State Consumer Disputes Redressal Commission
Sivaranganadane S/O Sadasivam vs Bank Of India And Three Others on 20 February, 2023
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BEFORE THE STATE CONSUMER DISPUTES REDRESSAL
COMMISSION AT PUDUCHERRY
Dated this the 20th day of February 2023
Consumer Complaint No.10/2015
1. Sivaranganadane,
S/o.Late.Sadasivam,
Hindu, aged about 40 years
2. Sivagamasundari,
W/o.Sivaranganathan,
Hindu, aged about 34 years
Both are residing at No.99, 5th Cross,
Annai Nagar, Lawspet, Puducherry-605 008. ... Complainants
Vs
1. Bank of India,
Main Branch Pondicherry,
Rep. by its Branch Manager,
Having office at No.110, J.N.Street,
First Floor, Raja Complex,
Pondicherry-605 001.
2. Bank of India,
Asset Recovery Department,
Rep. by its Zonal Manager,
Having office at No.17/31,
II Floor, Star House, Errabalu Street,
Chennai-600 001.
3. G.Purushothaman,
S/o.Govindarajalou,
Hindu, aged about 69 years
No.876, Vijayalakshmi Nagar,
Koothapakkam, Cuddalore.
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4. Sukumaran,
Manager,
Bank of India, Kathirkamam Branch,
Pondicherry. .. Opposite Parties
BEFORE:
HON'BLE THIRU JUSTICE R. PONGIAPPAN
PRESIDENT
DR.S.SUNDARAVADIVELU,
MEMBER
TMT.S. OUMASANGUERY,
MEMBER
FOR THE COMPLAINANT
Tvl.J.Cyril Mathias Vincent, and M.Anuradha, Advocates
FOR THE OPPOSITE PARTIES 1,2 and 4:
Tvl.J.Marie Anna Dayavady, K.Sri Iyyappan
O R D E R
(By Dr,.S.Sundaravadivelu, Member) This complaint has been filed by the complainants as against the Opposite parties seeking the following reliefs:
(1) To award a sum of Rs.25,00,000/- (Rupees twenty five lakhs only) as compensation for the delay, negligence and deficiency in service resulting in 3 the loss of apartment with interest at 18% p.a. from the date of sanction of loan (10.12.2010) till the date of realisation.
(2) To award a sum of Rs.25,00,000/- (Rupees twenty five lakhs only) as compensation for involving the complainants in ruinous litigation with interest at the rate of 18% p.a. from the date of plaint (January 2012) in O.S.No.08/2012 pending on the file of III Additional District Judge, Puducherry and the date of application (December 2013) in O.A.No.202/2013 (Renumbered as O.A.No.826/2014) foisted before the Debt Recovery Tribunal III, Chennai under the Recovery of Debts due to Bank and Financial Institutions Act, 1993 till the date of realisation. (3) To award a sum of Rs.25,00,000/- (Rupees twenty five lakhs only) as compensation for declaring the loan account of the complainant as NPA without application of mind and failing to act fairly with interest at the rate of 18% p.a. from the date of declaring the loan account of the complainant as NPA (31.12.2011) till the date of realisation.
(4) To direct the opposite parties to return and refund a sum of Rs.10,00,000/-
(Rupees ten lakhs only) paid by the complainants towards the purchase of the undivided share in the land, and apartment, morefully described in the 'A' and 'B' schedule properties with interest at the rate of 18% p.a. from the date of payment (02.11.2010) till the date of realisation. 4 (5) To direct the opposite parties to return and refund the instalment payments collected from the complainants from February 2011 till August 2011 with interest at the rate of 18% p.a. till the date of realisation. (6) To award a sum of Rs.5,00,000/- (Rupees five lakhs only) as costs Gist of the complaint is as follows:
2. Shri.Sivaranganadane complainant no.1 working as a Head constable in India Reserve Police Battalion, Puducherry and his wife Tmt.Sivagamasundari came to know of the Opposite party No.3, herein after called the Builder through their friend and approached him for the purchase of flats in the project called as Sea View Apartments being promoted by the Opposite party no.3, by availing loan from the opposite party no.1 bank. The Opposite party no.3 was constructing the apartments consisting of 9 flats and he had availed loan for this purpose from the first opposite party. As security for the loan, the land where the apartments were being built was mortgaged to the bank/opposite party no.1. A memorandum of agreement was signed between the complainants and the builder on 09.12.2010 for the purchase of 2 flats identified as Flat No F-3 and F-4 in second floor of the project with an extent of 1700 square feet at a total cost of Rs 30,00,000/-, Exhibit No.3. As per the agreement, the construction was to be completed in 3 months time from the date of agreement and flats should be handed over within 1 month thereafter. The complainants were introduced to the opposite party no.1-bank by 5 the builder for availing housing loan and as later as per the request of the complainant, Rs.15,00,000/- was sanctioned as housing loan and the loan was to be repaid in 180 EMI at the rate of Rs.15,900/-. Opposite party no1 issued NOC dated nil based on which on 10.12.2010 a sale deed was registered by the Opposite party no.3 builder in favour of the complainant conveying 2/9th undivided share of the land - an extent of 496.66 sq ft for a consideration of Rs.3,50,000/-. The first opposite party bank adjusted the entire housing loan advance to the account of the third opposite party builder. The complainants were making repayment of the loan as per schedule and occupied the flats in September 2011. While so on 01.10.2011, he was summoned by the Superintendent of Police North and asked to vacate the flat which is in the occupation of the complainants. In this regard a case has been registered in First Information Report in Cr.No 265 /2011 Muthialpet Police Station upon the complaint given one Richa Bairoliya alleging that she has purchased the apartment and later the first complainant has trespassed into the apartment. Smt.Richa Bairoliya had also filed a suit in O.S No.8/2012 on the file of III Additional District Judge Court, Puducherry through which she is claiming ownership of the flats. In the meantime, the Opposite party bank has filed a case in the DRT, Chennai for recovery of the loan amounts due in O.A No.202/2013 renumbered as O.A.No.826/2014 and has also proceeded under the SARFAESI Act. In the said circumstances, alleging unfair trade practice and deficiency in 6 service rendered by them, this complaint has been filed as against the opposite parties.
3. The first opposite party filed reply version which was adopted by the Opposite parties 2 and 4. Opposite party 3/builder didn't file any reply and therefore he was set ex- parte.
4. In the reply version, the Opposite party no.1 denied the allegations made by the complainants and set out his defence as follows.
It is true that Thiru. G.Purushothaman, third Opposite party as owner of the land was promoting a scheme to construct and sell residential apartment in the land and was given financial assistance by the bank for construction of apartment. In September 2009, after completion of all legal formalities, a working capital term loan was provided for construction of 9 flats. The property was mortgaged as security. The third opposite party/builder introduced the complainants to the first opposite party for providing loan for the residential apartment to be bought by them. The complainants entered into a sale agreement for the purchase of undivided share of land in the mortgaged property. Since the entire property was already under mortgage with the first Opposite party bank ,on subsequent mortgaging of the undivided share of land to be purchased by the complainants, a housing loan of Rs 15,00,000/- was agreed to be sanctioned to the complainants for the purchase of apartments F3 and F4.A no- objection letter dated nil was 7 issued based on which a sale deed was registered in favour of the first complainant on 10.12.2010 for an undivided share in the land by the builder. The loan was sanctioned on 10.12.2010 as per bank's rules and taking into account the fulfilment of the eligibility norms by the complainants. The loan was to be repaid in 180 months commencing from February 2011 and EMI for repayment was Rs 15,900.Equitable mortgage of apartments was created by Memorandum of Oral Assent executed by the borrowers ie the complainants herein. The financing to the builder and subsequently to the complainants was done in good faith as per guidelines related to housing loan. On non repayment of loan by the complainant, the Debts Recovery Tribunal was approached in December 2013. In the meantime, one Richa Bairoliya had filed a criminal complaint and also filed a civil suit in District Court , Puducherry against the first complainant seeking possession of the flats.
5. In order to prove the case, on the side of the complainants, the first complainant examined himself as CW1 and marked documents C 1to C 40. On the Opposite parties' side, two witnesses were examined as RW.1 and RW.2 and Exs.R1 to R4 marked.
6. After considering the pleadings set out on either side, the following issues were framed for settling the disputes.
1. Whether the complainant is a consumer as per the CP Act.1986? 8
2. Whether the complaint is barred by limitation?
3. Whether the opposite parties have rendered deficient service? and if so,
4. Whether the Complainant is eligible for any compensation for the deficiency in service?
5. To what other relief?
7. Oral arguments were made . Written submissions were made by both sides.
In the written arguments the counsel for the complainant reiterated the complaint and stated that the Opposite party no.1 has financed working capital term loan to promote and construct residential apartments. Even though Opposite party no.3 had mortgaged the land, the loan documents were not produced before this commission. No proof was produced to substantiate the claim of verification and scrutiny of title and encumbrance certificate for the property. The above documents were not produced because Opposite parties 1,2 and 4 had prior knowledge that Opposite party no.3/builder had already illegally sold the undivided share and apartments allotted to the complainants to one Harshad Patel on 24.8.2010 but suppressing such fact mortgage was created. Exhibit R3 dated 13.9.2011 and the fact that NOC was issued without date shows this. Even the encumbrance certificate obtained after giving loan to the complainants has not 9 been filed. Hence adverse inference is to be drawn against the Opposite parties for not producing the crucial relevant documents.
8. The complainants became debtors for a property they have lost and declared as defaulters and almost lost their jobs. There was no due diligence in the verification and scrutiny of title and encumbrance by the Opposite party 1,2 and 4. SARFAESI proceedings were initiated inspite of the letter of Opposite party no.3/builder wherein he claims to have committed a mistake. Opposite party 1 and 2 knowing very well that the flats in question were already sold to Smt.Richa Bairoliya.
9. In the written submission of Opposite parties, they stated that the complaint has been filed only on 29th April 2015 that is after one year and 7 months since the complainants came to know of the alleged fraud in September 2011 and hence complaint should have been filed in September 2013 itself. No evidence has been produced to prove the allegation of collusion between Opposite parties 1,3 and 4. As per R3, the bank was not at all having any knowledge about the promoters and about the sale agreement executed to sell F3 and F4 to the complainants. The complainants have not verified the title of the promoter in respect of flat F-3 and F- 4 by taking an encumbrance certificate for the property owned by the builder. Had they taken the encumbrance certificate before purchasing the undivided share from the builder, they could have come to know the fact that the builder has 10 already sold the undivided share along with flat numbers F -3 and F -4 to one Harshad on 24.08.2010 itself and the complainants deferred from purchasing the said property. It is the complainants who have not exercised due diligence before entering into construction agreement with the promoter and hence are barred by the doctrine of Caveat emptor and they cannot attribute any negligence on Opposite parties 1,2 and 4. The bank had no knowledge about the fraud committed by the builder namely Opposite party no.3/builder sale of flats to Harshad.
The first complainant admitted that the sale deed dated 10. 12. 2010 does not reveal which flat was being purchased by the complainant. At the time of granting loan by the bank ,the flats F3 and F4 in the second floor were not existing and he has created mortgage in favour of the bank only over 2/ 9th undivided share and the banks claim is limited only to the 2/9th undivided share. The III Additional District judge has categorically given a finding that the 2/9th undivided share purchased by the first complainant is different from the 2/9th undivided share purchased by one Harshad to whom the builder sold the flats F3 and F4 at an earlier date. The findings of the district court have not been challenged.
10. The bank has taken steps to recover the loan in accordance with the provisions of SARFAESI Act. The complainants have not chosen to file any counter before the DRT to substantiate their allegation that they were misled and cheated by the bank in connivance with the builder. The DRT found that the 11 complainants herein defaulted in repayment of the loan availed from the bank and the bank has proceeded to recover the loan from the complainants in accordance with the provisions of SARFAESI Act. The findings of the Debts Recovery Tribunal have not been challenged by the complainants. The bank is not a party to the sale deed and agreement entered by the complainants with the promoter ie Opposite party no.3 and hence no liability can be fixed on the part of the bank. Since Harshad has not applied for No Objection Certificate from the bank to purchase the undivided share from the promoter and since he has not availed any loan for construction of flats F3 and F4 from the bank, the Opposite parties 1 and 4 are not having any knowledge about the sale of the flats to Harshad. It is the promoter Opposite party no.3 who played fraud on the complainants by taking advantage of the negligence of the complainants to verify his title over the property agreed to be sold to him. There is no deficiency in service on the part of the bank.
11. We have given careful consideration to the documents on record and the pleadings made.
Issue No.1.
Whether the complainant is a consumer as per the CP Act.1986?
12. As per Section 2 d (ii) of Consumer Protection Act 1986 Consumer means any person who hires or avails of any services for a consideration which has been paid or promised. Section 2(1)(o)defines service as service of any description made 12 available to potential users including the provision of facilities in connection with banking, financing, transport, housing etc. It is evident that the complainants herein have made sale deed with the Opposite party 3 for the purchase of 2/9th undivided share of land on payment of Rs.3,50,000/- as consideration and agreement for the purchase of flats for a consideration of Rs.30,00,000/-. They have availed loan of Rs.15,00,000/- for the purchase of flats from the Opposite parties no.1,2 and 4. By availing loan from the Bank, they have availed the services of the bank. Complainant no.1 is working in Government of Puducherry as a head constable and complainant no.2, wife of complainant no.1 is a Ph.D scholar. They are not traders in buying and selling houses and flat purchase was not done for commercial purpose. Therefore this Commission has no hesitation in holding that the complainants are consumers under the Consumer Protection Act. Issue No. 2.
Whether the complaint is barred by limitation?
13. It is the contention of the Opposite parties that the complainants acquired knowledge about the alleged fraud in September 2011 itself and consequently the complaint ought to have been filed in September 2013 itself. Since the complaint has been filed only on 29.4.2015 i.e after expiry of one year and seven months, the complaint is barred by limitation and liable to be dismissed in limine. As per Consumer Protection Act Section 24-A, the complaint shall not be admitted unless 13 it is filed within two years from the date on which the cause of action has arisen. It is seen from exhibit C 37 that the complainant 1 has issued a legal notice to the op Bank which is dated 30.04.2013 for which the Opposite Party Bank has given reply vide its letter dated 13.06.2013 Exhibit R 2. The Opposite Party Bank has filed application on 6.12.2013 before the Debt Recovery Tribunal III, Chennai for recovery of Rs.17,75 ,264 from the complainants which was decided by the Debt Recovery Tribunal III on 28.08.20. A suit was filed against the complainant 1 as defendant 1 by Smt.Richa Bairoliya in the court of the III Additional District Judge, Puducherry in O.S.8/12 which was taken on file on 06/03/2014 and decided on 29.07.2016. In this occasion, the present complaint was filed before this Commission on 29.04.2015 before the expiry of two years from the date of respective orders from Debt Recovery Tribunal as well as by III Additional District Judge, also he issued notice only on 30.04.2013. Therefore the commission is of the view that the complaint has been filed within time and not barred by limitation and this issue is decided accordingly.
Issue Nos.3 to 5.
Whether the opposite parties have rendered deficient service and if so, Whether the Complainant is eligible for any compensation for the deficiency in service?
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14. The expression deficiency of services is defined in Section 2 (1) (g) of the CP Act 1986 as:
(g) "deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.
15. Let us analyze whether the opposite parties have rendered any deficiency in service. The service rendered by the builder/Opposite party no.3 Thiru.G.Purushothaman may be taken up in the first instance for analysis. The complainants have marked Exhibit C1 which is a Sale Agreement between the first complainant and the third Opposite party/Builder dated 2.11.2010. As per this agreement a portion of the second floor of the apartment complex being built by the third opposite party measuring an extent of 1700 square feet is to be sold to the complainant for a consideration of Rupees 25 Lakhs. As per sale deed dated 10.12.2010 an undivided share of 496 sq.feet in the plot of 2235 sq.ft .in T.S number 220 in block number 15 of ward A of Pondicherry revenue village was sold to the complainant 1 by the op 3 for a consideration of Rs 3,50,000(Exhibit C4).The complainant and Op 3 entered into a Memorandum of Agreement on 09.12.2010 for the construction of two flats bearing numbers F3 and F4 total extent 1700 sq ft -in the second floor of the four storeyed residential apartments to 15 be constructed in the said larger plot of 2235 sq.ft for a consideration of Rs.30,00,000 including the cost of the undivided share of land. ( Exhibit C3). As per this exhibit Rs.10,00,000 was paid by cash by the complainant to the op3 and Rs.15,00,000 was to be paid by way of bank loan and Rs5,00,000 after completion of construction. The construction was to be completed within a period of 3 months from the date of agreement and handed over within one month thereafter .
16. In Arifur Rahman Khan Vs DLF Southern Homes Pvt Ltd, the authority submitted by the complainant, Hon'ble Supreme Court held that "24 A failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within a contractually stipulated period amounts to a deficiency. There is a fault, shortcoming or inadequacy in the nature and manner of performance which has been undertaken to be performed in pursuance of the contract in relation to the service. The expression service in Section 2 (1) (o) means a service of any description which is made available to potential users including the provision of facilities in connection with (among other things) housing construction. Under Section 14(1)(e), the jurisdiction of the consumer forum extends to directing the opposite party inter alia to remove the deficiency in the service in question. Intrinsic to the jurisdiction which has been conferred to direct the removal of a deficiency in service is the provision of compensation as a measure of restitution to a flat buyer for the delay which has been occasioned by the developer beyond the period within which possession was to be handed over to the purchaser. Flat purchasers suffer agony and harassment, as a result of the default of the developer. Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These 16 legitimate expectations are belied when the developer as in the present case is guilty of a delay of years in the fulfilment of a contractual obligation"
17. A perusal of the construction agreement between the complainant 1 and op3 Exhibit C3 dated 9.12.2010 reveals that construction of the flats F3 and F4 is to be completed in the second floor of the four storied residential apartment within three months from the date of agreement i.e by 8.02.2011.The flats should have been handed over by 8.03.2011.The flats have not been handed over till date. Applying the principles laid down by the Hon'ble Supreme Court in the case cited supra mere delay in handing over of flats amounts to deficiency in service by the builder. In the case on hand, not only there was delay in handing over possession. In this case the complainants have been subjected to criminal proceedings, suspension from service, suit for title in civil court, recovery proceedings in DRT etc. When the complainant occupied the flats on 05.09.2011 after getting keys from the Opposite party no.3 he was called to the office of his superior S.P North and ordered to vacate the house since one Richa Bairoliya had lodged a complaint stating that she has purchased the apartment and the complainants had trespassed into the apartment. She filed a complaint in crime number 265/2011 in Muthialpet police station. She filed suit in III Additional District judge in OSNo.8/2012 claiming title for the apartment. Addl.District judge in his award has decreed that the property belongs to Smt Richa Bairoliya and not to the complainant. The Opposite party 17 Bank had initiated proceedings under the Sarfaesi Act for recovery of the loan amount as the complainant has defaulted in the repayment of the loan. The Debts Recovery Tribunal had passed the order on 28.08.2020 ordering for the issue of recovery certificate for rupees 17,75,264/- with future interest @ 8% on the above amount which remains unpaid from the date of this application from the complainants
18. The Opposite party no.3 himself has admitted that the flats were sold already to Shri.Harshad and undertakes to repay the loan taken by the complainants. Exhibit R3.Thus it is very obvious that the Opposite party 3 has failed miserably to fulfil the obligations under the Memorandum of agreement dated 09.12.2010 constituting deficiency of service and liable to pay compensation to the complainants. Hence it is directed that Opposite party 3 shall refund the amount of Rs.3,50,000/- received from the complainants towards the sale of undivided share of land and Rs.10,00,000/- towards the purchase of the flats F3 and F4 and the loan amount due to the Opposite party bank of Rs .17,75,264/- with 8% future interest as decreed by the DRT in its order dated 28.10.2020. The Opposite party 3 shall also pay a compensation of Rs.50,000/- for the deficiency in service caused
19. The question of whether there is any negligence and deficiency of service on the part of Opposite parties 1,2 and 4 is taken up now.18
20. Thiru Siva Ranganathan the complainant no.1 as applicant and his wife Tmt.Sivagamasundari complainant no.2 as co applicant applied to the Bank of India, Puducherry branch for availing housing loan under the Star Home loan scheme. The loan application was scrutinized and approved for sanction of Term loan of rupees 15 lakhs. Relevant comments of the manager in the loan application form Exhibit C15 is reproduced below.
"The proposed flat's construction is nearly over and final touch up is remaining and shall be made available within two months. The builder Mr.G.Purushothaman is our existing customer."
"Our panel advocate has opined that the property is free from all encumbrances and that the vendor Mr. Purushothaman has a valid and clear title over the property."
"Sanctioned a term loan of Rs.15.00 lacs under Star Housing Loan scheme. Shall be repaid in 180 EMI of Rs 15,900/- commencing from Feb 2011."
21. In Ex.R2 which is the reply given by the Bank of India Senior Manager Law to the notice given by the counsel for the complainant, it has been stated as follows "During the year 2010 your client/our customer Sri.Sivaranganathan approached our Pondicherry branch seeking housing loan for purchase of residential flat promoted by M/s.G.P builders in the above said property which was sanctioned after observing required due diligence". It is clear that the housing 19 loan was given to the complainants after satisfying themselves that the property is free from all encumbrances after due technical verification process by their panel advocate and the complainants fulfill the eligibility criteria of the bank for availing housing loan.
22. This is what the Opposite party no. 1 and Opposite party no.4 who was the credit manager at the relevant period said in their depositions regarding the loan process to the complainants "As such in September 2009, after clearance of all legal formalities the first opposite party has financed a Working Capital Term loan to the third opposite party who was the original owner of the property to promote and construct residential apartments totally consisting of 9 flats. "The complainants were introduced to the first opposite party by the third opposite party for providing a housing loan for the residential apartment to be purchased by them. As the entire property was already under mortgage with the first opposite party, on subsequent mortgage of the undivided share of land to be purchased by the complainants, the first opposite party agreed to sanction a housing loan of Rs.15,00,000 to the complainants".
23. They further talk about the procedure for sale of land which is already mortgaged to the bank.
"I further submit that it is true that the first opposite party issued a No Objection letter ,dated 09.12.2010 and based on which the sale dated 10.12.2010 was 20 registered in favour of the first complainant for an undivided share in the land. Further I submit that when the builder i.e the third opposite party/Builder, commenced booking of the flats ,as required by the rules in force, he obtained No Objection Certificate for the respective flats for which he could get a suitable buyer." In R2 which is the reply given by the op bank Senior Manager Law to the notice given by the counsel for the complainant, it has been stated as follows "We state that the entire property at door number 6 Neithal street, Solai Nagar Pondicherry is mortgaged in favour of our Pondicherry branch as security for the credit limits availed by M/s G.P builders represented by its proprietor Shri.G.Purushothaman."
"As stated above , the entire property is mortgaged in favour of our bank and alienation of any part of the said property is not valid and will be subject to the mortgage rights of our bank unless specific No Objection Certificate in the prescribed manner was issued by our bank for alienation of the property. In the subject case, our bank has issued No Objection Certificate to M/s.GP builders for alienation of the part of the property to your client and the said part of the property has been again mortgaged to our bank for the credit limits availed by your client."
It is seen from Exhibit that the property was mortgaged to the op bank from 07.09.2009.
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24. From the above it is evident that the entire larger property of 2235 sq.ft on which the apartment complex was being constructed was under mortgage with the op bank from 07.09.2009 and No Objection Certificate from the op bank is to be obtained if part undivided share is to be sold to the flat buyers. If the mortgaged property is alienated without getting No Objection Certificate, the transaction will be invalid. When such mechanism/due process is in place how the alienation of a part of the mortgaged property could happen to Shri.Harshad Patel by the Opposite party no.3/builder is to be examined. In his letter dated 01.11.2011,Exhibit C 12 ,the Chief Manager of Bank of India, Puducherry branch addressed to the complainant 1 confirms that No Objection Certificate was not given in respect of the Flats F3 and F4 to any other person. Opposite no.4 in his cross examination has stated that two NOCs were given one to Mr K.G.Saroop Kumar and other to the complainant herein. Whereas the fact remains that Flat F3 and F4 with undivided share of land of 496.66sq.ft was sold by the op 3 to Shri.Harshad Patel who in turn sold them to Ms.Richa Baroliya. Further a perusal of Encumbrance certificate issued by the Sub Registrar, Puducherry dated Exhibit reveals the sale of parts of mortgaged land on 9 other occasions. This means 9 transactions have happened without getting NOC from the op bank.
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25. The No Objection Certificate issued to the complainant for registration of his share of the undivided share of land was perused(Exhibit C9).The relevant portions are reproduced below for ease of reference "Sub: No Objection in release of Mortgage Doc.No.3222/2007 The Property under T.S.No .220,R.S.No.55/1,CAD No.623/1 Patta No.1880 to the extent of 2235 sq.ft belonging to Mr.G.Purushothaman is mortgaged to us.In this Mr.G.Purushothaman wants to sell a part of UDS of 496.66 Sq.ft and also 1700 sq.ft of Flat No.F3 & F4 in Second Floor.
We have no objection to release the above said part ie UDS of 496.66 Sq.ft and also 1700 sq.ft of Flat No.F3 &F4 in Second Floor."
26. This No Objection Certificate was addressed by the Chief Manager of Bank Of India Puducherry branch to The Registrar of Assurance, Pondicherry. The letter is neither dated nor numbered. The person to whom the builder wants to sell the UDS and flats is also not mentioned. Probably the issue of such No Objection Certificate without the basic essential particulars may have enabled the alienation of the mortgaged property. The argument of the opposite parties relying on the doctrine 'Caveat Emptor' that if the complainants had taken Encumbrance certificate before the purchase of the undivided share they could have come across the fact that the undivided share and the flats F3 and F4 have already been sold is not acceptable since the complainant was led to believe that the project is 23 financially supported by the bank by lending loan and the entire property is under mortgage with the bank and as the legal verification of the property has been done by the bank, the title would be clear. In fact the panel advocate certified as much. This may be the reason why the op bank did not insist on Encumbrance certificate for the property from the complainants/ buyers as is done normally and the complainant also did not feel the necessity to see the Encumbrance Certificate.
27. As the entire property of 2235 sq.ft was under mortgage with the opposite party, it is the duty of the opposite party as Mortgagee to manage the property as a person of ordinary prudence would manage if it were his own
28. Thus it is clearly established that the Opposite party nos.1,2 and 4 have failed to perform their statutory duty of safeguarding the mortgaged property of 2235sq.ft ,in particular the undivided share for which loan was given to the complainants and the Flats F3 and F4. Lack of due diligence, negligence in duty and deficiency in service on the part of the Opposite party nos. 1,2 and 4 has caused a cascade of damages to the complainants including criminal proceedings, suspension from service, civil suit, deprivation of title of the property, debt recovery proceedings not to speak of mental agony and financial loss for which they have to be suitably compensated.
29. Therefore this commission is of the view that the op 1,2 and 4 are liable to pay compensation to the complainants for the damages suffered by them. Keeping 24 in mind the principles laid down by the Hon'ble Supreme Court and the Hon'ble National Consumer Disputes Redressal Commission in various judgments, this Commission is of the view that Rs.50,000/- shall be paid by the Opposite parties 1,2 and 4 jointly and severally to meet the ends of justice.
30. In the result ,the complaint is allowed with the following Directions:
1. The Opposite party no.3, G.Purushothaman is directed to repay to the complainant No.1 Rs.3,50,000/- received as consideration for the sale of the undivided share of land as per sale deed registered on 10.12.2010 in Doc.No 5309 of 2010
2. The Opposite party no.3 G.Purushothaman is directed to repay to the complainant No.1 the sum of Rs.10,00,000 received as part consideration for the construction of flats with 8 % interest from 9.12.2010 till date of payment.
3.The Opposite party no.3, G.Purushothaman is directed to pay the complainants Rs.17,75,264/- along with 8 % interest from the date of application to the Debts Recovery Tribunal by the Opposite party no.3 till the date of realisation of the loan amount from the complainants.
4.The Opposite party no.3 G.Purushothaman is directed to pay Rs.50,000/- as compensation for the mental agony, loss of reputation, hardship suffered by the complainant due to the deficiency in service and unfair trade practice. 25
5. The Opposite party nos. 1,2 and 4 are directed to pay jointly and severally Rs.1,00,000/- as compensation to the complainants for the mental agony, loss of reputation, hardship suffered by the complainants due to their negligence and deficiency of service.
6. The Opposite parties are directed to pay jointly and severally Rs.5,000/- as cost of the proceedings.
7. The above amounts shall be paid within 2 months from the date of this order failing which the payments in Sl.Nos 1,4 and 5 shall be made with 8% interest from the date of this order till the date of payment.
Dated this the 20th day of February 2023.
Sd/-
(Justice R. PONGIAPPAN) PRESIDENT Sd/-
(S.SUNDARAVADIVELU) MEMBER Sd/-
(S. OUMASANGUERY) MEMBER LIST OF COMPLAINANT'S WITNESSES:
CW.1 07.09.2017 Sivaranganathan 26 LIST OF OPPOSITE PARTIES' WITNESSES: RW.1 01.02.2018 V.Rajaraman RW.2 24.11.2022 G.Sugumaran LIST OF COMPLAINANT'S EXHIBITS: Ex.C1 02.11.2010 Photocopy of agreement between the opposite no.3 and the complainants. Ex.C2 07.12.2010 Photocopy of Housing Loan Application of the complainants. Ex.C3 09.12.2010 Photocopy of Memorandum of Agreement between the first complainant and the third opposite party. Ex.C4 10.12.2010 Photocopy of sale deed for the undivided share in the land in favour of the complainant by the third opposite party. Ex.C5 30.08.2011 Photocopy of Report in non-cognizable offence. Ex.C6 01.10.2011 Photocopy of First Information Report against the first complainant. Ex.C7 13.10.2011 Photocopy of anticipatory bail order. Ex.C8 28.10.2011 Photocopy of suspension order. Ex.C9 -- No objection letter from opposite party no.1 Ex.C10 04.10.2011 Out-patient slip of the first complainant issued by General Hospital, Puducherry. Ex.C11 07.10.2011 Photocopy of the representation of the first complainant to the first opposite party. 27
Ex.C12 01.11.2011 Photocopy of reply given by the first opposite party.
Ex.C13 July 2010 Salary slip of the first complainant.
Ex.C14 July 213 Salary slip of the first complainant.
Ex.C15 10.12.2010 Report of the first opposite party. Ex.C16 13.09.2011 Photocopy of representation of the first complainant to the first opposite party.
Ex.C17 20.09.2011 Photocopy of the police complaint of the first complainant against the third opposite party.
Ex.C18 19.10.2011 Photocopy of the police complaint of the first complainant against the third opposite party.
Ex.C19 10.01.2012 Photocopy of FIR in Cr.No.01/2012. Ex.C20 24.03.2012 Photocopy of the representation of the first complainant to the first opposite party.
Ex.C21 29.04.2012 Paper Publication in Tamil Daily 'Dinakaran'. Ex.C22 01.06.2012 Photocopy of the representation of the first complainant to the first opposite party.
Ex.C23 30.01.2012 Departmental enquiry order.
Ex.C24 10.09.2012 Photocopy of bank statement account of the first complainant.
Ex.C25 14.08.2012 Encumbrance certificate.
Ex.C26 21.01.2013 Photocopy of the representation of the first complainant to his department.
28Ex.C27 15.05.2013 Photocopy of the representation of the first complainant to his department.
Ex.C28 15.05.2013 Photocopy of the representation of the first complainant to his department.
Ex.C29 21.02.2012 Notice u/s.13(2) of SARFAESI Act, 2002 issued by the first opposite party to the first complainant.
Ex.C30 21.02.2012 Notice u/s.13(2) of SARFAESI Act, 2002 issued by the first opposite party to the second complainant.
Ex.C31 16.08.2012 Notice from the first opposite party to the complainants.
Ex.C32 12.07.2012 Re-instatement order of the first complainant.
Ex.C33 -- Letter sent by the first opposite party.
Ex.C34 14.12.2012 Last pay certificate of the first complainant. Ex.C35 -- Summon issued by Vigilance and Anti-Corruption Police Unit, Government of Puducherry.
Ex.C36 10.10.2013 Copy of the representation of the first complainant for arrears of salary.
Ex.C37 30.04.2013 Photocopy of legal notice issued by the first complainant.
Ex.C38 -- Photocopy of the plaint in O.S.No.08/2012 on the file of the III Additional District Judge, Puducherry.
Ex.C39 -- Photocopy of the amended plaint in O.S.No.08/2012 on the file of the III Additional District Judge, Puducherry.
Ex.C40 -- Photocopy of the application in O.A.No.826/2014 on the file Debts Recovery Tribunal-I, Chennai.
29LIST OF OPPOSITE PARTIES' EXHIBITS :
Ex.R1 28.08.2020 Photocopy of order in O.A.No.826/2014 on the file of Debts Recovery Tribunal-III, Chennai.
Ex.R2 29.07.2016 Photocopy of judgment and decree in O.S.No.08/2012 on the file of the III Additional District Judge, Puducherry.
Ex.R3 13.09.2011 Letter given by the third opposite party to the bank. Ex.R4 13.06.2013 Reply given by the first opposite party to the complainant's counsel.