HARDEV KUMAR SEHGAL (DECEASED) THROUGH vs Ghaziabad Development Authority

IS a Compensation Application under Section 12B of the Monopolies and Restrictive Trade Practices Act, 1969 (the Act for brief) seeking compensation for loss and damage suffered by Shri Hardev Kumar Sehgal, as a consequence of certain unfair trade practices indulged in by the Ghaziabad Development Authority (GDA). During the pendency of the proceedings, Shri Hardev Kumar Sehgal passed away and by an order dated 16th October 1996, the following legal heirs have been substituted in hIS place: 1.Ms. Anju Sehgal, w/o Late Shri Hardev Kumar Sehgal.

SHRI Ajay Sehgal, s/o Late SHRI Hardev Kumar Sehgal. Atul Sehgal, s/o Late Shri Hardev Kumar Sehgal. 2. In this narrative, therefore, the three legal heirs named above will be referred to as applicants collectively and the GDA as the respondent. 3. Shri Hardev Kumar Sehgal, in his compensation application, preferred in the Commission on 23rd May, 1994, made the following averments:

In the year 1989, he came across an advertisement relating to a scheme known as "Indirapuram Plots/Apartments/Houses" scheme of the respondent in or around Ghaziabad U.P. near the National Highway No. 24. The respondent invited applications, inter alia, for plots and stipulated that registration for the same would be open between 27th June, 1989 and 31st July, 1989. A registration booklet indicating the terms and conditions for the allotment of plots under the scheme was also published by the respondent, a copy of which was purchased by Shri Sehgal. He noted from the booklet that the respondent was in possession of the land for the scheme and that possession would be handed over to the allottees "within two years". Shri Sehgal applied for a plot for which he tendered an amount of Rs. 42,000/- towards registration amount and a further amount of Rs. 20/- towards registration fee on 31st July, 1989, for which an acknowledgement was given by the respondent through the Oriental Bank of Commerce. In terms of the scheme, allotments were to be made through a manual/computerised draw. Shri Sehgal was informed by the respondent through its letter dated 5th November, 1989 that a plot had been reserved for him in the category "Plot A" measuring an area of about 350 sq. metres. The estimated cost of the plot indicated as Rs. 4,20,000/- and payment schedule was stipulated in terms of which reservation amount of Rs. 63,000/- was to be paid on 4th December, 1989 with a further six instalments of Rs. 52,500/- each to be paid in six monthly instalments between 4th May, 1990 to 4th November, 1992 (in addition to the instalment amounts, the interest payable was also indicated in the payment schedule). In the said reservation order, "grace period of one month" was given to the allottees "for. payment of reservation amount/instalment after the due date". It was also laid down by the respondent that if an allottee fails to make the payment within the grace period, he would be required to pay interest at the penal rate of 18 per cent per annum from the original due date.

AVAILING of the grace period of one month for the reservation amount which was due for payment on 4th December, 1989, Shri Sehgal paid the reservation amount of Rs. 63,000/- on 4th January 1990 alongwith the entire due amount towards the price of the plot constituting the six instalments referred to above "in one go". Thus, according to Shri Sehgal, he did not avail to the option of making the payments on instalment basis but had paid me entire amount in one lump sum. By paying the entire amount on 4th January, 90 several months in advance of even the due date of the first instalment, he had paid the price of the plot to the respondent ahead of the stipulated schedule. In terms of Clause 15.00 of die booklet, possession of the land was expected to be given to the allottees including Shri Sehgal "within two years". In terms of the same Clause houses were expected to be completed within two and a half years. As the reservation letter was issued on 5th November 1989, Shri Sehgal expected that the possession of the plot will be given in 1991. The reservation letter also mentioned that possession of the plot was expected to be given "during 1991".

SHRI Sehgal has alleged that despite the year 1991 elapsing, nothing was heard from the respondent nor was there any general public notice about any delay in the delivery of possession of plots. He addressed a letter on 11th January, 1992 requesting for information on possession of the plot stating that he had paid the entire consideration towards the price of the plot. He sent a reminder on 31st March, 1992, and this was followed by another reminder from him on 22nd October, 1992. The respondent informed Shri Sehgal through its letter dated 19th December, 1992 that he has been allotted a plot in the draw held on 6th November, 1992 and requested him to send photocopies of the payment receipts of the instalments paid by him. Upon this, Shri Sehgal furnished photocopies as desired and draw the respondent''s attention to the fact that he had made the payments in one lump sum without availing of the instalment facility. Subsequently, according to Shri Sehgal, he visited the location of the scheme in question and was "shocked" to find that there was no trace of the plot allotted to him, that there was no demarcation of the land into sectors and/or plots and that there were no roads, no water pipelines, no power supply lines, etc. Shri Sehgal has alleged that the respondent had made false and misleading representations in writing to the public in general and to him in particular thus attracting the provisions of Section 36A(1), (i), (ii), (iv), (vi) and (viii) of the Act. Inasmuch as he has suffered loss and damage, he had claimed the refund of the amount paid by him of Rs. 4,20,000/- with interest at 19 per cent per annum plus compensation for the mental agony and pain suffered by him of Rs. 1,00,000/-

THE respondent, on being furnished with a nonce and a copy of the compensation application, furnished its reply in the form of a counter affidavit of Shri R.K. Singh, its Executive Engineer. In the counter affidavit, the following defence has been taken by the respondent: 1. THE compensation application is not maintainable as the activities of the respondents are not one of "any trading agency". 2. Shri Sehgal did not pay the reservation amount with time nor did he pay any penal interest as per the stipulations for delayed payments. However, he made payment of instalments well within time. 3. THE booklet only indicated the expected time of handing over the possession of the plots which was subject to change. THE work of development "is being carried on in full pace and as soon as it is complete the notice of possession" will be set to the allottees. 4. THEre has been no deliberate delay in developing and delivering the plots. "Earnest efforts" are being made. 5. THEre has been no misleading statement from the respondent. Being a statutory body, it is functioning "in the best interest of the public at large."

IN his rejoinder, Shri Sehgal has pointed out specifically that he had availed of the grace period of one month in respect of the reservation amount of Rs. 36,000/- according to the stipulation in the booklet and except that one factor the payments had been made not only in time but well ahead of the due dates stipulated for payment of instalments. After the pleadings were completed the following issues were framed: 1. Whether the compensation application is not maintainable for the reasons stated in the respondent''s reply as preliminary objections? 2. Whether the respondent is or has been indulging in unfair trade practices as alleged in the compensation application? 3. If the answer to the foregoing issue is in the affirmative whether the unfair trade practices are prejudicial to public interest or the interest of the consumer or consumers generally ? 4. Whether as a result of unfair trade practices the applicant has suffered any loss or injury ? 5. What relief, if any, is the applicant entitled ?

Shri Sehgal filed his affidavit in evidence on 20th September, 1995. After this, Shri Sehgal passed away and an application was made by his three legal heirs to which we have made a reference earlier in this order. The respondent did not file any counter affidavit in evidence though an opportunity was given to him on 22nd September, 1995.

We gave a hearing to Mr. S.K. Chachra, Advocate, for the applicants and Mr. Pramod Swarup, Advocate for the respondent. Both the Advocates filed a synopsis of their respective arguments.

THE first issue need not detain us, as the maintainability of the application was not seriously contested by the respondent. However, we have considered the preliminary objection of the respondent that its activities do not constitute any trade. This objection is not tenable as the definition of "trade" is Section 2(s) of the Act includes the provision of any services. Section 2(r) of the Act defines "service" as service made available to potential users. In the explanation to Section 2(r) of the Act, it has been declared that any dealings in real estate shall be included and shall be deemed always to have been included within the definition of service. In this view of the matter, the respondent, inasmuch as it is dealing in real estate, in rendering a service in terms of Section 2(r) of the Act and thus indulging in trade within the meaning of Section 2(s) of the Act. The preliminary objection has no force and is rejected. The first issue is therefore decided in the negative against the respondent.

THIS leads us to the main issue namely the second issue as to whether the respondent has indulged in unfair trade practices as alleged. The controversy itself is rather narrow and very limited. The lament of the applicants is that despite the respondent assuring possession of the plot within two years, failed to honour the same. Shri Chachra, Advocate for the applicants makes a forceful plea that the respondent had not merely failed to honour its assurance of possession within two years, but it has failed to even develop the land, years after the two year period had expired. Even in its reply the compensation application, which was filed with the date 2nd December, 1994, almost three years after the expiry of the year 1991 (by which possession should have been given) it has made the averment that "the work of development is being carried on in full pace." Shri Chachra argues that if the respondent cannot fulfil its promise even within five years, let alone the original promise of two years, it is nothing but unpardonable deficiency in service calling for exemplary costs to be awarded against it. He cited the observations of the Hon''ble Supreme Court of India in Lucknow Development Authority v. M.K. Gupta, (1993 CCJ 1100 dated 5th November 1993 in Civil Appeal No. 6237 of 1990) which are extracted herein under: "Construction of a house or flat is for the benefit of person for whom it is constructed. He may do it himself or hire services of a builder or contractor. The latter being for consideration is service as defined in the Act. Similarly, when a statutory authority develops land or allots a site or constructs a house for the benefit of common man, it is as much service of a builder or contractor. The one is contractual service and other statutory service. If the service is defective or it is not what was represented, then it would be unfair trade practice as defined in the Act. Any defect is construction activity would be denial of comfort and service to a consumer. When possession of property is not delivered within stipulated period, the delay so caused is denial of service. Such disputes or claims are not in respect of immovable property as argued but deficiency in rendering of service of particular standard, quality or grade."

(Note: The Act referred to in the extract is the Consumer Protection Act, 1986 which defines an unfair trade practice on lines similar to the definition in the M.R.T.P. Act, 1969). In addition. Shri Chachra argues that the respondent by stating that possession of the land was expected to be given to the allottees within two years cannot take advantage of the expression "expected" to mean that the time frame is open ended. Shri Chachra had taken us through the definition of the word "expected" from Black''s Law Dictionary, 6th Edition, which says that the said expression would mean "to await'' to look forward to something intended, promised or likely to happen". He has also taken us through the definition of the expression "within" and the expression "during" in the same Dictionary. His argument is that the respondent''s interpretation of the expression "expected" is manifestly perverse and untenable. Shri Pramod Swarup, Advocate for the respondent admitted during the arguments that due to certain unavoidable circumstances, possession could not be given and that the respondent is now in a position to give possession if the applicant so desired. Shri Pramod Swarup further points out that the applicants have now refused to take possession and insist only on compensation. In para 5 of his synopsis, Shri Pramod Swarup has stated that the respondent is ready to return the amount deposited by Shri Sehgal provided the original papers are returned to it. He has also resisted payment of any interest as the original scheme itself stipulates that no interest would be paid in the circumstances of this case.

WE have given anxious consideration to the arguments of both the parties. Leaning on the Supreme Court''s observation in the Lucknow Development Authority case (supra), we are of the view that there has not only been delay in terms of the assurance given by the respondent (albeit expected estimation) in its booklet but there has been unquestionable delay of many years after 1991, the expected year in which possession was to be delivered. The semantic nuances of the expression "expected", "within" and "during" need not to be laboured as the delay in this case is not just two years but atleast five years or even more. During the arguments, it was indicated by Mr. Pramod Swarup that possession was offered to the applicant but it was refused. WE have been shown no evidence on the completion of the development work and on the plot being readied for possession at the time of arguments. Presuming that the respondent''s Advocate''s statement is correct, even then it constitutes a delay of a period of about eight years since the payment of the registration amount by Shri Sehgal. By no standards, can this be considered a reasonable delay to give any benefit of doubt to the respondent. There has been unquestionably a deficiency in service on the part of the respondent.

IN this view of the matter, we conclude that the second issue has to be answered in the affirmative against the respondent. The respondent has indulged in unfair trade practices referred to in the compensation application. The third issue is also answered in the affirmative as the said unfair trade practices have been prejudicial to the applicant and similar allottees under the scheme. The fourth issue is also answered in the affirmative as the applicants have suffered loss and injury as a consequence of the aforesaid unfair trade practices. This leads us to the relief. The applicants are entitled to refund of Rs. 4,20,020/- deposited by Shri Sehgal under the scheme. They are also entitled to interest at the rate of 18 per cent per annum as follows: (a) On Rs. 42,020/- with effect from 31st July, 1989 till the date of payment. (b) On Rs. 3,78,000/- from 4th January, 1990 till the date of payment. Towards mental agony and pain suffered by Shri Sehgal and later his three legal heirs, we award compensation which we assess at Rs. 10,000/-. We also allow costs to the applicants of Rs. 5,000/- The respondent shall pay the aforesaid amounts within six weeks from today and file an affidavit in compliance within the same time frame. Application disposed of. ______________