Ambica Constructions Civil Engineers Builders And Real Estate Developers vs Martin J Pinto

THE complainant, respondent herein, is a retired Bank employee. He filed a complaint bearing No. 19/1999 alleging deficiency in service on the part of the opposite party, appellant herein, for failure to deliver possession of the flat in the project ''Ambica Nagar'' before the State Consumer Disputes Redressal Commission, Panaji, Goa (for short ''State Commission'').

THE facts as per the complaint, briefly stated, are that the complainant and the opposite party entered into an agreement on 31.1.1996 by which the opposite party agreed to sell to the complainant two adjoining flats bearing Nos. B-1/S-5 and B-1/S-6 admeasuring 112 sq. mtrs. for a total consideration of Rs. 6,35,000 in the project ''Ambica Nagar''. As per the agreement, the possession of said flats was to be given within 18 months after making them ready for occupation i.e. by July 1997 provided all the amounts due and payable are paid by the complainant. The complainant paid a sum of Rs. 5,90,000 but the opposite party failed and neglected to deliver the possession of the two flats in question. The opposite party made certain major deviations from the approved plans and also committed some other breaches of the terms and conditions of the construction licence Workmanship was also sub-standard and shoddy. The complainant obtained a report from an architect which enumerated various deficiencies in the construction of the flats. The complainant lodged a compliant in respect of these and some other deficiencies and also claimed an amount of Rs. 43,498.25 against the material supplied by him to the opposite party. In view of the disputes that arose between the parties, the complainant referred the matter to arbitration and the parties agreed to appoint an arbitrator in the matter. However, the arbitration was never proceeded with. The complainant, in the meanwhile learnt that Occupancy Certificate was refused by the Municipality for certain reasons, although he came to know later that part occupancy had been granted to the project except the two flats purchased by the complainant. The complainant, therefore, prayed for refund of Rs. 6,33,498.25 along with interest @ 24% p.a. in addition to an amount of Rs. 2,500 p.m. from January, 1997 being rental of the premises occupied by him and further an amount of Rs. 1 lakh for mental agony. The State Commission passed the impugned order on this complaint on 25.4.2005 which reads as under: (i) "The opposite party is directed to deliver possession of the said two suit flats to the complainant within sixty days upon completing/rectifying the incomplete works/ shortcomings observed by the Commissioner and listed by us at para 12 above. (ii) The opposite party is directed to pay to the complainant interest at the rate of 15% p.a. on the amount of Rs. 5,90,000 from 1.8.1997 to 16.8.2001 and further interest at the rate of 12% p.a. from 17.8.2001 till full settlement compounded annually within thirty days. (iii) The opposite party is directed to pay to the complainant Rs. 50,000 as compensation for mental agony, etc. within 30 days. (iv) The opposite party is directed to pay to the complainant an amount of Rs. 23,669 along with interest at the rate of 12% p.a. from the date of filing of the complaint till full settlement within thirty days. (v) The amount of Rs. 45,000 payable by the complainant to the opposite party against the consideration of the suit flats to be adjusted/deducted from the amount to be paid by the opposite party to the complainant awarded above. (vi) The opposite party is directed to pay to the complainant an amount of Rs. 8,000 as costs of this litigation. Order accordingly".

AGGRIEVED by the aforesaid order of the State Commission, the opposite party/appellant herein has filed the present appeal challenging this order.

AFTER the initial hearing and going through the record, vide our order dated 27.7.2005, we admitted the appeal on limited points, namely, reliefs of direction to pay Rs. 50,000 as compensation in addition to directions for delivery of possession and on the point of rate of interest of 15% and notices were issued accordingly returnable on 24.11.2005. Against this order of 27.7.2005, the appellants filed a Special Leave Petition before the Hon''ble Supreme Court. Vide its order dated 20.3.2006, the Apex Court set aside our order dated 27.7.2005 and passed the following order: "Heard learned Counsel for the parties. Leave granted. By the impugned order passed on 27th July, 2005, the National Consumer Disputes Redressal Commission (for short, ''the National Commission'') has admitted the appeal only on limited points. In our view, once the appellant authority was of the view that it was a fit case for admitting the appeal, it should not have admitted the same on limited points, but should have admitted the same for hearing the parties on all the points involved in the case. Accordingly, the appeal is allowed, impugned order is modified to the extent that the appeal shall be heard by the National Commission upon all the points."

IN view of the aforesaid direction of the Apex Court, we have heard the present appeal upon all the points raised therein.

THE case of the appellant is that the flats in question had been completed within the stipulated time i.e. 18 months period from the date of the execution of the agreement as per the terms and conditions of the agreement. He issued a notice to the complainant/respondent for taking over the possession on 30.7.1997. It was stated in this letter issued by the appellant that the flats are ready for possession except for fixing of the internal doors and internal painting for which the complainant was requested to inform the opposite party within a period of seven days from the date of receipt of this letter of 30.4.1997. It was indicated in this letter that failing receipt of a response from the complainant within a period of seven days, the opposite party would complete the flats as per the agreement dated 31.1.1996. It is submitted by the appellant that no response or instructions were issued by the complainant to him regarding the fixing of the internal doors and internal painting. Instead a notice was issued on 5.8.1997 on behalf of the complainant to the opposite party invoking the arbitration clause in the agreement. It was specifically requested in this notice that further works of painting and fixing of internal doors should be stopped till the dispute is resolved through arbitration. In view of this, it is the case of the appellant that it would be factually incorrect to allege that delivery of the flats was delayed by over four years by the opposite party. Regarding the issuance of the Occupancy Certificate, it is submitted that the appellant/opposite party had applied for the Occupancy Certificate on 27.2.1998 but the same came to be issued by the local Municipal Corporation only on 16.7.2001 for which delay the appellant cannot be held responsible.

IT was submitted on behalf of the opposite party/appellant that the appellant has handed over the possession of the premises in question in pursuance of the order of this Commission and the complainant/respondent has taken over the same on 30.1.2008. Learned Counsel for the appellant also indicated that the opposite party is ready and willing to pay for the cost of rectification/completion of the flats. In this context, he referred to the inspection carried out by the Special Commissioner appointed by the State Commission, who, after carrying out site inspection in the presence of the representatives of the two parties, submitted his report in which the cost of rectification of the defects and completion of the remaining items of work was estimated at Rs. 26,957.65 and submitted that the appellant would be ready and willing to pay this amount to the complainant/respondent. In view of this and in pursuance of the orders of this Commission, the two flats have been handed over to the complainant/respondent on 30.1.2008.

LEARNED Counsel for the complainant/respondent has submitted that although the complainant/respondent has taken over the possession of the two flats from the appellant on 30.1.2008, the fact remains that the delivery of the possession of two flats in question has been delayed and in spite of the occupation of the two flats, they are far from being completed in terms of the agreement between the two parties and hence keeping in view the serious deficiencies on the part of the opposite party/appellant, the respondent needs to be compensated suitably by giving appropriate directions in the matter.

REGARDING the delay in handing over the possession, Counsel for the appellant has reiterated that the flats in question had been completed within the specified period of 18 months from the date of execution of agreement in accordance with the terms and conditions of the agreement and a notice for taking over the possession was also issued on 30.7.1997, a copy of which is placed at page 70 of the paper book. However, even as the appellant awaited the response of the complainant, the complainant sent a notice on 5.8.1997 invoking the arbitration clause and specifically requesting the appellant to stop further works of painting and fixing of internal doors till the dispute is resolved through arbitration. Counsel for the appellant has contended that the correspondence clearly establishes that the flats were ready for possession as on 30.7.1997 except in respect of fixing of internal doors and painting work for which a response was requested from the complainant which was not received and the matter was required to be referred to the arbitrator. Regarding the Occupancy Certificate, it is the contention of the learned Counsel for the appellant that even though the Occupancy Certificate was issued by the Municipal Corporation only on 16.7.2001, it would be improper to draw an adverse inference on this ground because the appellant had applied for Occupancy Certificate on 27.2.1998 i.e. within the period agreed to in the agreement and hence the appellant cannot be held responsible for the delay on the part of the Municipality to issue the required Occupancy Certificate. The Counsel further submitted that pursuant to the orders of this Commission, the flats in question have already been handed over to the respondent and the respondent is in possession thereof since 30.1.2008. In view of taking over the possession of the suit premises by the respondent, there is no case for grant of any compensation or interest to the complainant. In this regard, he has relied on the ratio laid down by the Apex Court in the cases of Bangalore Development Authority v. Syndicate Bank, II (2007) CPJ 17 (SC)=I (2008) SLT 761=(2007) 6 SCC 711, and Chairman-cum-Managing Director, Rajasthan Financial Corporation and Anr. v. Commander S.C. Jain (Retd.) and Anr., II (2010) CPJ 24 (SC)=III (2010) SLT 466=(2010) 4 SCC 107. Learned Counsel however, conceded that there are certain items of work which have remained to be completed. The cost of rectification of such items has been estimated at Rs. 26,957.65 by the Special Commissioner appointed by the State Commission and the appellant is ready to pay this amount to the complainant/respondent to enable him to carry out such rectifications.

WE have carefully considered the submissions made before us as well as perused the record. No doubt the complainant has taken over actual physical possession on 30.1.2008, the question is as to whether the opposite party can be held liable for deficiency in respect of the delay in possession of the two flats. It is to be noted that the appellant has challenged the finding of the State Commission regarding non-issuance of written notice by him to the complainant to take over the possession in terms of the agreement. In support of this contention, the appellant has specifically referred to a letter dated 30.7.1997, a copy of which is placed at Annex. P-9 which was sent by registered AD post to the complainant. In this letter, it was informed that the flats are ready for possession except for fixing up the internal doors and internal painting for which the instructions of the complainant were awaited and he was requested to intimate the same within a period of seven days from the date of receipt of the letter failing which the appellant/opposite party was to go ahead with the completion of the flat as per the agreement. Even if it is assumed that the complainant did not receive this letter, admittedly, a notice came to be issued by him to the opposite party inter alia requesting the opposite party to withhold further work of painting and fixing of internal doors till the disputes mentioned in the notice are resolved through arbitration. Although, the arbitration did not proceed further, we agree with the Counsel for the appellant that in the given situation and in the face of the notice given by the respondent, the delay in the delivery of the possession and completion of the remaining works cannot be solely attributed to the appellant/opposite party. As regards the deficiency in respect of sub-standard work in the flats, the report submitted by the Special Commissioner is important and provides a reasonable basis for making an assessment in this regard. According to this report, a copy of which is placed on record, the total cost of rectification of defects and completion of remaining items of works comes to Rs. 26,957.65. Since, this is a report submitted by a qualified Engineer after carrying out spot inspection in the presence of the parties concerned, the liability of the appellant/opposite party would be limited to the extent of rectification of these defects only and not as per the claim made by the complainant. We accept as reasonable the offer of learned Counsel for the appellant to pay an amount of Rs. 26,957.65 to the complainant to enable him to carry out the rectification work himself. During the course of hearing, it was brought out by learned Counsel for the respondent that the Electricity Board has not supplied the electric connection to the flats for want of a No Objection Certificate from the builders i.e. the appellant. Learned Counsel for the appellant has assured us that the appellant undertakes to issue necessary No Objection Certificate to the respondent in this regard for getting an electric connection but the respondent will have to comply with other formalities for getting the connection directly with the Electricity Board. Regarding the question of payment of interest @ 15% p.a. from 1.8.1997 to 16.8.2001 and 12% p.a. from 17.8.2001 till full settlement, it is to be noted that the delay in handing over and taking over the possession cannot be solely attributed to the opposite party/appellant herein alone and there has been a long correspondence between the two parties in respect of the suggestions regarding alterations and additions to be carried out in the flat and the consequential adjustments in the cost to be carried out by the opposite party. It is also noticed that during the course of hearing before this Commission, learned Counsel for the respondent/complainant had submitted that the respondent is prepared to take possession of the flat in question subject to the removal of whatever deficiencies remained therein to be rectified. In view of this and taking into consideration the entirety of facts and circumstances, we are convinced that there is no case for award of any interest to the respondents keeping in view the ratio laid down by the Apex Court in the case of Bangalore Development Authority v. Syndicate Bank (supra).

IN view of the above, we consider it expedient to modify the impugned order of the State Commission while partly allowing the appeal as under: (i) Since the complainant/respondent has already taken over the possession of the two flats on 30.1.2008, he shall release the balance amount of Rs. 45,000 payable by him to the opposite party/appellant on account of cost of the construction of the suit premises. While doing so, the complainant/respondent shall be entitled to adjust the amount of Rs. 26,957.65 on account of cost of the rectification of the defects/items of works remaining in the suit premises to be completed. The balance amount after such adjustment shall be released by the respondent/complainant to the appellant within four weeks from the date of this order. (ii) The builder, i.e., the appellant shall render necessary assistance by issuing his NOC to the complainant/respondent for getting an electric connection from the local Electricity Supply Co. in the suit premises. (iii) In the facts and circumstances of this case, there shall be no order as to costs.

Appeal partly allowed.