PUSHPA BUILDERS FLAT BUYERS ASSN. vs PUSHPA BUILDERS LTD.

THESE are two separate complaints filed by M/s. Pushpa Builders Flat Buyers'' Association alleging deficiency in service on the part of M/s. Pushpa Builders Ltd., the respondents in this case.

BRIEFLY put the facts are that the complainants in both the cases, in response to the advertisement/property melas, applies for purchase of flats in 1988-89 in two complexes namely, ''Pushpa Akash'' and ''Pushpa Vaishali'' to be built by the respondents, in Vaishali area G.D.A., in Ghaziabad. These were to be built in both free-hold and lease-hold hands. According to the Brochure on record, flats were to be completed by December, 1991. When the flats were nowhere in sight, the complainants delayed the payment of instalments on the one hand and the work came to a standstill at the site, on the other. As a result of these allegations and counter allegations, some ten complainants filed a complaint before this Commission in 1994 (O.P. 60/1994), orders on which was passed by this Commission in June, 1996 directing the respondents - who are also the respondents in these complaints before us - to refund the amount deposited by those ten complainants along with interest @ 18%. In appeal, the order of this Commission was maintained by the Hon''ble Supreme Court. It appears that five more flat buyers applied to be included in Complaint No. 60/1994, but this Commission did not take them on record and the order in O.P. 60/1994 was passed in respect of ten complainants as originally listed in that complaint. Since complainants in both the complaints before us in O.P. 215/1996 and 326/2000 are being represented through the same complainant''s Association, respondents are the same and cause of action is the same, we are inclined to pass one single order in the two complaints filed before us. O.P. No. 215/1996 :

Originally, the complainant Association filed this complaint before this Commission in respect and on behalf of ten flats purchasers from the respondent - Pushpa Builders. These ten flat purchasers were M/s. Kamala Mathur, Sunil Malhotra, V. Krishnamurthy, S.M. Afzal Naqvi, Janardan Pant, Anuragni Sharma, Indu Aggarwal, Chandan Mitra, S.K. Kharbanda and M/s. Nugas Engineering Corpn. Their case is that they have paid between 50% to 100% of the booked price of the flat in the two complexes namely, ''Pushpa Akash'' and ''Pushpa Vaishali'' in response to the advertisement and at several Property Melas organised by the respondent. Bookings were done in late 1988 - early 1989 with a promise to deliver flats in 1991, ''Agreements'' for which were signed much later. Even though, the complainants did not like many ''Terms'' of the Agreement, they could not get out of it as they had already made substantial payments to the respondent. In the Brochure several promises were made about these complexes, highlights of which were just 15% of ground coverage; all rest landscaped lush green; parking and recreational area; marble flooring in the ''lift'' lobby, balance flooring in white cement with white marble chips; high speed modern elevators. Some of the special features were : independent electric transformers in each apartment; standby generator sets; Central Video system; parks and playground for children; huge parking areas all around the complex buildings etc. etc. Complainant''s case is that even though the year 1996 has arrived but there is no sign of the completed flats ready to be handed over to them. They have also referred to the ''inadequacies'', brought about in the report of the Special Commissioner appointed by this Commission in 1995 to report on the same complex in a case (O.P. 60/1994) decided by us. It was based on this report that this Commission arrived at the conclusion (in O.P. 60/1994) finding the respondent before us deficient in services and ordering refund of the total amount deposited by the flat purchasers along with interest @ 18%. Prayer of the complainant is that since the respondent has failed to deliver the possession of completed flats as promised, respondent should be ordered to refund the amount of the complainants paid to the respondent with interest @ 22%, pay compensation for the alternate residential accommodation and interest @ 22% for five years for the mental agony and torture suffered by them.

THE respondent filed his reply to which a rejoinder was also filed by the complainant. In the meantime, the complainant moved an application for inclusion of three more names i.e. of Wing Commander R. Ranjan, Shri S. Kumar, and Smt. Seema Sethi the flat purchasers to be represented by the complainant Association. And yet again, an application was moved by the complainant to include two more names of flat purchasers i.e. M/s. Bajaj Enterprising Company and Smt. Prem Lata Dutta whom the complainant Association represented as members of its Association. This Commission by its order dated 6.7.1998 allowed their impleadment as a sequel to which the complainant filed an amended complaint enabling the complainant to represent fifteen flat purchasers. THE respondent filed a reply to the amended complaint and denied all the averments made in the complaint. Three main grounds were taken by the respondent to oppose the complaint. Firstly, respondent raised the point of jurisdiction of this Commission to entertain the complaint in view of para 37 of the agreement between the parties which stipulates that in case of any dispute between the parties provisions of Arbitration Act shall apply. Secondly, in the original complaint, there were only ten flats purchasers whose names were mentioned; subsequent allocation of five more flat purchasers behind the back of respondent is not in order and goes on to say that a wrong information was given to the High Court dealing with the same subject by the complainant that there were fifteen flat purchasers while in fact on the date i.e. 2.4.1998 there were only ten flat purchasers whom the complainant Association was representing. Thirdly, that rate of interest i.e. 18% granted under similar circumstances in Case No. O.P. 60/1994 decided by us should not become a precedent. It is also the plea of the respondent that many flats are ready; complainants are not taking possession because market rates have come down and finding encouragement from the order of this Commission in O.P. 60/1994, the complainants under any pretext, largely wrong ones, who otherwise had made investment for commercial purposes and have failed there on account of fall in market prices, now wish to profit by getting interest @ 18% on the principal amount deposited by them. If any party is at fault it is the complainant who did not deposit the instalments in time, they are hampering the progress of work on site. In spite of severe constraints, respondents have completed the work using its own resources; the respondent is ready to give possession of the flats provided the balance amount due from the complainants is deposited by them. THEre has been no deficiency on the part of respondent. If there has been any deficiency, it has been on the part of the complainant who did not deposit money in time and failed to honour their part of the agreement. In its reply, the respondent also stated that this Commission alone should adjudicate the matter as the Company Court cannot interfere in the jurisdiction of this Commission and the orders passed by the Company Court dated 2.4.1998 and 14.9.1998 are void on this basis. It is argued by the learned Counsel for the complainant Mr. Arun Khosla that the respondent was successful in alluring the complainants through its ''Property Melas'' organised in Posh Hotels of Delhi. The respondent Builder has admitted receipt of 50 to 100% of the value of flats, that the builder admittedly abandoned part of the said project. Flat purchasers in this complaint are similarly situated as in O.P. 60/1994 (decided by this Commission in June, 1996). In the other petition, this Commission appointed a former D.G. (Road Development) to submit a report on the status of the complex as late as 1995 and he had found those flats not habitable. Vide order dated 2.4.1998, Hon''ble High Court, on the consent of the opposite party, directed the opposite party (respondent before us) to pay 80% of the principal amount received from the fifteen flat buyers covered by O.P. 215/1996 (in instant case). The question of interest to be paid to the flat buyers, was left open for adjudication by this Commission. A company appeal having been filed by the respondent also the respondent before us, was dismissed and S.L.P. filed before the Hon''ble Supreme Court was dismissed in limine, thus making the order final. It was his prayer that the complaint be allowed in full. On the other hand, it was argued by learned Counsel for the respondent Mr. Uppal that the complaint is wholly misconceived and abuse of process of law. None of the flat purchasers have paid money in full. Had the money been paid in time, flats would have been completed in time. General slump in the market and seeing some flat purchasers getting their money back with interest @ 18% (consequent to orders of this Commission in O.P. 60/1994) have motivated them to file their complaints one after another. He also argued the complaint is time barred. According to him since the same complainant Association represented the case of ten members in O.P. 60/1994, thus the cause of action crystalized for all flat buyers in the same complex on 18th March, 1994 was filed, filing another complaint in March, 1996 is clearly barred by limitation. Respondent also challenged the report of the Commission Shri D.P. Gupta appointed by the Commissioner to report on the status of flats (in O.P. 60/1994) on grounds of bias. He also stated that in persuance of the order of Company Court all the 15 flat purchasers received 80% of the principal amount, from the amount ordered to be deposited by the respondent, by the Company Court in June, 1999. He also argued that no interest is payable to the complainant as they never paid the instalments in time and their allotments have been cancelled. He concedes that the contractual rate is only 12%. He drew our attention to two judgments of the Hon''ble Supreme Court in Gautam Constructions and Fisheries Ltd. v. National Bank of Agriculture and Rural Development, reported in VI (2000) SLT 21=(2000) 6 SCC 519, and G.D.A. v. Union of India, II (2000) CPJ 1 (SC)=IV (2000) SLT 654=(2000) SCC (113) as regards rate of interest payable and rules of remoteness of damage and compensation payable. In view of above, there is no deficiency in service and prayed for dismissal of the complaint with costs.

IT is relevant and germane to refer to parallel proceedings before the Hon''ble High Court. From the material on record it appears that the complainants in O.P. 60/1994 moved Company Court for winding up the respondent Company and by an order dated 16.8.1995 the Company Court had ordered citation to be issued in newspaper and Delhi Gazette, which was appealed against and was finally dismissed. In the meantime, the complainant also went before the National Commission and got some relief but since the payment as per orders of the National Commission were not made, i.e. return of money of 10 ''flats purchasers'' in O.P. No. 60/1994 with interest @ 18%, the Company Court again ordered on 16.1.1998 to issue citation as ordered on 16.8.1995. Since the amount was not being paid by the respondent (also the respondents before us in the instant case) the Company Court vide its order dated 16.3.1998 reiterated issue of citation and appointed Official Liquidator and directing him to take over the assets of the respondent company. Matter was again taken on a C.A. Nos. 431, 432, 498/1998 in C.P. 120/1994 on 2.4.1998 wherein, learned Counsel for the respondent Mr. Uppal also stated that the entire amount deposited by fifteen flat purchasers (complainants in O.P. 215/1996) shall be refunded after deducting 20% of the principal amount deposited by them. He also stated before the Company Court, that legality or otherwise of deduction of 20% as well as question of rate of interest could be raised before the National Commission in O.P. 215/1996. In respect of the fifteen flat purchasers the Company Court ordered refund of principal amount deposited by the complainants with respondent after deducting 20% by 7th December, 1998 after which the complainants were to surrender all the documents pertaining to the flats. IT was also ordered that in case payments are not made within the time granted to the respondent it will not be open to the respondent to oppose the winding up of the Company. On an application by one of the flat purchasers (O.P. 60/1994), the Company Court again took up the matter and passed orders on 14.9.1998 alluding to the above position. Appeal on this, filed by the respondent also the respondent before us, was dismissed by a Division Bench of the High Court on 24.9.1998. S.L.P. filed against this was dismissed in limine by the Hon''ble Supreme Court. IT appears that in June, 1999, payment was made to the fifteen flat purchasers by the respondent as per direction of Company Court vide its order dated 2.4.1998 i.e. refund of principal amount deposited by each member before us (in O.P. 215/1996) of the complainant Association after deduction of 20%. We have perused the material on record and heard the arguments. In our view it is relevant to quote a portion of the order of the Company Court dated 14.9.1998 : "It must be stated at the outset that there is a chequered history of litigation and round of applications filed by the respondent. This is not the first application of its hand. Number of applications had earlier been filed by the respondent before various Forums seeking modification of their orders..." A protracted litigation has been the only response of the respondents using all the process of law available, to any request of refund of money by the helpless flat purchasers. Facts are not disputed, hence, are not being repeated. It may be necessary to deal with the three objections/grounds offered by the respondent. Firstly, on the question of maintainability of the complainant before us, we see that based on the judgment of Hon''ble Supreme Court in Lucknow Development Authority v. M.K. Gupta, this Commission has held Builder to be a ''service'' provided to the flat purchaser, hence, falls within the definition of Consumer under Section 2(d)(ii) of C.P.A., hence, within the jurisdiction of Consumer Forums. So far as the argument of the respondent, to exclude the jurisdiction of this Commission in view of terms of Agreement between the parties, is concerned, we do not find that Clause 37 comes in their way. Clause 37 of the agreement between the parties reads as follows :

"Unforeseen and Additional Charges and Arbitration Clause 37(a) It is agreed between the parties that the Promoter shall also be entitled to claim further amounts for any unforeseen charges and outgoings incurred by the Promoter. The amount of such additional charges, payable by the Buyer shall be settled by him by mutual discussion with the Promoter. The decision of the Promoter shall be final and binding upon the Buyer.

(b) That is case of any disputes, difference or any matter arising out of or touching this agreement for sale, excepting those in respect of which the decision of the Promoter is final and binding, shall be referred for decision to the Chairman and Managing Director of the Promoter or any person nominated and appointed by him whose decision shall be final. The provisions of the Indian Arbitration Act, as amended from time to time, shall apply to such arbitration excepting that the person nominated are appointed as an Arbitrator shall have full authority to adjudicate upon the dispute or difference and it shall not be open to the buyer to contend that such person is either an employee or connected with the promoter. The Arbitrator shall be entitled to extend time for making the award from time to time, fix the place of siting of arbitration meeting(s). The Arbitrator shall be entitled to fix his remuneration and other charges for arbitration". Not only it appears to be one-sided, it also needs to be seen in the context of pleadings of the complainant. It has been stated by them that the agreement was made years after payment of first instalment and they had their own reservation on several clauses of the Agreement. Complainants found it too late in the day to withdraw and under the circumstances signed on dotted line. In any case, facility to approach the Consumer Forums is an additional remedy to the consumers. We do not find any merit in this. Second ground/objection taken is that in the original complaint there were only ten flats purchasers, later on, increased to fifteen behind the respondents'' back, and that before the High Court this wrong was repeated. Perusal of material on record shows that the original complaint was filed on 7.10.1996 and two applications were filed subsequently on 11.7.1997 and 27.1.1998 respectively to add three and two more flat purchasers in the complaint. Notice was ordered to be issued to respondent vide order dated 20th April, 1998 and impleadment was allowed on 6th July, 1998. The Company Court passed orders on refund of amounts on 2.4.1998 to the fifteen flat purchasers in the presence of the opposite party before us. Two things can be seen; that application for increasing the number of flat purchasers from ten to fifteen were on record of the National Commission on the date of passing of order by the Company Court i.e. 2.4.1998 and secondly no such ground was taken before the Company Court, it appears, in order to save the day, the learned Counsel for the respondent voluntarily agreed to refund the amount to all the fifteen flat purchasers. There is not a whisper on this point before that Court. We find no merit on this ground either. Third point is that this Commission should not grant interest @ 18% following our own order in a similar case with the same respondent passed in O.P. 60/1994. That should not be a precedent. Suffice here to say that the respondent went before the Supreme Court in appeal against our order passed in O.P. 60/1994 which was dismissed making it final. Hon''ble High Court also held the same view in the appeal filed by the same respondent in L.P.A. 324 and C.Ms. 2218-19/1998.

"By the impugned order, the Company Judge has dismissed the assertion of M/s. Pushpa Builder that interest to be paid at the rate of 12% (which was the rate of interest in the agreements) and not at the rate of 18%."

We are of the view that inasmuch as the appeal against the order of National Consumer Disputes Redressal Commission was dismissed by the Supreme Court, the order of the Commission has become final and it cannot be questioned before this Court and asking this Commission not to follow our own order passed in similar circumstances, begs question. Respondent has drawn our attention to two judgments of the Supreme Court (2000) 6 SCC 519 and (2000) SCC 113 on the subject of interest. We have carefully gone through them. Hon''ble Supreme Court has granted 12% rate of interest, in G.D.A. v. Union of India (supra), but subsequent to that judgment, Hon''ble Supreme Court has also upheld rate of interest of 18% granted by National Commission in its judgment dated 12th March, 2001, G.D.A. v. Dhanesh Chander Goel, which also lays down that it is the facts and circumstances of each case which will determine the rate of interest. Grant of compensation on the amounts deposited for long periods to cover the cost-escalation in getting a new accommodation as a result of deficiency on the part of respondent, is a justified and equitable proposition, which can be met by grant of interest to the complainant, hence, keeping in view the facts and circumstances of the case, we have no hesitation in granting 18% rate of interest on the amounts deposited following our own order in O.P. 60/1994 upheld by Hon''ble Supreme Court. We find no merit in this point either.

AT this stage of argument, a new point has been taken i.e. with regard to limitation. In the amended reply to the complaint this plea has not been taken, though it found only a single line mention in reply to the original petition. As is well settled, no new plea can be taken unless it emanates from the pleadings. Even otherwise, flats were to be developed in 1991, they were not ready as late as 1995. We have also on record O.P. 326/2000 wherein a report from a Commission in this case appointed by the Company Judge to ascertain the status of flats is quite revealing. There is scaffolding on site, work is going on in upper floors, dampness was noticed on the walls of bed rooms etc. until repairs were carried out and permanent remedial measure are taken, it cannot be considered habitable. He has concluded ''in the absence of basic facilities of electricity, sewage and lift as also because of dampness observed in the flats, it is difficult to accept the flats owners to inhabit in the residential complex at present''. This report is of as late as November 24, 1999. We see a continued cause of action. We are even otherwise inclined to condone the delay, if any, keeping in view the facts and circumstances of the case. We also find the ground to be untenable.

THE main plea of the respondent is that since the instalments were not paid by the flat purchasers in time, hence, work cannot progress. More than 50 to 70% of amounts of the total cost of the flats were deposited upto 1991 - yet we find the flats remaining incomplete/inhabitable till 1999. This is a Self Financing Scheme, payments of instalments are linked to progress of work. Since admittedly progress come to standstill, at one point of time the project is left abandoned, how could the flat purchasers be expected to continue to pay the builder to possibly finance his (mis)adventures and dupe the public elsewhere ? THE two reports of the Commission - one appointed by this Commission and the other appointed by the Company Judge nail the lie and expose the hollowness of the claim of the respondent. His allegation that complainants had purchased these flats as commercial investments perhaps fits more, on his own objective. For the respondent, it was out and out a commercial proposition when he saw himself unable to live upto the expectations aroused by the hollow promises made though the Brochure, he not only decided to go slow and partly abandoning the project at that time, but also initiated moves to harass the complainants by continuously engaging them in litigation, whatever it took to do so. We find no merit in the arguments advanced by the respondent that had the flat purchasers continued to give money, he would have completed the flats. If 70% of the payment did not bring them near their dream houses in eight years, to expect that remaining amount would have brought them any closer would be stretching our comprehension. Perusal of material on record before us as well as the arguments advanced before us make it abundantly clear that, respondent himself seeing no merits in his case, had agreed to refund the principal amount of the complainants after deducting 20% by virtue of Clause 29 of Agreement. Clause 29 of the Agreement reads as follows : "If the Buyer neglects, omits, or fails for any reason whatsoever to pay to the Promoter any of the amounts due and payable by the Buyer under the terms and conditions of this Agreement (whether before or after delivery of possession), on or before the respective due date thereof, time being the essence of the contract, or if the Buyer shall in any other way fail to perform or observe any of the convenants and conditions on his part herein contained or referred to, the Promoter shall be entitled to re-enter upon and resume possession of the said flat and everything whatsoever therein, and this agreement shall cease and stand terminated and earnest money and all other amount already paid by the Buyer to the Promoter shall be refunded after deducting 20% of the value of the property involved and the Buyer hereby agrees to forego all his rights, title and interest in the said flat and the Buyer shall also be liable to immediate ejectment as trespasser but the right given by this clause to the Promoter shall be without prejudice to any other rights, remedies and claims whatsoever in law or under this Agreement of Promoter against the Buyer."

Firstly, that the complainants were given this Agreement much later and secondly, they have had some reservations about the clauses of the Agreement. In our view, this clause has to be seen in a perspective, which is, that the builder should also continue to perform his part by way of showing continued visible progress in work which is linked with the payment of instalments. By 1991, flats were to be handed over, more than 50% to 70% of instalments stood paid but progress on ground was poor a mismatch, compelling the complainants to withhold payment of instalments on their part. There appears to be no ground for deduction of 20% under Clause 29 of the Agreement, keeping in view the facts and circumstances of the case before us.

In the light of discussions above, we find a clear deficiency on the part of respondent in rendering service to the complainants. The complaint is allowed. The respondent is directed to refund full amount deposited by each of the fifteen flat purchasers along with rate of interest @ 18% from the respective dates of payment till the repayment is made within a period of three months. The final amount to be paid shall be worked out after adjusting for the amount already given to the flat purchasers pursuant to the orders of the Company Court. Each of the flat purchasers is also awarded cost, assessed at Rs. 5,000/- against the opposite party for harassment and dilatory tactics of the builders. O.P. No. 326/2000 :

THIS complaint has been filed by the complainant - Pushpa Builders Flat Buyers Association against Pushpa Builder alleging deficiency in service on the part of the latter. THIS complaint involves ten flat buyers. In the reply filed by the respondents, plea of limitation was raised as also the point that these ten complainants after having taken the possession of flats have no locus standi, hence, the complaint needs to be dismissed. Even though, the Commission ordered this to be tagged along with O.P. No. 215/1996, the complainant failed to meet at any stage the point on limitation raised by the respondent. THIS point was neither touched during the arguments nor is there a whisper in the written notes submitted by the learned Counsel for the complainant meeting this point. We did not go into the question of limitation in O.P. No. 215/1996 as the orders of the High Court have been made applicable in that case. Under these circumstances, any discussion on the question of limitation was in any case infructuous in O.P. No. 215/1996, but same is not the case in this complaint. Two salient differences are apparent as per record. Firstly, possession of flats were taken over by all the ten complainants in this case, and secondly, the complaint has been filed four years after the other complaint before us. The cause of action in the case at best emanated from the date of possession, i.e., 1995 and 1996, whereas the complaint in this case has been filed in the year 2000 which shows that this complaint before us is clearly barred by time under Section 24A of the Consumer Protection Act. There is no plea or application for condonation of delay on record nor is there any rejoinder filed by the complainant meeting this point. We are unable to sustain this complaint, hence, dismissed. No order on costs. Ordered accordingly