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Supreme Court of India
Venkataraman Krishnamurthy vs Lodha Crown Buildmart Pvt. Ltd on 22 February, 2024
Author: Sanjay Kumar
Bench: Sanjay Kumar, Aniruddha Bose
2024 INSC 132 Non-reportable IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 971 OF 2023 Venkataraman Krishnamurthy and another … Appellants Versus Lodha Crown Buildmart Pvt. Ltd. … Respondent JUDGMENT
SANJAY KUMAR, J
1. National Consumer Disputes Redressal Commission, New Delhi
(in short, ‘NCDRC’), decided Consumer Complaint No. 35 of 2018, vide
order dated 09.11.2022. Disgruntled with the said order, the complainants
therein preferred this statutory appeal.
2. The appellants intended to purchase an apartment in a building to
Signature Not Verified
Digitally signed by
be constructed by the respondent-company at New Cuffe Parade, Wadala,
NIRMALA NEGI
Date: 2024.02.22
16:12:06 IST
Reason:
Mumbai. The parties executed Agreement to Sell dated 29.11.2013
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(hereinafter, ‘the Agreement’), whereby the 4BHK apartment bearing
No. B-602, on the sixth floor of the proposed building named ‘Lodha Evoq’,
with a carpet area of 1966 sq. ft. was allotted to the appellants. The sale
consideration was fixed at ₹7,55,50,956/-. As per the payment schedule,
this sale consideration was to be paid in four sets of ‘application money’,
viz., ₹18,00,000/-, ₹57,55,096/-, ₹74,79,545/- and ₹21,62,700/-
respectively, and the balance amount, being ₹5,83,53,615/-, was to be paid
on initiation of fit outs. It is not in dispute that the appellants paid
₹2,25,31,148/- in all to the respondent-company by the date of institution of
their consumer complaint before the NCDRC and were not in default. As
per the Agreement, possession of the apartment was to be delivered to the
appellants for fit outs by 30.06.2016 or, with a grace period of one year, by
30.06.2017. Alleging that the respondent-company had not delivered
possession of the apartment for fit outs by the said date and that they had
terminated the Agreement, the appellants approached the NCDRC. Their
prayer was for refund of the amount paid by them with compound interest
thereon @ 18% p.a. along with compensation for the harassment, mental
agony and torture suffered by them, apart from litigation costs.
3. By the impugned order dated 09.11.2022, the NCDRC disposed of
the appellants’ consumer complaint with the following directions: –
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‘i. OP shall deliver the actual physical possession of the unit in
question, complete in all respects, as per specifications and with
amenities and facilities, including the club house etc. as promised in
the brochure and/or ABA within 3 months of date of this order.
ii. OP shall arrange a joint inspection of the unit in question
with Complainants/their representative and OP’s representative
within 15 days of date of this order. If as a result of this inspection,
any deficiencies are noticed, the same shall be rectified by the OP
within 30 days from the date of joint inspection. Immediately on
rectification of all the defects, OP shall intimate, in writing, to the
Complainants about the readiness of the unit in all respects for actual
physical possession, giving him 15 days’ time from the date of such
communication to complete various formalities with respect to taking
possession and remitting balance dues, if any, as per the payment
plan/terms and conditions of the ABA. OP shall charge EDCs/IDCs,
and other charges like car parking, IBMS, club membership etc.
strictly as per ABA dated 29/11/2013. No maintenance and/or holding
charges shall be payable by Complainants till the date of actual
physical possession after issuance of communication about
readiness of the unit for physical possession. Complainants shall be
liable to pay service tax/other applicable taxes etc. payable to
government agencies as per prevailing rates notified by the
government and OP shall be bound to duly deposit such amounts to
concerned government authorities within 45 days of receipt of such
amounts under intimation to the Complainants. However, if
government authorities have not raised any demand with respect to
VAT etc. and OP considers that it is likely to be raised in future and
create a liability which has to be borne by the Complainants, OP may
take an indemnity bond from the Complainants in this regard to pay
such amount in future, as and when demanded by the Government
Authorities.
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iii. OP shall pay delay compensation in the form of simple
interest @ 6% p.a. on the total amount paid from the committed date
of possession as per ABA (30/06/2016) till the date of offer of
possession (29/11/2017).
iv. Parties to bear their respective litigation cost.
v. In case the Complainants does not wish to take possession
of the unit in question now, for whatsoever reasons, and wishes to
seek a refund, as prayed for, he shall make a specific request in this
regard, in writing, to the OP within 15 days of this order. In such a
situation OP shall be entitled to deductions/forfeiture of earnest
money as per provisions of the agreement. OP shall, on receipt of
such written request for refund the amount paid by the Complainants
after making deductions towards forfeiture of earnest money, as per
provisions of the agreement, within two months from the date of
request from the complainants.’The appellants are referred to as ‘complainants’ in the order
extracted above while the respondent-company is ‘OP’.
4. Aggrieved by the disposal of their case on the aforestated lines
and more particularly, para ‘v’ of the directions set out hereinabove, the
appellants assert before us their right to terminate the Agreement and claim
unconditional refund of the total amount paid by them with interest thereon.
5. It would be appropriate at this stage to note the terms and
conditions which were arrived at by and between the parties and reduced
to writing in the Agreement executed by them. The relevant definitions, set
out in Clause 1, titled ‘Definition and Interpretation’, read as under: –
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‘1.13 “Date of Offer of Possession (for fit outs)” shall mean the date
as specified in Annexure 2 herein on which the Company shall
endeavor to make available to the Purchaser the Unit for fit outs
subject to the receipt by the Company of the Total consideration and
all other taxes and charges payable under this Agreement. This shall
be the date on which the notice for readiness of the Unit for fit outs is
issued by the Company plus 15 days.
1.14 “Date of Offer of Possession” shall mean that date on which the
occupation certificate is issued (or deemed to be issued as per the
relevant provisions of legislation)’
6. Clause 11 of the Agreement is most relevant for the purposes of
this case. It is titled ‘Fit Outs and Possession’ and the relevant paragraphs
thereof are extracted hereunder: –
‘11. Fit Outs and Possession: –
11.1. Subject to the Purchaser not being in breach of any of the terms
hereof and the Purchaser having paid all the dues and amounts
hereunder including the Total Consideration, the Company shall
endeavor to provide the Unit to the Purchaser for fit outs on or before
the date as set out in Annexure “2” hereto. The Company shall
endeavor to make all necessary submissions to obtain the
occupation certificate in respect of the Unit of the Building and make
available the key Common Areas and Amenities in respect of the
Building within a period of 1 (one) year from the Date of Offer of
Possession (for Fit Outs) as set out in Annexure “2” hereto and this
shall be deemed to be the final possession of the Unit.
11.2. The Company shall without being liable to the Purchaser, be
entitled to a grace period of 1 (One) year beyond the aforesaid dates
mentioned in the Clause 11.1. The date on which the occupation5
certificate is issued (or deemed to be issued as per the relevant
provisions of legislation) shall be deemed to be the “Date of Offer of
Possession”.
11.3. Delay in handover of possession (for fitouts) subject to the
provisions of Clause 11.5 hereof and the Purchaser having paid all
the amounts due and payable hereunder, in the event the Company
fails to offer the possession of the Unit for fit outs by the date stated
in Annexure – 2 and the aforesaid grace period, then within 30 (thirty)
days of expiry of such grace period, the Company shall inform the
Purchaser the revised date by which the Unit is likely to be ready for
being offered for possession for fit out. Upon expiry of such grace
period, the Purchaser may elect to continue with this Agreement in
which case, the date of offer of possession for fit outs mentioned in
Annexure-2 shall stand revised to and substituted by the revised date
of offer of possession (for fit outs) as communicated by the Company.
Alternatively, the Purchaser may by giving notice in writing elect to
terminate this Agreement. Provided that such right to terminate shall
be exercised by the Purchaser within a period of 90 days from the
expiry of the aforesaid grace period. In the event, the letter of
termination is not received by the Company within the said period of
90 days or is received after the said period of 90 days, the Purchaser
shall, without the Company being liable to the Purchaser be deemed
to have elected to continue with the Agreement to Sell and the
Purchaser shall deemed to have waived his right to terminate this
Agreement. In the event that the termination is done within 90 days
from the expiry of the aforesaid grace period, the Company shall
refund to the Purchaser the Total Consideration amount or part
thereof paid by the Purchaser in 12 equal monthly installments
through post dated cheques together with simple interest thereon at
the rate of 12% per annum from the date of receipt of the Total
Consideration or part thereof till repayment. The first monthly
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installment shall commence from the 13 th month of the date of receipt
of the said letter of termination and ending on the 24 th month thereof.
11.5. Notwithstanding the provisions hereof, the Company shall
without being liable to the Purchaser be entitled to reasonable
extension of time for making available the Unit for fit out or
completion of said Building beyond the aforesaid dates mentioned in
Clause 11, if the same is delayed for reasons beyond the control of
the Company including on account of: –
(i) Non-availability of steel, cement, other building material water or
electric supply, or
(ii) Labour problems, shortage of water supply or electric power or by
reason of any act of God, or
(iii) non delivery of possession is as a result of any notice, order, rule
or notification of the Government and/or any other public or
Competent authority or of the court or on account of delay in
issuance or non-issuance or receipt of NOC’s, in issuance,
Occupation Certificate, Approvals etc. or non availability of essential
amenities, services and facilities such lifts, electricity and water
connections or sewage or drainage lines or for any other reason
technical or otherwise or for any reason beyond the control of the
Company, or Economic Hardship
(iv) Delay in receipt of documents and/or Approvals.’
In keeping with and in continuance of Clause 11.1 set out
hereinbefore, Annexure 2 to the Agreement stipulated that the date of offer
of possession for fit outs would be 30.06.2016.
7. Clause 21 of the Agreement is titled ‘Purchaser’s Covenants’. To
the extent presently relevant, it reads as under:
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’21. PURCHASER’S COVENANTS
The Purchaser for himself with intention to bring all persons into
whosoever hands the Unit may come, doth hereby covenant with the
Company as follows:
…..u. The Purchaser acknowledges that as on the Date of Offer of
Possession (for fit outs) works in the Unit shall be complete and the Unit
shall have regular water and electricity supply, as well as lift access. There
may be certain works which may be ongoing in the Building/
development/Property at such time but all due care shall be taken to
ensure that the fit outs of the Unit are not affected in any manner by such
works. It is clarified that the Offer of Possession (for fit outs) entitles the
Purchaser to carry on interior and other related works in the Unit but does
not entitle the said Unit to be occupied till such time that the Occupation
Certificate is received in relation to the said Unit.’
8. Cursory overview of the above clauses manifests that the
respondent-company was to deliver possession of the apartment to the
appellants for fit outs by 30.06.2016 but grace period of one year was
provided under Clause 11.2, whereby the date for delivery of such
possession stood extended till 30.06.2017. Clause 21.u indicates that the
works in the apartment, so far as the respondent-company is concerned,
were to be completed by that date and the apartment was to have regular
water and electricity supply, apart from lift access, and the appellants could
carry on interior and other related works therein. Further, as per Clause
11.1, the respondent-company was required to obtain the Occupation
Certificate in respect of the apartment and make available the key common
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areas and amenities in the building within one year from the date of offer of
possession for fit outs. That was deemed to be the final possession of the
apartment in terms of Clause 11.2. This date for delivery of final possession
was also extendable by one year, i.e., up to 30.06.2018.
9. Significantly, Clause 11.3 makes it clear that delay in delivery of
possession of the apartment for fit outs, subject to Clause 11.5 and
payment of the sale consideration amounts due and payable, would entail
two possible situations. Firstly, the respondent-company could inform the
purchaser, within thirty days of the expiry of the grace period, the revised
date by which the unit was likely to be ready for being offered for
possession for fit outs and if the same is accepted by the purchaser, the
contract would stand extended. Secondly, the clause provides that upon
expiry of the grace period, the purchaser could elect either to continue with
the agreement or, in the alternative, give notice in writing electing to
terminate the agreement. The purchaser was required to exercise this right
within ninety days from the expiry of the grace period.
10. It was not the case of the respondent-company that Clause 11.5
had a role to play in the case on hand and it was not its claim that any sale
consideration amounts payable by the appellants remained outstanding at
that point of time. The respondent-company, however, asserted that it had
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received the Occupation Certificate for the appellants’ apartment on
08.06.2017, which was well before the expiry of the grace period, and it
had called upon the appellants by e-mail on the very same day to make the
balance payment in order to initiate the possession process. It alleged that
the appellants had failed to make the balance payment and the default,
therefore, lay with them. It relied on Clause 11.2, which provided that the
date on which the Occupation Certificate is issued shall be deemed to be
the date of offer of possession and contended that the appellants could not
claim that it had not offered possession of the apartment before expiry of
the grace period. Further, it contended that the appellants wanted to back
out of the contract as they did not wish to bear the additional burden of the
newly introduced Goods and Service Tax payable by them in relation to the
subject transaction.
11. Perusal of the certificate dated 08.06.2017 relied upon by the
respondent-company reflects that it is titled ‘Part Occupancy Certificate’. It
was issued by the Town & Country Planning Division of the Mumbai
Metropolitan Region Development Authority and recorded, under Condition
No. 6 thereof, that the respondent-company should complete the unfinished
internal works before applying for grant of a Full Occupation Certificate of
the building or before handing over physical possession of the premises for
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habitation, whichever was earlier. Notably, in the State of Maharashtra,
‘Occupancy Certificate’ is defined under Regulation 6(7) of the
Development Control Regulations, 1991, and it reads as follows: –
‘6(7). Occupancy Certificate: – On receipt of the acceptance of
completion certificate in the form in Appendix XXI, the owner through his
licensed surveyor/engineer/structural engineer/supervisor of this architect
shall submit to the Commissioner a development completion certificate in
the form in Appendix XVIII with three copies of the completion plan, one
of which shall be cloth mounted for record. The Commissioner may
inspect the work and after satisfying himself that there is no deviation
from the sanction plans, issue an occupancy certificate in the form in
Appendix XXII or refuse to sanction the occupancy certificate within 21
days from the date of receipt of the said completions certificate….’It is clear from the aforestated definition that the ‘Occupancy
Certificate’ denotes completion of the project in all respects and this is
fortified by the format of the ‘Occupancy Certificate’ in Appendix XXII to the
Development Control Regulations, 1991, which reads thus:
‘The full development work of a residential building comprising of ____ +
_____+_____ upper floors on plot bearing C.S. No./CTS No. _____ of
Division/Village ______ at ____ is completed under the supervision of
Shri._______, Lic. Architect, Lic. No. ______; Shri ______, Lic. Site
Supervisor, Lic. No. _______ and Shri. ____, RCC Consultant Lic.
No._______ and as per completion certificate issued by Chief Fire Officer
u/no. ______ dated ______, the same may be occupied and completion
certificate submitted by you is hereby accepted.’11
12. Significantly, the ‘Part Occupancy Certificate’ obtained by the
respondent-company is not in the aforestated format and states to the
effect that a ‘Full Occupation Certificate’ may still have to be obtained
thereafter. The said certificate cannot, therefore, be equated to the
‘Occupancy Certificate’ issued under Regulation 6(7) of the Development
Control Regulations, 1991. The respondent-company’s argument that
issuance of the aforestated certificate should be construed to mean that
there was no delay on its part in delivering possession of the apartment is
utterly misconceived. Clauses 1.13 and 1.14 of the Agreement
demonstrate, in no uncertain terms, that two separate dates for delivery of
possession are contemplated – one being the ‘date of offer of possession
for fit outs’ and the other being the ‘date of offer of possession’. The ‘date of
offer of possession for fit outs’, allowing for the grace period of one year,
was 30.06.2017 and it is the admitted position that the respondent-
company did not offer such possession before that date. Without doing so,
it was not open to the respondent-company to proceed directly to the next
date, viz., the ‘date of offer of possession’ under Clause No. 1.14, which is
linked with the ‘Occupation Certificate’ which it did not even have by that
date. Further, it is not even its case that it made available the key common
areas and amenities, as provided in the Agreement. In effect, expiry of the
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‘date of delivery of possession for fit outs’, with the grace period, being
30.06.2017, the appellants were well within their rights, under Clause 11.3,
in getting issued a legal notice on 01.07.2017 stating that they had not
received any letter of offer of possession for fit outs and that they had
elected to terminate the Agreement. The respondent-company was called
upon, in consequence, to refund the monies paid by them with interest
thereon. The respondent-company, however, disclaimed liability, by its reply
legal notice dated 21.07.2017, constraining the appellants to move the
NCDRC.
13. This being the factual backdrop of the case, the NCDRC noted
that there was ‘some delay’ in handing over of possession of the apartment
by the respondent-company, but opined that it was not ‘unreasonable’,
whereby the appellants could cancel the Agreement and seek a refund.
The NCDRC further opined that in the event they wish to seek a refund, the
respondent-company was entitled to deduction/forfeiture of the earnest
money as per the provisions of the Agreement. Having said so, the NCDRC
observed that the respondent-company was still bound to provide actual
physical possession of the apartment, complete in all respects, and issued
the directions set out hereinabove.
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14. At this stage, it may also be noted that, by letter dated 29.11.2017,
the respondent-company informed the appellants that their apartment was
ready for possession and called upon them to make the payment due at the
earliest to enable the process to hand over possession being initiated.
15. Once the parties committed themselves to a written contract,
whereby they reduced the terms and conditions agreed upon by them to
writing, the same would be binding upon them. In the event such a written
contract provided for the consequences that are to follow in the event of
breach of the conditions by one or the other of the parties thereto, such
consequences must necessarily follow and if resisted, they would be legally
enforceable. In the case on hand, the Agreement stipulated the date of
delivery of possession of the apartment for fit outs with a grace period of
one year. In terms thereof, the date for delivery of possession of the
apartment for fit outs, with the grace period, was 30.06.2017. Admittedly,
the respondent-company did not offer delivery of possession of the
apartment for fit outs by that date. The ‘date of offer of possession’, under
Clause 1.14, linked with issuance of the ‘Occupation Certificate’ was
distinct and separate from the ‘date of delivery of possession for fit outs’
and Clause 11.3 unequivocally provided the consequences in the event of
delay in that regard. The right of election given thereunder to the appellants
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to either continue or to terminate the Agreement within ninety days from the
expiry of the grace period was absolute and it was not open to the NCDRC
to apply its own standards and conclude that, though there was delay in
handing over possession of the apartment, such delay was not
unreasonable enough to warrant cancellation of the Agreement. It was not
for the NCDRC to rewrite the terms and conditions of the contract between
the parties and apply its own subjective criteria to determine the course of
action to be adopted by either of them.
16. In this regard, we may refer to the Constitution Bench decision in
General Assurance Society Ltd. vs. Chandumull Jain and another 1,
wherein it was observed that, in interpreting documents relating to a
contract of insurance, the duty of the Court is to interpret the words in
which the contract is expressed by the parties because it is not for the
Court to make a new contract, however reasonable, if the parties have not
made it themselves. Thereafter, in Rajasthan State Industrial
Development & Investment Corporation vs. Diamond & Gem
Development Corporation Ltd.2, this Court reiterated that a contract,
being a creature of an agreement between two or more parties, is to be
interpreted giving the actual meaning to the words contained in the contract
1
AIR 1966 SC 1644
2
(2013) 5 SCC 470
15
and it is not permissible for the Court to make a new contract, however
reasonable, if the parties have not made it themselves.
17. More recently, in Shree Ambica Medical Stores vs. Surat
People’s Coop. Bank Ltd.3, it was observed that, through its interpretative
process, the Court cannot rewrite or create a new contract between the
parties and has to simply apply the terms and conditions of the agreement
as agreed between the parties. Again, in GMR Warora Energy Ltd. vs.
Central Electricity Regulatory Commission 4, it was observed that Courts
cannot substitute their own view of the presumed understanding of
commercial terms by the parties, if the terms are explicitly expressed. It
was held that the explicit terms of a contract are always the final word with
regard to the intention of the parties.
18. Though the respondent-company would argue that the appellants
accepted and acquiesced with its proposal to dispense with delivery of
possession of the apartment for fit outs, we do not find merit in this
contention. According to the respondent-company, the appellants were
informed of the change proposed by it on 30.05.2017 and 07.06.2017.
However, the response of the appellants on 12.06.2017 discloses that the
‘Part Occupancy Certificate’ was not even made available to them at that
3
(2020) 13 SCC 564
4
(2023) 10 SCC 401
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time and the first appellant specifically requested the respondent-company
to update him as soon as the ‘Occupancy Certificate’ was uploaded on its
website, so that he could initiate steps for securing a loan. He further stated
that his wife and he would like to see the unit before the handing over of
possession. It was agreed by and between the parties that the appellants
would be permitted to visit the apartment on 14.06.2017 but it is an
admitted fact that the apartment was not shown to them on that day. They
were informed that they would not be able to see any other similar unit till
the end of July, 2017 and that their own apartment would be ready for
inspection only in August, 2017 or later.
19. It is not clear as to when the appellants were actually provided with
the ‘Part Occupancy Certificate’ dated 08.06.2017 obtained by the
respondent-company, but it is not in dispute that the appellants took steps
to terminate the Agreement immediately after expiry of the grace period on
30.06.2017, by getting a legal notice issued on 01.07.2017. As there was
no novation of the contract in writing by the parties and as it was not open
to one of the parties thereto, viz., the respondent-company, to unilaterally
change the agreed terms and conditions, the action of the appellants in
terminating the Agreement on the first available date, as provided therein,
cannot be found fault with. Mere exchange of correspondence by and
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between the parties prior to expiry of the grace period, when the appellants
were not even seized of all the facts, cannot be held against them by
treating it as an act in acceptance of or acquiescence with the change
impliedly suggested by the respondent-company.
20. The fact that the appellants were anxious to avoid the additional
tax liability, owing to the introduction of the Goods and Service Tax regime,
cannot be held against them or be imputed to them as an underhand
motive for backing out of the Agreement. Avoidance of tax is neither illegal
nor equivalent to tax evasion and, therefore, the urgency shown by the
appellants in trying to complete the process quickly so as to avoid an
additional tax burden was natural. Further, it cannot be presumed that the
appellants, who were willing to spend over ₹7.5 Crore for the apartment,
would back out at the eleventh hour only because the tax component was
increasing by ₹40 lakh or so.
21. Reliance is placed by the respondent-company on the decision of
this Court in Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna5 in the
context of the rate of interest payable on the refund. However, we find that
the aforestated decision is distinguishable on facts. Therein, the contract
condition provided for payment of delay compensation and in the event of
such delay exceeding twelve months from the end of the grace period, the
5
(2021) 3 SCC 241
18
allottee could opt for termination of the contract and for refund of the
amount paid by him. The contract condition, however, provided that the
refund would be made without any interest thereon. It is in this factual
scenario that this Court, in equity, decreed that the amount should be
refunded with simple interest thereon @ 9% p.a. On the other hand, in the
present case the Agreement itself provided for the interest component on
the refund amount and stipulated the rate thereof as 12% p.a. That being
so, the respondent-company cannot seek reduction of the rate of interest
contrary to the agreed rate.
22. On the above analysis, we have no hesitation in holding that the
NCDRC overstepped its power and jurisdiction in ignoring the binding
covenants in the Agreement and in introducing its own logic and rationale
to decide as to what the future course of action of the parties and more
particularly, the appellants, should be. As we are informed that the
appellants did not choose to act upon the belated offer of the
respondent-company, in its letter dated 29.11.2017, and are still intent on
terminating the Agreement as per Clause 11.3 of the Agreement, we set
aside the order dated 09.11.2022 passed by the NCDRC and allow
Consumer Complaint No. 35 of 2018, directing the respondent-company to
refund the deposited amount of ₹2,25,31,148 /- in twelve equal monthly
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installments, through post-dated cheques, with simple interest thereon
@ 12% p.a., from the date of receipt of the said amount or parts thereof till
actual repayment. The first such installment shall be payable on the 5 th of
April, 2024, and the succeeding installments shall be payable on the fifth of
each calendar month thereafter, till fully paid.
The appeal is allowed to the extent indicated above.
Pending IAs, if any, shall stand closed.
In the circumstances, parties shall bear their own costs.
………………………..,J
(ANIRUDDHA BOSE)
………………………..,J
(SANJAY KUMAR)
February 22, 2024;
New Delhi.
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