Adarsh Developers vs Geetha Bhat W/O Vishwanath Bhat

DELAY condoned. This First Appeal, under Section 19 of the Consumer Protection Act, 1986 (for short "the Act"), is filed by the Opposite Party in the complaint, questioning the correctness and legality of order dated 31.10.2008 passed by the Karnataka State Consumer Disputes Redressal Commission, Bangalore (for short "the State Commission.") in Complaint No. 55/2007. By the impugned order, the Complaint has been allowed with a direction to the Appellant to execute sale deeds, conveying the subject Flats to the Respondents/ Complainants on their depositing the balance sale consideration with interest @ 12% p.a. on the defaulted amounts.

THE background facts leading to the Appeal, as pleaded in the Complaint, are that the Respondents are the husband and wife. On 16.02.2005, they blocked two flats, Nos. F804(a) and F804(b) in the project named "Adarsh Rhythm", developed by the Appellant, by depositing a total sum of Rs. 1,00,000/ -, as blocking amounts, for a total consideration of Rs. 40,00,000/ - (Rs. 20,00,000/ - each). On 06.04.2006, an agreement to sell, in respect of the said flats, was entered into between the parties. On 28.02.2005, the Respondents paid further sums of Rs. 7,17,059/ - and Rs. 2,53,205/ - towards costs of Flat Nos. F804(a) and F805(b) respectively. On 26.06.2006, further amounts of Rs. 2,80,000/ - and Rs. 2,15,000/ - were deposited in respect of Flat Nos. F804(a) and (b) respectively. Thereafter pursuant to the demand notes, issued on 12.08.2006, 22.08.2006 and 06.09.2006, asking them to pay the amounts in arrears as per the Schedule to the Sale Agreement, on 19.09.2006, the Respondents deposited a further sum of Rs. 3,00,000/ - towards Flat No. F804(a). However, no deposit for the second flat was made. On 26.09.2006, yet another demand notice was issued to the Respondents, wherein it was stated that "if there was any delay in payment, it will attract penalty in terms of interest and may also lead to cancellation at the discretion of the Management. There will be no reminder in this regard. We request you to co -operate." There was no response to the said notice on behalf of the Respondents. On 05.10.2006, the Appellant terminated the sale agreement in respect of both the flats. Relevant part of the said letter reads as follows: - "We find from our records that the last payment made by you is on 19.09.06 for a sum of Rs.3,00,000/ -. The balance payments start from the date of signing of the Agreement and they have been delayed beyond 9 months. Our representatives had informed you several times for payment of the due amount. In spite of repeated reminders and requests at various times, you have failed and neglected to pay the due amount and have defaulted the terms of agreement. We had warned you of the termination of the agreement and cancellation of the Flat for non -payment of the due amounts, within the specified time. Hence, in view of the above, we regret to inform you that due to the inordinate delay in making the due payments in time and default of the terms of the Agreement, we hereby terminate the Agreement dated.06.04.06 and have cancelled the allotment of the Apartment no. F804 (a) in Adarsh Rhythm Against your name. Out of the total advance sum of Rs.14,51,059/ - paid by you, we have deducted a sum of Rs.50,000/ - and balance sum of Rs.14,01,059/ - will be returned to you in 8 -10 workings days. This letter is issued to you in terms of termination of Agreement dated 06.04.06 and cancellation of Flat No. F804 (a) in Adarsh Rhythm against your name."

SIMILAR letter was issued in respect of the second Flat. A cheque in the sum of Rs. 18,19,264/ -, towards refund of the sums paid by the Respondents, after deducting Rs. 50,000/ - in respect of each of the Flats, was sent to the Respondents. The cheque was encashed by the Respondents. On 03.03.2007, the Respondents caused a legal notice issued to the Appellant, requiring them to recall the termination notices, failing which legal action was threatened. The legal notice was replied, refuting the allegations in the notice. On 14.09.2007, the Respondents filed the Complaint against the Appellant.

UPON notice, the Appellant filed its written version contesting the claim in the Complaint. It was pleaded that the relief prayed for in the Complaint being in the nature of Specific Performance of the Agreement, dated 06.04.2006, a purely civil in nature, requiring full fledged trial, the Complaint was not maintainable.

ON appraisal of the material on record, including the demand notes/letters issued by the Appellant to the Respondents, the State Commission has come to the conclusion that since a 10 days'' notice, as stipulated in Clause 1.3 of the Agreement to sell, was not given to the Respondents, the termination/cancellation of allotments was illegal and hence, the Respondents were entitled to have the sale deeds, in respect of the said Flats, executed. The State Commission has also rejected the plea of the Appellant that the Flats in question having been sold to third parties, after the termination of the Agreement to sell, the Agreement is incapable of performance. Hence the present Appeal.

MR . Amit S. Chadha, Ld. Senior Counsel, appearing for the Appellant, strenuously contended that having accepted cheque, dated 18.10.2006, in the sum of Rs. 18,91,264/ - without demur and then keeping quiet till 03.03.2007, when a legal notice was got issued, as a matter of fact, the Respondents had not only waived their right, if any, under para 1.3 of the Agreement, they had no surviving and enforceable claim against the Appellant. It was argued that the State Commission has misconstrued Para 1.3 of the Agreement and has also failed to advert to para 5 of the Agreement, which stipulates that any indulgence shown by the developer to the flat buyer in not enforcing the terms of the Agreement or any forbearance on its part, shall not be construed as waiver of the breach or non -compliance of any of the terms and conditions of the Agreement. It was asserted that admittedly the Respondents did not adhere to the payment schedule and despite repeated demand notes and e -mails, calling upon them to make payment of the amounts due as per the schedule, they failed to clear all the arrears. According to the Ld. Counsel, deposit of a partial amount of Rs. 3,00,000/ - on 19.09.2006, in respect of one of the Flats, pursuant to notice of demand dated 06.06.2006, which contained a post script warning to the effect that failure to make payment of a sum of ?13,07,085/ - on or before 16.09.2006 would result in automatic cancellation of the Apartment booked, did not tantamount to waiver of its right to terminate the Agreement. It was also highlighted that though the Complaint before the State Commission was preferred on 14.09.2007, application for interim relief was filed only on 16.11.2007 and by the time ex -parte stay order was obtained by the Respondents, the two Flats in question had already been sold to third parties on 25.11.2006, after cancellation on 05.10.2006, and issue of cheque for refund on 18.10.2006. It was thus, argued that the contract, viz. the Agreement to Sell dated 06.04.2006, stood frustrated and could not be enforced.

PER contra, Ld. Counsel for the Respondents, while supporting the impugned order, reiterated that letter dated 26.09.2006, issued by the Appellant, calling upon the Respondents to pay a sum of Rs. 11,75,451/ - on or before 06.10.2006, subsumed all their earlier demand notes and acceptance of a cheque for Rs. 3,00,000/ - on 19.09.2006, which shows that the Appellant had waived the threat of termination of the said Agreement, wielded vide earlier demand notices. It was, thus, asserted that cancellation of Flats was in clear violation of para 1.3 of the Agreement. It was also pleaded that the cheque, dated 18.10.2006, towards refund of the amounts deposited by the Respondents, was got encashed under protest, which was duly conveyed to the Appellant through legal notice dated 03.03.2007.

HAVING given our anxious consideration to the material on record, we are of the opinion that the decision of the State Commission is unsustainable.

THE first and the foremost question for consideration is whether or not, the Respondents are estopped from raking up the issue of delivery of possession of the Flats in question after accepting the amount remitted to them towards refund of the amounts deposited by them with the Appellant from time to time.

IT is trite that unless a claimant is able to show, with cogent material, that he had accepted the payment made to him by way of discharge of a debt by exercise of undue influence or by misrepresentation or coercive bargaining or fraudulently, he is estopped from making any further claim after accepting the amount offered by the debtor. Nevertheless, if any of such circumstance is established, acceptance of any amount or execution of a discharge voucher/receipt would not deprive the claimant from preferring claim against the debtor with respect to the alleged default.

IN the present case, admittedly except for legal notice dated 03.03.2007 issued on behalf of the Respondents to the Appellant wherein it was stated that "Our clients are constrained to encash the cheque issued by you under protest as the cheque is valid for a period of six months" no other letter of protest or even whisper about any kind of duress or coercion, after receipt of the said cheque dated 18.10.2006, is on record. If the Respondents were not interested in the refund of the amounts paid by them and were keen to have the possession of the flats booked, nothing prevented them from returning the cheque back to the Appellant. The plea that the cheque had to be encashed as the period of its validity was expiring, in our opinion, is not sufficient to infer that the Respondents were victims of fraud, coercion or undue influence. Having found so, in our view, on acceptance of the refund amount, right, if any, in favour of the Respondents to prefer claim with respect to any deficiency in service on the part of the Appellant in not delivering possession of the flats in question or consequential benefits arising therefrom, stood extinguished.

HAVING arrived at the said conclusion, we deem it unnecessary to examine the issue of alleged breach of para 1.3 of the Agreement.

FOR the aforegoing reasons, the Appeal is allowed; the impugned order is set aside and the Complaint filed by the Respondents is dismissed, with no order as to costs.

VIDE order dated 06.02.2009, it was directed that any deposit(s) made by the Respondents, in pursuance of the impugned order, towards balance sale consideration, may be accepted by the Appellant without prejudice to its rights and contentions. We direct that if any such amount has been withdrawn by the Appellant in terms of the said order, the same shall be refunded to the Respondents within six weeks from the date of this order, along with simple interest @ 12% p.a. from the date of the withdrawal till the date of actual refund. However, the Statutory deposit made by the Appellant at the time of filing the Appeal shall be transferred to the Consumer Welfare Fund.