PARSVNATH DEVELOPERS LTD.versusGAGANDEEP BRAR AND ANOTHER

422                      [2023]REPORTS
               SUPREME COURT    3 S.C.R. 422              [2023] 3 S.C.R.


A                     PARSVNATH DEVELOPERS LTD.
                                       v.
                    GAGANDEEP BRAR AND ANOTHER
                        (Civil Appeal No. 6380 of 2021)
B                               APRIL 13, 2023
                   [M. R. SHAH AND A. S. BOPANNA, JJ.]
             Consumer Protection Act, 1986: Compensation – Award of,
      in a flat buyer agreement – Payment to be borne by the developer
      or by the developer and Housing Board – On facts, in a dispute
C
      between the developer and the Housing Board as regards
      development agreement, arbitrator passed an award directing that
      any amount payable on account of refund of price, interest or
      compensation (if and when finally determined by the National
      Commission/Supreme Court) would be borne by the developer and
D     the Housing Board in the ratio of 70:30 – Award attained finality –
      However, the State Commission as well as the National Commission
      fastened the entire liability to pay compensation solely upon the
      developer – On appeal, held: Compensation in terms of clause 9(c)
      of the Flat Buyer Agreement is to be shared between the developer
      and the the Housing Board in the ratio of 70:30 as apportioned/
E     determined by the sole arbitrator in the award – Orders passed by
      the National Commission and that of the State Commission modified
      to the extent holding the developer liable to pay compensation under
      clause 9(c) of the Flat Buyer Agreement to the extent of 70% and
      30% liability would be upon the Housing Board.
F           Chandigarh Housing Board v. M/s Parasvanath
            Developers Pvt. Ltd., Civil Appeal No. 10748/2016
            decided on 17.12.2019 – referred to.
            CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6380
      of 2021.
G
            From the Judgment and Order dated 05.02.2020 of the National
      Consumers Disputes Redressal Commission, New Delhi in AE No. 4 of
      2016.
            With
H           Civil Appeal Nos. 6383, 6385, 6384, 6382 and 6381 of 2021.
                                      422
PARSVNATH DEVELOPERS LTD. v. GAGANDEEP BRAR AND                               423
                  ANOTHER

      Sachin Datta, Sr. Adv., Rajesh P., Deeptanshu Jain, Ms. Harvinder       A
Chowdhury, Vishal Kumar, Sahieya Singh, Tarun Gupta, Abhishek
Sharma, Ms. Sonam Gupta, Anurag Tandon, Kshitiz Rao, Manish Jha,
Kartikey Gupta, Divyam Agarwal, Mrs. Rachna Joshi Issar, Ms. Nidhi
Tewari, Advs. for the appearing parties.
      The Judgment of the Court was delivered by                              B
      M. R. SHAH, J.
      1. Feeling aggrieved and dissatisfied with the impugned common
order dated 05.02.2020 passed by the National Consumer Disputes
Redressal Commission, New Delhi (for short, ‘National Commission’)
passed in the respective Appeal Executions dismissing the same, the           C
developer – Parsvnath Developers Limited (hereinafter referred to as
the ’Developer’) has preferred four appeals bearing Civil Appeal Nos.
6380/2021, 6383/2021, 6385/2021 & 6384/2021.
      1.1 Feeling aggrieved and dissatisfied with the orders dated
04.10.2017 passed by the National Commission in I.A. Nos. 14331 &             D
14332 of 2017 (for modification) dismissing the said applications, the
Chandigarh Housing Board (hereinafter referred to as the ‘CHB’) has
preferred Civil Appeal Nos. 6382 and 6381 of 2021.
      2. The facts leading to the present appeals in nutshell are as under:
                                                                              E
       That the Chandigarh Administration on 01.12.2005 appointed CHB
as the nodal agency for development of residential, commercial and other
related infrastructure facilities as an integrated project at Rajiv Gandhi
Chandigarh Technological Park in Chandigarh by the name “Pride Asia”.
The bid of the appellant – developer was accepted by the CHB.
Consequently, CHB and the developer entered into a Development                F
Agreement dated 06.10.2006 for grant of development rights in respect
of land measuring 123 acres. The said land was allotted to the appellant
– developer by CHB for constructing residential units, who then advertised
its project for the sale of flats and pent houses in the name and style as
“Parsvnath Pride Asia”.
                                                                              G
      2.1 The respective private respondents applied for allotment of
apartments in the said project. Later, Tripartite Agreements were
executed between the Developer, CHB and the private respondents/flat
owners/allottees. Clause 9(a) of the said agreement provided that the
construction of the flats was likely to be completed within 36 months
                                                                              H
424             SUPREME COURT REPORTS                           [2023] 3 S.C.R.


A     from the date of signing of the Development Agreement between CHB
      and the appellant, i.e., 06.10.2006. That the appellant could not carried
      out the construction as, according to the appellant, the CHB failed to
      handover the possession of the unencumbered land to it for raising the
      construction.
B            2.2 A dispute arose between the appellant – developer and the
      CHB and in terms of the development agreement, the dispute was
      referred to the arbitrator. A former Judge of this Court was appointed as
      the sole arbitrator to adjudicate the dispute between the appellant and
      the CHB.
C             2.3 Pending arbitral proceedings, due to delay in allotment of the
      flats to the allottees, the allottees filed individual complaints before the
      District Consumer Disputes Redressal Commission (for short, ‘District
      Forum’), the State Consumer Disputes Redressal Commission (for short,
      ‘State Commission’) and before the National Commission. The District
      Forum and the State Commission allowed a batch of almost 75 complaints
D
      which were impugned before the National Commission by way of First
      Appeal No. 269 of 2012 and other connected appeals and the revision
      petitions, which were disposed of by the National Commission vide its
      common order dated 05.03.2013. The National Commission modified
      the orders passed by the District Forum and the State Commission to
E     the extent that it had directed payment of uniform rate of interest to the
      allottees, i.e., 9%. Insofar as the payment of compensation under clause
      9(c) of the Flat Buyer Agreement was concerned, the National
      Commission directed that the payment of compensation be made by
      way of interim measure, subject to final outcome of the arbitration
      proceedings between the appellant and the CHB.
F
             2.4 Being aggrieved by the common order dated 05.03.2013 passed
      by the National Commission, the appellant filed Special Leave Petition
      bearing S.L.P.(Civil) Nos. 17133-17134 of 2013 and connected matters.
      This Court vide order dated 10.05.2013 issued notice and stayed the
      operation of the judgment and order dated 05.03.2013 of the National
G
      Commission in part to the extent of the payment of compensation under
      clause 9(c) of the Flat Buyer Agreement.
             2.5 That finally on 09.01.2015, the learned arbitrator passed an
      award in the arbitration proceedings between the appellant and the CHB.
      In the award, the learned arbitrator also held that any amount payable
H
PARSVNATH DEVELOPERS LTD. v. GAGANDEEP BRAR AND                                425
            ANOTHER [M. R. SHAH, J.]

on account of refund of price, interest or compensation (if and when           A
finally determined by the National Commission/Supreme Court) would
be borne by the appellant and the CHB in the ratio of 70:30.
       2.6 That the special leave petitions filed before this Court came to
be disposed of vide order dated 21.04.2015 upholding the order dated
05.03.2013 passed by the National Commission, holding that the                 B
compensation under clause 9(c) of the Flat Buyer Agreement is payable.
At this stage, it is required to be noted that the award passed by the
learned arbitrator was brought to the notice of this Court and it was
submitted that in view of the award passed by the learned arbitrator, the
period that is stipulated in the agreement has been extended from
                                                                               C
06.10.2006 to 05.02.2008. However, this Court observed that the Court
is not inclined to enter into this controversy and if for any reason, the
allottees/buyers file any execution petition for execution of the judgment
and order passed by the Commission, the Developer would be at liberty
to take such objections based on award passed by the learned arbitrator
and if such objections are raised, it is for the executing court to consider   D
the same and pass appropriate orders in accordance with law. With
these observations, this Court disposed of the respective special leave
petitions and civil appeals.
      2.7 That thereafter, by order dated 08.05.2015, the National
Commission disposed of First Appeal No. 352/2014 and connected                 E
appeals in view of the order passed by this Court dated 21.04.2015.
       2.8 That thereafter, the respective buyers – original complainants
filed execution petitions before the State Commission. That the State
Commission passed an order dated 19.01.2016 in E.A. No. 100/2015
directing the appellant – Developer – Parsvnath Developers Ltd. only           F
to pay compensation to the allottees in terms of clause 9(c) of the Flat
Buyer Agreement dated 28.02.2008. Similar orders were passed by the
State Commission in other execution applications filed by the respective
buyers/allottees.
       2.9 Aggrieved by order dated 19.01.2016 passed by the State             G
Commission, the appellant herein filed the present Appeal Execution
before the National Commission. At this stage, it is required to be noted
that the similar Appeal Execution No. 41/2016 was dismissed by the
National Commission, against which the appellant preferred a special
leave petition before this Court being S.L.P.(Civil) No. 9961/2017.            H
426             SUPREME COURT REPORTS                            [2023] 3 S.C.R.


A            In a similar matter being Consumer Complaint No. 19/2011, the
      National Commission by order dated 11.05.2016 directed the appellant
      and CHB to pay principal sum with interest @ 10% and compensation
      to the complainant/buyer/allottee. Both the appellant and CHB were
      directed to borne the aforesaid amount in the ratio of 70:30 as mentioned
      in the award. Challenging the said direction, the CHB filed Civil Appeal
B
      No. 10748 of 2016 before this Court. This Court vide judgment and
      order dated 17.12.2019 dismissed the civil appeal filed by the CHB. This
      Court specifically observed that clause 9(c) is not applicable. This Court
      also observed that the split of 70:30 under the arbitration award must be
      given effect, having attained finality.
C           2.10 That thereafter, by the impugned common order, the National
      Commission has dismissed the respective Appeal Executions, which are
      the subject matter of the present appeals at the behest of the Developer.
             3. Shri Sachin Datta, learned senior counsel has appeared on behalf
      of the Developer and Mrs. Rachna Joshi Issar along with Ms. Harvinder
D     Chowdhury, learned counsel have appeared on behalf of the Chandigarh
      Housing Board.
             3.1 Shri Sachin Datta, learned senior counsel appearing on behalf
      of the Developer has vehemently submitted that the impugned order
      passed by the National Commission is just contrary to the decision of
E     this Court in Civil Appeal No. 10748/2016, titled Chandigarh
      Housing Board v. M/s Parasvanath Developers Pvt. Ltd., decided
      on 17.12.2019, wherein this Court had categorically held that clause
      9(c), i.e., compensation on account of delay in construction is not
      applicable.
F            3.2 It is submitted that in the present case, it was found that both
      the appellant – developer as well as the CHB were responsible for delay
      and therefore clause 9(c) of the Flat Buyer Agreement shall not be
      attracted, more particularly when there has been no fulfilment of conditions
      in clause 9(a).
G           3.3 It is further submitted that even the impugned judgment and
      order/s is/are inconsistent with other orders passed by the National
      Commission in similar Appeal Executions emanating from the same order
      dated 08.05.2015, which was also the subject matter of First Appeals. It
      is submitted that even otherwise, in view of the arbitration award dated
      09.01.2015 which attained finality, it provided that the liability to pay the
H
PARSVNATH DEVELOPERS LTD. v. GAGANDEEP BRAR AND                                 427
            ANOTHER [M. R. SHAH, J.]

amount to the buyers/allottees including the amount of compensation             A
shall be paid in the ratio of 70:30 and even this Court also while disposed
of Civil Appeal No. 10748/2016 specifically observed that split of 70:30
under the arbitration award must be given effect, having attained finality.
The impugned order passed by the National Commission and even the
State Commission directing the appellant-developer to pay the entire
                                                                                B
amount of compensation is therefore unsustainable.
      3.4 Making above submissions, it is prayed to allow the present
appeals preferred by the Developer – Parsvnath Developers Ltd.

       4. While opposing the present appeals, learned counsel appearing         C
on behalf of the CHB have vehemently submitted that under the Tripartite
Agreement/Flat Buyer Agreement and as per clause 9(c), it is the
exclusive liability of the developer to pay the compensation to the buyers/
allottees. It is submitted that the plain language of clause 9(c) of the Flat
Buyer Agreement/Tripartite Agreement, which is a commercial
agreement, is binding upon the parties.                                         D

      4.1 It is submitted that the liability to pay compensation under
clause 9(c) of the Flat Buyer Agreement of the developer has been
affirmed by this Court in the judgment and order dated 21.04.2015.

                                                                                E
       4.2 Making above submissions and relying upon the orders passed
by this Court dated 21.04.2015 in Special Leave Petition (Civil)
Nos.17133-17134/2013 and other allied special leave petitions/civil
appeals and the subsequent order passed by this Court on 17.12.2019 in
Civil Appeal No. 10748/2016, it is prayed to dismiss the appeals preferred
by the developer.                                                               F
       5. We have heard learned counsel for the respective parties at
length.
        At the outset, it is required to be noted that the principal amount
as well as the interest in terms of the order(s) of the State Commission
                                                                                G
have been paid to the respective complainants/allottees and the only
issue involved in these appeals is as to whether the compensation
awarded by the State Commission in terms of clause 9(c) of the Flat
Buyer Agreement is payable solely by the developer – appellant herein
or it is to be shared between the developer and the CHB in the ratio of
70:30?                                                                          H
428            SUPREME COURT REPORTS                           [2023] 3 S.C.R.


A            6. While considering the aforesaid issue, it is required to be noted
      that the learned arbitrator in the award dated 09.01.2015 in a dispute
      between the developer and the CHB had specifically directed that any
      amount payable on account of refund of price, interest or compensation
      (if and when finally determined by the National Commission/Supreme
      Court) would be borne by the appellant and the CHB in the ratio of
B
      70:30. The award passed by the learned arbitrator has attained finality.
      That thereafter, during the hearing of Special Leave Petition (Civil) Nos.
      17133-17134/2013 and other allied connected matters, when the award
      passed by the learned arbitrator was brought to the notice of this Court,
      this Court specifically observed in paragraphs 6 & 7 as under:
C           “6. Further, it would be pertinent to note that the Commission has
            observed that its order would be subject to the pending arbitration
            proceedings between the Developers and the Chandigarh Housing
            Board.
            7. In this context, Shri Rakesh Dwivedi, learned senior counsel
D           would state that in view of the award passed by the Arbitrator the
            period that is stipulated in the Agreement has been extended from
            06.10.2006 to 05.02.2008. We are not inclined to enter into this
            controversy. If, for any reason, the respondent(s)/buyer(s) file
            any execution petition 8 for execution of the judgment(s) and
E           order(s) passed by the Commission, the Developer is at liberty to
            take such objections based on award passed by the Arbitrator. If
            such objections are raised, it is for the executing Court to consider
            the same and pass appropriate orders in accordance with law.”
            Even thereafter when this Court disposed of/dismissed Civil Appeal
F     No. 10748/2016, it is observed in paragraphs 12 & 13 as under:
            “12. We also note that the finding in the arbitration award dated
            09.01.2015 as to the apportionment of liability between the
            Developer and CHB to pay the principal sum and general
            compensation, must be given effect. To this extent, we find merit
G           in the argument raised by the learned Senior Counsel for
            Respondent No. 1 that the prior National Commission order dated
            05.03.2013 and the subsequent order of this Court dated 21.04.2015
            both relegate the inter se apportionment of liability between the
            Developer and CHB to the arbitration award. Thus, the split of
            70:30 under the arbitration award must be given effect, having
H           attained finality.
PARSVNATH DEVELOPERS LTD. v. GAGANDEEP BRAR AND                               429
            ANOTHER [M. R. SHAH, J.]

      13. In any case, we find that such division is well-founded as the      A
      sale proceeds from the flat buyers were apportioned in the 16
      same ratio of 70:30 between the Developer and CHB. This is
      supported by the Escrow Agreement dated 01.06.2007 executed
      by CHB and the Developer in pursuance of the Development
      Agreement dated 06.10.2006. Clause 4(b) of this Escrow
                                                                              B
      Agreement provides that 30% of the sale proceeds in respect of
      the residential units would first be transferred to CHB, and the
      remaining amount shall then be transferred to the Developer. In
      view of this, we find that the amount directed to be paid by the
      National Commission in the impugned order must be paid by the
      Developer and CHB in the ratio of 70:30.”                               C
      7. In view of the above both, the State Commission as well as the
National Commission have seriously erred in fastening the entire liability
to pay compensation solely upon the appellant – developer. The
compensation in terms of clause 9(c) of the Flat Buyer Agreement is to
be shared between the developer and the CHB in the ratio of 70:30 as          D
apportioned/determined by the learned sole arbitrator in the award dated
09.01.2015 and thereafter as observed by this Court while disposing of/
dismissing Civil Appeal No. 10748/2016.
        8. In view of the above, the impugned orders passed by the National
Commission and that of the State Commission are required to be modified       E
to the extent holding the appellant – developer liable to pay compensation
under clause 9(c) of the Flat Buyer Agreement to the extent of 70% and
30% liability would be upon the Chandigarh Housing Board. The present
appeals preferred by the appellant – developer are to be allowed to the
aforesaid extent and the appeals preferred by the CHB are required to
be disposed of in terms of the above.                                         F

       9. Accordingly, in view of the above and for the reasons stated
above, the appeals preferred by the Developer – Parsvnath Developers
Limited are hereby partly allowed. The impugned common judgment
and order dated 05.02.2020 passed by the National Commission in Appeal
Execution No. 4/2016 and other connected Appeal Executions is hereby          G
modified to the extent holding the appellant – developer liable to pay
compensation to the respective allottees/buyers/original complainants to
the extent of 70% and the liability to pay balance 30% of the compensation
in terms of clause 9(c) of the Flat Buyer Agreement would be upon
Chandigarh Housing Board.                                                     H
430              SUPREME COURT REPORTS                       [2023] 3 S.C.R.


A           10. In view of the above order passed in the appeals preferred by
      the Developer, no further orders are required to be passed in both the
      appeals preferred by the Chandigarh Housing Board, i.e., Civil Appeal
      Nos. 6382/2021 & 6381/2021 except ordering disposal of the said appeals.
      Ordered accordingly.
B
      Nidhi Jain                                             Appeals disposed of.
      (Assisted by : Abhishek Pratap Singh, LCRA)




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