B.B. Patel vs DLF Universal Ltd.

 B.B. Patel vs  DLF Universal Ltd. - Supreme Court Case 2022

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

Civil Appeal No. 1106 of 2009

 B.B. Patel & Ors. .... Appellant (s)

Versus

 DLF Universal Ltd. …. Respondent (s)

J U D G M E N T

L. NAGESWARA RAO, J.

1. This appeal has been filed against the judgment

dated 19.01.2009 of the Monopolies and Restrictive Trade

Practices Commission, New Delhi dismissing a complaint

filed by the appellants under Sections 36-A, 36-B(a) and

(d), 36-D and 36-E read with Sections 2(i) and 2(o) of the

Monopolies and Restrictive Trade Practices Act, 1969

(hereinafter referred to as “MRTP Act”).

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2. An advertisement was issued by the respondent

proposing attractive schemes of payment for the sale of

group housing apartments/flats namely, “Beverly Park-I”

at Qutab Enclave Complex in Gurgaon. According to one

of the schemes, possession of the flats/apartments was

to be handed over on payment of 40% of the cost of the

flat within 2 ½ (two and half) years and the balance

amount was to be paid within equated instalments over

the next seven and half years. On 14.01.1993, the

appellants applied for allotment of 4 apartments Nos.

404A, 404B, 406A and 406B in Tower No. 4, Windsor. By

choosing the aforementioned option, the appellants

sought to make payment for the apartments within a

period of 10 years. According to the application form,

possession was to be delivered to the appellants as

“Licensees” for use and occupation on a monthly License

Fee till the balance sale consideration was paid. Flats

with super area of 270.35 sq. meter at the basic sale

price of Rs.7,525/- per sq. meter were allotted to the

appellants. Apart from the basic sale price, External

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Development Charges (EDC) @ Rs.376/- per sq. meter,

construction deposit of Rs.21.5 per sq. meter and

lumpsum security of Rs.15,000/- were to be paid by the

appellants for each flat.

3. The Apartment Buyer Agreement (hereinafter

referred to as “ABA”) was executed on 23.03.1993. The

relevant clauses of the ABA are as under: -

“2(b). The Apartment allottee shall additionally

pay on demand to the Company his proportionate

share of the cost for the provision of external

electrification (including but not limited to

installation of electric sub-station, meter box,

electric stand-by generator) and all fire safety

measures (including but not limited to fire

fighting equipment and other accessories,

materials and other items required for the

installation and use of the aforesaid equipment.).

In addition, if due to subsequent legislation/Govt.

orders of directives or guidelines or if deemed

necessary by the Company, any further fire

safety measure are undertaken, the proportionate

charges in respect thereof shall also be payable

on demand by the Apartment allottee.

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2(c). The Apartment Allottee shall pay a further

sum of Rs.____________ (Rupees ___________only)

as preferential location charges as per schedule

of payments (Annexure II) annexed hereto.

However, if due to change in the layout plan and

consequent change in the allotment of the

Apartment, it ceases to be so located or there is a

change in the preferential location before or after

the registration of sale deed, the Company shall

be liable only to refund without interest extra

charges recovered for such preferential location

or shall be entitled to recover extra preferential

location charges as the case may be.

 XXX XXX XXX

 XXX XXX XXX

4. The price of the Apartment stipulated

hereinabove is based on the price of all materials

and labour charges pertaining thereto ruling on

the 1st day of January, 1993. If, however, during

the progress of work, there is increase in the

price of the materials used in the construction

work and or labour charges on account of any

reason statutory or otherwise, the cumulative

effect of such increase as assessed by the

Company and intimated to the Apartment

Allottee shall be debited to Apartment Allottee’s

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account who shall pay the same on demand. The

decision of the Company in this respect shall be

final and binding on the Apartment Allottee. The

increased incidence may be charged and

recovered by the Company from the Apartment

Allotee with any one or more of the instalments

or separately but in any case, before giving

possession or deemed possession of the

Apartment.

 XXX XXX XXX

 XXX XXX XXX

16. That the possession of the said premises is

proposed to be delivered by the company to the

Apartment allottee within two and half/three

years from the date of booking of the said

premises by the time aforementioned. If the

completion of the buildings (s) is delayed by

reason of non-availability of steel and or cement

or other building materials or water supply or

electric power or slow down strike or due to a

dispute with the construction agency employed

by the company civil commotion or by reason of

war or enemy action or earthquake of any act of

god or if non-delivery of possession is as a result

of any act, notice, order, rule or notification of the

government and or any other public competent

authority or for any other reason beyond the

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control of the company and in any of the

aforesaid events the company shall be entitled to

a reasonable extension of time for delivery of

possession of the said premises.

The Company as a result of such a contingency

arising reserves the right to alter or vary the

terms and conditions of allotment or if the

circumstances beyond the control of the company

so warrant the company may suspend the

scheme for such period as it may consider

expedient and no compensation of any nature

whatsoever can be claimed by the apartment

allottee for the period of suspension of the

scheme.

In consequence of the company abandoning the

scheme the company liability shall be limited to

the refund of the amount paid by the allottee

without any interest or any other compensation

whatsoever.

 XXX XXX XXX

 XXX XXX XXX

18. THAT, if for any reason, the Company is

unable or fails to deliver possession of the said

premises to the Apartment Allottee within the

time specified in clause 16 above, or within any

further period or periods as agreed to by and

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between the parties hereto, then in such case,

the Apartment Allottee shall be entitled to give

notice to the Company terminating the

Agreement, in which event the Company shall be

at liberty to sell and dispose of the said premises

to any person at such price and upon such terms

and conditions as the Company may deem fit.

The Company shall within a reasonable time from

the date of receipt of such notice and sale of the

premises, refund to the Apartment Allottee the

aforesaid amount of earnest money and the

further amount, that may have been received by

the company for the apartment allottee as part

payment(s) in respect of the said premises

neither party shall have any other claim against

the other in respect of the said premises or

arising out of this Agreement.

 XXX XXX XXX

 XXX XXX XXX

21(d). That the Company shall endeavour to

handover, to the Apartment Allottee, the

Possession of the premises as merely a

“Licencee” on monthly licence basis on the

Apartment Allottee completing payment of 40%

of the sale price and other charges and the

Apartment Allottee agree to pay the balance 60%

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of the sale price in 30 quarterly instalments as

indicated in schedule of payments (Annexure II).

If, however for any reason whatsoever, the

Company is unable to handover

possession/deemed possession of the Apartment

within the agreed time, the Apartment Allottee

shall continue to make payment to the Company

only of the agreed equated quarterly instalments

including interest @ 18% per annum on reducing

balance payment basis. The Licence Fee shall,

however, become payable from the date of the

possession/deemed possession of the

Apartment.”

4. Though the possession of the flats was to be handed

over to the appellants in January 1996, according to the

appellants, construction commenced only in June, 1996.

The appellants continued to make payment of the

instalments as per schedule of payments annexed with

the ABA. An amount of Rs.14,62,552/- was paid till

14.4.1997 for each flat. On 21.04.2007, the respondent

issued a Circular apologizing for the delay in construction

which was due to major improvements being carried out

in specifications and facilities in order to provide a better

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product. The circular also referred to the delay in

obtaining Government approvals. The appellants were

informed about the improvements in the project that

were being introduced which included (a) provision for

extra lift, (b) large entrance hall, (c) imported marble, (iv)

copper pipes for plumbing, (v) standby generator and (vi)

wooden flooring in study room.

5. The respondent sent a demand letter on 02.06.1997

by which the appellants were intimated about the extra

charges which worked out to Rs. 8,78,905/- for each flat

on account of increase in the area by 9.236 sq. meters,

escalation charges on material and labour, external

electrification costs including 24 hours back-up power,

sub-station DG sets, etc. and costs for firefighting

measures including sprinkler system and smoke

detectors which were being provided. On 26.06.1998, the

respondent informed the appellants that the completion

certificate had been received from the authorities and

that the apartments were ready for use and occupation.

The appellants were requested to make the payments of

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outstanding dues and complete the documentation work.

According to the Statement of Account sent by the

respondent, an amount of Rs.19,88,242/- was already

paid and the balance due as on 31.07.1998 was

Rs.7,46,919/-. In response to the demand for payment of

outstanding amount made by the respondent, the

appellants sent a letter dated 12.08.1998. In this letter,

the appellants informed the respondent that they had

paid money in excess of what was due and sought refund

of the excess amount paid. Another reminder was sent by

respondent asking the appellants to remit an amount of

Rs.8,84,287/- which was overdue. Thereafter on

19.01.1999, the respondent cancelled the ABA as the

outstanding amount was not paid. The respondent also

issued cheques refunding the amounts paid for the flat by

the appellants which were not encashed by the

appellants.

6. The appellants filed a complaint bearing RTPE No. 36

of 1999 under Sections 10(a)(i) IV, 36A, 36B(a) and (d),

36D and 36E read with Sections 2(i) and 2(o) of the MRTP

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Act along with Regulations framed thereunder. In the

complaint, the appellants sought for an inquiry into the

commission of various restrictive/unfair/monopolistic

trade practices by the respondent and for an appropriate

cease and desist order against the respondent restraining

the respondent from indulging in similar

restrictive/unfair/monopolistic trade practices. Further,

the cancellation of the allotment of apartment Nos. 404A,

404B, 406A and 406B “Beverly Park-I” at Qutab Enclave

Complex was challenged. The appellants also sought for

setting aside the extra charges levied by respondent by

letter dated 02.6.1997. A direction was sought to the

respondent to pay interest @ 24% per annum on the

instalments paid by the appellants from the date of

payment to the date of handing over of the possession of

the apartments. The appellants also sought for a

direction to the respondent to handover possession of the

apartments forthwith after appropriating the amounts

already paid towards basic sale price and a direction to

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pay liquidated damages for loss of rental income from

15.07.1996 along with Rs.10,00,000/- as compensation.

7. A preliminary objection was raised by the

respondent about the jurisdiction of MRTP to entertain the

complaint. Relying upon judgments of this Court, the

respondent contended that the complaint flows from an

agreement, breach whereof can only be subject matter of

civil suit, and therefore, a complaint of unfair trade

practice cannot be entertained by the Commission. The

Preliminary objection was rejected by the Commission on

the ground that Sections 36-A and 37(1) of the MRTP Act

related to unfair/restrictive trade practices and the

Commission has jurisdiction to examine the validity of the

agreement.

8. The contention of the appellants relating to

monopolistic practice was rejected by the Commission. In

respect of a complaint of unfair trade practice due to the

delay in handing over possession of the apartments, the

Commission examined the relevant clauses of the ABA

and the contentions of the appellants. In particular,

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clauses 16, 18 and 21(d) were referred to by the

Commission to hold that no fixed period of 2 ½ to 3 (two

and half to three) years was agreed upon between the

parties for handing over possession of the apartments.

The Commission was of the view that it is clear from the

ABA that the construction and development would be in

accordance with the building plan as may be approved by

the Director, Town and Country Planning, Government of

Haryana and that possession of the premises was only

proposed to be delivered within 2 ½ to 3 (two and half to

three) years. Clause 16 of the ABA was referred to by the

Commission to observe that the respondent would be

entitled for a reasonable extension of time for delivery of

possession, in case there was any delay. Further, the

Commission was of the view that the allottee was entitled

to issue notice to the company terminating the ABA

under clause 18 thereof, in case, respondent fail to

deliver possession within the time mentioned in clause

16. The Commission concluded that since there was no

misrepresentation made by respondent and there was no

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material produced by the appellants to show that they

entered into the agreement under duress or fraudulent

representation, delay in handing over possession of the

apartments to the appellants did not amount to an unfair

trade practice. In so far as the extra cost demanded by

the respondent resulting in unfair trade practice is

concerned, the Commission was of the opinion that

demand and collection of extra cost was in terms of the

ABA which was agreed to by the appellants and some

instalments towards extra cost have been paid by them.

As the details for the demand of extra charges were

given by the respondent, it cannot be said that there was

any concealment on their part. The Commission further

took note of the fact that the cost of escalation beyond

the contract period was absorbed by the respondent.

Ultimately, the Commission concluded that the appellants

failed to substantiate the allegation of unfair trade

practice on the ground of imposing extra charges.

9. We have heard Mr. M.L. Lahoti, learned Counsel

appearing for the appellants and Mr. Pinaki Mishra,

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learned Senior Counsel appearing for the respondent. The

learned counsel appearing for the appellants submitted

that the appellants entered into an ABA on 23.03.1993

for purchase of apartments after being misled by the

advertisements issued by the respondent. According to

the advertisement and brochures, possession of the

apartments had to be delivered within 2 ½ to 3 (two and

half to three) years from the date of signing of ABA and

on prompt payment of the instalments till that date. The

remaining amount could be paid by the buyers within

next 71/2 (seven and half) years. The construction of the

apartments could not commence even after the expiry of

a period of three years, as the building plans were

approved only on 14.08.1996. It was submitted that since

a clear case of misrepresentation has been made out, the

respondent is guilty of unfair trade practice in not

handing over the possession of the apartment within the

fixed period of 2 ½ to 3 (two and half to three) years. The

appellants submitted that a perusal of the ABA would

show that it is a one-sided contract completely in favour

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of the respondent. The buyers were made to sign on

dotted lines and the conditions in the clauses of the

contract would demonstrate that the ABA is lopsided

tilting in favour of the builder. Such agreements have

been declared to be unconscionable and void by this

Court. Appellants further submitted that the demand of

extra charges by the respondent was impermissible. As

the respondent imposed extra charges which are not

contemplated in the ABA, it is clear that the respondent

has committed an unfair trade practice. The appellants

were not informed at the time of entering into the ABA

that extra charges would be levied. Moreover, the details

of the extra charges were given only after persistent

demands of the appellants.

10. Per contra, the defense of the respondent is that

appellants were not coerced to enter into the ABA. It was

only after understanding the implications of different

clauses in the ABA, that the appellants booked 4

apartments in the project, which is a landmark property

in Gurgaon today. There was no fixed time for handing

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over of the possession and the delay was due to late

approval of plans from the concerned authorities apart

from other unforeseen reasons. It was submitted that it

was open to the appellants to terminate the contract if

they were aggrieved by the delay in handing over

possession of the apartments. The appellants initially

accepted the demand of certain amounts towards extra

charges and paid some instalments towards the same.

Thereafter, the appellants protested payment of extra

cost. The demand of extra cost was permissible

according to the terms of the ABA. As there was no

misrepresentation on the part of the respondent, unfair

trade practice as complained by the appellants has not

been made out. The respondent submitted that majority

of buyers of Beverly Park flats have taken over

possession of their apartments long back without any

complaint. A few others who raised some disputes have

settled with the respondent. It is only the appellants who

have been continuing to litigate for nearly 30 years since

the date of signing of the ABA in 1993. Several attempts

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were made for settling the dispute, which yielded no

result.

11. The MRTP Act, 1969 was meant to ensure that the

operation of the economic system does not result in the

concentration of economic power to the common

detriment, for the control of monopolies, for the

prohibition of monopolistic and restrictive trade practices

and for other connected matters. The Act was made

pursuant to the recommendations made by the

Monopolies Enquiry Commission which submitted its

report on 31.10.1965. Initially, there was no provision

relating to unfair trade practices in the MRTP Act. By

Section 30 of Act 30 of 1984, Sections 36A, 36B, 36D and

36E were inserted in the MRTP Act. Unfair trade practice

as defined in Section 36A of the MRTP Act is a trade

practice which, for the purpose of promoting the sale, use

or supply of any good or for the provision of any services

adopts any unfair method or unfair or deceptive practice

including other practices mentioned therein. The manner

in which the inquiry may be conducted by the

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Commission into unfair trade practices is dealt with by

Section 36B of the MRTP Act. Section 36D of the MRTP Act

provides for the powers which may be exercised by the

Commission while inquiring into an unfair trade practice.

After conducting an inquiry, if the Commission is of the

opinion that the practice is prejudicial to the public

interest, or to the interest of any consumer or consumers

generally, the Commission, may direct that (a) the

practice shall be discontinued or shall not be repeated (b)

any agreement relating to such unfair trade practice shall

be void or shall stand modified in respect thereof in such

manner as may be specified in the order and (c) any

information, statement or advertisement relating to such

unfair trade practice shall be disclosed, issued or

published, as the case may be, in such manner as may

be specified in the order. There was a further

amendment made in the year 1991 by which Section 36C

was inserted in the MRTP Act which dealt with

investigation by Director General before issuing any

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process in certain cases, apart from certain changes

made to Sections 36A and 36D of the MRTP Act.

12. As against this, it is also necessary to deal with

relevant provisions of the Consumer Protection Act, 1986

(hereinafter referred to as the “Consumer Protection Act”)

as the appellants have relied upon judgments of this

Court on unfair trade practice in disputes under the

Consumer Protection Act. The Consumer Protection Act

was meant for better protection of the interest of

consumers and for the purpose, to make provision for the

establishment of consumer councils and other

authorities, for settlement of consumer disputes and for

matter connected therewith. Section 2(r) was introduced

in the Consumer Protection Act by an amendment with

effect from 18.06.1993. Section 2(r) of the Consumer

Protection Act defines unfair trade practice, which is

exactly the same as the definition of unfair trade practice

in MRTP Act. In case a consumer satisfies the consumer

forum that the goods complained against, suffer from any

defect or there is deficiency in service, the opposite party

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can be directed to remove the defect or replace the

goods free from defect. The appropriate forum can direct

removal of deficiency in service and direct the opposite

party to discontinue the unfair trade practice or

restrictive trade practice. The forum also has the power

to award any amount towards compensation for any loss

or injuries suffered by the consumer due to the

negligence of the opposite party.

13. It would be relevant to refer to the law laid down by

this Court in respect of unfair trade practices under the

MRTP Act. In M/s Lakhanpal National Limited v.

M.R.T.P. Commission & Anr.1

, this Court has held as

follows: -

“7. However, the question in controversy has to

be answered by construing the relevant provisions

of the Act. The definition of "unfair trade practice"

in Section 36-A mentioned above is not inclusive or

flexible, but specific and limited in its contents.

The object is to bring honesty and truth in the

relationship between the manufacturer and the

consumer. When a problem arises as to whether a

particular act can be condemned as an unfair

1 (1989) 3 SCC 251

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trade practice or not, the key to the solution would

be to examine whether it contains a false

statement and is misleading and further what is

the effect of such a representation made by the

manufacturer on the common man? Does it lead a

reasonable person in the position of a buyer to a

wrong conclusion? The issue cannot be resolved by

merely examining whether the representation is

correct or incorrect in the literal sense. A

representation containing a statement apparently

correct in the technical sense may have the effect

of misleading the buyer by using tricky language.

Similarly, a statement, which may be inaccurate in

the technical literal sense can convey the truth

and sometimes more effectively than a literally

correct statement. It is, therefore, necessary to

examine whether the representation, complained

of, contains the element of misleading the buyer.

Does a reasonable man on reading the

advertisement form a belief different from what

the truth is? The position will have to be viewed

with objectivity, in an impersonal manner. It is

stated in Halsbury's Laws of England (Fourth

Edition, paragraphs 1044 and 1045) that a

representation will be deemed to be false if it is

false in substance and in fact; and the test by

which the representation is to be judged is to see

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whether the discrepancy between the fact as

represented and the actual fact is such as would

be considered material by a reasonable

representee. "Another way of stating the rule is to

say that substantial falsity is, on the one hand,

necessary, and, on the other, adequate, to

establish a misrepresentation" and "that 'where

the entire representation is a faithful picture or

transcript of the essential facts, no falsity is

established, even though there may have been

any number of inaccuracies in unimportant details.

Conversely, if the general impression conveyed is

false, the most punctilious and scrupulous

accuracy in immaterial minutiae will not render the

representation true."

14. Referring to the amendment made to the MRTP Act

in 1984, this Court in M/s Philips Medical System

(Cleveland) v. Indian MRI Diagnostic & Research

Limited2

, held that the object of the amendment

broadly was to prevent false or misleading

advertisements, or false representations, claiming that

the goods sold are of a certain standard or have certain

qualities, which, in fact, they do not possess.

2 (2008) 10 SCC 227

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Amendment made in 1984 was to ensure that the

persons buying certain goods were not duped or misled

by a representation or advertisement which stated that

these goods have certain features or qualities which, in

fact, they do not possess.

15. In Rajasthan Housing Board v. Parvati Devi3

,

delay in delivering of possession of a building amounting

to unfair trade practice was dealt with in the following

terms: -

“14. For deciding such question, the Commission

has to find out whether a particular act can be

condemned as an unfair trade practice; whether

representation contained a false statement and

was misleading and what was the effect of such a

representation made to the common man. The

issue cannot be resolved by merely holding that

representation was made to hand over the

possession within stipulated period and the same

is not complied with or some lesser constructed

area is given after the construction of the building.

The Commission has to find out whether the

representation, complained of, contains the

element of misleading the buyer and whether

3 (2000) 6 SCC104

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buyers are misled or they are informed in advance

that there is likelihood of delay in delivering the

possession of constructed building and also

increase in the cost. For this purpose, terms and

conditions of the agreement are required to be

examined by the Commission. Not only this, the

Commission is required to consider whether the

Board has adopted unfair method or deceptive

practice for the purpose of promoting the sale, use

or supply of any goods or for the provisions of any

services. Unless there is finding on this issue,

appellant Board cannot be penalized for unfair

trade practice.”

16. The thrust of the complaint preferred by the

appellants is that the respondent is guilty of unfair trade

practice for misrepresentation as there was delay in

handing over possession of the apartments and extra

charges were imposed arbitrarily. According to the

appellants, there was a fixed period of 2½ to 3 (two and

half to three years) during which the apartments should

have been handed over and there was considerable

delay in the completion of the project. Imposition of

extra cost was impermissible as the buyers were not

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informed about such future cost at the time when the

ABA was entered into amounting to a false

representation resulting in an unfair trade practice.

17. In so far as unfair trade practice with reference to

the delay in handing over possession is concerned, the

relevant clauses in the ABA which was entered into

between the parties on 23.3.1993 are clauses 16, 18 and

21(d) of the aABA. According to clause 16, the company

is entitled for reasonable extension of time for delivery

of possession of the premises, in case, possession could

not be delivered within 2

1/2 to 3 (two and half to three)

years from the date of booking. The reasons for which a

reasonable extension of time is available are elaborated

in clause 16. Clause 18 permits the allottee to terminate

the ABA by giving a notice if the company fails to deliver

the possession of the premises within the period

specified in clause 16. The amount of earnest money

and other amounts paid by the allottees shall then be

refunded by the company. According to clause 21(d), the

company shall endeavour to hand over the possession of

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premises to the apartment allottee as a licensee on

monthly license basis on completion of payment of 40%

of the sale price and other charges as per clause 21(d).

There is no doubt that there has been a delay in

completion of the project beyond three years. However,

the appellants did not issue any notice for termination of

the agreement. On the other hand, notices issued by the

appellants on 24.02.1998, 22.04.1998 and 12.08.1998

related to demand of extra costs. The appellants did

not, at any point of time, make a grievance relating to

delay in handing over of possession of the apartment.

The main relief in the complaint filed by the appellants is

to declare the termination of the ABA by the respondent

as void. A further direction was sought for handing over

the apartments without any payments towards the

remaining principal amount and extra charges alongwith

damages and compensation.

18. In Bangalore Development Authority v.

Syndicate Bank4

, this Court examined the question

whether the time is of essence in a construction contract

4 (2007) 6 SCC 711

27 | P a g e

which was the subject matter of dispute therein.

Bangalore Development Authority pleaded that the time

was not the essence of the contract. This Court

concluded that in a contract involving construction, time

is not the essence of the contract unless specified. This

Court referred to letters written by the respondent in

which he did not make time of performance as the

essence of the contract and did not fix even any

reasonable time for performance. This Court also took

notice of the fact that the respondent therein did not

choose to terminate the contract in view of the manifold

increase in the value of the houses. Much later, the

respondent demanded delivery of the property. In the

facts of the said case, this Court held that it could not be

said that the respondent made time the essence of

contract in a manner as recognized by law. The Court

also noted that the value of the house had escalated to

more than 10 times from the date of the Agreement and

the respondent therein had the benefit of such rise in

price and value. Finally, this Court held that there was no

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deficiency in service by the appellant entitling the

respondent for any compensation.

19. In the present case, though there is a clause in the

ABA which mentioned that the possession has to be

handed over within a period of 2

1/2 to 3 (two and half to

three) years from the date of ABA, it cannot be said that

time was made the essence of the contract as a

reasonable extension of time for delivery was

permissible as per clause 16. There was no intention on

the part of the appellants to insist on time being the

essence of contract as they did not terminate the ABA

due to delay in handing over possession of the

apartments which they could have in accordance with

clause 18 of the ABA. As stated earlier, no notice was

issued by them which related to their grievance with

respect to the delay in handing over the possession. The

allegation in the complaint is that the respondent has

committed unfair trade practice by seeking to recover

large sums of money from the buyers without handing

over possession of the flats. In the garb of delay in

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handing over possession of the property, the appellants

are seeking possession of a property, the cost of which is

more than 10 times the price at which it was offered,

without even paying the balance basic sale price.

20. This Court in Colgate Palmolive (India) Ltd. v.

MRTP Commission & Ors.

5

, elucidated the following

five ingredients to constitute an offence of unfair trade

practice: -

“1. There must be a trade practice (within the meaning

of section 2(u) of the Monopolies and Restrictive Trade

Practices Act);

2. The trade practice must be employed for the purpose

of promoting the sale, use or supply of any goods or the

provision of any services;

3. The trade practice should fall within the ambit of one

or more of the categories enumerated in clauses (1) to

(5) of Section 36A;

4. The trade practice should cause loss or injury to the

consumers of goods or services;

5. The trade practice under clause (1) should involve

making a "statement" orally or in writing or by visible

representation.”

5 (2003) 1 SCC 129

30 | P a g e

None of the above ingredients constituting an offence of

unfair trade practice have been substantiated by the

appellants. On a detailed consideration of the material

on record, we are of the considered view that there has

been no misrepresentation made by the respondent

amounting to an unfair trade practice for the delay in

handing over possession of the apartments.

21. The extra charges that were demanded by the

respondent were pursuant to clauses 2(b), 4, 15 and 16

of the ABA. According to the appellants, demand of

extra charges after the commencement of construction

amounted to manipulation of prices which resulted in

increase in the cost to the detriment of the buyers. Extra

cost demanded by the respondent was incurred due to

introduction of a third lift in each tower, space being

provided for laundry facility in basement and larger

entrance lobbies in each tower. Other charges relate to

firefighting system, external electrification and normal

operation and maintenance costs of recreational

facilities. It is pertinent to note that the cost towards

31 | P a g e

escalation of material and labour after the 30.03.1996

was not included in the demand. Even the additional

cost incurred due to revision in the schedule was born by

the respondent. There is no dispute that appellants had

paid initial instalments towards extra charges. The

respondent had also duly informed the appellants of the

details of the extra cost being incurred. We are not in

agreement with the contention of the appellants that

imposition of extra charges is a calculated and preplanned design of the respondent. We are convinced

that there is no misrepresentation made by the

respondent and, therefore, we reject the allegation of

unfair trade practice.

22. Relying upon the judgments of this Court in

Central Inland Water Transport Corporation Ltd. &

Anr. v. Brojo Nath Ganguly and Anr.6

, Pioneer

Urban Land & Infrastructure Limited v. Govindan

Raghavan7

, Wing Commander Arifur Rahman Khan

And Aleya Sultana & Ors. v. DLF Southern Homes

6 (1986) 3 SCC 156

7 (2019) 5 SCC 725

32 | P a g e

Private Limited8 and Ireo Grace Realtech Private

Limited v. Abhishek Khanna & Ors9

, the appellants

have contended that the terms of the ABA are

unconscionable. In Central Inland Water Transport

Corporation Ltd. case (supra), clause 9(1) of Central

Inland Water Transport Corporation Ltd. Service

Discipline and Appeal Rules, 1979, providing for

termination of a permanent employee subject to three

months’ notice was challenged as being violative of

Article 14 of the Constitution of India. Upholding the

judgment of the Calcutta High Court declaring the said

rule as void, this Court observed that Rule 9(1) was

opposed to public policy and was void under Section 23

of the Indian Contract Act, 1872. Delay in handing over

possession of the flat to the purchaser was the subject

matter in Pioneer Urban Land & Infrastructure

Limited (supra). The purchaser in that case filed a

consumer compliant seeking refund of the amount paid

by him in view of the delay in handing over possession

8 (2020) 16 SCC 512

9 (2021) 3 SCC 241

33 | P a g e

of the flat along with interest, which was allowed by the

National Commission. The builder approached this Court

challenging the order passed by the National

Commission. The order of this Court upheld the order of

National Commission while observing that the contract

between the parties therein was one sided. As the

builder could not fulfil its contractual obligation in

offering the possession of the flat within a reasonable

period, this Court directed refund of the entire amount

deposited by the purchaser. Similarly, the issue that fell

for consideration in Wing Commander Arifur Rahman

Khan and Aleya Sultana (supra) was whether the flat

buyers were constrained by the stipulation in clause 14

of apartment buyer agreement which provided for

compensation for delay in completion of the project @

Rs.5/- per sq. feet per month. After examining the

agreement, this Court held that the agreement was one

sided as it provided for payment of interest rate @ 15%

per annum by the allottee in case there is delay of

payment in accordance with schedule as opposed to the

34 | P a g e

stipulation of compensation @Rs. 5/- per sq. ft per

month in case of delay on the part of the builder in

completion of the project. In view of the said conditions,

this Court was of the opinion that the agreement is one

sided and therefore, the consumer fora have jurisdiction

to award compensation more than what was agreed

upon by the parties in the agreement. In Ireo Grace

Realtech Private Ltd. case (supra), the order of the

National Commission directing refund of amount

deposited by purchasers along with appropriate

compensation was approved by this Court. The

concerned apartment buyer’s agreement was examined

therein and it was held that the consumer fora have the

jurisdiction to award just and reasonable compensation

as an incident of their power to direct removal of

deficiency in service.

23. There is no quarrel with the proposition in Central

Inland Water Transport Corporation (supra) that an

unconscionable term in a contract is void under Section

23 of the Indian Contract Act, 1872. The other cases

35 | P a g e

relied upon by the appellants pertain to disputes under

the Consumer Protection Act. All the three cases relate to

either refund of the amounts deposited by the flat buyers

or payment of compensation for delay on the part of the

builder in handing over possession of the flats on a clear

finding of fact that the delay in handing over possession

was solely attributable to the builder. After examining the

terms of the Agreement in those cases, this Court was of

the opinion that entitlement of the flat buyers to

compensation for deficiency in service on the part of the

builder cannot be restricted by the agreements which are

one sided. The said judgments are not applicable in the

instant case. The reliefs claimed in the above cases are

completely different from the main reliefs in the present

case. In the cases cited above, the grievance of the flat

buyers was that since there had been a substantial delay

in delivery of the apartments, the buyer should be

entitled to terminate the agreement and to recover the

amounts already paid along with just and reasonable

interest/compensation which could not be confined to the

36 | P a g e

terms as stated in a one-sided agreement. As against

this, the appellants in this case are essentially seeking

possession of the apartments by declaration of

termination of the agreement by the respondent to be

void, without having to pay any money towards extra

charges or even the basic sale price. There has been no

specific reference to any clause in the ABA by which the

appellants appear to be aggrieved so as to shock the

conscience of this Court to travel beyond its terms in light

of it being an unconscionable contract.

24. There is an averment in para 16 of the complaint

that ABA is an unconscionable contract opposed to public

policy as a consumer has no bargaining power and is an

easy victim of unfair trade practice. There is no reference

to any clause of the ABA, in particular, to substantiate the

allegation. On the other hand, the appellants repeatedly

refer to the allegation of delay in handing over possession

and imposition of extra charges apart from non-refund of

interest on the amounts paid by them. The appellants

are not entitled to any relief on this count as we have

37 | P a g e

already approved the order of MRTP by holding that there

is no unfair trade practice on the part of the respondent.

The compensation sought by the appellants cannot be

granted as Section 12-B of MRTP Act empowers the

Commission to grant compensation only when any loss or

damage is caused to a consumer as a result of a

monopolistic, restrictive or unfair trade practice10. As the

appellants have failed to prove unfair trade practice on

the part of the respondent, they are not entitled to any

compensation.

25. The learned Senior Counsel for the respondent

submitted that the price of each flat is Rs.3.25/- crores

today. In response to the suggestion made by this Court,

he obtained instructions from the respondent and

submitted that the respondent is willing to handover the

flats provided the appellants pay the balance amount

payable i.e., Rs.31,52,933/- for each flat. The breakup of

Rs.31,52,933/- is given as follows: -

1

.

Rs.14,25,684/- is the balance to be paid

towards basic sale price and interest on

10 Girish Chandra Gupta v. U.P. Industrial Development Corn. Ltd. & Ors., (2012) 13 SCC 452

38 | P a g e

instalments/license fee.

2

.

The balance amount payment towards

extra charges is Rs.6,59,179/-

3

.

Maintenance charges till 01.11.2021

calculated at Rs.10,14,281/-

4

.

House tax recoverable is shown as

Rs.53,789/-

5

.

After deducting Rs.19,82,422/- which was

paid by the appellants for each apartment,

the appellants have to pay Rs.31,52,933/-

for each apartment.

26. It is settled law that final relief granted by this

Court need not be the natural consequences of the ratio

decidendi of its judgment. (See: Sanjay Singh & Anr.

v. U.P. Public Service Commission & Anr.

11

 and U.P.

Public Service Commission v. Manoj Kumar Yadav

& Anr.

12

). Though, we have upheld the order of MRTP

Commission, in the interest of justice, the respondent

shall handover possession of the flats to the appellants

on payment of Rs.25,00,000/- (Rupees Twenty-Five Lakhs

Only) for each flat by the appellants.

27. For the foregoing reasons, the appeal is disposed of

with a direction to the appellants to pay Rs.25,00,000/-

11 (2007) 3 SCC 720

12 (2018) 3 SCC 706

39 | P a g e

(Rupees Twenty-Five Lakhs Only) for each flat within a

period of four weeks from today and the respondent

shall handover possession of the flats to the appellants

within a week from the date of payment.

.....................................J

[ L. NAGESWARA RAO ]

 .....................................J.

 [ B.R. GAVAI ]

.....................................J.

 [ B.V. NAGARATHNA ]

New Delhi,

January 25, 2022.

40 | P a g e

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले