KAVITA SHARMA vs RAJINDRA PROPERTIES

THE composite application filed by the applicant was treated as compensation application under Section 12-B of the Monopolies and Restrictive Trade Practices Act, 1969 (the MRTP Act, in brief) and a notice was accordingly issued under the aforesaid provisions of law. In their reply to the notice, while the respondents admitted delay in the completion of the project as also their failure to refund the full amount to the applicant, they have denied the other allegations and have raised the legal issue that the matter is actionable only in the Civil Court and that it is beyond the purview of the MRTP Commission, in her rejoinder, the applicant has refuted the contentions of the respondents. After the completion of pleadings, the following issues were framed : (1) Whether the application is maintainable under the MRTP Act, 1969 ? (2) Whether the respondents have indulged in the unfair trade practices as alleged in the compensation application ? (3) Whether the complainant has suffered any loss or injury ? (4) Relief.

BRIEFLY, the facts of the case are that in response to an advertisement published in the Hindustan Times dated 2.2.1985 for raising a shopping complex called ''Mahabir Towers'', the complainant booked space for a shop under the aforesaid scheme and deposited the initial instalment of Rs. 13,921 /- with the respondents. The complainant was allotted Shop Space No. RMT-112 and thereafter a Licence Deed dated 1.3.1985 was duly signed by the parties. Subsequently, the complainant deposited two more instalments with the respondents, raising the total amount of deposit to Rs. 41,762/-. The built-up shop space was promised to be delivered by October, 1986. Since the construction of the project did not make any head-way in the promised time, the complainant approached the respondents for refund of the amount deposited. The respondents agreed to refund the amount alongwith interest at the rate of 6% per annum through post-dated cheques amounting to a total of Rs. 51,353/- drawn on the Corporation Bank, Connaught Place, New Delhi. A compromise deed to this effect was also duly signed by both the parties on 18.9.1989. Out of these cheques, only two for an amount of Rs. 5,000/- each were honoured by the Bank and the rest were dishonoured due to ''insufficient funds''. Thereafter, the respondents issued post-dated cheques drawn on Oriental Bank of Commerce, Laxmi Nagar and when this arrangement also failed to work, fresh cheques drawn on the Bank of Baroda, Connaught Place, New Delhi, were issued. When this arrangement also proved abortive, cheques drawn on the Oriental Bank of Commerce, Laxmi Nagar, Delhi, were finally issued to the applicant. In the entire process, cheques amounting to Rs. 20,000/- were honoured and the rest were dis-honoured on the ground of ''insufficient funds'' leaving an unpaid balance of Rs. 31,353/- which the respondents failed to pay despite promise made to the contrary. The applicant has alleged that the respondents misled her by false representations and promises which they failed to keep. While arguing his case, learned Advocate for the applicant reiterated the facts mentioned in the complaint application and emphasized that the respondents have neither delivered possession of the shop space allotted to the applicant nor have they refunded the full amount of money deposited with them. He further submitted that the respondents always adopted dilly-dallying tactics in making the payment by issuing post-dated cheques first drawn on one Bank and later on other Banks which they changed one after the other. Despite change of Banks and inconvenience caused to the applicant larger part of the deposit still remained unpaid. This he contended was nothing short of unfair trade practices. He also cited the judgment of the Hon''ble Supreme Court in Lata Construction & Ors. v. Dr. Rameshchandra Ramniklal Shah & Anr., reported in III (1999) CPJ 46 (SC)=X (1999) SLT 77=2000 (1) CPR 81 (SC), dated 12th August, 1999, in support of his claim. In the end, he pressed for immediate payment of the balance amount alongwith interest @ 18% and suitable compensation for the untold mental torture and agony caused to the applicant.

Learned Advocate for the respondents invited my attention to the fact that in the instant case, two agreements were signed by the parties. The first was in the form of a licence deed signed at the initial stage of allotment and the second signed subsequently was for the refund of the amount due to the applicant. He contended that the second agreement amounted to novation of contract. Under the novated contract, the applicant waived her rights under the original contract, he added. Therefore, she had no right to fall back upon the earlier contract to claim any relief, he argued. Though, dishonouring of the cheques was admitted, learned Advocate for the respondents contended that the cause of action arising from dishonourising of cheques is not actionable under the MRTP Act, because it does not amount to unfair trade practices for the simple reason that it cannot be construed as a deficiency qua goods and services. It is nothing but a payment simplicitor for which the appropriate Forum is not the MRTP Commission but the Civil Court. For this he relied on the judgment of the Hon''ble Supreme Court in the Union of India v. Kishorilal, reported in AIR 1956 Cal. 612, dated 21st May, 1959.

I have carefully considered the submissions made by the learned Advocates for the parties and have also gone through the case law cited by them in support of their respective contentions. Inordinate delay in the construction of the shopping complex and failure to deliver possession of the allotted space to the applicant within reasonable time stand admitted by the respondents. All the same the respondents agreed to refund the amount due to the applicant. Since they were not in a position to refund the same in lumpsum, a compromise for payment of the due amount in a staggered manner was arrived at. The compromise deed was duly signed by both the parties. What followed thereafter is the chequered history of issuance, re-issuance and dishonouring of cheques. Even after this rigmarole only a small sum of Rs. 20,000/- got paid to the applicant and the rest of the agreed amount remained unpaid. These failures on the part of the respondents, in my considered view, are nothing short unfair trade practices as contemplated in Section 36A of the MRTP Act, as a result of which the applicant was not only subjected to financial loss but also to great mental agony due to the dilly-dallying tactics of the respondents. I am fully in agreement with the learned Advocate for the applicant that the instant case is covered by the judgment of the Hon''ble Supreme Court in Lata Construction & Ors. v. Dr. Rameshchandra Ramniklal (supra), because the facts and circumstances in both the cases are similar. However, I find it difficult to agree with the contention of the Counsel for the respondent that in the second agreement, the applicant waived her rights arising from the original agreement. I also find it difficult to accept the contention that the second agreement is tantamount to novation of contract. Para IV of the second agreement dated 18.9.1989 clearly stipulates that the dispute regarding the space booked under the first agreement dated 1.3.1995 shall come to an end in the event of the respondents making the said payment. From this, it is abundantly clear that the applicant''s rights under the first agreement of 1985 were kept alive even after the signing of the second agreement of 1989. These rights will extinguish only after the respondents make payment of the amount due to the applicant. In this situation, it is open to the applicant to take recourse to the remedies available under the first agreement if the respondents fail to honour the second agreement. Therefore, the signing of the new agreement in this case is not tantamount to novation of contract. Novation of contract implies complete substitution of an old contract by a new contract. The second agreement in the instant case is merely an off-shoot of the firs t agreement to bind down the respondents for discharge of their liability arising out of first agreement. Hence, it is not correct to say that the second agreement is merely a payment simplicitor and that it can be adjudicated upon only by a Civil Court. The violation of the second agreement, in this case only further adds to the burden of unfair trade practices on the part of the respondents. The ruling cited by the Counsel for the respondent in Union of India v. Kishorilal (supra), is also not applicable in the instant case because the facts and circumstances of this case are totally different. 7. In view of the aforesaid discussion, I have no hesitation in arriving at the conclusion that the respondents are guilty of unfair trade practices as defined in Section 36-A of the MRTP Act. I further hold that these unfair trade practices are prejudicial to public interest and that they not only caused financial loss to the applicant, but have also subjected her to great mental agony. In these circumstances, the compensation amounting to Rs. 31,353/- (Rupees thirty one thousand three hundred fifty three only) with interest at the rate of 15% from the date of deposit till the date of payment is awarded to the applicant. Interest @ 15% is considered reasonable keeping in view the facts and circumstances of the case. It is important to note that in para 37 of the Licence Deed dated 1.3.1985, it has been covenanted by the respondents that interest at the rate of 24% will be charged for delayed payments from the allotees. The applicant is also awarded an amount of Rs. 5,000/- by way of compensation for mental agony caused to her due to the unfair trade practices adopted by the respondents and the callous attitude demonstrated in the issuance of cheques which came to be dishonoured again and again. The respondents are directed to pay the compensation thus awarded within eight weeks from the date of receipt of this order and file an affidavit of compliance within two weeks thereafter. It is further clarified that failure on the part of the respondents to comply with this order will render them liable for further action under the law.C.A. disposed of.