seeking quashing of O.M. dated 16.04.2020 issued by the Ministry of Civil Aviation and also seeking a declaration that the denial of refund by the third respondent – Air India Ltd. – for tickets booked by them on 18.12.2019 to travel to United States of America on 08.05.2020 with a return ticket to India on 05.06.2020, as illegal, arbitrary and contrary to CARs. They seek directions to refund the full amount of Rs. 1,66,434/- collected by respondent no.3 for the tickets booked by them on 18.12.2019. In this writ petition it is the case of the petitioners that, petitioner no.1 is a senior citizen who has served in Indian Army for 27 years and retired as a Colonel and the petitioner no.2 is his wife and on 18.12.2019 they have booked tickets to Air India Flight No.AI-173 to travel to San Francisco, United States of America from New Delhi on 08.05.2020 with a return flight AI-102 from New York to New Delhi on 05.06.2020 for an amount of Rs. 1,66,434/-. While referring to the advisory issued by the United States of America, by way of Advisory dated 19.03.2020 recommending to avoid any travel and the proceedings issued by the Director General of Civil Aviation, Government of India for banning flights during the lockdown period, it is alleged that in view of cancellation of flights they had no option but to cancel their tickets by seeking refund of the amount. In this writ petition it is the specific case of the petitioners that the O.M. dated 16.04.2020 issued by the Ministry of Civil Aviation, which directs all airlines to pay full refund without levying any cancellation charges for the bookings made and payment received only, during the lockdown period from 25.03.2020 to03.05.2020, as illegal. It is alleged that the said Memorandum leaves out a majority of passengers including the petitioners who had booked their tickets to travel to United States of America, much earlier to restrictions imposed to control the spread of CORONA virus. Pleading discrimination for the passengers who had booked tickets during the lockdown period, and the passengers who had booked tickets earlier, petitioners seek quashing of O.M. dated 16.04.2020 by further declaration that denial of legitimate refund to the petitioners by the airlines is patently unfair and also states that the action of the third respondent in offering ‘Credit Shell’ instead of refund is unreasonable and unjustified. It is also pleaded that in view of their age and the pandemic situation in the world, the travel for leisure is likely to remain restricted in the foreseeable future. Petitioners, while pleading that giving ‘Credit Shell’ vouchers without refunding the full fare to the petitioners, as sought by them, runs contrary to CAR, allege that the denial of refund by third respondent amounts to unjust enrichment at the expense of the petitioners and similarly placed persons. With the aforesaid allegations, petitioners seek quashing of O.M. dated 16.04.2020, with a consequential direction to refund the full amount of Rs. 1,66,434/- collected by the third respondent for the flights booked by them on 18.12.2019.

7. W.P.(C)No.595 of 2020 is filed by Travel Agents Federation of India, a society registered under the Societies Registration Act, 1860 seeking declaration that the action on the part of the airlines operating domestic as well as international flights in India, in refusing to refund the full amount collected for tickets to travel during the period of ban on air travel, as illegal and arbitrary with a consequential direction to the respondents to facilitate refunds of the amounts received by the airlines towards the booking of tickets during the period of ban on air travel. In this writ petition, petitioner-Federation seeks directions against the Ministry of Civil Aviation and Directorate General of Civil Aviation, for issuance of appropriate directions to airlines for full refund on tickets booked for travel during the lockdown on account of their cancellation. It is the allegation of the petitioners that there are certain ambiguities in the O.M. dated 16.04.2020 and 19.04.2020, which are being used by the airlines to avoid payment of refund, as sought by the passengers towards the cancellation of flights. In writ petition, it is stated that there are many passengers who had booked their flights through travel agents who are the members of the present petitioner. While stating that the flight booking process through travel agents is distinct from passengers who have booked the tickets directly from the airline. It is the allegation of the petitioner that instead of refunding the amount deposited by the travel agents with the airlines they are compelling the travel agents/passengers to accept the facility of ‘Credit Shell’, which compels the bookings to be rescheduled instead of cancellation. While pleading that there is no certainty in rescheduling the travel plans, petitioner-Federation has questioned the action of the respondents in offering ‘Credit Shell’ and seeks directions for refund of full amount in lieu of cancellation of tickets. In the writ petition, by giving details of various orders passed by the Government and also the Directorate General of Civil Aviation banning the flights during the lockdown period and ban imposed on operation of domestic as well as international flights, it is the case of the petitioner that non-refund of the amount by airlines for the tickets due to cancellation, is illegal and contrary to CAR. While referring to the CARs issued by DGCA and Rule 133A of the Aircraft Rules, it is alleged that holding the refund amount in credit shell by the airlines is the prerogative of the passenger and not a default practice of the airline. With reference to O.M. dated 16.04.2020 issued by the MoCA, it is the case of the petitioner that the said Memorandum directs the airlines to refund value of only those tickets that were booked during the lockdown period by leaving vast majority of passengers who had booked tickets before the flights were banned and also on the tickets which are booked by the travel agents. It is the case of the petitioner that as per the practice in vogue there are several travel agents who have booked tickets to passengers even before receipt of fare amount from the passengers and if the refunds are not made to them, they will suffer undue hardship. While referring to the situation of pandemic COVID-19 globally, it is stated that tourism industry is suffering from great financial losses and it is further unlikely that people will travel for leisure activities in near future, until the spread of COVID-19 is contained fully. It is the case of the petitioner that where the tickets are booked by travel agents from their account, refund should be made in the same manner and channel through which payments for tickets have been received by the airline. It is alleged that such directions would secure fair and expedient justice by avoiding locking up of funds of the passengers as well as the members of the petitioner-Federation.

8. The first Writ Petition (C) being Diary No. 10966 of 2020 is filed by the Pravasi Legal Cell and other subsequent writ petitions are also tagged with the same. Pursuant to order of this Court, Airlines were impleaded as the party respondents, and some Airlines and others have filed applications on their own for intervening in the matter which were allowed by this Court. Common affidavit was filed on behalf of respondents nos.1 and 2- Union of India and Directorate General of Civil Aviation in the abovementioned writ petition. Individual affidavits were filed by the impleaded respondents on behalf of the Airlines; Travel Agents Federation of India and others who are allowed to be impleaded as party respondents.

9. In the affidavit filed on behalf of respondent nos. 1 and 2 while denying the various allegations made by the petitioners, they have explained the existing legal regime with respect to refund of fares and clarified the circumstances which led to issuance of O.M. dated 16.04.2020. While referring to the meetings held by the Ministry of Civil Aviation with the representatives of Airlines, the affidavit discloses the concerns highlighted during such meetings and indicated the proposed workable solutions keeping in view the interests of passengers as well as the airlines. The Ministry of Civil Aviation after consulting all the stake holders arrived at certain formulations, which were referred to in the affidavit and deals with various situations, such as, for domestic airlines where tickets were booked by the passengers directly with the airline; for domestic airlines when the ticket had been booked through a travel agent, by the passenger with the airlines; for international travel when the ticket had been booked on an Indian carrier, when the booking is for ex-India; and for international travel when the tickets have been booked on a foreign carrier and the booking is ex-India. The supplementary affidavit filed on behalf of respondent nos.1 and 2 further clarified on categories of passengers who are proposed to be covered and clarified the period of booking of tickets and also with regard to the credit shell. Further additional affidavit is also filed on behalf of the said respondents further clarifying with regard to credit shell proposals as proposed by the Government which were referred to in the earlier affidavits. Detailed affidavits are filed on behalf of the airlines and other stake holders who are impleaded as party respondents.

10. We have heard Sri Sanjay Hegde, learned senior counsel appearing for the petitioner-Pravasi Legal Cell in W.P.(C).Diary No. 10966 of 2020; Sri C.A. Sundaram, learned senior counsel appearing for the petitioner in W.P.(C)No.570 of 2020; Ms. Sonal Jain, learned counsel appearing for the petitioners in W.P. (C)No.952 of 2020 and Sri Harshwardhan Bhende, learned counsel appearing for the Travel Agents Federation of India; Sri Tushar Mehta, learned Solicitor General appearing for the Union of India; Sri Arvind P. Datar, learned senior counsel appearing for Go Airlines (India) Ltd.; Sri Harish N. Salve, learned senior counsel appearing for Spicejet Ltd.; Sri Mukul Rohtagi, learned senior counsel appearing for Interglobe Aviation Ltd. (Indigo Airline); Sri Pinaki Misra, learned senior counsel appearing for Tata SIA Airlines Ltd. (Vistara Airlines) and Air Asia India Ltd. and Sri Pallav Shishodia, learned senior counsel appearing for the Indian Association of Tour Operators.

11. By considering the grievances amongst the airline passengers on the issue of refund of tickets by airlines, the Directorate General of Civil Aviation has issued Civil Aviation Requirements by proceedings dated 22^nd May 2008. As indicated in the said requirements when the tickets are purchased by means of credit card payments, refund shall be made by airlines within seven days of cancellation; in case of cash transactions refund shall be made immediately; in case of purchase of tickets through travel agents airline shall ensure that the refund process is completed within 30 working days. Further directions were issued to the airlines to refund all statutory taxes and User Development Fee/Airport Development Fee/Passenger Service Fee to the passengers in case of cancellation/non-utilisation of tickets. Similar such Requirements are also issued by proceedings dated 06.08.2010 which were revised on 27.02.2019 and clause 3.3 of the said Requirements deals with the issue relating to ‘cancellation of flight’ and the obligations on the airliner either to offer an alternate flight or refund the ticket as acceptable to the passenger. In ordinary course the said requirements are to be followed by the airliner whenever there is a cancellation of tickets.

12. In view of peculiar situation which has arisen on account of pandemic COVID-19, to resolve the issues raised by the various stake holders, while issuing notice this Court vide order dated 12.06.2020 has passed the following order :

“

WRIT PETITION(CIVIL) .. Diary No.(s). 10966/2020

Issue notice. Mr. Raj at Nair, learned counsel accepts notice on behalf of the Union of India.

Let notice be issued to the other respondents.

Mr. Tushar Mehta, learned Solicitor General appearing for the Union of India may file counter affidavit to the writ petition within two weeks from today.

Learned Solicitor General submits that a suggestion given by Mr. Harish Salve, learned senior counsel that the Ministry of Aviation shall call for a meeting with the airlines and sort out all the issues is a welcome suggestion and steps shall be taken by the Ministry of Aviation to do the needful.

Liberty is given to the airlines to file counter affidavit within three weeks.

“

13. In the affidavit filed on behalf of respondent nos.1 and 2 in compliance of order dated 12.06.2020, filed by Director General of Civil Aviation it is stated that after the order dated 12.06.2020 passed by this Court, a meeting was held on 02.07.2020 at 17:00 Hrs. under the Chairmanship of Secretary, Civil Aviation through video conferencing, to discuss issues relating to refund of air fares by airlines. As referred in the affidavit, the meeting was attended by the following participants:

Name and Designation
MoCA:
1.	Shri Pradeep Singh Kharola, Secretary
2.	Smt. Usha Padhee, Joint Secretary
3.	Shri Amit Kumar Jha, SO
4.	Shri Avinav Tiwari, ASO
DGCA:
5.	Shri Arun Kumar, DG
Airlines:-
6.	Shri Vinay Dubey, CEO, Go Air
7.	Shri Rajiv Bansal, CMD, Air India
8.	Shri K. Shyam Sundar, CEO, Air India Express
9.	Shri V. Hejmadi, Director Finance, Air India
10.	Shri Melwin D’Silva, ED (Commercial), Air India
11.	Shri Bhaskar Bhat, Chairman, Vistara
12.	Shri Leslie Thng, CEO, Vistara
13.	Shri Moin Wasil, Head (Regulations), Vistara
14.	Shri Ankur Garg, CCO, Air Asia
15.	Ms. Priya Mehra, Head (Legal), IndiGo
16.	Shri Sanjay Gupta, Head (Commercial), IndiGo
17.	Shri Chandan Sand, Spicejet

A copy of the Minutes of the meeting dated 02.07.2020 is also placed on record. Thereafter further follow-up meeting was held on 08.07.2020. By referring to two more meetings held by the Ministry on 11.07.2020 – one with Online Travel Agents and other with TAAI/TAFI representatives, minutes of such meeting are also placed on record. While explaining the existing legal regime relating to refund of fares, it is stated that same is governed by Civil Aviation Requirements, which recognise the rights of air passengers to seek refund of their air tickets. While referring to relevant provisions of the CARs of 22.05.2008 and 06.08.2010 as revised on 27.02.2019, it is stated that for cancellation of flights due to force majeure (extraordinary circumstances beyond the control of airline), though airline is not obligated to pay any compensation but it is obligated to refund the fare to the passengers. At the same time while referring to the meetings held by the respondent nos.1 and 2 concerning the issues which are raised by the passengers as well as the airlines, and other stake holders it is stated if any enforcement action is initiated by the DGCA for violations of CARs mentioned above, same may result in reduction/suspension of approved schedule of airline, who have already started operating their flights with limited capacity. It is stated that any such strict enforcement action against airline would further restrict/reduce their operation and any such strict enforcement action may further jeopardise the possibility of generation of cash by the airline which can further adversely affect/delay the refund cycle. As suggested by the respondents, the workable solutions keeping in view the interests of both passengers as well as airlines the following formulations are arrived at to harmonise the interests of passengers and the viability of airlines to an extent. The said formulations read as under:

“Formulations based on the discussions with scheduled domestic airlines on refund of air fare

A. For domestic airlines when the ticket has been booked directly by the passenger with the airline.

1. If the tickets have been booked during the first lockdown period, i.e. 25^th of March, 2020 to 14^th of April, 2020 for the journeys to be undertaken in both first and second lockdown period i.e. from 25^th of March, 2020 to 3^rd of May, 2020, in all such cases, full refund shall be given by the airlines immediately (this is being mandated vide MoCA’s OM dated 16^thApril, 2020 as the airlines were not supposed to book such tickets).

2. For all other cases, the airlines shall make all endeavours to refund the collected amount to the passenger within 15 days.

a. The passenger shall be able to consume the credit shell up to 31^st March, 2021 on any route of his choice. If the passenger wants to buy a ticket of value more than the credit shell, then he can use cash to top it up. If he wants to buy a ticket of value less than the credit shell, he/she can do so and the balance amount of credit shell shall be available to him/her.

b. There shall be an incentive mechanism to compensate the passenger if there is a delay in consuming the credit shell – from the date of cancellation upto 30^th June, 2020 the value of credit shell shall be enhanced by 0.5% of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and 30^thJune, 2020. Thereafter, the value of credit shell shall be enhanced by 0.75% of the face value per month, up to March 2021.

c. The credit shell shall be transferable. The passenger can transfer the credit shell to any person, and the airlines shall honour such a transfer. The airlines shall devise a mechanism to facilitate such a transfer.

d. By the end of March, 2021, the Airlines shall refund cash to the holder of the credit shell.

4. Notwithstanding what is stated above, the airlines shall refund the full amount in case of travellers who have since expired to theaccount of the passenger or to his representative.

B. For domestic airlines when the ticket has been booked through a travel agent (including OTA) by the passenger with the airline.

1. If the tickets have been booked during the lockdown period for travel within the lockdown period, in all such cases full refund shall be given by the airlines immediately (this is being mandated vide MoCA’s OM dated 16^th April, 2020 as the airlines were not supposed to book such tickets). This amount shall be passed on immediately by the Agent to the passengers.

2. For all other cases, the airlines shall make all endeavours to refund the collected amount within 15 days. This amount shall be passed on immediately by the Agent to the passengers.

3. If on account of financial distress, if the airlines are not able to do so they shall provide a credit shell equal to the amount of fare collected. This credit shell shall be issued in the name of the passenger who has booked the ticket. The credit shell shall be transferred by the Agent to the passengers (if booking is through an agent).

b. There shall be an incentive mechanism to compensate the passenger if there is a delay in consuming the credit shell – from the date of cancellation up to 30^th June, 2020 the value of credit shell shall be enhanced by 0.5% of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and 30^thJune, 2020. Thereafter, the value of credit shell shall be enhanced by 0.75% of the face value per month, up to March 2021.

d. By the end of March, 2021, the Airlines shall refund cash to the holder of the credit shell.

e. The travel agents shall be entitled for their usual fees/service charges/commission.

4. Notwithstanding what is stated above, the airlines shall refund the full amount in case of persons who have since expired. This amount shall be passed on immediately by the Agent to the passengers.

C. For international travel when the ticket has been booked on an Indian carrier and the booking is ex-India

2. For all other cases, the airlines shall make all endeavours to refund the collected amount within 15 days. This amount shall be passed on immediately by the Agent to the passengers, as the case may be.

b. There shall be an incentive mechanism to compensate the passenger if there is a delay in consuming the credit shell – from the date of cancellation up to 30^th June, 2020 the value of credit shell shall be enhanced by 0.5% of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and 30^thJune, 2020. Thereafter, the value of credit shell shall be enhanced by 0.75% of the face value per month, up to March 2021.

d. By the end of March, 2021, the Airlines shall refund cash to the holder of the credit shell.

e. Notwithstanding what is stated above, the airlines shall refund the full amount in case of persons who have since expired. This amount shall be passed on immediately by the Agent to the passenger’s representative.

D. For international travel when the ticket has been booked on a foreign carrier and the booking is ex-India

2. For all other cases, the airlines shall refund the collected amount to the passenger within 15 days. This amount shall be passed on immediately by the Agent to the passengers. (If the booking is through an agent).”

14. Further affidavit in the form of supplementary affidavit is filed on behalf of respondent nos.1 and 2 which is more in the nature of a clarificatory one on certain doubts expressed by the learned counsel for the petitioners. While clarifying the category of passengers who are proposed to be covered under the proposed formulations mentioned in the earlier affidavit, it is clarified that the following categories are covered:

“(i) Passengers who had booked their tickets directly from the domestic airline for domestic travel;

(ii) Passengers who had booked their tickets through a travel agent (including OTA) for domestic airline for domestic travel;

(iii) International travel passengers who had booked their ticket on an Indian carrier and the booking is ex-India;

(iv) International travel passengers who had booked their ticket on a foreign carrier and the booking is ex-India.

Though the term ex-India is not defined in the Aircraft Act, 1934 and the Aircraft Rules, 1937, but in aviation industry this term denotes the flights which are originating from India.”

Further clarification is also made on period of booking of tickets. It is stated that the formulations suggested will cover category of cases where passengers who have booked the tickets prior to lockdown for travel upto 24^th May 2020 and refund of fares to passengers covered under this category shall be governed by the proposed formulation relating to credit shell and incentive scheme. Further, passengers who have booked tickets during lockdown for travel during lockdown, such category of passengers are entitled for immediate refund of fares by the airline as the airlines were not supposed to book such tickets. With regard to passengers who have booked tickets at any period of time but for travel after 24^th May 2020 it is stated that the passengers covered under this category shall be governed by the provisions of CAR. While clarifying the issue raised by the tour operators with regard to credit shell, it is stated that in this category there are two types of purchase of ticket by the agents. The first mode is that when initially passengers pay the money to agent and agent purchases ticket for the passenger and the second mode is the one where agent purchases the ticket for the passengers through its advance deposit with the airline and the passengers pay the money either at the time of consumption of ticket or may be even after consumption of ticket. In the affidavit it is made clear that even in cases where tickets are purchased by tour operator, who has paid the money to the airline for purchasing the ticket for the client but the client is yet to pay that money to the agent, then on cancellation of ticket and converting it into a credit shell, the ticket will remain in the name of passenger and in case passenger utilises the credit shell he will have to pay to the agent and not to the airline. However, in case the passenger does not utilise the credit shell till 31^st March 2021, then airline will have to refund the amount as per proposed formulation and money will go back to the same account of the agent from which the ticket amount was paid to the airline. It is also clarified that in case passenger in whose name the ticket is booked does not utilise the credit shell till 31^stMarch 2021, then the airline will have to refund with interest prescribed in the formulation to the agent from whose account the ticket was booked.

15. Referring to supplementary affidavit filed on behalf of respondent nos.1 and 2 learned counsel appearing for the agents have submitted that when the tickets are purchased by the agent for the passenger by paying their money which is yet to be received from the passenger, there should not be any difficulty for giving the credit shell in the name of the agent himself who has purchased the ticket. When it was pointed out that as per the supplementary affidavit filed by the respondent nos.1 and 2 it was made clear that in cases where tickets were purchased by agents for passengers, where credit shell is given in the name of passenger, if it is not utilised before 31^st March 2021 money will be returned to the account of agent from whose account money was paid to the airline, there should not be any difficulty in issuing credit shell in the name of agent, the learned Solicitor General obtained instructions in this regard and filed additional affidavit on 24^th September 2020 on behalf of respondent nos.1 and 2. In this affidavit, it is stated that the existing regulatory mechanism recognises the contract between the passenger and the airlines only, for a ticket which is purchased and for which a named passenger only can be accounted for in the ‘passenger manifest’ of a schedule flight which is to be maintained as per the best international practices and regulations. The travel agent, if any, involved in the purchase of any ticket on behalf of any passenger remains only a via-media, leaving the principal contract between the airline and the passenger only. Therefore, the proposed formulation suggested earlier, only recognises the contract between the airline and the passenger of a purchased ticket. As such it is stated that credit shell is proposed to be issued in the name of passengers only who have booked their tickets through agents and it is not feasible to issue a credit shell in the name of agent, as much as ticket was purchased in the name of passenger but at the same time it is clearly stated that if such voucher is not used before 31^st March 2021 as per the formulation, money has to be paid back by the airliner through the same account from which they have received money.

16. In view of such formulations which are arrived at during the course of meetings held by the respondent nos.1 and 2 with other stake holders, airlines etc., it is submitted that substantially their grievances stand resolved but at the same time certain issues were raised during the course of hearing.

17. Sri Sanjay Hegde, learned senior advocate appearing for the Pravasi Legal Cell has submitted that in view of the proposals as mentioned in the affidavit filed by the respondent nos.1 and 2, their grievances are substantially redressed but at the same time he has submitted that for the bookings made for foreign air travel through Indian carriers outside the country, same formulation as proposed by the respondent nos. 1 and 2 can be applied. Sri C.A. Sundaram, learned senior counsel appearing for the Air Passengers Association of India has submitted that whatever the mode they have booked, all passengers are entitled for refund immediately. It is submitted that the problems faced by the airlines is no ground for not refunding the money which is paid by the passengers. Sri Harshwardhan Bhende, learned counsel appearing for the Travel Agents Federation of India has submitted that when the tickets are booked by travel agents by investing their money on behalf of the passengers there is no reason for not issuing credit shell in the name of agents. Sri Pallav Shishodia, learned senior counsel appearing for Indian Association of Tour Operators has contended that, when tickets are booked by agents, there is no reason for not issuing credit shell in the name of agents. It is further submitted that in case credit shell is not utilised by 31^st of March 2021, refund has to come back to the same account of the agent, from which account money is paid for bookings.

18. Shri Harish Salve, learned senior counsel appearing for Spicejet Ltd., in view of the stand of respondent nos.1 and 2 in their first affidavit, has stated that the formulations arrived at as mentioned in the affidavit are by and large acceptable to his client. Sri Rohtagi, learned senior counsel appearing for Indigo Airlines, also has submitted that the suggestions/ formulations as suggested in the affidavit filed on behalf of respondent nos.1 and 2 are acceptable. Shri Pinaki Misra, learned senior counsel appearing for Tata SIA Airlines Ltd. (Vistara Airlines) and Air Asia India Ltd. has submitted that the incentive mechanism suggested for enhancing the face value of the credit shell, in the affidavit filed by respondent nos.1 and 2 itself is reasonable and no higher amount of interest may be considered on the refund. Sri Arvind Datar, learned senior counsel appearing for Go Airlines India Ltd. by drawing our attention to the detailed affidavit filed on its behalf has submitted that COVID-19 is an existential threat to commerce generally, and to airlines in particular. It is submitted that in developed countries airline industry has been able to secure itself more broad-based State relief (whether by bail-out or otherwise, including dispensations from refunds). However, no comparable measures have yet been introduced in India. By referring to facts and figures as mentioned in the affidavit, learned senior counsel has submitted that airlines is one of the worst affected sectors on account of pandemic COVID-19. Learned counsel drew our attention to the Report dated 09^th June 2020, of IATA (the world-wide Aviation Industry Association) on the economic performance of the airline industry. In its report, after predicting a world-wide US$ 434 billion drop in airline revenue and related indirect tax receipts and a 50.6% fall in passenger demand it further states that GDP growth is likely to contract by 5.0% in 2020; COVID-19 will have a significant impact on international trade (a 13% decline); 2020 will be the worst year in the history of airlines with net losses of $84.3 billion; and 32 million jobs supported by aviation are at risk etc. Referring to the severe liquidity crunch faced by airlines it is submitted that if the credit shells are not utilised by 31^st March 2021, it is not possible to refund the money as ordered and learned counsel has requested to extend the time to encash credit shell at least up to 31^st March 2022 to balance the equities.

19. Though the various contentious issues are raised on both sides and at the same time the suggestions/formulations as suggested by respondent nos.1 and 2 in the affidavits filed before this Court are by and large acceptable to the majority of stake holders. In ordinary course modalities and timelines for refund on cancellation of tickets are governed by, the Civil Aviation Requirements, i.e. CAR dated 22^nd May 2008; 06^th August 2010as revised on 27^th February 2019, and the said Requirements are issued by the competent authority in exercise of powers under the provisions of Aircrafts Act, 1934 and the Rules made thereunder. But at the same time we cannot lose sight of the present situation prevailing in the country and across the globe, i.e. the effect of pandemic COVID-19. It cannot be disputed that the civil aviation sector, which is one of the important sectors, is seriously affected in view of the ban imposed for operating flights. Added to the same, air passenger traffic has come down heavily and which is gradually being restored. At this moment any strict enforcement action of the CARs would further restrict/reduce their operations and such enforcement action may further jeopardise the possibilities of generation of cash by airlines which can further adversely affect/delay the refund cycle. Strict enforcement of Civil Aviation Requirements at this moment may not yield any meaningful result for any stake holder. In view of the suggestions and formulations arrived at in the meetings held by respondent nos.1 and 2, which are acceptable to the majority of stake holders, have to be implemented in letter and spirit. We also feel that such formulations are workable solutions in these peculiar circumstances which are prevailing in the country. The grievances which are raised on behalf of agents can be taken care by this Court by issuing appropriate directions wherever bookings are made by them, so as to see that their interest is safeguarded. Sri Arvind Datar, learned senior counsel, though has argued to extend the timelines for encashment of credit shell at least up to 31^st March 2022 or any other shorter period but we are not inclined to accept the same, keeping in mind that the passengers who, with the hope of travel, have booked their tickets by spending their own money. For these reasons we are not inclined to delve any further on any of the contentions and deem it appropriate to dispose of this batch of cases with the following directions:

1. If a passenger has booked a ticket during the lockdown period (from 25^th March, 2020 to 24^th May, 2020) for travel during lockdown period and the airline has received payment for booking of air ticket for travel during the same period, for both domestic and international air travel and the refund is sought by the passenger against that booking being cancelled, the airline shall refund the full amount collected without any cancellation charges. The refund shall be made within a period of three weeks from the date of cancellation.

2. If the tickets have been booked during the lockdown period through a travel agent for a travel within the lockdown period, in all such cases full refund shall be given by the airlines immediately. On such refund, the amount shall be passed on immediately by the agent to the passengers.

3. Passengers who booked tickets at any period of time but for travel after 24^th May, 2020 – refund of fares to the passengers covered under this category shall be governed by the provisions of Civil Aviation Requirements (CAR).

4. Even for international travel, when the tickets have been booked on an Indian carrier and the booking is ex-India, if the tickets have been booked during the lockdown period for travel within the lockdown period, immediate refund shall be made.

5. If the tickets are booked for international travel on a foreign carrier and the booking is ex-India during the lockdown period for travel within the lockdown period, full refund shall be given by the airlines and said amount shall be passed on immediately by the agent to the passengers, wherever such tickets are booked through agents. In all other cases airline shall refund the collected amount to the passenger within a period of three weeks.

6. In all other cases, the airlines shall make all endeavours to refund the collected amount to the passenger within 15 days from today. If on account of financial distress, any airline / airlines are not able to do so, they shall provide credit shell, equal to the amount of fare collected, in the name of passenger when the booking is done either directly by the passenger or through travel agent so as to consume the same on or before 31^st March, 2021. It is open to the passenger either to utilize such credit shell up to 31^st March, 2021 on any route of his choice or the passenger can transfer the credit shell to any person including the travel agent through whom he / she has booked the ticket and the airlines shall honour such a transfer.

6.1. The credit shell issued in the name of the passenger shall be transferable which can be utilized up to 31^st March, 2021 and the concerned airline shall honour such a transfer by devising a mechanism to facilitate such a transfer. It is also made clear that such credit shell can be utilized by the concerned agent through whom the ticket is booked, for third party use. It is also made clear that even in cases where credit shell is transferred to third party, same is to be utilized only through the agent who has booked the ticket at the first instance.

7. In cases where passengers have purchased the ticket through an agent, and credit shell is issued in the name of passenger, such credit shell is to be utilized only through the agent who has booked the ticket. In cases where tickets are booked through agent, credit shell as issued in the name of the passenger which is not utilized by 31^st March, 2021, refund of the fare collected shall be made to the same account from which account amount was received by the airline.

8. In all cases where credit shell is issued there shall be an incentive to compensate the passenger from the date of cancellation upto 30^th June, 2020 in which event the credit shell shall be enhanced by0.5% of the face value (the amount of fare collected) for every month or part thereof between the date of cancellation and 30^th June, 2020. Thereafter the value of the credit shell shall be enhanced by 0.75% of the face value per month up to 31^st March, 2021.

Further, the second respondent-Directorate, shall ensure strict compliance of the directions referred above, by issuing necessary instructions to the all concerned.

20. With the above directions, these writ petitions are disposed of.

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Posted on 25th September 2020 by rajatbindal5gmailcom — Leave a comment

Complaint—Limitation—Possession of building not delivered despite agreement—This would be a case of continuing cause of action till flat is provided to complainant as per agreement between parties—Even if complainant failed to file consumer complaint within a period of two years as prescribed under Section 24A, she cannot be debarred from filing same after expiry of said period

(2018) 1 CPJ 328 : (2018) 2 CPJ 5 : (2018) 1 CPR 193

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

ANTHONY H. SILVA — Appellant

Vs.

HERMONIE MARY SALAZAR — Respondent

( Before : B.C. Gupta and S.M. Kantikar, Members )

First Appeal No. 884 of 2013

Decided on : 10-01-2018

Consumer Protection Act, 1986 – Section 19, Section 21(a)(ii), Section 24A

Complaint—Maintainability—Developer completed construction of building but failed to put complainant in possession of flat to which she was entitled as per terms and conditions of agreement—Complainant is a consumer vis-a-vis OPBuilder and hence, Consumer Fora had jurisdiction to handle consumer complaint in question. Consumer Protection Act, 1986—Section 2(1)(d)]
Complaint—Limitation—Possession of building not delivered despite agreement—This would be a case of continuing cause of action till flat is provided to complainant as per agreement between parties—Even if complainant failed to file consumer complaint within a period of two years as prescribed under Section 24A, she cannot be debarred from filing same after expiry of said period—State Commission had directed OP to handover possession of flat to complainant in terms of agreement and also to provide compensation of ` 50,000/- for mental agony and ` 10,000/- as cost of litigation—No infirmity in impugned order—Appeal dismissed. [Consumer Protection Act, 1986—Section 24-A]

Counsel for Appearing Parties

S.B. Prabhavalkar, Advocate, Sukruta A. Chimalker, Advocate

Final Result : Dismissed

Judgment/Order

B. C. Gupta, Member

1. This first appeal has been filed under section 19, read with section 21(a)(ii) of the Consumer Protection Act, 1986 against the impugned order dated 19.11.2013, passed by the Maharashtra State Consumer Disputes Redressal Commission (hereinafter referred to as ‘the State Commission’) in consumer complaint No. 480/2000, filed by the present respondent and others, vide which, the said complaint was allowed.

2. Briefly stated, the facts of the case are that the respondent/complainant Mrs. Hermonie Mary Salazar and others, filed the consumer complaint no. 480/2000 before the State Commission, saying that she alongwith her siblings were absolute owners of agricultural land measuring 4972.9 sq. mtr. alongwith structures standing thereon, at village Kondivata, Taluka Andheri East at Bombay suburban. The exact details, including the survey numbers of the said land have been detailed in the consumer complaint. The Opposite Party (OP) builder/appellant Anthony H. Silva, approached them with a proposal to take over the said land on “as is where is” basis and develop the same, by settling with the persons in occupation of the structure on the said land at his own cost and expenses and after obtaining necessary permissions and sanctions from the concerned authorities. On 07.11.87, an agreement was entered between the complainant and four others on one side and the OP Builder on the other side, according to which, the developer was supposed to provide flats to the 5 owners, including the complainant for a total area of 8500 sq. ft. and sell the rest of the flats to various other persons and appropriate the sale proceeds thereof. The flats were to be provided to the complainants on ownership basis. It was also stipulated that if the flats allotted by the developer to the owners do not cover up the entire area agreed to be allotted, the developer shall pay the cost of such deficient area at the then prevailing market price. It is alleged that the developer completed the construction of the building, but failed to put the complainant in possession of the flat, to which she was entitled as per the terms and conditions of the agreement. He had, however, sold the flats so constructed to various purchasers and earned enormous profits. The complainant filed the consumer complaint in question, seeking directions to the OP to allot and give possession of a flat to her of area, measuring 1700 sq. ft. and also to provide compensation of Rs. 20 lakhs for deficiency in service and further damages of Rs. 20,000/- per month, till the complainant was put in possession. It was also prayed that interest @18% p.a. on the amount so worked out, should also be granted to her.

3. The complaint was resisted by the OP Builder by filing a written version before the State Commission, in which he stated that the agreement between the complainant and the builder was a commercial transaction and hence, the matter did not fall within the jurisdiction of the consumer fora. The only remedy available to the complainant was to file a civil suit. The OP stated that he had satisfied the claims of four co-owners by allotting them flats at various places. He had also called upon the complainant to take possession of a flat in or around 1995, but she was reluctant to take possession of the same. He was, therefore, left with no alternative, but to sell the flat to some other parties.

4. After taking into account the evidence produced by both the parties, the State Commission vide impugned order dated 19.11.2013, ordered as follows:-

“1. Complaint is allowed.

2. Opponent/developer is directed to hand over possession of the flat or flats having aggregate area of 1700 sq. ft. to the complainant in terms of agreement dated 07/11/1987 within one month from the date of receipt of copy of this order.

3. Opponent is directed to pay a sum of Rs. 50,000/- to the complainant as compensation for mental agony.

4. Opponent is directed to pay Rs. 10,000/- as cost of litigation to the complainant and shall bear his own costs.”

5. Being aggrieved against the order of the State Commission, the OP Builder is before this Commission by way of the present first appeal.

6. During proceedings before this Commission, the last appearance of the counsel for the appellant was made on 14.02.2017. On the next date of hearing on 17.08.2017, none was present on behalf of the appellant. The case was fixed for hearing before the Circuit Bench at Mumbai on 06.11.2017. Due notice for the said hearing was sent to the appellant as well as their counsel. Despite the delivery of the notice to the learned counsel for the appellant, none appeared on their behalf for hearing made on 06.11.2017. However, the learned counsel for the respondent was present and was heard.

7. The learned counsel for the respondent argued during hearing that in accordance with the agreement arrived at between the parties, the OP Builder was directed to provide a flat measuring 1700 sq. ft. of area. The order passed by the State Commission reflected a correct appreciation of the facts and circumstances on record and the said order had been passed in accordance with the terms and conditions of the agreement. The present first appeal should therefore be dismissed and the impugned order be upheld. In support of his arguments, the learned counsel has invited attention to an order passed by the Hon’ble Supreme Court in “Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ld. and Anr., 2008 10 SCC 345″, according to which, it has been clearly laid down that the complainant does fall within the definition of ‘consumer’.

8. Since the learned counsel for the appellant did not put in appearance during hearing, he could not be heard, but the grounds of appeal filed by them have been carefully studied.

9. The main contention taken by the appellant in the grounds of appeal is that the complaint was barred by limitation under section 24A of the Act, as the same should have been filed within two years of the cause of action, according to section 24A of the Consumer Protection Act, 1986. The cause of action had accrued to the complainant in the year 1994, when the possession of the flat had been offered to her by the complainant. It is further stated that as per the agreement entered in the year 1987, the appellant/OP was under an obligation to provide a house within a period of three years of the agreement. However, the complaint filed after a period of 10 years was not maintainable. Attention has been invited to the orders passed by the Hon’ble Supreme Court on the issue of limitation in “State Bank of India v. B.S. Agriculture Industries (I), 2009 5 SCC 121″. It has further been stated in the grounds of appeal that the agreement between the parties was commercial in nature and hence, the provisions of the Consumer Protection Act, 1986 were not applicable. The issue should have been agitated before a civil court of competent jurisdiction.

10. We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us.

11. The main issue that arises for our consideration is whether the consumer fora had the jurisdiction to deal with the consumer complaint in question. The issue has been discussed in detail in a number of judgments passed by the Hon’ble Supreme Court from time to time. In “Bunga Daniel Babu versus M/s Sri Vasudeva Constructions & Ors.” [Civil Appeal No. 944/2016 decided on 22.07.2016], the Hon’ble Apex Court brought out clearly that in cases where development is made by a developer on the property provided by the land owner, and in lieu of that a certain portion of the developed property is to be provided to the land owner, the Builder does come under the definition of ‘service provider’ vis–vis the land owner and hence, the land-owner does come under the definition of consumer. There is only one rider provided in the matter that the land-owner should not be an active participant in managing the affairs of the builder. In the present case, it is made out that the complainant alongwith her siblings made her property available to the OP and she had no role in the management of the affairs of the Builder. Relying upon the judgment of the Hon’ble Apex court in “Bunga Daniel Babu versus M/s Sri Vasudeva Constructions & Ors.” , therefore, the complainant does fall under the definition of ‘consumer’ vis–vis the OP Builder. A similar view was earlier expressed in the case, “Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ld. and Anr.” as well, as quoted by the learned counsel for the complainant during his arguments. It is held, therefore, that the complainant is a consumer vis–vis OP Builder and hence, the consumer fora had the jurisdiction to handle the consumer complaint in question.

12. The next issue for consideration is whether the consumer complaint was barred by limitation under section 24A of the Consumer Protection Act, 1986. The appellant/OP has stated that the agreement between the parties was entered in the year 1987 and according to the same, the property was to be provided to the complainant within a period of 3 years. However, it is their own version that they offered the possession of the property to the complainant in or around the year 1994 only, meaning thereby that they failed to take action in accordance with the terms and conditions of the agreement. It is also the case of the OP that they provided flats having built-up area of 950 sq. ft. each to the land owners at a different locality in lieu of built-up area of 1700 sq. ft. each to be provided under the agreement dated 07.11.87. The allegations levelled by the complainant, therefore, that the OP failed to provide her a flat, having area of 1700 sq. ft. as promised, is true. This would, therefore, be a case of continuing cause of action till the flat is provided to the complainant as per the agreement between the parties. Even if the complainant failed to file the consumer complaint within a period of 2 years as prescribed under section 24A of the Act, she cannot be debarred from filing the same after the expiry of the said period, as she cannot be denied the offer of flat in terms of the agreement. We, therefore, do not agree with the contention of the OP that the complaint was barred by limitation, as it is a case of continuing cause of action.

13. Vide impugned order, the State Commission directed the OP to handover the possession of the flat or flats having aggregate area of 1700 sq. ft. to the complainant in terms of the agreement dated 07.11.1987 and also to provide compensation of Rs. 50,000/- for mental agony and Rs. 10,000/- as cost of litigation. We do not find any infirmity or illegality in the said order, which may call for any interference in the exercise of the appellate jurisdiction. The present appeal is, therefore, ordered to be dismissed and the order passed by the State Commission upheld. There shall be no order as to costs.

Posted on 23rd September 202023rd September 2020 by rajatbindal5gmailcom — Leave a comment

Consumer Protection Act, 1986—Section 23—Insurance—SBI Life Insurance Cover under Group Insurance Scheme for home loan borrowers—Repudiation of death claim on ground that proposal for policy was not accepted as insured did not present himself for medical examination—Medical examination was to take place prior to premium being debited from bank account of proposer—If proposal was not accepted for any reason premium would have been credited to account of proposer—By very fact that they accepted premium waived condition precedent of medical examination.

(2018) ACJ 1025 : (2018) 187 AIC 137 : (2018) AIR(SCW) 2180 : (2018) 4 AIRBomR 454 : (2018) AIR(SC) 2180 : (2018) AllSCR 1210 : (2018) 129 ALR 216 : (2018) 5 AndhLD 104 : (2018) 2 ApexCourtJudgments(SC) 81 : (2018) 1 CPJ 21 : (2019) 1 CPR 16 : (2018) 3 CTC 683 : (2018) DNJ 323 : (2018) 2 JBCJ 147 : (2018) 2 JCR 219 : (2018) 3 JT 10 : (2018) 2 LawHerald 952 : (2018) 1 LawHerald(SC) 832 : (2018) 5 LW 174 : (2019) NCJ 216 : (2018) 1 PLR 802 : (2018) 2 RajdhaniLR 212 : (2018) 2 RCR(Civil) 161 : (2018) 3 Scale 85 : (2018) 3 SCC 653 : (2018) 7 SCJ 147 : (2019) 1 UC 130 : (2018) 3 WLN 45

SUPREME COURT OF INDIA

DIVISION BENCH

D. SRINIVAS — Appellant

Vs.

SBI LIFE INSURANCE CO. LTD. — Respondent

( Before : N.V. Ramana and S. Abdul Nazeer, JJ. )

Civil Appeal No.2216 of 2018 (Arising Out of SLP (C) No. 14021 of 2017)

Decided on : 16-02-2018

Consumer Protection Act, 1986—Section 23—Insurance—SBI Life Insurance Cover under Group Insurance Scheme for home loan borrowers—Repudiation of death claim on ground that proposal for policy was not accepted as insured did not present himself for medical examination—Medical examination was to take place prior to premium being debited from bank account of proposer—If proposal was not accepted for any reason premium would have been credited to account of proposer—By very fact that they accepted premium waived condition precedent of medical examination—There is no reason to believe that there was no complete contract—There is clear presumption of acceptance of proposal in favour of proposer—Order of National Commission set aside and order of State Commission restored.

Counsel for Appearing Parties

Ms. Anu Gupta, Devesh Singh, Ms. Gouri Karuna Das Mohanti, Advocates, for the Appellant; Ms. Anuradha Dutt, Ms. Fereshte D. Sethna, Ms. B. Vijayalakshmi Menon, Haaris Fazili, Shatadal Ghosh, Ms. Akanksha Banerjee, A. V. Rangam, Buddy A. Ranganadhan, Ms. Aanchal Arora, Advocates, for the Respondent

Cases Referred

LIC Vs. Raja Vasireddy Komalavalli Kamba, (1984) 2 SCC 719

JUDGMENT

S. Abdul Nazeer, J.—Leave granted.

2. In this appeal, the appellant has questioned the legality and correctness of the order dated 03.02.2017 in First Appeal No.560/2012, passed by the National Consumer Disputes Redressal Commission, New Delhi (for short ‘the National Commission’) whereby the National Commission has allowed the appeal filed by the first respondent herein and rejected the complaint of the appellant.

3. Brief facts necessary for disposal of this appeal are that the appellant along with his wife, Smt. D. Suguna and son Mr. D. Venugopal obtained housing loan of Rs. 30,00,000/- (Rupees thirty lacs) in the month of September, 2008 from the respondent Nos. 2 and 3 for construction of a house in Hyderabad. On 29.09.2008, a sum of Rs. 78,150/- (Rupees seventy eight thousand one hundred fifty) was debited from their loan account towards SBI Life Insurance Cover under Group Insurance Scheme for home loan borrowers, through master policy holder i.e. State Bank of Hyderabad, covering the Life of Mr. D. Venugopal, who was one of the joint loanees. The proposal form dated 29.09.2008 was accompanied by good health declaration by the insured. D. Venugopal expired on 17.12.2009 due to a massive heart attack. Consequently, the said life insurance obtained in his name came into force, obligating the insurer, the first respondent herein, to pay the outstanding amount in their loan account. The appellant approached the insurer and the bank informing them about the demise of D. Venugopal and requested them to settle the insurance claim and to discharge the outstanding loan amount in their house loan account. Since the insurer did not accede to his request, he filed a consumer complaint before the State Commission.

4. The insurer contested the complaint mainly on the ground that the proposal for the policy was not accepted as the insured did not present himself for medical examination in spite of repeated requests made by the insurer. It was asserted that the amount of premium of Rs. 78,150/- was refunded by cheque dated 10.12.2008 to the State Bank of Hyderabad. Thus, the insurer pleaded no deficiency in service and denied its liability in connection with the payment to the insured.

5. The State Commission allowed the complaint by its order dated 16.07.2012. However, the National Commission, by majority, allowed the appeal and dismissed the complaint filed by the appellant.

6. Learned counsel for the appellant submits that the insurance policy was taken in the name of D. Venugopal in terms of the Insurance Scheme. The proposal was sent along with the premium of Rs. 78,150/- on 29.9.2008. Admittedly, the insurance company has received the premium on 13.10.2008. D. Venugopal died on 17.12.2009. This was intimated to the State Bank of Hyderabad on 3.4.2010. Thereafter, several letters were sent to the bank for discharge of the loan amount in terms of the insurance policy. The deceased – D. Venugopal was never called for medical examination. It was only on 18.1.2011 the insurance company had called for medical examination for coverage of life insurance of the deceased and, therefore, the policy could not be completed pending examination and that the proposal was returned. It is clear that there was presumption of acceptance of the proposal in favour of the deceased as the proposal form along with good health declaration form was accepted by the bank and sent to the insurance company and the premium was debited by the bank from his loan account. Neither the appellant nor the deceased were intimated by the respondents to appear for medical examination. They did not receive any intimation from the respondents that the policy has not been issued even though he continued to remain alive for more than 1 year 3 months. The premium was refunded only after the appellant insisted for clearance of dues vide cheque dated 23.2.2011, nearly 2 years after the death of the insured. In this view of the matter, the majority view of the National Commission is clearly unsustainable.

7. Learned counsel for the respondents, on the other hand, submits that there is no concluded contract between the parties. Therefore, the insurer is not bound to discharge loan merely on the ground of receipt of premium for issuing policy. The deceased did not appear for medical examination. Therefore, the policy could not be completed on receipt of the death intimation. The premium amount has been refunded. He prays for dismissal of the appeal.

8. We have carefully considered the submissions of the learned counsel for the parties. It is not in dispute that the appellant, his wife and his son D. Venugopal had obtained a housing loan of Rs. 30 lacs from the bank in the month of September, 2008 for the construction of the house. A sum of Rs. 78,150/- was debited from their loan account towards life insurance cover, covering the life of D. Venugopal, who was one of the joint loanees. The proposal form dated 29.09.2008 was also accompanied by good health declaration by the insured. The insurance company received the premium on 13.10.2008. D. Venugopal died on 17.12.2008. This was intimated to the bank on 13.4.2010. A notice dated 14.5.2010 was issued to the bank to settle the loan account. However, the bank did not send any reply to this notice. For the first time on 18.1.2011 the bank sent a reply stating that the insurance company vide reference No.15365 dated 17.10.2008 had called for medical examination for coverage of life insurance of D. Venugopal in respect of the housing loan in question. It was also informed that a communication was sent on 16.12.2008 regarding refund of the proposal amount as the insurance policy could not be completed pending medical examination and the proposal was rejected. The appellant submitted a reply dated 25.2.2011 stating that at no point of time any letter from the insurance company was received calling for medical examination nor did they receive any amount under cheque dated 10.2.2008 said to have been issued. Neither the bank nor the insurance company had ever informed the proposer or the appellant herein about the non-issuance of policy for want of medical certificate though they have alleged that they have intimated the said fact. The letter dated 17.10.2008 was not sent to the appellant herein.

9. From the scheme it is clear that in the case of joint housing loan the full loan amount will be insured even if the policy is issued in the name of only one loanee. In this case, the insured was D. Venugopal son of the appellant, whereas the loan is the joint loan in the name of the appellant, his son – the insured and wife of the appellant. The insured had signed a declaration which is as under:

Good Health Declaration:

“I declare that I am in sound health, do not have any physical defect/deformity, perform my routine activities independently and, that I have never suffered or have been suffering, or have been hospitalized for any critical illness @ or a condition requiring medical treatment for a critical illness as on date.”

10. In cases of loan amount exceeding Rs. 7.5 lacs, the provision in the policy is as under:

Where the loan Amount Exceeds Rs. 7.5 Lacs

“As I am willing to join for life insurance cover from SBI Life Insurance Co. Ltd. subject to my under-going the medical examination and satisfying the health underwriting criteria of the Company, I authorise the Bank to debit my account for the standard gross premium plus any additional premium that may be required by SBI Life based on medical underwriting.

I also note that in the event of SBI Life Insurance Co. Ltd. not being in a position to accept my life insurance for any reason whatsoever, the initial premium amount remitted by the Bank would be refunded and credited back to my account.”

11. It is clear from the above that the proposer was willing to join the life insurance coverage from the respondent insurance company subject to his undertaking medical examination and for his willingness he authorized the bank to debit his account for payment of the premium. This clearly implies that medical examination was to take place prior to the premium being debited from the bank account of the proposer. The specific condition in the policy is that in case the loan amount exceeds Rs. 7.5 lacs the medical examination was compulsory. If the medical examination was compulsory for such cases it should have been done along with filing of the proposal form before the payment of the premium. If the proposal was not accepted for any reason the premium would have been credited to the account of the proposer. The premium has been refunded after 23.2.2011. From this, it is clear that the insurance company had not rejected the proposal before 23.2.2011.

12. Our attention has been drawn to the case of LIC v. Raja Vasireddy Komalavalli Kamba and Ors., (1984) 2 SCC 719, wherein this Court has clearly stated that the acceptance of an insurance contract may not be completed by mere retention of the premium or preparation of the policy document rather the acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance.

13. Although we do not have any quarrel with the proposition laid therein, it should be noted that aforesaid judgments only laid down a flexible formula for the court to see as to whether there was clear indication of acceptance of the insurance. It is to be noted that the impugned majority order merely cites the aforesaid judgment, without appreciating the circumstances which give rise to a very clear presumption of acceptance of the policy by the insurer in this case at hand. The insurance contract being a contract of utmost good faith, is a two-way door. The standards of conduct as expected under the utmost good faith obligation should be met by either party to such contract.

14. From the aforesaid clause it may be seen that the condition precedent for acceptance of the premium was the medical examination. It would be logical for an underwriter to accept the premium based on the medical examination and not otherwise. Therefore, by the very fact that they accepted the premium waived the condition precedent of medical examination.

15. It is an admitted fact that the premium was paid on 29.09.2008. That it was only in 18.01.2011 that the respondent insurance company informed the appellant that the policy was not accepted by them. We are unable to fathom the reason for such excessive delay in informing the appellant, which cannot be excused. We are of the opinion that the rejection of the policy must be made in a reasonable time so as to be fair and in consonance with the good faith standards. In this case, we cannot hold that such enormous delay was reasonable. Moreover, it is borne from the records that the premium was only re-paid on 24.02.2011, after a delay of more than one year five months. If we consider above aspects, it can be reasonably concluded that the insurer is only trying to get out of the bargain, which they had willfully accepted. From the aforesaid circumstances we can easily conclude that the policy was accepted by the insurer.

16. In the circumstances, there is no reason to believe that there was no complete contract. There is clear presumption of the acceptance of the proposal in favour of the proposer. Therefore, the majority view of the Commission would not sustain.

17. In the result, the appeal succeeds and is accordingly allowed. The order of the National Commission dated 22.11.2016 is hereby set aside and the order of the State Commission dated 16.7.2012 is restored.

18. There shall be no orders as to costs.

Posted on 25th August 2020 by rajatbindal5gmailcom — Leave a comment

Consumer Protection Act 1986 – Delay in handing over the possession of residential flats – Compensation – Failure of the developer to fulfill the representations made to flat buyers in regard to the provision of amenities – Flat buyers are entitled to compensation for delayed handing over of possession – Dismissal of the complaint by the NCDRC was erroneous – Appeal allowed.

SUPREME COURT OF INDIA

FULL BENCH

WG. CDR. ARIFUR RAHMAN KHAN AND ALEYA SULTANA AND OTHERS. — Appellant

Vs.

DLF SOUTHERN HOMES PVT LTD. (NOW KNOWN AS BEGUR OMR HOMES PVT. LTD.) AND OTHERS — Respondent

( Before : Dr. Dhananjaya Y. Chandrachud and K M Joseph, JJ. )

Civil Appeal No. 6239 of 2019 and Civil Appeal No. 6303 of 2019

Decided on : 24-08-2020

A. Consumer Protection Act 1986 – Section 12(1)(c) – Deficiency of service – Delay in handing over the possession of residential flats – Compensation – Failure of the developer to fulfill the representations made to flat buyers in regard to the provision of amenities – Flat buyers are entitled to compensation for delayed handing over of possession – Dismissal of the complaint by the NCDRC was erroneous – Appeal allowed.

B. Maharashtra Ownership Flats Act 1971 – Section 3(f) – Demand of parking charges is in terms of the Apartment Buyers Agreement and hence it is not possible to accede to the submission that there was a deficiency of service.

C. Apartment Buyers Agreement – Clause 23(b) – Levy of electricity charges by developer – NCDRC has upheld the collection of the charges towards electricity based on the terms of the ABA – There is no infirmity in the finding of the NCDRC, which is based on the provisions contained in clause 23(b) of the ABA – Charges recovered are not contrary to what was specified in the contract between the parties.

D. Consumer Protection Act 1986 – Section 12(1)(c) – Deficiency of service – Failure to construct the club house – Developer has stated that it has been following up with BDA to permit them to hand over possession and management of the club to the RWA – Since permission of BDA has still not been received legal action is contemplated again – Developer has produced photographs depicting the amenities which have been provided within the precincts of the club house – Membership fees for the club are stated to have been received in the account of the RWA and not in the account of the developer – Position which has been stated before the court as elucidated above has not been disputed by counsel for the appellants – There has been no breach by the developer of the obligation to provide a constructed facility of a club for the RWA.

Counsel for Appearing Parties

Mr. Bishwajit Bhattacharyya, Sr. Advocate, Mr. Prashant Bhushan, Advocate, Mr. Chandrachur Bhattacharyya, Advocate, Mr. Sahil Tagotra, Advocate, Col. R. Balasubramaniam, Sr. Advocate, Mr. Shankar Divate, Advocate for the Appellant; Mr. Pinaki Misra, Sr. Advocate, Ms. Ruby Singh Ahuja, Advocate, Ms. Seema Sundd, Advocate, Mr. Pravin Bahadur, Advocate, Mr. Sanjeet Ranjan, Advocate, Ms. Kritika Sachdeva, Advocate, Mr. Priyash Sharma, Advocate, Mr. Prabhat Ranjan, Advocate, Mr. Ritu Raj Srivastava, Advocate, Mr. Aditya Singh, Advocate, Mr. Alabhya Dhamija, Advocate, Ms. Tanushi Patel, Advocate, M/s. Karanjawala & Co. for the Respondent.

Cases Referred

Balbir Singh, (2004) 5 SCC 65
DLF Homes Panchkula Pvt. Ltd. vs. D S Dhanda, Etc., 2019 SCC OnLine SC 689
DLF Limited vs. Manmohan Lowe, (2014) 12 SCC 231.
Ghaziabad Development Authority vs. Balbir Singh, (2004) 5 SCC 65
HUDA vs. Raje Ram, (2008) 17 SCC 407
Larsen and Toubro Limited vs. State of Karnataka, (2014) 1 SCC 708.
Lucknow Development Authority vs. M K Gupta, (1994)1 SCC 243
Nahalchand Laloochand Private Limited vs. Panchali Cooperative Housing Society Limited, (2010) 9 SCC 536
Name Construction (P) Ltd. vs. Union of India, (2012) 5 SCC 359
Pioneer Urban Land and Infrastructure Limited vs. Govindan Raghavan, (2019) 5 SCC 725
R V Prasannakumaar vs. Mantri Castles Pvt Ltd. 2019 SCC OnLine SC 224

JUDGMENT

Dhananjaya Y. Chandrachud, J. – The National Consumer Disputes Redressal Commission[1] dismissed a consumer complaint filed by 339 flat buyers, accepting the defence of DLF Southern Homes Pvt. Ltd. and Annabel Builders and Developers Pvt. Ltd. that there was no deficiency of service on their part in complying with their contractual obligations and, that despite a delay in handing over the possession of the residential flats, the purchasers were not entitled to compensation in excess of what was stipulated in the Apartment Buyers Agreement[2].

[1] “NCDRC”

[2] “ABA”

2. The complaint before the NCDRC was initially instituted by nine flat buyers. These nine complainants had booked residential flats in a project called Westend Heights at New Town, DLF, BTM Extension at Begu, Bengaluru. The project was being developed in an area admeasuring 27.5 acres and was to consist of 1980 units, spread across nineteen towers each consisting of a stilt and eighteen floors.

3. The Brochure of the first respondent advertised the nature of the project and the amenities which would be provided to buyers. It held out the following representations on the basis of which buyers were induced to invest:

“New Town – the premier choice for Bangalore living. A premium residential enclave that celebrates life in all its resident splendor. Featuring spacious apartments and a rich selection of amenities, you will find in New Town, a residence specially appointed to maximize your comfort and convenience. In New Town premium high rise apartments are set against the backdrop of a vibrant living environment where fun, comfort, security, and serenity blend in perfect unison. Life at New Town satisfies all your needs and fulfils your heart’s desire. Imagine a place where leisurely pursuits are always within reach. Imagine living where convenience is never more than around the corner.

Westend Heights at New Tower DLF, BTM Extn.

Designs, keeping in mind the modern day requirements and meeting them with apt amenities, Westend Heights is the first phase of New Town, with premium high-rise apartments at affordable prices. The complex brings you comfort living embodied in individual towers overlooking sprawling parks and vistas. This project is being developed in a land area of 27. 5 acres. The project consists of 1980 units spread across 19 towers that are Stilt+ 18 floors high.

Amenities

Fun, Fitness, Leisure, Right Next Door

The most exclusive Club in Bangalore at New town, DLF BTM, EXTN,

The Club set amidst a very comfortable setting is an impressive feature of New Town. It is specially designed to take care of all stresses brought on by the modern world. Altogether a beautiful composition, that blends seamlessly with your lifestyle.

Swimming Pool:

Gymnasium/ Aerobics Centre

Restaurant & Bar

Billiards Room

Banquet Hall

Tennis Courts

Cards Room

Squash Courts

Spa, Massage & Beauty Parlour

Ease, Enjoyment, Convenience. Right Next Door

Convenient shopping facilities at New Town, DLF BTM EXTN

Shop with ease at our convenience shopping centre, well equipped to handle your everyday needs. The shopping centre will offer an array of outlets to make your life a trouble free affair.

Experience convenience at your doorstep

Hope, Dreams, Future. Right Next Door

Renowned Early Learning School at New Town DLF BTM EXTN.

Our play school airs to care for your child in a stimulating safe, fun-filled environment. It symbolizes our conviction that nurtured roots lay the foundation of a fully grown blossomed tree.

Health, Wellbeing. Assurance, Right Next Door

State-of-the-art healthcare facilities at New Town DLF BTM EXTN.

In these years of fast paced lives, your family’s wellbeing is foremost in our minds. Our healthcare centre will better the latest in screening, diagnosis, and medical care with competent medical professionals by your side, we will make sure that you would always remain in the best of health.

Comfort, Confidence, Peace of Mind Right Next Door.

Keeping your loves ones safe and secure at New Town, DLF BTM EXTN.

Let New Town set your mind at rest when it comes to security. Our advanced, state-of-the-art security system ensures comfort & peace of mind for you and your loved ones, with monitored gates, CCTV for parking and entrance lobby, video surveillance system and a rigorously screened 24-hour security guard workforce, New Town offers you a secure and a well-protected abode.” (emphasis supplied)

4. Responding to the representation held out by the developer, the complainants booked flats in the residential project. The flat buyers entered into agreements with the developer. Clause 11(a) of the ABA indicated that the developer would endeavour to complete construction within a period of thirty-six months from the date of the execution of the agreement save and except for force majeure conditions. Clause 11(a) provided:

“11. (a) Schedule for Possession of the Said Apartment The Company/LOC based on the present plans and estimates and subject to all just exceptions, endeavors to complete construction of the Said Building /Said Apartment within a period of thirty six (36) months from the date of execution of this Agreement unless there shall be delay or failure due to Force Majeure conditions including but not limited to reasons mentioned in Clauses 11(b) and 11(c) or due to failure of Allottee to pay in time the Total Price and other charges taxes, securities etc. and dues/payments or any failure on the part of the Allottee to abide by all or any of the terms and conditions of this Agreement.”

5. Force majeure stipulations were illustrated in sub-clauses (b) and (c) of clause 11, which included delay due to the reasons beyond the control of the developer and failure to deliver possession due to Government rules, orders or notifications, respectively. Construction was behind schedule. The flat purchasers were informed on 12 January 2011 that possession of the apartments was expected to be completed by the middle of 2012. This assurance was not fulfilled. By a communication dated 18 June 2013, the developers issued a revised timeline intimating all flat buyers that the delivery of possession would commence from October 2013. However, on 8 August 2013 another communication was issued stating that the real estate industry was affected by an economic slowdown which had hampered the pace of construction. The date for handing over possession was extended to June 2014. A tentative schedule for delivery was indicated under which Towers D1 and D2 would be handed over by January 2014, and Towers A3 to A6, A7, B3 and B4 would be handed over by May 2014. On 8 August 2014, the timelines for handing over possession were again extended by the developers : under the revised schedule the flats in Towers D1 and D2 were to be handed over in August 2014, those in A1 to A-7 in February 2015, B1 to B6 in April 2015 and C1 to C4 in June 2015. On 4 May 2015, the developers issued another communication indicating the progress of the work and informed the purchasers that site visits had been initiated for the project “till we receive the occupancy certificate for clusters A, B and C”. This is an admission of the fact that until then the occupation certificate had not been received. The obligation to handover possession within a period of thirty-six months was not fulfilled.

6. The first batch of nine flat purchasers moved a consumer complaint before the NCDRC complaining of a breach by the developer of the obligation, contractually assumed, under the terms of the ABA. Since the nine complainants purported to represent the entire group of flat purchasers, a notice of the complaint under Section 12(1)(c) of the Consumer Protection Act 1986[3] was published in the newspapers.

[3] “CP Act 1986”

7. Numerous applications for impleadment were allowed by the NCDRC and an amended complaint was ordered to be filed. On the complainants moving an application under Section 12(1)(c), the NCDRC by its order dated 21 November 2017 permitted them to file the complaint on behalf or for the benefit of all the flat buyers who were interested in the reliefs. However, flat buyers who had (i) executed deeds of conveyance; or (ii) executed affidavits while accepting the agreed compensation in full and final satisfaction; or (iii) received possession within the stipulated time period; or (iv) had sold their flats after the execution of the conveyance; or (v) who were subsequent purchasers having purchased the flat after the execution of the conveyance deed were to remain outside the purview of the proceedings. Further, the buyers from whom Preferential Location Charges, charges for the preferential location of the apartment, were not charged and were not chargeable were to remain out of the class on whose behalf or benefit the complaint was instituted. On a challenge to the order, this Court by an order dated 10 April 2018 directed:

“Since the complaint filed by the appellants was only by nine persons jointly for their benefit, the same could not be treated to be in representative capacity. Accordingly, the impugned order is set aside.

Aggrieved parties are at liberty to file an appropriate fresh application under Section 12(1)(c) of the Consumer Protection Act, 1986 before the National Consumer Disputes Redressal Commission within two weeks from today. The same may be disposed of by the National Commission in accordance with law within three months from the date of filing of such an application.”

8. Pursuant to the liberty which was granted by this Court, an I.A.[4] was filed before the NCDRC under Section 12(1)(c). The application was disposed of on 13 July 2018 which led to an appeal before this Court.

[4] IA No. 8083 of 2013

9. On 28 September 2018, this Court set aside the order of the NCDRC with the following directions:

“Having heard learned counsel for the appellants, we are of the view that the impugned judgment dated 13.07.2018 needs to be set aside. We set it aside and direct the National Consumer Disputes Redressal Commission to treat the complaint, as amended, that has been filed, as a complaint filed on behalf of all 339 persons and to proceed on merits.

It will be open for the respondents to give their say on the merits of each of the 339 complainants.

The Commission will decide the matter within a period of six months from today.

The Civil Appeals are disposed of accordingly.”

10. Procedural directions issued upon several impleadment applications resulted in a further order of this Court of 8 May 2019 reiterating that the complaint would be treated as having been filed on behalf of 339 persons. By its order dated 28 September 2018, which was reiterated again on 8 May 2019, this Court had laid down a peremptory time schedule of six months for the disposal of the complaint. Eventually, on 2 July 2019, the complaint was dismissed by the NCDRC.

11. Civil Appeal No 6239 of 2019 comprises of 83 appellants. Civil Appeal No 6303 of 2019 comprises of 88 appellants. Thus, there are before this Court a total of 171 flat purchasers in the appeals. The complaint before the NCDRC, which was confined by the order of this Court dated 28 September 2018 to 339 complainants, now covers a more restricted field of 171 flat purchasers. Annexure-1 to Civil Appeal No 6239 of 2019 contains a tabulation of (i) names of the flat purchasers; (ii) dates on which the flats were booked; (iii) dates on which the ABAs were signed; (iv) dates by which possession was to be handed over under the ABAs; and (v) dates on which the letter for possession was issued by the developers.

12. The NCDRC divided the group of 339 flat buyers into six groups based on whether or not they had taken possession, executed deeds of conveyance, settled the dispute or sold the flats before or during the pendency of the complaint or their applications for impleadment:

Group A: Complainants who took possession of their flats before the filing of the complaint/impleadment applications.

Group B: Complainants who took possession and executed deeds of conveyance during the pendency of the complaint/impleadment applications.

Group C: Complainants who took possession during the pendency of the complaint/impleadment applications but have not executed deeds of conveyance.

Group D: Complainants who settled their dispute during the pendency of the complaint/ impleadment applications.

Group E: Complainants who sold their flats during the pendency of the complaint/impleadment applications.

Group F: Complainants who have not taken possession of the flats and have not executed a deed of conveyance.

13. The NCDRC held that flat buyers in Groups A and B who had taken possession before the filing of the complaint / impleadment applications and those who took possession and executed deeds of conveyance before or during the pendency of the proceedings would not be entitled to pursue their claims. The execution of the deed of conveyance, according to the NCDRC, is a transfer of a right in property and it is not within the jurisdiction of the Commission to entertain a grievance that the conveyances have been entered into under coercion. Additionally, according to NCDRC, under the conveyance deed, such flat buyers had accorded their satisfaction to the services provided by the developer and voluntarily discharged the developer of all its liabilities under the ABA. As regards flat purchasers in Group C, the NCDRC noted that even those who have taken possession but have not executed a deed of conveyance have voluntarily discharged the developer. The NCDRC observed that flat buyers in Group C had taken possession without protest, without its permission and without lodging any complaint with it after taking the possession. Those in Group D who had settled their dispute during the pendency of the complaint were held to be estopped from pursuing their grievances. The NCDRC did not accept the contention of the flat buyers in Group D that that they had settled the matter under coercion and undue influence since, according to the NCDRC, no specific facts and circumstances were pleaded by such flat buyers which made them surrender their free will. The buyers in Group E who have sold their flats during the pendency of the complaint were held to have no subsisting right. The NCDRC noted that as regards Group F (complainants who had neither taken possession nor executed a conveyance), as many as 337 out of 339 flat purchasers had in fact taken possession. The NCDRC had to deal with the claims of two remaining complainants, who had accepted the delayed compensation but did not accept possession. Their complaints were dismissed.

14. The primary grounds on which compensation have been sought before the NCDRC were:

(i) Delay in handing over possession of the flats;

(ii) Reimbursement of taxes and interest charged to the flat purchasers under clause 1.10 of the ABA;

(iii) Deficiency in providing amenities;

(iv) Levy of electricity charges by the developer; and

(v) Failure to construct the club house.

15. The NCDRC, in the course of its judgment, observed that delay in the handing over of flats to the flat purchasers was admitted. While recording a finding of fact that there was an admitted delay on the part of the developer, the NCDRC held that the agreements provided compensation at the rate of Rs 5 per square foot of the super area for every month of delay. The NCDRC held that the flat purchasers who agreed to this stipulation in the agreements were not entitled to seek any amount in addition. Paragraph 470 of the judgment of the NCDRC contains its finding:

“470. There is no dispute to the fact that the completion of the project had been delayed. Delay had been acknowledged by the opposite parties. They had also offered to these complainants the delayed compensation calculated @ Rs 5/-per sq. ft. of the super area.”

The NCDRC observed that the developer had while computing the final demand made an adjustment on account of delayed compensation at the rate stipulated in the ABA. The flat purchasers having been provided credit at the rate agreed by the developers, it was held that no further entitlement existed under the law. In the view of the NCDRC, the flat purchasers had failed to prove that the stipulation contained in the agreement for the payment of compensation at Rs 5 per square foot was unreasonable. In taking this view, the Commission has lent support to its decision by relying upon the decisions of this Court in DLF Homes Panchkula Pvt. Ltd. vs. D S Dhanda, Etc., 2019 SCC OnLine SC 689 (“Dhanda”) and Ghaziabad Development Authority vs. Balbir Singh, (2004) 5 SCC 65 (“Balbir Singh”). On the merits of the other grievances, the NCDRC has held that

(i) The charges recovered towards tax and interest are in terms of clause 1.10 of the ABA;

(ii) Charges recovered for electricity are in terms of the ABA;

(iii) The levy of parking charges is valid; and

(iv) The club house has been constructed.

16. In order to facilitate the final disposal of the Civil Appeals, counsel appearing on behalf of the appellants formulated the nature of the grievances of the flat buyers in the written submissions tendered during the hearing. Mr Prashant Bhushan, learned Counsel appearing for the appellants has formulated his submissions under the following heads:

(i) There is a gross delay ranging between two and four years in handing over possession and the flat buyers ought not to be constrained by the terms of the agreement which are one-sided and unreasonable;

(ii) The execution of conveyances or settlement deeds would not operate to preclude the flat buyers from claiming compensation. The emails of the developer clearly indicate that the flat buyers were not permitted to execute conveyances or to receive possession under protest;

(iii) The amenities which have been contracted for have not been provided by the developers; and

(iv) The flat buyers are not liable to indemnify the developer for the demand of interest and penalty raised by the tax authorities as a result of the failure to deposit the tax on time. During the oral arguments, it was clarified that only interest has been recovered from the flat buyers.

The above submissions of Mr Prashant Bhushan have been reiterated in the submissions urged before the Court by Mr Bishwajit Bhattacharya, learned Senior Counsel appearing on behalf of another group of purchasers. Mr R Balasubramanian, learned Senior Counsel has, while adopting the submissions which were urged by Mr Prashant Bhushan, advanced submissions on the levy of electricity charges and charges for parking spaces.

17. Opposing the submissions which have been urged on behalf of the appellants, Mr Pinaki Misra, learned Senior Counsel urged that:

(i) Despite the order of this Court dated 28 September 2018, no evidence has been led by the complainants to discharge the onus placed upon them to establish coercion or duress while executing conveyances or settlements;

(ii) Possession of the complex, which is situated on land admeasuring about 27 acres and comprising of 813 apartments in nineteen towers has been handed over between four to six years ago and the developer has transferred his right, title and interest to the Residents’ Welfare Association (“RWA”);

(iii) The allottees have benefited by the appreciation in the value of their flats;

(iv) Out of 171 applicants, 145 have received compensation at the agreed rate while handing over possession. The allotments were escalation free and the burden of increased costs has been borne by the developer;

(v) Under clause 14 of the ABA, the flat buyers have been compensated at the rate of Rs 5 per square foot per month which would work out to about Rs 7500 per month for a flat admeasuring 1500 square feet. No proof or measure of actual loss suffered has been adduced;

(vi) The facts pertaining to the appellants would indicate that:

(a) Eighteen appellants executed conveyances before filing the complaints;

(b) Fifty-four appellants executed conveyances during the course of the proceedings;

(d) The above individuals include 11 who have entered into written settlement deeds;

(e) There is no delay in offering possession to seven appellants; and

(f) Three appellants are continuing to agitate their grievances despite having transferred their rights in the flats. Out of 171 appellants, 122 executed conveyances before the complaint; during the pendency of the proceedings or thereafter. Eleven appellants who have entered into settlements did not raise a ground of coercion prior to a reply which was filed in December 2018 shortly before the final hearing;

(vii) As regards the construction of facilities and amenities, a club house containing a swimming pool, gymnasium, tennis court, indoor badminton court and squash courts has been constructed and an occupation certificate has been received on 13 May 2019. The RWA is conscious of the fact that difficulties in the allotment arose as a result of the action of the Bangalore Development Authority[5] which led to the filing of writ proceedings before the High Court of Karnataka both by the developer and the RWA. Even after the receipt of the occupation certificate, the developers have been corresponding with BDA for permission to hand over possession to the RWA. Other amenities including a school and health care facilities were going to be developed in the entire township comprising of 80 acres of which the complex of 27 acres was a part. The flat buyers were aware of the fact that under the terms of the ABA, the allottees have no right, title or interest in the amenities outside their residential complex and forming a part of the wider complex of 80 acres. Moreover, this issue is rendered academic since the area around DLF township has become urbanized where adequate facilities are available;

(viii) Clauses 1.3, 1.10, 2 and 3 require the allottees to bear tax liabilities including towards works contract tax. When the project commenced in 2009, there was an absence of clarity in regard to the liability on account of works contract tax which was settled eventually by the judgment of this Court in Larsen and Toubro Limited vs. State of Karnataka, (2014)1 SCC 708. It was as a result of this judgment that the issue was settled following which, the developer while computing the amount payable in the final statements of accounts passed on the liability on account of the interest (but not towards penalty) on a proportionate basis in terms of clause 1.10 of the ABA;

(ix) Clause 23(b) entitles the developer to raise a demand on a proportionate basis from the flat buyers for electricity charges. Initially, BESCOM provided a connection for electricity but subsequently as a substantial load was required, the developer was permitted to build its own electricity sub-station. This was built at a cost of Rs. 18.01 crores for which the pro rata cost could be allocated to flat buyers in terms of clause 23(b); and

(x) The price of the apartment, as agreed in the ABA, included in the breakup, parking charges for exclusive use of earmarked parking spaces. Parking charges were also revealed upfront in the brochure. The appellants had erroneously relied on the decision of this Court in Nahalchand Laloochand Private Limited vs. Panchali Cooperative Housing Society Limited, (2010) 9 SCC 536 which turned on the construction of the provisions of the Maharashtra Apartment Ownership Act 1971 and Development Control Regulations for Greater Bombay 1991. This has subsequently been explained in the decision in DLF Limited vs. Manmohan Lowe, (2014) 12 SCC 231. There is no prohibition in the Karnataka Apartment Ownership Act upon the developer providing earmarked parking charges in the breakup of the total price of the apartment.

[5] “BDA”

The rival submissions will now be analysed.

Compensation for delayed possession

18. The fulcrum of the case of the developer rests on clause 14 of the ABA which is in the following terms:

“14. The Allottee agrees and understands that if the company is unable to give possession within the period as mentioned above or such extended period as permitted under this Agreement, due to reasons other than those mentioned in this Agreement, then the Company agrees to pay only to the Allottee and not to anyone else, subject to the Allottee, not being in default under any terms of this Agreement compensation @ Rs. 5/- per sq. feet of the Super Area of the said apartment per month for the period of such Delay. The adjustment of such compensation shall be done only at the time of execution of the Conveyance Deed of the Said Apartment to the Allottee first named under this Agreement and not, earlier.”

19. Clause 11(a) of the ABA indicates that subject to “all just exceptions” the developer endeavoured to complete construction within a period of thirty-six months from the date of the execution of the agreement unless hindered by force majeure conditions. Undoubtedly, the expression ‘endeavour’ indicates that the developer did not bind itself to an inflexible timeline of thirty-six months. But then again, the timeline of thirty-six moths was subject to just exceptions and could be excused in the event of force majeure conditions coming into operation. By the provisions of clause 14, the developer agreed to compensate the flat buyers at the rate of Rs. 5 per square feet of the super area of the apartment per month for the period of delay. According to the developer (i) the flat purchasers are bound by the above stipulations under which their entitlement was to receive compensation at the agreed rate (and hence not beyond); and (ii) no evidence has been adduced to indicate that the rate which has been prescribed in the agreement is unreasonable. The developer relies on the observation in the decision of this Court in Dhanda, 2019 SCC OnLine SC 689 that when parties have agreed to a consequence of delay in handing over possession, there must be exceptional and strong reasons for the consumer fora to award compensation at more than the agreed rate. In assessing these submissions, we must at the outset note the submission of Mr Prashant Bhushan, learned Counsel that:

“There are a total of 4 blocks in ‘WESTEND HEIGHTS’ project. In Blocks A, B and C, the delay is huge, over 4 years. For block D, the average delay is 2 years. Out of 339 complainants, for 268, the delay is huge, over 4 years.

The Builder sought repeated extension of time to deliver possession, vide communications dated 18.06.2013[6], 8.8.2013[7], 8.8.2014[8], 4.5.2015[9] etc.”

[6] Annexure A9 @ page 929

[7] Annexure A10 @ page 932, 933

[8] Annexure A11 @ page 936

[9] Annexure A12 @ page 938

20. The extent of the delay as set out in the above submissions has not been controverted in the submissions which were urged before this Court by the developer. On the contrary, the finding of the NCDRC in paragraph 470 of its judgment is that:

“…there is no dispute to the fact that the completion of the project has been delayed. Delay has been acknowledged by the opposite parties….”

21. The existence and extent of the delay constitute an admitted factual position. In fact, in the written submissions which have been filed by the developer, it has been admitted that out of 171 appellants, 145 were given compensation in terms of the rate prescribed in clause 14 of the ABA. Once the developer has accepted that there was a delay on his part which triggered of the liability to pay compensation (albeit, according to the developer, in terms of clause 14) there can be no manner of doubt that:

(i) the developer assumed an obligation in terms of the ABA to endeavour to hand over possession in thirty-six months of the date of the execution of the agreement;

(ii) there was a failure on the part of the developer to comply with the contractual obligation;

(iii) the failure of the developer was neither relatable to a “just exception” or the prevalence of force majeure conditions referable to clause 11; and

(iv) the payment of compensation to the flat buyers or at least 145 of the group of 171 represents an admission by the developer of its breach, thereby triggering a liability to pay compensation.

22. The only issue which then falls for determination is whether the flat buyers in these circumstances are constrained by the stipulation contained in clause 14 of ABA providing compensation for delay at the rate of Rs 5 per square feet per month. In assessing the legal position, it is necessary to record that the ABA is clearly one-sided. Where a flat purchaser pays the instalments that are due in terms of the agreement with a delay, clause 39(a) stipulates that the developer would “at its sole option and discretion” waive a breach by the allottee of failing to make payments in accordance with the schedule, subject to the condition that the allottee would be charged interest at the rate of 15 per cent per month for the first ninety days and thereafter at an additional penal interest of 3 per cent per annum. In other words, a delay on the part of the flat buyer attracts interest at the rate of 18 per cent per annum beyond ninety days. On the other hand, where a developer delays in handing over possession the flat buyer is restricted to receiving interest at Rs 5 per square foot per month under clause 14 (which in the submission of Mr Prashant Bhushan works out to 1-1.5 per cent interest per annum). Would the condition which has been prescribed in clause 14 continue to bind the flat purchaser indefinitely irrespective of the length of the delay? The agreement stipulates thirty-six months as the date for the handing over of possession. Evidently, the terms of the agreement have been drafted by the developer. They do not maintain a level platform as between the developer and purchaser. The stringency of the terms which bind the purchaser are not mirrored by the obligations for meeting times lines by the developer. The agreement does not reflect an even bargain.

23. On behalf of the flat purchasers it has been urged by Mr. R Balasubramanian (a submission which has not been controverted in rejoinder) that 95 per cent of the purchase price was paid during the course of the first two and a half to three years. The agreement did not stipulate that the developer would pay any interest on the amount which had already been received. A large chunk of the purchase price was thus available to the developer to complete construction. The court must take a robust and common-sense based approach by taking judicial notice of the fact that flat purchasers obtain loans and are required to pay EMIs to financial institutions for servicing their debt. Delays on the part of the developer in handing over possession postpone the date on which purchasers will obtain a home. Besides servicing their loans, purchasers have to finance the expenses of living elsewhere. To postulate that a clause in the agreement confining the right of the purchaser to receive compensation at the rate of Rs 5 per square foot per month (Rs 7,500 per month for a flat of 1500 square feet) precludes any other claim would be a manifestly unreasonable construction of the rights and obligations of the parties. Where there is a delay of the nature that has taken place in the present case ranging between periods of two years and four years, the jurisdiction of the consumer forum to award reasonable compensation cannot be foreclosed by a term of the agreement. The expression deficiency of services is defined in Section 2 (1) (g) of the CP Act 1986 as:

“(g) “deficiency” means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service”

24. A failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within a contractually stipulated period amounts to a deficiency. There is a fault, shortcoming or inadequacy in the nature and manner of performance which has been undertaken to be performed in pursuance of the contract in relation to the service. The expression ‘service’ in Section 2 (1) (o) means a service of any description which is made available to potential users including the provision of facilities in connection with (among other things) housing construction. Under Section 14(1)(e), the jurisdiction of the consumer forum extends to directing the opposite party inter alia to remove the deficiency in the service in question. Intrinsic to the jurisdiction which has been conferred to direct the removal of a deficiency in service is the provision of compensation as a measure of restitution to a flat buyer for the delay which has been occasioned by the developer beyond the period within which possession was to be handed over to the purchaser. Flat purchasers suffer agony and harassment, as a result of the default of the developer. Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These legitimate expectations are belied when the developer as in the present case is guilty of a delay of years in the fulfilment of a contractual obligation. To uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate irrespective of the nature or extent of delay would result in a miscarriage of justice. Undoubtedly, as this court held in Dhanda, courts ordinarily would hold parties down to a contractual bargain. Equally the court cannot be oblivious to the one-sided nature of ABAs which are drafted by and to protect the interest of the developer. Parliament consciously designed remedies in the CP Act 1986 to protect consumers. Where, as in the present case, there has been a gross delay in the handing over of possession beyond the contractually stipulated debt, we are clearly of the view that the jurisdiction of the consumer forum to award just and reasonable compensation as an incident of its power to direct the removal of a deficiency in service is not constrained by the terms of a rate which is prescribed in an unfair bargain.

25. Numerous judgments of this Court have elaborated on the nature and extent of the jurisdiction of the consumer forum to award just and reasonable compensation. Since the decision of this Court in Lucknow Development Authority vs. M K Gupta, (1994)1 SCC 243, it has been a settled principle of law that the jurisdiction of the consumer forum extends to the award of compensation to alleviate the harassment and agony to a consumer. In Balbir Singh, (2004) 5 SCC 65 a two judge Bench of this Court, while explaining the ambit of the jurisdiction of the adjudicatory fora under the CP Act 1986 observed:

“6…The word compensation is of a very wide connotation. It may constitute actual loss or expected loss and may extend to compensation for physical, mental or even emotional suffering, insult or injury or loss. The provisions of the Consumer Protection Act enable a consumer to claim and empower the Commission to redress any injustice done.”

26. The court observed that the award of compensation has to be based on a finding of loss or injury and must correlate to it. The court observed that no “hard and fast rule” could be prescribed:

“8…No hard-and-fast rule can be laid down, however, a few examples would be where an allotment is made, price is received/paid but possession is not given within the period set out in the brochure. The Commission/Forum would then need to determine the loss. Loss could be determined on basis of loss of rent which could have been earned if possession was given and the premises let out or if the consumer has had to stay in rented premises then on basis of rent actually paid by him. Along with recompensing the loss the Commission/Forum may also compensate for harassment/injury, both mental and physical.”

Where possession has been given, one of the circumstances which must be factored in is that the purchaser has been compensated by the increase in the value of the property.

27. In R V Prasannakumaar vs. Mantri Castles Pvt Ltd. 2019 SCC OnLine SC 224 under the terms of the ABA, possession of the flats was to be handed over to the buyers on 31 January 2014. However, the developer received an occupation certificate only on 10 February 2016 and it was thereafter from May 2016 that the developer started issuing letters offering possession. Based on this, the NCDRC awarded compensation in the form of interest at the rate of 6 per cent per annum. The developer had pleaded that since the agreement provided compensation at the rate of Rs. 3 per square foot per month for delayed possession, the purchasers were not entitled to anything in addition. Dealing with the submission, this Court observed:

“9. We are in agreement with the view of the NCDRC that the rate which has been stipulated by the developer, of compensation at the rate of 3 per sq. ft. per month does not provide just or reasonable recompense to a flat buyer who has invested money and has not been handed over possession as on the stipulated date of 31 January 2014. To take a simple illustration, a flat buyer with an agreement of a flat admeasuring a 1000 sq. ft. would receive, under the agreement, not more than Rs. 3000/- per month. This in a city such as Bangalore does not provide just or adequate compensation. The jurisdiction of the NCDRC to award just compensation under the provisions of the Consumer Protection Act, 1986 cannot in the circumstances be constrained by the terms of the agreement. The agreement in its view is one sided and does not provide sufficient recompense to the flat purchasers.”

The Court observed that there was a delay of two years and hence the award of interest at the rate of 6 per cent was reasonable and justified.

28. In Pioneer Urban Land and Infrastructure Limited vs. Govindan Raghavan, (2019) 5 SCC 725 there was a delay of almost two years in obtaining an occupancy certificate after the date stipulated in the ABA. As a consequence, there was a failure to provide possession of the flat to the purchaser within a reasonable period. This Court dwelt on the terms of the ABA under which the builder was entitled to charge interest at 18 per cent per annum for the delay in payment of instalments by the purchaser. On the other hand, the failure to provide possession on the part of the developer was subject to a grace period of twelve months followed by a termination notice of ninety days and a further period of ninety days to the developer to effect a refund. Adverting to these clauses, the court noted:

“6.4. A perusal of the apartment buyer’s agreement dated 8-5-2012 reveals stark incongruities between the remedies available to both the parties. For instance, Clause 6.4(ii) of the agreement entitles the appellant builder to charge interest @18% p.a. on account of any delay in payment of instalments from the respondent flat purchaser. Clause 6.4(iii) of the agreement entitles the appellant builder to cancel the allotment and terminate the agreement, if any instalment remains in arrears for more than 30 days. On the other hand, as per Clause 11.5 of the agreement, if the appellant builder fails to deliver possession of the apartment within the stipulated period, the respondent flat purchaser has to wait for a period of 12 months after the end of the grace period, before serving a termination notice of 90 days on the appellant builder, and even thereafter, the appellant builder gets 90 days to refund only the actual instalment paid by the respondent flat purchaser, after adjusting the taxes paid, interest and penalty on delayed payments. In case of any delay thereafter, the appellant builder is liable to pay interest @9% p.a. only.

6.5. Another instance is Clause 23.4 of the agreement which entitles the appellant builder to serve a termination notice upon the respondent flat purchaser for breach of any contractual obligation. If the respondent flat purchaser fails to rectify the default within 30 days of the termination notice, then the agreement automatically stands cancelled, and the appellant builder has the right to forfeit the entire amount of earnest money towards liquidated damages. On the other hand, as per Clause 11.5(v) of the agreement, if the respondent flat purchaser fails to exercise his right of termination within the time limit provided in Clause 11.5, then he shall not be entitled to terminate the agreement thereafter, and shall be bound by the provisions of the agreement.”

Justice Indu Malhotra speaking for the Court noted:

“6.8. A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder. The contractual terms of the agreement dated 8-5-2012 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.”

The Court observed that in these circumstances, the flat purchasers could not be compelled to obtain possession which was offered almost two years after the grace period under the agreement had expired. Hence, the NCDRC was held to have correctly awarded interest at the rate of 10 percent per annum.

29. The decision of this Court in Dhanda, 2019 SCC OnLine SC 689 has been relied upon by learned Senior Counsel appearing on behalf of the developer as elucidating the principle that where a flat buyers’ agreement stipulates a consequence for delayed possession, exceptional and strong reasons must be established before the forum constituted under the Act of 1986 awards compensation in addition to what has been contractually agreed. In Dhanda’s case, the SCDRC issued a direction for handing over physical possession of the residential unit to the complainant and for execution of a sale deed. In addition, compensation was awarded by way of interest at the rate of 12 per cent per annum with effect from twelve months after the stipulated date under the agreement. In an appeal by the developer, the NCDRC directed that the rate of interest for a house building loan for the corresponding period in a scheduled nationalised bank would be appropriate and if a floating rate of interest was prescribed, the higher rate of interest should be taken for the computation. A sum of Rs. 1 lac per annum from the date for handing over possession to the actual date of possession was regarded as appropriate in the facts of the case. In that case under the terms of the buyer’s agreements, possession was to be delivered within twenty-four months of the execution of the agreement i.e. 10 February 2013 – failing which the developer was liable to pay compensation at the rate of Rs. 10 per square foot per month for the delay. The developer contended that construction activities were delayed as a result of an injunction granted by this Court over a period of eight months and consequently sought an extension of the period for handing over possession by one year. Alternatively, the developer offered to refund the money deposited with interest at 9 per cent per annum. Construction of 258 independent floors was completed while about 1,500 units were nearing completion. In two sets of Civil Appeals which came up before this Court earlier, agreed terms were arrived at providing for the award of interest at 9 per cent per annum from the date of deposit till refund. While considering the order of the NCDRC, this Court observed:

“16. The District Forum under the Consumer Protection Act, 1986 is empowered inter-alia to order the opposite party to pay such amount as may be awarded as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party including to grant punitive damages. But the forums under the Act cannot award interest and/or compensation by applying rule of thumb. The order to grant interest at the maximum of rate of interest charged by nationalised bank for advancing home loan is arbitrary and no nexus with the default committed. The appellant has agreed to deliver constructed flats. For delay in handing over possession, the consumer is entitled to the consequences agreed at the time of executing buyer’s agreement. There cannot be multiple heads to grant of damages and interest when the parties have agreed for payment of damages at the rate of Rs. 10/- per sq. ft. per month. Once the parties agreed for a particular consequence of delay in handing over of possession then, there has to be exceptional and strong reasons for the SCDRC/NCDRC to award compensation at more than the agreed rate.”

30. The orders of the SCDRC and NCDRC were held to be without any foundation being led by the complainant and based purely on a “rule of thumb”. The court noted that the amount of interest represents compensation to the beneficiaries who are deprived of the use of the investment which has been made and will take into its ambit the consequence of a delay in not handing over possession. The court held that both the SCDRC and NCDRC awarded compensation under different heads on account of a singular default of not handing over possession. This was held not to be sustainable. The court held that:

“19. Thus, we find that the complainant is entitled to interest from the Appellant for not handing over possession as projected as is offered by it but it is not a case to award special punitive damages as one of the causes for late delivery of possession was beyond the control of the Appellant. Therefore, in view of the settlement proposal submitted by the Appellant in earlier two set of appeals in respect of same project, and to settle any further controversy, the Appellant is directed as follows:

i) To send a copy of the occupation certificate to the Complainants along with offer of possession. The Appellant shall also direct the Jones Lang LaSalle – the real estate maintenance agency, engaged by the Appellant to undertake such maintenance works as is necessary on account of damage due to non-occupation of the flats after construction etc.

ii) It shall be open to the Complainants to seek the assistance of the maintenance agency to attend to the maintenance work which may arise on account of non-occupation or on account of natural vagaries.

iii) Such maintenance work shall be completed by the Appellant within two months of the offer of possession but the payment of interest at the rate of 9 per cent per annum will be for a period of two months from the date of offer of possession in all situations.

v) Since the Complainants have been forced to invoke jurisdiction of the consumer forums, they shall be entitled to consolidated amount of Rs. 50,000/- in each complaint on all accounts such as mental agony and litigation expenses etc. The complainant shall not be entitled to any other amount over and above the amount mentioned above.

vi) In case, the original allottee has transferred the flat, the transferee shall be entitled to interest at the rate of 9 per cent per annum from the date of expiry of three years from the agreement or from the date of transfer, whichever is later.”

31. The judgment in Dhanda’s case does not prescribe an absolute embargo on the award of compensation beyond the rate stipulated in the flat buyers’ agreement where handing over of the possession of a flat has been delayed. Dhanda’s case was preceded by consent terms which were presented before this Court in two earlier civil appeals under which interest at the rate of 9 per cent had been granted. The decision lays down that the award of interest cannot be arbitrary and without nexus to the default which has been committed. Hence, the award of interest at the maximum rate of interest charged by a nationalised bank for advancing home loans was construed to be arbitrary. It was in this context that the court observed that the parties having agreed to a consequence for delay, exceptional and strong reasons must exist for the consumer fora to depart from the agreed rate. The decision, in other words, does not lay down that there is an absence of jurisdiction in the adjudicatory fora constituted under the CP Act 1986 to award remedial compensation to a flat buyer for the delay of the developer in handing over possession on the agreed date.

32. In the present case, there exist, clear and valid reasons for not holding down the flat buying consumers merely to the entitlement to receive compensation at the rate of 5 per square foot per month in terms of clause 14 of the ABA:

(i) There has been a breach on the part of the developer in complying with the contractual obligation to hand over possession of the flats within a period of thirty-six months of the date of the agreement as stipulated in clause 11(a);

(ii) The failure of the developer to hand over possession within the contractually stipulated period amounts to a deficiency of service within the meaning of Section 2 (1) (g), warranting the invocation of the jurisdiction vested in the NCDRC to issue a direction for the removal of the deficiency in service;

(iii) The triggering of an obligation to pay compensation on the existence of delay in handing over possession is admitted by the developer for, even according to it, it has adjusted compensation at the agreed rate of Rs 5 per square foot per month to 145 out of the 171 appellants;

(iv) The agreement is manifestly one-sided: the rights provided to the developer for a default on the part of the home buyer are not placed on an equal platform with the contractual right provided to the home buyer in the case of a default by the developer;

(v) There has been a gross delay on the part of the developer in completing construction ranging between two and four years. Despite successive extensions of time to deliver possession sought by the developer, possession was not delivered on time;

(vi) The nature and quantum of the delay on the part of the developer are of such a nature that the measure of compensation which is provided in clause 14 of the ABA would not provide sufficient recompense to the purchasers; and

(vii) Judicial notice ought to be taken of the fact that a flat purchaser who is left in the lurch as a result of the failure of the developer to provide possession within the contractually stipulated date suffers consequences in terms of agony and hardship, not the least of which is financial in nature. Having paid a substantial amount of the purchase price to the developer and being required to service the debt towards loan installments the purchaser is unable to obtain timely possession of the flat which is the subject matter of the ABA.

But, it has been submitted by the developer – a submission which found acceptance by the NCDRC – that the execution of the Deed of Conveyance by a flat purchaser precludes a consumer claim being raised for delayed possession. During the course of the proceedings before the NCDRC, the flat purchasers relied upon the communications which were issued by the developer to demonstrate that the purchasers were not permitted by the developer to execute a Deed of Conveyance or to take possession under protest. The material which was produced before the NCDRC supports this submission, which was urged before the Court by Mr Prashant Bhushan, learned Counsel. By a communication dated 16 February 2016, the developer informed a flat buyer that in terms of the ABA, the allottee is required to take possession of the apartment by making payments and executing documentation after the developer has obtained a certificate for occupation from the competent authority and has offered possession of the apartment to the allottee. The developer stated:

“We may also like to bring to your notice, that if the acceptance of offer of possession terms is being conveyed by the allottee under protest the Company will not be in a position to hand over the possession and execute the Conveyance Deed and as such your request to take over the possession and execute the documents under protest is untenable.”

33. By an email dated 24 December 2016, another flat buyer was informed that:

“It would be a pleasure to progress with possession once you submit the affidavit. However we can’t accept any documents to this effect under protest or claim of coercion. This affidavit has to be unconditionally submitted and possession taken.”

By another communication dated 21 December 2016, a flat purchaser was informed that:

“It was explained to you in our FDN itself and our earlier reply/clarifications, that any kind of protest ‘is not tenable if you wish to take possession and register the property as well. Kindly execute the affidavit as advised and proceed for further process on registering the property.”

By a communication dated 1 December 2016, the developer informed a flat purchaser that

“Your letter that you took possession and executed the documents under protest is untenable and unacceptable and the company will not be in a position to execute the conveyance deed under protest.”

Copies of these communications are marked as Annexures P-28, P-29, P-30 and P-31 to Civil Appeal 6239 of 2019.

34. The developer has not disputed these communications. Though these are four communications issued by the developer, the appellants submitted that they are not isolated aberrations but fit into a pattern. The developer does not state that it was willing to offer the flat purchasers possession of their flats and the right to execute conveyance of the flats while reserving their claim for compensation for delay. On the contrary, the tenor of the communications indicates that while executing the Deeds of Conveyance, the flat buyers were informed that no form of protest or reservation would be acceptable. The flat buyers were essentially presented with an unfair choice of either retaining their right to pursue their claims (in which event they would not get possession or title in the meantime) or to forsake the claims in order to perfect their title to the flats for which they had paid valuable consideration. In this backdrop, the simple question which we need to address is whether a flat buyer who seeks to espouse a claim against the developer for delayed possession can as a consequence of doing so be compelled to defer the right to obtain a conveyance to perfect their title. It would, in our view, be manifestly unreasonable to expect that in order to pursue a claim for compensation for delayed handing over of possession, the purchaser must indefinitely defer obtaining a conveyance of the premises purchased or, if they seek to obtain a Deed of Conveyance to forsake the right to claim compensation. This basically is a position which the NCDRC has espoused. We cannot countenance that view.

35. The flat purchasers invested hard earned money. It is only reasonable to presume that the next logical step is for the purchaser to perfect the title to the premises which have been allotted under the terms of the ABA. But the submission of the developer is that the purchaser forsakes the remedy before the consumer forum by seeking a Deed of Conveyance. To accept such a construction would lead to an absurd consequence of requiring the purchaser either to abandon a just claim as a condition for obtaining the conveyance or to indefinitely delay the execution of the Deed of Conveyance pending protracted consumer litigation.

36. It has been urged by the learned counsel of the developer that a consequence of the execution of the Deed of Conveyance in the present case is that the same ceases to be a transaction in the nature of “supply of services” covered under the CP Act 1986 and becomes a mere sale of immovable property which is not amenable to the jurisdiction of Consumer Fora. In Name Construction (P) Ltd. vs. Union of India, (2012) 5 SCC 359 this Court distinguished between a simple transfer of a piece of immovable property and housing construction or building activity carried out by a private or statutory body falling in the category of ‘service’ within the meaning of Section 2 (1) (o) of the CP Act 1986. This Court held that:

“8. Having regard to the nature of transaction between the appellant Company and its customers involved much more than a simple transfer of a piece of immovable property it is clear the same constitutes “service” within the meaning of the Act. It was not the case that the appellant Company was selling the given property with all its advantages and/or disadvantages on “as is where is” basis, as was the position in UT Chandigarh Admn v. Amarjeet Singh. It is a case where a clear-cut assurance was made to the purchasers as to the nature and extent of development that would be carried out by the appellant Company as a part of package under which a sale of fully developed plots with assured facilities was made in favour of the purchasers for valuable consideration. To the extent the transfer of site with developments in the manner and to the extent indicated earlier was a part of the transaction, the appellant Company has indeed undertaken to provide a service. Any deficiency or defect in such service would make it accountable before the competent Consumer Forum at the instance of consumers like the respondents.”

The developer in the present case has undertaken to provide a service in the nature of developing residential flats with certain amenities and remains amenable to the jurisdiction of the Consumer Fora. Consequently, we are unable to subscribe to the view of the NCDRC that flat purchasers who obtained possession or executed Deeds of Conveyance have lost their right to make a claim for compensation for the delayed handing over of the flats.

37. However, the cases of the eleven purchasers who entered into specific settlement deeds with the developers have to be segregated. In the case of these eleven persons, we are of the view that it would be appropriate if their cases are excluded from the purview of the present order. These eleven flat purchasers having entered into specific deeds of settlement, it would be only appropriate and proper if they are held down to the terms of the bargain. We are not inclined to accept the contention of the learned counsel of the appellants, Mr. Prashant Bhushan, that the settlement deeds were executed under coercion or undue influence since no specific material has been produced on record to demonstrate the same.

38. Similarly, the three appellants who have transferred their title, right and interest in the apartments would not be entitled to the benefit of the present order since they have sold their interest in the apartments to third parties. The written submissions which have been filed before this Court indicate that “the two buyers stepped into the shoes of the first buyers” as a result of the assignment of rights and liabilities by the first buyer in favour of the second buyer. In HUDA vs. Raje Ram, (2008) 17 SCC 407 this Court while holding that a claim of compensation for delayed possession by subsequent transferees is unsustainable, observed that:

“7. Respondents in the three appeals are not the original allottees. They are re-allottees to whom re-allotment was made by the appellant in the years 1994, 1997 and 1996 respectively. They were aware, when the plots were re-allotted to them, that there was delay (either in forming the layout itself or delay in delivering the allotted plot on account of encroachment etc). In spite of it, they took re-allotment. Their cases cannot be compared to cases of original allottees who were made to wait for a decade or more for delivery and thus put to mental agony and harassment. They were aware that time for performance was not stipulated as the essence of the contract and the original allottees had accepted the delay.”

Even if the three appellants who had transferred their interest in the apartments had continued to agitate on the issue of delay of possession, we are not inclined to accept the submission that the subsequent transferees can step into the shoes of the original buyer for the purpose of benefiting from this order. The subsequent transferees in spite of being aware of the delay in delivery of possession the flats, had purchased the interest in the apartments from the original buyers. Further, it cannot be said that the subsequent transferees suffered any agony and harassment comparable to that of the first buyers, as a result of the delay in the delivery of possession in order to be entitled to compensation.

Amenities

39. The brochure that was issued by the developers spoke of a “Distinctive DLF Living” while advertising the project, which was described as “DLF Westend Heights”, New Town. This was described as “the premier choice for Bangalore living…a premium residential enclave featuring spacious apartments with a rich selection of amenities.” Westend Heights at New Town was described as a project which was being developed on a land area of 27.5 acres. The brochure specifically referred to the amenities being provided. Among them were (i) “The most exclusive club in Bangalore”; (ii) a swimming pool; (iii) gymnasium/ aerobics centre; and (iv) a restaurant and Bar together with other sports facilities. Besides this, the brochure contained a representation of the setting up of a convenience shopping centre with an array of outlets, a renowned early – learning school and state of the art health care facilities. Clause 1.10(a) of the ABA, which imposes the liability to bear taxes on the allottees states that this liability will be proportionate to the ratio of the super area of the apartment to the total super area of all the apartments and other “shops, clubs etc” in the said complex.

The grievance in regard to the alleged failure of the developer to provide amenities may be divided into two segments:

(i) The club house; and

(ii) Other amenities

Club house

40. The developer has stated before the court that a club house containing appurtenant facilities including a swimming pool, gymnasium, billiards room, tennis court, indoor badminton court, squash court and community hall has been fully constructed and an occupation certificate has been received on 13 May 2019. The developer has stated that under the building regulations, it has to handover 5 per cent of the area of the group housing complex to BDA as a civic amenities (“CA”) area. The RWA has to apply to BDA for allotment of the CA area in its favour. Upon allotment, the RWA hands over the area to the builder for construction of the club. The developer relinquished the CA area in favour of the BDA, constituted an RWA and applied to BDA on 22 June 2010 for the allotment of the CA site in favour of the RWA. The written submissions indicate that a dispute over the charges demanded by BDA towards lease rent led to a writ petition before the Karnataka High Court being instituted both by the developer and the RWA which was allowed on 29 June 2015. The developer submitted a building plan to the municipal body. A second writ petition had to be filed in which the High Court on 18 October 2016 directed the municipal body to proceed with the approval of the building plans. Sanction for the building plan was received on 18 May 2017 and after construction of the club building, an occupation certificate was received on 13 May 2019. The developer has stated that it has been following up with BDA to permit them to hand over possession and management of the club to the RWA. Since permission of BDA has still not been received legal action is contemplated again. The developer has produced photographs depicting the amenities which have been provided within the precincts of the club house. Membership fees for the club are stated to have been received in the account of the RWA and not in the account of the developer. The position which has been stated before the court as elucidated above has not been disputed by counsel for the appellants. Hence, we find that there has been no breach by the developer of the obligation to provide a constructed facility of a club for the RWA.

Other amenities

41. As regards the other amenities, the defence of the developer is that these were to be developed as an integral element of the entire township of 80 acres of which the project admeasuring 27 acres (comprised in Westend Heights) was a part. The ABA stipulates that allottees of the complex have no right, title and interest in respect of the amenities or facilities outside the residential complex, which lie within the larger township. According to the developer, no part of the consideration which was paid by allottees, including the appellants, was towards the amenities and facilities falling outside the boundary of the complex. In this regard, the developer relies on the following stipulation accepted by allottees under clause 5 of the Booking Application Form:

“The applicant confirms and represents that he has not made any payment to the Company in any manner whatsoever and that the Company has not indicated / premised / represented / given any impression of any kind in an explicit or implicit manner whatsoever, that the Applicant shall have any right, title or interest of any in whatsoever in any lands, buildings, common areas, facilities and amenities failing outside the Said Complex…”

The above stipulation is reiterated under clause 1.21 of the ABA:

“The allottee acknowledges and confirms that the allottee is not entitled to or has not paid for the lands outside the said land/said complex whether the same is within said project or other. The said project would comprise of many complexes similar on different to said complex. Allottee has not paid any amount towards any other lands, areas, facilities and amenities including but not limited to those listed below, and as such, the allottee shall have no right interest of any nature whatsoever in the same and the same are specifically excluded from the scope of this agreement. The allottee acknowledges that the ownership of such land and facilities and amenities shall vest solely with the company/LDC and its associate companies subsidiaries and they alone shall have sole right and absolute authority to deal with the same including their usage and manner/method of use, disposal etc. creation of rights in favour of other person by way of sale, transfer, lease Joint venture, collaboration or any other including transfer of government, semi-government, any other person.”

42. Now, it is correct as the developer contends that the flat purchasers have no right, title or interest in respect of the amenities which were to be constructed by the developer as a part of the larger township of New Town. The entire area comprised 80 acres of which Westend Heights was situated on 27 acres. The absence of a title or interest in the flat purchasers in the amenities to be provided outside the area of 27 acres begs the question as to whether there was a breach of a clear representation which was held out to the flat purchasers by the developer. A deficiency under Section 2(1)(g) means a fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance. This may be required to be maintained under law or may be undertaken to be performed in pursuance of a contract or otherwise in relation to any service. The builder invited prospective flat purchasers to invest in the project of Westend Heights on the basis of a clear representation that the surrounding area of New Town situated on 80 acres was being developed to provide a wide range of amenities including a shopping centre, health care facilities and an early learning school. The developer has failed to provide these amenities. In the reply, the developer has stated that:

“It is stated that School, Commercial Complex and Health clinic are part of the facility which will be provided upon the completion of the Whole New Town project as these facilities, with existing population cannot sustain these facilities. Every matter has to be adjudicated in light of its own facts and circumstance…”

In the written submissions of the developer, the failure to provide the amenities is sought to be glossed over by contending that:

“…the issue of these facilities has since become completely academic since the area around the DLF Township has already become totally urbanized and well developed thanks in larger measure due to the DLF’s activities in the area and there are now many proximate hospitals, schools, shopping areas that have mushroomed in the immediate vicinity and neighbourhood of the DLF Township which are in fact being regularly and conveniently used by the residents of the DLF residential complex which include the Appellants herein. As such, there is no loss or claim for any damages that could be said to have accrued to the Appellants either under the ABA or otherwise under this alleged head of claim.”

43. In other words, what the developer holds out as a defence is that though there has been a failure on their part to provide the amenities, the flat buyers have the benefit of facilities in the surrounding area which has become urbanised. We cannot agree with this line of submissions. The reply of the developer seeks to explain the failure to construct the facilities on the ground that the “existing population cannot sustain these facilities” – a school, commercial complex and health care facilities. This is a case involving an experienced developer who knew the nature of the representation which was being held out to the flat purchasers. Developers sell dreams to home buyers. Implicit in their representations is that the facilities which will be developed by the developer will provide convenience of living and a certain lifestyle based on the existence ofthose amenities. Having sold the flats, the developer may find it economically unviable to provide the amenities. The flat purchasers cannot be left in the lurch or, as in the present case, be told that the absence of facilities which were to be provided by the developer is compensated by other amenities which are available in the area. The developer must be held accountable to its representation. A flat purchaser who invests in a flat does so on an assessment of its potential. The amenities which the builder has committed to provide impinge on the quality of life for the families of purchasers and the potential for appreciation in the value of the flat. The representation held out by the developer cannot be dismissed as chaff. True, in a situation such as the present it may be difficult for the court to quantify the exact nature of the compensation that should be provided to the flat buyers. The general appreciation in land values results in an increase in the value of the investment made by the buyers. Difficulties in determining the measure of compensation cannot however dilute the liability to pay. A developer who has breached a clear representation which has been made to the buyers of the amenities which will be provided to them should be held accountable to the process of law. To allow the developer to escape their obligation would put a premium on false assurances and representations made to the flat purchasers. Hence, in factoring in the compensation which should be provided to the flat buyers who are concerned in the present batch of appeals, we would necessarily have to bear this issue in mind.

Tax

44. The ABA contained specific provisions in regard to the payment of taxes.

Clause 1.3 of the ABA provided:

“1.3 The Allottee shall make the payment of the Total price as per the payment plan set out in annexure -III of this Agreement. Other charges, securities, payments etc. (as specified in this Agreement), Taxes and increase thereof (as provided in clause 1.10) shall be payable by the Allottee, as and when demanded by the Company.”

Clause 1.10 contained a specific provision in regard to the obligation of the allottee to pay taxes in addition to the total price. Clause 1.10 provided:

“1.10. The Allottee agrees and understands that in addition to Total price, the Allottee shall be liable to pay the Taxes, which shall be charged and paid as under:

a) A sum equivalent to the proportionate share of Taxes shall be paid by the Allottee to the Company. The Proportionate share shall be the ratio of the Super Area of the said Apartment to the total super area of all the apartments other buildings shop, club etc. in the said complex.

b) The Company shall periodically intimate to the Allottee herein, on the basis of certificates from a Chartered Engineer and /or a Chartered- Accountant, the amount payable as stated above which shall be final and binding on the Allottee and the Allottee shall make payment of such amount within 30 (thirty days) of such intimation.”

The ABA also contains the following provisions:

2. Payment for taxes on land, wealth-tax, cesses etc. by Allottee:–

The Allottee agrees and confirms to pay all Government rates, tax on land, municipal tax, property taxes, wealth tax, Building and Other Construction Workers Welfare Fund (Cess),taxes, one time building tax, luxury tax if any, fees or levies of all and any kind by whatever name called, whether levied or Leviable now or in future by the Government or municipal authority or any other governmental authority on the Said Complex and I or the Said Building or land appurtenant thereto as the case may be as assessable or applicable from the date of the Application if the Said Apartment is assessed separately and if the Said Apartment is not assessed separately then the Allottee shall pay directly to the concerned authority and if the same is levied on or paid by the Company or the Allottee then the same shall be borne and paid by the Allottee on pro-rata basis and such determination of proportionate share by the Company and demand shall be final and binding on the Allottee. However, if the Said Apartment is assessed separately the Allottee shall pay directly to the Government Authority.

3. Amount paid by Allottee with Application

The Allottee has paid a sum of Rs. 3,00,000/- (Rupees 3 Lakhs only) alongwith the Application, the receipt of which the Company doth hereby acknowledge and the Allottee agrees to pay the remaining price of the Said Apartment as prescribed in schedule of payments (Annexure-Ill) attached with this Agreement along with all other charges, Taxes, securities etc. as mentioned in this Agreement and as per the de-mand raised by the Company in accordance with the Agreement.”

The ABA contains the definition of taxes in the following terms:

“”Taxes” shall mean any and all taxes payable by the Company/LOC and/or its contractors, suppliers, consultants, etc. by way of value added tax (VAT), state sales tax, central sales tax, works contract tax, service tax, cess, levies and educational cess and any other taxes levies, charges by whatever name called levied and collected by Government Agency in connection with Development / construction of the Said Apartment/Said Building/Said Complex.”

The expression total price is also defined in the ABA so as to be exclusive inter alia of taxes.

45. The two certificates of the Chartered Accountant issued on 26 July 2013 and 9 August 2014 indicate that taxes inclusive of interest have been recovered. According to the appellants, the builder admitted that it had “not properly discharged” his liability towards taxes for a period of thirty-six months between 2011-2012 and 2013-2014 and that tax dues were paid on 25 March 2015 together with penalty and interest. Hence, it has been urged that the liability to pay interest which arose on account of the default of the developer in discharging the tax liability on time cannot be fastened upon the buyers.

46. On behalf of the developer it has been submitted that when construction commenced in 2009, there was an absence of clarity on whether works contract tax was liable to be paid in relation to agreements between owners-developers and allottees of apartments where the apartments were to be delivered in future. In 2013, this Court delivered its judgment in Larsen and Toubro Limited vs State of Karnataka, (2014) 1 SCC 708 as a result of which the liability towards works contract tax was adjudicated upon. Consequently, while computing the amount payable in the final statements of accounts, the developer passed on the interest burden but not the penalty on a proportionate basis in terms of clause 1.10. The allottees were required to pay their proportionate share of the works contract tax in terms of the ABA and the final demand was raised at the time of the offer of possession.

47. The specific conditions contained in the ABA clearly imposed the liability to bear the proportionate share of taxes on the purchasers. Clauses 1.3 and 1.10 leave no manner of doubt in regard to the position. The developer has offered an explanation of why as a result of pending litigation, the dues towards works contract tax were not paid earlier. Indeed, if they were paid earlier, the purchasers would have been required to reimburse their proportionate share of taxes earlier as well. No part of the penalty imposed on the developer has been passed on to the purchasers. In view of the terms of the ABA and the explanation which has been submitted by the developer, there is no deficiency of service in regard to the demand of interest payable on the tax which was required to be deposited with the revenue.

Electricity

48. The submission by Mr. R. Balasubramanian, learned Senior Counsel is that the initial collection of Rs. 1.50 lacs from each buyer towards BESCOM /BWSSB charges for electricity and water are admitted. Subsequently, invoking clause 23(b) of the ABA, the developer collected two lacs from each buyer towards additional electricity charges. The appellants contest the entitlement of the developer to claim these charges.

Clause 23(b) of the ABA is in the following terms:

“23. (b) Payments and other charges for bulk supply of electrical energy

If Company or the Maintenance Agency decides to apply for and thereafter receives permission from BESCOM or from any other body / commission/ regulator/ licensing authority constituted by the Government of Karnataka for such purpose, to receive and distribute bulk supply of electrical energy in the Said Project/Said Complex then the Allottee undertakes to pay on demand to the Company proportionate share as may be determined by the Company of all payments and charges paid/ payable by the Company or the Maintenance Agency to BESCOM…The proportionate share of cost incurred by the Company for creating infrastructure like HT feeder, EHT sub stations etc shall also be payable by the Allottee on demand.”

49. According to the developer, initially an electricity connection was provided by BESCOM without insisting on the requirement of an electric sub-station. Subsequently as occupation certificates were received for additional towers, BESCOM required a dedicated electric sub-station which was constructed by the developer at a cost of Rs. 18.01 crores. The pro rata cost for setting up this additional infrastructure was, according to the developer, payable by the allottees. When offers for possession were issued to the buyers, the following stipulation was contained in the letter:

“Our initial effort was to obtain and energize the power supply to the entire project of 1830 apartments through individual 11 KV feeders from Golahalli 66/11KV Substation. On this basis, the costing for infrastructure towards provisioning of utilities as per clause 1.14, 1.15, 23(b) and JDC of ABA was estimated at rate Rs. 127.96/sft., which was reflected in the Final Demand to D Block customers. However, after a detailed evaluation of the load requirement for the project as per norms, BESCOM has now stipulated that, in accordance with clause 3.2.4 of KERC Regulations, we establish a dedicated 66/11 kv Substation within our project site to cater to the needs of the project, instead of the earlier proposed scheme of 11 Kv feeders from Golahalli. The increase in cost because of this new sub-station and allied works, over and above the originally envisaged 11KV scheme is estimated @Rs. 18.01 Cr., thereby increasing the total infrastructure cost recovery towards provisioning of utilities to Rs. 188.00/sft. In view of the above said amounts are being recovered on the basis of provisional estimates. On commissioning and energizing the substation, the company shall arrange a certificate from independent chartered accountant/ chartered engineer to arrive at the actual cost incurred. Your share of the said actual cost by the Company shall be duly intimated to you accordingly. If it is found that excess amount paid by you, over and above the actual cost incurred by the company, said excess amount so collected shall be refunded to you without interest. If the actual expenses exceeds the estimated amount computed @Rs. 188/-sq. ft. then demand for the shortfall amount shall be raised through further demand on the owner of the property and shall be payable by you. We would further like to bring to your kind attention that the provision of 66/11KV substation will ensure better quality uninterrupted power supply as compared with the previously planned scheme of 11KV‟reeders.

50. Mr. R. Balasubramanian, learned Senior Counsel contends that clause 23(b) relates to receiving and distributing the bulk supply of electrical energy to “the said project /said complex” which is defined as “project under the name and style of “New Town DLF BTM Extension”. According to the submission, the charges have been collected for the entire New Town project and not for Westend Heights alone. In this context it has also been submitted that distribution of electricity is governed by the KERC Regulations 2006. While planning the project, the developer calculated the cost of the 66/11 KV sub-station and collected charges from each of the 1830 buyers. Hence, it has been submitted that there was no requirement of additional bulk supply of electricity for the nineteen hundred buyers. In this context, the formulation in the written submissions is extracted below:

“(under) regulation 3.02 (e) of KERC (Conditions of Supply of Electricity by the Distribution Licensee) Regulations 2004, it is mandatory to set up 66 KV supply line/ KV substation if the demands goes beyond 7500 KVA. Further under regulation 3.2.4 KERC (Recovery of Expenditure for Supply of Electricity) Regulations 2004 : “In case of layouts/buildings requiring power supply and the requisitioned load is more than 7500 KVA, the developer/ Applicant shall provide the space for erection of sub-station and also bear the entire charges of such a sub-station and associated lines/equipments. The work shall be carried out either by the Licensee duly recovering the charges as per estimate or by the Applicant himself through appropriate class of licensed contractor by paying 10% of the estimate as supervision charges to the Licensee.”

51. The NCDRC has upheld the collection of the charges towards electricity based on the terms of the ABA. There is no infirmity in the finding of the NCDRC, which is based on the provisions contained in clause 23(b) of the ABA. The charges recovered are not contrary to what was specified in the contract between the parties.

Parking

52. The appellants seek a refund of an amount of Rs. 2.25 lacs collected from each buyer towards car parking. The submission is that under Section 3(f) of the Karnataka Apartment Ownership Act 1972[10] , common areas and facilities include parking areas. According to the appellants, the flat buyers had already paid for the super area in terms of clause 1.6 of ABA including common areas and facilities which would be deemed to include car parking under the KAO Act. The relevant portion of clause 1.6 is extracted below:

“1.6. The Allottee agrees that the Total price of the said Apartment is calculated on the basis of its Super Area only (as indicated in clause 1.1.) except the parking space, additional car parking space which are based on fixed valuation….”(emphasis supplied)

[10] “KAO Act”

53. We are unable to accede to the above submission. The ABA contained a break-up of the total price of the apartment. Parking charges for exclusive use of earmarked parking spaces were separately included in the break-up. The parking charges were revealed to the flat buyers in the brochure. The charges recovered are in terms of the agreement.

54. The decision of this Court in Nahalchand Laloochand Private Limited vs. Panchali Cooperative Housing Society Limited, (2010) 9 SCC 536 turned on the provisions of the Maharashtra Ownership Flats Act 1971, as explained in the subsequent decision of this Court in DLF Limited vs. Manmohan Lowe, (2014) 12 SCC 231. The demand of parking charges is in terms of the ABA and hence it is not possible to accede to the submission that there was a deficiency of service under this head.

55. For the above reasons we have come to the conclusion that the dismissal of the complaint by the NCDRC was erroneous. The flat buyers are entitled to compensation for delayed handing over of possession and for the failure of the developer to fulfil the representations made to flat buyers in regard to the provision of amenities. The reasoning of the NCDRC on these facets suffers from a clear perversity and patent errors of law which have been noticed in the earlier part of this judgment. Allowing the appeals in part, we set aside the impugned judgment and order of the NCDRC dated 2 July 2019 dismissing the consumer complaint. While doing so, we issue the following directions:

(i) Save and except for eleven appellants who entered into specific settlements with the developer and three appellants who have sold their right, title and interest under the ABA, the first and second respondents shall, as a measure of compensation, pay an amount calculated at the rate of 6 per cent simple interest per annum to each of the appellants. The amount shall be computed on the total amounts paid towards the purchase of the respective flats with effect from the date of expiry of thirty-six months from the execution of the respective ABAs until the date of the offer of possession after the receipt of the occupation certificate;

(ii) The above amount shall be in addition to the amounts which have been paid over or credited by the developer at the rate of Rs 5 per square foot per month at the time of the drawing of final accounts; and

(iii) The amounts due and payable in terms of directions (i) and (ii) above shall be paid over within a period of one month from the date of this judgment failing which they shall carry interest at the rate of 9 per cent per annum until payment.

56. The civil appeals are accordingly allowed in the above terms.

57. Pending application(s), if any, shall stand disposed of.

Also