Monopolies and Restrictive Trade Practices Commission
Mrs. Meena Balan And Anr. vs Maxworth Homes Ltd. And Anr. on 15 April, 2002
ORDER
Moksh Mahajan, Member
1. The respondent Maxworth Homes Ltd. which is a part of Maxworth Group of Companies, Chennai is engaged in the business of developing land and making colonies thereon. In 1998 it announced a housing projects scheme of free quality homes under a unique township concept at various places in south India. One of the projects was at Maxworth Nagar, Bannerghatta which is at the outskirts of Bangalore. As per the advertisement, the same consisted of development of sizable acre of land containing affordable aesthetically designed homes on independent plots with builtup area ranging from 700 sq. ft. to 1,400 sq. ft. As claimed in the brochure, a host of special privileges like round-the-clock security, with an CBSE/ICSE afffiliated school, modern medical facilities, shopping complexes, community hall and others were also to be made available. Services like trained plumbers, electricians, gardeners and household help along with transport facilities were also offered on a "pay and use" basis.
2. Allured by these promises, the applicants opted for purchase of a developed plot measuring 1,800 sq. ft. with house built therein for a sum of Rs. 4.50 lacs. They were also allotted a plot No. 88. The Sale-deed was executed on dated 13th March, 1998.
The payments made by the applicants were as under :
3. Despite full amount having been paid there was no development on the plots. The fully development plot was not handed over to the applicants within 21 months from the date of agreement as promised. The applicants accordingly approached the respondent and were informed that it was facing a financial crunch because of which the projects were being downsized. Even after a passage of time there appeared to be no development carried out by the respondent. In the premises, the applicant had no other alternative but to file an application under Section 12B of the Monopolies and Restrictive Trade Practices Act, 1969 (for brief the Act) charging the respondent for making false and misleading promises within the meaning of Section 36A(1)(i), (ii), (iv) and (vi) of the Act. For having suffered losses on account of such unfair trade practices indulged in by the respondent the applicants claimed refund of Rs. 4,50,000/- along with interest @ 24% per annum on the amount as paid. In addition, a sum of Rs. 5,00,000/- towards mental stress, hardship and agony along with Rs. 50,000/- as cost for legal proceedings was claimed.
4. In pursuance to the notice issued, the respondent in its reply while admitting the averments made in the application however denied theer being no development carried on land. As per para 7 of its reply, as many as 21 houses were in the process of being completed. In addition, it is stated to have taken drastic measures to continue the construction work and to hand over the plots to the applicants in short span of time. It therefore denied having made any false and misleading statement in the brochure.
5. Subsequent to filing of the reply, the respondent did not attend the proceeding. Even the arguments had to be heard ex-parte as the proceedings had already been set ex-parte against the respondents.
6. The applicant on its part filed evidence by way of affidavit along with supporting evidence in the form of brochures issued, receipt of payments and correspondence exchanged.
7. The submissions of the applicant made through its Advocate have been carefully considered in the light of the evidence placed on record. In its publicity material, the respondent made various promises starting with "Own a home in Maxworth Nagar--a place so special you will be happy to call it your home-town." This was accompanied by the photographs, which could allure anybody to buy a home as promised. The offer was accompanied with various promises. To put it in its own word :
"When you move into your home in Maxworth Nagar, you can take certain things for granted. And we promise the following :
There will be a fully-staffed and equipped school functioning from the first academic year after you move in.
There will be an out-patient polyclinic with beds where routine and emergency cases will be dealt with, functioning from the day you move in.
There will be electricity connections, underground telephone cabling with intercom facilities, a water treatment plant, over-head tanks to bring you water, a centralised sewage system, a compound wall surrounding the whole Nagar and a round-the-clock security service on the day you move in.
There will be a well-stocked shopping centre within the township for all your daily essentials on the day you move in.
There will be broad paved, well-lit roads within the township on the day you move in..
You will also hold the free Title to your land.
Finally, we will ensure that your home will be ready on time and the price will not go up after you pay your first instalment."
There were other similar facilities offered to the prospective applicants. To give a concrete shape to the promises, an agreement was entered into with the applicant whereby the respondent agreed to procure the land, construct the house and to provide the amenities for which the applicants agreed to make the payments as demanded. The total payment was to be paid at Rs. 4.50 lacs for purchase of land measuring about 1,800 sq. ft. The payments were to be made in instalments and house was to be handed over within 21 months from the date of agreement and amongst other clauses transfer of land and house was to be done on completion of the construction. In case of default the applicant could either complete the house itself or opt out for refund of an amount along with interest @ 24% per annum, in case the house is notcompleted within extended time of six months. The party was also entitled to claim liquidated damages calculated @ Rs. 1,000/- per month. There was also a provision for arbitration whereby the/ Arbitrator is to be nominated by the respondent in accordance with the Arbitration Act, 1940. Apparently none of the promises made in brochure as well as the terms and conditions laid down in the agreement were adhered to. The copies of the correspondence placed on record show that as per letter dated 15.11997, the respondent is contended to have made progress in respect of construction of site office, park, road cutting, etc. it had also contended that trench cutting for sewerage, drainage, etc. as well as horticulture work for the parks were in progress. In its letter dated 2.11.1997 it is also stated to have completed the foundation for 18 houses, the super structure of which was under way. In respect of 25 houses the foundation work was stated to be under way. The pictures taken on 2.1.2001 enclosed by the applicant however do not confirm the claims of the respondent. There is hardly any development in respect of the construction on the land. The downsizing of the project as well as the change in the management on the other hand tell another story which also belies the claim of the respondent. By making false promises and misleading the parties the respondent has indulged in unfair trade practices. By retaining the amount and not refunding it as demanded, the applicants have been deprived of the returns on the investments. Therefore/ the applicants are entitled to refund of their deposits along with interest @ 12% on the amounts from the date of payments till the date of refund. Interest @ 12% (as against 24% provided in the agreement) as given in the other similar cases is considered to be reasonable. The applicant is also entitled to litigation expenses at Rs. 5,000/-. No compensation in respect of the mental agony is payable in view of the decision of the Hon'ble Supreme Court of India in the case of Ghaziabad Development Authority v. Union of India and Anr. reported in 2000 CTJ p. 205 (S.C.) (MRTPC).
The respondent is, therefore, directed to implement the order within six weeks of receipt of the same and file an affidavit of compliance within two weeks thereafter.