State Consumer Disputes Redressal Commission
Smt.Vitthala Usha Rani, D/O.Late ... vs M/S.Vishal Projects ... on 16 February, 2010
FA BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD. C.D.No.69 of 2008 Between: 1. Smt.Vitthala Usha Rani, D/o.late V.Srinivas Rao, Aged about 49 years, Indian, Occ:Advocate, R/o.1-1-385/43, Gandhinagar, Hyderabad. 2. Smt.Vitthala Jayaprada Srinivasa Rao, W/o.late V.Srinivas Rao, Aged about 71 years, Occ:Housewife, R/o.1-1-385/43, Gandhinagar, Hyderabad. ..Complainants. And M/s.Vishal Projects Limited, Plot No.22, Vishal House, Chandragiri Colony, Tirumalagherry, Secunderabad, rep. by its Managing Director, Sri G.Sridhar Rao. ..Opp.party. Counsel for the Complainants:M/s.V.Gourisankara Rao Counsel for the Opposite party: M/s.S.Malla Rao QUORUM: THE HONBLE JUSTICE SRI D.APPA RAO, PRESIDENT. SMT.M.SHREESHA, MEMBER
& SRI K.SATYANAND, MEMBER .
TUESDAY THE SIXTEENTH DAY OF FEBRUARY, TWO THOUSAND TEN (Typed to the dictation of Sri K.Satyanand,Honble Member) *** This is a consumer complaint jointly filed by the purchasers, Smt.Vithala Usha rani and her mother, of two houses from a real estate developer, an incorporated company, represented by its Managing Director, Sri G.Sridhar Rao, seeking a direction to it to complete the construction and hand over the possession of the houses bearing no.B14 and B13 by executing the sale deeds in favour of the complainants respectively, to pay compensation of Rs.5,00,000/- as also costs and consequential reliefs.
The facts of the case as culled out from the complaint are briefly as follows:
The opposite party is the absolute owner and possessor of land on which he intended to construct independent houses and sell them to aspiring allottees. Accordingly on an offer made by the opposite party, the complainant No.1 and 2 purchased two plots bearing Nos. B14 and B13 respectively with houses planned to be built upon them for consideration of Rs.18,75,000/- each. They claimed to have entered into separate sale agreements in terms thereof under which they claimed to have paid Rs.4,00,000/- each of which Rs.1,00,000/- in cash and Rs.3,00,000/- by way of cheque dated 21-2-2006, though the agreements were dated 12-1-2006 ( may be agreements antedated or cheques post dated?). The complainants also claimed to have paid Rs.6,00,000/- each on 21-2-2006. While things stood thus on 11-4-2006, the opposite party requested the complainant No.2 to pay Rs.14, 75,000/- towards the further instalment of the sale consideration for the two plots. On 22-4-2006 the opposite party made a further demand of Rs.1,42,688/-each comprised of 1% vat 4.21% service tax and Rs.45,000/- approximate registration charges. Finally on 14-10-2006, the opposite party requested the complainant No.2 to pay a further amount of Rs.20,55,000/- towards the balance of amount due to him from out of the consideration agreed upon. The complainant no.1 and complainant No.2 claimed to have issued cheques for Rs.10,00,000/- each on 14-11-2006 and delivered the cheques to the opposite party. However, it was their further case that the complainants were due only a further amount of Rs.1,75,000/- which they promised to pay at the time of registration. It seems the opposite party intentionally abstained from encashing the Rs.10,00,000/- cheques with a motive to sell the houses at higher rates in view of the escalation in prices. The complainants claimed to have made entreaties to the opposite party to encash the cheques while offering to pay the balance amount. But the opposite party went on postponing encashment of the cheques on one pretext or the other. To the utter shock and surprise of the complainants they finally received on 28-6-2007 two cheques of Rs.7,00,000/- each in favour of the complainants with a covering letter revoking the contract and returning the money allegedly paid by the complainants. This recession of the contract according to the complainants marks the deficiency in service and they therefore claimed to have issued legal notice which did not evoke any response from the opposite party. In these circumstances they claimed to have resorted to this remedy before this Commission.
The opposite party resisted the claim by filing a counter denying all the material allegations though the basic transaction in question was categorically admitted. It submitted that it received only Rs.4,00,000/- each from the complainants by admitting the facts stated in para 3 of the complaint and that it never received any amount of Rs.6,00,000/- each from them. Likewise it also denied having received any cheques for Rs.10,00,000/- each. It submitted that the complainant themselves ran into arrears and they did not adhere to the payment schedule. Their failure to pay the amounts as agreed in the sale agreements drove it to cancel the agreement and return the money paid by them through cheques. It tried to justify the cancellation of the agreement as the complainants never responded to its letters. It submitted that this commission had no jurisdiction as a joint CC cannot be maintained. Ultimately it submitted that there was no deficiency on its part and therefore prayed to dismiss the complaint.
In support of their case, the complainants filed the affidavit of the first complainant and relied upon documents marked as Exs.A1 to A12.
On the other hand, the opposite party filed the affidavit of the Managing Director and it also relied upon documents marked as Exs.B1 and B2.
Heard both sides. The opposite party filed written arguments also.
The pleadings and the evidence adduced by both sides give raise to the following points for determination?
1) Whether the complainants could successfully show that the cancellation of the agreement by the opposite party is invalid and thereby constitutes deficiency in service?
2) Whether the complainants are entitled to any relief?
3) To what relief?
Before going into the merits germane to this issue, it is necessary to point out that basically this is a consumer dispute in as much as the opposite party happened to be a real estate developer being the land owner as also the builder at the same time. So in the adjudication of matters like this, not only the principles of the Specific Relief Act but also the reliefs specifically contemplated in Section 14 of the C.P.Act have to necessarily guide the adjudication. The provisions of Section 14 lay clear emphasis on granting all such reliefs that would remove the deficiency in service. In the present case the central theme of the case is deficiency in service and it hinges upon the enforcement of the contract against the back drop of the protection of the consumer rights. So it is well within the competence of all the adjudicatory machineries contemplated under the Consumer Protection Act, 1986 to grant all the relief without being fettered by the restrictions which are peculiar to the specific performance remedy in the domain of the civil courts jurisdiction. Here the deficiency of service attributed to the opposite party as alleged in the complaint rests very much on the failure on the part of the opposite party to complete the construction and hand over the possession of the houses in question by executing the sale deeds in favour of the complainants apart from other consequential injuries stated to have been inflicted upon the complainants by germinating the associated mental agony actuated by the indifference of the property developer by not adhering to the promises that were made by way of the agreement which include the ultimate execution of the sale deeds associated with delivery of possession as also the complete fulfillment of the construction obligations undertaken by virtue of the presents of the agreements.
The chief defense urged by the opposite party as could be seen from the counter or written version is that the opposite party cancelled the agreement and refunded the amount as the complainants failed to pay the amount as per the agreed schedule of payment. In consumer jurisprudence, the unilateral cancellation of agreement by a real estate developer in favour of the aspirant that seeks to purchase a house cannot be readily accorded judicial recognition by the adjudicatory machinery. The State Commission cannot oblige to uphold such cancellation and simply give some alternative relief to the promisee under the agreement like refund of the money and damages etc., The reason is the cancellation of agreement prima-facie answers the description of deficiency in service especially when it is evaluated in the adjudication of rights between a consumer and a service provider and the adjudicatory bodies under Consumer Protection Act, 1986 are conceived precisely to administer remedies for deficiencies in service among other infractions of consumer rights This intendment is very much explicit in the way the relief are cast U/s.14 of the C.P.Act, which reads as follows:
14. Finding of the District Forum.
(1) If, after the proceeding conducted under section 13, the District Forum is satisfied that the goods complained against suffer from any of the defects specified in the complaint or that any of the allegations contained in the complaint about the services are proved, it shall issue an order to the opposite party directing him to do one or more of the following things, namely:
(a) to remove the defect pointed out by the appropriate laboratory from the goods in question;
(b) to replace the goods with new goods of similar description which shall be free from any defect;
(c) to return to the complainant the price, or, as the case may be, the charges paid by the complainant;
(d) to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party.
Provided that the District Forum shall have the power to grant punitive damages in such circumstances as it deems fit;
(e) to remove the defects in goods or deficiencies in the services in question;
(f) to discontinue the unfair trade practice or the restrictive trade practice or not to repeat it;
(g) not to offer the hazardous goods for sale;
(h) to withdraw the hazardous goods from being offered for sale;
(ha)to cease manufacture of hazardous goods and to desist from offering services which are hazardous in nature;
(hb)to pay such sum as may be determined by it if it is of the opinion that loss or injury has been suffered by a large number of consumers who are not identifiable conveniently:
Provided that the minimum amount of sum so payable shall not be less than five per cent. of the value of such defective goods sold or service provided, as the case may be, to such consumers:
Provided further that the amount so obtained shall be credited in favour of such person and utilized in such manner as may be prescribed;
(hc)to issue corrective advertisement to neutralize the effect of misleading advertisement at the cost of the opposite party responsible for issuing such misleading advertisement;
(i) to provide for adequate costs to parties.
(2) Every proceeding referred to in sub-section (1) shall be conducted by the President of the District Forum and at least one member thereof sitting together:
Provided that where a member, for any reason, is unable to conduct a proceeding till it is completed, the President and the other member shall continue the proceeding from the stage at which it was last heard by the previous member.
(2A) Every order made by the District Forum under sub-section (1) shall be signed by its President and the member or members who conducted the proceeding:
Provided that where the proceeding is conducted by the President and one member and they differ on any point or points, they shall state the point or points on which they differ and refer the same to the other member for hearing on such point or points and the opinion of the majority shall be the order of the District Forum.
(3) Subject to the foregoing provisions, the procedure relating to the conduct of the meetings of the District Forum, its sittings and other matters shall be such as may be prescribed by the State Government.
Section 14 of Consumer Protection Act, 1986, is applicable to the State Commission also under Section 18, however, with necessary modifications. Section 18 reads as under:
18. Procedure applicable to State Commissions: (The provisions of Sections 12, 13 and 14 and the rules made thereunder) for the disposal of complaints by the District Forum shall, with such modifications as may be necessary, be applicable to the disposal of disputes by the State Commission.
Thus, in this context the cancellation of agreement pleaded by the opposite party calls for a closer scrutiny. In this process, we have to see the payment schedule and the performance schedule that govern the parties as culled out from the agreement of sale.
The payment schedule is found as term No.3 of the agreement at page 3 which reads as follows:
The second party shall pay the balance sale consideration of Rs.14,75,000/- (Rupees Fourteen lakhs Seventy five thousand only) to the first party in the manner indicated below:
a) a sum of Rs.7,37,500/- (Rupees Seven lakhs Thirty Seven thousand Five hundred only) shall be paid within 15 days from the date of this agreement.
b) a sum of Rs.5,90,000/- (Rupees Five lakhs Ninty thousand only) shall be paid before completion of slab work of the said house.
c) a sum of Rs.1,47,500/- (Rupees One lakh Forty Seven thousand five hundred only) shall be paid before completion of brick work of the said house.
Then coming to the obligations, the bulk of the obligations the very same agreement imposes upon the opposite party are found in para 5 and 6. It is not in dispute that the total sale consideration for each plot is fixed at Rs.18,75,000/-. Even according to the agreements, Exs.A1 and A2, each complainant paid an amount of Rs.1,00,000/- in cash and Rs.3,00,000/- in cheque dated 21-2-2006. The receipt of these amounts is incorporated in the agreements dated 12-1-2006. Neither of the parties contradicted the truth of these agreements though there is a slight discrepancy in the date of agreement and date of payment referred therein. Obviously the date of agreement might have been antedated and there is absolutely no difficulty to hold that Exs.A1 and A2 bear testimony to the fact that each of the complainants paid Rs.4,00,000/- to the opposite party at the inception of the deal. The complainants, however, claimed that they paid Rs.6,00,000/- each to the opposite party on 21-2-2006 but there is absolutely no proof tendered by them.
Nevertheless there is proof that they so paid Rs.6,00,000/- though not on 21-1-2006 but some where before Ex.A6 dated 14-10-2006. This is established as the opposite party demanded an amount of Rs.20,55,000/- as amount due from the complainants put together as on 14-10-2006. They could not have demanded Rs.20,55,0000/- as on 14-10-2006 if they had not received Rs.10,00,000/- each from the complainants i.e. Rs.20,00,000/- in all before 14-10-2006. This finding can be better explained by going into the total amount the complainants were supposed to pay to the opposite party by way of consideration for the two houses. The total sale consideration for each house is Rs.18,75,000/- that means, for both the houses put together the amount they were expected to pay was Rs.37,50,000/- as per the agreements dated 12-1-2006 (Exs.A1 and A2). Subsequently by letter dated 14-10-2006 per Ex.A6, written by no other than the opposite party itself, the amount outstanding due to the opposite party was Rs.20,55,000/-. This amount appears to have been comprised of the balance sale consideration of Rs.17,50,000/- plus the amounts set out in Ex.A5 again written by the opposite party itself detailing an amount of Rs.18,750/- towards VAT at the rate of 1% on the sale consideration, Rs.78,938/- towards service tax at the rate of 4.21% and Rs.45,000/- towards registration amount payable by each complainant. The amounts mentioned in Ex.A5 if multiplied by two and added to the total balance of sale consideration payable by the complainants together quantified at Rs.17,50,000/-, the whole amount due to the opposite party would be nearly as much as they demanded from the complainants under Ex.A6 though strictly speaking it would be Rs.20,34,876/-.
Thus this demand implicitly acknowledged the receipt of a total amount of Rs.20,00,000/- from the complainants in the course of the compliance with the terms of the agreement. At this juncture, it has to be at once pointed out that the opposite party developer, which is under an obligation to execute the sale deed if every thing goes on well cannot collect the registration charges in advance. The law never permits such kind of the seller arrogating to himself the duty of collecting registration fees as after all the registration fees can be collected validly only by the Registrar at the time of registration. If the demand for payment of registration charge is deleted, the total amount due to the opposite party from the complainants would be Rs.19,44,876/- only.
It is evident from the agreement terms extracted in the foregoing discussion that the payment schedule is not punctuated by any dates. On the other hand, it speaks of the payments being made from time to time pegged to the stages of progress in the construction work. The opposite party did not make any such kind of demands synchronized with the stage of construction of which it never appraised the complainants. It is also abundantly clear from the record that the opposite party never adhered to the schedule of performance or construction. So when the opposite party was patently guilty of lapses, as notifying the progress in the construction, it can hardly justify its unilateral cancellation. As already pointed out the cancellation of agreement is not an easy job as the agreements entered into between the availer of service and the provider of service are shielded by a further safe guard in the realm of consumer jurisprudence. In any view of the matter, the cancellation of the agreement pleaded by the opposite party is utterly untenable and such step on its part itself signifies any amount of deficiency in service.
Yet even the complainants cannot be exonerated of the reciprocal obligations they owe to the opposite party. In these circumstances, we do not have any hesitation to hold that the complainants could prove that the opposite party was guilty of deficiency in service.. However, the casting of the proper relief in the circumstances of the case will be presently dealt with under the next point. It is clear from the above discussion that the complainants owe an amount of Rs.9,72,438/- each to the opposite party and the opposite party is under an obligation to execute the sale deed in favour of the complainants, put them in possession of the property agreed to be sold after completing the construction. Any relief that would be granted should take care of all the above aspects evenly holding the scales of justice. Thus even while handing down a finding as to the deficiency of service on the part of the opposite party, the following order is passed taking into account the reciprocal obligations resting upon both sides.
Accordingly the complaint is allowed:
i) Directing the complainants to pay to the opposite party Rs.9,72,438/-
each within four months of this order
ii) Directing the opposite party to execute a sale deed in favour of each of the complainant in respect of the property covered by each of the agreements i.e. Exs.A1 and A2 on the complainants making the payment of registration fee before the appropriate authorities within two weeks after the completed payment by the complainants as per clause 1.
iii) Directing the opposite party to simultaneously complete the construction in the meanwhile and make the houses ready for occupation by the complainants even by the date of execution of the sale deed as per the schedule fixed as above and hand over possession of the subject houses to the complainants on the eve of execution and registration of sale deeds and
iv) Each party shall bear their own costs.
Sd/-PRESIDENT.
Sd/-MEMBER.
Sd/-MEMBER.
Dt. 16-2-2010 //APPENDIX OF EVIDENCE// Witnesses examined for Complainant Opposite parties Affidavit of complainant filed.
Exhibits marked on behalf of the complainant: