{"id":231637,"date":"2006-11-24T00:00:00","date_gmt":"2006-11-23T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/saurabh-prakash-vs-dlf-universal-ltd-on-24-november-2006"},"modified":"2017-12-04T19:32:47","modified_gmt":"2017-12-04T14:02:47","slug":"saurabh-prakash-vs-dlf-universal-ltd-on-24-november-2006","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/saurabh-prakash-vs-dlf-universal-ltd-on-24-november-2006","title":{"rendered":"Saurabh Prakash vs Dlf Universal Ltd on 24 November, 2006"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Saurabh Prakash vs Dlf Universal Ltd on 24 November, 2006<\/div>\n
Author: S.B. Sinha<\/div>\n
Bench: S.B. Sinha, Dalveer Bhandari<\/div>\n
           CASE NO.:\nAppeal (civil)  7960 of 2004\n\nPETITIONER:\nSaurabh Prakash\t\t\t\t\t\t\t\n\nRESPONDENT:\nDLF Universal Ltd.\t\t\t\t\t\t\n\nDATE OF JUDGMENT: 24\/11\/2006\n\nBENCH:\nS.B. Sinha & Dalveer Bhandari\n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T
\nWITH
\nCIVIL APPEAL NO. 5179 OF 2006
\n[Arising out of SLP (C) No. 26795 of 2004]
\nCIVIL APPEAL NO.5180 OF 2006
\n[Arising out of SLP (C) No. 3788 of 2005]
\nS.B. SINHA, J :\n<\/p>\n
\tLeave granted in the SLPs.\n<\/p>\n
 \tExtent of jurisdiction of the Monopolies and Restrictive Trade
\nPractices Commission (for short “the Commission”) is the question involved
\nin these appeals, although they arose under different fact situations.\n<\/p>\n
 \tWe would notice the fact involved in both the appeals separately.\n<\/p>\n
 \tIn Civil Appeal arising out of SLP (C) No. 26795 of 2004, Sunil
\nGulati, Respondent herein entered into an agreement with Respondent No. 1
\n(DLF) for purchasing a flat in a building known as Windsor Court, DLF
\nCity, Gurgaon  and made payment of a sum equivalent to 10% of the agreed
\nprice as earnest money at the first instance.  The balance payment was to be
\nmade in instalments.  Clause 17 of the Agreement entitled the allottee to
\ncancel the allotment at any time and take refund of the amount paid by him
\nwithout interest, but the earnest money was liable to be forfeited in the
\nfollowing terms:\n<\/p>\n
“17. In case the allotment is got cancelled by the
\nAllottee himself, he shall be entitled to the refund
\nof the amount paid by him, after deducting the
\nearnest money, but without payment of any interest
\non the balance amount, paid by him.”\n<\/p>\n
 \tClause 8 of the said Agreement reads as under:\n<\/p>\n
“8. That the time of payment of installments as
\nstated in schedule of payments (Annexure II) and
\napplicable stamp duty, registration fee,
\nmaintenance charges and other charges payable
\nunder this agreement as and when demanded is the
\nessence of this Agreement.  It shall be incumbent
\non the Apartment Allottee to comply with the
\nterms of payment and\/ or other terms and
\nconditions of sale, failing which he shall forfeit to
\nthe Company the entire amount of earnest money
\nand the Agreement of sale shall stand cancelled
\nand the Apartment Allottee shall have no right,
\ntitle, interest or claim of whatsoever nature on the
\nsaid premises.  The company shall thereafter be
\nfree to resell and deal with the said premises in any
\nmanner, whatsoever, at its sole discretion.  The
\namount(s), if any paid over and above the earnest
\nmoney shall however be refunded to the
\nApartment Allottee by the Company without any
\ninterest or any compensation of whatsoever
\nnature.”\n<\/p>\n
 \tRespondent paid some instalments but allegedly was unable to pay the
\nsame from the month of June, 1996.  One of his cheques bounced which fact
\nwas intimated to him by Appellant by a letter dated 7th January, 1998.\n<\/p>\n
 \tHe entered into an Apartment Buyers Agreement on 8.4.1996.  At his
\nrequest a 2 and = year payment plan was converted into a 7 year payment
\nplan in May, 1996.  Respondent did not pay the instalment in due time
\nwherefor allegedly reminders were sent.\n<\/p>\n
 \tA demand letter was also sent to him.  Respondent on or about
\n3.8.1998 showed his inability to make any payment and informed Appellant
\nthat he was in desparate need of funds so as enable him to make a new
\nbeginning in India, requested Appellant to promptly make payment of the
\namount with interest at the rate of 24% per annum.  A reminder was sent by
\nhim on 10th September, 1998.  On 3.11.1998, he suggested that he may be
\nallotted some other smaller property.  The said letter reads as under:\n<\/p>\n
“The Chairman,
\nDLF Universal Limited
\nNew Delhi.\n<\/p>\n
Dear Sir,<\/p>\n
Re: SO8B Windsor Court<\/p>\n
I am writing this letter with the hope that due
\nregard and consideration will be extended to me by
\nyour goodselves.\n<\/p>\n
I was working in Bangkok and due to the Asian
\nfallout I have lost my job and I am back home
\ntrying to settle my family and myself.  I have been
\npaying my instalments against the above stated
\nproperty, but now due to my present
\ncircumstances, I will not be able to pay any further
\ninstalments.  Till date I have already paid a sum of
\nRs. 24,96,685\/- towards the said property.\n<\/p>\n
Since I do not have a house, my immediate need is
\nto settle down my family.  I have been talking to
\nyour sales people and they have suggested me to
\nlook for some other smaller property where I could
\nswap the amount paid against the new property.
\nOn getting a list of the limited available options, I
\nhave chosen property No. L19\/97 in Phase  II (a
\ntown house unit) for which an application form has
\nalready been handed over by me to your sales
\ndepartment.  The cost of the property is Rs.
\n24,85,428\/- plus Rs. 2,60,000\/- towards
\nregistration.\n<\/p>\n
The figure works out as under:\n<\/p>\n
Total amount paid:\tRs. 24,96,685\/- + parking
\ncharges
\nCost of townhouse: Rs. 23,45,428\/-\n<\/p>\n
The amount suits my budget and the balance
\namount should be refunded to me so that I can get
\nthe interiors done and settle down my family.\n<\/p>\n
I have been told that the earnest money of Rs.
\n602,221\/- will not be adjusted against the new
\nproperty and will be forfeited.  Since I am
\nswapping from one property to another I don’t see
\nwhy this amount would not be adjusted against the
\ncost of the townhouse, this townhouse is a
\nbackside unit and is lying unsold since it was
\nconstructed.  The drawback of a backside unit is
\nevident by itself.  To add to this, my dream of
\nproperty an ‘A’ class unit in Windsor Court is not
\ncoming true as I am now settling down for a lesser
\ngrade property.  If I am told that my earnest money
\nwill be forfeited, inspite of the fact that I am
\nswapping from one property to another, I will not
\nbe able to pay any further difference and in that
\ncase would request you to refund my money of Rs.
\n18,94,464\/- immediately so that I can go
\nsomewhere else and buy a house and settle my
\nfamily.\n<\/p>\n
I have always believed in the name DLF and
\ninspite of my present financial situation I would
\nstill like to be a part of your colony.  The rest
\ndepends on your goodselves I hope that my earnest
\nmoney will not be forfeited but adjusted in this
\nnew property as it is a case of swapping.\n<\/p>\n
Hoping for a favourable consideration.\n<\/p>\n
With due regards,<\/p>\n
Sd\/-\n<\/p>\n
SUNIL GULATI
\nNov. 3, 1998″\n<\/p>\n
\tRespondent through his advocate by a notice dated 26th March, 1999
\ncalled upon Appellant to pay the entire amount i.e., Rs. 25,83,625\/-  along
\nwith interest at the rate of 24% as also damages.\n<\/p>\n
 \tAs Appellant did not accede to his request, he filed an application
\nbefore the Commission purported to be under Section 12-B of the
\nMonopolies and Restrictive Trade Practices Act, 1969 (for short “the Act”)
\ncontending:\n<\/p>\n
“The Applicant desired to swap the amount paid
\nfor this property against another property which
\nwas less expensive.  The Applicant indicated his
\nchoice of property in this letter and requested the
\nRespondent to adjust the amount paid in
\ninstallments by the Applicant towards the cost of
\nthe new property.  In the alternative the
\nRespondent was asked to refund the money of the
\nApplicant at the earliest.  Thereafter the Applicant
\nvisited the office of the Respondent and inquired
\nabout the possible options now that it was decided
\nthat the Applicant was not proceeding with the
\npurchase of this property.  The Applicant was told
\nby the Respondent to go in for a corporate discount
\nscheme and then adjust the moneys already paid by
\nhim against a new property which the Respondent
\nwould help him identify.  Thereafter on many
\noccasions the Applicant went to the office of the
\nRespondent but was denied any sort of change in
\nthe situation.  In fact on 28.08.98 the Applicant
\nsent a fax and letter to the respondents from
\nMcCreade Software (Asia) Pvt. Ltd. to clarify that
\nthe applicant was working for them as a SAP
\nConsultant.  The respondent replied to this letter
\nby their letter dated 12.12.98 that they had not
\nreceived any intimation from the applicant on the
\nsubject of swapping and so were closing that
\noption.”\n<\/p>\n
 \tThe application filed by Respondent herein was allowed by the
\nCommission on arriving at the following findings:\n<\/p>\n
“The Respondents did not reciprocate and took no
\nsteps to refund the amount even consequent to the
\nterms of the agreement by retaining the earnest
\nmoney and making the necessary payment to
\nwhich the Applicants were entitled in law. The
\nApplicants sent a legal notice through their
\nCounsel dated March 26, 1999 which also had no
\neffect and the Respondent continued to withhold
\nthe amount which was allegedly and validly due to
\nthe Applicants even according to the terms of the
\nagreement.  These facts illustrate that the
\nRespondent was clearly guilty of unfair and
\nrestrictive trade practices causing immense
\ndamage to the Applicants. In this background, it is
\nneither understood nor appreciated in what context
\nthe Respondent has made lengthy legal
\nsubmissions taking shelter of the law which will
\nnot apply to the facts and circumstances of the
\npresent case.  It is unfortunate that the Respondent
\nonly treated cancellation from 26th February, 2004
\nand claimed recovery from the Applicants for a
\nsum of Rs. 33,21,290\/-.  This is a preposterous
\nclaim and cannot be given any credence.  In this
\nbackground we feel that even the forfeiture of
\nearnest money by the Respondent cannot be
\njustified as immense delay in the refund of the
\namount requested by the Applicants as far back as
\nin 1998 was without any just and bonafide reason
\nand is clearly an arbitrary and discriminatory
\nexercise of power which does not vest in the
\nRespondent.  The gross delay in return of the
\nmoney even in terms of the agreement by the
\nRespondent is an unfair trade practice within the
\nmeaning of Section 36-A as well as restrictive
\ntrade practice within the meaning of Section 2(o)
\nand the Compensation Application filed by the
\nApplicants is maintainable and the Applicants are
\nentitled for the relief as prayed for.  The
\nRespondent has also not proved any loss which
\nmay have occurred by the action of the Applicants
\nto justify retention of alleged earnest money.
\nClause 7 of the agreement may also be referred to
\nreiterate that the Respondent is not entitled to
\nretain the earnest money in the facts and
\ncircumstances of the case.  Furthermore the law is
\nwell settled that the party to a contract taking
\nsecurity deposit from the other party to ensure due
\nperformance of the contract is not entitled to forfeit
\nthe deposit on ground of default when no loss is
\ncaused to it in consequence of such default.”\n<\/p>\n
 \tAppellant was directed to refund the entire amount together with the
\ninterest at the rate of 12% per annum from the date of filing of the
\nCompensation Application till the date of payment.\n<\/p>\n
 \tMr. Anil B. Divan, learned senior counsel appearing on behalf of
\nAppellant principally raised three contentions:\n<\/p>\n
(i)\tThe Commission had no jurisdiction to entertain the application as
\nno case of indulgence in unfair trade practices or restrictive trade
\npractices was made out.\n<\/p>\n
(ii)\tRespondent did not prove as to how he suffered any damage by
\nreason of any action on the part of Appellant.\n<\/p>\n
(iii)\tIn any event, in terms of Clause 17 of the Agreement, refund could
\nbe directed to be made only after deduction of earnest money.\n<\/p>\n
 \tMr. O.P. Dua, learned counsel appearing on behalf of Respondent, on
\nthe other hand, would submit that Appellant in the instant case has accepted
\nthat a sum of more than Rs. 25 lakhs was paid.  The only contention raised
\nby Appellant, it was pointed out, was that such refund of the amount would
\nbe subject to deduction of the earnest money.  It was contended that
\nAppellant had been constructing flats.  It had been promoting sale of
\napartments including promotion of the services which would come within
\nthe purview of the provisions of the said Act.\n<\/p>\n
 \tThe fact involving Civil Appeal No. 7960 of 2004 is as under:\n<\/p>\n
\tOn 3.6.1995, Appellant made an application to DLF for sale of an
\napartment and a parking space for a total consideration of Rs. 54,37,664 and
\npaid Rs. 5.48 lakhs as earnest money.  In the application form, it was stated
\nthat the possession would be given in 4 years.  Under clause 9 of the
\napplication form, it was stated that the existing fire fighting safety code\/
\nregulations were already covered and extra fire-fighting charges would be
\nlevied if further measures are required to be taken due to additional
\nrequirements imposed by the authorities.  It was also stipulated that DLF
\nwould send the buyer an Apartment Buyers’ Agreement which the buyer
\nwould have to sign.\n<\/p>\n
 \tOn 8.8.1998, DLF sent Appellant an unsigned Apartment Buyers’
\nAgreement for his signatures thereupon.  In this Agreement, DLF
\nunilaterally altered the time period for handing over the possession.  It
\nextended the time period by a grace period of 90 days in terms of clause 15
\nof the application form.  It also added several other exclusion clauses on
\nvarious grounds and limited their liability for delay.  However, Appellant
\nsigned the Agreement and returned it to DLF.\n<\/p>\n
 \tOn 31.10.1995, DLF sent the Agreement signed by it at a future date,
\ni.e., 6.11.1995.  It had subsequently taken this date, i.e., 6.11.1995 as the
\nbase date for computing the compensation payable by it for delay.  On the
\nother hand, it purported to have counted delay on Appellant’s part with
\nreference to the date of application and, thus, it had burdened Appellant with
\ninterest for such prior period also.  However, the said period is not a long
\none.\n<\/p>\n
 \tAppellant contended that Respondent had taken an advantage of eight
\nmonths for which no compensation had been paid to anyone.  Even at the
\nrate it had offered compensation, this could have come to Rs. 120,000 for
\nAppellant’s flat.  Since there were 134 flats in Windsor Court, DLF had
\ngained well over Rs. 1.5 crores.\n<\/p>\n
 \tIn a letter dated 14.10.1999 issued by DLF, it was stated that the
\napartment would be completed by January, 2000.  It demanded an additional
\namount of Rs. 2,08,099.22 which included:\n<\/p>\n
(i)\tRs. 50,943.33 towards additional fire-fighting equipment.\n<\/p>\n
(ii)\tRs. 59,767.53 towards increase in area of 3.026 sq. mts.\n<\/p>\n
(iii)\tRs. 97,388.76 towards DG sets to provide about 7 to 10 KW per
\napartment.\n<\/p>\n
 \tIt was further stated in the aforesaid letter:\n<\/p>\n
“We are in the process of submitting these figures
\nfor independent auditing and we wish to assure
\nyou that if during the process of audit any
\nreduction is effected, the same shall be credited to
\nyour account”.\n<\/p>\n
 \tHowever, it allegedly never gave any accounts despite repeated
\nrequests.  Appellant paid these amounts.\n<\/p>\n
 \tOn 29.5.2000, Appellant requested DLF for the audited statement of
\naccounts.  DLF in its letter dated 9.6.2000 stated that the audit was not
\ncomplete and it would inform him thereabout as and when the same is
\ncompleted.  It has not supplied audited accounts.  However, it has only
\noffered to show Appellant the accounts in its office when they become
\navailable.\n<\/p>\n
  \tOn 25.7.2000, Appellant asked DLF for a statement of accounts
\nwhich was denied by DLF.\n<\/p>\n
 \tOn or about 31,7.2000, DLF asked Appellant to furnish an
\nundertaking in the following terms:\n<\/p>\n
Clause 11\t“.Further, I hereby agree not to
\nraise any claim or dispute on any account
\nwhatsoever.”\n<\/p>\n
Clause 16\t“That I\/We undertake not to approach
\nHSEB for individual electric connection to the
\nApartment in view of the Power Back up being
\nprovided by the Company.”\n<\/p>\n
 \tAppellant objected to the said terms of undertakings and on 5.8.2000
\noffered to submit the same without the objectionable clauses.  DLF gave no
\nreply thereto.\n<\/p>\n
 \tIt may be mentioned that as of this date Appellant had paid all
\nprincipal amounts.  There was no demand for interest outstanding as on that
\ndate. On 11.11.2000, Appellant invoked Clause 18 of the agreement and
\ncancelled his booking.  He also exercised his option of taking immediate
\nrefund of the full amount in the alternative.  As DLF did not act according to
\nClause 18, Appellant filed the application before the Commission.\n<\/p>\n
 \tThe Commission held that Appellant was not seeking possession of
\nthe apartment but was seeking refund of the money deposited by him along
\nwith interest.  It stated:\n<\/p>\n
“Looking at the totality of facts and circumstances
\nas discussed in the foregoing order, a case of unfair
\ntrade practice as defined in Section 36-A of the
\nMRTP Act, is made out against the respondent.
\nWe have, therefore, no hesitation in holding that
\nthe applicant is entitled to refund of the amount
\ndeposited by him with interest.  Although the
\napplicant has claimed interest @20% per annum
\nand he has also cited case law in support of his
\nclaim.  He has also referred to the ruling of
\nHon’ble Supreme Court to justify award of interest
\n@18% per annum.  However, in Ghaziabad
\nDevelopment Authority Vs. Union of India’s case
\n(supra), the Hon’ble Supreme Court has
\nconsidered that it is reasonable to award interest
\n@12% per annum.  In a recent case in Sunil Gulati
\nand another Vs. DLF Universal Limited in
\nCompensation Application No. 222\/1999 also,
\nwhich is similar to the instant case, the MRTP
\nCommission has ordered refund of the amount
\ndeposited by the applicant at a rate of 12% per
\nannum.\n<\/p>\n
In view of the above, we order that the respondent
\nshall refund the entire amount of Rs. 57,45,763.22
\n(Rupees fifty seven lacs forty five thousand seven
\nhundred sixty three and paise twenty two only)
\ndeposited by the applicant with interest @ 12% per
\nannum from the date of filing of the present
\nCompensation Application till the date of refund.
\nWe also award costs which are quantified at Rs.
\n30,000=00 (Rupees thirty thousand only).  The
\nrespondent is directed to comply with this order
\nwithin two months from the date of receipt of this
\norder and file an affidavit of compliance within
\ntwo weeks thereafter.”\n<\/p>\n
 \tAppellant, who appeared in person, submitted that in the instant case
\nSection 36-A of the Act was clearly attracted as the action on the part of
\nDLF would come within the purview  of the expression “for the purpose of
\npromoting the sale”.  According to him, as there had been no cancellation,
\nthe offer remained valid and, thus, he was entitled to purchase the self-same
\nflat at the rate which was prevailing in the year 2000 upon deducting the
\namount which has already been paid.\n<\/p>\n
 \tMr. Anil Diwan, learned senior counsel appearing on behalf of
\nRespondent would submit that the Commission in the facts and
\ncircumstances of this case had no jurisdiction to grant any relief to Appellant
\nand in any event, it has not determined the jurisdictional fact.\n<\/p>\n
 \tThe Act was enacted to provide that the operation of the economic
\nsystem does not result in the concentration of economic power to the
\ncommon detriment for the control of monopolies, for the prohibition of
\nmonopolistic and restrictive trade practices and for matters connected
\ntherewith or incidental thereto.  The Act, therefore, primarily deals with the
\ncontrol of monopolies and prohibition of monopolistic and restrictive trade
\npractices.\n<\/p>\n
 \t‘Trade Practice’ has been defined in Section 2(u) to mean any practice
\nrelating to the carrying on of any trade, and includes\n<\/p>\n
(i)   \tanything done by any person which controls or affects the price
\ncharged by, or the method of trading of, any trader or any class of
\ntraders,\n<\/p>\n
(ii)   \ta single or isolated action of any person in relation to any trade.\n<\/p>\n
 \tSection 2(o) defines ‘restrictive trade practice’ to mean a trade
\npractice which has, or may have, the effect of preventing, distorting or
\nrestricting competition in any manner  and in particular,<\/p>\n
(i)  \twhich tends to obstruct the flow of capital or resources into the stream
\nof production, or\n<\/p>\n
(ii)\twhich tends to bring about manipulation of prices, or conditions of
\ndelivery or to affect the flow of supplies in the market relating to
\ngoods or services in such manner as to impose on the consumers
\nunjustified cost or restrictions.\n<\/p>\n
 \tThe expression ‘service’ has been defined in Section 2(r) in the
\nfollowing terms:\n<\/p>\n
“service” means service which is made available to
\npotential users and includes the provision of
\nfacilities in connection with banking,  financing,
\ninsurance chit fund, real estate, transport,
\nprocessing, supply of electrical or other energy,
\nboard or lodging or both, entertainment,  amuse-
\nment or the purveying of news or other
\ninformation, but does not include the rendering of
\nany service free of charge or under a contract of
\npersonal service.”\n<\/p>\n
 \t‘Unfair trade practice’ has been defined in Section 36-A of the Act  to
\nmean a trade practice which, for the purpose of promoting the sale, use or
\nsupply of any good or for the provision of any services, adopts any unfair
\nmethod or unfair or deceptive practice including any of the practices
\nenumerated therein.\n<\/p>\n
 \tSub-section (1) of Section 36-A enumerates various kinds of visible
\nrepresentation.\n<\/p>\n
 \tThe power of the Commission is enumerated under Section 12 of the
\nAct.  Section 12-A provides for the power of the Commission to grant
\ntemporary injunction.  Power to award compensation by the Commission is
\ncontained in Section 12-B of the Act, sub-section (1) whereof reads as
\nunder:\n<\/p>\n
“12B. Power of the Commission to award
\ncompensation.(1) Where, as a result of the
\nmonopolistic or restrictive, or unfair trade practice,
\ncarried on by any undertaking or any person, any
\nloss or damage is caused to the Central
\nGovernment, or any State Government or any
\ntrader or class of traders or any consumer, such
\nGovernment or, as the case may be, trader or class
\nof traders or consumer may, without prejudice to
\nthe right of such Government, trader or class of
\ntraders or consumer to institute a suit for the
\nrecovery of any compensation for the loss or
\ndamage so caused, make an application to the
\nCommission for an order for the recovery from
\nthat undertaking or owner thereof or, as the case
\nmay be, from such person, of such amount as the
\nCommission may determine, as compensation for
\nthe loss or damage so caused.”\n<\/p>\n
 \tThe power of the Commission to award compensation, therefore, is
\nrestricted to a case where loss or damage had been caused as a result of
\nmonopolistic or restrictive or unfair trade practice.  It has no jurisdiction
\nwhere damage is claimed for mere breach of contract.\n<\/p>\n
 \tIt was not a case where a notice of inquiry had been directed.  If there
\nhad been no inquiry, the petitioner has to file a suit wherein the relevant
\nparticulars are required to be stated as to how loss or damage occurred
\nowing to one or the other trade practices referred to therein.  The power of
\nthe Commission is not in addition to the power of the civil court.  An
\napplication under Section 12-B of the Act would not lie where a complaint is
\nconfined to a breach of contract.  Purchases on the part of Respondent must
\nnecessarily relate to one or the other trade practices contemplated under sub-
\nsection (1) of Section 12-B of the Act.\n<\/p>\n
 \tThe question came up for consideration before this Court in Colgate
\nPalmolive (India) Ltd. v. MRTP Commission and Others<\/a> [(2003) 1 SCC
\n129] and Hindustan Ciba Geigy v. Union of India and Others<\/a> [(2003) 1 SCC
\n134].  In Colgate Palmolive (supra), it was stated:\n<\/p>\n
“16. A bare perusal of the aforementioned
\nprovision would clearly indicate that the following
\nfive ingredients are necessary to constitute an
\nunfair trade practice:\n<\/p>\n
1. There must be a trade practice [within the
\nmeaning of Section 2(u) of the Monopolies and
\nRestrictive Trade Practices Act].\n<\/p>\n
2. The trade practice must be employed for the
\npurpose of promoting the sale, use or supply of any
\ngoods or the provision of any services.\n<\/p>\n
3. The trade practice should fall within the ambit
\nof one or more of the categories enumerated in
\nclauses (1) to (5) of Section 36-A.\n<\/p>\n
4. The trade practice should cause loss or injury to
\nthe consumers of goods or services.\n<\/p>\n
5. The trade practice under clause (1) should
\ninvolve making a “statement” whether orally or in
\nwriting or by visible representation.”\n<\/p>\n
\tYet again in Premier Engineers v. Taj Rubber Industries and Another,<\/a>
\n[(2005) 6 SCC 610], following Colgate Palmolive (supra), this Court
\ncategorically held:\n<\/p>\n
“12. In the present case, we find that in the
\napplication filed by the respondent applicant apart
\nfrom saying that the defective machinery fitted
\nwith old\/second-hand parts had been supplied after
\nconsiderable delay the respondent did not say a
\nword regarding the actual loss and injury or a
\nnotional loss caused to the respondent. There is
\nnothing on the record to suggest that any actual
\nloss or injury was caused to the respondent. The
\napplication filed by the respondent applicant was
\nnot only cryptic but lacked in particulars to fall
\nwithin the definition of unfair trade practice as
\ndefined in Section 36-A read with Section 2(u) of
\nthe MRTP Act. The MRTP Commission in its
\norder has not adverted to this fact and has not
\nrecorded a finding as to any actual loss or injury
\ncaused to the respondent.”\n<\/p>\n
 \tWe have noticed hereinbefore that the issue addressed before us
\nveered around the question as to whether it was a sheer breach of contract or
\ndeficiency in service.  There had been allegations and counter-allegations.
\nThe fact remains that the applicant before the Commission did not pay the
\namount.  They intended to get refund of the amount which had already been
\npaid.  They sought for grant of interest also.\n<\/p>\n
\tIn Civil Appeal arising out of SLP (C) No. 26795 of 2004, Appellant
\nwas entitled to deduct the amount of earnest money.  A distinction exists
\nbetween the security and earnest money.  The Commission unfortunately
\nlost sight of the said issue.\n<\/p>\n
 \tIn H.U.D.A. and Another v. Kewal Krishan Goel and Others,<\/a> [(1996)
\n4 SCC 249, the law was stated in the following terms:\n<\/p>\n
“7. A combined reading of the aforesaid three
\nclauses of letter of allotment together with the
\nadvertisement issued indicates that the scheme of
\nallotment was that an applicant could make an
\napplication along with 10% of the tentative price
\nof the land as earnest deposit. On receipt of the
\nletter of allotment he is required to indicate either
\nhis letter of acceptance or letter of refusal within
\n30 days from the date of the receipt of the
\nallotment letter. In case of acceptance he would be
\nfurther required to make an additional deposit
\nwhich deposit together with the earnest money
\nalready deposited would constitute 25% of the
\ntotal tentative price. If he fails to accept the
\nallotment within 30 days from the date of receipt
\nof the letter then the authority is entitled to forfeit
\nthe earnest money. Further the balance amount
\ncould be deposited in instalments. Thus under the
\nallotment in question an allottee was required to
\ndeposit 10% of the tentative price of the land as
\nearnest money which is given to bind the contract
\nand the said earnest money could be forfeited by
\nthe authority in case the allottee does not
\ncommunicate the letter of refusal within 30 days
\nfrom the date of receipt of the allotment order.”\n<\/p>\n
 \tIn the facts of the matter, it was held that the demand was not
\nunreasonable.\n<\/p>\n
 \tYet again in Union of India v. Rampur Distillery & Chemical Co. Ltd.<\/a>
\n[(1973) 1 SCC 649], this Court stated:\n<\/p>\n
“3. Only one contention was urged on behalf of the
\nappellants before us: that the security deposit was
\ntaken from the respondents in order to ensure the
\ndue performance of the contract and respondents
\nhaving defaulted, the entire amount was liable to
\nbe forfeited. A similar contention was advanced
\nbefore this Court but was rejected in Maula Bux v.
\nUnion of India.The<\/a> appellant therein had entered
\ninto a contract with the Government of India for
\nthe supply of certain goods and had deposited a
\ncertain amount of security for the due performance
\nof the contract. As in the instant case, it was
\nstipulated in the contract there that the amount of
\nsecurity deposit was to stand forfeited in case the
\nappellant neglected to perform his part of the
\ncontract. On the appellant committing default in
\nthe supply, the  Government rescinded the contract
\nand forfeited the security deposit. It was held by
\nthis Court that forfeiture of earnest money under a
\ncontract for sale of property does not fall within
\nSection 70 of the Contract Act, if the amount is
\nreasonable, because the forfeiture of a reasonable
\nsum paid as earnest money does not amount to the
\nimposition of a penalty. But, “where under the
\nterms of the contract the party in breach has
\nundertaken to pay a sum of money or to forfeit a
\nsum of money which he has already paid to the
\nparty complaining of a breach of contract, the
\nundertaking is of the nature of a penalty”. It was
\nfurther held that the amount deposited by way of
\nsecurity for guaranteeing the due performance of
\nthe contract cannot be regarded as earnest money.”\n<\/p>\n
\tThe distinction between a security and an earnest money has also been
\npointed out by this Court in Maula Bux v. Union of India<\/a> [(1969) 2 SCC
\n554] in the following terms:\n<\/p>\n
“4. Under the terms of the agreements the amounts
\ndeposited by the plaintiff as security for due
\nperformance of the contracts were to stand
\nforfeited in case the plaintiff neglected to perform
\nhis part of the contract. The High Court observed
\nthat the deposits so made may be regarded as
\nearnest money. But that view cannot be accepted.
\nAccording to Earl Jowitt in Dictionary of English
\nLaw at p. 689; “Giving an earnest or earnest-
\nmoney is a mode of signifying assent to a contract
\nof sale or the like, by giving to the vendor a
\nnominal sum (e.g. a shilling) as a token that the
\nparties are in earnest or have made up their
\nminds”. As observed by the Judicial Committee in
\nKunwar Chiranjit Singh v. Har Swarup:\n<\/p>\n
“Earnest money is part of the purchase price when
\nthe transaction goes forward; it is forfeited when
\nthe transaction falls through, by reason of the fault
\nor failure of the vendee.”\n<\/p>\n
In the present case the deposit was made not of a
\nsum of money by the purchaser to be applied
\ntowards part payment of the price when the
\ncontract was completed and till then as evidencing
\nan intention on the part of the purchaser to buy
\nproperty or goods. Here the plaintiff had deposited
\nthe amounts claimed as security for guaranteeing
\ndue performance of the contracts. Such deposits
\ncannot be regarded as earnest money.”\n<\/p>\n
 \tReferring to Section 74 of the Indian Contract Act, it was observed:\n<\/p>\n
“There is authority, no doubt coloured by the view
\nwhich was taken in English cases, that Section 74
\nof the Contract Act has no application to cases of
\ndeposit for due performance of a contract which is
\nstipulated to be forfeited for breach, Natesa Aiyar
\nv. Appayu Padayachi; Singer Manufacturing
\nCompany v. Raja Prosad; Manian Pattar v. Madras
\nRailway Company. But this view is no longer good
\nlaw in view of the judgment of this Court in Fateh
\nChand case. This Court observed at p. 526:
\n“‘Section 74 of the Indian Contract Act deals with
\nthe measure of damages in two classes of cases: (i)
\nwhere the contract names a sum to be paid in case
\nof breach, and (ii) where the contract contains any
\nother stipulation by way of penalty,’ ‘The
\nmeasure of damages in the case of breach of a
\nstipulation by way of penalty is by Section 74,
\nreasonable compensation not exceeding the
\npenalty stipulated for.’ ”\n<\/p>\n
The Court also observed:\n<\/p>\n
“It was urged that the section deals in terms with
\nthe right to receive from the party who has broken
\nthe contract reasonable compensation and not the
\nright to forfeit what has already been received by
\nthe party aggrieved. There is however no warrant
\nfor the assumption made by some of the High
\nCourts in India, that Section 74, applies only to
\ncases where the aggrieved party is seeking to
\nreceive some amount on breach of contract and not
\nto cases whereupon breach of contract an amount
\nreceived under the contract is sought to be
\nforfeited. In our judgment the expression “the
\ncontract contains any other stipulation by way of
\npenalty” comprehensively applies to every
\ncovenant involving a penalty whether it is for
\npayment on breach of contract of money or
\ndelivery of property in future, or for forfeiture of
\nright to money or other property already delivered.
\nDuty not to enforce the penalty clause but only to
\naward reasonable compensation is statutorily
\nimposed upon courts by Section 74. In all cases,
\ntherefore, where there is a stipulation in the nature
\nof penalty for forfeiture of an amount deposited
\npursuant to the terms of contract which expressly
\nprovides for forfeiture, the court has jurisdiction to
\naward such sum only as it considers reasonable,
\nbut not exceeding the amount specified in the
\ncontract as liable to forfeiture, and that,
\n“There is no ground for holding that the expression
\n‘contract contains any other stipulation by way of
\npenalty’ is limited to cases of stipulation in the
\nnature of an agreement to pay money or deliver
\nproperty on breach and does not comprehend
\ncovenants under which amounts paid or property
\ndelivered under the contract, which by the terms of
\nthe contract expressly or by clear implication are
\nliable to be forfeited.”\n<\/p>\n
 \tDLF, therefore, cannot be said to be wrong in exercising its right to
\nforfeit the earnest amount.\n<\/p>\n
 \tIt may be so, but we have noticed hereinbefore that Respondent in its
\nletter dated 3.11.1998 gave three offers.  It was expected that at least the
\namount would be refunded after deducting the earnest amount.  DLF,
\nhowever, did not do so.\n<\/p>\n
 \tIn Civil Appeal arising out of SLP (C) No. 26795 of 2004, we,
\ntherefore, are of the opinion that the interest of justice would be subserved if
\nwe, in exercise of our discretionary jurisdiction under Article 142 of the
\nConstitution of India keeping in view the facts and circumstances of this
\ncase, direct DLF to pay a sum of Rs. 37 lakhs to Respondent herein.  Such
\npayment should be made within four weeks from date failing which interest
\nat the rate of 9% per annum shall be levied till actual payment is made.  The
\nappeal is disposed of accordingly.\n<\/p>\n
 \tIn Civil Appeal No. 7960 of 2004, the principal contention of
\nAppellant was his insistence on the part of the developer not to deposit
\nfurther amount by way of additional fire fighting equipments as the same
\nwas not necessary.  Our attention has further been drawn to the fact that DLF
\ninsisted on furnishing of undertakings which is contrary to law.  Appellant
\nalso questions the levy of holding charges and\/ or maintenance charges.
\nThere had been some delay also in handing over of the possession.  DLF,
\nhowever, appears to have treated all the allottees on similar terms.\n<\/p>\n
 \tThe validity or otherwise of the conditions imposed by DLF is not in
\nquestion.  It was, therefore, not a case which could be entertained by the
\nCommission.  However, we suggested as to whether Appellant herein can be
\ngiven possession of the flat on his clearing of the dues, DLF agreed thereto.
\nThe total amount payable in respect of the flat is a sum of Rs.17,27,612\/-.
\nDLF has agreed to deduct a sum of Rs.93,745\/- which was agreed to be paid
\nby way of compensation.  The total amount payable, therefore, would be
\nRs.16,33,867\/-.   The amount has been calculated on the premise that the
\nregistration would be done in the name of Appellant’s wife and\/or daughter
\non the rate of stamp duty and charges payable in case of family allottee.\n<\/p>\n
\tWe furthermore clarify that Appellant, upon getting possession of the
\nsaid flat shall be treated by DLF at par with all others similarly situated.
\nAppellant may pay the aforementioned amount of Rs.16,33,867\/- within
\neight weeks from date, whereupon, Respondent shall execute and\/or register
\nthe requisite documents in favour of the wife of Appellant.\n<\/p>\n
\tWe are passing this order on broad consensus arrived at by the parties
\nas also in exercise of our jurisdiction under Article 142 of the Constitution of
\nIndia.\n<\/p>\n
 \tThis order shall not be treated to be a precedent.\n<\/p>\n
 \tWe are, therefore, of the opinion that in a case of this nature the
\nCommission had no jurisdiction.  Civil Appeal No. 7960 of 2004 and Civil
\nAppeal arising out of SLP (C) No. 3788 of 2005 are disposed of accordingly.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Saurabh Prakash vs Dlf Universal Ltd on 24 November, 2006 Author: S.B. Sinha Bench: S.B. Sinha, Dalveer Bhandari CASE NO.: Appeal (civil) 7960 of 2004 PETITIONER: Saurabh Prakash RESPONDENT: DLF Universal Ltd. DATE OF JUDGMENT: 24\/11\/2006 BENCH: S.B. Sinha & Dalveer Bhandari JUDGMENT: J U D G M E N T […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-231637","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nSaurabh Prakash vs Dlf Universal Ltd on 24 November, 2006 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/saurabh-prakash-vs-dlf-universal-ltd-on-24-november-2006\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Saurabh Prakash vs Dlf Universal Ltd on 24 November, 2006 - 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