Avm Jonnalagadda Rajendra Avsm Vsm Member

1. The Appellants filed the instant First Appeal against the Order dated 07.06.2024 passed by the State Consumer Disputes Redressal Commission, Uttar Pradesh ("State Commission") in CC No. 257 of 2023, wherein the State Commission allowed the Complaint.

2. For convenience, the parties in the present matter are being referred to as per position held in the Consumer Complaint.

3. Brief facts of the case, as per the complaint, are that the OPs are builders/developer/promoters engaged in construction activities. The Complainants were allured by the OPs marketing officials to purchase a flat in the project "Experion Capital" at Gomti Nagar, Lucknow, and thus applied for allotment on 25.12.2017. Upon the payment of Rs.5,00,000, the Complainant was allotted Flat No.703 on 7th Floor in Tower-2 on 06.01.2018. A provisional allotment letter dated 17.03.2018 was issued, followed by execution of Agreement for Sale dated 10.07.2018. As per the Agreement, the carpet area was 111.41 Sq Mts and the total sale consideration was Rs.1,13,68,681, payable as per Construction Linked Payment Plan, with possession to be offered on or before 30.11.2022 along with Completion and Occupancy Certificates. It is stated that the Complainants paid a total sum of Rs. 1,34,98,422.11 (including TDS), allegedly in excess of the agreed sale consideration. The OPs issued an offer of possession dated 05.04.2022 demanding an additional sum of Rs. 28,81,524.70, which the Complainants claim was arbitrary. Upon inspection, the project was found incomplete and without promised amenities. Thereafter, OPs cancelled the allotment of the Complainant vide letter dated 16.09.2022 for non-payment of the demanded amount and forfeited Rs. 29,49,933/-. The Complainants allege that the said cancellation was later admitted to be erroneous by OPs. Under pressure, they paid further amounts in 2023, including maintenance charges, making the total deposited amount Rs.1,34,98,422.11, i.e., Rs.21,29,741.11 in excess of the sale consideration. Despite repeated requests for possession, execution of sale deed and refund of excess amount, the OPs allegedly failed to comply and instead reiterated that the unit stood cancelled.

4. On being issued notice, the OPs filed their written statement, denied the allegations and contended that the complaint was based on incorrect and misleading facts and was devoid of any cause of action. OPs further contended that there was no deficiency in service on their part and, therefore, the complaint was not maintainable under the Consumer Protection Act, 2019. It was also contended that the project was RERA registered vide Registration No.UPRERAPRJ 4224 and, therefore, the matter fell within the jurisdiction of RERA. OPs further alleged that the Complainants were investors and not consumers, and that they had failed to perform their contractual obligations by not making timely payments. The Complainants had suppressed material facts and had not approached this Commission with clean hands, and thus, the complaint was liable to be dismissed with costs.

5. The learned State Commission vide order dated 07.06.2024 allowed complaint with the following directions:

                          "ORDER The complaint is allowed with the following directions. The OPs are directed to deliver Physical possession of the allotted flat No.703, situate at 7th floor, in Experion Capital in Tower No.2. Phase-1, built on Plot No. TCG-1/AV-6, TCG-1/AV-7, Gomti Nagar, Phase-1 Vibhuti Khand, Gomti Nagar, Lucknow, along with the Copy of Occupancy Certificate and Completion Certificate of the Project with all facilities and amenities as well within a period of 30 days from the date of this judgment.

                          The opposite parties are directed to pay interest @10 p.a. on the deposited amount of Rs.1,34,98,422.11 w.e.f. the respective date of deposits till the date of delivery of possession and execution of sale deed of the allotted flat.

                          The opposite parties are also directed to refund the excess amount Rs.21,29,741.11 of the flat in question with interest @10% p.a. from the date of deposit till the date of refund The opposite parties are directed to pay a sum of Rs.10,00,000.00 (Rs. Ten Lakhs) as compensation for mental agony, economical loss, physical torture and for rendering of unfair trade practice.

                          The opposite parties are also directed to pay a sum of Rs.50,000.00 Rs. Fifty Thousands) as cost of the litigation/case."

6. Being aggrieved by the order dated 07.06.2024 passed by the State Commission, OPs filed this Appeal No. 567 of 2024 seeking to:

                          a) Allow the appeal and set aside the final order and judgment passed by the Ld. State Consumer Disputes Redressal Commission, Lucknow, UP on 07.06.2024 (Annexure A-1) in CC No. 257/2023 titled as : Preeti Yadav & Anr. Vs Experion Developers Pvt. Ltd."; and

                          b) Consequently, dismiss the complaint filed by the respondents; and

                          c) And pass such other and further orders in favour of the Appellants as deemed fit and proper in the facts and circumstances of the case."

7. In the grounds of the instant appeal, the Appellants/OPs have mainly contended the following:

                          A. The State Commission failed to appreciate that the OPs fulfilled their contractual obligations by obtaining the Completion Certificate dated 07.01.2022 and offering possession on 05.04.2022, i.e., prior to the stipulated date of 30.11.2022. Thus, there was no delay or deficiency in service. The finding that cancellation and forfeiture were unjustified was erroneous, particularly when no defect in the unit or project was established.

                          B. The Complainants persisted with default in payment, while all demands raised by OPs were strictly as per the Agreement terms. As on 16.09.2022, the Complainants paid only Rs.98,54,888, which was less than sale consideration agreed, and subsequent payments made in 2023 were unauthorized and could not revive the cancelled allotment. The State Commission failed to appreciate that payments made after cancellation do not bind the OPs.

                          C. The State Commission erred in holding that excess payment of Rs.21,29,741.11 was made by the Complainants, ignoring that these amounts were towards taxes and other contractual charges payable, over and above the basic sale consideration. The ledger account clearly reflected Complainants default. The impugned order also suffers duplication of relief by awarding interest on the entire deposited amount as well as separately on the excess paid, while also directing delivery of possession along with refund and interest, conferring an undue benefit upon the Complainants.

                          D. The State Commission failed to appreciate that the Agreement has reciprocal obligations, making timely payment the essence of contract and, in case of default, the OPs were entitled to cancel the allotment and forfeit the earnest money. The Complainants defaulted persistently despite repeated demands, and OPs rightly cancelled the allotment and refunded the admissible amount.

                          E. The project being registered under RERA, the matter fell within the jurisdiction of RERA. The Complainants were investors and not consumers. The State Commission lacked pecuniary jurisdiction as the value of the reliefs claimed exceeded Rs. 2,00,00,000.

8. The learned counsel for the Appellants/OPs reiterated the grounds of appeal and argued that the impugned order dated 07.06.2024 was without jurisdiction, inasmuch as the amount paid by the Complainants towards consideration was only Rs.98,54,888, which was below Rs.1,00,00,000. The pecuniary jurisdiction was to be determined on the basis of the amount paid as consideration, and not on the value of relief claimed, placing reliance upon M/s Pyaridevi Chabiraj Steels Pvt. Ltd. v. National Insurance Company Ltd CC No.833 of 2020 (NCDRC) and Jatin Kumar Verma v. Sumit Garg, 2024 Supreme (Online) (NCDRC) 741. It was further argued that despite specific objection, the State Commission failed to adjudicate this issue and erroneously considered the payments made after cancellation, which were not part of the contract. The impugned order was devoid of proper reasoning. The OPs fulfilled all contractual obligations by obtaining the Completion Certificate dated 07.01.2022 and offering possession on 05.04.2022, prior to the deadline of 30.11.2022. The issue of Completion Certificate by the competent authority established that the project was complete in all respects, and therefore, there was no deficiency in service. It was argued that the State Commission failed to appreciate that there was no finding of any defect in the unit or project. The Complainants were in continuous default in making payments since 2020 despite repeated demand letters, reminders and final notice dated 22.07.2022. It was pointed out that they themselves admitted financial inability in their letter dated 15.10.2021. Consequently, the allotment was lawfully cancelled on 16.09.2022 after due notice, in terms of Clause 14 of the Agreement for Sale. Further, the Agreement contained reciprocal obligations, and under Sections 51 and 52 of the Indian Contract Act, 1872, a party in default could not seek enforcement of the contract. Clause 5 of the Agreement made timely payment the essence of the contract and permitted forfeiture in case of default, which was also in consonance with the provisions of RERA. It was further contended that as on the date of cancellation, the Complainants paid only Rs. 98,54,888 towards sale consideration, and that amounts subsequently deposited in June- July 2023 were unauthorized, as the allotment was already cancelled. The said amounts, along with refundable sums, were duly returned by the OPs on 08.02.2024 through RTGS/NEFT, without prejudice. He argued that despite such refund, the Complainants again remitted amounts to the account of OPs, which were not accepted towards sale consideration. He asserted that the State Commission finding regarding alleged excess payment of Rs. 21,29,741.11, contending that the said conclusion was erroneous as the total sale consideration included various components such as PLC, parking charges, common area charges, taxes, and other statutory dues. The total demand including taxes was Rs.1,38,63,691, and no excess amount was charged. The direction to refund the alleged excess amount and to pay interest @ 10% on the entire deposited sum was unjustified, particularly when there was no delay or deficiency attributable to OPs. The direction to deliver possession of the cancelled unit was unsustainable, as the cancellation dated 16.09.2022 had not been set aside or adjudicated upon. The award of compensation of Rs. 10,00,000 and litigation costs was also assailed as arbitrary and without basis. The learned counsel further argued that the Complainants were not consumers but investors who booked multiple units in the same and other projects for speculative purposes, and therefore did not fall within the definition of "consumer" under the Act, 2019. As regards forfeiture of earnest money, he relied on Hon'ble Supreme Court in Housing Urban Development Authority v. Kewal Krishan Goel & Ors., (1996) 4 SCC 249 and Satish Batra v. Sudhir Rawal, (2013) 1 SCC 345.

9. The learned counsel for Complainants reiterated the facts of the case and argued that the impugned order was detailed and well- reasoned and based on proper appreciation of facts and evidence, and therefore did not warrant interference. He asserted that the Complainants applied for allotment of a flat by depositing Rs. 5,00,000 on 06.01.2018, pursuant to which Flat No.703 in Tower-2 was allotted vide letter dated 17.03.2018, followed by execution of Sale Agreement dated 19.07.2018 for a total consideration of Rs. 1,13,68,681 under a Construction Linked Payment Plan. The Complainants had paid a total amount of Rs. 1,34,98,422.11 (including TDS), which was in excess of the agreed sale consideration by Rs.21,29,741.11. He argued that the Appellants/OPs issued an offer of possession dated 05.04.2022 raising an illegal and arbitrary demand of Rs.28,81,524.70 without any basis. Upon visiting the site, the Complainants found that the project was incomplete and the promised amenities were not available and, despite requests, the Appellants/OPs failed to provide Completion Certificate and Occupancy Certificate. He asserted that despite the Complainants having already paid approximately 90% of the sale consideration prior to cancellation, the Appellants/OPs illegally and unilaterally cancelled the allotment vide letter dated 16.09.2022 and forfeited Rs.29,49,933. The said cancellation was arbitrary, unsustainable and contrary to the facts on record. It was further contended that the officials of OPs had admitted the error in issuing the cancellation letter and assured that the same would be withdrawn. It was further submitted that even after cancellation, the Appellants/OPs continued to raise demands, including maintenance charges and additional amounts and, under pressure, the Complainants deposited further sums in June-July 2023, thereby making the total payment Rs. 1,34,98,422.11. This demonstrated clearly that the cancellation was not bona fide and stood impliedly revoked. The learned counsel also contended that the Appellants/OPs had wrongfully transferred certain amounts to the Complainants' in February 2024, which were immediately returned by the Complainants, thereby indicating that they never accepted the cancellation. It was further argued that continued communications, including SMS demands for maintenance charges, showed that the Appellants/OPs themselves treated the allotment as subsisting. It was argued that the Appellants/ OPs had falsely claimed that only Rs. 98,54,888 was paid, whereas even the cancellation letter recorded payment of over Rs. 1 Crore, and in fact, the total amount paid was Rs.1,34,98,422.11. It was also contended that the so-called Completion Certificate was only a partial certificate and that no Occupancy Certificate had been obtained, thereby establishing that the project was incomplete at the time of offer of possession. The learned counsel further argued that the actions of the OPs in raising illegal demands, cancelling the allotment and forfeiting substantial payments amounted to deficiency in service, unfair trade practice. It was also pointed out that the State Commission had passed an interim order restraining the Appellants/OPs from creating third-party rights in respect of the subject flat. It was thus, prayed that the appeal be dismissed with costs and the impugned order be upheld.

10. We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by learned counsels for both the parties.

11. The main issues for determination are whether the complaint was maintainable before the State Commission under the Act, 2019? And whether there was deficiency in service or unfair trade practice on the part of the OPs in cancelling the allotment and forfeiting, certain part of payments towards consideration and warrant interference?

12. As regards the first issue, the Appellants/OPs have assailed the maintainability of the complaint on multiple grounds, namely, lack of pecuniary jurisdiction, bar on jurisdiction in view of RERA and that the Complainants were investors and not "consumers". At the outset, insofar as the objection regarding jurisdiction under RERA is concerned, it is now well settled that the remedies available under the welfare legislation such as the Consumer Protection Act are in addition to and not in derogation of any other law for the time being in force. The same point has been reiterated by the Hon'ble Supreme Court in Today Homes & Infrastructure Pvt. Ltd. v. Ajay Nagpal, Special Leave to Appeal (C) No(s). 23386/2019, wherein it was held that existence of a remedy under RERA does not oust the jurisdiction of the Consumer Fora. The State Commission, therefore, rightly entertained the complaint. As regards the contention that the Complainants were investors, the Appellants/OPs have failed to place any cogent evidence on record to substantiate that the flat in question was booked for commercial or speculative purposes. Mere bald assertion that the Complainants had booked multiple units, without documentary proof, is insufficient to dislodge their status as "consumers". In the absence of any material to the contrary, the Complainants are held to be consumers within the meaning of the Act.

13. With respect to the objection regarding pecuniary jurisdiction, the Appellants/OPs have contended that the State Commission lacked jurisdiction on the ground that the amount paid by the Complainants towards consideration was below Rs.1,00,00,000, and that jurisdiction ought to have been determined on the basis of such amount. At the outset, it is apposite to refer to the statutory scheme under the Consumer Protection Act, 2019. The pecuniary jurisdiction of the Consumer Fora stands revised as under:

                          * District Commission: up to Rs. 50,00,000/-

                          * State Commission: above Rs. 50,00,000/- and up to Rs. 2,00,00,000/-

                          * National Commission: above Rs. 2,00,00,000/-

14. Plain reading of Section 58(1)(a)(i) of the Act, 2019 makes it abundantly clear that the jurisdiction is to be determined on the basis of the "value of goods or services paid as consideration", and not on the basis of the value of reliefs claimed in the complaint. The legislative intent behind this departure from the earlier regime is to introduce an objective and uniform standard, thereby obviating the possibility of artificial inflation of claims for the purpose of invoking jurisdiction. This legal position now stands authoritatively settled by the Hon'ble Supreme Court in Rutu Mihir Panchal & Ors. vs. Union of India & Ors., 2025 LiveLaw (SC) 503, decided on 29.04.2025, wherein it was held that the value of consideration paid constitutes the determinative factor for jurisdiction, being more certain and rationally connected with the nature of the dispute than self-assessed claims for damages. Applying the aforesaid settled position to the facts of the present case, it is evident that, even as per the OPs own showing, the Complainants had paid at least Rs. 98,54,888 prior to cancellation, while the Complainants have asserted total payments of Rs.1,34,98,422.11 (including subsequent deposits). Thus, the value of consideration paid undeniably falls above Rs. 50,00,000/- and below Rs. 2,00,00,000/-, thereby squarely bringing the matter within the pecuniary jurisdiction of the State Commission. The OPs contention that only the amount paid till the date of cancellation should be considered, and that subsequent payments ought to be excluded are untenable. The record reflects that financial transactions between the parties continued even after the purported cancellation, and the Complainants' case is that such payments were made pursuant to continuing demands raised by the Appellants/OPs.

15. In such circumstances, the entirety of the consideration paid in relation to the transaction cannot be artificially truncated for the purpose of determining jurisdiction. Also, the contention that the complaint lacked cause of action is untenable in view of the admitted facts regarding cancellation of allotment, forfeiture of substantial amounts, and dispute regarding possession and refund. Also, the argument that the jurisdiction should be assessed independently of the actual course of dealings between the parties or by selectively excluding certain payments runs contrary to the very object of the statutory provision. In view of the foregoing, we are of the view that the State Commission rightly exercised pecuniary jurisdiction in entertaining the complaint.

16. With respect to the main issue, the core dispute between the parties revolves around (a) alleged delay and deficiency in the project;

                          (b) validity of the cancellation of allotment; (c) alleged excess payment; and (d) the reliefs granted by the State Commission. In this regard, the Appellants/ OPs contended that they obtained the Completion Certificate dated 07.01.2022 and offered possession on 05.04.2022, prior to the date stipulated i.e. of 30.11.2022 and, therefore, there was no delay or deficiency. However, the Complainants have specifically asserted that the project was incomplete, the promised amenities were not available, and that no valid Occupancy Certificate had been furnished by the OPs at the time of the offer of possession. It is a settled principle that a mere issuance of an offer of possession does not absolve the builder unless the unit is complete in all respects and is supported by requisite statutory approvals, including OC. In the present case, the OPs have not placed on record any material to establish that a valid OC was obtained and communicated to the Complainant at the relevant time. The plea of due completion, therefore, does not inspire confidence.

17. As regards the aspect of payment, admittedly the Complainants deposited substantial amounts. Even as per OPs, over Rs.98,00,000 was paid prior to cancellation. On the other hand, the Complainants established paying Rs.1,34,98,422.11 (including subsequent deposits) to the OPs. The OPs by continuing to raise demands even after alleged cancellation of allotment and also accepting/processing transactions thereafter, gave credence to the contention that the cancellation was neither bona fide nor final. Thus, the cancellation dated 16.09.2022 and forfeiture of Rs.29,49,933 also do not appear to be justified. The Complainants already paid substantial portion of the sale consideration, and there is nothing on record to show that the OPs suffered any loss commensurate with forfeited amount. It is trite law that forfeiture must be reasonable and cannot be punitive in nature as was observed by the Hon'ble Supreme Court in Godrej Projects Development Limited v. Anil Karlekar & Ors., 2025 LiveLaw (SC) 150, decided on 03.02.2025. The OPs contention that subsequent payments made in 2023 were unauthorized and could not revive the contract is also not tenable in view of their own conduct in continuing dealings with the Complainants. The subsequent refund in February 2024, which was admittedly not accepted by the Complainants, also does not validate the earlier alleged cancellation. As regards excess payment, OPs contended that additional components such as taxes, charges etc., were payable over and above the base sale consideration. However, the demand raised by OPs and the total amount received indicate lack of transparency. On due consideration of facts, the State Commission returned a finding regarding excess payment, which does not suffer from perversity warranting interference. The State Commission directions for delivery of possession, payment of interest, compensation and refund of excess amount are based on deficiency in service and unfair trade practice.

18. In view of the above, having been allowed the possession of the unit in question, the Complainant is entitled for delay compensation from the date on which the possession ought to have been handed over as per the terms of agreement till the date of offer of possession along with OC. At the same time, while the total consideration payable was Rs.1,13,68,681 and the additional amount charged by the OP from the Complainant was Rs.21,29,741, making the total payment made by the Complainant as Rs.1,34,98,422, the learned State Commission apparently allowed delay compensation on Rs.1,34,98,422 as well as ordered refund of Rs.21,29,741 with further compensation in the form of interest. This needs interference.

19. As regards the rate of compensation we rely on the Hon'ble Supreme Court order in "Arifur Rehman Khan & Ors. vs. DLF Southern Homes Pvt Ltd & Ors., (2020) 16 SCC 512", has held:

                          69.1. Save and except for eleven appellants who entered into specific settlements with the developer and three appellants who have sold their right, title and interest under the ABA, the first and second respondents shall, as a measure of compensation, pay an amount calculated @ 6 per cent simple interest per annum to each of the appellants. The amount shall be computed on the total amounts paid towards the purchase of the respective flats with effect from the date of expiry of thirty-six months from the execution of the respective ABAs until the date of the offer of possession after the receipt of the occupation certificate.

20. Also, the Hon'ble Supreme Court in DLF Homes Panchkula Pvt. Ltd. Vs. D.S. Dhanda, in CA Nos. 4910-4941 of 2019 decided on 10.05.2019 has held that multiple compensations for singular deficiency is not justifiable. Therefore, the order directing OPs to pay the Complainant Rs.10,00,000 as further compensation is untenable and thus set aside.

21. In view of the foregoing, the instant FA No.567 of 2024 is disposed of with the following directions:

                          ORDER A. The OPs are directed to deliver Physical possession of the allotted flat No.703 at 7th floor in Experion Capital in Tower No.2. Phase-1 at Plot No. TCG-1/AV-6, TCG-1/AV-7, Gomti Nagar, Phase-1 Vibhuti Khand, Gomti Nagar, Lucknow, along with the Copy of Occupancy Certificate and Completion Certificate of the Project with all facilities and amenities as well within a period of 30 days from the date of this order, unless already delivered;

                          B. The OPs are directed to pay delay compensation in the form of simple interest @ 6% per annum on the deposited amount of Rs.1,13,68,681 from the date the delivery of the Flat was due till the date of offer of possession with the Occupancy Certificate. This payment shall be made within two months from the date of this order. In the event of default, the interest liability for such delayed period shall be @ 9% per annum.

                          C. The OPs are directed to refund Rs.21,29,741.11 charged in excess to the Complainant, along with simple interest @ 9% p.a. from the date of deposit till the date of refund. This payment shall be made within two months from the date of this order. In the event of default, the interest liability for such delayed period shall be @ 12% per annum.

                          D. The OPs are directed to pay Rs.50,000.00 as costs of litigation.

22. All pending Applications, if any, are disposed of accordingly.