RAMESHWAR SHARMA vs HIMACHAL PRADESH NAGAR VIKAS PRADHIKARAN

BY this complaint, the complainant has prayed for various relief(s), inter alia, that the Himachal Pradesh Nagar Vikas Pradhikaran opposite party be directed to deliver the possession of the house to the complainant after removing all the defects in the house and by ensuring the compliance of the stipulations as provided in the brochure before delivery of the possession of the house and to pay a sum of Rs. 3,15,467/ as compensation for the loss suffered by the complainant by way of escalation in the price of the house because of the delayed construction of the house; a sum of Rs. 2,00,000/ for the use of sub standard construction and defective workman ship and Rs. 1,60,000/ as compensation for loss of occupation of the house and costs of the complaint.

THE relevant facts set out in the com plaint are that the complainant applied to the Himachal Pradesh Nagar Vikas Pradhikaran opposite party for independent Type B house under the Fifth Partially Self Financing Scheme floated by the opposite party in the year 1989 exclusively for the employees and his name was registered by the opposite party vide letter dated 7.12.1990 (Annexure ''A''). THE tentative cost of the house was Rs. 3,94,400/ . THE complainant was required to pay the aforementioned amount in two manners. 50 percent of the price was to be paid before the delivery of pos session whereas balance 50 per cent of the price was to be paid in 15 years by way of monthly instalments after the delivery of the possession. To be precise, 10% of the price was paid alongwith the application and 10% of the price was paid at the time of allotment of the house and 30% of the price was paid in 30 monthly instalments from March, 1991 upto August, 1993. THE details of payment has been given by the complainant in para 3 of the complaint. As per tentative schedule of construction, the construction was to be completed within 2 years. Thus the house should have been completed by the end of June, 1993 if the period of 2 years was to commence from the date of allotment. Otherwise also, this being a Self Financing Scheme, the opposite party was required to invest the money being received from the complainant and other similar allottees in the construction of the house but the opposite party did practically nothing towards construction of the house till October, 1992 although the opposite party has been receiving various instalments against the price from the complainant. The opposite party vide letter dated 30.10.1992 informed the complainant that due to various reasons like inclement weather and unfavorable working season at Shimla etc., the completion and handing over of the units was delayed beyond the stipulated time, and there is likelihood of the escalation in the cost from 50% to 70% over the cost stipulated in the brochure of the Scheme. The complainant was given option to withdraw from the Scheme in case he felt aggrieved against the aforesaid alterations. Such an act, according to the complainant, is of utter negligence and arbitrariness. Suddenly, to the utter surprise and shock to the complainant, the opposite party vide letter dated 31.12.1993, increased the tentative cost of the house from Rs. 3,94,400/ to Rs. 7,88,800/ and the complainant was asked to pay the escalated price of Rs. 3,94,400/ in 30 monthly instalments of Rs. 9,203/ per month. In this letter it was also intimated that the house shall be completed by the end of year 1995. Being a salaried employee, it was not possible for the complainant to pay monthly instalment of Rs. 9,203 / and he consequently represented and the opposite party amended its earlier letter and vide letter dated 5.2.1994 and vide its letter dated 5.2.1994 also, the opposite party did not provide any relief to the complainant and instead indulged in a statistical juggalary and demanded the escalated price in 35 monthly instalments of Rs. 3,944 / per month. The complainant further made representation to the opposite party against the payment of the instalments even @ Rs. 3,944/ per month but in the fear of forfeiting the allotment of the house, the complainant after lodging his protest, has been paying the instalments of Rs. 3,944/ per month commencing from April, 1994 and had already paid 30 such instalments by the end of September, 1995. According to the complain ant, the house has not been delivered to him till to day. The opposite has not only increased the cost of the house to extremely unreasonable proportions, but also have constructed the house with gross carelessness and negligence by using sub standard material and due to poor workmanship, the house of the complainant developed cracks even before the delivery of possession. The complainant is aggrieved against the alarming increase in the escalated price which has gone beyond all proportions and this is clearly due to the negligence of the opposite party. Had the construction of the house been completed and its possession delivered to the complainant within the stipulated period by the end of August, 1993, the complainant could have occupied the house and utilised such a house for such a long period and for such sheer negligence he is suffering great loss. According to the complainant, he has suffered because of escalation in the price of the house due to delayed construction of the house by the opposite party and on account of sub standard material used in the construction of the house and defective workmanship and for loss of occupation of the house @ Rs. 5,000/ per month with effect from 1.9.1993 to the end of September, 1996 or till the actual date of delivery of the possession of the house. Further the opposite party was legally bound to deliver the possession of the house to the complainant immediately after removing the defects and after compliance of the conditions provided in the brochure. Therefore, he has been forced to file the present complaint.

The opposite party has controverted the allegations on merits and has raised various preliminary objections. According to the opposite party, the complainant has got no vested right to get the flat at the tentative cost as indicated in the brochure and that the escalation of price is not a consumer dispute. Further, the complainant is not entitled to any interest as there has been no agreement to pay interest to the allottees and in case there has been delay in handing over the possession, the complainant is at liberty to get refunded the amount as per terms and conditions of the brochure. The opposite party has acted in accordance with the provisions of the Act and rules framed there under and, therefore, has committed no illegality, unfair trade practice and monopolistic acts.

THE scheme floated by the opposite party is a self-Financing Scheme and the consumer has to bear the financial burden. THE delay in expeditious completion of the house has been due to unforeseen reasons; hilly area apart from the vagaries of weather, non availability of material etc. which are beyond the control of the opposite party, as according to the opposite party, normally 6 to 8 years are required to develop the complex. Further, escalation in prices is due to enhancement of the land cost, enhancement of the cost due to land acquisition charges, all round rise in cost, labour, machine etc. and it cannot be attributed to the negligence of the opposite party. According to the opposite party, it is not correct that period of 2 years was provided for the completion of the house. The scheme floated by the opposite party being a partially Self Financing Scheme, not only the money received is invested but also the opposite party has to raise loan from the financial institutions and Banks for the construction of the houses. Even vide letter of registration of allotment-dated 7.12.1990, it was made clear that the authority shall not be responsible for any further delay in the construction of the house. Therefore, ac cording to the opposite party, 5 6 years cannot be construed to be unreasonable period. Ac cording to the opposite party, no time was stipulated for the completion of the construction at the inception of the Scheme and even regarding cost, it was mentioned in Annexure ''A'' appended to letter dated 7.12.1990 that opposite party reserves the right to change the cost depending upon actual cost of construction, escalation in cost of land, material, labour or for any other unforeseen reasons. The possession of the house has been offered to the complainant after filing of this complaint and, therefore, there is no occasion for the complainant to allege about the quality of construction as the quality of construction can only be seen after the completion of the house in all respects and according to the opposite party, the allegations made in the complaint are pressure tactics. According to the opposite party, costing has been done by a duly constituted Costing Committee and has been approved by the Board after taking into consideration the relevant factors. There is no negligence on the part of the opposite party or its officials and that the complainant has not been put into loss. On the other hand, because of the appreciation in the value of the property, the complainant has taken gains. Further the consting of the house and escalation of price is not within the purview of this Commission as it is not a consumer dispute. The possession of the house has been offered to the complainant and it cannot be said that the quality of the construction was poor. The house has been constructed in accordance with the terms and conditions of the brochure of the Scheme. Since there was no commitment to hand over the possession by a particular date, it cannot be said that the complainant has been deprived from the occupation of the house as made but by him. The relief(s) claimed by the complainant are without basis and the complaint deserves to be dismissed.

MR. Rameshwar Sharma, the complain ant himself has argued the matter. He has very strenuously contended that the construction of the house applied for by him has been inordinately delayed by the opposite party and as a result thereof, the price of the house consequently has escalated to a considerable extent inasmuch as the cost of the house has become double of the tentative cost made out by the opposite party and the delay in the construction of the house has been caused due to gross negligence of the opposite party. Therefore, he is entitled to be compensated for the loss he has suffered because of such later construction. Ac cording to him, as per the tentative schedule and in terms of allotment letter, the construction of the house should have been completed within 2 years and the house should have been handed over by the end of June, 1993. Even the possession of the house which was proposed to be offered to the complainant in terms of the letter dated 28.10.1996 is still incomplete and full of defects and the possession thereof has still not been delivered to him, inspite of the fact that he has pointed out certain material defects to the opposite party. On the other hand, Mr. Harish Behl, learned Counsel appearing for Himachal Pradesh Nagar Vikas Pradhikaran opposite party has submitted that there was never any commitment on the part of the opposite party to complete the construction within 2 years as no such period was contemplated under the scheme and the brochure and the scheme could only be expected to be completed within a reasonable time and reasonable time, according to him, in the facts and circumstances of the case, should be 6 8 years. Further, the price originally given out by the opposite party was tentative and the opposite party has reserved its right to change the cost depending on actual cost of construction, escalation in the cost of land, material, labour or any other unforeseen reasons. In order to appreciate the rival contentions of the parties, we have to first determine whether any time was prescribed in terms of Schedule and the letters of allotment issued by the opposite party for completion of the construction and for delivery of the possession of the house. It would be seen from a letter issued by the opposite party dated 7.12.1990, Annexure ''A'' that the complainant was registered for allocation of House Type (B) and Registration No. 5th PSFS/IH(B) 6320 was given to the complain ant. Annexure ''B'' is annexed to this letter dated 7.12.1990 which provides terms and conditions of such allotment. According to this letter, the tentative cost was shown as Rs. 3,94,400/ and the half of the price of the house which includes earnest money, registration charges, and 30 monthly instalments (Rs. 3,944/ each) from March, 1991 onward upto August, 1993 was to be paid by the complainant before the delivery of possession of the house, and the balance amount as per revised costs was to be paid after the delivery of the possession of the house in 15 years. To be more precise, 50% of the price of the house was to be paid before the delivery of the possession whereas 50% of the price was to be paid in 15 years in monthly instalments after the delivery of the possession. Admittedly, the complainant has paid Rs. 1,96,552/ upto 10.3.1993, the details of which have been explained by him in para 3 of the complaint. Although no specific date has been given in this letter Annexure ''A'' by which the house should have been constructed but the payment schedule as given out in this letter by implications does suggest that the pos session of the house was to be delivered after 50% of the price was paid by the complainant maximum upto August, 1993. The Scheme, being a Self Financing Scheme, it is reasonable to assume that the money already received by way of earlier instalments must have been utilised by the opposite party for construction of the house and that some more time shall be required for the construction of the house as after the receipt of the last instalment before delivery of the possession from the complainant, that amount was to be utilised for construction of the house and which might take reasonably 4 months or so. Being conscious of the payment schedule as given out by the opposite party, themselves in their wisdom in Annexure ''B'' annexed to letter-dated 7.12.1990, Annexure ''A'' has provided for completion of the construction in paragraph 10, which may be reproduced below: "Efforts shall be made to complete the Scheme in 3 to 4 years but this Authority shall not be responsible in any way in case of further delay in completion due to various reasons".

According to this Annexure ''B'', the construction of the house should have been completed within three years in normal course i.e., by December, 1993. However, the opposite party have by way of abundant precautions them selves put an outer limit or ceiling of 4 years for completion of such construction.

HAVING regard to the payment schedule as contained in letter dated 7.12.1990, Annexure ''A'' read with Clause 10 of Annexure ''B'', the construction of the house, in our opinion, in normal course should have been completed by 7.3.1993 but at the most this period could have been extended by the opposite party by 4 years i.e. by 7.3.1994.

NO doubt, the stipulation has been made by the opposite party in Clause 10 of the Annexure ''B'' that the efforts shall be made to complete the scheme in 3 to 4 years and this authority shall not be responsible for further delay in completion due to various reasons. Great capital has been made out of this provision by the opposite party. In order to take the benefit of this clause, the opposite party has necessarily to show (i) what efforts were made by them to complete the construction within 3 4 years, and (ii) what were the reasons for further delay in completion of such construction.

There is no material whatsoever on record to show as to what efforts were made by the opposite party to complete the construction of the house in 3 4 years and what were the reasons for further delay in completion of the house. The complainant has specifically averred in para 5 of the complaint that although the money as required was paid from 1989 onwards but the opposite party did practically nothing towards the construction of the house till October, 1992 and these averments have not been denied by the opposite party which clearly shows that although the opposite party has been receiving regular instalments from the complain ant but nothing has been done by them upto the month of October, 1992. Even nothing has been shown by the opposite party as to what efforts have been made from 1989 onwards when the Scheme was floated till 7.12.1993. Furthermore, nothing has been shown how has there been delay in the completion of the house except that it has only been alleged that there has been delay in the construction due to unforeseen reasons like hilly area, vagaries of weather, non avail ability of material, labour etc.

THERE is again absolutely no material whatsoever available on the record which substantiates that inspite of the efforts having been made to complete the construction within the stipulated period as given in Annexure A, they have not been able to complete such construction due to various reasons. Merely bald assertion made by the opposite party for delayed construction due to hilly area, vagaries of weather, non availability of material, labour etc., cannot be accepted. Even otherwise suffice to say that the scheme was floated by the opposite party and the brochure was issued in 1989, they should have anticipated all these problems like complex process of construction, non availability of material, labour, machine etc. including land acquisition while laying down the terms and conditions in the brochure and the allotment letter. They should have completed the construction within the reasonable period and the reasonable period in accordance with the terms and conditions has been laid down by the opposite party for 3 4 years and it cannot be extended beyond this period. It may be noticed that the opposite party has taken this defence in every case that they have not been able to complete the construction for various reasons like complex process of construction, non availability of material, labour, machine paucity of finances etc. In Original Complaint No. 21 of 1990, Vijay Kumar Joshi v. State of Himachal Pradesh and Others, decided on 20.12.1996, Original Complaint No. 9 of 1991, R.D. Soni v. Shimla Development Authority decided on 2.1.1992 and Original Complaint No. 25 of 1990, Bhag Singh Sain v. Shimla Development Authority dated 5.8.1992=II (1992) CPJ 1043, such defences were taken and these have been repelled exhaustively by this Commission more particularly in Vijay Joshi''s case (supra). In these circumstances we are of the opinion that normally the construction should have been completed in 3 years as provided in Annexure ''B'' Clause 10 i.e. by 7.12.1993. However, by giving due and reason able allowance to the opposite party, about complex process of construction, non availability of material, labour, machine etc. and outer limit of 4 years provided by the opposite party in Annexure ''B'' we are inclined to give a benefit of one year more i.e. upto 4 years for completion of the construction which in the facts and circumstances should be considered as reasonable. This is also in consonance with our judgment in Vijay Kumar Joshi''s case (supra). Outer limit of 4 years provided in Clause 10 of Annexure ''B'' cannot be further extended, as the conditions of such extension are not satisfied as discussed above. Even otherwise it is highly inconceivable that the construction of scheme floated in 1989 has not been completed even in 1994. Therefore, we are of the firm opinion and hold that the construction of the house should have been completed by 7.12.1994.

IT may be noticed that although the scheme was floated in 1989 but the opposite party has never been serious in completing the construction within the stipulated period and has taken the matter so lightly, carelessly and negligently. This is evident from the subsequent letters dated 3.10.1992 and 31.12.1993, Annexures ''C'' and ''D'' respectively whereby the complain ant was informed that the units shall be completed by 1995. The matter did not rest there. Inspite of this commitment having been made by the aforementioned letters, the possession was still not offered to be delivered to the complainant till 28.10.1996 when the complainant was required to enter into Hire Purchase Agreement. Even the possession of the house which was proposed to be delivered to the complainant in 1996 suffered from certain defects which would be discussed later and which the complainant wanted to be removed and rectified first. The defects are still not removed and the possession still has not been delivered to the complainant. In the aforementioned circum stances, we are of the firm opinion that the opposite party has been grossly negligent and thereby deficient in completing the construction within the reasonable time and that the complainant is entitled to be compensated for the loss and damage which has been caused to him because of the non delivery of the possession of the house within time. The contention of Mr. Behl, learned Counsel for the opposite party that 6 8 years should be considered as reasonable period for the construction for the house, cannot be accepted for the reasons stated above. It was next contended by the complain ant that no doubt the house was offered to be delivered and the complainant was asked to enter into Hire Purchase Agreement on 28.10.1996, Annexure R 6, but sub standard material has been used by them in the construction and workmanship has been quite poor. The house has developed cracks even before the delivery of the possession to the complainant. The stand taken by the opposite party is that the possession of the house has been offered to the complainant after the complaint was filed i.e., 6.10.1996 and before the offer of delivery of the possession of the house, the complainant possibly cannot allege about the defects of the house as the house was not complete and the quality of the construction can only be ascertained after the construction of the unit. Such contention of the opposite party cannot be accepted for the reasons that the complainant is the President of the District Forum, Shimla and is residing at Shimla where the houses of the opposite party are being constructed. Since the complainant had applied for the house to the opposite party which was nearby to the house of the complain ant, he was naturally interested for seeing whether the house is being constructed by the opposite party after observing proper norms, standards and quality. This apprehension of the complainant further finds corroboration and support from the letter written by the complain ant dated 5.12.1996, Annexure ''I'' after the house was offered to be delivered to the complainant whereby it was brought to the notice of the opposite party that the house was still having some noticeable defects and deficiencies which were listed as under: (i) A visible crack in the roof of the house. (ii) Apparent bulging out and peeling of the paint on the joints between ceil ing and the walls of both the bed rooms suggesting dampness and seepage of water from these points. (iii) Flooring surface plastering in the kitchen and on the rear platform is quite rough and uneven requiring the smoothing of the same. (iv) Absence of security grills and curtain brackets in all the windows pro vided in the drawing room, bed rooms and kitchen.

The Chief Administrator of the opposite party was requested by the complainant to remove these defects in order to enable him to take over the possession of the house. Unfortunately, such letter has never been replied to by the Chief Administrator nor was the complainant in formed at any stage that the house was in proper condition and did not have any defect that he should take over the possession as it is. In rejoinder also this position has been reiterated by the complainant. Furthermore, we do not find anything in any document produced on the record by the opposite party which shows that the house to be delivered to the complainant was in perfect condition and there was no defect in the house.

HAVING regard to the totality of the circumstances we have no hesitation to hold that the house offered to the complainant had notice able defects and deficiencies as has been listed by him in the letter dated 5.12.1996 and which are required to be rectified before the possession of the house is handed over to the complainant. It goes without saying that complete house, with out defects, in accordance with norms, terms and conditions as given in the brochure and letters should have been delivered to the complainant. In such a situation the offer for delivery of the possession of the house cannot be considered as 28.10.1996 but such date should be construed as the date when the defects pointed out by the complainant in his letter dated 5.12.1996 Annexure ''I'' are removed by the opposite party.

MR. Harish Behl, learned Counsel how ever, raised another contention that the complainant has constantly been informed by the opposite party that the price given in the schedule and allotment letter dated 7.12.1990 and subsequent letter was only tentative and that the opposite party reserved the right to change the cost depending upon actual cost of construction, escalation in cost of land, material, labour or for any other unforeseen reasons and now the complainant cannot have any possible grievance about the escalation of price, more particularly when vide letter dated 8.8.1990, Annexure R l, he was given an opportunity to withdraw from the Scheme. It was clearly stipulated in that letter that in case his request for withdrawal did not reach within 15 days from the issue of the letter, it shall be presumed that he intended to continue with the scheme. The argument is that since the complainant knew fully well that the prices have escalated and that the construction could not be completed within time and he was given an option to withdraw from the scheme which he elected not to do so, he cannot, there fore, be permitted to say that he is entitled to compensation for the so called lapse or negligence on the part of the opposite party. In this connection it may be noticed that the complain ant has shown ignorance of the letter dated 8.8.1990, Annexure R l whereby he was given option to withdraw from the scheme. Vide letter dated 3.10.1992 Annexure ''C'' the complainant was only asked to represent in case he was aggrieved against the alteration of time schedule for the construction of the house and also for the escalated price. Even if it is assumed that such option was given to him vide letter dated 8.8.1990 Annexure R l and this letter has been communicated to him, it will not advance the case of the opposite party. Such question also was considered by us in Vijay Joshi''s case (supra) and we have held that action of the public authority must be reasonable, fair and equitable and they are not expected to act arbitrarily.

With the fond hope the complainant had applied for the allotment of the house which was allotted to him and also has paid substantial amount to the opposite party for getting such house and after a considerable period if the complainant is given an option to withdraw from the scheme, such an action of the opposite party is wholly unjust, inequitable and unreasonable and this itself cannot be a ground to preclude the complainant to claim compensation for the late delivery of the possession of the house. We have already held that the construction has been considerably delayed due to the negligence and inefficiency of the opposite party and the opposite party in these circumstances should not be permitted to take advantage and benefit of their own gross negligence and inefficiency.

THE next question that requires consideration is as to how the complainant should be compensated for the loss suffered by him be cause of delayed construction of the house. The Supreme Court in Lucknow Development Authority v. M.K. Gupta, III (1993) CPJ 7 (SC)=(1994) 1 SCC 242 has held that: "the work compensation is of very wide connotation. In legal sense it may constitute actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult or injury or loss."

There cannot be two opinions that the price of the house has escalated out of all proportions by Rs. 3,94,400/ almost double the amount of tentative cost as the revised tentative cost has been assessed at Rs. 7,88,000/ whereas the tentative cost was only Rs. 3,94,400/ which is apparent from Annexure ''D''. According to the complain ant, he should be paid a sum of Rs. 3,15,467/ (Rs. 7,09,867 - Rs. 3,94,400/ ) as compensation for the loss suffered by the complainant by way of escalated price of the house because of delayed construction of the house by the opposite party for their negligence.

THE determination of compensation in the light of what has been claimed by the complainant depends upon as to what should be in fact the revised cost and whether it has been calculated correctly by the opposite party. In other words, it would amount to entering into arena of adjudication on the escalation of price which we have already held by separate order in Vijay Kumar Joshi''s case dated 3.10.1996 that such dispute is not a consumer dispute and we have no jurisdiction to entertain such dispute. THErefore, we are afraid we are unable to deter mine the compensation on such basis. THE complainant has also claimed compensation for loss of occupation of the house. What method should be adopted for determining the compensation in such matters which could adequately compensate the complainant for the delayed construction of the house and also for the loss of occupation of the house etc. has been under consideration by us in Vijay Kumar Joshi, R.D. Soni and Bhag Singh Sain''s cases (supra) and we have in all such cases awarded interest to the complain ant @ 18% per annum from the date of deposit of the amount tentatively by the complainant be fore the delivery of the possession of the house and in accordance with the terms of payment schedule till the possession of the house was offered to be delivered to the complainant. That view is also in consonance with the decision of the National Commission. It is no doubt true that there is no agreement in the contract for claim ing interest as stated by the opposite party, but the interest at the rate of 18% is being awarded for compensating the complainant for the delayed delivery of the possession of the house because of negligence of its officials. As a matter of fact, such compensation is being awarded having regard to the delayed possession of the house, loss of occupation of house the charging of interest at this rate of 18% per annum by the opposite party themselves for the delayed payment of instalments payable by the complainant and other totality of circumstances. In this case, as per the allotment letter dated 7.12.1990, Annexure ''A'' the complainant by 10.3.1993 had deposited Rs. 1,96,552/ and thereafter within a reasonable period, he was entitled to take possession of the house. In this case we have held that the possession should have been delivered positively by 7.12.1994. In these circum stances, following those decisions, we are of the opinion that the complainant should be adequately compensated for the loss he suffered due to delayed construction of the house. He should be paid interest on the amount of Rs. 1,96,552/ at the rate of 18% per annum with effect from 7.12.1994 till he is delivered the possession of the house. Other reliefs cannot be granted. In the light of what is discussed above, the opposite party is directed to: 1. (a) deliver the possession of the house after removing all the defects immediately as pointed out by the complainant in the letter dated 5.12.1996, Annexure I and by ensuring compliance of the stipulations as provided in the brochure. (b) to pay interest for the loss suffered by the complainant for the delayed construction of the house on the amount of Rs. 1,96,552/ at the rate of 18% per annum with effect from 7.12.1994 till the date of delivery of possession of the house after removing all the defects.

The interest so ordered to be paid can be adjusted by the opposite party against the balance payment the complainant has to pay if not already paid within a period of one month of the delivery of the possession of the house. In case the balance amount already stands paid, the amount of interest as directed shall be payable within one month to the complain ant. In case of failure to do so, the complainant shall further be allowed interest @ 18% on the aforementioned amount from the date of order till actual payment. The other relief (s) prayed for in the complaint are disallowed. The complainant shall be entitled to the costs in the present proceedings from the opposite party which we assess at Rs. 3,000/.Complaint allowed with costs.