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

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