DELTA ASSOCIATES vs LALSAB A.NAIKODI

THIS appeal is directed against the order dated 1.3.1994 of the State Commission, Goa allowing the complaint and directing Opposite Parties 1, 2 and 3 (Appellants herein) to furnish certain documents requested for by the Complainant as being required for obtaining loan facility, on the grant of which the Complainant should pay the balance amount to the appellants and thereupon the appellants should deliver the possession of the flat within 7 days of such payment

THE appellants entered into an agreement of sale dated 23rd November, 1990 with , respect to the property admeasuring 3600 sq. mtrs. known as NAGAMOSODICODIL BORCD TICAN with owners for the purpose of construction of building premises therein comprising of flats/garages and shops. The appellants planned to build on ownership basis flats/ shops in the said plot and offered to sell. By registered agreement dated 20.9.1991 between the Complainant and the appellants, the Complainant agreed to purchase and the appellants agreed to sell a single bed room flat admeasuring approximately 54.63 sq. mtrs. situated on the 2nd floor of the proposed building for the price of Rs. 1,36,000/- payable as per Schedule-Ill annexed to the agreement reading as follows : Schedule III hereinabove referred to : The other terms of the agreement are not relevant for the disposal of the appeal and need not be noticed. It is the admitted case of the appellants that the Complainant paid a sum of Rs 15,000/- before the execution of the said agreement and has also paid another sum of Rs. 60,000/- in instalments towards the cost of the flat (although the Complainant alleges that he has paid total sum of Rs. 80,000/-).

The Complainant applied to the Goa State Co-operative Housing Finance and Federation Ltd. ,Panaji (for short called GSCHFF)for a loan of Rs. 80,000/- on 26.6.1992 for financing of construction/payment of the said flat. On a preliminary/prima facie scrutiny of the loan proposal by GSCHFF it was found that there were following deficiencies in the proposal, namely: (i) copy of power of attorney given by land owners to builders had to be furnished. (ii) certified copy of the agreement executed between land owners and builders had to be furnished. (ii) construction licence issued by village Panchayat had expired and it is required to be renewed and furnished accordingly.

The Complainant obtained the all requisite documents except power of attorney and filed it with GSCHFF who obtained legal opinion from their Standing Counsel Mr. D.V. Amonkar, Advocate. Mr. Amonkar went through the documents and submitted his legal opinion in respect of the same and opined that the title to the said plot is clear and marketable. One of the documents required in the letter dated 9.7.1992, was the copy of the power of attorney given by land owners to the builders and according to the Complainant this was not furnished. GSCHFF insisted that the power of attorney is required for finalising the loan application of the Complainant. In fact in the reply dated 23rd April, 1993 by GSCHFF before the State Commission, it is stated that the said proposal/application of the Complainant was principally accepted in the Board''s meeting of the Federation; however, for want of certain compliances the sanction order was not issued. The State Commission on the appreciation of the material on record has observed that having made the payment of an amount of Rs. 80,000/-, it is common knowledge that the Complainant would desire to complete the formalities for obtaining the loan from the Opposite Party No. 4 and complete the transaction with Opposite Party Nos. 1,2 and 3, that it is apparent on the face of the case that the Complainant failed to produce necessary documents to Opposite Party No. 4 and that the document required to be produced was the power of attorney which was in the custody of Opposite Party Nos. 2 &3. The conclusion drawn by the State Commissions that non-production of the relevant documents by the Opposite Party Nos. 2 and 3 has led to non-compliance in production of the said document before the Opposite Party No. 4 and this clearly amounts to negligence on the part of the Opposite Party Nos. 1, 2 and 3. The State Commission in the impugned order has granted reliefs already noticed.

MR . Manoj Swarup, the learned Counsel for the appellants concedes that in August, 1992, the Complainant approached the appellants stating that the Complainant intended to raise housing loan from GSCHFF and wanted copies of all documents of title and that he collected the file containing copies of all documents in respect of the said property in which the proposed building was being constructed inclusive of a power of attorney dated 14.6.1992 executed by the owners of the said property in favour of the appellants. The Counsel submits that though the appellants had given the documents, yet the raising of finance or making payments to the appellants towards the consideration of the said flat is the entire responsibility of the Complainant who had not hired the services of the appellants for consideration. The Counsel sums up that the Complainant is not a consumer within the meaning and ambit of the Consumer Protection Act and the State Commission had no jurisdiction to entertain the complaint and grant the relief.

THE proposal of loan was not cleared by GSCHFF for want of copy of the power of attorney and this is so stated by them in their reply dated 23.4.1993 before the State Commission, Goa after GSCHFF was impleaded as Opposite Party No. 4. It is established, in our view, from the records that the copy of the power of attorney dated 14.6.1992 executed by the owners of the said land in favour of the appellants was not furnished to the Complainant in August, 1992. The copy of the opinion of Mr. D.V. Amonkar, Advocate (Annexure A3) refers to 16 documents including agreement of sale dated 23.11.1990, agreement dated 20.9.1991, non-encumberance certificate etc. on the basis of which opinion that title is clear and marketable, is given but copy of the power of attorney dated 14.6.1992 is not mentioned. If it had been furnished by the appellants to the Complainant, then there is no reason as to why he should withhold it. GSCHFF vide their letter dated 17.9.1992 to Mr. D.V. Amonkar, Advocate raised a query whether or not the power of attorney was necessary for having a clean, clear and marketable title. Mr. D.V. Amonkar, Advocate in his letter dated 19.9.1992 confirmed that the power of attorney was a legal necessity. The Complainant sent a notice dated 27th of October, 1992 through his Counsel asserting inter alia that it was brought to the notice of the appellants that the proposal of loan could not be cleared for want of power of attorney to develop the land, mortgage the flat, present the deed for registration at Sub-Registrar Office to effect the transfer of the said flat, from the owner of the land to the appellants firm M/s. Delta Associates represented by the other two appellants. No reply is given by the appellants to this notice dated 27th of October, 1992. The complaint was filed in December, 1992 wherein again the above noticed facts have been alleged. The appellants for the first time took the plea in their written version before the State Commission that the copy of the power of attorney dated 14th June, 1992 executed by the owners of the said property in favour of appellants 2 &3 was furnished to the Complainant. This, in our view, is falsely taken to defeat the just claim of the Complainant. Under Section 2(1)(o) of the Consumer Protection Act, 1986, the definition of the term "service" is very comprehensive, it means service of any description including construction of house. The said agreement dated 20.9.1991 is not sale of flat, pure and simple, but in substance it is hiring of service for construction of flat. The appellants entered into the said agreement dated 23rd November, 1990 with the owners for the purpose of construction of the building comprising of flats/shops. The dominant aim in the said agreement dated 29.9.1991 is to construct the building with the flats at the cost of the Complainant who has to pay the instalments linked with the progress of the construction. The investment for the construction comes from the Complainant and other intending purchasers like the Complainant. Even though in ultimate analysis, it will be a sale of the said flat, but it is a service for consideration rendered by the builder. In Lucknow Development Authority v. MX. Gupta, 1994 (1) CPR 569, the Supreme Court has held that the construction of a house or a flat is for the benefit of a person for whom it is constructed. He may do it himself or hire service of a builder or a contractor, the latter being for consideration is service as defined in the Act. In the amendment to the Act in 1993, the housing construction being service was added by way of abundant caution as it was included even earlier.

IT cannot be disputed that the appellants had to produce all requisite documents to establish that they had a clean, clear and marketable title to the said property. If the appellants had no title then it would be an act of deficiency in service rendered by the appellants by selling a flat on which they had no right to allot and sell the flat. The title in the said land vested with the original owners and it had to be shown as to how the appellants were dealing with this property. The Complainant had a right to demand and receive from the appellants all requisite documents including the power of attorney from the original owners of the land authorising the appellants to develop the land, mortgage the flat, present the deed for registration and ultimate sale to effect complete transfer. Correspondingly there was a duty on the part of the appellants to furnish all documents of title to the intending purchasers. The State Commission/ therefore, rightly held that the appellants were negligent in not furnishing the copy of power of attorney to the Complainant resulting in the non-disbursement of loan which on principle was approved by GSCHFF. There is thus clear deficiency in service on the part of the appellants.

THE version before the State Commission was filed by the appellants some time in January, 1993 annexing the copy of the said power of attorney dated 14th June, 1992. The Complainant, therefore, had the copy of the power of attorney dated 14th June, 1992 in his possession after the version was filed by the appellants before the State Commission. It appears from the written version dated 23rd April, 1993 of GSCHFF that subsequently vide letter dated 12.4.1993 the Goda Taluka Cooperative House Mort. Society Ltd. made request to GSCHFF enclosing therein the copy of the letter of request of the Complainant to sanction the loan afresh. That application had not been considered and decided when the reply dated 23rd April, 1993 was filed. We are noting these facts with a view to mould the relief that is granted by the State Commission. It is also borne from the record that the Complainant with his letter dated 28th March, 1994 after the order of the State Commission dated 1st March, 1994 sent the balance payment of Rs. 58,000/-less Rs. 3,000/- compensation awarded by the State Commission, in all Rs. 55,000/- by cheque. The appellants refunded the cheque and have preferred the appeal before this Commission. We, therefore, direct that the Complainant shall make the balance payment of Rs. 61,000/- (taking the admitted payment of Rs. 75,000/-) with interest at the rate of 18% per annum from 1st March, 1993 till payment to the appellants within one month from the date of receipt of this order. The appellants are directed to deliver possession of the said flat within 7 days of such payment. The Complainant shall be entitled to receive the compensation of Rs. 3,000/- as directed by the State Commission. The parties shall, however, bear their own costs of the appeal.