ORISSA STATE HOUSING BOARD vs Santosh Kumar Nanda

DELAY condoned. These four Appeals, preferred by the Orissa State Housing Board (for short "the Housing Board"), under Section 19 of the Consumer Protection Act, 1986 (for short "the Act"), arise out of a common order dated 26.11.2007, passed by the State Consumer Disputes Redressal Commission, Orissa (for short "the State Commission") in C.D. Cases No. 118, 135, 159 and 175 of 1993, and are therefore, being disposed of by this order.

SOMETIME in the year 1989 the Respondents/Complainants were allotted MIG (Self -Financing Scheme) houses under the MIG Housing Scheme at Chandrashekarpur, Orissa advertised by the Appellant in the year 1988. The possession of the houses was to be delivered by 31.12.1990. However, actual physical possession of the houses was delivered in or around September, 1992. Aggrieved by the delay in delivery of possession; enhancement in cost; defects in construction, the Respondents filed Complaints against the Appellant Housing Board, claiming the following reliefs: "(a) Interest from the OSHB for its delay in delivery of houses, i.e. at the same rate of 15% at which it had collected interest for delay in payments from the complainants.

(b) Refund/remission of the unreasonable escalation collected/demanded by the OSHB.

(c) Award of compensation as estimated by the registered Valuer for rectifying the defects in the houses allotted.

(d) Award of compensation towards consequential mental agony and due to erratic behaviour/acts of the Board.

(e) Award of compensation for unnecessary expenditure they had to incur in taking possession of the houses and seeking Redressal/relief before this Hon''ble Commission.

THE Complaints were contested by the Appellant, inter -alia, on the ground that the price of ''2.5 lakh was purely provisional and it had to be raised to ''3.43 lakhs due to unavoidable circumstances for completion of construction. The delay took place on account of heavy rains in 1989 and 1991 as well as due to non -availability of bricks, frequent interruption in construction work, increased labour rates during that period, scarcity of cement from February to June, 1991 and delay in installation of 33 KV sub -station by the Orissa State Electricity Board (OSEB). The plinth area was increased from 1200 sq. ft. to 1403 sq. ft. A writ petition bearing OJC B No. 3181 of 1989 was filed in the Orissa High Court relating to land in dispute, which led to the delay in construction and increased cost of construction. It was pleaded that the causes for delay were beyond the control of the Housing Board and it had taken every care to rectify the defects pointed by the allottees after joint inspection. Alleged discrimination in the costing of other duplex houses in the same area and at Nageswar Tangi; adverse report of the Vigilance Squad and Committee on Public Undertaking of the State Legislature relating to the quality of the work executed in the scheme, etc. were also denied. Upon consideration of the pleadings and the defects pointed out by a retired Chief Engineer, Mr. S.S. Panda, vide order dated 05.11.1997, the State Commission awarded various amounts to the complainants. The State Commission passed the following operative order: - "A detailed chart showing defects and the valuation therein is attached alongwith. Hence in conclusion relying on the aforesaid judgment of N.C. in Kailash Malpani Vs. Kishore Kumar Kathri we hold that each of allottees will get

(1) 18% interest for the delay in delivery from the period from 31st Jan., 92 to the actual date of possession in each case on the deposits made by January, 1992.

(2) Compensation towards defects in their respective houses as per the schedule attached alongwith.

(3) Rs. 5,000/ - towards cost of litigation.

The above mentioned amounts may be adjusted against the balance if any payable by each allottee towards price of the house. It should be paid by the Board within one month from the date of receipt of this order failing which the complainants may proceed against the opposite parties as available under law."

BEING aggrieved, the Appellant filed Appeals before this Commission. These Appeals (FA No. 133 to 135 and 137/1998) were disposed of by this Commission by a common order dated 06.12.2006. Inter -alia observing that although the related extracts of the vigilance squad and the report of the Public Undertaking Committee regarding defects in the houses were placed before the State Commission, but the same had not been taken into consideration while deciding the cases and its decision was based on the report of Sh. S.S. Panda, who had carried out inspection about 4 or 5 months before the completion of the houses, it was held that the decision of the State Commission could not be sustained. However, as regards the delay in delivery of possession, this Commission held that in view of the decision of the Supreme Court in Ghaziabad Development Authority Vs. Balbir Singh, 2004 5 SCC 65, the Housing Board was liable to pay interest @ 12% p.a. instead of @ 18% p.a. as directed by the State Commission. Other directions by the State Commission were maintained. Finally, the cases were remanded to the State Commission for fresh adjudication, on the following points: - "We are just specifically remanding the matter for ascertaining the defects in each of the house allotted to the complainants and to check the record at the time of handing over of possession and to fairly estimate the expenditure which might have been required to be spent by each of them or actually incurred by them, whichever is reasonable."

THE parties were permitted to file additional evidence in support of their respective stands, within the time as may be accorded by the State Commission.

DISSATISFIED with the decision of this Commission regarding award of interest on account of delayed delivery of the houses, the Appellant preferred Special Leave Petitions before the Hon''ble Supreme Court, which were dismissed on 12.07.2007. On dismissal of the SLPs, the rest of the directions by this Commission are stated to have been complied with.

WHEN the cases were taken up by the State Commission for decision on the afore -noted points, no additional evidence was adduced by the parties, despite liberty having been granted by this Commission in this behalf. Thus, the State Commission was required to ascertain the defects in each of the houses and estimate expenditure, which might have been incurred by each of the Complainants, the Respondents herein, on the basis of the existing material/reports on record.

ACCORDINGLY , the State Commission has taken into consideration the report submitted by the Vigilance Sub -Committee constituted by the Housing Board to review construction work of its different housing colonies. On inspection of the construction work on 16.04.1990, in its report, the Sub -Committee recorded as follows: - "The committee observed that the constructions were invariably poor and sub -standard due to low percentage of cement, inadequate curing and lack of supervision on the site right from work charges employees up to project engineer''s level. Thus the Orissa State Housing Board has failed to(sic) discharge its administrative duty and recommends that responsibility be fixed on officials concerned for such serious lapses and irregularities." (Vide annexure 13 in C.D. case no. 118 of 1993). "

IN the light of the adverse report of the Vigilance Sub -Committee, the Public Undertaking Committee visited the spot and in its report, noted as follows: - "The Committee visited Block nos. 2 and 12 of HIG Housing Scheme at Chandrasekharpur. The occupants of the buildings alleged before the Committee that the latrine water is leaking in almost all the houses; there is no provision for discharge of overhead tank as the roof is of bowl size. Rain water and extra water from tank accumulate most of the time on the roof as a result of which the entire building is affected and the present occupants are suffering, after paying a good amount of money i.e. ''2.00 lakhs and more. There are large number of deviation from the original specification. As the workmanship is very poor most of the wall have cracked.

The Committee found that recreation Centre is in miserable condition. There is no scope for recreation of children in the colony. No cycle stand has been provided for multistoried buildings. No developed infrastructure and modern civic amenities have been provided to the inhabitants of the colony to make human living comfortable. As regards supply of drinking water, the inhabitants complained that most of the time they do not get water. The Committee recommends that to meet the immediate requirement of drinking water some tube -well should be installed in different housing colonies.

The occupants of E.W.S. quarters complained that there was written agreement between the Board and the allottees to pay 7% interest on defaulted dues but later the Board arbitrarily raised the same to 9% without any reasons or justification. The Committee expressed its dissatisfaction on this issue and recommend that interest be limited to the percentage contemplated in the agreement to win the faith of allottees." (Vide annexure 13 in C.D. Case no. 118 of 1993.)"

RELYING on the observations of the said two Official Committees, the State Commission has come to the conclusion that the version of Housing Boards''s witness, namely Sachidananda Jena, Assistant Project Engineer, to the effect that defects in the houses belonging to the Respondents had been removed before delivering the possession, could not be accepted. In other words, the State Commission has affirmed the findings recorded by it in its earlier order, dated 05.11.1997, in relation to various defects in the houses in question, which in turn were based on the report of Sh. S.S. Panda, Retired Chief Engineer. In so far as the estimates of the expenditure, which might have been incurred by the Respondents for rectifying the defects; the State Commission, in the absence of any additional evidence by both the parties, relied on the report of the valuer, submitted by the Respondents, and estimated the expenditure ranging between approx. Rs. 45,000/ - to Rs. 55,000/ -. The State Commission has also held that the Respondents shall be entitled to interest @ 9% p.a. on the said amount, from the date of delivery of possession to them. Payments in terms of the said order were directed to be made by 31.12.2007, failing which, the rate of interest was to be @ 14% p.a. Hence, the present Appeals.

AT the outset, we may note that during the course of hearing on 19.08.2014, Ld. Counsel for the parties had stated that the controversy surviving for consideration in these Appeals was confined to "Ground H" in the Memo of Appeals, which reads as follows: "The award of compensation without any basis or materials, records that too ignoring the observation of the Hon''ble National Commission not only is illegal but also further award of interest on the compensation of defects from the date of delivery of possession @ 9% and further award of interest @ 14% in case of non -compliance by 31.12.2007 is totally illegal unfair and arbitrary. As calculated @ 9% the total award amount of compensation comes about Rs. 1,06,425/ - (CD Case No. 118/93), Rs. 1,03,075/ - (CD case No. 135/93), Rs. 1,28,838/ - (CD Case No. 159/93) and Rs. 1,08,849/ - (CD Case No. 175/93) and if calculated @ 14% it will be near about Rs. 2 lakhs in each case."

IT is manifest from the afore -extracted ground that the grievance of the Appellant Housing Board is that award of compensation by the State Commission on account of defects/deficiencies in the houses allotted to the Respondents, is without any basis or material.

WE have heard Mr. Swetaketu Mishra, Advocate on behalf of the Appellant and Mr. Goutam Bhol, Advocate appearing for the Respondents.

THE main thrust of the arguments of Ld. Counsel for the Appellant was that reliance by the State Commission on portions of the reports submitted by the Vigilance Sub -Committee and Public Undertaking Committee was misplaced as the said reports did not pertain to the houses in question but to a different HIG housing scheme. It was also urged that the said reports were prepared during construction of the houses in the year 1990, whereas the possession of the houses in question was delivered during September 1992 and January 1993, by which time, all defects had been rectified. Though at the first blush, the argument appears to be attractive but on deeper examination with reference to the observations of the two Committees in the afore -extracted portions of the report, the argument lacks substance. It may be true that both the Committees refer to their inspections of a few blocks of HIG (High Income Group) Housing Scheme of the Appellant, but their general observations in the reports speak volumes of the poor and sub -standard quality of construction, low percentage of cement, inadequate curing and lack of supervision at the site of the houses constructed and allotted by the Housing Board. As a matter of fact, the Committees made scathing remarks about the quality of construction and indicted the Appellant Housing Board for having failed in the discharge of its administrative duty and have recommended that responsibility for the said lapses be fixed on the officials concerned. These remarks lend support to the stand of the Respondents that the allotted houses did suffer from a number of defects and deficiencies. We dare say that if this was the quality of the houses constructed by the Appellant for High end houses, meant for high income groups, the onus to prove that the quality of the houses, constructed for middle income group (MIG), subject matter of these Appeals, was better, was on the Appellant. Admittedly, despite specific opportunity afforded to it by this Commission while remanding the cases to the State Commission, the Appellant failed to produce any evidence in regard to the quality of construction and the defects/deficiencies pointed out by the Respondents. In our view, a bald statement of its Assistant Project Engineer, that all the defects had been removed before delivery of possession, is not sufficient to rebut the existence of specific defects pointed out by the Respondents in their complaints and recorded in detail in the earlier order of the State Commission dated 05.11.1997. On the contrary, in his statement, Sh. Sachinanda Jena admitted that the report of the vigilance squad was relevant to the houses in question. Another witness, Sh. Indramani Sahu, Jr. Engineer, produced as witness by the Appellant also admitted certain defects in the plastering, etc. and stated that the same had been rectified after handing over of the possession, as and when these were pointed out. Accordingly, we reject the said stand of the Appellant that there were no defects/deficiencies in the subject houses at the time of delivery of possession and affirm the decision of the State Commission on the point.

THE next question for consideration is whether or not the estimates for the amounts, claimed to have been spent by the Respondents on rectification of the defects, suggested by the State Commission are fair. We find that here again, the State Commission has based its estimates on the valuer''s report, filed by the Respondents. The valuer, in turn had quantified the expenditure incurred in respect of each defect, as corroborated by the Defect Rectification Register maintained by the Appellant. No material has been placed on record by the Appellant to controvert the said estimates. The State Commission having further reduced the amount quantified by the valuer, there is no ground to interfere with the amounts, so estimated, more so when in such cases, some sort of guess work is inevitable. It cannot be said that in the present cases, the amounts estimated are wild, so as to warrant interference at our end. Accordingly, we uphold the decision of the State Commission on this issue as well.

LASTLY , the question is whether the State Commission is justified in awarding interest @ 9% p.a. on the amount awarded as estimated expenditure incurred by the Respondents on repairs. Having affirmed the findings of the State Commission on the aforenoted issues, we are of the view that award of nominal interest @ 9% p.a. on the expenses incurred by the Respondents, cannot be held to be unreasonable. However, we feel that in the absence of precise details of the time when the said expenditure was incurred by each of the Respondents, it would be proper and expedient to direct that simple interest @ 9% p.a. shall be payable on the estimated amounts from the date of filing of the complaint till 29.08.2008, when this Commission had directed payment/adjustment of the amount, initially awarded by the State Commission. It was stated by Ld. Counsel for the Appellant that the said directions had been duly complied with.

IN the result, all the four Appeals are dismissed with modification regarding the period of interest. Amounts due in terms of this order shall be paid/adjusted within four weeks from the date of receipt of a copy of this order, failing which the Appellant shall be liable to pay interest @ 12% p.a. from the date of the complaint till the date of actual realization. Respondents in First Appeals No. 46, 47 and 48/2008 shall be entitled to costs of these proceedings quantified at Rs. 25,000/ - in each of the cases. (Respondent in Appeal No. 49/2008 did not participate in the proceedings.)