H.R.Venkatesh vs Deutshe Post Bank Home Finance Ltd.

THESE two Revision Petitions arise out of identical matters and therefore, had been clubbed for disposal, both in the proceedings before the District Consumer Forum Bangalore as well as the Karnataka State Consumer Disputes Redressal Commission. The Complainant in RP No.1047 of 2010 is Shri H.K.Ramana represented by his son and power of attorney holder H.R.Venkatesh. This pertains to purchase of Flat No. FF 2 in Apartment block, Elegent Shine. In RP No.1048 of 2010 Shri R.S.S.Sharma was the Complainant before the District and State Fora. This RP pertains to purchase of Flat No.SF 3 in the same Apartment called Elegant Shine. Loans for purchase of the flats in both the cases have been raised from the Respondent, M/s. Deutsche Postbank Home Finance Ltd., with their zonal office in Bangalore and head office in Gurgaon. In both cases, the amount of loan disbursed is substantially higher than the amount for which the respective flat is registered. In both cases, records show that the Revision Petitioner has, in a letter addressed to OP-1, accepted his part of the blame when he writes The grant of a loan for a value much higher than registered sale value establishes the existence of a financier-builder racket but I do not hold this as a deficiency in service as the amount was paid at our instance. In this background, these revision petitions are taken up for disposal through this common order.

THE case of the Complainants is that there has been deficiency in service on the part of the OPs/Respondents in their failure to inspect the building before the disbursal of the loan amount. THEy allege that the opposite parties have collected large sums as processing fees and therefore, had the obligation to properly inspect the building and detect the violations which were subsequently found. Subsequent inspection of this apartment block Elegant Shine by the Engineers of BBMP has resulted in detection of large-scale violation of the building bye-laws. This District Forum rejected the claim on the ground that the transaction between the Complainant and the Opposite Parties was only about giving of housing loans and the opposite parties were not concerned with how the building was constructed. It was held that if any part of the building, constructed prior to the sanction of the loan, was in violation of the sanction plan or building bye-laws, this should have been within the knowledge of the Complainants themselves. In such a case, the Complainant could have brought it to the notice of the Opposite parties and refrained from drawing the loan amount. The allegation that the opposite parties have colluded with the Builder was rejected by the District Forum with the observations that the bank would not have sanctioned loan if such defects has come to its notice.

As already noted, the appeals before the Karnataka State Consumer Disputes Redressal Commission were also decided through a common order. The State Commission held that to invoke the jurisdiction under the Consumer Protection Act, the Complainants/Appellants needed to prove that there was any deficiency in service or any unfair trade practice on the part of the Opposite Parties/Respondents. It dismissed the appeals with the following observation:- If there were any defects in the constructions, the Complainants ought to have been brought to the notice of the Ops so that the Respondents could not have sanctioned from taking the loan prior to filing of the Complaint. The Appellants have not brought to the knowledge about the violation of the building bye-laws. Therefore, there was no information about the violation of the building bye-laws by the Builder to withheld the disbursement of the sanctioned loan. So, if really the builder has violated the terms & condition of the building bye-laws, the remedy available for the Appellant/Complainants is elsewhere. They cannot blame the Respondent who sanctioned the loan and disbursed the same. The matter mainly considered with security for the loan and therefore it is the liability of the Appellant to repay the loan borrowed for purchase of building and constructed the building through a Builder.

THE above order has been challenged by the Revision Petitioner, alleging collusion between the Respondents/OPs and the Builder. Surprisingly, even in this background, in the proceedings before the Karnataka State Commission as well as the District Forum Bangalore, the Builder has not been impleaded by the Complainants as Respondent, although the main grievance arises from detection of violations of building bye-laws by the Builder from whom the Revision Petitioners have purchased their respective Flats. From the records of the cases, we find that the Revision Petitioners had requested the Respondent as well as National Housing Bank to inspect the apartment block called Elegant Shine in the background of allegations of violation of building bye-laws. During the course of arguments, our attention has been specifically drawn to a communication of 23.11.2006 from the National Housing Board to all housing finance companies. In this, a very clear advice has been given which is of direct relevance to the facts of these Revision Petitions. Para B of the communication containing this advice reads as follows:- B. Housing Loan for purchase of constructed property/built up property i) in cases where the applicant approaches the HFC for a credit facility to purchase the built up house/flat, it should be mandatory for him to declare by way of an affidavit-cum-undertaking that the built up property has been constructed as per the sanctioned plan and/or building bye-laws and as far as possible has a completion certificate also. ii) An Architect appointed by the HFC must also certify before disbursement of the loan that the built up property is strictly as per sanctioned plan and/or building bye-laws.

FURTHER, in the complaint petitions before the District Consumer Forum, compensation of Rs.200,000 has been sought for suffering and agony caused to the complainant towards reduced value in the property which is under confirmed order for 100% violation in FSI and total 171% violation (i.e. 50% purchase value) and difficulties for raising loan for purchase of alternative accommodation. To take a view on this, it was required to examine with reference to the agreement between the Complainants and the Opposite Parties, circular dated 23.11.06 referred to above, as well as other evidence brought on record of the fora below to decide whether there was any deficiency in service on the part of Respondents/OPs or not, while sanctioning the loan and implications thereof in the matter. This apparently has not been done. In the absence of the same, we are unable to accept the conclusion that at all stages it was the responsibility of the Complainants, and not of the Opposite parties to see that the Building is constructed according to the sanctioned plan. For the reasons detailed above, the impugned order passed by the Karnataka State Consumer Disputes Redressal Commission, is set aside and the matter is remanded to the District Consumer Forum Banglaore, for fresh consideration in the light of aforesaid discussion.