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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.

xxx xxx xxx

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”.

(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.

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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.

xxx xxx xxx

(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.

xxx xxx xxx

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.

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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.