M.P.Housing Board vs PRAHLAD KUMAR JODHANI

REVISION Petition No. 1003/96, First Appeal No. 372/97 and First Appeal (Cross-Appeal) No. 323/98, First Appeal Nos. 289 to 301/98 and First Appeal (Cross Appeals) Nos. 309 to 321 /98 have arisen out of the relevant orders of the Madhya Pradesh State Consumer Disputes Redressal Commission and have been heard by us as connected matters, as facts in these cases are the same and common questions of aware involved. In the REVISION Petition and First Appeals, Madhya Pradesh Housing Board (M.P. Grih Nirman Mandal), is the petitioner/appellant before us (opposite party in the original complaints) while in the Cross Appeals, the complainants in the respective original Petitions are the appellants.

FACTS of the cases are broadly as follows : The M.P. Housing Board invited applications for registration of HIG houses under self-financing scheme in Lake View, Kohey Fiza, Bhopal; the advertisement dated 5.9.1991 in a local daily indicated the approximate cost of the house as Rs. 5,80,000/-. An amount of Rs. 58,000/- was to be deposited by the applicants towards registration on or before 10.10.1991 and the balance amount was to be deposited in five instalments, the 5th instalment being payable within a period of 18 months after acceptance of registration amount or on completion of house whichever is earlier. The other terms and conditions for allotment attached to the application forms are (i) the cost shown in the advertisement is an approximate one and the final cost will be determined on the basis of actual measurement and expenses incurred which will be binding on allottees and there can be a 10% increase in the above cost; (ii) the cost of corner plot/house will be 10% extra to the actual cost; (iii) the construction period of houses is decided as per rules but for any unavoidable circumstances, if there is any delay in construction, the allottee-applicant will not be entitled for any claim or damage; and (iv) there would be no change in dates already fixed for payment of instalments and in case payments are not made within stipulated time, the allotment can be cancelled without any prior notice. Draw for allotment of houses was held on 22.10.1991 and the Board intimated the successful applicants through their letter dated 15.11.1991 that four instalments each of Rs. l,04,000/-should be paid on 15.1.1992, 15.5.1992, 15.8.1992 and 15.11.1992 and the 5th instalment of Rs. 1,06,000/- on 15.5.1993. In this letter, the Board again stressed that the cost was totally approximate and the actual cost would be determined on the basis of actual measurement and cost incurred which would have to be accepted by the allottees. This initial allotment reference of 15.11.1991 of the Board is significant in two respects; the indicative ceiling of 10% increase in the cost of the house as also the words "on completion of house whichever is earlier" appearing in the advertisement alongwith the schedule date of payment of final instalment stood deleted. By this, the Board perhaps attempted to absolve itself of any cost overruns and time overruns. The Board issued the final letter of the allotment of houses on 14.11.1994 whereby it also intimated the total computed cost at levels higher than the original anticipated cost of Rs. 5,80,000/-. Subsequently, however, these additional amounts were marginally revised downwards through the Board''s letter of February 10, 1995 and demanded to be paid by 28.2.1995. Aggrieved by this demand for additional payment over and above their expected escalation of 10% of the original cost of Rs. 5,80,000/- and also alleging inordinate delay in delivery of possession beyond the stipulated date of final instalment namely 15.5.1993, the aforesaid fifteen allottees sought remedy under the Consumer Protection Act.

Respondent/complainant in R.P. No. 1003/96 approached the District Forum, Bhopal whereas the respondents/complainants in the First Appeals herein had approached the M.P. State Commission. In the case before the District Forum, Bhopal, the opposite party Board submitted that the Forum had no jurisdiction as the matter pertained to pricing of the house. They referred to their letter dated 15.11.1991 according to which the final price of the house was to be worked out on the basis of actual measurement and actual expenses. The Board mentioned that the (i) complainant failed to make payment of instalments as per schedule, (ii) the house was not to be completed and given by the Board by 15.5.1993, and (iii) while the construction work was in progress, riots pursuant to the Ayodha dispute broke out in the city of Bhopal in December, 1992 which brought the work to a standstill and resulted in delay in construction of the work. While acknowledging that the Consumer Fora cannot go into the realm of pricing, the District Forum observed they were examining whether the terms of advertisement were being contravened and whether even the maximum limit fixed in the advertisement is being flouted by the Board''s letter dated 14.11.1994. In their order dated 2.8.1995, the District Forum took into account that the actual plinth area of the house was larger than that indicated in the advertisement, and after allowing for 10% increase in the original estimated cost, worked out the escalated cost as Rs. 7,42,239/- and found that the amount finally demanded by the Board through their letter of 10.2.1995 being Rs. 7,41,039/- has not exceeded the maximum limit of 10% percent. The District Forum held that whereas the house ought to have been completed by 15.7.1993 being one and a half years from the date of first instalment, it was actually ready on 14.11.1994 when the final letter of allotment was issued and that after giving allowance for a period of three months from 15.7.1993, there was still a delay on the part of the Board and hence deficiency in service. The District Forum, therefore, directed the Board to pay interest @ 15% per annum from 15.10.1993 to 14.11.1994 on the amount deposited by the complainant. As regards delayed payment of instalments, the Forum felt that the Board by not exercising the right of cancellation had waived its right. The District Forum further ordered that since there has been an increase in the area without the consent of the complainant, the complainant can exercise the option whether he intends to take possession at the higher cost and if he exercises his option to take possession within three weeks of receipt of their order and pays the balance amount i.e. amount demanded by the Board in the letter of 10.2.1995 less (a) payments already made by the complainant to the Board, and (b) interest allowed by the Forum as above or furnishes Bank Guarantee or surety for the same or any other security which both the parties agree, reserving right to agitate the matter of pricing before the Civil Court, possession of the said house may be handed over to the complainant within a period of three months of the receipt of their order. The District Forum also gave costs of proceedings of Rs. 1,500/- to the complainant.

THE M.P. Housing Board appealed against this order of the District Forum before the State Commission through F.A. No. 650 of 1995. THE State Commission noticed an arithmetical error in the escalated cost worked out by the District Forum and corrected it as Rs. 7,25,496/- (which is less than the amount of Rs. 7,41,039/- demanded by the Board) as the admissible price. THE Commission also found that although the additional cost as demanded by the Board stood paid by the complainant on 29.8.1995 after adjustment of interest amount ordered by the District Forum in favour of the complainant, possession was not delivered in spite of the directions of the District Forum. THE Commission directed the Board to hand over possession of the house within one month from the date of receipt of their order and to pay to the complainant within the said period of one month interest @ 15% from 2.11.1995 till date of delivery of possession on the total cost of Rs. 7,41,039/- (i.e. Rs. 5,80,000/- plus Rs. 1,61,039) which remained deposited with the Board. THE Board was also directed the refund of the amount charged by them in excess of the cost calculated by the Commission i.e. Rs. 7,25,496/-. THE Board has preferred Revision Petition No. 1003/96 before us, against this order of the State Commission dated 19.8.1996. As for the First Appeals/Cross Appeals, the complainant-appellant in Cross Appeal No. 323/98 had filed case No. 6/95 before the State Commission alleging that terms offered by the Board were casual and ad hoc, that there were changes in plan of construction and that the reasons for showing separately cost of plot and house were not clear and sought direction to the Board (a) to hand over possession of the house to him without any delay, deferring finalisation of unsettled payment or refund till an agreement is reached, (b) to pay to him Rs. 1,82,000/- towards interest charges up to 15.12.1994 and damages, less Rs. 45,000/- being his unpaid balance, as also pay to him Rs. 7,500/- per month beyond 15.12.1994 till delivery of the house, and (c) allow him to verify documents of the Board relating to costing/pricing of the house before paying excess demand. The M.P. Housing Board contended that (a) the complaint is not specific and deserves to be dismissed, (b) the grievance of the complainant being one of pricing is not maintainable under the Consumer Protection Act, and (c) the grant of relief under Section 14(d) is not available to the complainant as no negligence has been established.

THE State Commission held in this case that there was deficiency of service on the part of the Board because of (a) refusal of the Board to show to the complainant the records and expenditure details to know the cause of escalation which clearly indicated, in their view, lack of transparency in the working of the Board, especially when the direction to show the records was from the Commission, and (b) failure of the Board to file a counter-affidavit to rebut the averments of the complainant in his affidavit and to justify the increase in the price, even after opportunity was given to the Board; the Commission, therefore, ordered that the complainant was not liable to pay the excess amount. THE Commission further observed that the trouble in Ayodhya and the consequential law and order situation occurred only after December, 1992 and the Housing Board failed to demonstrate that these two causes had similar effect of delay in construction activity elsewhere and in the absence of such a document forthcoming from the opposite party, delay in construction is established leading to deficiency of service on the part of the Board. In the result, the Commission directed, (i) the complainant to pay to the Board within 15 days of receipt of their order the balance amount of Rs. 45,000/- due for payment on 15.5.1993 together with interest @ 18% from that date up to the date of payment, (ii) the Board to pay compensation of Rs. 30,000/- for deficiency in service together with interest @ 18% per annum from the date of filing of complaint till the date of payment, (iii) the Board to hand over possession of the house within 7 days after payment by the complainant, failing which the Board shall pay interest @ 18% per annum on the final amount paid till the date of handing over possession, and (iv) cost of Rs. 1,000/- to the complainant. First Appeal No. 372/97 and 323/ 98 have been filed respectively by M.P. Housing Board and complainant against this order of the State Commission dated 26.7.1997. The complainants/appellants in Cross Appeal Nos. 309 to 321/98 herein had filed their respective cases (case Nos. 25 to 37) before the State Commission alleging deficiency in service on the part of the Board mainly on two counts : (i) there was inordinate delay in delivery of possession, and (ii) the demand of additional amount was unjustified since the escalation exceeded 10% of the estimated costs in the advertisements. These cases were considered together by the State Commission and disposed of by a common order dated 5.9.1998 relying upon their finding in the aforesaid F. A. No. 650/ 95 and O.P. No. 6/95. The State Commission directed that the complainant in each case shall pay Rs. 58,000/- towards balance amount upon which the Board within 15 days thereafter, put the complainants in vacant possession of their respective houses. The State Commission also observed that since they have not directed payment of any interest on the balance amount of Rs. 58,000/- required to be paid by the complainants, they do not deem it necessary to award any compensation to them for late delivery, although they observed that in case of any further delay, the Board shall be liable to pay Rs. 2,500/- to each of the complainants by way of compensation for every month''s default till delivery. As against this common order, the Board has filed F.A. Nos. 289-301/98 while the respondent-complainants have filed Cross Appeal Nos. 309-321/98 before us. We have heard the Counsel for the revision petitioner/appellants/complainants/ respondents in the aforesaid cases except in First Appeal No. 323/98 where the appellant was heard in person and carefully perused the papers.

IN R.P. No. 1003/96 the petitioner Board submitted as follows. There was no condition according to the Board''s letter of 15.11.1991 that the actual cost of the house would not exceed 10% of the estimated cost. Even the mention of possibility of 10% increase in the advertisement only gives an indication of the likelihood of the extent of increase but does not put a limit on the actual cost as not exceeding 10%; consequently, the respondent is liable to pay the actual costs as determined on the basis of actual measurement and actual cost of construction of the house intimated by the Board through their letter dated 14.11.1994 as amended by their letter dated 10.2.1995. Also being a self-financing scheme, delayed payment of instalments is bound to delay construction and a depositor in default is not entitled to complain against the delay in construction and is not entitled to demand interest for the delayed period of construction. Besides, there was a clause in the advertisement and letter of 15.11.1991 that if there is delay due to unavoidable reasons, the depositor is not entitled to any damage and here delay caused by the depositor contributed to the delay. Riots which broke out in December, 1992 in Bhopal pursuant to Ayodhya dispute was one of the factors for delay in completion of construction. Respondent- complainant having not deposited the additional demand by the Board, which was a pre-condition for claiming possession, cannot demand interest beyond that period up to the date of delivery of the possession.

IN the appeals, the Board submitted that the Consumer Protection Act does not encompass complaints regarding pricing of houses and that except the respondent-complainant in Appeal No. 372/97, the respondent-complainants in other cases have not challenged the actual expenditure. The Board, in their appeals dated 5.10.1998 against the common order of the State Commission, made the following points which were not stated before the State Commission, (i) the duplex built house has provision for 3 bed rooms, 3 toilets, kitchen, drawing room, dining room and a study room and the total built up area of the accommodation was 174.36 sq. meters but by mistake, the same was mentioned as 133.17 sq. metres and the estimated cost was worked out on the basis of 133.17 sq. meters as against the actual area of 174.36 sq. meters, (ii) space being available, 2 additional houses were also planned to accommodate two more consumers and the work order for these two additional houses was issued on 1.3.1993. This additional construction added burden of workload on the contractor thereby hampering the progress of work. Also, other buildings and development works were in progress leaving only a limited working space for the contractor to carry out the construction activity, (iii) the award of contract for construction of houses consists of various steps and takes time to finalize. Further, the contractor quite unexpectedly had to face difficulties in leveling the ground, excavation in a rocky strata for foundation work, etc., transportation difficulties due to topography of location. The complainants pleaded in their cross appeals that the common order of the State Commission in Cases 25-37/76 is different from their orders in F.A. No. 650/95 and O.P. No. 6/95 although the facts were similar, whereas in the latter two cases, the Commission allowed interest @ 15% from the date of payment of last instalment till 14.11.1994 and also interest from 1.11.1995 till delivery of possession, similar award of interest of compensation on account of delay was not granted in their cases. On 29.4.1999, the Counsel for the Housing Board was directed to submit a statement furnishing details of amounts to be paid by the allottees to the Board and the actual amount received by the Board, and an advance copy of the same was directed to be served on the opposite side who will file their reply within a period of two weeks thereafter. The Housing Board has filed on 5.5.1999 the details; reply of respondent-complainants have not become available.

At the outset, we find that although facts are similar in all these complaints, the three orders of the State Commission on the same subject are not uniform. Basically there are two allegations made by the appellant-complainants before us (1) delay in handing over possession, and 2) excess of additional amount demanded over and above 10% possible increase indicated in the advertisement. There is a specific allegation by complainant in Cross Appeal No. 372/97 about his not being allowed by the Board to verify the calculation of the costs.

AS for delay, whereas according to the advertisement, possession was to be given within a period of one and half years from the date of first instalment i.e. 15.1.1992, the houses were not ready till 14.11.1994 when the final letter of allotment was issued. The District Forum held that even allowing a period of three months from the due date of 15.7.1993, there has been delay. AS already observed, the Board had omitted mention of this time-limit in their initial letter of allotment dated 15.11.1991; we find that at that time, none of the allottees protested against this omission. The Board has pointed to the specific constraint to progress of construction due to the riots on accounts of Ayodhya dispute. They also have a clause in their advertisement that no damages could be claimed for delay, in the event of unavoidable circumstances. However, the observation of the State Commission in Case No. 6/95 that the Board failed to show whether these riots affected other construction activities similarly is significant. Further, it appears from their version before us that whereas they had planned to construct 26 houses, they had to make adjustment to raise two more houses which also added to the delay. We are of the view that it is not fair that the original allottees should suffer delay on account of this change in scheme of the Housing Board. The pleading of the Board that the award of contract is a time consuming process and the location where construction was to be carried out was rocky, etc. is hardly convincing, having regard to the fact that the Board established in 1973 has been undertaking such housing schemes and should have gained sufficient experience in tackling such situations. Delay in payment of instalments has also been pointed out as a reason for delay in progress of construction. In the statement of arrears due from the allottees furnished by the Board as per our direction, delay in instalment is noted in some cases. However, although the Board had only referred to the cancellation in the event of delayed payment which right, as pointed out by the District Forum, the Board had not exercised and thus may be taken to have waived, the calculations of costing supplied by the Board to the complainants shows that interest has been charged for delay in payment of instalments. We, therefore, agree with the finding of District Forum and the State Commission that there has been delay leading to deficiency in service on the part of the Housing Board. Having regard to the totality of the case, we are of the view that houses should have been completed and possession handed over by October, 1993. The Board is, therefore, liable to pay interest to the allottees on the respective instalment amounts paid by them upto October, 1993 by way of compensation. Actually, it happens that even after the orders of the State Commission, possession has not yet been given except in the case of the complainant in F.A. No. 299/98 (Smt. Manjula Verma who had paid the full amount demanded by the Board). In regard to the allegation of excess amount demanded by the Board, although the possibility of 10% increase was there in the advertisement, it stood omitted in the offer letter and none of the allottee-complainants raised any objection against this omission. Besides, the Board had hedged itself by saying that the cost indicated in the advertisement as also in the offer letter is an approximate one and that the final cost will be determined on actual measurement and expenses. However, the point of deviation of actual measurement and the size indicated as per advertisement has not been taken by the Board in their reply before the State Commission in the case of the other allottees who approached the State Commission under original jurisdiction; it is only in the Appeals before us that the Board has gone into this point of deviation in measurement in these cases also. It is surprising that the Board has come out with this deviation in measurement only in October, 1998 whereas the houses were reported to have been ready in November, 1994. Perhaps it is because of these vexatious aspects of plot area, plinth area, built- up area, etc. projected by the Board in justifying the demand of additional amounts over the levels fixed in the minds of the allottees at 10% of the advertisement cost that the appellant- complainant in F.A. No. 323/98 before us made allegations about correctness of records/ calculations and wanted to verify the same. In any case, these are the questions falling in the realm of costing and pricing. We are clear in our mind that this is an area in which Consumer Fora should not normally enter for satisfactorily deciding on the correctness or otherwise of the actual price. As a matter of fact, the foot rule method adopted by District Forum as also by the State Commission in calculating the cost of the house is not sustainable when the Board has said that the final cost will depend on actual measurement and expenses incurred.

IN the light of the aforesaid discussion, we set aside the orders of the State Commission and pass the following order : (a) The amounts indicated by the Board in their letter of February, 1995 will be firm and final and not further interest will be charged by the Board and the balance amount, if any, after adjusting instalments already paid, shall be deposited by the complainants within a period of one month from the date of receipt of our order and possession shall be handed over to the complainants/allottees within one month thereafter. (b) The Board will pay each of allottees / complainants interest @ 15% per annum for a period of one year on the total of instalment amounts deposited by the allottees up to the period ending 31.10.1993 by way of compensation on account of delay in construction of the house. (c) Both the parties (allottees and the Board) are at liberty to agitate on aspects governing actual measurement vis--vis plan of construction and related matters of pricing before the Civil Court, if so advised. (d) IN the facts and circumstances of the case, we do not consider to impose any costs.

In the case of respondent/complainant in F.A. No. 372/97, the Board had referred to certain documents to show that the complainant was given opportunity to go through the records and submitted that the remarks of lack of transparency on the part of the Board may be deleted. Since we have given opportunity of approaching the Civil Court for agitating the question of measurement and pricing, it is not considered necessary to make any observations about the transparency or otherwise in the dealings of the Board. Ordered accordingly. ________________