State Consumer Disputes Redressal Commission
Mr. Boyd Ward, 2. Mrs. Caroline Ward, vs M/S. Iona Fernandes Developers Private ... on 31 October, 2012
BEFORE THE GOA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, PANAJI- GOA Complaint No. 05/2011 1. Mr. Boyd Ward, 2. Mrs. Caroline Ward, Both major of age, r/o. 58, Capel St., Capel-le-ferne, near Folkstone, Kent, UK CT 18 7LY 00441303257313, through their attorney; Mr. Rupesh Shirodkar, Major of age, r/o Bhatti Wada, Nerul, Bardez Goa. Complainants V/s. M/s. Iona Fernandes Developers Private Ltd., Represented by its Managing Director, Ms. Iona Yvette Fernandes, Major of age, r/o 2057, Kobravaddo, Calangute, Bardez Goa. .Opposite Party Complainants are represented by Adv. Shri. A.V. Kurdikar. O.P. is represented by Adv. Miss. L. Rego. Coram: Shri Justice N.A. Britto, President Shri Jagdish Prabhudessai, Member Dated:31/10/2012 ORDER
[Per Justice Shri N.A. Britto, President] The Complainants are British Nationals. The Opposite Party is a Company engaged in the business of building, construction and development. The Complainants read an advertisement on the internet and came to Goa and contacted the Managing Director of the Opposite Party and entered into an agreement dated 11/03/2006 styled as an `Agreement for Sale by which the Opposite Party agreed to construct and sell to the Complainants a bungalow, identified as Bungalow No.5, having an area of 298 sq. mts., for a sum of Rs. 53,46,120/-, as per specifications mentioned therein.
The Complainants paid the full price of the Bungalow in question and the possession along with the occupancy certificate was to be given to the Complainants on or before August 06.
2. By the present complaint filed on 30/05/2011, the Complainants have sought peaceful possession of the said Bungalow with proportionate undivided share in the land along with amenities of swimming pool, health club and other facilities and interest on the amount of Rs. 53,46,120/- @ 12% p.a. from the date of the execution of the agreement till delivery of possession of the Bungalow with occupancy certificate and Rs.16,50,000/- towards the expenditure incurred for travelling from England to and fro and for accommodation in Goa. In the alternative, the Complainants have sought refund of the amount of Rs. 53,46,120/- with interest @ 12% p.a. from the date of execution of agreement till 28/09/2010 amounting to Rs.29,18,900/- plus Rs.16,50,000/-
towards the said expenditure totaling to Rs.99,15,100/- with further interest @ 12% p.a. on the entire amount from 29/09/2010 till payment plus costs of complaint and damages for mental torture, agony and for deficiency in service.
3. The execution of the agreement is admitted by the Opposite Party. Some relevant clauses of the said agreement may be taken note of:
9. The Developer shall give possession of the premises to the Purchaser on or before August 2006. If the Developer fails or neglects to give possession of the premises to the Purchaser on account of reasons beyond their control, ten the Developer shall be liable on demand to refund to the Purchaser the amounts already received by him with simple interest of 12% p.a. Provided that the Developers shall be entitled to reasonable extension of time for giving delivery of the bungalow on the aforesaid date incase the completion of the bungalow is delayed on account of non availability of steel, cement, sand and other building material or was or acts of God or as a consequence of any notice of notification of the Government.
10. The Purchaser shall take possession of the Bungalow within 30 days of the Developer giving written notice to the Purchaser, intimating that the said premises is ready for use and occupation. One week after the notice in writing given by the Develper to the Purchaser that the Bungalow is ready for use and occupation, the Purchaser shall be liable to pay all the local taxes to the authorities, Government and other incidental charges.
11. The Developer shall deliver possession of the said bungalow to the Purchaser after the Developer has obtained from the concerned local authorities occupation certificate in respect of said Bungalow and upon the Purchaser paying the full amount of the price of said bungalow as mentioned in schedule of payment hereto annexed.
13. At the time of the registration of the conveyance deed the Purchaser shall pay stamp duty and registration charges.
22. We consider 12 months from the date of starting, as good time to carry out and complete the construction of your Holiday Home.
23. Failing which 5% penalty amount is due payable by us. In Retrospect, should the payments not reach us in time, according to the stages of work, then the delays in constructions are considered out liability.
4. The case of the Complainants is that they received an email dated 16/08/06 from Mrs. Fernandes, the Managing Director of the Opposite Party stating that the tiling of Bungalow no.5 was complete and the construction was done as per schedule followed by another email dated 31/08/06 stating that the Bungalow would be ready as and when the Complainants would visit Goa and the Complainants were told to book the tickets in November 06. Complainants say that they received another email on 12/09/06 that the Bungalow was ready, the work of plumbing and wiring was going on, tiling and painting would be executed shortly, and believing on her representation, the Complainants came down to Goa with 7 family members and stayed in Goa for almost 21 days for making arrangements of accepting possession of the Bungalow but they were shocked and perplexed to see that the Bungalow was not ready which otherwise was to be completed and handed over to the Complainants in August 06.
4.1. According to the Complainants, on the assurance given by said Ms. Fernandes, the Complainants had even purchased furniture and kept in Bungalow No.5, in March 07 at a cost of about Rs.3 lacs. The Complainants say that Ms. Fernandes misled and misguided them and they suffered monetary loss and had to incur an expenditure of about Rs.75,000/- per person in travelling from England to Goa and back and for their accommodation totaling to Rs.5,25,000/-. Complainants say that they gave time to Ms. Fernandes out of magnanimity to hand over the possession by end of March 07. Complainants say that Complainant No.1 Mr. Boyd Ward visited Goa in March 07 and although he made efforts to take an appointment from the Opposite Partys office for discussion to obtain possession, the Opposite Party purposely neglected to give an appointment which clearly shows the malafide intentions of the Opposite Party not to hand over the posession of the Bungalow with occupancy certificate. The Complainants say that in the year 2008 the Complainants came along with their entire family members, total 7 persons, to take possession of the Bungalow with occupancy certificate as per the instructions of the said Ms. Fernandes but the Opposite Party failed to hand over the legal possession of the Bungalow with occupancy certificate and they could not take possession for want of occupancy certificate.
Complainants say that the Oppoiste Party took 3 years and 5 months extra time but the Bungalow was not ready in all respects as per the specifications in the agreement which facts were revealed upon inspection of the Bungalow on 10/02/2010 on which date Ms. Fernandes, the Managing Director, furnished a xerox copy of the occupancy certificate and although the Complainants were ready to accept the possession of the Bungalow, though the same was not ready as per the specifications, Ms. Fernandes declined to hand over the possession of the Bungalow, under the pretext that the Complainants should obtain the permission of the RBI for obtaining the possession of the Bungalow.
4.2. The complainants say that Ms. Fernandes is unncessarily with malafide intentions and oblique means is avoiding to hand over the possession of the Bungalow inspite of having obtained entire consideration in one stroke at the time of execution of the agreement.
4.3 According to the Complainants, the agreement for sale does not speak anything about RBI approval for handing over the possession of the Bungalow or for refunding the consideration amount with agreed interest of 12% p.a. on termination of agreement for sale. The Complainants say that the said Ms. Fernandes had indirectly threatened the Complainants by email dated 27/01/2009 stating that they had reported about John and Barbara to the Directorate of Enforcement, Mumbai, as they were instructed by Consumer Court order to hand over possession of the Villa and the day John and Barbara take possession of their Villa the same would be confiscated and kept by the Government and Ms. Fernandes would not be liable to refund the monies and by further email dated 29/11/09 the said Ms. Fernandes informed the Complainants that they had informed the Enforcement Department for taking over their villa.
Complainants say that the said statements in the email speak about the Opposite Partys conduct and ulterior motive to cheat the foreigners inviting them to purchase the properties in Goa by giving advertisements on internet and once the foreigners become prey of their illegal goal the Opposite Party ditches them by giving evasive replies which is not expected from the Opposite Party.
4.4. At this stage we may note that the said John and Barbara were the Complainants before this Commission in C.C. no.03/07 who by virtue of an agreement dated 31/03/04 had agreed to purchase villa no.3, in the same project as that of the Complainants, and whose complaint was decided in their favour by this Commission by order dated 31/12/07 and an Appeal filed therefrom is now pending before the Honble National Commission for final disposal, being first Appeal no.54/08. Initially, possession was directed to be delivered to the said John and Barbara by Honble National Commission by order dated 12/02/2008. Later it was realized that the concerned village Panchayat had declined to issue occupancy certificate to the Opposite Party. We assume the Final Appeal No.54/08 is still pending. The Opposite Party had not raised an objection that no sale deed could be executed in favour of John and Barbara for want or RBI permission, either in the Complaint or the First Appeal.
4.5. Complainants say that the Opposite Party had not obtained RBI approval for sale of Bungalow to the Complainants and so also the Opposite Party had not obtained approval from RBI to accept a huge amount and that the said Ms. Fernandes, Managing Director, had specifically told the Complainants at the time of entering into an agreement for sale that there was no need of RBI approval for taking the possession of the Bungalow or for refunding the amount in case the agreement was terminated by either of the parties.
The Complainants say that they have learnt from the owners of the adjacent Bungalow that the Opposite Party gave them possession without the approval of RBI in 2009 from which it is crystal clear that there is no need of approval of RBI for handing over the possession of the Bungalow with occupancy certificate.
4.6. The Complainants say that they received another email dated 17/12/2009 stating that the Complainants had not taken possession nor had paid their maintenance fees for the years 2007 - 2008, 2008 2009 and 2009 2010 and outgoings and it is surprising to note that without giving possession of the Bungalow that the Opposite Party has been demanding maintenance fees from the Complainants which is an attempt to extort money from the Complainants.
4.7. The Complainants say that they had registered legal notice dated 18/02/2010 sent to Opposite Party calling upon the Opposite Party to hand over possession of the Bungalow with occupancy certificate within a period of 15 days failing which the Complainants would claim interest of 12% on the entire amount from September 06 till the date of issue of notice amounting to Rs.22,18,638/- along with occupancy certificate and furniture of the Complainants and also Rs.75,000/- for each person being the expenditure incurred by them to travel from England to Goa to and fro and for accommodation in Goa thrice for 7 persons and once for one person total to Rs.16,50,000/- in addition to damages of Rs. 5 lacs for mental torture, agony and inconvenience and for spending their valuable time and for deficiency in service. Complainants say that they made it clear that they would also lodge a cheating case against Opposite Party, in case the Opposite Party failed to give possession of Bungalow with occupancy certificate and furniture of the Complainants and to initiate proceedings against Opposite Party for recovery and possession of the said Bungalow. Complainants say that the Opposite Party failed to give possession of the Bungalow with occupancy certificate. Complainants say that he Opposite Party has made mockery of the Complainants by calling them from England to take possession but every time she acted just opposite.
4.8. Complainants say that after receipt of the legal notice the Opposite Party came for a settlement and in view of the said settlement the Complainants were permitted to remove furniture from the Villa and the Complainants through their attorney Mr. Rupesh Shirodkar removed the furniture and thereafter the Opposite Party gave an offer on 28/09/2010 to pay Rs. 58 lacs all inclusive with a condition that the Complainants would permit the Opposite Party to sell the Bungalow and for payment within 3 months from the issue of letter. The Complainants say that the Opposite Party made it clear in telephonic conversation that no permission from RBI was required for cancellation of the agreement and for refund of the amount but changed her stand from time to time so much so that by earlier email dated 29/08/08 the Opposite Party had clearly made the statement that she could refund the amount only on RBI clearance.
4.9. The Complainants say that under the pretext of settlement the Opposite Party made attempts to delay the delivery of possession or to refund the amount so as to make the case time barred. The Complainants say that the conduct of Opposite Party leaves no manner of doubt that the Opposite Party all along harbored the intentions of playing fraud upon the Complainants in order to cheat them. The Complainants say that they are left with no other alternative but to approach this Commission to seek justice which has been denied to them in a most highhanded, arbitrary and unlawful manner. The Complainants say that the attorney of the Complainants is aware of the entire transactions that took place between the Complainants and Opposite Party as he used to accompany the Complainants in Goa with his tourist taxi so also the Complainants used to inform the attorney about the emails sent by Ms. Fernandes from time to time.
5. The Complaint has been contested by the Opposite Party. It is their case that in the advertisement on the internet they had displayed that in case of foreign clients prior permission from RBI was a pre-requisite and in such case primary agreement for sale were executed and sale deed were registered later pending the approval to purchase from RBI. The Opposite Party says that the delay was because of the shortage of construction material and this was informed by email to the Complainants. The Opposite Party says that they had not given any assurances to the Complainants. Complainants purchased the furniture at their own risk when the Opposite Party had sought an extension of time for completion and handing over possession of the said Bungalow. The Opposite Party denied that the Complainants visited Goa for taking possession and says that the Complainants knew very well that they had not obtained clearance from RBI for executing the title deed. Opposite Party denies that the Complainants visited Goa in March 07 and further denies that they made any attempts to contact the Opposite Party. The Opposite Party says that there was no stipulation to give occupancy certificate. The Opposite Party says that on 27/09/08 the Opposite Party addressed a letter to Mr. Boyd to produce their RBI clearance which was required to purchase the property and take final possession within 20 days from the receipt of the letter. The Opposite Party has denied the allegation that the Opposite Party took 3 years and 5 months extra time to complete the Bungalow. The Opposite Party says that it has never avoided to hand over the possession of the Bungalow nor has shied away from doing so but since such transactions are subject to prerequisites , the transactions cannot be effected unless the prerequisites are complied with by the respective parties.
The Opposite Party denied that it had given any possession of any Bungalow to any foreign national without the approval from RBI. Opposite Party says that they had written email to the Complainants calling upon them to produce RBI clearance and take over the possession of the Bungalow but the Complainants did not pay any heed to the calls and requests made by the Opposite Party. The Opposite Party says that it is the Complainants who have made mockery of the Opposite Party and now are seeking to make a mockery of Indian laws by trying to circumvent the provisions of law by seeking an order of equitable relief in their favour against the Opposite Party.
According to them, they had received the money from the Complainants from a local standard Chartered Account in Mumbai and as such there was no transaction pertaining to foreign currency.
The Opposite Party says that the complaint is time barred and the Opposite Party had brought to the notice of the Complainants by email dated 13/01/2011 that their attorney did not have authority to receive the money of the Complainants on their behalf.
Opposite Party says that the Power of Attorney is a well tutored attorney but he does not have the power to enter into any financial transactions with any party. The Opposite Party says that the Complainants have shown a inflated amount and that the Complainants are not entitled to any reliefs.
6. The Complainants have filed their affidavit in evidence through their attorney Shri Rupesh Shirodkar, pursuant to power of attorney given in his favour dated 18/02/2010 and have produced the said agreement dated 11/03/06 and the email letters along with a list dated 16/05/2011. The Opposite Party has not produced the advertisement displayed by them on the internet which according to Opposite Party required foreigners to obtain prior permission of RBI to execute sale deed nor the letter dated 27/09/08 or for that matter email dated 13/01/2011 and as such adverse inference is required to be drawn against Opposite Party for non production of the said documents.
7. At the hearing of the arguments, the Opposite Party through their lr. advocate had shown their willingness to refund the sum of Rs.53,46,120/- but without any interest. In this context, it also may be noted that in their written version filed on 30/11/2011 the Opposite Party had stated that inorder to establish their bonafides they were ready and willing to deposit the money received from the Complainants without any interest before this Commission.
The Opposite Party had also stated that the Complainants were entitled to only refund of the money paid by them but were not entitled to any interest, compensation or damages. However, till date the Opposite Party has not deposited the said sum of Rs.53,46,120/- and this only shows that they have no bonafides whatsoever, to show.
8. Be that as it may, before we proceed to deal with the objections raised by the Opposite Party to the complaint we would like to refer to the case of LDA vs M.K. Gupta, AIR 1994 SC 787, wherein the Apex Court has held that housing construction or building activity carried on by a private or statutory body is service within the meaning of section 2 (o) of the Consumer Protection act, 1986. The Apex Court has further held that construction of house or flat is for the benefit of persons for whom it is constructed. He may do it himself or hire services of a builder or contractor. The latter being for consideration is a service as defined in the Act. Similarly, when a statutory authority develops land or allots a site or constructs a house for the benefit of a common man it is as much service as by a builder or contractor. The one is contractual service and the other is statutory service. If the service is defective or it is not what was represented then it would be unfair trade as defined in the act. Any defect in construction activity would be denial of comfort and service to a consumer. When possession of property is not delivered within stipulated period the delay so caused is denial of service. Such disputes or claims are not in respect of immovable property as argued but deficiency in rendering of service of particular standard, quality or grade. Such deficiencies or omissions are defined in sub-clause (ii) of clause (r) of section 2 as unfair trade practice. If a builder of a house uses substandard material in construction of a building or makes false or misleading representation about the condition of the house then it is denial of the facility or benefit of which a consumer is entitled to claim value under the Act. When the contractor or builder undertakes to erect a house or a flat then it is inherent in it that he perform his obligation as agreed to. A flat with a leaking roof, or a cracking wall or substandard floor is denial of service.
9. In the case at hand, the Opposite Party has not handed over possession of the Bungalow in question to the Complainants within the stipulated time, nor the extended time nor has refunded the money with or without interest which was agreed by the Opposite Party vide clause 9 of the agreement on 11/03/06 and reiterated in letter dated 29/08/08 and as such there is a gross deficiency in service on their part, and the Complainants as consumers are certainly entitled to approach this Commission to set right the wrongs committed by the Opposite Party. We have already stated that although the Opposite Party had shown their inclination to deposit the amount of Rs.53,46,120/- they have not done so and it only shows that they have absolutely no bonafides in their favour.
10. The first objection taken by Ms. L. Rego, the lr. advocate of Opposite Party, is that the complaint is barred by limitation in view of section 24A of the Consumer Protection Act, 1986 which provides for limitation of 2 years for filing a complaint. Ms. L. Rego would contend that the 2 years period has got to be computed from the date of email sent by the Opposite Party i.e. 27/09/08.
On the other hand, Shri A. V. Kurdikar, the lr. advocate of the Complainants would submit that the Complainants came to take possession and inspected the Bungalow on 10/02/10 and were ready to take possession but the same was declined on the pretext that the Complainants should obtain RBI permission. According to him, the period of 2 years has got to be computed from 10/02/10 and when so computed it shows that the complaint which has been filed on 30/05/2011 is within time.
11. We are not impressed with the submission made by lr adv. Ms. Rego. The facts giving rise to the cause of action have been pleaded in para 26 of the Complaint. The Opposite Party has not produced letter dated 27/09/08 and therefore adverse inference needs to be drawn against Opposite Party. If at all the Bungalow was not completed within the stipulated time or extended time, the fault lies entirely on the Opposite Party. By letter dated 16/08/06, the Opposite Party informed the Complainants, inter alia, that they were on schedule tiling of the villa was completed your home looks splendid . In letter dated 3/08/06 the Complainants were informed that the house was already ready If that be so and the house was ready, non-availability of stones, assuming there was shortage of stones, as conveyed by email dated 12/09/06 could not have come in the way of the Opposite Party in handing over the possession of the Bungalow to the Complainants. Non-availability of laterite stones, is only an excuse put forward to delay the handing over the possession of the Bungalow. Even in letter dated 29/11/09, the Opposite Party informed the Complainants that if they were interested in taking possession of the villa, they could do so. Again by letter dated 01/12/09, the Complainants were informed by the Opposite Party to produce the RBI clearance/approval required to purchase the property and take final possession of the villa. No time limit was set. Then the Complainants were declined to handover possession of the Bungalow on 10/02/10 on inspection without RBI permission. Firstly, we are of the view that in case the complainants produce the NOC even now, the O.P. would be bound to hand over the possession as no time limit to produce such a NOC was stipulated by the O.P. in the letters sent to the complainants. Alternatively, we are of the view that the period of 2 years has got to be reckoned either from 10/02/10 or 01/12/09 and in either case, the Complaint filed is within the prescribed period of 2 years. The submission that the complaint is time barred needs to be rejected.
12. The next submission of Ms. Rego is that the agreement dated 11/03/06 between the parties was not registered with the Sub-Registrar as required by section 17 of the Indian Registration Act, 1908 and therefore is unenforceable in law and in this context the lr. advocate has placed reliance on the case of Suraj Lamp Industries Pvt. Ltd. Vs. State of Haryana, (2009) 6 Mh. L.J. 11. We are not impressed with this submission for reasons more than one.
12.1. According to O.P. this was a primary agreement for sale. The gist of sections 17/49 of Indian Registration Act, 1908 is that a document which creates any right, title or interest in an immovable property of the value of Rs. 100/- upwards is required to be registered and unless it is registered it will not affect immovable property comprised therein or received as evidence of any transaction affecting such property.
Firstly, although the agreement dated 11/03/06 is styled as an agreement for sale it is nothing but an agreement for construction of a Bungalow at a given price of Rs.53,46,120/- which by itself did not create any right, title or interest in any immovable property of the value of Rs.100/- upwards. Secondly, the execution of the agreement is admitted. What is admitted need not be proved. Thirdly, the O.P. was a party to the agreement and to its execution before the Notary. It is not the case of Ms. Fernandes, the Managing Director of the O.P. that she had advised the complainants that the agreement dated 11/03/06 was required to be executed before the Sub-Registrar. If at all anybody was presumed to know the law of the land it is the said Managing Director who is an Indian Citizen and not the complainants, who are British Citizens. In other words, the Managing Director of the Opposite Party ought to have known what is the law of this country and advised the complainants accordingly. It was not expected of the Complainants to know the law of another country. The O.P. having been a party to the execution of the agreement before the Notary is now estopped from contending that the agreement ought to have been executed before the Sub-Registrar. The Opposite Party cannot be allowed to take advantage of their own mistakes.
13. The third objection taken by Ms. Rego, the Lr. Adv. of the O.P. is that no sale deed can be executed in favour of the Complainants in view of prohibition contained in section 6 (3) (i) of the Foreign Exchange Management Act, 1999 (FEMA, for short). Shri Kurdikar, lr. advocate of the Complainants would submit that at the relevant time, there was no such requirement and even if there is such a requirement of NOC being obtained from RBI, the Complainants being British nationals, there is no such requirement to take possession of the Bungalow in question and that the Complainants would pursue the matter thereafter with the RBI and obtain such NOC at the time of execution of sale deed. Shri. Kurdikar further submits that such a NOC otherwise is not required in view of the order of this Commission in the case of John and Barbara (order dated 31/12/07 in CC no. 03/2007) in which possession was ordered to be given to the said Complainants.
13.1. We are not impressed with the submission of both the Lr. Advocates. We had asked Ms. Rego whether there was any notification issued by the RBI in terms of Section 6(3)(i) of FEMA but she was not able to throw any light on that question. In the complaint of John and Barbara no such objection was raised by the O.P. either before this Commission or for that matter before the Honble National Commission where the appeal filed by the O.P. is still pending and is not finally disposed.
14. We are not inclined to believe that the O.P. had in their advertisement conveyed that foreigners would be required to obtain clearance of the RBI at the time of execution of sale deed. We have already noted that the O.P. has failed to produce a copy of the said advertisement to substantiate their claim that such a condition was inserted in the said advertisement. If there was such a condition, the O.P. would have said so in their written statement in case of John and Barbara or insist that they too produce the NOC from the RBI. That was not done. If we go by para 26 of the written arguments submitted on behalf of the O.P., the O.P. would have asked the complainants about the clearance from the RBI to enter into the agreement dated 11/3/2006. No such clearance was sought from the complainants at the time of execution of the said agreement. That apart, the O.P. would have insisted in inserting such a condition in clause 13 of agreement dated 11/03/06 stating that at the time of registration of the conveyance deed the purchaser would be required not only to pay the stamp duty and registration charges but also to produce a clearance or an NOC from the RBI. Further, if such a condition was at all contemplated, the O.P. would have atleast mentioned about the same in their first letter on record, namely, the email dated 16/08/06. We therefore reject the O.Ps story about the complainants being informed through the advertisement about the requirement of NOC from RBI. It appears that it dawned on the O.P. for the first time about such a requirement in their email letter dated 29/08/08, after having given to the complainants a crooked idea, as how to undermine the law, in their letter dated 31/08/06, by conveying to them that they should mention to the Indian embassy that they would be establishing a Company and would be running a bed and breakfast from their propertyetc. It appears that the O.P. is Managing Director was under an impression, like many others, that foreigners could acquire immovable property in case they formed a Company. It is for the first time that the requirement of a NOC from the RBI was conveyed to the complainants by the O.Ps by their email letter dated 29/08/08 followed by email letter dated 17/12/09 by which the O.P. required the complainants to produce their RBI clearance in accordance with the RBI guidelines. Was the O.P. right in demanding the clearance from RBI or was the demand motivated to deny the complainants the bungalow? We will answer this question a little later.
15. Section 6 of the FEMA deals with Capital account transactions and sub section 3, clause (i), inter alia, states that without prejudice to the generality of the provision of sub section (2) the Reserve Bank of India may by Regulations, prohibit, restrict or regulate the acquisition or transfer of immovable property in India, other than a lease not exceeding 5 years, by person resident outside India. We had asked Ms. Rego whether any Regulations were made by the RBI, as contemplated by sub-section(3) but Ms. Rego was unable to throw any light on the subject.
Nevertheless, we have come across the Regulations framed by RBI dated 17/05/2000 which are known as Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations 2000.
15.1. Regulation 3 of the said Regulations deals with acquisition and transfer of property in India by an Indian citizen resident outside India. Regulation 4 deals with acquisition and transfer of property in India by a person of Indian origin. Regulation 5 deals with acquisition of immovable property for carrying on a permitted activity. (At this stage we may note that the O.P. might have had in mind the provision of Regulation 5 when its Managing Director wrote email letter dated 31/08/06 as observed earlier in para 14 hereinabove.) Regulation 7 reads as follows:
7. Prohibition on acquisition or transfer of immovable property in India by citizens of certain countries.
No person being a citizen of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal or Bhutan without prior permission of the Reserve Bank shall acquire or transfer immovable property in India, other than lease, not exceeding five years.
Regulation 8 deals with prohibition on transfer of immovable property in India.
16. We are here not to decide whether the complainants, being British Nationals, would require a NOC from RBI to acquire the Bungalow in view of Section 6(3)(1) of FEMA r/w. the said Regulations but we are certain of one thing that if a sale deed is presented for registration by the complainants, the same would not be registered by the Sub-Registrar and the complainants may have to challenge such a decision of the Sub-Registrar and that may take years. We say so on the basis of letter dated 24/06/11 issued by Central Public Information Officer of RBI stating that a foreigner (a person of non-indian origin residing outside India) cannot acquire immovable property in India, other than on lease not exceeding 5 years, without specific approval from Reserve Bank, as per section 6(3)(i) of FEMA, 1999 and letter dated 11/07/11 by which the Sub-Registrars have been informed by the Under Secretary, (Estt.) Law Department of Government of Goa that as per the instructions issued by the Ministry of Home Affairs, it is mandatory for a person of Foreign National to furnish PIO/OCI card for execution of sale deed. The net result of the said instructions is that a Civil Registrar-cum-Sub-Registrar now will no longer register a sale deed in favour of a Foreign National without a NOC from the RBI and that would apply to the complainants. The O.P. was therefore right, whatever might have been its motive otherwise, in demanding that the complainants produce a clearance or NOC from RBI, first by their letter dated 29/08/2008. So why this change, one may be constrained to ask?
17. May be, we have an explanation. We live in a Society wherein several powerful mafia matka, drugs, real estate, illegal mining, etc operate with free hand, while the Governments look the other way. There was a hue and cry about illegal mining but only after Justice M.B. Shah submitted his report to Parliament that the entire mining activity was suspended, first by the State Government then by the Central Government and then by the Supreme Court. Similarly, there was hue and cry made about purchase of land by foreigners. The Legislative Assembly of the State was informed by the Government in July 2007 that as per the records of the Land Registrar, 562 foreigners from 27 countries had purchased 21.44 lacs sq.mts. of land in Bardez Taluka during the previous three years and during the same period 482 foreigners from 22 countries had purchased 12.44 lacs sq.mts. of land in Salcete Taluka. Most of other Talukas had also witnessed similar sharp rise in number of foreigners buying land in Goa (see article on edit page of Herald dated 12/10/12). We assume that the authorities woke up thereafter and strict instructions came to be issued to the Sub-Registrars in the year 2011. That also explains the silence of the O.P in not demanding any NOC from the RBI from the complainants prior to 2007.
18. We have taken a view in CC No. 06/10 vide order dated 14/6/12 that Compensation in terms of Section 14(1) (d) of Consumer Protection Act, 1986 would include both pecuniary and non pecuniary losses caused to the complainant and his family. Pecuniary losses are those which the victim has actually incurred and which are capable of being calculated in terms of money; whereas non pecuniary losses are those which are incapable of being assessed by arithmetical calculations and the latter would include, inter alia, compensation for inconvenience, hardship, discomfort, etc. 18.1. As regards the expenditure of Rs. 3 lacs incurred by the complainants to purchase the furniture, it was stated by Shri. Kurdikar that the complainants did not suffer any loss on the same as the furniture was taken back by the suppliers.
18.2 Admittedly, inspite of the O.Ps letters dated 29/08/08 as well as letter dated 17/12/09 the complainants did not inform the O.P. that no NOC was required by them to register a sale deed in their favour in respect of the bungalow. It is also not their case that they have applied for such a NOC. In our view mere asking the O.P. to hand over the possession of the bungalow without a sale deed may create more problems to the complainants then solve any. One also does not know how long the RBI would take to issue the NOC in case the same is now applied for by the complainants or whether the same would be issued at all to the complainants or not. In such a situation, in our view, it would be wiser and more prudent to grant to the complainants the alternate relief sought for by them.
18.3. In the case of Mrs. Urmila Uday Kamat vs. M/s. Lodha Estate Pvt. Ltd., (2001)(4) ALL MR (Journal) 14 the complainant had sought refund with interest at the rate of 24% and what was granted by the State Commission was interest at the rate of 15% as reasonable.
18.4. As per clause (9) of the agreement and as reiterated by the O.P. in their letter dated 29/08/06 the complainants are entitled to demand the refund of money paid, with interest at 12% p.a. The O.P. has made use of that money of the complainants and have built the bungalow at their cost. The O.P. will be in a position to sell the same with the passage of almost for 6 years at more than double of its price. As already stated, O.P. had agreed to pay interest at 12% for a period of 2 years i.e from August 2006 to August 2008. We therefore direct the O.P. to refund the sum of Rs. 53,46,120/- with pending and future interest at the rate of 12% from 11/03/06 untill payment.
18.5. The Complainants have claimed Rs. 16.5 lacs towards the expenditure incurred by them to travel to and fro from England and for accommodation. It has been submitted by Ms. Rego that the complainants have not produced any tickets and in that Ms. Rego may be right. The complainants have claimed Rs. 75,000/- for each person for 3 trips for 7 persons, and once for 1 person. In our view, reasonable compensation on that count, could be restricted to Rs. 5.25 lacs i.e Rs. 1.5 lacs for 2 persons i.e for the complainants only excluding other members of the family, for 3 trips, and for one person for one trip.
18.6. The complainants have also claimed a sum of Rs. 5 lacs for mental torture agony, inconvenience and waste of time.
18.7. We have held in Suo Moto Revision No. 04/12 by order dated 15/10/12 relying on Ghaziabad Development Authority vs Balbir Singh (2004 (5) SCC 65) and Alok Tandon vs Scadinavian Airlines Systems (2009 CTJ 85) and other decisions that the liability to pay compensation for mental agony, harassment, emotional suffering, mental discomfort, etc. is by way of additional liability arising from the charge of deficiency of service as defined under section 2(1)(g) of the C.P. Act, 1986.
18.8. Compensation can never be assessed with arithmetical precision and some element of guess work is always inevitable in assessing the same. There are no golden scales to measure it. At the same time one has to be realistic and pragmatic.
Considering the facts of the case, we find that a sum of Rs. 3 lacs would be reasonable compensation under this head, considering that for all these years the complainants have been deprived of their bungalow for which they had paid the price and had to undergo lot of hardships including several trips to Goa. The complainants may not even get a similar bungalow today even if they are willing to pay double of its price.
19. For reasons aforesaid, we allow the complaint in terms of prayer (b) and direct the O.P. to refund to the Complainants Rs. 53,46,120/- with pending and future interest at the rate of 12% per annum from 11/03/06 untill payment, and, to pay to the complainants the said sums of Rs. 4.25 lacs and Rs. 3 lacs within a period of 30 days and in case the same are not paid, the said sums of Rs. 4.25 + 3 lacs shall also carry interest at the rate of 12% untill payment. The O.P. shall also pay to the complainants costs of Rs. 5000/- . The payments shall be made in the name of any one of the complainants by a crossed demand draft in Indian currency. It will be look out of the complainants as to how to deal with the said money whether they would spend it here or repatriate it to their Country. Needless to observe, in case the complainants wish to repatriate the said amount to their Country, they would be bound to follow the law of this land or face the consequences in case there is any breach. Crossed demand draft drawn in the name of either of the complainants shall be deposited before this Commission or shall be handed over to the attorney of the complainants within the said period of 30 days.
[Shri. Jagdish G. Prabhudesai] [Justice Shri N. A. Britto] Member President