Ashish Dev vs Improvement Trust Sangrur & Anr

Subhash Chandra, Presiding Member;

This appeal under section 19 of the Consumer Protection Act, 1986 (in short, ‘the Act’) challenges the order dated 10.08.2017 of the Punjab State Consumer Disputes Redressal Commission, Chandigarh (in short, ‘the State Commission’) in CC no. 242 of 2016 allowing the complaint and directing the appellant/ complainant to pay the balance installments due without imposing any interest to the respondent/ opposite party within 30 days of the order and the respondent/ opposite parties to deliver the complete legal possession of the flat in question to the appellant/ complainant within 45 days from the date of clearance of dues of instalments, if any, along with compensation of Rs.1.00 lakh and Rs.25,000/- as litigation cost within 45 days of the receipt of the certified copy of the order.

This appeal seeks enhancement of the compensation awarded by the impugned order @ 18% on the deposited amount along with the requisite amount of compensation and any other order/ order(s) as deemed fit and proper in the facts and circumstances of the case. This order will also dispose of FA no.809 of 208 filed by the respondent against the same order emanating from CC no.242 of 2016 praying for setting aside the impugned order on the grounds that the State Commission erred in arriving at its finding for the reasons stated therein. For the sake of convenience FA No. 682 of 2018 is taken as the lead case and the parties referred to as designated therein.

In brief, the relevant facts are that the appellant was allotted Flat no.3GF, MIG Flat in Captain Karam Singh Nagar, Sangrur under a self-financing scheme of the respondent by draw of lots on 19.10.2011 for a consideration of Rs.19,90,000/- vide allotment letter no.634 dated 26.04.2012. The appellant was required to deposit 25% of the consideration within 30 days of this letter and the balance 75% in 10 half yearly installments between 25.10.2012 to 25.04.2017. As stated by the respondent in the brochure published, in terms of clause/ condition no. 12, possession was promised within 18 months. According to the appellant, Rs.17,71,850/- was paid to the respondent towards sale consideration as per schedule but the possession was not handed over as per condition no.12 (18 months as promised). He, therefore, approached the State Commission by way of CC no.242 of 2016 which decided on contest in his favour. However, aggrieved by the quantum of compensation awarded, the appellant is before us seeking enhancement of compensation.

We have heard the learned counsel for the respondent/ Improvement Trust and perused the material on record. None appeared on behalf of appellant/ Ashish Dev, except an intern on the date for final arguments. His appeal and synopsis of arguments are taken to be his final submissions.

The contention of the appellant is that despite payment of the required installments, the respondent failed to offer possession within 8 months of the allotment dated 26.04.2012. Instead, the date for the promised possession was revised vide memo no.176 dated 17.03.2017. It is contended that the delay has been admitted vide memo no.559 dated 25.05.2015 as per which the respondent through is Executive Officer, informed that the construction had stopped on account of increase in cost estimates which were in the process of approval of the Government. As per evidence filed before the State Commission it had been admitted that due to a dispute with the contractor, the construction of the flats had been stopped/ delayed as the contractor abandoned the project and a new contractor had been identified to complete the finishing work. The contention of the appellant is that in view of this admission, the order of the State Commission was in order and that only compensation awarded to him needed to be revised since he had raised loan from the Punjab National Bank, SAFB Branch, Sangrur, by paying interest on the loan, apart from the rent incurred by him on the house where he was residing. It was contended that the respondent had made a paper possession on 18.06.2016 which was almost 5 years from the promised date of possession, i.e., 26.04.2012 without completing all the promised amenities, such as installation of lift, construction of pavement apart from poor quality construction. Reliance was placed on this Commission’s order in Town Improvement Trust vs Kapil Bansal and Others in RP No. 96 of 2017 which held that :

“if the Trust offers possession of the flats in question to the complainant, in the condition these were to be made available under the scheme, with basic amenities, like sewerage, drinking water supply, lifts etc., if these were to be provided, the Trust shall not be liable to pay to the complainant/ allottees the compensation, as directed by the lower Fora, after the expiry of two month of the date of the said offer”.

Per contra, the respondent has argued that the appellant had mis-interpreted condition no.12 of the brochure regarding handing over the possession within 18 months since that was only a tentative estimate of time of completion of the flat. The scheme had been notified as a Self Financing Scheme (SFS) and a condition of the scheme was that no claim could be raised by an allottee, including dispute regarding date of possession since the Improvement Trust was not charging any interest on the amount to be paid except on the delay after offer of possession. It was also contended that the flat was to be sold on an ‘as is, where is’ basis in a semi-finished condition, and therefore, the allegation of the appellant with regard to the flat being in complete at the time of offer of possession was stated to be incorrect.

The order of the State Commission has held that the appellant/ complainant had prayed for possession of the flat on the same terms and conditions as set out in the allotment letter with compensation for harassment and delayed possession apart from litigation cost on the rental value of the flat from September 2013 to till date of possession. It had arrived at the following finding:

The OPs gave out in the brochure Ex C 1 that estimate time of delivery of flat is one year and six months which could be extended. There is no reasonable ground for Ops in seeking extension of time, when no circumstances beyond their control have been proved on the record. Whenever a developer or any other Board or Improvement Trust gives out any advertisement and people deposit the amounts pursuant thereto, then a solemn duly is cast upon it to complete the flats within the estimate time. We do no find any fault on the part of the complainant in this case, because he has already paid substantial amount out of the total price of the flat to OP. Allotment letter was issued on 26.04.2012 and one year and six months’ time came to end by November 2013, much time earlier. The complainant deposited the installments with Ops as recorded in Ex C 2, the allotment letter. The construction is still incomplete as established by photographs Ex C – 17 to Ex C – 26 on the record and it is not still worthy for living at this stage, because it is incomplete. We do not find any merit in the submissions of OPs in this case. OPs have no ground to stand in this case.

It is evident that the appellant had paid the prescribed installments on time as per the allotment letter. The issue is whether the delay in possession by the respondent beyond the period of 18 months mentioned in the brochure at condition no.12 amounted to deficiency in service under the Consumer Protection Act, 1986. The respondent has admitted that the project was delayed on account of the contractor abandoning the project and the need to engage another contractor and obtaining approval of the revised estimates. The contention of the appellant is that the offer of possession was without completion of the promised amenities has also not been denied by the respondent. It is the respondent’s contention that the scheme was envisaged to offer semi-finished flats on an ‘as is, where is’ basis and that the State Commission had erred in arriving at its findings and awarding of compensation of Rs.1.00 lakh apart from other costs. According to the respondent, it is the appellant who is liable to pay interest on the delay in payment of the final installment at the time of taking the possession as per the terms and conditions of the allotment.

From the foregoing, it is evident that the scheme of the respondent was of flats constructed on a self-financed scheme flat on non-profit basis to allottees selected by draw of lots. The respondent had estimated the execution of the project within 18 months at the time of launch of the scheme. It has cited the reasons for change of contractor in the project to plead for the justification for extention of the construction period. The contention of the allottee/ appellant is that on account of the delay he has been saddled with additional financial liability in servicing the loan obtained from the Punjab National Bank as well as on account of rent he has paid for residing in a rented accommodation and not being able to realize same rental income from this flat to obviate the these costs.

On consideration of the facts as stated above, we find that the respondent has been deficient in service qua the appellant since it has clearly failed to live up its promise of providing accommodation within 18 months as per the brochure. While it has claimed, this period was clearly stated in the brochure notifying the scheme to only be and ‘endeavor’, it cannot be said that this may not have been a consideration for allottees of the scheme seeking to obtain a flat for their residential purpose through the agency of the Improvement Board, which as an arm of the Government, offered the promise of residential security at a reasonable cost. The uncertainties of obtaining the same from a private builder on a reasonable consideration would also have been a factor. The allottee obtained a loan from a Public Sector Bank to finance the cost of the said flat. Inability of the respondent to complete the construction within the promised period of time or within a reasonable period thereafter cannot be considered to be conscionable to absolve it from the liability of compensation as imposed by the State Commission. An Improvement Board as an instrument of the sovereign State is equally liable under the Consumer Protection Act in the delivery of the promised service for which it has charged a consideration. The respondent’s argument that since it did not levy any interest on the amounts to be paid, the Improvement Board may not be held liable for deficiency in service cannot be accepted. However, the contention of the appellant that it should be compensated @ 18% per annum is also not valid or justifiable since it seeks to apply interest rates normally applicable in a commercial project to a project which was undertaken by the Improvement Board on a non-profit basis.

In view of the fact that the project was based on a self-finance scheme basis and was intended delivery only a semi-finished flats, the contention of the appellant with regard to enhancement of compensation is not acceptable. The order of the State Commission has considered the contention of both the parties and came to a considered decision that balances equity on both sides.

In view of the foregoing, we do not find any reasons that warrant our interference in the impugned order of the State Commission. Accordingly, the order of the State Commission is affirmed and the appeal is disallowed.

Appeal no. 809 of 2018 is also accordingly dismissed in the light of the forgoing discussion. Vide order dated 25.09.2023 an amount of Rs.10,000/- was imposed for restoring the MA no.208 of 2023, out of which Rs.5000/- was ordered to be deposited in Consumer Legal Aid Account and the balance amount of Rs.5000/- was directed to be paid to the Complainant / Respondent.

In case, the amount of Rs.5000/- is not paid to the complainant/ respondent the same shall be paid within four weeks.

Pending IAs, if any, also stand disposed of with this order.