Pace Builders Pvt. Ltd. vs K. RAJU

THE complainant/respondent, Dr. K. Raju negotiated with the appellants for acquiring a flat measuring 700 sq.ft. in a commercial complex which the appellant was developing in Anna Nagar, Chennai. The price of the flat was fixed at Rs. 3,000/ - per sq.ft. which included undivided share of land measuring 320 sq.ft. and construction on plinth area of 700 sq.ft.. The complainant paid Rs. 20,01,001/ - to the appellant on various dates between 14 -04 -1997 to 15 -12 -1998. A sale deed dated 14 -05 -1997, was executed in favour of the complainant, transferring undivided share in land measuring 320 sq.ft., in favour of the complainant. Thereafter, on 01 -06 -1997 the parties entered into a construction agreement whereby the constructed flat was to be delivered to the complainant on or before 01 -06 -1998, subject to a grace period of three months. The consideration for the purpose of construction was shown as Rs. 5,33,760/ - in the agreement dated 01 -06 -1997. In the event of delay in construction the builder was to pay interest at the rate of 24% p.a. to the complainant on the payments made by him whereas in case of delay on the part of the complainant in making payment, the appellant was entitled to interest at the rate of 24% per annum, on the belated payment. The case of the complainant is that though he extended time to complete construction and handover possession of the flat on the request of the builder appellant, it failed to deliver possession on one pretext or the other and did not complete the construction, demanding an extra payment of Rs. 1,00,000/ -.

ALLEGING deficiency in the services provided by the appellant, the complainant approached the Tamil Nadu State Consumer Disputes Redressal Commission at Chennai (for short, the State Commission) seeking the following reliefs: (a). to complete the construction of the flat and hand over the same to the complainant;

(b). to pay Rs. 12,06,668/ - towards loss and damage suffered by the complainant together with interest at 24% per annum on Rs. 20,01,000/ - from the date of complaint till the date of delivery of possession of flat;

(c). to pay further damages at the rate of Rs. 20,000/ - per month from the date of complaint till the date of delivery of the flat to the complainant;

(d). to pay Rs. 10,000/ - towards cost of this complaint.

The complaint was resisted by the appellant which claimed that it was the complainant who had defaulted in complying with the terms & conditions of the agreement dated 01 -06 -1997. According to the appellant, the total price of the flat including the value of the undivided share in the land was fixed at Rs. 21,00,000/ - out of which Rs. 5,33,760/ - was payable as per the schedule stipulated in the agreement dated 01 -06 -1997. It was further alleged that a sum of Rs. 99,000/ - was still due to the appellant from the complainant as on 31 -12 -1998, but the complainant had failed to pay the aforesaid amount. It was also claimed in the reply that the complainant had failed to make payment for the EB deposit to obtain power supply, security for motor, water and sewerage and a sum of Rs. 75,000/ - was due in this regard. It was also alleged that towards the completion of the construction, the complainant used to suggest alterations and additions suitable to his convenience and taste, though the construction was as per the agreed specifications and the appellant agreed to execute the extra work at the cost of the complainant. A sum of Rs. 1,50,000/ - was alleged to be due from the complainant to the appellant towards extra work. It was also claimed in the reply of the appellant that the work had been completed by 31 -05 -1999 but the complainant failed to take delivery of the same against payment of the balance amount.

VIDE impugned order dated 19 -10 -2005, the State Commission directed the appellant to pay a sum of Rs. 5,60,280/ - to the complainant towards interest on the amount of Rs. 20,01,000/ - for the period from 01 -01 -1999 to 01 -03 -2000 together with further interest on the said amount, at the same rate till payment. The complainant was also awarded Rs. 25,000/ - as compensation and Rs. 2,500/ - towards cost of litigation.

BEING aggrieved from the impugned order, the appellant is before us by way of this appeal. The following issues primarily arise for our consideration in this appeal: - 1. Whether the complainant requested the appellant/builder to carry out additions and alterations, beyond the scope of the agreement dated 01.06.1997 and if so, to what effect.

Whether the failure of the appellant to complete construction, within the time stipulated in the agreement dated 01.06.1997, was attributable to some act or omissions on the part of the complainant and if so, to what effect.

Whether the complainant committed default in making payment to the builder, as per the schedule stipulated in the agreement dated 01.06.1997 and if so, to what effect.

THE case of the appellant in the reply filed before the State Commission was that the complainant used to suggest additions and alterations to suit his taste and convenience, although the construction was made as per the agreed specifications and the said extra work was to be carried out at the cost of the complainant, amounting to Rs. 1,50,000/ -. However, there is absolutely no document to show that the complainant had, at any point of time, asked the appellant to carry out any addition or alterations in the premises, which the appellant was to construct for the complainant. There is no document from the complainant referring to any addition or alteration suggested by him and promising to make payment for the same. The State Commission, in our opinion rightly held that the appellant had failed to establish any such instructions from the complainant. It appears from the record that instead of marble flooring, granite flooring was provided by the builder, but, there is no documentary evidence of the complainant having asked the appellant to replace the marble flooring by granite flooring. Therefore, it appears to us that the said change was carried out by the appellant of its own, without any instructions to this effect from the complainant. Moreover, there is no evidence of the appellant having written to the complainant, at any point of time, referring to the alleged instructions to carry out additions or alterations and seeking payment for the same from him. Had the appellant carried out any additions or alterations on the instructions of the complainant, it would certainly have asked for payment of the said additions or alterations, particularly when the complainant had been writing to it alleging inordinate delay in completion of the construction. One such letter is dated 26.02.2000, whereby a number of unfinished works were brought by the complainant to the notice of the appellant. Therefore, we are unable to accept the contention of the appellant that they had carried out additions and alterations on the instructions of the complainant and were entitled to a payment of Rs. 1,50,000/ - for the said work.

IT is an admitted case that in terms of the agreement dated 01.06.1997, the work was required to be completed in all respect on or before 01.09.1998. The aforesaid date has been arrived at by us after including the grace period of three months. There is no evidence of the work having been completed in all respect on or before 01.09.1998. Vide letter dated 26.02.2000, the complainant wrote to the appellant, expressing grievance on account of the construction having not been completed even in 33 months. It was pointed out in the aforesaid letter that two units of centralized air conditioning, installed just in front of the entrance of his flat had not been shifted despite assurance in this regard having been given several times. It was also pointed out in the said letter that the work relating to (a) Providing and fixing of doors, (b) False ceiling in the front hall and rear room where there is sunken portion of toilets provided for the first floor residents, (c) Color washing of walls, (d) Polishing the marble flooring, (e) Concealing all the pipe lines adjoining the entrance and (f) Completely arresting leakages and other correctional works was still incomplete. We may also refer to the letter of the appellant dated 15.03.2000, whereby the complainant was informed that though they (the builder) had stopped finishing works, so as to enable the complainant to compete the interior work, their contractor can not wait any longer and they would be starting the finishing works and it will be complete by March 31, 2000. This letter is a categorical admission on the part of the appellant that the work in terms of the agreement dated 01.06.1997 was not completed till 15.03.2000. This is not the case of the appellant that they could not complete the work on account of non -payment from the complainant. Their case, on the other hand, is that despite the complainant having not made full payment, they had completed the construction work, at their own cost. According to the appellant, a sum of Rs. 99,000/ - remains payable by the complainant, in terms of the agreement dated 01.06.1997. Out of this, Rs. 20,000/ - was to be paid by the time of handing over possession to the complainant. Thus, deficiency on the party of the complainant in making payment to the appellant was only to the extent of Rs. 79,000/ -. There is no documentary evidence of the appellant having asked the complainant to pay the aforesaid amount so as to enable it to complete the remaining work.

As per clause 4 of the agreement, in the event of any delay in making payment by the purchaser/complainant, the builder was entitled to interest at the rate of 24% per annum on the delayed payment, from the respective due date till the payment was made. Therefore, for the delay in making payment of the balance amount of Rs. 79,000/ -, the appellant was entitled only to interest in terms of clause 4 of the agreement, but it could not have delayed the construction of the flat on account of the said delay. This is more so when no notice was given by the appellant to the complainant, informing him that unless the payments of the balance amount of Rs. 79,000/ - was made, further construction would be stopped by it.

As per clause 3 of the agreement dated 01.06.1997, the builder was required to handover possession within the period of 15 months from the date of agreement only after receipt of all the amount from the purchaser except the last installment of Rs. 20,000/ -, which was payable on the date of delivery. The contention of the learned counsel for the appellant was that since there was shortfall in payment, to the extent of Rs. 79,000/ -, the appellant was not obliged to hand over the possession to the complainant. However, even the aforesaid clause did not permit the appellant to delay the completion on account of deficiency in payment on the part of the complainant, though he could have, after completing the construction in all respects, withheld the possession till the time the aforesaid deficient amount was paid to him. However, in the case before us, neither the construction was completed nor did the appellant offer possession of the completed flat to the complainant. Therefore, clause 3 of the agreement does not come to the aid of the appellant.

IT was contended by the appellant, before the State Commission that they had discharged the liability of the complainant towards Electricity Water etc., though in terms of the agreement, the aforesaid payment was to be made by the complainant. The State Commission found, on perusal of the record that the payment of property tax as well as electricity bills was made by the complainant. Under Ex. A21, the receipts relating to payment made by the complainant to the Electricity Board were noticed by the State Commission. Ex. A22 produced before the State Commission was the statement of the water tax and the water charges, paid by the complainant. Ex. A22 also contained the receipts issued by CMWSSB, whereas Ex. A23 was the statement of telephone bills paid by the complainant alongwith receipts. On perusal of the aforesaid documents, the State Commission found that the appellant had suppressed material facts and made false statements against the complainant particularly with respect to the payment of charges with the Electricity Board and CMWSSB.

HOWEVER , it is an admitted case that there was a shortfall of Rs. 79,000/ - on behalf of the complainant in making the payment made to the appellant. Under the agreement dated 01.06.1997, the entire payment except the last installment of Rs. 20,000/ - was to be made at the stage of completion of brick work. This is not the case of the complainant that even the brick work was not done by the appellant. The complainant, therefore, has to pay appropriate interest on the aforesaid deficient amount of Rs. 79,000/ -. As far as the last installment of Rs. 20,000/ - is concerned that was to be paid on handing over the possession. During the course of arguments, it transpired that presently the flat in question is in possession of the complainant though it could not be verified in what manner and on which date the possession of the flat came to the complainant. Therefore, the aforesaid amount of Rs. 20,000/ - has also become payable to the appellant. For the reasons stated in above, we find no fault with the order of the State Commission in directing the payment of interest amounting to Rs. 5,60,280/ - to the complainant for the period from 01.01.1999 to 01.03.2000. However, interest on the amount of Rs. 79,000/ - which the complainant ought to have paid to the appellant is to be deducted from the aforesaid amount. The interest on Rs. 79,000/ - for the period from 01.01.1999 to 01.03.2000 comes to Rs. 22,120/ -. After deducting the said amount from Rs. 5,60,280/ -, the balance amount comes to Rs. 5,38,160/ -. Also, we find no justification for the direction of the State Commission for payment of interest on the aforesaid amount of Rs. 5,60,280/ -, which by itself represents interest for the period from 01.01.1999 to 01.03.2000 at the rate of 24% per annum. As noted earlier by us, a sum of Rs. 99,000/ - is payable from the complainant to the appellant towards the cost of construction. After deducting the amount of Rs. 99,000/ - from the amount of Rs. 5,38,160/ -, the balance amount payable to the complainant comes to Rs. 4,39,160/ -. The complainant, in view of the agreement between the parties is entitled to the aforesaid amount from the appellant. However, we find no justification for awarding interest on the aforesaid amount at the rate of 24% per annum. Since, the aforesaid amount represents compensation in the form of interest, and it had become due on the date the complaint was filed, we are of the view that the appellant should pay interest on that amount at the rate of 12% per annum, as against at the rate of 24% per annum awarded by the State Commission.

FOR the reasons stated in above, we are of the considered view that the appellant is required to pay an amount of Rs. 4,39,160/ - to the complainant alongwith interest on that amount at the rate of 12% per annum from the date of filing of the complaint till the date of the payment.

WE have noted that though one of the prayers made by the complainant was for a direction to the appellant to complete the construction of the flat and hand over its possession to him, no such direction was given by the State Commission in the impugned order. No direction was given by the State Commission for payment of interest on the amount of Rs. 20,01,000/ -, till the time possession was handed over to the complainant after completing the construction in all respects. Though, it was contended before us that the possession had been given to the complainant, we cannot accept the contention, considering the letter of the appellant dated 15.03.2000, which refers to the instructions given by the appellant to its contractor to complete the finishing work. Obviously that could not have been possible, without the possession being with the appellant. Moreover, the reply of the appellant, before the State Commission also contains an admission that the possession was with the appellant, even at that time. However, since no cross appeal has been filed by the complainant, we are unable to give any relief to him in this regard. For the reasons stated in above, we dispose of this appeal by directing that as against the amount awarded by the State Commission, the appellant shall pay Rs. 4,39,160/ - alongwith interest on the aforesaid amount at the rate of 12% per annum from the date of filing of the complaint till the date of payment.