MANOHARLAL L. NARANG vs AMITA CORPORATION

OPPOSITE Party No. 1 Amita Corporation, who claimed to be expert, experienced and successful builders, put up a scheme of construction of residential flats named as "Shodhannagar", opposite Saijpur Bogha Railway Station near Hamamdas Park Society, in the Kubernagar area of the city of Ahmedabad. A public notice was got inserted in daily newspaper Gujarat Samachar of the issue dated December 20, 1981 which clearly represented that the construction was going on with full speed and the scheme consisted of 65 sq. yards of build up work, having one drawing room, a bed room, a kitchen, with lavatory, bath-room, with three open balcony. These flats were described as modern Hats. The public advertisement has been produced on record along with the list of documents by the complainants. This public advertisement has not been denied by OPPOSITE Party No. 1 Amita Corporation, a partnership who is a promoter and organiser of the said scheme.

THE complainants have also produced a letter written by the Amita Corporation to the General Manager of New Swadeshi Mills, Ahmedabad, informing him that the Shodhannagar Scheme is very attractive and the land admeasuring 42,000 square yards near Saijpur Bogha Railway Station, was being developed by them in two phases; that the Scheme under Phase No. 1 has been commenced and is to be over by the end of 1983; and that this letter was written in order to give priority to the persons and institutions intending to join the Scheme in group. THE letter further states that Opposite Party (Amita Corporation) has already procured NOC from Urban Land Ceiling Authorities and after obtaining Non-Agricultural user permission from AUDA (Ahmedabad Urban Develop- ment Authority), the construction work has commenced. THE complainants have also attached the building plan in Shodhannagar Scheme No. 1. THE value of each flat is shown at Rs. 36,505/- in which the members has to invest initially Rs. 13,505/- and the balance amount was to be met with from the proposed loan. At the time of enrolment as member, one had to pay only Rs. 3,500/- and the balance amount was payable by 15th October, 1983. This complaint was received by the Commission on December 7, 1990. In pursuance of the Notice issued by the Commission, Amita Corporation, who was the only opposite party being promoter and organiser in the originally filed complaint, appeared and filed its written statement. The opposite party in its reply has admitted about its status of a partnership firm and about they having advertised the Scheme of Shodhannagar in the newspaper. According to this Corporation, they had there after formed a co-operative society; that they have utilized the members'' money as well as the Bank loan. It is then contended by this opposite party that since they could not get the remaining amount from Gujarat Housing Financial Corporation, they had to stop the work of further construction and that thereafter they have transferred the obligation of the whole Shodhannagar Scheme to Mahalaxmi Construction Company by and under an Agreement of November 1985 and by virtue of the said Agreement, it is Mahalaxmi Construction Company only, which is responsible and answerable to the complainants. In short, Opposite Party No. 1 Amita Corporation which is admittedly an organizer developer and the party who has collected full amounts from the members as shown in the Schedule (members contribution) is trying to get out from the obligation merely on the alleged ground that the partnership firm has transferred that obligation of completing the Scheme to Mahalaxmi Construction Company, by aforesaid agreement to which complain- ants are not parties.

There are eight complainants and they have alleged that they have paid Rs. 17,000/- per Flat and the total amounts so paid by them comes to Rs. 1,36,000/-. They have further alleged that the further construction work has been transferred by Amita Corpora- tion to Mahalaxmi Builders without informing the members that the said work has been given over to Mahalaxmi Construction Company. When some of the complainants went to meet Mr. Navnitlal Wankawala, partner of Amita Corporation, he asked them to contact the Mahalaxmi Construction Company, and when they approached Mahalaxmi People, none from their side gave any reply and only asked them to contact Amita Corporation people.

AFTER receipt of the reply from Amita Corporation and after going through the Agreement produced by Amita Corporation alongwith the said reply, the complainants moved an amendment application and thereby they amended the original complaint and joined by way of amendment, the said Mahalaxmi Construction Company, as also Dayakor Co-operative Housing Society, as Opposite Parties Nos. 2 and 3, respectively. On the complaint being amended, fresh notices were issued to all the three parties. The notice meant for Dayakor Society was served at the address of the Mahalaxmi Construction Company who were in possession of all the record of the said society. After service of the fresh notices, of the amended complainant. Opposite Party No. 1 Amita Corporation, filed its written statement to the amended complaint, reiterating the averments made in the earlier reply and relying upon the documents produced by them. The Opposite Party No. 1 has contended that they are not in possession of the premises and that it is Mahalaxmi Construction Company, who are in possession of the buildings and the site and have also reiterated their say that they are not responsible.

OPPOSITE Party No. 2 Mahalaxmi Construction Company, appeared in response to the Notice and filed cryptic written statement on May 11, 1990, contending inter alia that they were not aware as to whether the eight complainants had paid the amounts as alleged in the complainant. This OPPOSITE Party has, however, not denied the fact that the development rights had been given over to them by Amita Corporation. They have further stated that OPPOSITE Party No. 1 has not transferred about 10,000 square meters of land to them and that they have transferred the land to one Vithalbhai Patel and there is litigation going on and is pending between OPPOSITE Party No. 1 and OPPOSITE Party No. 2 over that dispute. The Manager of Ahmedabad District Co-op. Bank appeared and filed the written reply, stating that the Bank was appointed as Administrator of Dayakor Co-operative Housing Society Ltd., by the District Registrar of Ahmedabad for one year, and that they tried to get charge of the record from Amita Corporation as well as from Mahalaxmi Construction Company but no-body cared to hand over any charge of the record and in these circumstances, he has made a report to the District Registrar requesting him to appoint some other officer as Administrator. In these circumstances, according to him, though Mahalaxmi Construction Company is in possession of the record, the same was not handed over to the Bank. In view of the above say of the Bank, we directed Mahalaxmi Construction Company To produce the record of Dayakor Society for our inspection, and after production thereof and examining the same, we took possession of 3 Registers and returned the rest of the record to Mahalaxmi Construction Company for safe custody. It is thus clear that Mahalaxmi Construction Company is in possession of the record of the society and the said Construction company is also in possession of the land as well as the site. It also transpires that while Mahalaxmi Construction Company has enrolled new members, they have not taken care of the old members. We are of the clear view that both Amita Corporation and Mahalaxmi Construction Company have together, exploited the present complainants to enrich themselves, so much as, that Mahalaxmi Construction Company did not surrender the official record of the Society to the Administrator appointed by the District Registrar; and in turn. even the District Registrar of Co-operative Societies has remained a silent spectator for long time.

IT appears to us that in order to get the land released from the Ceiling prescribed under the Urban Land (Ceiling) Act, a systematic Scheme was hatched and poor and lower middle class persons have become victim of such a device. The Co-operative Society has been labelled, having their own persons as officer bearers. Further, loans of substantial amount have been recovered and everything has dis-appeared, leaving huge financial burden on the heads of the poor and needy persons. In number of cases we have noticed this type of systematic plan to obviate the clutches of the ULC Act and it is very high time that the authorities who are supervising the work of Co-operative Housing Societies, should take appropriate steps and to take legal action, both civil and criminal, against the wrong doers.

IT is well-known that the exemption under the U.L.C. Act is given to the owners of the land on certain conditions and requirements, which are very rigorous; but after giving such permission, no-body takes any steps, with the result that the piece of land which is released by the authority, is utilized only for the purpose of exploiting the poor persons by forming a collusive scheme on paper, wherein there is no intention at all on the part of the promoter or developer to deliver any flat to anybody but only with an intention to release land and pocket the moneys coming from poor and lower middle class members of the society, getting loan from the concerned authority by creating a show of forming a Co- operative Housing Society consisting of their own mean, and thereby to exploit poor persons by saddling further financial liability over their heads. This, we observe, is a very sorry state of affair. We are, therefore, of the view that a special authority should be created to investigate all duel fraudulent schemes of getting the land released from Urban Land Ceiling Act, inviting general public to join the Housing Scheme, getting their moneys by way of enrolment fees, and then stop all the activities after getting huge amount of loan from the Housing Finance Agencies, and thereby exploiting poor persons by forming societies in one name or the other. Considering the miseries and exploitations of the persons from the lower middle strata of the society, we have recorded oral evidence of the partners of both the opposite parties, namely, Amita Corporation as well as Mahalaxmi Construction Company. This evidence reveals startling facts. Navnitbhai Mankawala in his cross-examination has admitted that all the complainants had given Rs. 13,000/- by way of members'' contribution. He has, however, not admitted that he was given Rs. 3,500/- by each member as "ON" money. He has further admitted that he had procured a loan of Rs. eighteen lacs. He has admitted in clear terms that his firm was a promoter and developer of the ''Shodhannagar'' Scheme. According to him each flat owner had to give Rs. 2,000/- as his fees and thereafter around Rs. Four lacs, but he does not remember as to whether he had withdrawn the full amount. In a question put to him, this witness further stated that it was true that after the alleged formation of Dayakor Society, Amita Corporation had received the money and given receipt for the same. He has further admitted that he has been paid by the so-called society, an amount of Rs. Four lacs, that is to say, the said amount has been paid to his firm. In further question by Mr. Vinodbhai on behalf of the complainant, Mr. Mankawala has stated that under the Scheme, he had enrolled 200 members and had received Rs. Four lacs as developer and organizer. This witness has further admitted that when he delivered the possession of the project to Mahalaxmi Construction Company, the work of construction of 200 flats had started.

Bholabhai the main witness of Opposite Party Mahalaxmi Construction Company has clearly admitted in his oral deposition that he had received the record of the society along with the Books of Account from Amita Corporation. Now, this Bholabhai, examined on behalf of Opposite Party No. 2 is not even the partner of the said company. He has gone to the extent of stating that Mahalaxmi Construction Company is not in possession of either the buildings or the site; nor they have employed any watchman. Bholabhai has also stated that he does not know any of the member or the committee member; and that no-body has given any resignation. Some questions were asked to witness Bholabhai regarding taking of money from some members and regarding account, etc., but we are at present not concerned with this aspect and, therefore, we have not considered this part of his evidence.

AFTER appreciating the entire pleadings. Affidavits, oral evidence and documents; following facts and circumstances emerge:- (i) Each Complainant has paid Rs. 13.505/- that is to say, full member''s contribution to Amita Corporation; (ii) Amita Corporation were the promoters and organizers of the Shodhannagar Scheme and they were under legal obligation to complete the Scheme, meaning thereby to complete the construction work of flats, forming the society, giving full and complete account to each member, to get the loan sanctioned and finally to hand over possession of the constructed flats to the members; (iii) Amita Corporation has received an amount of Rs. four lacs as their fees; (iv) Amita Corporation has entered into agreement dated 9th November, 1985 Ex. 7A with Opposite Party No. 2 Mahalaxmi Construction Company and Mahalaxmi Construction Company has accepted the obligations as stipulated in the agree- ment; and has admitted the execution thereof. (v) The Complainants have not been informed by Opposite Parties No. 1 and 2 regarding the said Agreement of November, 1985; nor any of the member or the society is a party to such an Agreement which has been proceed by Amita Corporation on record; (vi) Neither Mahalaxmi Construction Company nor Amita Corporation has ever, either in the pleadings or in their affidavits or during the course of oral depositions; has made any statement to the effect that any one of them had given any information regarding progress of construction or raising of any loan in writing to any of the members after receiving their contributions. (vii) There is no document, letter or any advertisement which shows that any of the complainant was aware of any progress made by Opposite Party No. 1, or had any knowledge as to loan applied for and obtained or about formation of Dayakaor Society. (viii) There is no evidence on record to show that any of the present complainant was a party or had ever been informed of any meeting or of any progress of the construction work at any stage. (ix) At every point, there is a non compliance of the provision of the Gujarat Ownership Flats Act, 1973 and Amita Corporation being promoters and organis- ers, has failed in its duty and has committed clear breach of the legal obligations for which the Amita Corporation has been paid a very huge fee of Rs 4,00,000/-. (x) The record of the alleged Society are in possession of Mahalaxmi Construction Company and the same was not handed over to the District Co-operative Bank the Administrator inspite of the legal obligation and inspite of demand by the Bank, with a view to suit their own purpose only. (xi) The said Agreement dt. 9.11.1985 between Opposite Parties Nos. 1 and 2, inter- se is not binding to the complainants; nor to the society who were not parties to the said Agreement.

Since litigation is going on and is pending between Opposite Parties Nos. 1 and 2 in the Civil Court, we are not expressing any opinion regarding inter se rights and liabilities of the said parties in respect of the said Agreement. We only hold that the said Agreement is not binding to third parties, namely, the members of the Co-operative Society and hence Amita Corporation, Opposite Party No. 1, cannot place this agreement into service for getting away from their legal liabilities to construct the flats, to obtain the loan and to deliver the constructed flats to the members for which the Amita Corporation has unilaterally collected flat fee of Rs. 4,00,000/- from original members including complain- ants. In view of our above findings and considering the facts and circumstances, though the price of immovable property has increased many more times between 1981 and 1991, we are not inclined to pass orders directing Opposite Party No. 1 to complete the construction work and deliver the flats to the complainants as promised, because obviously, such an order will create number of legal complications and perhaps the complainants may not be able to get any benefit of such an order. We, therefore, deem it just and proper and in the interest of justice to award damages to the complainants. We award Rs. 5,000/- (Five thousand) to each complainant by way of damages, considering the inflation of price of immovable properties in the city and also considering the circumstances referred to above and in order to do justice to the poor people belonging to very lower middle class strata of the society with a view to curb such an illegal scheme being advertised in the name of Housing Flats.

SINCE Opposite Party No. 2 Mahalaxmi Construction Company has no direct contract with the complainants, we are not passing any order against Opposite Party No. 2. However, we make it clear that we are not deciding inter-se rights between the two Opposite Parties Amita Corporation and Mahalaxmi Construction Company as the matter is pending before the Civil Court and the Civil Court is the only competent authority to decide this inter-se right and obligations. We do not express any opinion or pass any order against Opposite Party No. 2 in this matter, though we are aware that Opposite Party No. 2 has recovered money from new members and was in possession of record of the society and being the party to the said agreement has intervened with the suit property. The original record of the society be returned to the new administrator appointed by the Registrar who had approached us for that purpose only. In the result, therefore, we pass the following final order: - (A) Opposite Party No. 1, Amita Corporation shall return to each complainant, the amount of Rs. 13,505/- with running interest thereon at 18 (eighteen) per cent, per annum from the date of receipt of the said sum till payment of the entire amount back to the respective complainant. (B) Opposite Party No. 1 shall also pay to each complainant, an amount of Rs. 5,000/- (five thousand) by way of damages since the complainants have been deprived the price escalation of flats. (C) The Amita Corporation will also pay an amount of Rs. 1,000/- (one thousand), by way of costs to the Consumer Association. (D) The Complaint against the other parties shall stand disposed of without any order and the complainants will be at liberty to initiate proceedings against them if they so desire. (E) Opposite Party No. (1) shall pay up or deposit before this Commission the aforesaid amounts, together with interest and costs, within three months from the date of this order. (F) The Opposite Parties to bear their own costs.

Order accordingly.