Citizen Builers vs Rameshwar Nath Anand

THERE is a magic in that little word, ''home'', it is a mystic circle and surrounds comforts and virtues, never known beyond its hollowed limits. However, the customers are exasperated by senseless delay made by the Builder of a colony.

THIS order shall decide two appeals filed by both the opposite parties in respect of the same order rendered by the State Commission. This is an old case filed by Sh. Rameshwar Nath Anand, 81 years'' old and his wife Smt. Promil Anand, 78 years'' old, the complainants, who are senior citizens. The cause of action in this case arose in the year 1994 -96. Two decades have elapsed. The complainants still are waiting for relief.

PLOT Nos.27 and 28, Sector 15, CBD, Belapur, were allotted in favour of one Ashutosh Developers Pvt. Ltd.in the year 1993. Plot No.27 was transferred in favour of M/s. Citizen Builders, OP1 for an amount of Rs.40,89,000/ - @ Rs.7,250/ - per sq.mt. by M/s. Ashutosh Developers Pvt. Ltd. in July, 1993. The Maharashtra Government cancelled the allotment of plot No.27 in favour of Ashutosh Developers Pvt. Ltd. in February, 1994. The cancellation of allotment was set aside by the Government of Maharashtra on the condition that premium payable to CIDCO would be raised from Rs.7,250/ - per sq.mtr. to Rs.11,112.56 per sq.mt. The total amount was increased from Rs.4,08,90,000/ - to Rs.6,26,74,838.40. A lease was accorded by CIDCO on 12.07.1994, after receipt of entire money. Op1 commenced booking of flats in the building proposed to be constructed on the plot No.27 and accepted deposits from various prospective buyers towards the allotment of flats in the proposed building. It was also agreed between the allottees and Op1 that Op1 would give the possession of the premises on or about December, 1998, subject to ''force majeure''. The construction of flats and shops was started in November, 1994. The flat owners did not pay him the amount, in time. In view of shortfall in the amount, Op1 approached the GICHF for construction loan to the extent of Rs.3.00 crores to be disbursed as per the work progress in October, 1995. Op1 fully utilised the said loan and to secure the due repayment of the loan, created a charge, by way of equitable mortage in favour of GICHF on plot No.27, building and 19 flats thereupon.

THE complainants, booked a flat Duplex No.A -704 in the proposed building in Punit City Co -operative Housing Society Ltd on Plot No.27, through OP1. OP1 issued an allotment letter dated 05.04.1996 for a consideration of Rs.9,45,000/ -. OP1 gave promise that the flat would be allotted to them in the year 1998. The allotment letter also stipulated that there was no escalation, penalty/levy of any amount towards the cost of flat. OP1 further allotted car parking space on further payment of Rs.10,000/ - which was acknowledged vide Ex.A1, dated 15.04.1996. The complainants also paid stamp duty, etc. The complainants paid the entire sale amount. Sale Deed was yet to be executed. According to OP1, there was slump in the real estate market and the prices in Navi Mumbai and Belapur fell sharply below the prices at which the purchasers had booked the flats. It is contended that most purchasers including the complainants, who were investors, lost interest and the instalments payable by the purchasers became very irregular and some of them, completely stopped the payment of the instalments to OP -1. Despite such adverse circumstances, the construction continued up to October, 1997 and 80% of the construction stood completed. In spite of progress, the purchasers delayed payment and / or stopped payments. In December, 1997, according to OP1, it had no alternative but to suspend the work of the building. They were in constant touch with the allottees and in December, 1997, they even offered to withdraw if the purchasers could identify any other building willing to invest the money and complete the construction.

ON 01.08.1999, Punit Co -operative Society Ltd. through its Honarary Secretary, OP2, convened a meeting of all the purchasers and asked the flat purchasers to agree to reasonable escalation of cost to enable the association to raise funds so that the work may be completed. Most of the purchasers agreed, but the complainants did not agree. Consequently, OP2 -Punit City Co -operative Society Ltd., took over the construction from OP1. Those purchasers formed the association, known as ''Punit City Co -operative Society Ltd., OP2. The flat purchasers constituted an adhoc committee specifically with an object to take over the construction and complete the building and give possession to flat purchasers. A Memorandum of Understanding was executed between the OP1 and OP2 sans complainants and OP3. The MOU confirmed full payment made to OP1 but stipulated that further amount in the sum of Rs.1000/ - towards the incidental charges.

THE grouse of the complainants is that the OP -1 has delayed the construction of the flat and failed to give possession of it since 1999. They are ready to pay the legitimate dues and stamp duty, etc. OP1 has committed breach of several provisions of MOFA Act and has not given them the possession of the flat. They are also entitled to compensation for harassment and mental torture. At the time of final arguments, it transpired that the construction of the flat has already been completed, by OP3. The present complaint was filed before the State Commission, against all the OPs, on 06.01.2003, with the following prayers : - "a) That the Opposite parties be ordered to complete construction and handover possession and complete the title to flat No. Duplex A -704 in Punit City Plot No.27, Sector 15 at CBC Belapur Car parking space at Navi Mumbai together with interest @ 24% p.a., from January, 1999 for delayed possession;

b) failing which, refund of entire amount with interest @ 24% p.a., from dates of payment till realisation.

c) That the opposite parties be ordered to pay compensation of Rs.3 lakhs to the complainants who are senior citizens;

d) that costs of Rs.10,000/ - be directed to be paid towards cost of proceedings".

ACCORDING to OP1, their right to construct vide MOU dated 15.06.2006 was completely diversed. It cannot be held liable for any deficiency of service. It was also not liable to complete the construction because the entire amount collected from the flat purchasers plus the amount borrowed from GICHF had been utilised in the construction. OP 1 averred that it had called upon the complainants for executing the agreement for sale under MOFA Act Agreement but the "complainants" did not execute the same. It is contended that the MOU is binding upon the "complainants", after the execution of the MOU on 15.06.2000, OP1 ceased to be the builder, vis - -vis, the complainants and other flat purchasers.

OP 1, OP2 and OP3 vide agreement dated 20.12.2006, agreed that the members who want to retain their flats had to pay outstanding amounts per sq.ft escalation charges immediately on signing the Agreement and Rs.150/ - per sq.ft., being service charges for guaranteed possession of their flat on or before 30.04.2007 to OP3 who would complete the construction. The "complainants" failed to pay the same. They did not sign the agreement dated 20.12.2006. Consequently, complainants have right to claim guaranteed possession of the flat booked by them on payment of said charges. OP 3 also gave offer to those members who were not ready to pay escalation charges and ready to surrender their flat to pay Rs.1,200/ - per sq.ft., within 30 days from the signing of the Agreement. The complainants did not react. They did not send any information. OP3 admitted that the complainants were not signatories to the Agreement reached between OP1, OP2 and OP3. He contended that he has not replied to refund the price of the flat. Again, the complainants have slept over their rights for over 10 years. Consequently, the case is barred by time.

OP 2 also contested the case but he did not appear before this Commission.

WE have heard the counsel for the parties. Counsel for the OPs 1 and 3 vehemently argued that the complainants are investing amount in this venture. They explained that they have got lot of accommodation. It was also pointed out that in another case for sale of shop from the said OPs, having the same facts and circumstances is pending in this case and the same was preponed at the request of the counsel for the OPs.

WE desired to hear the arguments in that case as well but it had to be adjourned. However, we do not locate any substance in these arguments. The complainants themselves stated that they are residing in a rented house. There is not even an iota of evidence to reveal that they are having some additional accommodation. The allegation made by the OPs 1 and 3 is not supported by any cogent and unflappable evidence. Consequently, this argument has to be eschewed out of consideration.

COUNSEL for OP3/Appellant - M/s. Gokul Construction, admitted that the flat is ready. OP3 has constructed the flats and it could be given to the complainants immediately subject to the condition that they should pay OP3 the amount in the sum of Rs.22,00,000/ - which OP3 had spent thereon. He further submits that the complainants and OP3 have got no privity of contract. The Ld. Counsel vehemently argued that the complainants are not consumers qua OP3. Again OP3 is a stranger who came in the picture in the year 2006. He further argued that cause of action arose in the year 1994/2000/2003 and OP3 is not liable for the same. The Ld. Counsel contended that no cause of action has arisen against OP3. OP3 should not be saddled with liability or burden with costs for further construction, for no fault of it. He vehemently argued that O3 has come to the rescue of the flat owners, otherwise, they would not have got the flats at any time. He argued that OP2 should appear and that should be burdened with compensation.

COUNSEL for OP1 submitted that OP1 is facing precarious circumstances and they are living in extreme penury. He contended that due to financial stringency and non -co -operation of the members of the Society, OP2, it could not complete the construction. He contended that OP1 had already constructed 80% of the whole construction, OP3 merely completed work up to 20% only. The relevant portion of MOU dated 15.06.2000 reads as follows : - "AND WHEREAS the Builder have partly completed the construction of all the three residential buildings of A, B -1 and B -2 wings in the said property which consist of ground plus fifteen floors having total 89 flats, 33 shops and ___ garages.

AND WHEREAS on account of financial stringency and other adverse circumstances, the Builders are unable to continue with the construction work and have not completed the construction work as promised by them under the various agreements / letter of allotments entered into by the BUILDERS and the Purchasers.

AND WHEREAS the members of the SOCIETY got together and approached the BUILDERS to take over the entire incompleted construction work from the BUILDERS as the BUILDERS have not been able to complete the name and for that purpose there were several meetings held and during such meetings the proposal was put forward by the BUILDERS to the members of the SOCIETY that if the members of the SOCIETY are willing to take over the entire construction work and complete the said work, the BUILDERS will have no objection to handover the said project to the SOCIETY / its members and after considering the proposal the members of the SOCIETY agreed to accept the same on a clear understanding that have and except the 20 flats which are kept reserved and / or not sold by the BUILDERS for security of the loan amount of said GICHF".

OUR attention was also drawn to Tripartite agreement dated 20.12.2006. Its para No.3, runs as follows: - "3. The Developer and the Association agree, confirm and declare that the MOU dated 15.06.2000 executed between the 1st Developer and the Association will be binding with the 2nd Developer known as Gokul construction till first draft copy of such agreement shall be released by developer No.2. It shall be the responsibility of the association to resolve and finalise of such draft agreement within 30 days from the date of handing over first draft copy by developer No.2. The association shall take necessary step and pursuance for finalisation of draft agreement as per advise of advocate Mr.Jagtap in accordance with terms and conditions of 2nd July, 20006 resolution and agreement executed hereof. It is further agreed that all the original documents, papers pertaining to the project Punit Citi and pertaining to the Plot No.27, Sector 15, CBD, shall be handed over by the 1st developer and association to the intending developer upon the execution of this Agreement".

DURING the arguments, we put the following question to the counsel for the OP3, "Why did OP3 touch the flat of the complainants, particularly, when he had no agreement with them -. To this poser, the Ld. counsel for OP3 replied that everything was in air. OP 3 had to construct all the flats, and their numbers were not given till then. It appears that OP3 is economical with truth. The above said agreement dated 15.06.2000 clearly, specifically and unequivocally mentions that the builder has partly completed the construction of the three buildings, B1, B2 Wings in the said property which consist of Ground plus 15 floors having total 89 flats, 33 shops and garages. The stand taken by OP3 stands falsified. OP 3 has not come to the Commission, with clean hands.

ALL these arguments advanced on behalf of OP1 and OP3 have left no impression upon this Commission. All these knotty matters should be considered with full awareness of the root realities on the ground, not with head in the clouds. OP3 had no privity of contract till it itself of its own took the plunge in constructing the flats without any rhyme or reason or agreement. Consequently, he deliberately stepped into the shoes of the OP1. OP3 should not have constructed the flat in question at all, when it did not get the escalation amount from the complainants. It did the needful at its own peril. By no stretch of imagination, it can be held that he can withhold the flat and give it to the complainants after receipt of the amount. He can, however, claim this amount from OPs 1 and 2 as per the agreement or otherwise. It has acted as self -appointed inspector/builder. It cannot be allowed to pull the wool in the eyes of Law, like this. Why should the complainants be made to cough up the extra amount under the nose, particularly when they have already paid the amount fully?. The State Commission has already taken a lenient view qua OP3. Does it deserve that amount? Again it is not ready to part with the flat in favour of the complainants. Why should the complainants take a dollop of injustice from OP3 because it is under the circumstances more influential than them. Are OP1 and OP3 working in cahoots with each other to lead the gullible consumers up the garden path?

HOWEVER , the main deficiency lies at the door of the OP1. He could not raise the construction of the building for one reason or the other. The fabian policy adopted by him has gone into the detriment of the complainants. They are waiting for the flat since 1998. We are not swayed away by the crocodile tears shed by OP1. He has succeeded to feather his own nest, i.e., to make profits for himself, often at the expenses of others. He is playing false and loose with the consumers. He is liable to pay the amount of all the allottees.

IT is well said that justice denied is not only justice delayed but it is also justice circumvented, justice mocked and the system of justice undermined. The main question is, whether, these two senior citizen complainants will get their flat during their life time -.

CONSEQUENTLY , we hereby order that flat No.A -704 in Punit City Co -operative Society Ltd., be given to the complainants immediately, within 15 days from the date of receipt of copy of this order. Opportunity is given to OP3 to file appropriate case against OP1 and OP2, as per law. On the other hand, OP1 will pay interest only, at the rate of 9% p.a., on the entire amount in the sum of Rs.9,45,000/ - from the date of its payment, till the date of realisation. In case, the flat is not handed over to the complainants, with the said period, both the OPs, i.e. OP1 and OP3 will pay penal amount in the sum of Rs.2500/ -, each, per day, till the possession is handed over to the complainants. The complainants have suffered mental agony, harassment, disappointment for almost two decades. Both OPs 1 and 3 are further burdened with costs for mental agony and harassment in the sum of Rs.50,000/ - each, which be paid to the complainants, within 15 days from the receipt of copy of this order, otherwise, it will carry interest @ 9% p.a., till its realisation. However, it is made clear that the complainants will pay the stamp duty, amount to be paid to OP3 as ordered by the State Commission and other miscellaneous charges, connected therewith to the OPs 1 and 3.