Rajan Joshi vs Harsh Kakkar

THE complainant, Ranjan Joshi, entered into an agreement dated 11.04.2015 with the opposite party (OP) who is a builder/contractor, for the construction of his house at Almora, Uttarakhand at a cost of 20,91,795/ -. The time laid down for the construction of the said house was seven months, i.e., upto November 2005. It was also laid down that if the OP contractor failed to carry out the job within the time schedule, he shall be liable to pay a penalty of 1% of the cost of the construction per week of delay. If the construction of the house was made in time, an incentive bonus of 20,000/ - was to be paid to the OP builder. The approved building plans were provided to the builder and the payment schedule was also laid down. An advance payment of 2 lakh was made at the time of signing the agreement on 11.04.2005 and by July 2005, a payment of 5,00,180/ - was made to the OP. In August 2005, a change was requested in the roof configuration to provide a covered terrace. According to the complainant, the OP accepted the change and stated that this shall not affect the time schedule for completion. A further payment of 3,82,000/ - was made during August 2005. During the period December 2005 to March 2006, another payment of 6.5 lakh was made, making it a total of 20,67,180/ -. It is alleged that very little work was done during this period, rather the OP gave a written schedule for completion of the project by June 2006 and also requested for more funds. The complainant made a further payment of 4,45,000/ - by May 2006 taking the cumulative total to 26,12,180/ -. However, the contractor stopped the work on the site completely in June 2006 and asked for more funds. There was correspondence between the complainant and OP regarding increase in the scope of the work and more funds required. On 27.07.2006, the OP wrote a letter to the complainant saying that the entire construction work shall be completed by 30.09.2006. He also stated in that letter that if the construction was not done by then, he shall pay 1% of the total cost of construction per week as penalty with effect from 15.10.2006. The complainant says that the OP did not complete the work by then and ultimately, he had to move in the unfinished house by the end of January 2007. He noticed various defects and deficiencies in the house which were not removed despite giving another chance to the builder, and ultimately, these had to be rectified by engaging the services of some other people and spending extra money for the same. The complainant says that he is a management professional based in Mumbai and is engaged in consultancy work all over India. Due to the non -completion of the construction of the house in time, he had to undergo a lot of mental harassment and agony and his professional work also suffered. The complainant alleged that he had made total payment of about 43 lakhs approximately to the contractor but despite that, there were lot of deficiencies/shortcomings in the house. The complainant filed the instant consumer complaint, demanding a sum of 1,11,47,000/ - from the OP as compensation, consisting of the following details: -

THE OP builder contested the complaint by filing a written statement in which he stated that there were many disputed question of facts involved in the present case which could not be gone into in the present summary proceedings before this Commission and hence, the complaint was not maintainable. He also took the plea that the house in question was required to be completed by November 2005, but the complaint was filed in April 2008 and hence, the same was time barred. The main plea taken by the OP, however, is that ever since the signing of the agreement with the complainant, the plan of construction and scope of work kept on changing from time to time. The complainant had demanded additional covered area and more amenities and hence, the agreed time schedule could not be followed. The complainant got a revised plan and elevation on 25.09.2009 from an architect Naina Borkar for one more floor. The tiles ordered by the complainant arrived on 15.12.2006 and the details of the furniture etc. were given by the wife of the complainant in December 2006. The OP has maintained that the complainant was always fully aware of the financial and physical status of the project and he never took any objection when the initial payment of 20,91,795/ - was exceeded. He never raised any question of amount being more than double of the initial amount agreed. During hearing before this Commission, both the parties led evidence in support of their contentions. At the time of arguments, the learned counsel for the complainant stated that the OP had abandoned the project in between, leading to a lot of harassment to the complainant and they had to incur extra amount of money to get the project completed. Despite making commitment that the work shall be completed by September 2006, the OP failed to complete the said work. They wrote a letter on 11.10.2006 asking the OP to provide the completion schedule and to bring the project to completion at the earliest. After moving into the house in January 2007, the complainant sent a letter on 28.02.2007 asking the OP to complete all pending jobs, by the middle of March 2007, otherwise the complainant shall have no option but to have the work completed through other parties. It was made clear that if there was an increase in cost due to delay, the said cost shall have to be borne by the OP. The OP replied on the same day that he was facing extreme shortage of funds and hence, he could not finish the work. He also stated that he had done some calculations to submit the bills, but he lost is polybag in the train and hence, he will do the measurements and calculations again. The OP also requested for release of more funds. The complainant then sent a letter to him on 1.03.2007 that any further payment can only be made after completion of the work satisfactorily. The OP sent his reply dated 02.03.2007, in which he stated that the complainant may give him some amount '' as loan '' if he thought that no more funds were payable. The learned counsel for the complainant stated that for the failure of the OP to complete the work in time, despite notice contained in their letter dated 28.02.2007, they had to get the work completed and necessary rectifications done by engaging other contractors. He has drawn our attention to a judgment by the Hon''ble Apex Court in " Oil & Natural Gas Corporation Ltd. v. Saw Pipes Limited" as reported in [ : 2003 (5) SCC 705], saying that in the event of breach of contract, damages could be awarded against the contractor.

IN reply, the learned counsel for the OP maintained that the delay occurred due to increase in the scope of work and non -payment of his bills by the complainant in time.

AFTER the conclusion of the arguments, the learned counsel for the complainant submitted details of the payments made by the complainant for rectification and completion of the proposed work, which was agreed to by the opposite party as per the contract. As per this statement, a sum of 2,67,219/ - had been spent on said rectification and copies of the vouchers to that effect had been placed on record. According to the complainant, the balance amount of 3,28,281/ - was to be spent by him after the institution of the present complaint. A complete chart depicting the concerned expenses had been attached at page No. 176 of the complaint and the total amount of expenses was 6,25,275/ -. On the other hand, the OP builder also gave his written version after the conclusion of arguments, in which he stated that the total estimated cost of the project was 45,79,178/ -, out of which the complainant had paid only 42,93,285/ - till 27.01.2007. He also stated that the total amount payable as on 27.07.2006 was 2,87,443/ - while a sum of 3,91,483/ - was payable on 25.01.2007.

THE basic issue that arises for our consideration is whether there has been any deficiency in service on the part of the OP Builder, in carrying out the construction of house for the complainant in accordance with the terms and conditions of the agreement executed between the parties. It is an admitted fact that as per the agreement made between the parties, the house was to be constructed within a period of seven months, i.e., by November 2005 at a cost of 20,91,795/ -. The OP builder have taken the stand that the delay occurred because the scope of work kept on changing and consequently, the value of the estimate got increased and the time schedule for the said construction could not be followed. A perusal of the correspondence between the parties, in particular letter dated 12.07.2006 sent by the OP to the complainant indicates that there was increase in the scope of work to be executed. It is also an admitted fact that the complainant made a payment of 42,93,285/ - till 27.01.2007 as against the estimated amount quoted in the agreement as 20,91,795/ -, implying thereby that the complainant acknowledged increase in the scope of work and the estimate for completion of the job. The core issue to be considered, however, is whether the OP was able to honour the commitment made by him regarding the time schedule and whether there was any deficiency in service on his part. In this regard, the letter dated 27.07.2006 written by the OP builder to the complainant is a material document and is reproduced below: - "This is to confirm that all the constructions and finishing work for the residence shall be over by September 30, 2006 and the house shall be completed/ready for occupation in all respects by then.

If for some reasons other than natural calamities, the house is not ready even by October 15, 2006, I hereby agree to pay the penalty @1% per week of delay with retrospective effect from November 1, 2005 as per the contract.

The above condition is applicable subject to certain points, which are as follows: -

"1. All decisions acquired from your side are taken and conveyed to us in time.

Payments for all materials and labour procurement is done in due time per schedule provided.

There shall be no major increase in Work Scope, other than alterations and additions at site.

I agree to inform you in writing at least 7 days in advance, regarding any action required from your side to comply with these points."

A plain reading of the above letter shows that a commitment was given by the OP builder to complete the house in all respects by 30.09.2006 and also to undergo penalty, if the house was not ready for some reasons other than natural calamities. No doubt, the OP builder imposed certain conditions in the above letter, saying that all decisions required from the side of the complainant should be taken and conveyed in time and the payments for materials etc. is done as per time schedule, but the OP builder has also given an undertaking that if any action was required from the side of the complainant, he shall inform him in writing at least seven days in advance. During course of hearing before us, the OP builder could not produce any material to show that he had sent any such communications to the complainant, pointing out any deficiency or shortcoming on his part. On the other hand, when the complainant moved into the house in January 2007 and sent him a letter saying that the house should be completed by the middle of March 2007, the OP builder replied that he was extremely short of funds and he even asked him to give some money as loan so that the work could be completed. In case, the builder had not received the requisite money as per the estimate for the construction of the house, he should have specifically spelt out the quantum of more funds required to complete the work. The very fact that the OP in his letter stated that he had lost his bag containing the calculations done by him and he asked for additional money as loan, shows that the complainant was not at fault for the non -completion of the house in time. In his written submissions filed after the conclusion of the arguments, the OP builder has stated that on 27.07.2006, the pending amount was 2,87,443/ -. If this was the case, he should have specifically asked the complainant to remit this amount, rather than giving a commitment that the house shall be completed by 30.09.2006. The OP builder is, therefore, clearly guilty of deficiency in service towards the complainant for his failure to complete the work within the promised time. The complainant stated that he spent a further sum of 6 lakh for the rectification of the defects etc. However, the complainant was able to provide details of the amounts spent for 2,67,219/ - only, saying that the balance amount was to be spent by the complainant after the institution of the present complaint. Since no proof regarding spending of any further amount has been given, it is held that the complainant is entitled to receive a sum of 2,67,219/ - only from the builder for the extra money spent by him for the rectification of the defects. In addition, it is stated that since the OP had himself given an undertaking that the work shall be completed by September 2006, and he was prepared to pay the penalty with effect from 15.10.2006, he is liable to compensate the complainant for the delay in the completion of the work. The OP had agreed to pay penalty as 1% of the amount deposited per week with effect from 1st November 2005, i.e., with retrospective effect, if the house was not completed by 15.10.2006. In the interest of justice, however, it is considered appropriate that the OP should pay half of the amount of penalty @1% of the amount deposited per week with effect from 15.10.2006 till the date of filing the complaint in April 2008.

BASED on the discussion above, this consumer complaint is allowed with directions to the OP builder to remit a sum of 2,67,219/ - alongwith the penalty amount as stated in the preceding paragraph to the complainant within a period of eight weeks from today, failing which interest @9% p.a. on the total amount payable shall have to be paid by the OP builder to the complainant. There shall be no order as to costs.