1. These two (02 nos.) appeals have been filed under section 19 of the Act 1986 respectively apropos the same Order dated 22.04.2019 of the State Commission passed in complaint no. 107 of 2017.
2. We have heard the learned counsel for M/s Pioneer Urban Land & Infrastructure Ltd. and its Managing Director (the ‘builder co.’) and for Mr. Anil Jain and Mrs. Anju Jain (the ‘complainants’). We have also perused the record including inter alia the State Commission’s impugned Order dated 22.04.2019 and the two (02 nos.) memoranda of appeal.
3. The matter relates to a builder-buyer dispute. Briefly, as per the agreement entered into between the builder co. and the complainants, possession of the residential unit in question had to be delivered on or before 29.06.2012. But it was actually delivered on 21.06.2016. For the delay in delivery of possession beyond the assured and committed period, the State Commission, vide its Order of 22.04.2019, has awarded compensation by way of interest at the rate of 12% per annum on the deposited amount for the period of delay i.e. from 29.06.2012 to 21.06.2016. It has also stipulated that the payment be made within three months, failing which the rate of interest shall become 18% per annum for the defaulting period. It has also ordered for refund of Rs. 34,610/-, illegally charged as penal interest by the builder co., with interest at the rate of 12% per annum. It has awarded Rs. 3,00,000/- as compensation for mental agony and physical harassment and Rs. 21,000/- as cost of litigation. It has also made it explicit that the complainants are liable to deposit VAT and GST with the builder co.
4. Appeal no. 963 of 2019 has been filed by the builder co. challenging the compensation awarded the State Commission. Appeal no. 1060 of 2019 has been filed by the complainants seeking enhancement in compensation.
5. Learned counsel for the builder co. does not assail the findings of deficiency in service on its part as have been conclusively determined by the State Commission. He also does not question the period of delay i.e. from 29.06.2012 to 21.06.2016 as computed by the State Commission. He only argues with regard to the quantum of compensation awarded by the State Commission. Regarding the compensation for the delay in delivery, computed by way of interest at the rate of 12% per annum on the deposited amount for the period of delay, as also regarding the stipulation that the rate will become 18% if the payment is not made within three months, he submits that the rate of 12% is unreasonably high and the stipulation is entirely unfair. He submits that the builder co. can only consider rate of 4% per annum, which is by all means fair and reasonable. Learned counsel also questions the lumpsum compensation of Rs. 3,00,000/- granted towards mental agony and physical harassment, submitting that the same is not warranted in addition and may be dispensed with.
Learned counsel for the complainants submits that compensation by way of interest at the rate of 12% per annum on the deposited amount as granted by the State Commission is not in consonance with agreement itself that was executed between the builder co. and the complainants. He draws attention to clause 9.5 of the subject agreement dated 17.03.2010 which inter alia provides that “In the event the First party fails to deliver the possession of the Unit to the Second party within the stipulated time period and as per the terms and conditions of the Buyer’s Agreement then the First party shall pay to the Applicant compensation @18% p.a., on the amounts paid till handing over of the possession.” Learned counsel submits that when the agreement itself provided for rate of interest of 18% per annum in case of delay, the State Commission could not have reduced the same without any reasons given. Submission is that even though, going by the State Commission’s award, the rate has now become 18% per annum since payment has not been made within three months, but irrespective of the same the rate ought to have been 18% ab initio itself since it was part of the binding agreement. He further submits that compensation by way of interest on the deposited amount is for unduly, unjustly and inequitably retaining the complainants’ money beyond the assured and committed period of delivery. Compensation for the metal agony and physical harassment caused to the complainants has been separately provided for in lumpsum. He submits that the amount of Rs. 3,00,000/- on this count as granted by the State Commission is entirely just and fair.
In rejoinder learned counsel for the builder co. submits that rate of “18%” written in clause 9.5 of the agreement was a typographical error. He however fairly admits that this plea was never taken in its written version before the State Commission or even in its memorandum of appeal before this Commission.
In response learned counsel for the complainants submits that it was the builder co.’s own agreement, prepared by the builder co. itself, that the complainants had been asked to enter into. No action was ever taken by the builder co. to rectify this so-called error if it was so by way of any supplementary agreement or correspondence etc. Too obviously, this belated plea, that the rate mentioned in the agreement was a typographical error, is nothing but a baseless defence.
6. We note that the State Commission has provided compensation by way of interest on the deposited amount for the period of delay beyond the assured period of delivery. The same is apparently for unduly, unjustly and inequitably retaining the complainant’s deposited amount beyond the committed period. It has separately provided a lumpsum amount as compensation for mental agony and physical harassment that the complainants were made to suffer. We find no reason to disagree with the State Commission in computing the total compensation for the builder co.’s deficiency in this way.
However, regarding the rate of interest adopted by the State Commission, when the agreement itself provided for a particular rate of interest, the State Commission ought to have either enforced the same in the normal course, or could have, in its wisdom, for reasons given, increased or decreased the same to make the compensation on this count just and equitable commensurate with the loss and injury suffered by the complainants. In a given case, if there is an unfair or unreasonable clause in the agreement, the State Commission, while awarding compensation under the Act 1986, can definitely override the same and provide for just and equitable compensation which in its understanding is commensurate with the loss and injury suffered. But, in the present case, the State Commission has completely disregarded the fair and reasonable compensatory rate provided for and stipulated in the agreement itself without giving any reasons therefor at all. The State Commission appears to have overlooked the specific provision in the agreement and has gone ahead to provide for a lesser rate without any critique or justification. We agree with the learned counsel for the complainants that in the circumstances of the present case the State Commission ought to have retained the rate of 18% as provided for in the agreement itself, there being no good ground to either increase or decrease it.
7. Sequel to the afore discussion, the award made by the State Commission is modified to the extent that the compensation by way of interest on the deposited amount for the period of delay shall be at the rate of 18% per annum. Any discussion on the penal interest part of the impugned Order will be now redundant as the question of penal interest at the rate of 18% per annum after three months will not arise since the same rate ought to be and shall be from the beginning ab initio itself. Rest of the State Commission’s award remains undisturbed.
8. The modified award, as firmed-up herein, shall be made good by the builder co. within six weeks from today, failing which the State Commission shall undertake execution, for ‘enforcement’ and for ‘penalty’, as per the law.
9. The Registry is requested to send a copy each of this Order to the parties in the appeal and to their learned counsel as well as to the State Commission immediately. The stenographer is requested to upload this Order on the website of this Commission immediately.
