Corporative Hosuing, Contractual Property Price Is Binding In Nature, But Liable For Defects And Delay : NCDRC
The National Consumer Disputes Redressal Commission, presided by Mr. Subhash Chandra and Dr. Sadhna Shanker (member), held that consumer forums cannot arbitrate on pricing disputes since contractual property prices are binding in nature. It was held that pricing disputes come under contractual agreements and not a deficiency of service. Brief Facts of the Case In 2008, the...
The National Consumer Disputes Redressal Commission, presided by Mr. Subhash Chandra and Dr. Sadhna Shanker (member), held that consumer forums cannot arbitrate on pricing disputes since contractual property prices are binding in nature. It was held that pricing disputes come under contractual agreements and not a deficiency of service.
Brief Facts of the Case
In 2008, the Punjab State Federation Cooperative Society launched a housing scheme, and the complainant applied for a super deluxe flat, paying Rs. 1,44,000. He was allotted a flat for Rs. 28,75,000 and paid Rs. 17,25,000 in installments by 2011, with the remaining Rs. 11,50,000 due at possession. Despite the promise of timely possession after eight installments, the society delayed, later demanding an increased cost of Rs. 35,37,000 and Rs. 18,12,507, including unexplained interest. The complainant took possession in December 2015, moved in by July 2017, and found significant deficiencies. An architect's inspection confirmed the defects, but the society took no corrective action. The complainant filed a complaint to the State Commission of Punjab, which allowed the complaint. It directed the cooperative society to have its officials inspect the flat in the presence of the complainant, address any defects found at its own cost, cover the proportionate cost of electricity for all flats, ensure fresh water supply, and compensate the complainant ₹1,00,000 for deficiency in service, mental tension, and harassment. Additionally, the society was to cover litigation expenses due to the unspecified possession period in the allotment letter. Aggrieved by the State Commission's order, the Cooperative Society appealed to the National Commission.
Contentions of the Cooperative Society
The cooperative society argued that according to Clause 8 of the allotment letter, the final cost of the flat would be determined at possession, with any difference payable by the allottee. They emphasized that pricing decisions are within the seller's discretion unless regulated by law, citing legal precedents. The cooperative society also pointed out that the complainant did not raise objections at the time of possession in December 2015, nor for more than a year thereafter, until submitting the complaint. They highlighted Clause 18 of the brochure, requiring the establishment of a cooperative society for maintenance, which had been formed by the allottees themselves, and argued that the society should have been included as a necessary party in the complaint, which the State Commission overlooked.
Observations by the National Commission
The National Commission observed that the cooperative society had stipulated in Clause 8 of the allotment letter that the final cost of the flat would be determined after completion but before possession, amounting to Rs. 35,37,000. They noted that the complainant was bound by this contractual agreement, and therefore, there was no deficiency in service regarding the revised cost. This stance was supported by Premji Bhai Pramar & Ors. v. Delhi Development Authority & Ors. which emphasized that contractual terms regarding property prices are binding between parties, and consumer forums cannot arbitrate on pricing disputes. Furthermore, in Bareilly Development Authority & Anr. v. Ajai Pal Singh & Ors., it was held that the principle was that pricing issues are within the purview of contractual agreements, not deficiencies in service. Regarding the inspection of the flat, the Commission directed the cooperative society to conduct an inspection in the presence of the complainant to address any defects found. The Commission observed that the consumers have the right to raise issues about defects even after taking possession. Regarding electricity charges, the Commission noted that the complainant and other allottees were unfairly charged for unsold flats' electricity load. They directed the cooperative society to bear these charges for the unsold units, citing equitable principles. Regarding delayed possession, the Commission acknowledged the delay of about 6 years in handing over possession, which they deemed unreasonable. The Commission referred to Bangalore Development Authority v. Syndicate Bank, which highlighted that possession must be delivered within a reasonable time, even without a specific contractual deadline. For compensation due to delayed possession, the Commission relied on Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. v. DLF Southern Homes Pvt. Ltd. & Ors., where the Supreme Court established 6% interest as justifiable compensation for delays. Ultimately, the Commission found the compensation of Rs.1,00,00 awarded by the State Commission for mental agony and harassment excessive, citing DLF Homes Panchkula Pvt. Ltd. vs. D.S. Dhanda, where multiple compensations for singular deficiencies were deemed unjustifiable.
The commission modified the State Commission's order and directed the cooperative society to compensate the complainant with 6% interest on Rs. 17,25,000 from the due date of possession to the actual possession date and on Rs. 18,12,507 from the deposit date to the possession date, with a four-week deadline; failure to comply would increase the interest rate to 9% per annum.
Case Title: The Punjab State Federation Of Cooperativehouse Building Societies Ltd. Vs. Hari Singh
Case Number: F.A. No. 4/2019