State Consumer Disputes Redressal Commission
Smt. Pushpalata Vaman Sawant, vs Shri Sitaram Nasnodkar, on 15 January, 2009
THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION PANAJI GOA. Present: Smt. Sandra Vaz e Correia Presiding Member Smt. Caroline Collasso Member Appeal No.78/2007 Smt. Pushpalata Vaman Sawant, Major, r/o Sharada Colony, Bicholim, Goa. Appellant (Original Complainant) v/s Shri Sitaram Nasnodkar, C/o Nicolas House, Sasnamoddi, Kakoda-Goa. Respondent (Original Opposite Party) None for the Appellant For the Respondent Shri Dessai, Advocate Dated:15-01-2009 ORDER
[Per Smt. Caroline Collasso, Member]
1. This order shall dispose Appeal No.78/2008 seeking to challenge order dated 24-05-2007 of the District Forum, North Goa in consumer dispute No.206/2000 wherein Appellant was the original Complainant, a Government teacher, and the Respondent the original Opposite Party, a builder.
2. Complainant/Appellant and Opposite Party Respondent entered into a contract inter se dated 30-10-1998, whereby Complainant was assured a flat admeasuring about 80.00 square meters (said flat) to be constructed by the Opposite Party in a complex situated on plot bearing S.No.84/1 in Naik Nagar, Bordem, Bicholim, Goa. The price fixed was Rs.4,40,000/- of which Rs.1,10,000/- was to be paid on signing of the contract, and the remainder in various instalments based on completion of stages of work. The Complainant was to avail of a loan which awaited sanction by the Education Department and which finds mention in the contract. In the event of non-payment of scheduled instalment without any reasonable excuse, the Opposite Party at his discretion could return the amount received to the Complainant and presumably cancel the contract. In normal course the construction was to be completed within a period of 12 months. Delay, if any, by the Opposite Party were to be overlooked on various grounds, and in case the construction could not be completed within the stipulated plus period Opposite Party was liable to return all monies received together with interest @ 15% per annum. As far as claims and demands, it was categorically stipulated in Clause 7 that all notices for payments etc. were to be served on the Complainant by registered letter at her address stated therein as USHA NIWAS SUDHA COLONY, BORDEM, BICHOLIM GOA.
3. Admittedly, the Complainant paid a total of Rs.1,56,000/-
i.e. (Rs.1,06,000/-) on signing, and two instalments of Rs.25,000/- each thereafter. Apparently, the Complainant was having a problem with loan sanctioning mechanism and money was not forthcoming. Hence, by legal notice dated 12-07-1999, the Complainant was called upon to pay the instalments as per agreement forthwith failing which action as per agreement would be taken. Immediately thereafter another notice dated nil/07/1999 was received by the Complainant, which, while referring to the earlier notice dated 12/07/1999, unilaterally terminated the agreement dated 30-10-1998, claiming therein that the Opposite Party was free to sell the said flat to any other buyer.
4. In response to the above, the Complainant/Respondent through her legal Counsel by letter dated 29-07-1999 acknowledged the receipt of both the above notices, but at the same time challenged the unilateral decision of the Opposite Party on the ground that the loan was about to be sanctioned and the delay, if any, was not caused by any deliberate act of the Complainant.
This was followed by another letter dated 08-09-1999 stated to annex a letter by the Director of Administration on the final sanction of the loan. This met with a cold shoulder and by letter dated 20-09-1999. Opposite Party not only confirmed he had terminated/rescinded the contract, but had already sold the flat to another buyer and handed over possession to him, as such the Complainant was requested to consider the chapter as closed. All future correspondence only confirmed the above status, but, by way of concession, the Opposite Party did offer another flat on the ground floor which was not to the satisfaction of the Complainant. Hence, even when the loan was finally sanctioned about a year later, the matter remained unresolved and the Complainant was forced to approach the District Forum. Here, the Complainant prayed inter alia that:
a) The Opposite Party may be ordered to perform the contract and to give the possession of the said flat to the Complainant by executing a sale deed in her favour.
OR
b) The Opposite Party may be ordered to refund the sum of Rs.1,56,000/- and the compensation of Rs.75,000/- to the Complainant for non-performance of the contract.
5. The Opposite Party denied the claim chiefly on the ground that the agreement was legally terminated due to non payment of stipulated instalment despite being called upon to do so.
6. The District Forum, on going through the affidavits and taking into account the submissions of both parties, dismissed the complaint but directed the Opposite Party to refund the sum of Rs.1,56,000/- admittedly received from the Complainant. The decision of the District Forum is seen to be based on clause 4 of the agreement dated 30-10-1998, which, according to the District Forum empowered the Opposite Party to refund the amount paid to the Complainant in the event of failure on the part of Complainant to pay any instalment, further the discretion was held to be totally with the Opposite Party to allow further extension. The District Forum notes that on 12/07/1999 notice is issued by lawyer of Opposite Party demanding the balance payment of instalment. The District Forum does mention the fact that by Clause 3 of the agreement it appears that the Opposite Party was aware regarding obtaining loan by the Complainant from the Education Department and the Opposite Party was having the entire discretion to allow further time subject to payment of interest. The District Forum has opined that the terms and conditions of the agreement are contrary to each other. Though the possession of the said flat is agreed to be given within 12 months which is subject to payment of instalment. The Opposite Party has not allowed any further time to pay the instalment and have immediately issued the notice. The first demand notice was issued only after period of nine months when there was no sign of payment from the Complainant. In consequence, the District Forum held, that the entire records favour the case of the Opposite Party and concluded that the termination of agreement dated 30-10-1998 was not illegal, and the same was rightly terminated by the Opposite Party for non-compliance of terms in respect of payments. The District Forum ordered accordingly.
7. Both parties are now before us re-agitating the same old issues. We have given our anxious consideration to the opposite contentions and respectfully differ from the findings of the District Forum for reasons given hereunder.
8. As correctly assessed by the District Forum, the fulcrum on which the entire case rests is the contract dated 30-10-1998 titled as AGREEMENT OF SALE & SERVICE.
It may here be mentioned that this in itself lays to rest one of the preliminary objections the Opposite Party had raised claiming that the transaction was neither of service nor goods as defined in Section 2 of the Consumer Protection Act. The entire contract is one of services to be rendered by the Opposite Party to the Complainant falling squarely within the four corners of the Act.
9. Having said that, it is necessary to note the relevant clauses which come into play for deciding the present case. Without much ado, the said contract could be labled as what has come to be dubbed a Builders Agreement, meaning thereby, the entire document is stacked in favour of the builder, with a couple of additional jokers thrown in his favour for good measure. Clause after clause exonerates the builder from any liability due to delays on his part, while the sword of Damocles is kept handing over the Purchaser almost from day one. Be that as it may, the crucial clauses 3 & 4 read as under:
3. The remaining amount may be furnished by the Intending Purchaser to the Intending Vendor in following installments as decided by Education Department on the terms and conditions of the Education Department the latter being the Agency for obtaining loan by the Intending Purchaser by negotiating the flat agreed to be sold to the Intending Purchaser.
The remaining amount will be paid by the Intending Purchaser to the Intending Vendor in following instalments:-
i) After completion of 1st slab of the cost 18%
ii) During construction the 2nd slab of cost 20% iii During concreting of the 3rd slab of the cost 12%
iv)During masonary and inside plaster of the cost 8%
v) During plumbing tiling and electrical work of the cost 15%
vi) After Occupancy and completion in all respect.
3%
4. In all such payments the Intending Vendor shall give written receipt in acknowledging such payment. In case of failure on the part of the Intending Purchaser to pay the instalment as aforesaid without any reasonable excuse the Intending Vendor shall be entitled to refund the amount paid till (sic) the discretion to the Intending Purchaser without any interest thereon after deducting 10% of the amount so received. However, it is entirely at the discretion of the Indending Vendor to give further time to pay the instalment by charging 20% interest on the instalment amount.
10. The above are the two clauses which guided the District Forum in coming to the conclusion that the Opposite Party had correctly terminated the agreement after due notice as on 12-07-1999. We will return to this aspect a little later.
11. There are numerous other clauses which indicate that the Opposite Party was fully aware of the limitations within which the Prospective Purchasers were contracting i.e. in terms of them having to rely on various financial bodies for loans.
Hence, the possibility of a delay in actual payment of particular instalments was a matter of fact to be borne in mind at the time when the said agreement was signed and this is of great significance. A cursory perusal of clause 3 itself clearly indicates that the same has been specifically (re)moulded to incorporate the fact that remaining payment would be influenced by, if not made dependant on, the availability of loan amounts as decided by the agency of Education Department. The anomaly in clause 3 has been noted by the District Forum who has called it a contradiction in terms.
12. Even so, the stipulated break up of payment of instalments as stated in Clause 3 is faulty in more ways than one. Firstly, the agreement states that a sum of Rs.1,10,000/- of the total price of Rs.4,40,000/- is to be paid at the time of signing of the Agreement. Thus, 25% is the initial down payment. Subsequent amounts are quantified in terms of percentage of the cost. These, if added, total 101%. This has skipped everyones notice.
13. Be that as it may, the six stages of further payment are not dated or based on period of time, but are tied up to the completion of certain job requirements. In these circumstances, the claim to a particular payment is directly related to the completion of a specific stage of the job, and not on the fact that the demand is made nine months after the signing of the agreement. Hence, the notice for payment in order to be valid, would have to state in clear terms the stage which the construction has reached and for which the amount is due. This is keeping aside the act that the notice, though sent by Registered Post, carries an address which is at variance to that which was stipulated in the Agreement. But, more crucial is the fact that the notice dated 12-07-1999 fails to state the stage of job completion for which the amount is claimed. The said notice, also, does not demand a specific amount of money expected to be paid by the Complainant. All it does is call upon the Complainant to pay the instalments as per agreement forthwith so as to complete the work as schedule.
14. Obviously, the job was incomplete, and there is no way of knowing at what stage of completion as per agreement the progress had been made.
Occupancy Certificate had not been obtained, and so it could not be expected of the Complainant to pay the total amount. The reason this is of paramount significance is because of the ungodly haste in which the Opposite Party took the next step of terminating/rescinding the Agreement within a fortnight of the first notice.
15. Here, yet another flaw in the Agreement is worth mentioning.
Clause 4 which has been the backbone of the District Forum order, nowhere explicitly empowers the Opposite Party to rescind and/or terminate the agreement. On the contrary, the clause entitles the Intending Vendor (Opposite Party) to refund the amount paid till (sic) the discretion to the Intending Purchaser without any interest thereon after deducting 10% of the amount received. This would imply, perhaps necessarily, that the Intending Vendor (Opposite Party) could finally rescind the agreement, but even this action cannot be taken unilaterally, since the clause itself speaks of a discretion vesting in the Intending Vendor to give further time to pay the instalment by charging 20% interest on the instalment amount. This is also borne out by clause 8 of the Agreement.
16. Hence, on a plain reading of clause 4, the mode of its operation would be by the Opposite Party stating and dispatching the amount due to the Complainant i.e. the balance after having deducted the requisite 10%.
Clause 4 of the agreement could not be held to have been brought into effect till and until the money due to the Intending Purchaser was made available to him by way of cash or any other negotiable instrument. This was not done. Merely stating that the Intending Vendor has terminated the agreement has no value in the eyes of law if the Vendor does not back his decision with money due. It is not expected that the Intending Purchaser should run after the Intending Vendor for the return of her money. It is another matter if the Intending Purchaser had refused to receive the cash or negotiable instrument proffered to her. But the offer is of paramount importance if the agreement has to be held to have been rescinded on behalf of the Intending Vendor.
17. Reverting back to the agreement, and clause 4 in particular, interestingly, no period of time is granted to the Intending Purchaser/Complainant to fulfill her obligation of payment subsequent to receiving demand notice. This is a serious flaw, and, as such, sufficient time would have to be granted before which any further steps are to be taken. The minimum, if any, would have to be one month, which is stated in Clause 15 to the benefit of the Intending Vendor (Opposite Party) in the circumstances mentioned therein. If so, unilateral decision to terminate/rescind the agreement was definitely premature, being within a fortnight of the notice. Hence, even on this score the action of the Opposite Party is illegal.
18. Our opinion on the decision of the Opposite Party to terminate the agreement being illegal is further fortified by taking into consideration yet another aspect of Clause 4, and which has been completely ignored by the District Forum. This is even assuming there was a failure to pay certain instalments by the Complainant. Mere failure to pay any particular instalment on the part of the Intending Purchaser per se will not give cause to the Intended Vendor to rescind the Agreement. It is only when the failure to pay is without any reasonable excuse that the said clause could be invoked by the Intending Vendor. The question to be examined is whether or not there was a reasonable excuse on behalf of the Complainant for her not to pay any of the instalments. As stated earlier, the fact of the Intending Purchaser being dependent on loans from financial institutions, and in particular on the sanction from the Education Department is writ large on the face of the agreement. Clause 3 itself, which the District Forum has correctly described as being contradictory, spells out this condition in no uncertain terms.
Thus, delay, if any, in payment caused due to the loan amount not being sanctioned is very well within the scope of the phrase a reasonable excuse the same not being totally extraneous to the agreement. The Complainant did in fact attempt to set up conciliatory proceedings as provided under Clause 20, but to no avail. The Opposite Party in all probability had too much to loose by then, he having sold the flat to another party.
19. As we have stated in an earlier judgment, the tussle which often comes before the various Fora are not unlike a David and Goliath battle, with the tiny consumer being pitted against the giants of business and industry. The Consumer Protection Act, as its preamble clearly states, is to provide for protection of the interest of consumers, who very much like the one in the present case, have literally to beg borrow and do anything short of stealing to raise funds to meet their end of the bargain. It does not need much imagination to see her plight when, having parted with all she has managed to raise, dependent on the well know apathetic bureaucratic machinery for the balance to be granted by way of loan, she is suddenly faced with the prospect of loosing all that she hoped and dreamed of. It is for citizens such as these, the cobbler, tailor, foot soldier and sailor that the Act says we must protect when they come knocking at our doors. Sadly, the District Forum, having noted a contradiction in the terms of the Agreement, missed the boat, only because it did not keep the vision of the Consumer Protection Act before it.
20. To be fair to the Opposite Party, in the notice dated 12-07-1999 there is mention of two earlier notices dated 31-01-1999 and 25-05-1999 demanding payment of instalments. On record are barely decipherable carbon copies of two letters purporting to demand payment for work done. The District Forum has totally ignored these letters and concentrated on the notice of 12-07-1999 to base its decision. In our opinion the two documents cannot be looked upon as valid notices since they are not sent registered A.D. as required under the Agreement, and neither has the Complainant at any stage indicated receipt of the said two documents.
21. Having opined that the decision to terminate the agreement is illegal, the impugned order is liable to be quashed and set aside.
Since the flat has been sold to a third party we are not inclined to order to order the same to be delivered to the Complainant. In these circumstances we once again revert to the agreement to find a just solution.
In it we find at Clause 15 a cue to a just dessert for the Opposite Party. Clause 15 reads as under:
15. In case of failure on part of the Intending Vendor to complete the construction within the stipulated period or any extension thereof due to any valid reason, the Intending Purchaser shall be entitled to terminate the present agreement by giving one months notice to the Intending Vendor and shall refund to the Intending Purchaser (sic) till the date of such termination together with interest therein at the rate of 15% per annum, commencing from the date of execution of the agreement for sale and service.
22. The solution is there in black and white, though badly spelt out. The Opposite Party is liable to pay to the Complainant the entire amount of Rs.1,56,000/- received by him with interest thereon @ 15% per annum calculated from the date of receipt of such amounts. Payment date for amount of Rs.1,06,000/- presents no problem, but the two amounts of Rs.25,000/- each are not clear, as no receipts were made available. Hence the date of notice i.e 12-07-1999 is taken as starting point.
ORDER
1. Impugned order dated 24-05-2007 of the District Forum, North Goa, in Consumer Dispute No.206/2000 is hereby quashed and set aside.
2. Opposite Party/Respondent to refund to the Complainant/Appellant within one month of receipt of this order, the amount of Rs.1,06,000/- with interest @ 12 percent per annum calculated from 30-10-1998 till date of actual payment;
3. Opposite Party/Respondent to refund to the Complainant/Appellant within one month of receipt of this order, the amount of Rs.50,000/- with interest @ 12 percent per annum calculated from 12-07-1999 till date of actual payment.
4. No order as to costs.
Pronounced.
[Sandra Vaz e Correia] Member [Caroline Collasso] Member 15-01-2009 ORDER Impugned order dated 24-05-2007 of the District Forum, North Goa, in Consumer Dispute No.206/2000 is hereby quashed and set aside.
Opposite Party/Respondent to refund to the Complainant/Appellant within one month of receipt of this order, the amount of Rs.1,06,000/- with interest @ 12 percent per annum calculated from 30-10-1998 till date of actual payment;
Opposite Party/Respondent to refund to the Complainant/ Appellant within one month of receipt of this order, the amount of Rs.50,000/- with interest @ 12 percent per annum calculated from 12-07-1999 till date of actual payment.
No order as to costs.
Pronounced.
[Sandra Vaz e Correia] Member [Caroline Collasso] Member