HOUSING AND URBAN DEVELOPMENT CORPORATION vs BOBY KOVOOR

THIS order will dispose of both the above titled appeals as both arise out the order dated 30th June, 1992 passed by the Karnataka State Consumer Disputes Redressal Commission at Bangalore in Complaint No. 101 of 1991.

THE said complaint was filed by the present respondent Shri Boby Kovoor, hereinafter referred to as the ''complainant, against the Housing and Urban Development Corporation (for short HUDCO) who was the opposite party No. 1 in the complaint and now appellant in Appeal No. 297 of 1992 and Respondent No. 2 in Appeal No. 313/92 and M/s. Nirman who had been arrayed as opposite party No. 2 and who is now Respondent No. 2 in Appeal No. 297 of 1992 and appellant in the other Appeal No. 313 of 1992 (hereinafter referred to as opposite parties Nos. 1 and 2 respectively). By the impugned order the opposite parties Nos. 1 and 2 have been directed by the State Commission to pay Rs. 1,61,980 to the complainant jointly and severally with interest thereon @15% p.a. from the date of the order till the date of payment. Aggrieved by that order, the opposite parties have filed these appeals before this Commission. The case of the complainant is that on reading an advertisement published in ''Deccan Herald, Newspaper dated 16th March, 1989 regarding Laurie Baker Home, he secured a brochure, from opposite party No. 1"HUDCO, Madras and sent a sum of Rs. 250 as initial payment along with duly filled up forms and site plan in the month of July, 1989 to HUDCO. HUDCO thereafter, prepared a sketch and the diagram and finalised the plan for the construction after discussion with the complainant. HUDCO entrusted the said work to opposite party No. 2-M/s. Nirman to execute the construction work as per plan on turn-key basis.

M /s. Nirman had discussions with the complainant and prepared an estimate for completing the construction at a cost of Rs. 3,58,010 to be paid by the complainant in instalments at various stages. After the construction work was started, certain alterations were made on mututal terms and the total cost of construction was increased and fixed at Rs. 3,80,450.

THE opposite parties, though took up the construction in the month of April, 1990, did not complete the construction as promised by them by the end of August, 1990. The construction work was not continued at normal pace and they used to stop the work now and then without any valid reasons. The complainant had to run from Bangalore to Madras on various occasions in order to request the opposite parties for expediting the construction work. The opposite parties on all the occasions, gave assurances stating that construction would be completed as early as possible, but the work did not progress. According to the complainant, the opposite parties were totally indifferent and negligent in not executing the work as per the plan and have considerably delayed the construction without any valid reason. This act of the opposite parties has caused considerable financial loss to the complainant and he is under the threat of even losing the further facility of the loan availed from his employer. On account of non-completion of the construction of the house, he is forced to stay in the company''s leased house for which the lease expired by 30th April, 1991, and he is forced to pay the higher rent, as demanded by the owner. The company rule is that, if an employee avails the facility of house building loan, he will not be entitled for company quarters after a particular period. If the construction of the house was completed as per schedule, the complainant could have moved into his own house, for which he is also eligible for House Rent Allowance as per the company rules, which would have become a saving for the complainant. Thus due to the negligence and indifference of the opposite parties the complainant had to suffer great financial loss and is under heavy stress and mental agony.

THE complainant has made many telephone calls requesting the opposite parties to complete the construction, but in spite of repeated assurances the opposite parties never cared to come and execute the work. As on the date, only the superstructure of the house is complete and there are lot of work to be completed in order to get the house fit for habitation. The complainant has also made enquiries with the local architects for executing the remaining portion of the construction, and the same is estimated at Rs. 3,51,295. Since December 1990 half-constructed house has been left without being guarded by any security and lot of valuable construction materials which were stored, have disappeared, presumably stolen. No compound wall has been erected and doors have also not been fixed to the house. Due to torrential rain and lack of proper cementing the, bricks are coming down and heavy damage has been caused to certain portion of the building.

THE complainant has further stated that he was shocked and surprised to receive a letter dated 11th June, 1991 which was received on 19th June, 1991, from M/s. Nirman making frivolous allegations and untenable claims, imputing lack of co-operation from the complainant''s side, making it as a pretext for the inordinate delay. M/s. Nirman has also demanded further escalation cost. In his complaint the complainant sought the following reliefs: (a) directing the respondents to complete the construction of the house as per the approved plans and also rectify the poor quality of work and defects in construction within the stipulated time and also order payment of penal interest at 21% on the principal sum of Rs. 3,80,450.00 (Rupees three lakhs, eighty thousand four hundred fifty only) from the date of receipt, till the date of payment and also further order to pay damages in a sum of Rs. 50,000 (Rupees fifty thousand only); (b) In the alternative for an order permitting complainant to complete the remaining portion of the construction through a recognised architect and direct the respondents to pay the estimated cost of further construction, in a sum of Rs. 3,51,295.

BOTH the opposite parties contested the complaint and filed separate counters. HUDCO pleaded that its object is to provide long term finance for construction of houses for residential purposes and/or undertake housing and urban development programmes in the country. In pursuance of this objective, the answering respondent is making efforts in organising construction of low-cost housing scheme for which it imparts training to various entrepreneurs, engineers and architects. As a part of this scheme, an advertisement was released in Dec-an Herald seeking applications from intending parties for construction of Laurie Baker Home. It was mentioned in«4;he advertisement that the role played by it is only to assist the parties and to identify that who would be appointed by the said parties for taking up construction. Pursuant to the said advertisement, the complainant sent a Demand Draft for Rs. 250 towards the first instalment of consultancy fees which has to be paid to the engineers/architects identified by the respondent and appointed by the parties. HUDCO thus identified M/s. Nirman whose Engineers and Architects were trained by it. The object of collecting the said amount of Rs. 250 was only to receive the initial payment/ instalment and after identifying and appointing the said architects by the complainant the entire amount was to be paid to the said architects towards the consultancy fees such as preparing plans, sketch diagrams etc. Accordingly it has passed on the said amount of Rs. 250 to the second opposite party-M/s. Nirman. There is absolutely no service as such to be rendered by it to the complainant. It being a Government of India Undertaking, there is no profit motive in this enterprise. It has not received any consideration for rendering this public service to the complainant. After having identified M/s. Nirman, the complainant entered into an agreement with M/s. Nirman for construction of his Laurie Baker Home (for short the LBH technology). The entire payments towards construction of the said house were paid directly by the complainant to M/s. Nirman. The differences or disputes, if any are only between the complainant and M/s. Nirman. HUDCO communicated to the complainant vide its letter dated 3rd August, 1990 about the entrustment of the work to M/s. Nirman Vide its letter dated 28th December, 1990 addressed to the complainant with a copy to M/s. Nirman, it was made clear that HUDCO only does the initial work like linking up between the complainant and the consultant and further issues relating to construction would be settled through discussions between them only. There is no privity of contract even between it and the complainant for the construction of the said house. In fact there is no privity of contract between HUDCO and M/s. Nirman. HUDCO is neither the agents nor representatives M/s. Nirman. As admitted by the complainant, , M/s. Nirman was appointed by the complainant as architects, engineers and builders to execute the construction work as per plan of the complainant. As HUDCO is rendering free public service, such a role would not come within the definition of the expression "Service" as defined under Section 2(o) of the Consumer Protection Act, 1986. After the receipt of the said first instalment, correspondence was exchanged between the complainant and HUDCO. Later on, discussion took place at Bangalore when M/s. Nirman was identified who held further discussion with the complainant. After discussions, the representatives of M/s. Nirman and the complainant visited the site, checked measurements and thereafter the complainant wrote a letter dated 5th May, 1990 to HUDCO about their visit etc. In fact, the complainant was happy for the interest taken by HUDCO. Vide letter dated 2nd August, 1990, the complainant requested HUDCO to issue a formal letter certifying the identification of M/s Nirman as architects duly trained by them. Therefore, HUDCO issued a letter dated 3rd August, 1990 to show that M/s. Nirman is a consultancy group who are entrusted the work on turn key basis. In order to promote LBH-Technology, HUDCO agreed to convene a meeting at the request of the complainant and M/s. Nirman which took place on 30th January, 1991 for sorting out their differences. Even during that meeting HUDCO had explained that both the parties are required to sort out their differences mutually. HUDCO could not be held for any delay that might have been caused on either side, the complainant should approach M/s. Nirman for redressal of his grievances, if any. Apart from the identification of the architects, namely M/s. Nirman, in this behalf HUDCO is not obliged to render any more public services. HUDCO does not supervise the work of M/s. Nirman. In fact, HUDCO is riot even aware of the extent of money paid by the complainant to M/s. Nirman. HUDCO is also not aware of the correspondence exchanged between the complainant and M/s. Nirman.

OPPOSITE party No. 2 M/s. Nirman averred in their counter that they were identified as the Architects, Engineers and Builders by HUDCO. The complainant had several discussions with them regarding plans, estimates, fees etc. They clearly indicated by their letter of 8th December, 1989, the schedule of payments for architectural, consultation and supervision charges. It was agreed that this would be a turn-key based project whereby labour, material and construction service would be provided by the contractor for which payment is made in advance by the owner. The complainant through his letter dated 15th January, 1990 accepted the said terms. Later on an agreement was entered into between the complainant and M/s. Nirman for the construction of a Laurie Baker Home. An estimate for the construction was provided to the complainant. It was clearly stated in that agreement that the Architects and Builders are entitled to charge 5% of the total estimated construction costs as architectural and supervision part of work. It was further clearly indicated in this estimate that it was worked and based on actual existing material price, labour, construction work materials, transport etc. Provision was also made for price increase in this estimate saying that since the material and labour cost is increasing day by day, the increase in those costs should be paid by the owner and an option was also provided to the owner to procure and supply necessary materials and tools at the site. It was settled that M/s. Nirman were to procure the materials tools and labour for which the complainant was to make payments in advance. The first instalment of advance payment was for Rs. 1,16,962. This amount was to be paid in advance in order to enable M/s. Nirman to arrange for materials, tools and also specialised artisans from Kerala who are specially trained on the construction of Laurie Baker Homes. The 2nd instalment was for Rs. 1,29,242; the third instalment was for Rs. 31,306 and the fourth instalment was for Rs. 80,500. The total cost as per the estimate was, therefore, Rs. 3,58,010 plus 5% chargeable towards architectural and supervision of work which is Rs. 17,900.50 and therefore the total costs as per the abstract estimate was Rs. 3,75,910.50. The said agreement has not specified any time for completion of the house. A sum of Rs. 250 has been received by M/s. Nirman from HUDCO which has been paid by the complainant to wards plan, design etc. The work on the said construction started in April, 1990 itself. It was further averred by M/s. Nirman that the complainant was all along non-cooperative and so the work could not be carried on in the usual way. Moreover, the complainant also did not made payment on time. It was also pleaded by M/s. Nirman that certain modifications and alterations in construction were made at the instance of the complainant and he failed to make payments for additional costs incurred in making such alterations. Only 10% of the work has remained unfinished and in case the complainant had made payment of Rs. 50,000 they would be able to complete the construction. By not following the payment schedule it created hardship and inconvenience for M/s. Nirman to discharge its liablity. Instead of making payment of the remaining amount of Rs. 50,000 the complainant has filed this complaint. Whatever delay has occurred has been due to the untimely payment and difficulties created by the complainant himself. The complainant has paid a sum of Rs. 3,80,200 and the cost of work already executed comes to Rs. 3,75,598.55.

ACCORDING to M/s. Nirman a meeting was held on 11th December, 1990 at Bangalore between them and the complainant to resolve the differences that had arisen. M/s. Nirman had agreed to complete the work immediately and the complainant agreed to make payments soon to enable M/s. Nirman to go ahead with the work. The complainant agreed to make a payment of Rs. 50,000 by 11th December, 1990, Rs. 25,000 by 18th December, 1990 and further payments, if due to M/s. Nirman would be made after 18th December, 1990 in 10 days. The complainant also agreed to do himself the mosaic and plumbing work. It was agreed upon that if the complainant was unable to do the plumbing work himself, M/s. Nirman was willing to do it for him, provided the complainant made known his option to M/s. Nirman by 17th December, 1990. It was also agreed that M/s. Nirman will not be held responsible for delays which were due to the delays on the part of the complainant. The minutes of the discussion were signed by the partners of M/s. Nirman and the complainant.

THE State Commission has recorded evidence in the case. The complainant examined himself and another witness while the opposite parties examined their witnesses out of whom two witnesses were officials of HUDCO and the third witness is the partner of M/s. Nirman. Some documents were also tendered by the parties. After considering all the material on record, the State Commission held that it is not permissible for HUDCO now to say that their duty was only to identify architects, engineers and builders and that there was no liability on it regarding the construction of the house. It was also held that the construction of the house of the complainant, that was to be under Laurie Baker System was deviated and it was faulty and that there has been undue delay in the construction of the house. It further held that for plumbing, wall painting, painting of windows, doors, etc., plastering of roofing, out doors, walls, electrical wiring and switchings, ferrowcement water tank, providing shutters, repairs and painting of outside walls are yet to be done and the estimates for these works was Rs. 88,875. This estimate was of the year 1989-90. Therefore, to complete the same work now, a certain percentage has to be added towards escalation and the State Commission allowed 20% of the said estimated cost of Rs. 88,875/-. Thus according to the State Commission, the total amount comes to Rs. 1,06,650. Supervision charges @ 5% were added on that amount and this works out to Rs. 5,330. Thus, according to the State Commission, a total sum of Rs. 1,11,980 became payable by the opposite parties and the complainant was allowed to get the balance construction work done. The State Commission also allowed Rs. 50,000 to the complainant as compensation as he has suffered loss and undergone mental agony. Both the Opposite Parties were jointly and severally held responsible to pay a sum of Rs. 1,61,980 to the complainant. Both the opposite parties have come before this Commission by way of separate appeals as noticed earlier.

APPELLANT - HUDCO''s contention is that as the LBH technology, using cheap local materials and simple innovative techniques had been helping the people to make lovable and liveable homes, HUDCO undertook the task of educating the people desirous to have cheaper and better houses at their costs. With this view to help the people in educating in this technique, an advertisement was published in Deccan Herald Edition dated 16th March, 1989 to bring it to the notice of the larger section of the public about the Lauri Baker Technique. This was not undertaken as a measure of any professional/business activity nor for any consideration. Based on those advertisement some of the enquiries were general and therefore HUDCO issued general guidelines for the knowledge of all concerned and published booklet called The next step towards getting a Laurie Baker Home,. It was further averred that as specific enquiries also started coming, it was decided that a token advance of Rs. 250/- be taken which would be ultimately adjusted by the Architects/Engineers in the total cost of the house. No charge was taken for the booklet and whoever availed of the services of such Architects/Engineers in the construction of the house was given the adjustment of the amount of Rs. 250/- taken as token amount and nothing was retained by HUDCO as the assistance given by it was only as a social obligation and not for any consideration. The above contentions of HUDCO have force. Annexure A-l to the appeal is the advertisement issued by HUDCO in Deccan Herald Edition of 16th March, 1989. In this it was clearly mentioned "you too,- can now have a Lauri Baker Home but remember you have to make up your mind and you have to build, we only assist". The above words clearly show that HUDCO''s part in the construction of the house of a person desirous of having a Laurie Baker Home was only to assist. The Complainant-Respondent No.1 has produced Annexure R1 and R2 which are Photostat copies of some pages of the booklet issued by HUDCO. In our opinion the relevant portions marked by the Complainant do not help him. In Exhibit R 1 it is mentioned "With this background in view HUDCO in collaboration with COSTFORD is bringing out this general guidance publication. This will be followed by specific guidance to the home builders by making available professional back up services for designing and construction of their homes with the help of trained professional and skilled artisans . This clearly shows that the HUDCO itself was not to take up the designor construction of a Laurie Baker Home. It has specifically been said that it will make available professional back up services for design and construction of such home with the help of trained professionals and skilled artisans. In Exhibit R2 it is mentioned, ''''since we are now stepping out from a general guidance area to a specific guidance area and the guidance is for specific house construction, needs of your home should be articulated inasmuch details as possible. For your convenience these areas are identified in the form. This form should be furnished with date filled and sent along with a DD for Rs. 250/- in favour of: (a) COSTFORD, Trichur, (or) (b) HUDCO, Madras, (or) (c) Building Centre, Nizamuddin, New Delhi"

It was further mentioned, "this payment would cover the initial expenses for rendering professional services on plans, designs, construction and supervision. The total cost for running professional services from conception through construction, to completion would be 3% of the cost of the house. The initial payment of Rs. 250/- being made now would be reckoned as part of the above cost for professional services". Thus it is clear that the professional service was not to be rendered by HUDCO but by the Architects/Engineers trained by HUDCO and this initial payment of Rs. 250/- was an advance part payment towards the cost of professional services of those persons.

THIS is the consistent case of the HUDCO that its duty was only to bring together the persons desirous of having a Laurie Baker Home and the professionals/Engineers trained by it and M/s. Nirman who undertook to construct the house of the complainant was introduced by it to the Complainant and the Complainant entered into a contract for the construction of his house with M/s. Nirman and not with HUDCO. The Complainant placed much reliance upon letter Annexure R 9 written by HUDCO to the Complainant on 3rd August, 1990, in which it is mentioned that it has entrusted the work to M/s. Nirman a Consultancy Group on turnkey basis and that M/s. Nirman would charge for the above a nominal 5% charges for the planning and execution of the work. The argument of the Complainant was that from this letter it is clear that it was HUDCO who had entrusted the work to M/s. Nirman. This letter has been explained by Witness No.1,T. Chandrashekar Asstt. Appraised Officer, HUDCO who was examined on behalf of the Respondent No.1. He has stated that the Complainant had written a letter to HUDCO asking for a latter to show that the said work was entrusted by HUDCO to M/s. Nirman as he wanted it for securing loan and therefore letter dated 3rd August, 1990 was issued. (Copy of the statement of that witness has been provided by the Complainant). We do not find any ground to disbelieve the above statement of T. Chandrashekar particularly when he was not cross-examined in respect of that letter. Otherwise also there was no other purpose of writing that letter by HUDCO, except as explained by T. Chandrashekar, on 3rd August, 1990 when the construction work on the Complainant''s house had already been started in April, 1990 after he had entered into a contract with M/s. Nirman. The Complainant has himself produced letter dated 12th October, 1989 (Annexure R5 at page 120) written by the HUDCO asking him to visit the Regional Office of HUDCO at Madras at2.30 p.m. on 18th October, 1989 and that certain broad plans have been prepared and arrangement for getting a house constructed through trained professionals have also been lined up. As is mentioned in the reply to the memo of appeal by the Complainant he met the Executive Director of HUDCO in his office on 18th October, 1989 in response to that letter and was introduced to one Mr. Sherry K. Isaac a partner of Ms. Nirman who had been selected by HUDCO for the construction of his house and he was advised to have further discussions with Mr. Isaac to finalise the plan and cost. This clearly shows that the complainant was to finalise the contract with M/s. Nirman. Of course the Complainant has further mentioned that since Shri Suresh, Executive Director, HUDCO had told him that once the contract was finalised, HUDCO would entrust the construction of the house to M/s. Nirman on turnkey basis. That averment cannot be believed. The Appellant in First Appeal No. 313/92 has produced Annexure A1 in which M/s. Nirman stated its term for construction of the house. That proposal was accepted by the Complainant on 5th April, 1990. Thus it is clear that the contract for the construction of the house was entered in to between the complainant and M/s. Nirman. HUDCO was not a party to that contract.

IN Annexure R-8 (at page 123) dated 5th May, 1990 the Complainant had written to the Executive Director HUDCO stating that he was really happy and thankful to note that M/s. HUDCO was closely associated with this project and for the personal interest taken at the Executive Director''s level. Annexure R-10 is a letter dated28thDecember, 1990 written by HUDCO to the complainant explaining that the issues relating to the construction of the house should be sorted out through discussions with concerned Consultant, as HUDCO only does the initial spade work like linking up between the client and the Consultant. The Complainant has not produced any letter to contradict the above stand of HUDCO. On the other hand in letter dated 22nd February, 1991 (Annexure R-11 page 127) the complainant had himself stated that in the meeting with the Executive Director in February, 1990 he was assured that M/s. Nirman was reliable, well-qualified to take up the work and HUDCO''s close monitoring would always be there to ensure that the house is completed with best workmanship and materials. Thus the Complainant himself admitted that the HUDCO was only to monitor the progress of the house and was not concerned with the construction work. As is clear from the various other letters produced on the file HUDCO had been trying to bring together the Complainant and M/s. Nirman to sort out the differences. In none of the letters produced by the complainant either written by him or received by him from HUDCO or Nirman it is mentioned that HUDCO was in any way concerned with the construction except with the monitoring of the work. As HUDCO was carrying the message of low cost house to the general public it had to monitor the work entrusted to the Engineers/Architects trained by it. The Engineers/Architects were not the employees of HUDCO. They were only interested with HUDCO as they were getting work through it and were getting supervision charges from the clients.

THE initial payment of Rs. 250/-received by HUDCO, in accordance with the terms of the booklet was handed over to M/s. Nirman. The State Commission had made much ado about the fact that the said payment was made to M/s. Nirman after the filing of the complaint. In our opinion the time of payment of Rs. 250/- by HUDCO to M/s. Nirman is not much relevant. Witness T. Chandrashekar who has stated about the passing of this amount of Rs. 250/- to M/s. Nirman was not cross-examined to show that in other cases also such advances were not passed on to the Engineers/Architects who undertook to construct other houses. We have no other option but to hold that HUDCO being a Government Undertaking was doing this service only as a social obligation without any consideration. Consequently First Appeal No. 2.97/92 filed by HUDCO is liable to be accepted. Now we take up First Appeal No. 313 of 1992 filed by M/s. Nirman. Annexure Al with enclosures at pages 19 to 23 of that paper book show that the first estimate for the construction of the Complainant''s house was Rs. 3,58,100/-. That proposal was accepted on 5.4.1990 by the Complainant. Vide Annexure R-7 (page 69) dated 20th April, 1990 the Complainant suggests some alterations. The total cost of the alterations was assessed at Rs. 69,158.25 vide Annexure A-2 dated 14th November, 1990 (at page 24). According to M/s. Nirman they were entitled to 5% as supervisory charges over the total cost of the construction. The appellant has paid Rs. 3,80,450/- which .included the amount of Rs. 250/-received from HUDCO.

OF course no specific time was mentioned in the agreement about the completion of the house but from the documents produced in this file as well as in the other file it is clear that the probable time of the completion of the house was four months. Thus this house should have been completed in August, 1990. M/s. Nirman''s contention is that the delay took place as the payments were not released by the Complainant in time and the Complainant''s case is that the delay occurred as there were some differences among the partners of M/s. Nirman. However, the causes of the delay loses force because on 11th December, 1990 a meeting took place with M/s. Nirman and the Complainant, and the minutes were signed by Mr. N.V. Pillai on behalf of the Nirman and Mr. Issac as consultant Architect and the Complainant. Those minutes have been annexed as Annexure A-5 (page 34). M/s. Nirman wanted money to go ahead with the work and the Complainant agreed to make the following payment: (a) Rs. 50/-by 11.12.1990, (b) Another Rs. 20,000/-by 18th December, 1990, (c) Further payment, if any, due to Nirman 18th December, 1990 in 10 days.

It was also agreed that mosaic and plumbing work will be done by the Complainant himself and if by any chance he could not do then he would inform M/s. Nirman by 17th December, 1990. It is also incorporated in those minutes that those discussions cancelled the signed note given by the owner on 10th of December, 1990. The complainant paid Rs. 50,000/ - on 11th December, 1990 and did not make any further payment. M/s. Nirman again wrote letter dated 4th January, 1991 (Annexure A6 at page 37) by which they had replied certain queries raised by the Complainant in his letter dated 26th November, 1990. According to this letter certain items of cost included in the revised estimate were to be excluded. It was further mentioned that unless the payment as indicated in the above minutes were not received by them (M/s. Nirman) they would not be in a position to complete the work. They had further stated that they Would not do the plumbing job as the Complainant had not informed them by 17th December, 1990 as agreed upon. A meeting took place between M/s. Nirman and the Complainant on 31st January, 1991 to sort out differences between them. That meeting had been convened by the Executive Director of the HUDCO at HUDCO''s office. Certain defects were pointed out by the Complainant which M/s. Nirman agreed to carry out and also to do the remaining work by the end of February, 1991. Those minutes were signed by the Complainant, Shri Pradeepan, partner of M/s. Nirman and Mr. Isaac, Consultant. Architect. On 2nd March, 1991 the Complainant wrote letter (annexure R14 at page 78) to M/s. Nirman complaining that there has been no progress after 30th January, 1991. In that letter there is a mention of a meeting which had taken place on that date ix. 2nd March, 1991 with Executive Director, HUDCO, M/s. Nirman and the Complainant. That letter shows that M/s. Nirman had agreed to do rework and remaining work by15th March, 1991. On 19th April, 1991 M/s. Nirman wrote a letter (Annexure R15) to the Complainant stating that there has been delay in the pace of construction in the months of January, February and March, 1991 and that the balance construction work has been started and it would be completed by the end of April or latest by first week of May, 1991. In this letter nowhere it was mentioned that any amount was to be paid by the Complainant. In fact no such mention was made even in the minutes dated 31st January, 1991 referred to above or in the letter of 2nd March, 1991. It is not understood how M/s. Nirman is now saying that it could not complete the work for want of payment of the remaining amount by the Complainant. Vide Annexure R-16 (page 81) the Complainant wrote a letter dated 11th June, 1991 to the Executive Director, HUDCO stating that M/s. Isaac, Pradeepan and Pillai had called on him on that date and demanded that until and unless he paid further escalation in advance they would not complete the house. We are of the opinion that the said demand on behalf of M/s. Nirman was not lawful when as already been mentioned that demand was not made earlier. Here we may notice N.V. Pillai, partner of M/s. Nirman has admitted that some differences had crept up among the partners of M/s. Nirman. Copy of the statement of that witness has been produced by the Complainant. Thus the Complainant''s version is correct that the work on his house was delayed on account of those differences. (We may mention that the State Commission has not placed much reliance upon the statement of this witness on other points on the ground that he remained with M/s. Nirman only for 4 months. The witness has clarified that he had remained associated with the contruction work of M/s. Nirman for 4 months only but remained its partner even thereafter).

VIDE statement of Mr. N.V. Pillai 90% of the construction work on the house of Complainant has been completed and only work worth Rs. 30,000/- to 40,000/- still remains to be done. The State Commission noted the pending work from a letter written by M/s. Nirman on 11th June, 1991 but while preparing estimate for those works it has committed mistake. It has assessed the pending work at Rs. 88,875/- which includes plumbing work at Rs. 15,000/-. However, plumbing work was to be got done by the Complainant himself. Item for providing shutters has been taken at Rs. 40,650/-. These costs have been taken from the original estimate prepared by M/s. Nirman vide Annexure A-l. We are of opinion that the estimate arrived at by the State Commission for the remaining work is not correct. It is in the evidence of Mr. Pillai that the plastering of ceiling of walls etc. has been done. As is clear from the minutes dated 13th December, 1990 steel windows and door frames had been ordered and for door shutters frame etc. wood had been bought and work was going on. In the memorandum of appeal M/s. Nirman has clearly stated that shutters had already been procured and partly fixed but the job could not be completed inasmuch as the mosaic floor had not been completed (Some material was stored in the house which is in the possession of the Complainant). After consideration of the evidence and the record we are of the opinion that the completion of remaining work will cost Rs. 30,000/- to Rs. 40,000/- as staged by Mr. Pillai. We take the mean of it i.e. Rs. 35,000/-. M/s. Nirman is liable to pay that amount as it has already received the amount for those items.

THE State Commission has allowed escalation cost and supervision cost on the cost of remaining work. Escalation charges have been allowed at 20% while supervisory charges have been allowed at 5%. We allow those charges on the cost of Rs. 35,000/-. The escalation charges come to Rs. 7,000/- and supervisory charges Rs. 1,750/-. The total amount comes to Rs. 43,750/-.

THE Complainant has also been allowed by the State Commission Rs. 50,000/- as damages/loss for the delay caused in the completion of the house. No data has been given by it for arriving at the figure. There is a dispute between the parties about cause of delay. However, M/s. Nirman has admitted that from January, 1991 onwards there has been delay on their part for a couple of months. We allow Rs. 10,000/- as damages to the Complainant for this delay in the completion of the house. For the reasons given above we accept Appeal No. 297/92 and set aside the order of the State Commission passed against HUDCO and dismiss the complaint as against HUDCO. It may be mentioned here that while granting stay order, HUDCO was asked by this Commission to pay one-half of the amount covered by the Order of the State Commission to the Complainant. The amount so received by the Complainant will be refunded by him to HUDCO within three months from the date of receipt of this Order. So far as Appeal No. 313/92 is concerned the Order of the State Commission is modified to the extent that M/s. Nirman will be liable to pay Rs. 53,750/- to the Complainant, instead of Rs. 1,61,980/-. The said amount will be paid with interest at the rate of 15% from the date of the Order of the State Commission till payment. M/s. Nirman will pay this amount within two months of the receipt of copy of this order. This appeal is disposed off accordingly.

PARTIES are left to bear their own costs in both the appeals. Mr. Justice V. Balakrishna Eradi, President I agree that Appeal No. 297 of 1992 be allowed in toto and Appeal No. 313 of 1992 be allowed partially as proposed in the order prepared by Yadav, J .