A.P.MEHTA vs UTTAR PRADESH HOUSING And DEVELOPMENT BOARD

THIS is a composite application seeking the institution of an enquiry and seeking compensation preferred by Shri A.P. Mehta (complainant for short) alleging certain unfair and restrictive trade practices against Uttar Pradesh Housing & Development Board, Lucknow (respondent for short) under Section 10(a)(i) and Section 36B(a) read with Section 36A(1), Section 2(o)(ii) and Section 12B of the MRTP Act, 1969. Chronologically, the applicant has furnished the following details : 1. The respondent published advertisements in national dailies inviting applications for registration for houses and plots in different towns of Uttar Pradesh in the year 1982.

THE complainant allured by the features of the scheme as advertised by the respondent obtained its "registration booklet". THE complainant applied for a HIG house in Ghaziabad under the scheme. He deposited an amount of Rs. 7,000/- towards registration amount on 16th April, 1982, and obtained a registration certificate dated 22nd January, 1983. In terms of the information in the "registration booklet" of the respondent, the registration deposit was Rs. 7,000/-, the approximate cost range of the house was indicated as Rs. 90,000/- to Rs. 1.5 lakhs and the balance cost after allotment was payable over a period of 10 years in 120 monthly instalments. A waiting period between registration and allotment was indicated as between 3 and 5 years. The plot with the constructed house would be on a lease hold basis with the lease being for 90 years renewable every 30 years and the rate of lease rent being 0.125% of the value of the land per annum. The allotment would be by a lottery according to the seniority of the round.

The respondent demanded a further Rs. 8,000/- towards registration deposit in the year 1985 even though this was not stipulated in the "registration booklet" originally. This was paid by the complainant on 9th November, 1985.

THE respondent thereupon sent a fresh registration certificate of date 23rd May, 1986 indicating the total registration amount paid as Rs. 7,000/- plus Rs. 8,000/- equal to Rs. 15,000/-. Sometime in the middle of January, 1992 the complainant received an unsigned letter dated nil from the respondent asking for a consent letter in respect of the allotment of the HIG flat. It was informed in that letter that the estimated cost of that flat would be Rs. 5.10 lakhs. The payment instalments were indicated as six quarterly instalments of Rs. 55,000/- each, the first instalment being payable in March, 1992. It was also indicated that the flats were under construction under the "Ghaziabad Vasundra Plan" of the respondent and that they would be completed by December, 1992.

THE complainant was "shocked" to receive this communication containing new terms and conditions which were not existing at the time of registration in the year 1982. It is almost a decade since the registration. THE complainant having no choice signified his consent. The respondent through its letter dated 1st December, 1992 informed the complainant that according to the draw of lots held on 27th November, 1992, the flat number 16A- 104 (ground floor) in Vasundra Scheme, Ghaziabad had been reserved for him, who was asked to tender the quarterly instalments in terms of the instalment schedule. It was also indicated that in case of ground floor flats, the adjacent land as per availability would be given on garden lease. The complainant informed the respondent on 1st March, 1993 that the first instalment of Rs. 55,000/- had been deposited. He further brought it to the notice of the respondent that there was a news item in Navbharat Times, Hindi edition dated 16th January, 1993 in terms of which, the deficiencies in the Vasundra Scheme of the respondent had been highlighted. The news item informed of the lack of basic amenities like drinking water, light fittings, street lights, roads, toilets, shops and market, school, security and medical facilities in the scheme. The complainant drew the attention of the respondent to the fact that the letter of the respondent of date 1st December, 1992 did not even mention the likely date by which the flats would be ready and fit for occupation.

THE respondent in its letter dated 17th March, 1993 informed the complainant that possession would be given after the payment of six instalments by which time the necessary facilities would be made available.

UPON this, the complainant deposited the remaining 5 instalments of Rs. 55,000/- each as per the schedule. The aggregate amount deposited worked out at Rs. 3,45,000/- including the registration amount of Rs. 15,000/-. A further communication was received from the respondent of date 28th September, 1994 in which it was indicated to the complainant that the cost of construction of the flat would be Rs. 5,37,280/- and that the cost of the land covered by the flat was Rs. 1,61,988/- and that the cost of additional area was Rs. 1,14,758/-. The lease rent was charged at the rate of 10% on the cost of the land instead of 0.125% indicated in the "registration booklet".

The complainant has alleged that the charging of the lease rent at 10% of the cost of the land "for 90 years at one-go is nothing but manipulation of delivery of flat particularly when the lease is renewable after every 30 years". The complainant has further alleged that the respondent has manipulated the condition of delivery of the flat further by including the cost of the land to the tune of Rs. 2,76,746 /-for the area covered by the flat and some additional area. In addition the respondent has asked for certain miscellaneous fees which are "totally unwarranted and nothing but the manipulation of condition of delivery of flat."

A legal notice was issued by the complainant on 26th December, 1994 calling upon the respondent to deliver vacant and peaceful possession of the flat in question at the basic price of Rs. 5,37,280/- without demanding any further amount. Reply was received from the respondent to the effect that if the complainant did not take possession he would be liable to pay "delay charges" at the rate of Rs.50/- per day. Upon this the complainant gave a further notice stating that the reply was unsatisfactory and did not meet with the specific issues raised by him in his legal notice of 26th December, 1994. 2. The complainant has alleged that the respondent has misrepresented and falsely represented to the complainant and has adopted unfair method or unfair or deceptive practice and imposed on him unjustified cost or restriction thereby attracting the provisions of Section 36A(1) and Section 2(o)(ii) of the MRTP Act. He has prayed for institution of a regular enquiry and for passing a "cease and desist" order against the respondent relating to the unfair and restrictive trade practices alleged by him. In addition he has sought compensation of the principal amounts paid by him aggregating to Rs. 3,45,000/- plus interest at the rate of 18% per annum plus compensation towards mental agony and harassment suffered by him to the tune of Rs. 2,00,000/-. 3. After considering the various allegations in the complaint petition, a Notice of Enquiry (NOE) was issued by the Commission. Summarising the allegations in the complaint petition and calling upon the respondent to defend itself against the alleged unfair and restrictive trade practices, the NOE indicated that the aforesaid trade practices are prejudicial to public interest. 4. The respondent furnished its reply to the NOE. We have to mention that the reply is replete with spelling and grammatical errors and in a number of paragraphs is rather vague and bald in contents. Be that as it may, the reply is summarised herein below : 1. The brochure indicates that the price of the flat is approximate and that entries in the chart therein are liable to change. 2. In 1985, the respondent increased the registration amount and that is the reason why a further Rs. 8,000/- was demanded from the complainant in addition to the original registration amount of Rs. 7,000/-. 3. The brochure contains all information regarding the scheme, the cost of the flat etc. 4. The complainant gave his consent to the conditions mentioned in the brochure and only thereafter the allotment letter was issued to him. 5. The complainant was, in particular, informed about the cost of the flat and the instalments to be paid by him. A rejoinder was furnished by the respondent to the aforesaid reply of the respondent. After the pleadings were completed, the following issues were framed : 1. Whether the respondent has been indulging or has indulged in the restrictive and unfair trade practices as indicated in the NOE ? 2. Whether the alleged restrictive trade practices are not prejudicial to public interest and whether the alleged unfair trade practices are prejudicial to public interest and to the consumer or consumers generally ? 5. The complainant filed his own affidavit in evidence and the respondent filed the affidavit of Shri Ram Gilas, its Assistant Housing Commissioner. The Advocates of both the parties decided not to cross examine the witnesses. We gave a hearing to Dr. V.K. Aggarwal, Advocate for the complainant and Mr. M.N. Krishnamani, Sr. Adv. who was assisted by Mr. P.K. Jain, Advocate for the respondent. 6. The main charge of unfair trade practice is misrepresentation on the part of the respondent. The respondent floated the scheme as early as in 1982. It is now 15 years since then and the complainant has secured nothing except feeling utterly devastated by the inaction on the part of the respondent. According to Dr. Aggarwal, Advocate for the complainant, the respondent having floated the scheme in 1982 and stated in its "registration booklet" that the cost of the flat would range between Rs. 90,000/- and Rs. 1,50,000/- has totally gone back on its word and is now attempting to defend itself by pointing out some vague sentences in its booklet to the effect "Any of the entries in the above chart are liable to change" in para 3 thereof. Even granting, submits Dr. Aggarwal, that every statement made in the booklet is liable to change, the communication sent in the middle of January, 1992 by the respondent to the complainant cannot be overlooked. In the said communication, the respondent has clearly indicated that the flat would be completed by December, 1992 and that the cost of the flat would be Rs. 5.10 lakhs. Even though the cost of the flat has been indicated as "estimated" and the final cost was likely to go up, there is no indication whatsoever that the cost of the land would be in addition to the estimated cost indicated in the said communication. Nor was this aspect clarified in the respondent''s further communication dated 1st December, 1992. Dr. Aggarwal further says, that, in calculating the lease rent, the respondent has adopted 10% of the cost of the land instead of 0.125% originally indicated in the "registration booklet". A perusal of the respondent''s letter dated 28th September, 1994 shows that the lease rent has been calculated at 10% of the cost of the land for 90 years. Whereas according to the "registration booklet" the lease rent has to be calculated at 0.125% of the cost of the land per annum with the lease renewable once in 30 years. Dr. Aggrawal adds, charging of the lease rent at 10% of the cost of the land for 90 years at one-go, constitutes manipulation of conditions of delivery of the flat and the price thereof. In addition to the cost of construction of the flat namely to Rs. 5,37,280/- which his client was willing to pay, the respondent, has illegally demanded the cost of the land and cost of additional area aggregating to Rs. 2,76,746/-, once again a manipulation of conditions of delivery and the price of the property in question. 7. We have perused the documents and the pleadings of both the parties. It is obvious that even if one were to give the benefit of doubt in favour of the respondent in the light of the initial stipulation in the "registration booklet" that every entry therein was subject to change, the respondent has not even honoured its own commitment in the communication sent in the middle of January, 1992, that the flats would be completed by December, 1992. Furthermore, there is no indication whatsoever that separately, the cost of the land and the cost of additional area would be added to the estimated cost of the flat given in that communication. In fact, it is for the first time only in September, 1994, that the cost of the land and additional area was included in the demand letter. Thus, 12 years after the initiation of the Vasundra scheme, the respondent has put the complainant in a piquant situation by asking him to cough up money towards the cost of land and additional area which was never in the reckoning at any time. Furthermore, the lease rent which ought to have been calculated at 0.125% per annum was calculated at 10% for 90 years at one-go in the communication of the respondent of 28th September, 1984. These indeed constitute misrepresentation and even non-representation. 8. What constitutes misrepresentations, this Commission had an occasion to deal with in 1996. In a Full Bench decision in the case Gurucharan Ghai and Anr. v. N.D. Madan and New Delhi Municipal Council, UTPE 168/96 dated 30.9.1996, this is what the Commission has observed : 9. "Misrepresentation in our view, includes no representation when there ought to be a representation in public or consumer interest. In other words, overt and covert action of misrepresentation alone does not constitute the specie of unfair trade practice. Even inaction, where action is called for in public or consumer interest will fall under this specie. We regard inaction or silence as a taxonomic group of lower rank than a family of this genus but it is a closely related specie. Public interest will have to be read in terms of a large basket where misrepresentation, misleading representation, non- misrepresentation, inadequate representation, inert or passive representation will all find place, where they are pejorative to public interest or consumer interest. If in the given circumstances, inaction or silence on the part of one party can lead to prejudice to public or consumer interest, we will deem it an unfair trade practice." 10. The respondent inasmuch as it failed to mention right at the commencement of the scheme in 1982 in its "registration booklet" that cost of the land will be in addition to the cost of flat has indeed committed the unfair trade practice of non- representation which is a part of misrepresentation in terms of the extracted observations of the Full Bench decision of the Commission supra. Further more, it is highly regrettable and unfair that in the communication dated 1st December, 1992 of the respondent, there is no mention at all of the likely date of completion of the flat. Earlier in its communication of mid January, 1992, there is an indication that the flat would be completed by December, 1992. By not completing the flat by the end of December, 1992, the respondent has not honoured its assurance to the complainant. A further misrepresentation is that in the original "registration booklet", the lease rent was mentioned as 0.125% per annum whereas in its communication of 28th September, 1984, the lease rent has been calculated at 10% of the cost of land for 90 years in one-go. This again is dishonouring its original representation thus constituting an unfair or deceptive practice. 11. Possession was promised by the respondent in its letter dated 17th March, 1993, after payment of the six instalments. The respondent has admitted that the complainant had deposited the six instalments of Rs. 55,000/- each, as per the schedule. But possession was not given according to the promise. This again constitutes misrepresentation and not honouring of the assurance. 12. In this view of the matter, it is very clear that there has been an infringement of Section 36A of the Act constituting misrepresentation and adopting an unfair method or unfair practice. It is also manifest that by the actions of the respondent, the complainant has been visited with unjustified costs and restrictions besides manipulation of conditions of delivery and the price of the flat, thus constituting a restrictive trade practice under Section 2(o)(ii) of the Act. 13. In sum, we decide the first issue in the affirmative against the respondent. The actions of the respondent in having indulged in unfair and restrictive trade practices are clearly prejudicial to the complainant and, therefore, the second issue is also answered against the respondent. In the premises, we direct the respondent not to indulge in the aforesaid restrictive and unfair trade practices and not to repeat the same in future. The respondent shall filean affidavit of compliance within six weeks of the date of this order. 14. In so far as relief to the complainant is concerned, his original request was for refund of the amounts he had already deposited alongwith interest and for compensation towards mental agony and harassment. But, during the final arguments, a plea was agitated by the Advocate for the complainant, that his client has been essentially praying for delivery of possession of the flat and that he was not pressing for the refund of amounts deposited by him. We heard both the parties on this plea of the complainant. Both parties furnished their supplementary synopsis of their arguments. 15. In the original injunction application filed by the complainant under Section 12A of the Act, his prayer was that the respondent should be restrained from withholding the delivery of the possession of the flat No. 16A/104, Vasundra Scheme, Ghaziabad. During his brief arguments. Dr. V.K. Aggarwal, Advocate for the complainant stated that his client is a senior citizen of the country and that he has been waiting for many years to get a roof over his head and that despite all the waiting and agony he has undergone he has not been able to secure his objective.

WE have already arrived at the conclusion that the respondent has indulged in the unfair and restrictive trade practices to the detriment of the complainant. WE are of the view that in terms of the respondent''s letter dated 17th March, 1993, the complainant is entitled to the possession of flat in question subject to the payment of the price of the flat is six instalments. The complainant has already deposited six instalments of Rs. 55,000/- each according to the schedule stipulated by the respondent. The complainant has categorically agreed to take possession of the flat at the price fixed by the respondent namely Rs. 5,37,280/-. In view of this, taking into consideration that the complainant has already paid an amount of Rs. 3,30,000/- to the respondent, we direct that the respondent shall hand over possession of the flat No. 16A/104 in the Vasundra Scheme, Ghaziabad, within eight weeks from the date of this order, subject to the condition that the complainant deposits the balance amount of Rs. 2,07,280/- with interest to the respondent. In terms of the notice of the respondent dated 28th September, 1994, this balance amount including interest is payable in 16 quarterly instalments. Accordingly we direct that the balance amount alongwith interest as stipulated shall be paid in 16 quarterly instalments commencing from 1st September, 1997. Insofar as the lease rent is concerned, it shall be calculated by the respondent, in terms of its original representation and collected from the complainant alongwith aforesaid instalments. As there was no representation originally in the scheme at the time of registration, regarding the cost of land or cost of additional area, the respondent has no right to collect the same. With these directions, the prayer of the complainant stands disposed of. Both the parties are directed to comply with the directions above. Enquiry disposed of. ______________