DIRECTOR GENERAL (INVESTIGATION AND REGISTRATION) vs MOHAN INVESTMENT AND PROPERTIES LIMITED

AN investigation was ordered into several complaints regarding the false and deceptive claims being made by the builders and developers of real estate in different parts of the country. Director (Research), on the basis of the investigation, submitted a Preliminary Investigation Report (PIR) and mentioned therein that builders have been taking gullible consumers for a ride by making tall claims with regard to the appreciation of value of property and also the five-star comforts being provided by them. It was on the basis of these findings that it was recommended in the Preliminary Investigation Report that a Notice of Enquiry may be issued to the above respondent for unfair trade practices within the meaning of Section 36A(1)(ii) and (vi) of the MRTP Act, 1969 (the Act for brief). Accordingly, a Notice of Enquiry was issued to the respondent, Mohan Investment and Properties Limited.

THE allegations against the respondent are that it issued several advertisements and one such advertisement appeared in a newspaper on 6.12.1985 promoting its Mont Clair Apartments at Mussoorie and inviting applications from those desirous of buying apartments/flats. In addition to the pollution free environment, mountain peaks etc., the respondent promised a club house, skating rink, tennis court, restaurant etc. and other facilities to the buyers of these flats/ apartments. THE complaint of the flat buyers is regarding inadequate parking space, unsatisfactory maintenance of the flats, water seepage and lack of other amenities such as central heating, tennis courts, skating rink, lift, club house, restaurant etc. Although there were 65 flat buyers, who had either booked or purchased the flats built by the respondent, only five of them filed a reply to the questionnaire sent by Director (Research) as part of investigation into the complaint. It is on the basis of the information furnished by them that a Preliminary Investigation Report has been filed. In reply to the Notice of Enquiry while it has been denied by the respondent that although it adopted or indulged in unfair trade practices, it has been stated that 87 flats were sold to different persons, there have been no complaints except from five flat buyers and these complaints are not of a serious nature and pertain to minor problems like seepage of water. It has been clarified that water seepage is an individual problem of Shri C.S. Sachdeva who has been given Flat Nos. 501-B and 205-B in Blocks 1 and 2 respectively and steps had already been taken by the respondent to rectify this defect. With regard to the complaint of Lt. Col. Pritam Singh, it has been pointed out that rebate was given to the flat buyers and charges were reduced from Rs. 325/- per sq. ft. to Rs. 310/- per sq. ft. as central heating which was initially promised and was included in the costs of the flat but was not finally provided. Regarding the complaint of delay in handing over the possession to by M/s. Desh Rakshak Aushdhalaya Kankhal, UP and M/s. Shivalik Drugs, Kankhal, UP, it has been mentioned that since these flat buyers defaulted in making payments and their cheques were dishonoured, possession could be delivered to them only after payment was received. It has also been stated that initially three Blocks of six-storeys were to be constructed but later on, after completion of one block, due to certain objections, two blocks of only three-storeys were built and in buildings of three-storeys, it is not necessary to provide a lift while lift has been provided in the other block which has six floors. As regards the club house, restaurant and other facilities, it has been mentioned that the necessary structure of the building has come up and the facilities would be made available after some time. It has also been pointed out that the owners of the apartments are not keen on having a club of their own.

On completion of pleadings, the following issues were framed : (i) Whether the respondent has indulged in or is indulging in the unfair trade practices mentioned in the NOE ? (ii) If answer to issue No. 1 is in affirmative, whether the same UTPs are prejudicial to the public interest or to the consumer or to the consumers in general ? (iii) Relief.

WHILE on behalf of Director (Research), Lt. Col. Pritam Singh, Shri C.S. Sachdeva, Shri Manoj Kumar Jain appeared as witnesses, Shri Y.K. Kapoor, testified on behalf of the respondent. The witnesses appearing for Director (Research) have, by and large, supported the allegations against the respondent. They have deposed that there are no five-star comforts in these apartments and the building lacks the facility of central heating and there is seepage of water and cracks have appeared in the walls and the roof. Witness, Shri Manoj Kumar Jain also stating that not only five-star comforts have not been provided, there is scarcity of water in summer season and there is neither a tennis court nor a skating rink or a club house, not to speak of central heating even though it was promised by the respondent. In his testimony Shri Y.K. Kapoor, who appeared as a witness on behalf of the respondent stated that a rebate was given and the rate per sq. ft. was reduced from Rs. 325/- to Rs. 310/-when the facility of central heating was not provided. He however, admitted that there was no skating rink, tennis court and no restaurant although, the space for the same has been provided. He mentioned that the structure of the club house was complete and although there is a provision of a restaurant in the building, it is not functional.

NEITHER the Advocate for the DG nor the Advocate for the respondent was present when the case was taken up for final hearing, and keeping in view the fact that the case was pending for final arguments for nearly two years, no further adjournment was granted and the case was fixed for pronouncement of order without hearing the arguments. It appears from the facts on record as brought out in the Preliminary Investigation Report and as transpiring from the testimony of the witnesses, that these apartments were advertised and in the brochure issued by the respondent, a club house, restaurant, tennis court, skating rink, laundry service, central heating and caretaker and services cell were promised. Although these facilities have been highlighted in the brochure issued by the respondent at the time of selling these flats, the same have not been provided and, at any rate, are not available for use to the flat buyers. It is not necessary that all the flat buyers should make complaints or appear as witnesses to substantiate the allegations that the facilities advertised and promised by the respondent have not been made available for use and enjoyment. As pointed out by the witnesses who have bought flats in the building promoted and developed by the respondent, it is clear that these facilities have not been made available to the flat buyers. The testimony of the witnesses who have appeared including that of Shri Y. K. Kapoor who is working as Executive Director of the respondent is sufficient to throw light on the deficiencies in these apartments. It is also abundantly clear that neither the club house nor a skating rink has been provided even though the respondent claims to have built the structure of the club house and a restaurant. But, the fact remains that both the club house and the restaurant are not functional and the facilities which were advertised and which attracted the flat buyers are not available to the flat owners. Similarly, there are other deficiencies in the construction like water seepage, cracks in the walls, lack of lifts in two out of three blocks and central heating and insufficient water supply.4 While it is true that when the facility of central heating was deleted from the building plan, the charges were reduced from Rs. 325/- to Rs. 310/- per sq. ft. other basic and essential facilities are either deficient or totally lacking. In view of the above, there is no escape from the conclusion that the complaints of the flat owners are genuine and the respondent can be said to have indulged in unfair trade practices within the meaning of Section 36A(1)(ii) and (vi) of the Act. In view of the aforesaid discussion, the respondent is directed to cease the aforesaid unfair trade practices and desist from indulging in same or similar trade practices in future. Compliance of the order may be made within six weeks of the date of its pronouncement. NOE disposed of.