PAKHAR SINGH SAHOTA vs LLOYDS REALTY LTD.

THIS is the dispute between the shop purchaser and builders - complainant being a shop purchaser and O.Ps. being the builders. (For brevity''s sake complainant is hereinafter referred to as ''Shop Purchaser'' and O.Ps. as ''Builders'').

THE shop purchaser has filed this complaint as a consumer dispute alleging deficiency on the part of the builders in not handing over the possession of the shop for which he had paid considerable consideration to the extent of Rs. 7,08,792/- and possession of which was agreed to be made over within 3 years of the date of booking which was on 30th March, 1995. The shop purchaser is a retired service personnel and after retirement he wanted to settle himself as also pursue some occupation and with that view, he entered into an agreement with the builders for purchase of shop being Shop No. 12 admeasuring at about 553.77 sq. ft. on plot of land bearing Nos. 15 and 17, Sector-7, Kharghar, Navi Mumbai where the builders had announced their scheme for construction of the building.

The shop purchaser made the payments towards consideration as under : (1) On 30th March, 1995 Rs. 5,42,000/- (2) On 26th January, 1996 Rs. 70,000/- (3) On 11th March, 1996 Rs. 96,791/-

THUS, the total consideration paid by the shop purchaser to the builders comes to Rs. 7,08,792/- in respect of which builders have passed the receipts evidencing the payments which form part of the annexures to the complaint at page Nos. 9 to 11. The allotment letter and acknowledgement of the payment by the builders are at page Nos. 7 and 8 of the complaint. It may be stated that there is no dispute about receipt of the consideration as mentioned above. By letter dated 27th January, 1998 the builders informed about the abandonment of the scheme which letter is at page Nos. 12 and 13. The offer was made to the shop purchaser of alternative place in some other project of the builders, which were not found suitable to the shop purchaser.

THE correspondence exchanged forms part of the annexures to the complaint. Since the builders did not complete the construction of the building and hand over the possession and in fact abandoned the project, the moneys paid by the shop purchaser towards part consideration remained with the builders and the same were not refunded and hence the complaint. It is to be stated on behalf of the builders although process served, no written statement on merits as such has been filed. However, application has been filed challenging maintainability of the complaint. Although the same application has not been supported by affidavit which was must, we are taking note of the same.

THE builders have challenged the maitainability of the dispute of the shop purchaser as a consumer dispute before this Commission. THE following points would arise for consideration : (1) Whether the dispute as filed is a consumer dispute ? (2) Whether the shop purchaser-complainant proves the builders being deficient in rendering services? (3) Whether complainant-shop purchaser is entitled to the damages ? (4) What reliefs ?

Our findings on the aforesaid points are : PointNo. 1 - Yes Point No. 2 - Yes Point No. 3 - Yes Point No. 4 - As per order. Reasonings :

POINT Nos. 1 and 2 : We propose to take both of these points for consideration together to avoid overlapping discussion thereof. As far as first point is concerned, it needs to be stated that the disputes as obtained in the matter herein would be one, which would be between shop purchaser and builders and the various documents relied upon by the complainant and which form part of the annexures to the complaint such as allotment letter, receipts issued would clearly show that the builders have undertaken construction work of a complex in which they have agreed to provide a shop to the shop purchaser-complainant. It would further be noticed that the shop purchaser had agreed to pay the consideration for the shop and in fact has paid substantial part of the consideration to the extent of Rs. 7,08,792/- for which builders have passed receipts.

Taking into consideration all these factual aspects, it has to be held that as provided under Section 2(1)(o) of Consumer Protection Act, 1986 the kind of dispute being the subject matter of the complaint would conveniently and usefully categorised as falling under "housing construction " and as such same would squarely fall within the purview and ambit of this Commission functioning under Consumer Protection Act, 1986 as consumer dispute.

IT is to be stated that Sub-section 2(1)(o) of Consumer Protection Act, 1986 has been amended in the year 1993 when "housing construction" as kind of services came to be incorporated in the said section. IT needs to be stated that the kind of services, which the builders agreed in the transaction of such nature, would be certainly a service pertaining to the housing construction and this was the intention of the Legislature when it, by way of amendment, incorporated the same as services in the said Sub-clause 2(1)(o) of the Consumer Protection Act, 1986. That being so, the Point Nos. 1 and 2 should require to be answered in affirmative. Point No. 3 - There requires no elaboration for this, as the facts as averred herein above to which there was no challenge by and on behalf of the builders - O.P. that despite receipt of substantial consideration to the extent of Rs. 7,08,792/- the builders - O.P. have not completed the construction of the building and handed over the possesion of the shop as was agreed to be provided to the shop purchaser-complainant. In our view, this would certainly constitute deficiency in service on the part of the builders.

FURTHER, it was obligatory upon the builders to execute a proper agreement as required under the Maharashtra Flat Ownership Act, 1963 which has also not been done. FURTHER more, builders have received and accepted the consideration to the extent of more than 52% of agreed consideration, which the builders were not entitled to recover and receive under the provisions of Maharashtra Flat Ownership Act, 1963. Since, the said Act clearly provides the stages when the builders can receive the consideration from the shop purchasers depending upon the progress of the construction. So this is yet more instant of deficiency in services on the part of the builders. We, therefore, hold the builder being deficient in rendering services. Point No. 4 : Since the deficiencies stand proved as provided under Section 14(1)(d) of Consumer Protection Act, 1986, the complainant-shop purchaser would be entitled for the compensation for the loss sustained as also injury suffered. Across the learned Advocate for the builders submitted that the builders have abandoned the project because of Real Estate Market had crumbled down. We wish to state that such argument does not impress us and in any way cannot be taken as mitigating circumstances and for that matter exonerating circumstances. The builders are the businessmen and profit and loss is always part of the business and in the event of loss, the same should be taken as hazards of the occupation.

AS far as compensation to be awarded, we are of the view that the shop purchaser-complainant will have to be reimbursed the entire consideration that he has paid to the builders.

IT is noticed that the shop purchaser cannot be held responsible or accountable for the trend in the market, which is sought to be justified by the builders and we have proceeded to reject even otherwise. The Maharashtra Flat Ownership Act, 1963 envisaged the situation when for any reasons, on payment of consideration, the possession of the flat is not delivered to the flat purchaser in normal circumstances, Section 8 of the said Act provides interest @ 9% p.a.

However, in the instant case as noticed hereinabove, the deficiency in services against the builders stands sufficiently and convincingly established and, therefore, shop purchaser would be also required to be compensated for the injuries suffered.

WE have occasion to deal with somewhat similar situation in the Appeal Nos. 584/1998, 592/1998, 594/1998 and 595/1998 in the case of M/s. Paranjpe Construction Co. v. Nilesh Ram Marathe & Ors., decided on 20th June, 2001 reported in 2001 (3) All.MR (Journal) 1 and after reviewing the case law on the point as also on examining the statutory provisions, we have allowed the interest @ 15% on the consideration paid by the flat purchaser. This we have done after taking into consideration the interest which the Statute provides 9% p.a. (Refer 8 of Maharasthra Flat Ownership Act, 1963) and the interest awarded at the higher rate i.e., 15% p.a. would take care of the element of compensation as envisaged under Section 14(1)(d) of Consumer Protection Act, 1986. Hence the following order : ORDER 1. The builders-O.Ps. are ordered and directed to refund the sum of Rs. 7,08,792/- with interest @ 15% p.a. from the respective dates of payment as under till realisation : (i) Rs. 5,42,000/- - 30th March, 1995 (ii) Rs. 70,000/- - 26th January, 1996 (iii) Rs. 96,791/- - 11th March, 1996 2. The builders-O.Ps. shall also pay cost in this proceeding to the complainant-shop purchaser quantified at Rs. 7,500/-. 3. WE are granting 8 weeks'' time from today for the builders-O.Ps. to comply the order. 4. Office shall furnish copies of the order to the parties. Complaint disposed of.