Dlf Universal Ltd. v. Ekta Seth & Anr.
The Judgment of the Court was delivere!d by
Dr. MUKUNDAKAM SHARMA, J. 1. L1eave granted.
2. This appeal is filed by the appellant challenging the le-
E gality of the judgment and order dated 3rd July, 2006 passed by
the Monopolies and Restrictive Trade Practices Commission,
New Delhi (for short "the Commission"). By tine aforesaid judg
ment and order the learned Commission made certain obser
vations and recorded findings against the appellant herein,
F which are under challenge in this appeal. The Commission re
corded a finding that the action of the appe,llant in increasing
the cost which forced the respondent from making further pay
ments resulting in the cancellation referred 1to by the appellant
was unfair trade practice and the appellant had no right to for-
G feit the earnest money. Consequently a direction was issued
that the appellant should return the earnest money with interest
thereon @ 9% per annum from the date of withholding the ear
nest money till the date of repayment in respect of the main flat
as well as the parking space in respect of the letters dated 26th/
H 27th May, 1999.
DLF UNIVERSAL LTD. v. EKTA SETH & 1003
'*
ANR. [DR. MUKUNDAKAM SHARMA, J]
3. We may briefly state the facts leading to the aforesaid A
direction of the Commission. The respondent herein booked a
flat along with parking space in the appellant's DLF Regency
Park, Gurgaon by entering into an Apartment Buyer's Agree-
ment on 17th June, 1993. The sale price fixed by both the par-
- 'f ties was at Rs.16,37,448/- payable in 42 installments spread B
over a period of ten years commencing from 9th March, ending
on 9th March, 2003. The respondent, herein admittedly paid all
the installments due upto September 1998 which came to a
sum of Rs.9,94,836/-. But thereafter he did not make any pay-
ment of installment and therefor was considered to be a de-
faulter by the appellant. In the meantime by letter date 19th Feb-
ruary, 1998 the appellant demanded an additional amount of
Rs. 4,21, 474.06 from respondent on account of cost of escala-
tion, increase in area, external electrification, fire fighting sys-
tern and stand-by generators. The said amount was to be paid D
" in four equal bi-monthly installment of Rs.1,05,368.52/- com-}
mencing from 15th March, 1998. The respondent did not honor
the said demand. Consequently, the appellant cancelled the al-
lotment of the flat vide its letter dated 26th May, 1999 and for-
feited the earnest money and returned the balance amount due.
4. The respondent sent a legal notice dated 23rd May, 2001
to the appellant contending that the cancellation of the allotment
of the flat was illegal and arbitrary. The appellant sent a reply to
the legal notice on 25th June, 2001 stating that the deductions
made were lawful and in accordance with the terms of the agree- F
ment.
5. The respondent, however, was not satisfied with the re-
ply sent by the appellant and instead filed an application under
Section 12-B of the Monopolies and Restrictive Trade Prac-
tices Act, 1969 before the Commission for payment of com- G
pensation on the ground of unfair trade practice. It was con-
"f- tended inter alia, by the respondent that the appellant was not
entitled to forfeit the earnest money as they themselves were
unable to give delivery of the flat within the stipulated time and
more particularly, when the appellant has re-sold the said flat at H
""" A a good price, therefore, as the appellant did not incur any loss,
,:.,.~
they could not and were not, entitled to forfeit th13 earnest money.
1.l
The aforesaid submission of the respondent found favour with
the Commission and it recorded the aforesaid finding and al-
lowed the application filed by the respondent, consequent to
8 which the impugned directiol")S were issued which are under
~-
challenge in this appeal.
6. The issue which was raised and urged before us, there-
fore, clearly revolves around the power and jurisdiction of the
appellant in forfeiting the earnest money whiclh was to the tune
c of Rs.1,80,470/-. On going through the record w1e, however, found
that out Rs.1,80,470/- an amount of Rs.1,69,012/-was forfeited
as earnest money, out of which an amount of Rs. 1,62,412/-
was for the flat and an amount of Rs. 6600/- was for the parking
alloted to the respondent. The balance amount i.e Rs.9,571/-
D was forfeited by the appellant on account of interest on the de-
-"
layed payment. -\
7~ On behalf of the learned counsel forthE~ appellant a spe-
cific contention was raised before us that the appellant was
E entitled to forfeit the earnest money in terms of the stipulations
in the agreement arrived at between the parties with mutual
consent. Learned counsel appearing for the appellant has drawn
our attention to the various clauses of the said agreement which
empowered the appellant to deduct the aforesaid earnest
money. In this connection, reference was made to the provi-
F sions contained in clause 8 and 9 of the said ;agreement which ..;
read as follows:
)
"8. That the Company and the Apartment Allottee hereby
agree that the amounts paid on registration to the extent
G of 10% of the sale price of the said premises and on
allotment or in instalments as the case may be, will
collectively constitute the earnest money. Non-fulfillment
by the Apartment Allottee of the terms and conditions of ¥""
application fo( allotment, terms and conditions of sale arid
those of this Agreement as also in the 1event of failure to
DLF UNIVERSAL LTD. v. EKTA SETH & 1005
ANR. [DR. MUKUNDAKAM SHARMA, J]
sign this Agreement by Apartment Allottee within the time A
allowed may entail the forfeiture of the earnest money.
9. That the time of payment of installments as stated in
schedule of payments (Annexure-11) is the essence of this
-y Agreement. It shall be incumbent on the ApartmentAllottee
B to comply with the terms of payment and other terms and
conditions of sale, failing which he shall forfeit to the
Company the entire amount of earnest money and the
Agreement of sale shall stand cancelled and the Apartment
Allottee shall have no right, title, interest or claim of
whatsoever nature on the said premises. The Company c
shall thereafter be free to resell and deal with the said
premises in any manner, whatsoever, at its sole discretion.
The amount(s), if any, paid over and above the earnest
money shall be however refunded to theApartmentAllottee
/.. by the Company without any interest." D
>-
Relying on the said provision it was contended by the
learned counsel for the appellant that the action of the
appellant in forfeiting the earnest money was legal and
justified.
8. Counsel for the respondent, however, refuted the afore-
said position contending, inter alia that the possession was pro-
posed to be given to the respondent on or before June 16, 1996
i.e. within three years from the date of booking, but the said
,. possession was not given even till 1998, therefore, the appel- F ( lant could and would not have resorted to the power of forfeiture
of the earnest money. It was submitted on behalf of the respon-
dent that a sum of Rs. 4,21,474.06/- demanded towards cost of
escalation, increase in area, external electrification, fire fight-
ing system and stand by gene.rators was exorbitant. It was also G submitted that it is unfair on the part of the appellant to demand
,;. - . ,...,._ such a huge amount in such a short span of six months.
9. The aforesaid submission of the respondent was also
advanced before the Commission and the same found favour
with the Commission. The learned Commission observed that H
1006 SUPREME COURT REPORTS [2008) 10 S.C.R.
A substantial portion of the escalation has been attributed towards
creating additional facilities and upgrading the flats, thus put
ting additional and unforeseen burden upon the allottee and that
to, to be fulfilled in short span of time. The Commission further
held that the contract was one sided and the respondent was
B required to sign on the doted lines. While corning to the afore
said conclusion the Commission has relied upon one of its ear
lier order dated 2nd May, 2006 in Grahak Shayak Gurgon Vol
untary Consumer Association and Ors. v. DLF Universal Ltd.
& Anr. wherein in respect to the same complex for which the
c respondent filled the application for allotment, the escalation
made by the appellant has been held to be unfair trade prac
tice.
10. Th.e parties to the contract are governed and bound by
the terms and conditions of the agreement emtered into. In the
D case in hand though it cannot be denied that ithe respondents at
the time of signing the Apartment Buyer's A{~reement was well
aware of the fact that additional amount could be demanded on
account of factors enumerated in clause 4, but what would be
the maximum enhancement was not prescribed in the agree-
E ment. It seem that by inserting the words "the decision of the
Company in this regard would be final and bi.nding on the Apart
ment Allottee" in clause 4 of the agreement the company has
vested in itself unrestricted power to increase the cost.
11. Coming to the second aspect as per clause 16 of the
F agreement it was proposed that the possession could be given
within three years from the date of booking i.e by 161h June, 1996
but the same was not done even till September 1998 and it is
evident from letter dated 22nd February, 199'9 that there was still
some time and further work to be done by th13 appellant to· enable
G it to hand over the possession. As per clause· 18 the only option
given was that if there is delay in delivering the possession then
the allottee would be entitled for refund of entire amount depos
ited with the appellant but without any intemst. In other words as
per the terms of the agreement no liability w!ll accrue upon the
H appellant due to delay in handing the poss
1
ession.
'"): DLF UNIVERSAL LTD. v. EKTA SETH & 1007
ANR. [DR. MUKUNDAKAM SHARMA, J]
12. In the present case we find that the installments were A
duly paid for at least five years and payment was stopped there-
after on the ground that the increase in the cost of the flat was
beyond the means of the respondent and also the fact that ap-
- '( pellant had failed to deliver the possession of the flat in time.
On the other hand as submitted there were bona fide reasons B
on the part of the appellant for their inability to handover the
said possession within the stipulated time and the increase in
cost was on account of factors specifically enumerated in clause
2 (b) and clause 4.
13. Considering the entire facts and circumstances of the c
case, we are of the considered opinion that the interest of jus-
tice would be subserved if we, in exercise of our discretionary
jurisdiction under Article 142 of the Constitution o"f India, direct
;_ that 50% of the amount which was forfeited be refunded by the
? appellant to the respondent within three months from the date D
of this Judgment and the balance 50% would be considered as
forfeited in terms of the provisions of the agreement. However,
if the appellant fails to pay the said amount within the stipulated
period the same will carry an interest @ 8% p.a. which will be
calculated from the date when the abovementioned period ex- E
pires till the date of payment.
14. We also make it clear that this order is passed in the
peculiar facts and circumstances of this case and would not be
> considered as precedence in any other matter. 1 F
15. The appeal stands disposed of in terms of the afore-
said directions. There will be no order as to costs.
S.K.S. Appeal disposed of
l'~>f-