DELHI DEVELOPMENT AUTHORITY vs T.D.KALRA

BY a common order dated 22.8.1995, District Forum-II disposed of 21 complaints filed by different complainants as common questions of law were raised. The undisputed facts are that the complainants were successful in the draw of lots and were issued letters of allocation calling upon them to deposit 90% of the estimated cost of the flat by four instalments by the dates specified in the letter. The complainants managed to deposit the amount within the prescribed time even though the complainants had to raise funds from other sources by paying-considerable amount of interest and had to suffer great inconveniences because of the possibility of the cancellation in the event of default. BY a Notice issued by DDA in the Press, the dates for payment of one or more instalments was deferred on the ground that the construction of the flat was not yet completed and DDA was not in a position to deliver possession to the allottees. The complainants claimed compensation as their money had been blocked even though the DDA was entirely responsible for delay in completion of the construction.

ANOTHER grievance of the complainants was that according to the report of the Comptroller and Auditor General for the year ending 31st March, 1993 being No. 3 of 1994, the actual average cost of the flat worked out to Rs. 2.44 lacs as against average cost of Rs. 2.78 lacs which was recovered from each allottee. The complainants therefore, claimed refund of Rs. 34,000/- recovered in excess from the actual cost as reported by the CAG. Yet another grievance of the complainant was that the DDA had retained varying sums to pay Income Tax on account of deduction at sources from the interest component payable to the allottees. The DDA was withholding the payment of the said amount without any justification.

Lastly, the grievance put forward was that even though the complainants had completed the formalities by submitting the requisite documents in time, delay was caused in issuing letter of possession and also in some cases delivery of possession.

THESE cases were contested. On a consideration of the material before it, the District Forum allowed the complaints with the following findings: (i) Assuming that the delay in completion of construction occurred for reasons beyond the control of DDA, it was certainly open to them to give timely intimation to the complainants so that they could be spared the hardship of arranging money to be deposited in accordance with the Schedule mentioned in the letter of allocation.

(ii) The DDA was liable to pay interest for the period between the date on which the amounts had been deposited by the allottee and the date of deferred payment. (iii) The DDA was also liable to pay interest on the whole amount for the delay beyond 30 days after the completion of formalities by the allottee for the delivery of possession. (iv) Each of the complainants was entitled to Rs. 2,000/- on account of costs. The DDA was further directed to pay interest @ 24% on the entire sum payable under the order unless the payments were made within 60 days. (v) The question of pricing was beyond the jurisdiction of the Fora and could not, therefore, be gone into in these proceedings. Aggrieved by the order, DDA has preferred these appeals.

A cross appeal has been filed by one of the complainants Mr. Dinesh Madan against the same order. Two contentions were raised in the cross- appeal, namely, (a) that in view of the categorical finding in the report of CAG, the DDA had clearly charged Rs. 34,000/- in excess and the District Forum erred in dismissing the complainant''s case on that count. The second contention raised was that the appellant (Dinesh Madan) was entitled to the sum of Rs. 2,397/- retained by DDA as contingency charges especially as the Authorities concerned had since decided that the amount was not deductable by DDA. The District Forum had erred in describing the amount as Rs. 700/- instead of Rs. 2,397/-.

ELEVEN complaints referred to in the title of this order in Part-II were allowed in the same terms as the earlier complaints by order dated 29.12.1995. The DDA has preferred a consolidated appeal which is Appeal No. 85/96, D.D.A. v. R.K. Saxena and Others, impleading the complainants in eleven complaints whose cases were decided by the District Forum by the said order. The questions raised are similar to the one raised in the aforesaid bunch of cases in Part- I, Coming to Part-III, the District Forum by order dated 22.8.1996 allowed Complaint No. 3639/94 filed by Mr. Surinder Mohan Gupta in the same term as the aforesaid decision. Both the parties i.e. DDA as well as the complainant Surinder Mohan Gupta have filed Cross Appeal Nos. 698/96 and 693/96 respectively. The contention of learned Counsel for DDA is that the terms and conditions of the agreement between the parties arc given in the Brochure at the time of launching of the V or VI SFS as well as in the instructions which were sent along with the allocation letter. These terms and conditions were binding between the parties and under these terms and conditions, the DDA was not liable to pay interest over and above the stipulated rate on account of delay in the construction. It has been pointed out that no definite time limit was prescribed for completion of construction and in the nature of things, the delays occurred for a variety of reasons. Some of those reasons were beyond the control of DDA. The DDA had paid interest in terms of the standard terms which had been spelt-out in the brochure and the Letter of Allocation. With regard to delay in delivery of possession, it has been submitted that certain fittings and fixtures could not be made until the very date on which the flat was to be occupied lest they should be stolen. Sometimes for reasons of their own, some of the allottees were not keen on occupying the flats and taking over the responsibility for keeping a watch on the flat and its fittings, etc. With regard to retaining of certain amount to meet contingency charges it has been submitted that the DDA had issued TDS Certificates and the complainants could take-up the matter with the Income Tax Authorities. With regard to pricing of the flat, it has been stated that the report of CAG is in the nature of Audit, objection the Department submitted its reply thereto and the matter has been dealt with by the Parliament and this cannot be raised before the Fora constituted under the Consumer Protection Act.

THE various complainants who are mostly respondents in these appeals, have supported the judgment of the District Forum by repeating the reasons given by the District Forum in support of the order.

WE have carefully gone through the records and have heard the parties/their learned Counsel. The relevant extracts from the Brochure relating to the VI SFS are as under: (1) DDA proposes to construct and offer for allotment Semi-Finished Flats of different types, designs and plinth areas, to persons who get themselves registered under the Scheme, after obtaining their financial participation during the period of construction of the flats. (2) The Semi-Finished Flats to be constructed on multi-storeyed basis, expected to be ready within a short period of two years. xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx (3) Mode of payment towards the cost of Flats after allocation: After a person has been allocated a flat, he/she would be called upon to make the payments as per the following schedule: (a) 25% (including the amount paid as registration deposit) as initial deposit on allotment /allocation. (b) 20% after six months (c) 25% after next six months (d) 20% after next six months (e) 10% when required to take over possession. The demand-cum- allotment letters, whenever issued to the allottees will indicate the prescribed dates by which payments shall have to be made in regard to the first four instalments as mentioned above. For the 5th and final instalment, a fresh demand letter will be issued separately and which may also include the possible increase in the cost of the flat. It will be obligatory on the part of the allottees to make payment of the instalments before the due dates as indicated therein. In the event of default, the allocation of the flat is liable to be cancelled. (4) II. The Registration Deposit will carry interest @ 7% p.a. The interest amount will be credited to his/her account annually and interest thereon will be adjusted towards the payment of the first instalment or at the latest in the second instalment. This interest will be payable only upto the date of draw of losts. No interest will however be paid in case the deposit is withdrawn before the expiry of one year. No interest would be payable on the payments made by allottees towards the cost of flat, as long as they are able to secure the flat within two years of the acceptance of the application for the Scheme concerned in their favour. Interest @ 7% on the amount deposited will be payable for the period beyond two years to the date of the issue of possession letter, if the construction of flats is not completed by then. (5) 12. As and when the flats are released for allocation, DDA will notify the estimated cost taking into consideration the location, specifications, designs and sizes of flats. xxxxx xxxxx xxxxx xxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx Along with the Allocation Letter, the DDA sent detailed instructions. Para II thereof reads as under: "11. The estimated cost of the flat as given in the letter is provisional and is subject to revision on the completion of the flat. Any price difference between the estimated cost & the cost as it works out on completion as per costing formula in vague, would have to be paid along with the fifth and final instalment. No definite time by which the construction of the flats will be completed can be indicated at this stage. Normally it takes 2 years period for completion of the project. Sometimes, due to unforeseenable reasons completion of project may get delayed. For delay beyond 30th month upto 36th months till the issue of demand letter for fifth and final instalment the allottee shall be paid interest @ 7% per annum and beyond 36th month interest will be paid 10% on his/her deposit."

A perusal of the above provisions showsthe following features: (1) The scheme envisaged financial participation of the registrants. The period during which the flats were expected to be completed was about two years. It was expressly made clear that no definite time by which construction of the flat will be completed could be indicated at that stage. Normally it took 2 year for completion of project. Sometimes due to unforessen reasons, completion of project may get delayed. For delay beyond 30th to 36th months or delivery of issue of Demand Letter for 5th and final instalment the allottee shall be paid interest @ 7% and beyond 36th months, interest will be paid @ 10% on his/her deposit. The DDA was to pay interest @ 7% on the Registration Deposit from date of deposit till the date of draw of lots and again if the construction was not complete within a period of two years. The interest payable was 7% from the expiry of the period of 2 years upto date of issue of possession letter. The rate of interest was to be 10% where construction was not completed in three years i.e. 36th months from the date of Registration and liability to pay that interest continued upto the date of 5th and final Demand Letter. The above terms and conditions were binding on the complainants. This point is directly covered by the decision of the Supreme Court in Bareilly Development Authority and Anr. v. Ajay Pal Singh and Others, AIR 1989 SC 1076.

THE law laid down in the above decision in so far as relevant for the present purposes may be summarised as under: (1) A brochure was issued by Bareilly Development Authority (BDA) to the intending purchasers containing general terms and the estimated cost of dwelling houses. THE note given in the brochure clearly stated that the cost shown is only estimated cost and it would increase or decrease according to the rise or fall in the price at the time of completion of the houses/flats.

(2) As all the persons who got themselves registered were educated, it could be said that they have sent in their application for registration with initial payment only after having fully understood the terms and conditions of the brochure.

xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx So it could not be said that there was a mis-statement or incorrect statement or any fraudulent concealment in the information supplied in the brochure published by the BDA on the strength of which all the applicants falling under the various categories applied and got their names registered. xxxxx xxxxx xxxxx xxxxx xxxxx xxxxx (3) More so, when the BDA did not compel any one of the applicants to purchase the flat at the rates subsequently fixed by it and pay the increased monthly instalments. On the contrary, the option was left over only to the allottees. (4) THE allottees after voluntarily accepting the conditions imposed by BDA have entered into the realm of concluded contract pure and simple with the BDA and hence the allottees could only claim the right conferred upon them by the said contract and were bound by the terms of the contract unless some statute steps in and confers some special statutory obligations on the part of the BDA in the contractual field.

(5) When the contract entered into by the State is not statutory and purely contractual, the relations are no longer covered by the constitutional provisions but by the legally valid contract which determines the rights and obligations of the parties inter se.

From the above discussions, it is abundantly clear that DDA was liable to pay interest in terms of the conditions set out in the brochure upto the date of 5th and final Demand Letter and order of the District Forum directing DDA to pay interest over and above those terms is not warranted by law and is set aside.

THIS brings us to the consideration of the alleged unreasonable delay in the 5th and final Demand Letter and issue of the letter of possession/delivery of actual possession. Undoubtedly delay depended on the facts and whether circumstances of each concerned case. In other words, it is a question of fact whether the time taken in issuing letter of possession and putting the allottee into actual possession thereafter was reasonable or not. The rough and ready time limit mentioned in various cases is about four weeks from after the completion of the formalities by the allottee. Where delay exceeds that period, it is generally considered unreasonable. The amount deposited by the allottees stops earning interest after the issue of 5th and final Demand Letter. The law expects DDA to process the cases and issue Letter of Possession in about 4 weeks time from the completion of formalities by the allottee. We have no difficulty in rejecting the contention of DDA that the allottees themselves delayed taking possession for reasons of their own. Such a plea does not deserve to be accepted especially as in some cases letters were written to DDA that the delay was being caused in the delivery of possession. For instance, see letter dated I 25.11.1992 written by Surinder Mohan Gupta to DDA which was duly delivered in the office of DDA on the same date. The DDA is, therefore, liable to pay interest @ 15% per annum on the whole amount deposited by the allottee from after one month of the completion of formalities by the allottees till the date of possession letter. In addition, the DDA is also liable to pay interest @ 15% where actual possession was delivered after four weeks of the issue of the Letter of Possession for the period exceeding four weeks till date of actual delivery of possession. Interest in each individual case shall be worked out within 8 weeks from the receipt of a copy of this order and the amount found due shall be paid within the next two weeks thereafter. The DDA shall also within the said six weeks issue TDS Certificates of the amount deducted at the source for payment of the income tax liability if such certificates have not already been issued. The question of pricing cannot be gone into by the Fora constituted under the Consumer Protection Act. In view of the partial success of the appeals, the costs allowed to the complainants is reduced to Rs. 1,000/- each. The appeals and cross-appeals are disposed of in these terms and all directions given by the District Forum in the different orders under appeal which are contrary to above direction are hereby set aside. The parties shall bear their own costs in the appeal. A copy of this order be furnished to the parties as well as the District Forum-IL Appeals partly allowed.