SURENDER KUMAR SINGHAL vs SHIMLA DEVELOPMENT AUTHORITY

THIS shall dispose of the Notice of Enquiry (NOE) issued by the Commission on 28th Nov., 94 under Section 10(a)(i) read with Section 37 of the MRTP Act, 1969 charging Shimla Development Authority (now rechristened as Himachal Pradesh Nagar Vikas Pradhikaran) and the Chief Executive Officer-cum-Chief Engineer of the said Authority (hereinafter referred to as R-l & R-2) of having indulged in certain restrictive trade practices as well as unfair trade practices within the meaning of the provisions of Section 2(o)(ii) and Section 36A of the Act. THIS enquiry commenced with an application moved by Shri Surender Kumar Singhal (hereinafter referred to as the complainant) under Section 10(a)(i) and Section 36B(a) of the Act alleging that the respondents have perpetrated certain restrictive and unfair trade practices to the detriment of the interest of the complainant and to the detriment of public interest. A summary of the complaint of Shri Surender Kumar Singhal and the NOE is given herein below: 1. Shimla Development Authority (R1) is a Government of Himachal Pradesh Undertaking constituted under the Himachal Pradesh Town & Country Planning Act, 1977 and is, inter alia, engaged in the business of development, construction and making available housing facilities to citizens within the Shimla region. R-2 is the Chief Executive of R-l for implementing its schemes.

THE respondent Authority floated and advertised a Self Financing Scheme for a residential complex to be constructed in Kasumpti zone of New Shimla. THE scheme is known as Second Self Financing Scheme for residential complex. The respondent Authority invited applications for different categories of flats/houses and plots.

The respondents made certain representations to attract potential consumers. The representations highlighted that the residential complex proposed to be constructed would be prestigious and modem with 2500 flats and 800 houses, that it will be commanding ''excellent scenic panorama'', that the houses/flats will have ample open space, that it will be proximate to the Secretariat of the Government, school and commercial complex, that there will be a convenient shopping centre, parks etc. that the buildings will be on the pattern of ''beautiful Himalayan Architecture'', that there will be assured maintenance of common facilities, services, etc.

THE representations included a reference to the likelihood of the completion of the complex by December, 88. The brochure of the respondent Authority mentions that the cost of flats, houses and plots is tentative and that R-l reserves the right to increase the same depending upon the actual cost of construction, escalation in cost of land, material, labour or any other reasons.

THE complainant lured by and relying on the representations of the respondents registered for allotment of type-D independent house at a cost of Rs. 3,57,000/-. THE applicant deposited an amount of Rs. 53,550/- towards earnest money. The respondent Authority acknowledged the receipt of the registration of the application of the complainant and of the earnest money deposited through its letter dated 16th August, 86. In the same letter a hint was given of some ''unavoidable delay'' in the implementation of the scheme, the problem being attributed to acquisition and taking possession of the land. A further communication dated 8th November, 86 was received from the respondents by the complainant that he was allotted a type-D independent house stipulating the payment of a 9 instalments commencing 9th December, 86 and ending 9th December, 88.

IT was also made clear that default in payment of instalments would attract interest @ 18% per annum.

WHEN the complainant wrote a letter to R-2 on 22nd November, 86 seeking information on the status of the scheme and on the expected date of possession of the house, the said respondent replied that the possession of the house was likely to be given within two and a half years of the date of allotment, ''if work progresses as per schedule without any hindrances''. This was on 4th Feb., 87. As the progress of the scheme was not encouraging, the complainant sought refund of the amount deposited by him alongwith interest. To this a reply was received from R-2 that the construction of the complex had already been taken up and was likely to be completed as per schedule. This was on 28th Feb., 87.

The respondents demanded the payment of the first instalment of Rs. 35,700/- in their letter dated 17th Feb., 87. The complainant, however, reiterated his request for the refund of the amount already deposited by him.

AFTER some more correspondence the complainant issued a legal notice on 30th June, 87 seeking refund of the amounts already deposited by him with interest. The respondents'' reply to the legal notice was that the residential complex was in progress and was likely to be completed within the scheduled time, if there was no hindrance beyond its control. The respondents informed the complainant on 26th Aug., 87 that in terms of para 7(d) of the brochure relating to the scheme, he would be refunded the amounts already paid without interest deducting 50% of the earnest money, as he has cancelled his registration.

UPON this, the complainant paid three instalments. The complainant, however, made it clear that he would like to receive assurance from R-2 that the scheme would be implemented and that he would be entitled to possession. This was on 7th Oct., 87. Subsequently, on 15th June, 88 the complainant tendered payment of the fourth instalment of Rs. 35,700/-. Four more instalments aggregating to Rs. 1.42.800/- were also paid by the complainant on 23rd June, 89. With all these payments, only the last instalment of 5% was due to be paid at the time of possession. R-2, through its letter dated 26th Feb., 90 demanded the final instalment, upon which the complainant tendered that payment also. While doing so, the complainant informed the respondents that the delay in handing over possession of the house beyond Dec., 88 will be liable to be compensated towards interest/damages. One more payment was made of Rs. 17,850/- on 11th May, 94 which took the aggregate payment by the complainant to Rs. 3,74,850/-, more than the original cost of Rs. 3,57,000/-.

ON 6th Nov., 19 the complainant was advised by the respondents that the price of the house had been enhanced from Rs. 3,57,000/- to Rs.6,59,176/-. Thus the respondents'' with one stroke of pen and in autocratic and ham-handed manner increased the price of the house by Rs. 3.02 lakhs'' amounting to increase of about 100%. The respondents demanded that the enhanced cost on account of escalation in the cost of land, labour and material be paid. Furthermore, the respondents offered four alternatives for making the payment of the enhanced amount, one of the options being withdrawal from the scheme with respondent Authority offering the refund of the amount deposited by the applicant with interest @ 15% per annum compounded yearly upto 30th Nov., 91 without forfeiting the earnest money as per the original scheme.

THEREUPON the respondents on 29th May, 92 informed the complainant of draw of lots and also solicited his preference for particular row or house. The complainant indicated his preference for an independent house in row No. 1 in his letter dated 24th June, 92, the last date of receiving communication of preference being 27th June, 92. R. 2 communicated through his letter dated 17th July, 92 that the complainant has been allotted House No. 13 in row No. II.

The complainant protested upon the said allotment and requested that possession of the house already delayed by more than 42 months from Dec., 88 be given.

IGNORING this fact that the complainant has already made 100% payment of all the instalments by 14th March, 90, the respondents issued demand letter of date 17th Dec., 92 for an amount of Rs. 51,480/- which included the 9th instalment of Rs. 17,850/- (which had already been paid) and also interest on various instalments. This was once again protested by the complainant in his letter dated 9th July, 93 that the entire cost of the house had already been paid and stating further that there was delay on the part of the respondents in handing over possession. The complainant''s understanding is that the house in question was not ready even at that point of time because the respondent Authority had addressed a letter to the Executive Engineer on 7th April, 94 and 28th May, 94 to ensure completion of the house. The said letters were well after the letter of the respondents of date 17th Dec., 92 in which the respondents had categorically stated that ''the house is ready for handing over possession''.

R-2 sent a communication to the complainant on 26th Aug., 93 increasing the demand amount further to Rs. 66,742/- including the 9th instalment which had already been paid. This drew a further protest from the complainant in the form of his letter dated 15th Sept., 93. The complainant received a further letter from the respondents of date 8th Nov., 93 seeking payment of a further amount of Rs. 8,550/- towards the enhancement of land compensation by the District Judge, Shimla.

THE next communication of date 18th Jan., 94 from the respondents increased the amount demanded to Rs. 67,813/- inclusive of the 9th instalment already deposited by the complainant.

THE complainant, after once again raising a strong protest, opted to pay the demanded amount of Rs. 67,813/- subject to the confirmation that the allotted house is ready and possession will be handed over to him. On 9th May, 94 the complainant paid Rs, 17,850/- stating that this amount has already been deposited by him as the last instalment in 1990 itself. He further complained to the respondent Authority that the house was not ready even in April, 94, that it was only half built and was under ''improper use'' of the Junior Engineer for storing of various building materials etc.

The respondents thereupon addressed a letter to the complainant stating that if an amount of Rs. 69,152/- is paid by 9th June, 94 the possession of the house would be given.

THE coup de grace occurred on 7th July, 94 when the respondents through a letter addressed to the complainant sought a further amount which according to the complainant aggregated to Rs. 9,11,297/- inclusive of the amounts already paid by him. THE amount so demanded has been inspite of the respondents'' fault in delaying the construction when the complainant had made more than 100% payment of the originally booked amount. Demanding ground rent not envisaged in the brochure of the scheme originally, requiring the complainant to pay the revised cost and compelling the complainant to accept possession of the house in an ''as is where is basis'' are all unjustified according to the complainant. Thus the respondents firstly by delaying possession of the house for five years, secondly by taking 100% of the cost of the house upto the year 1990, thirdly by burdening the complainant with enhancement of cost even for the period subsequent to the date the respondents were supposed to hand over the possession of the house and finally arbitrarily and unreasonably enhancing the cost of the house from Rs. 3,57,000/- to Rs. 9,11,297/- with a threat to cancel the allotment which ''smacks not only of monopolistic arrogance but exploitative stance of public Authority'' have committed unfair trade practices attracting the provisions of Section 36A of the Act and also restrictive trade practices attracting the provisions of Section 2(o)(ii) of the Act, as the trade practices indulged in by the respondents have imposed unjustified costs on the complainant.