Giants Consumer Education and Research Society vs Ghaziabad Development Authority

These two complaints were filed by the complainants. Giants Consumer Education and Research Society, a registered society and also a registered Consumer Association under M.R.T.P. Act, on behalf of several consumers/flat purchasers against a common O.P.-Ghaziabad Development Authority (G.D.A.). Since most of the points at issue are common, both these complaints were dealt in together and we go on to pass a single order in respect of both the complaints. 2. Brief facts of each case are enumerated below : Original Petition No. 11 of 1994 This complaint was filed by the complainant in respect of 12 later on increased to 13 flat owners of ''Vaishali'' and ''Pratap Vihar Scheme'' floated by the O.P., G.D.A. in early 1990. It is the grouse of the complaint that the O.Ps. took almost a year after floating the scheme to conduct draw for purposes of reservation of flats. The draw was held in April, 1991 and the successful applicants were asked to deposit 10 per cent of the price of plots which was Rs. 2,75,000 for a ground floor flat and Rs. 2,40,000 for the first floor flat. Delayed draw Itself is a deficiency. In the Brochure there was provision for revision of price of the fiat every April inferring thereby that cost-escalation is inherent-hence, this delay in holding the draw obviously worked to the detriment of the flat purchasers as delay would necessarily result in price escalation to be payable by the complainants for no fault of theirs. Second point made is that the O.Ps. did not adhere to the time frame in offering possession of the flats. In fact, till the date of filing the complaint (18.1.1994), neither, the area has been developed nor possession of fully constructed flats have been offered to the complainants. Dimensions of the accommodation have not been made available in respect of Rachna Scheme under Vaishali. The O.Ps. have been arbitrary in fixing the final price of flats. In the offer letters, different prices were indicated to be paid by different flat owners without explaining the reason for doing so. The material used in the construction is below standard. Final price of the fiat asked is much higher than the one indicated in the Brochure and no sufficient reason has been given for such escalation whereas the escalation of prices was to be limited to the price Index level. Alleging all these deficiencies on the part of O.P., the complainant filed this complaint on behalf of the members listed therein seeking following reliefs ; (i) that the respondent be directed to develop the scheme site of the flats, complete the remaining construction work of the flats with full amenities and cost of the flats be assessed on the quality and quality of the materials actually used in the construction of the flats of the allottees in question ; (ii) that the respondent be further directed to pay interest on the amounts deposited by the allottees in question for the period the commission deems the respondent liable for delay, neglect and omission for starting and completing the development of the site and construction of flats ; (iii) that after completion of the construction of houses and development of site/environment, an inspection of the houses be permitted through an independent agency, i.e., Director, School of Architecture and Planning, New Delhi at the cost of the petitioner ; (iv) that the respondent be directed to issue revised allotment-cum-possession letter demanding amount payable in two instalments from the allottees : (v) that the respondent be directed to supply a copy of the site plan, dimensions of the accommodation along with completion certificate from the authorities of the Master Plan to each allottee in question : (vi) that the respondent be directed to pay an amount of compensation to the tune of Rs. 5,000 to each allottee in question or as the commission deems worth for the mental agony, inconvenience and harassment of the allottees in question as the respondent has caused delay in the construction of the flats resulting in the escalation of construction cost also ; (vii) any other relief which the Commission finds suitable may also be awarded to the allottees in question ; (viii) that the cost of proceedings be awarded to the G.C.E. and R.S. Rs. 10,000 for espousing the cause of allottees : and (ix) that since the respondent is not making available its Rules, Regulations and Bye laws to the public, a direction be issued to the respondent to give the Rules, Regulations and Bye laws on payment to the G.O.E. and R.S. 3. In the written version filed by O.P. all the allegations were denied and it was stated on this behalf that flats were offered in 1993. Some took possession, others did not for reasons best known to them. Material used is of approved quality. Flats are complete in all respect and area has been fully developed. Price variation is there in respect of certain flats, i.e.. in the case of comer/park facing/main road flats, hence difference in price is in order. Price escalation is on account of increase in prices of material used and labour costs, roads, sewerage, water supply is available and electric supply has been reached. It is for the individuals to get the electric connection for the flats. Flats were ready long time back but as per practise, they were not furnished as there is likelihood of it being pilfered. They are provided once the flat-owner moves in or intimates about his moving in after taking possession. Dimension of the flats can be seen on the ground. Since they are individual flat-owner and since the total relief sought is only Rs. 3.5. lakhs the Commission is not the right forum for dealing cases for such a pecuniary limit. Whoever have paid the money, those allottees have moved in the flats. There is no merit in the complaint, hence need to be dismissed. Original Petition No. 285 of 1994 4. This complaint was filed by the complainant on behalf of 19 later on increased to 20 members regarding allotment of flats in Govindpuram Scheme comprising several sub-schemes like Akansha I + II'' and ''Anukampa'' etc. As per procedure a tentative price of the flats was given, allotments were to be made after the draw and adhering to a payment schedule. The scheme covered both Hire-Purchase (H.P.) and Self Finance Scheme (S.F.S.). The complainant had applied in response to an advertisement dated 1.10.1988. Draw was held and reservation letters were sent between February, 1989 and November, 1989, except in the case of one where the letter was issued in May, 1990. The scheme envisaged deposit of 50 per cent of the total amount by a certain date (which was given in the reservation letters and varied in eanh case) after which possession was to be given and the balance amounts were to be paid within certain spread out period in instalments. It was the case of complainants that even when the complainants deposited the demanded amount-so-called allotment-cum-possession letters were issued by O.P. only in 1993 after a delay of 2 to 2.5 years, meaning thereby that really speaking they should have offered possession by April, 1991, as per its own commitment. Even when the flats were offered after a long delay they were incomplete, area was not developed. In the allotment letter escalated price was indicated without Justifying the reason behind it. The delay in handing over was caused by O.P. resulting in cost escalation for which complainants cannot be penalised and secondly price escalation had to be as per terms of the Brochure. There has also been different prices for different people under the same scheme. On receipt of possession letters, many deficiencies in the flats were noticed and they were brought to the notice of the O.P. but nothing was done. At the time of filing the complaint 14 out of 19 complainants had not taken the possession as the O.P. was deficient in rendering services, houses were not complete and area was not developed. 5. Alleging deficiency on the part of O.P.. the complainants have filed this complaint praying for following reliefs : (i) That the opposite party be directed to develop the scheme site of the houses, complete the remaining construction work of the houses with full amenities and cost of the houses be charged as prevailing on the date of allotment, i.e., at the time of reservation of the houses. (ii) That the opposite party be further directed to pay interest on the amounts deposited by the allottees in question for the period the commission deems the opposite party liable for delay, negligent and omission for starting and completing the development of the site and construction of houses : (iii) That after completion of the construction of houses and development of site/environment, an inspection of the houses be permitted through an independent agency at the cost of the petitioner. (iv) That the opposite party be directed to issue revised possession letter demanding amount from the allottees of Scheme No. 537 as per terms and conditions laid down in the Brochure and reservation (allotment) letter and also to refund the amounts received in excess than required along with interest at the rate of 18 per cent per annum from the date of deposit; (v) That the opposite party be directed to supply a copy of the site plan, dimensions of the accommodation along with completion certificate from the authorities of the Master Plan, G.D.A. to each allottee in question : (vi) That the opposite party be directed to pay an amount of compensation at the rate of Rs. 2,000 p.m. or as the Commission deems worth to allottee in question for undue delay caused by the opposite party in handing over the possession of the houses resulting loss of rental income by the allottees ; (vii) That the opposite party be directed to pay amount of compensation to the tune of Rs. 5,000 to each allottee in question or as the Commission deems worth for the mental agony, inconvenience and harassment of the allottees in question as the opposite party has caused delay in the construction of the houses resulting in the escalation of construction cost also ; (viii) Any other relief which the Commission finds suitable may also be awarded to the allottees in question ; and (ix) That the cost of proceedings be awarded to the C.G.E. and R.S. Rs. 20,000 for espousing the cause of allottees. Additional prayer was also made, which are as follows : (i) That the opposite party be directed to develop the scheme site of the houses, complete the remaining construction work of the houses with full amenities and cost of the houses be charged as prevailing on the date of allotment, Le.. at the time of reservation of houses. (ii) That the opposite party be further directed to pay interest on the amounts deposited by the allottees in question for the period the Commission deems the opposite party liable for delay, neglect and omission for starting and completing the development of the site and construction of houses. (iii) That after completion of the construction of houses and development of site/environment, an inspection of the houses be permitted through an independent agency at the cost of the petitioner. 6. In its written version filed by O.P., it denied all the allegations while admitting that there has been some delay in offering/handing over possession but it is not abnormal in such cases. Prices in Brochure were tentative which had to be revised as the cost of material went up and so did not labour costs. It was denied that incomplete houses were offered. All infrastructure like water, sewerage was complete. Houses and infrastructure is complete in ail respects. It is the complainants who have not been taking possession. O.P. cannot be faulted for this. In view of all these points, the complaint deserves to be dismissed with costs. 7. From here both the complaints traverse the same path. 8. After preliminary hearings, it was felt that the services of the Local Commissioner shall be needed to get the first hand picture on the status of the fiats and the infrastructure. In the light of this. Commission, passed the following order on 10.1.1996 : "After hearing both sides and perusing the list of names respectively filed by them we hereby appoint. Shri Hari Chand, 11-A/74, Nehrunagar. Ghaziabad, retired Chief Engineer of the U.P. State Government as expert Engineer to inspect the 33 buildings with which we are concerned in these dispute (13 buildings in Vaishali and 20 buildings in Govindpuram) to find out whether there are any constructional or structural defects in those buildings and if so what is the nature of those defects and make a report to this Commission setting out nature of the defects, if any noticed, the steps required to rectify them and the approximate amount that would be necessary for rectification of those defects. Such report should be filed before this Commission within a period of two months from the date of receipt of this order. The complainants as well as G.D.A. shall deposit Rs. 5,000 each with Mr. Hari Chand within three weeks from today towards his preliminary expenses and part of his remuneration. The final order fixing his remuneration of the work will be passed by us after receipt of the report. Copies of these two complaint petitions will be furnished to Mr. Hari Chand by the complainants counsel and Mr. Hari Chand shall issue prior notices to the G.D.A. as well as to the complainants in these two petitions before he proceeds to conduct the inspection of the building. In case they desire to present, they may be present at the time of visit. Post this case after receipt of the report of the expert." 9. The report of the Local Commissioner was received in March, 1997. O.P. was given time to examine it and file an affidavit on the status of the flats as also the formula followed in escalating the prices of the flats mentioned in the respective brochures. Affidavits and counter-affidavits were filed by the parties. 10. Shorn of paper filibuster, we see basically three points emerging for our attention and we are going to focus on them. These points are : (i) delay in delivery if any and relief thereon, (ii) defects in the fiats, and (iii) cost escalation. 11. Before we go to these points, we would like to deal with certain preliminary points raised by the learned counsel for the O.P. First point made out by him is that the complainants were offered possession in 1993, which they did not take. In the situation the complainants cannot raise any demand against the O.P. We are afraid the situation is not so in the instant case. The complainants had not taken the possession alleging deficiency on the part of the O.P. Proof of this is that they did take possession in the years. 1997 and 1998 after all defects were removed. The flat purchasers cannot be expected to move in a deficient house/flats. Even after taking possession, if defects are noticed or developed, in the near future like cracks, structural defects or the like, they have right to seek remedy against the flat seller. We see no merit in this plea of the O.P. It has also been stated by him that question of price cannot be gone into the Consumer Forums. It is true, yet, if we see violation of the terms of the brochure, nothing prevents us to go into it to ensure observance of the terms of the Brochure by the parties. A point is also made by the complainants about the different prices charged by the O.P. of flats ''under the same scheme''. The brochure itself provided for 10 per cent extra for corner plot, ground floor etc., there is no rebuttal to this by the complainants. We see no merits in this objection either. 12. We now go on to deal with the three main points. 13. On the point of delay in O.P. 11 of 1994 dealing with Vaishali/Pratap Vihar Scheme, we see that even though scheme was floated in March-April, 1990, the draw was held in April, 1991 and reservation letters were issued thereafter. It is not disputed that the possession was offered in 1993, i.e., within a period of two years, which the Commission is usually granting for construction of a flat. Admittedly there was no time frame. We consider two years as a reasonable time in this regard. In the instant case, offer of allotment was done within the time frame. Thus, in our view, there has been no delay in completion and offering the flats. They were allegedly incomplete and were not taken possession of-as per the complainants. But as per record, some people did take possession in December, 1993 and June, 1995. Right to claim compensation on account of delay starts with the issue of reservation letter and not before that date/period as after getting that paper he becomes a consumer. Therefore, we see no merit in this prayer. In O.P. 285 of 1994, the Govindpuram Scheme was floated in October, 1988, reservation letter was issued mostly in 1989 but possession was offered only in 1993. We find that as per our own judgment in H.U.D.A. v. Darsh Kumar, Revision Petition No. 1197 of 1998, normally the time taken for delivery of possession should be two years after the issue of reservation letter which obvious does not appear to have been done in most of the cases in the instant complainant, therefore, we find that there has been delay of varying period in this case. The O.Ps. are directed to pay interest at the rate of 18 per cent to each of the complainants for the period from after two years of the issue of reservation letter and the date of issue of letter for possession by the O.P. 14. On the question of defects, the report of the Local Commissioner who was a retired Chief Engineer of State P.W.D. appointed by this Commission, is on record, who made the detailed report in respect of each flat allotted to each of 33 complainants in both the complaints and had recommended a certain amount for carrying out repairs/providing facilities in respect of each of the flat in question. We also see on record affidavit dated 9.2.1998 of Mr. S.C. Jain, Executive Engineer of O.P. in Complaint No. 11 of 1994 and that of Mr. Beer Singh, Executive Engineer, G.D.A. in Complaint No. 285 of 1994. Their, repeatedly saying that the report of Local Commissioner is not reliable does not cut much ice with us. According to them, cost for repairs is not supported by any details and finally should not apply to those who have taken possession of the flat indicating full satisfaction. Subsequent to the report of the Local Commissioner, we have two situations ; one, the report of the Local Commissioner with costs of repairs of flats, and secondly, taking possession of flats by many complainants subsequent to the report of Local Commissioner. We also see that in the rejoinder-affidavit filed by the complainants, it is not denied that possession indeed has been taken ostensibly after full satisfaction and yet, claiming compensation on this account. There is no doubt in our mind that all this confirms the status that these flats did indeed require repairs, which was done by O.P. and in its corrected status, possession was taken by the complainant on different dates. For the delayed possession in such case, the complainant shall be entitled to interest on the deposited amount at the rate of 18 per cent p.a. from two years of the deposit till the date of taking the possession. This will be valid for those who have taken possession. Some complainants till date appear to not have taken the possession. They will be entitled to interest on above lines but only up to 9.12.1998, i.e., date of filing the affidavit by O.P. We see no reason as to why this smaller number could not take possession. They cannot be permitted to profit for delay on their part to take possession. Since compensation is being awarded by way of interest at the rate of 18 per cent p.a. as detailed above and since most complainants have taken possession after full satisfaction, and there is nothing to the contrary on record, we do not see any point in awarding any costs of repairs as awarded by the Local Commissioner. Compensation being awarded by way of interest, in our view, shall cover more than the costs of these repairs, if any, are left. 15. One of crucial points agitated was relating to costs escalation. It is the case of the complainants that there is no justification for increase in costs for two reasons. Delay in offering the possession letter, i.e., the excess time taken by the O.P. in completing the construction is at the root of it for which the complainants cannot be faulted and secondly, methodology of the cost escalation is given in the procedure, which has not been followed. On the other hand, it is argued by the learned counsel for the O.P. that as held by Hon''ble Supreme Court, Consumer Forums cannot go into the question of pricing. Prices have been revised on account of escalation in cost of raw material and labour costs. Some delay is normal in construction activity. No case is made out by the complainants. The escalation has been properly explained. We are quite aware of the settled law that the Consumer Forums cannot go into the question of pricing but what are looking into is the terms of the contract which is what the Brochure is : In the Brochure in respect of Vaishali Scheme, clause 3.30 reads as under : "3.30 Cost of Houses.- Approximate cost of each house given in column 5 of table 1. The cost of the ground floor house on the comer plot will be 10 per cent of the premium of land. Note.-Cost announced is only for the current financial year. Every year in April cost will be revised basing on the basic price index for the year and appreciation of the cost will be limited to that extent only." 16. As far back as 2.11.1998, this Commission had directed the O.P. to give us the break up and justification for the increase, obviously with reference to the terms of the Brochure. What we got were details of increase which had no co-relation with the basic price index. Last opportunity was given in July, 2002 to O.P. to obtain the details from the State Planning Institute, Lucknow, which has not been done till date whereas the complaints have worked out the same on the basis of building cost index developed by the same institute. 17. As per their formulation, Index increased from 167 in 1990-91 to 226 in 1992-93 showing an increase of 35.33 per cent original cost of a ground floor flat in Vaishali Scheme costing Rs. 2,75,000 which had two components. Cost of land and cost of construction including other charges. For example, the break up was as under :

Cost of land @ Rs. 935 per Sq. Mtr. (156.04 Sq. Mts.) Rs. 1,45,897.40

Cost of Construction

(i) Cost of construction Rs. 1,04,604.27

(ii) Other charges @ 23.42% of cost of construction Rs. 24.498.33

Rs. 2,75,000.00

The effect of the exercise shall be that cost of constitution, i.e., at 2 (1) shall go up by 35.33 per cent and as a consequence of this ''other charges'' also go up proportionately. It is this which can be charged as per terms of the Brochure. 18. The O.P. shall rework the final price chargeable from the complainants on the above basis. In the material on the subject supplied to us by complainant, they have worked the cost on area of 106.12 Sq. Mtr. in our view rather arbitrarily. As per Brochure (Col. 11 of Table 1) the area is 156.04 Sq. Mtr. It has never been their case that area given is less, hence we cannot allow the complainants to go beyond the pleadings. 19. In the case of Govindpuram Scheme, clause 3.30 of the Brochure reads as follows : Cost of houses "Approximate cost of each house is given in column of table 1. The cost of the ground floor house on the corner plot will be 10 per cent extra of the premium of land." Since, the word "approximate" has been mentioned, final cost could vary and since no clause/term of the Brochure has been violated and since consumer forums cannot go into the question of pricing of the house/flat we find ourselves unable to interfere in this regard in respect of flats under Govindpuram Scheme. 20. The complaints are allowed on above terms and the O.Ps. are given eight weeks to carry out the directions contained in the order. The O.Ps. shall also pay cost of Rs. 10,000 in each case.to the complainants