RAJIV MALHOTRA vs RAJ CHOPRA

THIS order will dispose of both the above titled complaints as questions of facts and law raised are identical. The facts, as gathered from the records, are that Smt. Satyawati Dhawan is the owner of plot No. 6, Jantar Mantar Road, New Delhi. She entered into an agreement with M/s. Competent Builders, hereinafter referred to as the Builders. By virtue of the said agreement and the Power of Attorney, the builders were empowered to sell "space" on ownership basis in the proposed mult-storyed building which the builders were to construct on the said plot. It may be mentioned here that the opposite parties No. 1 & 2 herein are partners of the said builder''s firm. Rajiv Malhotra (complainant in Complaint Case No. C-12 of 1991) entered into an agreement on 10.9.79 with the builders for the allotment of residential flat No. 203 on second floor. As per allotment letter, Rajiv Malhotra was allotted covered area of 1700 sq.ft. at the rate of Rs. 245/- per square ft. According to the complainant there was no clause about escalation in price in the allotment letter and the area to be worked out was in terms of covered area and not ''super area''.

THE builders were supposed to build the flats within two years of the sanction of the plans by the prescribed authorities. As per Clause 4 of the allotment letter 20% of the agreed amount, i.e. Rs. 75.000/-, was paid by Rajiv Malhotra to the builder''s firm and Rs. 52,000/- was paid to them as per their letter dated 2.12.81, intimating that the plans have been sanctioned. Upto the date of filing of the complaint, the builders had not commenced construction and thus, the latter earned interest on the payments made by the complainant. It was further the case of Rajiv Malhotra that he learnt through the letters dated 14.8.90 and 14.11.90 of Sh. H.D. Shourie and of opposite party No. 3 M/s. Ansal Properties & Industries Ltd., that the project had been taken over by the opposite party No. 3 from the builders and that they had entered into a second agreement with the owner of the plot. Complainant Rajiv Malhotra has not been formally informed by either of the opposite parties. He has visited the office of all the opposite parties several times to confirm about the fact but none of them was ready to show the said agreement. The complainant, Rajiv Malhotra, had also come to know from the letter dated 14.8.90 of Sh. H.D. Shourie that opposite party No. 3 is demanding Rs. 350/- per square ft. and that too on the basis of super area, though according to the original agreement the said complainant was liable to pay only @ Rs. 245/-per sq. ft. for "covered area". As per letter dated 25.8.90, the opposite party No. 3 was prepared to give credit of the amount paid by the complainant i.e., Rs. 1,27,500/-but it was not giving any credit of Rs. 6,02,245/- earned by the original builders as interest from the period September 1979 till date of complaint. The complainant also quoted the rates of construction of CPWD prevailing in the year 1979 and those current on the date of the complaint. The complainant further alleged that as per current rates of CPWD, the present cost of the flat came to Rs. 10,12,095/- and that he was prepared to pay that amount provided adjustment is given for the amount of Rs. 1,27,500 /- paid by him as principal amount plus Rs. 6,02,245 /- on account of interest earned by the original builders. His further contention was that he was entitled to "covered area" as distinguished from super area in terms of the original agreement. He, therefore, prayed that the opposite parties be directed to pay interest for 11 years on the amount collected by them and give credit for the same and allot the agreed covered area and not the super area and charge Rs. 595.35 per square ft. as per extent CPWD rates.

In complaint Case No. C. 30 of 1991 filed by Sh. V.P. Kapoor and his wife Smt. Raj Rani Kapoor, the complainants had entered into an agreement with the builders on 9.6.81 for the allotment of a residential flat in the above proposed multistoryed building. They were allotted flat No. 508 with an approximate covered area of 1150 sq.ft. accommodation @ Rs. 275/- per sq.ft. of the covered area. They paid 20% of the total cost i.e., Rs. 63,250/- on 11.6.81 at the time of booking of the flat with the builders and further paid 10% of the total cost i.e., Rs. 31,625 / - on 13.1.82 when they received letter from the builders intimating that the plans had been sanctioned by the local authorities. However, in this case, the builders had charged further amount of Rs.77,050/- as land development charges at the rate of Rs. 67/- per sq.ft. on total area of 1150 sq.ft. on 11.6.81 alongwith the first instalment of 20% at the time of booking/allotment of the flat.

ACCORDING to the complainants, the builders were required to charge land and development charges as and when demanded by the concerned authority in terms of Clause 14 of the allotment letter, but not at the inception of the agreement. The builders, however, returned the amount of Rs. 77,050/- to the complainants in September, 1986. The other allegations in complaint Case No. C-30 of 1991 are practically similar to complaint filed by Rajiv Malhotra. The complainants claimed interest amounting to Rs. 5.34.889/- from the dates of the deposit of Rs. 63.250/-, Rs. 77.050/- and Rs. 31,625/-. They claimed interest on the ground that the opposite parties retained those amounts wrongfully and appropriated the same for their own purposes for about 5 to 10 years and they should give credit for the same to them while calculating and charging the amount of costs of the flat. They also prayed for allotment of the covered area and not the super area as per the agreement, at the rates of Rs. 275/- per sq.ft. in terms of the original agreement and in the alternative the opposite parties should charge the escalated cost of construction that may have occurred from 11.6.81 when the flat was booked till 1.6.90 as per schedule of the rates of CPWD. It may be mentioned here that in both the cases the complainants alleged deficiency in service by the opposite parties in not constructing the flat within the agreed time and not allotting the flats to them. In both the cases opposite party No. 1, who is a partner of the original builder''s firm, and opposite party No. 3 filed separate counters. Opposite party No. 1 pleaded that opposite party 3, M/s. Ansal Properties & Industries Ltd. had already taken over the project in question. It was further pleaded that a Society of the flat buyers of the property in question had been formed and the complainants were members of the said Society. It was pleaded that the said Society and owner of the land ought to have been made parties to the present complaints.

IT was also pleaded that the builders had entered into an agreement with Smt. Satyawati Dhawan on 4.7.79 to construct flats on the plot in question but due to various reasons beyond their control, the builders could not start the project. Thereafter, there were various meetings between flat buyers, who were represented by Sh. H.D. Shourie and the builders when it was decided to hand over the project to opposite party No. 3 together with all the assets and liabilities and flat buyers were accordingly informed by Sh. H.D. Shourie vide letter dated 19.6.90. IT was further pleaded that the complaint which was filed in the year 1991, was time barred as the complainants were claiming interest from the year 1981. IT was further mentioned in the agreement executed between the builders and the complainants that no interest will be paid and, therefore, the complainants were not entitled to any interest. There was no delay on the part of the builders as the NDMC had sanctioned the plan subject to certain conditions i.e., clearance/ NOC from the Competent Authorities. Under the Urban Land Ceiling Act etc. permissions were not granted and therefore the project could not be started. Further, due to various other reasons, beyond the control of the builders, the project was abandoned. Counters filed by opposite party No. 3 in both the cases are similar. A preliminary objection was taken to the effect that Commission had no jurisdiction in respect of immovable propertics. However, this objection was not pressed at the time of arguments. On merits, it was pleaded that the complainants had no cause of action against the answering opposite party No. 3 as there was no privity of contract between them as they (i.e., opposite party No. 3) was not privy to the agreement under which the complainants were claiming their rights. The complainants had been represented by an Association/Society of flat owners/buyers of which they are members and that they are bound by the terms settled by the said Society in the interest of all flat buyers/owners. The earlier agreement of the complainant with the builders had been novated by the tripartite agreement between the builders, the owner and the opposite party No. 3. It was further pleaded that one of the terms of the earlier agreement entered into by the complainants with the builders, vide Clause No. 3 was that if for any reason whether within or beyond the control of the builders, the whole or part of the project was abandoned, no claim would be preferred against the builders except mat the money received would be refunded in full without any interest. Thus, the complainants were at the best only entitled to the refund of the money paid by them which the opposite party No. 3 as ready and willing to pay although the said claim was time barred. This readiness and willingness to pay as per Clause 3 of the agreement dated 9.6.81, it was added, may not be taken as acknowledgement of debt but was only an offer in the interests of equity and fair play. In terms of agreement dated 13.6.90, the answering opposite party was given explicit authority to allot or sell the flats falling to their share to any one they liked or to retain the same and if they so chose. And they were entitled to settle any terms afresh in their discretion with any one or more of the allottees who had already booked the flats. In this respect Clause 13(c) of the tripartite agreement dated 13.6.90 was relevant. The complainants, through their representative, namely the Flat Buyers Association, had agreed to the fresh terms entered, inter-alia, in terms of Clause 13(c) which were binding upon all the members of the said Association. The complainants were estopped in law from resiling from their contractual obligation in terms of understanding arrived at between the answering opposite party No. 3 and Flat Buyers'' Association called the "Dhawan Building Association of Purchasers/ allottees of Flats", since the complainants were signatories to the rules and regulations approving and subscribing to the rules and regulations of the said Association. The complaints were against public interest and public policies inasmuch as opposite party No. 3 did not take over an obsolete, abandoned if defunct project on its own but was persuaded to do so by the members of the Dhawan Building Association of Purchasers/allottees of Flats in general and by the President of the said Association namely Sh. H.D. Shourie who was a highly respected citizen of Delhi and of Common Cause fame in particular. The factual background was that the project was originally initiated about 10 years back by the builders and the said partnership- firm had made reservation of flats in the name of some person who had entered into agreements with them. A separate stipulation had been arrived at between the said partnership firm and owner of the land whereby a fixed portion of the building, on completion of construction, was to be given to the owners. When no progress in the construction of the building was made by the builders, it caused concern to the buyers of the flats ''as well as to the owner of the land. One of the partners of the builders'' firm took the matter to Delhi High Court against the other partner, inter-alia, for dissolution of the partnership. The buyers of the flats in the mean- while formed themselves into an Association. This Association also submitted an intervention application before the High Court for ensuring that the interest of the buyers of flats were not jeopardized upon the dissolution of partnership. While the matter was pending before the High Court, negotiations took place between opposite party No. 3 and the former builders with the full knowledge and support of the owner and Association of buyers of flats and eventually the project was abandoned by the builders and was taken over by opposite party No. 3. The Association of flat buyers had throughout been in the picture in regard to the taking over of the project by opposite party No. 3. The draft agreements in the shape of allotment letters were also prepared by the answering opposite party for execution with the individual buyers of flats who had made reservation with the original builders. On the advice of the Association certain portions of the draft were modified and the draft agreement alongwith the modified portion were sent to all the buyers of flats. The present situation being that the agreement on these modified basis have since been executed by the answering opposite party with a number of buyers of flats and these were also being executed with others who were coming forth for the purpose. The complainants could not claim that they had not been formally informed by any of the opposite parties as to the taking over of the project by the answering opposite party. The answering opposite party was executing this project more out of the alturistic motive rather than profit motive since the booking rates as of today were 400% more than what members of the Association would be required to pay. All the terms and conditions had been determined after taking the Association of flat buyers into full confidence. A supplementary agreement had also been separately worked out for these allottees in addition to Standard agreement of answering opposite party No. 3. We have heard learned Counsel for the parties and gone through the records carefully.

IT would be convenient to refer to the documents in Complaint No. C-30 of 1991. At the outset we may mention that the opposite parties have raised a plea that these complaints are not maintainable as they are in the nature of suits for specific performance. We do not agree. The case of the complainants is based on the plea that the opposite parties are guilty of deficiency in service. The complainants, thus, clearly fall within the purview of the Consumer Protection Act, 1986.

HOWEVER, the plea of the contesting opposite party No. 3 that in the present complaints, the complainants are disputing the price of the flats fixed by opposite party No. 3 and that this is not a consumer dispute, has force. It is the consistent view of the National Commission that pricing of plot/house and flat is not a matter which falls within the purview of Consumer Redressal Forum. Reference can also be made to First Appeal No. 241 of 1991 titled Gujarat Housing Board v. Datania Amritlal Phooja Chand & Others, decided on 7.10.93, reported as III (1993) CPJ 351 (NC)=1986-95, Consumer 527 (NC). Another plea of opposite party No. 3 that in Complaint Case No. C-30, the complainant''s claim about interest on the amount of Rs. 77,050/ -which had been realised by the then builders, as land and development charges, is time barred, has also force. The complaint had been filed more than 3 years after the said amount had been returned without interest. Letter was written by the complainant to the builders on 19.9.87 (which is ''Annexure ''H''). The complaint was filed in 1991. As noted above, opposite party No. 3 is willing to pay to the complainants the original amount paid to the then builder without interest. Vide Clause No. 13(a) of the tripartite agreement executed between the then builders, owner and opposite party No. 3, opposite party No. 3 had agreed to pay to the owner a sum not exceeding Rs. 43,32,627 /- refundable by the owner to the allottees as per Annexure I, appended to the agreement but that will be limited to what is actually refunded to the allottees. At the request of the owner, opposite party No. 3 agreed to make the refund to the allottees directly on behalf of the owner. Thus, opposite party 3 is not directly responsible towards the allottees.

Moreover, in the allotment letters is- sued to the complainants by the then builder, vide Clause No. 3, it was expressly provided as follows: "If for any reason, whether within or outside our control, the whole or part of the project is abandoned, no claim will be preferred against the builders except that money received will be refunded in full without any interest."

Admittedly the then builders have abandoned the project. Therefore, in view of the said terms in the agreement excuted by the buyers/allottees of the flats they are not entitled to any interest on the principal amount paid to the then builders. They are only entitled to refund of the principal amount and that liability has been taken over by opposite party 3 on behalf of the owner.

THE last question that arises, is, whether the complainants are entitled to any relief in respect of the flats booked by them with M/s. Competent Builders. As noticed above, the builders had entered into an agreement with the owner of the land and by virtue of the said agreement and the General Power of Attorney executed by the owner of the plot in their favour, they had become empowered to sell space on ownership basis in the proposed building in favour of different persons including the complainants. Thus, the builders have created an interest in the flats as Power of Attorney of Smt. Satyawati Dhawan. Smt. Satyawati Dhawan has not been made a party to the present proceedings and, therefore, no relief can be granted to the complainants on the basis of original allotment letter executed by the then builders. Before we proceed further, we may mention here that the complainants have not come before this Commission with clean hands. The original buyers had formed an Association under the name and style of "Dhawan Building Association of Purchasers/Allottees of Flats". The object, rules and regulations of that Association were incorporated in the document which is at page 127 of Case No. C-30. The Managing Board was constituted and the name of Rajiv Malhotra, complainant in Complaint No. C-12, finds mention at Sr. No. 2. There is also a list of members who had approved and subscribed to the rules and regulations of the Association and it is appended to that document. The name of Mr. V.P. Kapoor, complainant in complaint No. C-30 of 1991, finds mention at Sr.No.l9. Both the complainants have, of course, denied the existence of such Association. The opposite party have produced copy of judgment in case titled Sanjeev Sethi v. Union of India & Others, reported as 47 (1992) Delhi Law Times 144 (DB). That case related to the property in dispute. The question involved in that case was, of course, different. It was about certain provisions of the Income Tax Act. That judgment shows that Association referred to above was taking keen part in the litigations, execution of agreement and different memorandums of understanding executed between the then builders, owner of land and opposite party No. 3. Sh. H.D. Shourie was representing the Association. According to tripartite agreement referred to above, the owner had agreed to execute a power of attorney authorising Ansals (opposite party No. 3) to execute document and effecting transfer of built up area falling to the share of Ansals to the prospective buyers including undivided interest in the land. On 19th June, 90 Sh. H.D. Shourie informed the original buyers who were members of the Association that the project of construction of building in question had been taken over by "reputed builders, Ansals" and now one could hope that the construction work would start in a "couple of months". That letter is at page No. 19 of complaint Case No. C-30. On 14.8.90 Sh. H.D. Shourie worte another letter (at page 20) requesting the members of the Association to write individual letters to the Ansals for executing agreement and the prices chargeable by Ansal for the flats would be calculated at the rate of Rs. 350/- per sq.ft. It was also intimated that it had been agreed that where buyers may not desire to enter into agreement and assume the responsibility of payment on the basis indicated in the letter, Ansals would return the amount paid by the buyers to Competent Builders alongwith interest calculated at the rate of 30%. It was also mentioned in the letter that some agents were already offering Rs. 1,800/- per sq.ft. and Ansals would sell their flats in the building at not less than Rs. 2,000/- per sq.ft. Alongwith allotment letter which was in the standard form issued by Ansals to all the original buyers supplements was attached. That supplement is at page 26. The supplement stated that the attached letter of allotment stood modified to the extent mentioned in the supplement in respect of previous buyers of flats. There were a number of other clauses in the said supplement but it is not necessary to reproduce them in any great detail except that Ansals stated in that supplement that if the flat buyers did not like to retain his entitlement to the flat, the amount paid by him/her prior to the execution of letter of allotment would be refunded alongwith interest calculated @ 30% p.a. Complainants did not accept either of the offers. They did not enter into an agreement with the Ansals nor opted out of the Scheme. Of course the right to allotment of flat to the original buyers continued to exist notwithstanding the taking over of the project by Ansals. However, the complainants have not agreed to enter into an agreement with Ansals/ who were prepared to sell the flats to them at a revised price. Thus, against Ansals, the complainants have no case in respect of the flats except for the refund of the principal amount which Ansals have agreed to refund though they had not received any amount from the complainant.

IN the light of above discussion, we direct opposite party No. 3, Ansals, to pay Rs. 1,27,000/- to Rajiv Malhotra complainant of Case No. C-12 of 1991 and Rs. 94,375/- to complainants of Case No. C-30 of l991. These amounts shall be paid to the complainants within one month of the receipt of a copy of this order, failing which these amounts will carry interest from the date of order at the rate of 18% p.a. till payment. IN the circumstances of the case we leave the parties to bear their own costs in both the cases. A copy of this order be communicated to each of the parties. Complaints disposed of.