U.K.ASHOKA RAO vs CYMA CONSTRUCTIONS

IN this complaint, the complainant has sought the following reliefs:- (a) to complete all the balance works, relating to flat No. 3, on 5th Floor of Rajanigandha building, together with power supply, electric supply, sewerage connection, lifts, etc., in good operational condition and safe and adequate water supply, as per municipal standards. (b) to handover valid ''possession'' and ''occupation'' certificates. (c) to pay to the liquidated damages as under:

(i) Rentals paid by me for alternate accommodation during the last 11 years: Rs. 36,000 x 11= Rs. 3,96,000/- (ii) INterest charges thereon Rs. 2,00,000/- (iii) Expenses incurred on stationery, postage, legal matters, travel+ hotel expenditure. Rs. 1,00,000/- Rs. 6,96,000/- (d) to restrain Cyma Exports Pvt. Ltd. from acting in any manner prejudicial to his interests and claims in the said flat.

THE complainant averred that in pursuance of an advertisement issued by the opposite party Nos. 1 & 2, a builder, the complainant applied for a flat and the opposite party allotted a flat bearing No. 3 on the 5th floor in Rajnigandha Building of Garden Apartments at No. 21, Vittal Mallya Road (Grant Road), Bangalore, for a price of Rs. 2,25,000/- in the month of November 1979. THE complainant made an advance payment of a sum of Rs. 5,000/- to the opposite party, on 30th July, 1979 under Ex. C-1, the receipt issued by the opposite party for the same. The complainant further averred that the opposite party issued an allotment letter on 30th July, 1979 as per Ex. C-6 and specified thereunder the amounts to be paid by the complainant in instalments at various stages of construction. Thereafter, an agreement of Sale as per Ex.C-2 on 12.11.1979 was drawn up, wherein schedule of payments consisting with the progress of work of construction was specified and the same was registered. Under Clause (6) of Ex.C-2, it was specifically stipulated that the possession of the flat on its full construction would be delivered to the complainant on or before 30th June 1980.

The complainant further averred that he made further payments of Rs. 1,30,000/- , Rs. 20,000/- and Rs. 45,000/- to the opposite party on 14.8.1980, 12.12.1980 and 28.11.1981 under receipts Exs. C-3, C-4 and C-5 respectively, that is, in all he made payment of a sum of Rs. 2,00,000/- to the opposite party by 28.11.1981. The balance of amount of Rs. 25,000/- was to be paid prior to taking possession of the said flat.

THE complainant nextly averred that the opposite party did not deliver the possession of the flat to the complainant on or before 30th June, 1980 as stipulated under Clause (6) of Ex.C-2 Agreement. THE opposite party by its letter on 30th June, 1982 as per Ex. C-8 informed the complainant that they were in the process of completing the balance work and would be able to give possession of the flat by January 1983. THE opposite party even as per this letter did not deliver the possession of the flat to the complainant. The opposite party, by its letter on 18th June 1990, as per Ex. C-11, demanded a sum of Rs. 1,39,500/- as escalation of costs from the complainant. The complainant gave a legal notice as per Ex. C-13 on 7.12.1990 denying to make the payment of escalation costs of Rs. 1,39,500/- demanded by the opposite party. The complainant at para (5) of the legal notice, Ex. C13, adverted the attention of the opposite party that the opposite party had agreed to complete the construction of the apartments immediately without claiming any further escalation of costs from the purchasers of the apartment in the month of April 1986. The material part of it reads as under:- "My client states that he is one of the members of M/s. Garden Apartment Owners Association which fact is well known to you. Further, you had held various discussions with the said association which acted on behalf of its members including my client. As you are aware, in the meeting held in the month of April, 1986 between you and the representatives of the aforesaid association, you had committed and agreed to complete the construction of the apartments immediately without claiming any further escalation of cost from the purchasers of the apartments."

THE opposite party gave its reply on 9.1.1981, as per Ex. C-14 and further reiterated the claim for escalation costs though the opposite party admitted in the said reply notice as per Ex.C-14 that there was such an agreement between the purchasers and the opposite party in the month of April 1986 agreeing not to claim the escalation costs. THE material part of it at para (2) under Ex.C-14, reads thus:- "THE minutes of April 1986 was between a few purchasers and us and in the same year they could not fulfil the payment condition and hence the arrangement agreed stood cancelled. On going through the various details on cost escalation sent to you, you will find that our demand for escalation in cost in most reasonable and justified."

The complainant nextly averred that the opposite party by its letter on 14.3.1991, as per Ex. C-15, admitted their failure to handover possession of the flat by 30th June, 1980 as stipulated in Ex. C-2. The opposite party under the said letter suggested that the complainant could cancel the agreement and obtain the refund of the amounts paid. It also further suggested that the agreement could be revived on payment of the full escalation costs of Rs. 1,86,000/- and interest thereon. The complainant on the basis of these averments sought the reliefs as narrated above.

OPPOSITE party Nos. 1 & 2 filed .its version and admitted the fact that the complainant was allotted a flat as claimed by the complainant in the complaint. The opposite party also admitted the fact of receipt of a sum of Rs. 2,00,000/- from the complainant. The opposite party has specifically admitted this fact at para (6) and (10) of its version.

THE opposite party further averred that it could not complete the construction of the apartments due to various reasons beyond their control. THE opposite party has in this regard at para (11) of its version averred thus:- "THE respondent State that they could not handover the flat on the stipulated date i.e., 30.6.1980 or in any date thereafter because of the reasons beyond their control as clearly mentioned in their letter dated 18.6.1980. THE reasons are as follows:- Between 1.11.1979 and 28.2.1983 Cement was not available due to control. THE appropriate Government had taken a decision to allot only 1,000 bags of cement per quota, to each high rise complex irrespective of the total requirements. For Garden Apartments the total requirements amounted to Rs. 1,50,000/- . THE construction was also delayed due to the work being stopped by the Municipal Corporation because of cancellation of all high rise building plans in 1980 till they were re-sanctioned in 1981. Between September 1983 to December 1984, the construction of high rise buildings were stopped by the Government by public notice immediately of the collapse of Gangaram Complex on or about 9.9.1989 which caused stoppage and delay in construction. Between January 1985 and September 1989, the construction was delayed due to the refusal by the Municipal Corporation to grant occupation certificate due to the State Government Circular of 1984 questioning the validity of plans of buildings having a height of more than 55 feets. THEreafter, non-availability of construction material as well on non-payment of the costs of escalation by the complainant and others has been the said cause of the respondents being enable to complete the said project.

The opposite party further averred that it was justified in demanding escalation costs from the complainant considering the steepraise in the cost of building material and the cost of labour. The opposite party nextly averred that it was justified in cancelling the agreement itself as per its letter dated 26.11.1990 as per Ex.C-12.

The opposite party further averred that this Commission has no jurisdiction to entertain he complaint as the complainant cannot be classified as a ''consumer'' and the complaint cannot be classified as a ''complaint'' under the provisions of the Act. The opposite party Nos. 1 & 2, on the basis of these averments, sought the complaint to be dismissed. Opposite party No. 3 is Garden Apartments Owners'' Association which is a formal party. The complainant has not claimed any relief against opposite party No. 3. Opposite party No.3 has filed its version supporting the claim of the complainant.

14. DURING enquiry, the complainant filed his affidavit in evidence. The documents filed by the complainant with the consent of the learned Counsel for the opposite party came to be marked as Exs. C 1 to C-15. The order sheet dated 7.1.1993, in this regard reads thus:- The complainant has filed the affidavit. He has also produced certain documents. Learned Counsel for the opposite party has no objection to mark all those documents. Ex.C-1 a receipt, C-'' 2C-15 the correspondence is marked by consent of the opposite parties. Call on 8.2.1993 for further evidence. The opposite party did not lead any evidence nor filed the affidavit in evidence nor got any documents marked on its part.

16. THE opp. party went on taking time from the month of January 1993 onwards. When it came up finally on 17.4.1993 for hearing, even on that day, the opposite party sought time which was refused. THE order sheet dated 17.4.1993 reads thus:- "THE learned Counsel for the opposite party seeks further time to lead evidence and argue the matter. THE order sheets show that on each date of hearing, the complainant is coming from Hyderabad. THEre are absolutely no reasons to adjourn the matter any further. THE opposite party had taken adjournment to report settlement. But neither the settlement is reported nor the opposite party is ready to proceed with the matter. In view of these facts, we heard the complainant. Post this matter for orders. Call on ."

We heard the complainant and perused the pleadings of the parties and the documents filed. Having regard to the pleadings of the parties and the submission made by the complainant, the only point that arises for our consideration is whether there was any deficiency in service rendered by the opposite party, in consequence of which, did the complaint suffer any loss or injury, and if so, to what compensation the complainant is entitled to?

19. BEFORE considering the evidence, it is necessary to notice a preliminary objection raised by the opposite party. The objection raised was that the complainant cannot be classified as ''consumer'' nor the allegations contained in the complaint can be classified as a ''complaint'' as defined under Sections 2(1) (d) and 2(1) (c) of the Consumer Protection Act, 1986; so this Commission has no jurisdiction to entertain the complaint.

20. THE objection of the opposite party has to fail. THE ruling of the National Commission in U.P. Awas Evam Vikas Nigam v. Garima Shukla, reported in Volume I (1991) CPJ Page 1 (NC) covers this point. This Commission also has in complaint Nos. 13, 67, 82, 107, 115 and 113 of 1991 held as under:- M/s. Cyma Exports (Pvt.) Ltd., is the developer, builder in all these cases. THEy proposed to build and sell flats in three apartment buildings at Bangalore, called as - Silveroaks Suryamukhi Rajnigandha and entered into identical agreements with the complainants. THE considerations were to be paid in instalments during various stages of construction and the learned Counsel for the respondents admitted that each of the complainants has paid the full consideration in respect of the flat agreed to be built for him. THE complainants in all these cases have alleged that even though the apartments were agreed to be completed and delivered during 1986 and 1987; the respondents have not so far done so but on the other hand have stopped the work on the buildings and are demanding escalation charges to recommence the work. THEy have prayed for directions to the Respondents to complete and deliver possession of the flats and also for compensation. THE respondents among other things have contended that the complainants are not consumers and, therefore, this Commission has no jurisdiction to try these complaints. We have heard the learned Counsel on this question. It is argued by the learned Counsel for the respondents that the agreements, in question, relate to sale of flats which are immovable properties and therefore, this Commission has no jurisdiction to entertain these complaints. He argued that the respondents had purchased the lands on which the apartments are to be built and even though the consideration is paid in instalments by each of the complainants at various stages of the construction, what is agreed under each of the agreements is the sale of a particular flat, which is an immovable property, and therefore, the complainants are not consumers within the meaning of the Consumer Protection Act, 1986. THE Complainants'' Counsel contended that complainants are consumers as they have hired the services of the respondents to develop land and build flats and to sell the same to them and it is not a mere sale of immovable property. THEre is no dispute that flats are immovable property and if it is the case of mere sale of the constructed flats, this Commission will have no jurisdiction to entertain complaints. But on careful perusal of the agreements, we are convinced that the agreements are not for sale of flats pure and simple. In all agreements, the intention of the respondents is loud and clear. THEir intention is to purchase prime land in the city, develop it, build flats at the cost of the complainants. THE dominant aim is to construct the apartments and make a profit out of the services so rendered. Entire investment for the construction comes from the complainants. Even though in the ultimate analysis there is a sale of the flat involved. THE dominant purpose is rendering of services. If that is so, we have no doubt in our mind that the complainants have hired the services of the respondents and they are all consumers within the meaning of the Consumer Protection Act, 1986. We are fortified in this view by the decision of the National Commission in U.P. Avasevam Vikas Parishad (Housing & Development Board) v. Garima Shukla and Others in First Appeal No.5 of 1989, reported in CPJ of January 1991, Vol. I. In the said case, the National Commission held that the Housing Development Board engaged in serving the public in the matter of providing housing by acquisition of land, development of sites, construction of house thereon and allotment of plots and houses to the public and, therefore the persons who have been allotted house/flats/sites from the Board are consumers falling within the definition of Section 2(1)(d)(ii) of the Consumer Protection Act, 1986. In this case also the respondents have engaged themselves in acquiring the land, developing it and constructing flats thereon and sale of the flats to the intending purchasers. THE decision of the National Commission applies on all facts of these cases. For the above reasons, we hold that the complainants are consumers within the definition of Section 2(1)(d)(ii) of the CP. Act, 1986 and this Commission has jurisdiction to try these complaints." It is not disputed that the opposite party, a builder, allotted flat No. 3 on the 5th Floor in the Rajnigandha Building of Garden Apartments at No. 21, Vittal Mallya Road (Grant Road), Bangalore, in consideration of a sum of Rs. 2,25,000/- to the complainant. Ex. C-6, a letter of allotment issued by the opposite party and Ex. C-2. Agreement for sale of the said flat entered into between the complainant and the opposite party give the details of the amount paid as earnest money and the amounts to be paid by the complainant at different stages of the construction of the flat.

It is also not disputed that the opposite party received by 28.11.1981 in all a sum of Rs. 2,00,000/- from the complainant. THE payments are evidenced by the receipts Exs. C-1, C3, C-4 and C-5. THE opposite party has also specifically admitted this receipt of money from the complainant at para (6) and (10) of its version.

23. THE recitals contained at para (6) of Ex. C-2, Agreement for Sale, read as under:- "Subject to the availability of cement, steel and other building materials, electrical and/ or power connection and drainage connection and subject to force majeure including any act of God, drought, flood and any other natural calamity and /or war, restrictions by the Government Municipal Corporation or other public authorities or any other acts beyond the control of the Builders, the Builders agree to handover possession of the said flat to the buyer on or before 30th June, 1980."

This would go to show, the opposite party was to complete the construction of the building and deliver possession thereof to the complainant on or before 30th June, 1980. That is the evidence of the complainant and also the averments contained in the complaint. THE opposite party failed to complete the construction by that date.

25. EX.C-8, a letter written by the opposite party to the complainant dated 30th June, 1982, wherein, the opposite party agreed to complete the construction and give possession of the flat to the complainant by January 1983. The material part of this letter, in this regard reads thus:- "We are pleased to inform you that since March 1982, cement is available freely and we have started working in full swing so that possession can be given to you at the earliest possible. So far, we have completed all structure work, brick work and fixation of door and window frames. Now we are in process of completing balance work like plaster, floor and bathroom tiles, sanitary and electrical work, fixing of door and window frames and painting work. We hope to give you possession by January 1983."

The opposite party could not complete the construction and deliver possession of the flat to the complainant even by that date. EX. C-11, is the letter written by the opposite party to the complainant on 18.6.1990, wherein, he had given various reasons for not completing the construction of the building and demanded the escalation charges from the complainant in a sum of Rs. 1,39,500/- .

28. EX. C-13, is the legal notice issued by the complainant to the opposite party dated 7.12.1990. The recitals contained at para (5) of this notice would go to show that the opposite party had agreed not to collect the escalation charges from the complainant and other flat owners in the month of April 1986. This fact, the opposite party has admitted in its reply notice dated 9.1.1991 as per EX. C-14.

29. THE opposite party has pleaded various circumstances at para (11) of its version as referred above, which caused delay in constructing the building. THE opposite party has stated that there was scarcity of cement, the Municipal Corporation had stopped the work, the Government had issued a public notice stopping the construction of work of all high rise buildings, etc. THE opposite party has neither produced any material to prove these allegations made by it nor has lead any evidence either oral or documentary. THErefore, the averments made by the opposite party giving various reasons for the delay in construction of the flats has remained only at the stage of allegations. THE opposite party has failed to establish these circumstances to justify in not completing the construction of the flat and handing over the possession of the same to the complainant as stipulated under Ex. C-2 and in its letter under Ex. C-8. THE material on record further would go to show that even in the month of April 1986, the opposite party had agreed to complete the construction of the flat at an early date and deliver the possession of the same without collecting any escalation costs as per Exs. C-13 and C-14.

THErefore, it is clear, that the opposite party has failed to complete the construction and deliver possession of the flat without any valid reason whatsoever. THErefore, it is clear from this material that the services rendered by the opposite party are clearly deficient in nature.

32. IT is evident from the material on record, as referred above, that the opposite party failed to complete the construction and deliver possession of the flat to the complainant as per its promise made, and in our opinion, this lapse is due to the negligence on the part of the opposite party only. The complainant who has made the payment of a sum of Rs. 2,00,000/- by the end of year 1981 and so far he has not been able to get the delivery of the possession of the flat from the opposite party, and therefore, the complainant is necessarily put to lot of suffering and injury, and therefore, the complainant is necessarily to be compensated for the same.

34. IT is material on record, in the month of April 1986, the opposite party had agreed to complete the construction and handover the delivery of the possession of the flat soon thereafter without collecting any escalation costs. So, in our opinion, it would be just and proper to award reasonable interest on the amount of Rs. 2,00,000/- paid by the complainant to the opposite party towards compensation from January 1987 till the date of delivery of the possession of the flat to the complainant in a condition fit to occupy the same with all necessary amenities. ORDER In the Result, therefore, this complaint is allowed. Opposite Party Nos. 1 & 2 are directed to pay interest at the rate of 18% p.a. on the sum of Rs. 2,00,000/- from 1.1.1987 till the date of delivery of possession of the flat to the complainant in a condition fit to occupy the same. Opposite Party Nos. 1& 2 shall also pay a sum of Rs. 2,500/- to the complainant towards the costs of the proceedings. Opposite Party Nos. 1 & 2 shall pay the said sums so awarded to the complainant within a period of two months from this date. Complaint allowed with costs.