M. A. Bhimji (Deceased) vs Paul Compas & 2 Ors

This appeal petition has been filed by the appellant Shri M.A. Bhimji now (Deceased) Through LRs, against the order dated 8.11.2012 of the State Consumer Disputes Redressal Commission, Panaji, Goa, (in short 'the State Commission') passed in Complaint No.01/2002.

Brief facts relevant for disposal of the present first appeal are that the respondent Nos.1 and 2/original complainants booked a flat with opposite party No.1/respondent No.3 herein. Aggrieved with non-delivery of possession respondent No.1 and 2/complainants filed a consumer complaint before the State Commission alleging deficiency in service against the respondent No.3, who was the opposite party No.1 before the State Commission as well as against the opposite party No.2/appellant herein who was assigned the completion of the remaining work by the opposite party No.1/respondent No.3. The consideration amount was paid to the opposite party No.1/respondent No.3. Opposite party no.1 then entered into an agreement with opposite party No.2/appellant herein for completion of the project. The appellant demanded some more amounts from the complainants, which were not paid by the complainants as they had already paid the total amount to opposite party No.1/respondent No.3. Hence the complaint was filed by the complainants. The State Commission vide its order dated 16.09.2005 allowed the complaint and directed both the opposite parties to refund an amount of Rs.6.4 lakhs along with interest @15% p.a. jointly and severally. The appeal was preferred by the appellant before this Commission being FA No.482 of 2005. This Commission allowed the appeal of the present appellant and set aside the order of the State Commission dated 16.09.2005 qua the appellant, but upheld the same qua the other opposite party i.e. opposite party No.1/respondent No.3. The matter was remanded to the State Commission for deciding the question as to whether the present appellant was also liable to pay the awarded amount to the complainant.

The State Commission vide its order dated 08.11.2012 again considered the issue as per the direction given by this Commission. However, the State Commission confirmed its earlier order dated 16.09.2005. Hence the present appeal.

Heard the learned counsel for the parties and perused the record. Learned counsel for the appellant stated that the State Commission has again passed the same order, which was passed in the year 2005. The question of liability of the present appellant has not been discussed by the State Commission and only the earlier order has been reiterated. The fact is that there is no privity of contract between the respondent Nos.1 & 2 and the appellant herein. No money was ever given by the complainants to the present appellant. Hence there can be no liability of refunding any amount to the complainants by the appellant.

Learned counsel for the appellant stated that the State Commission has failed to appreciate in a proper perspective the Clause 2 of the Agreement dated 28.7.1999 that:-

"As regards the flats in respect of which the agreements of sale are entered into by the Assignee with the buyers as per the list mentioned in Annexure C hereto, the Assignee agrees to complete the said Flats and hand over the said Flats to the assignor to enable the Assignor to fulfil his commitments with the said buyers PROVIDED HOWEVER that the amounts remaining payable by the said buyers will be paid to the Assignee by the Assignor before taking possession of the said Flats from the Assignee and the responsibility and liability of honouring the commitments under the respective agreements with the buyers of the said six Flats shall remain exclusively on the Assignor. The Assignee shall have no connection whatsoever in any manner with the buyers of the said six Flats nor the Assignee shall have any commitment, liability or responsibility to the said buyers.

Learned counsel for the appellant stated that the State Commission with this Clause ought to have appreciated the entire Agreement in its entirety and would under no circumstances have made the appellant/opposite party No.2 jointly and severally liable.

Learned counsel for the appellant argued that the State Commission ought to have appreciated that the agreement was on the basis of some specific understanding that a decree was already passed against Regency Builders in the Civil Suit No.151/97/B by the Civil Judge Senior Division at Panaji in terms whereof M/s. Regency Builders were ordered to pay to the appellant/M/s. Mercantile Finance House Pvt. Ltd. an amount of Rs.41,35,172/- with interest @36% on Rs.10 lakhs from 15.9.1997 till payment.

Learned counsel for the appellant further stated that the State Commission consequently ought to have appreciated that the assignment was under some specific understanding, one of them being that the amounts remaining to be paid by the buyers would be paid to the assignee by the assignor before taking possession of the said flats.

In support of his arguments, learned counsel for the appellant relied upon the following judgment:-

Vimlesh Kumari Kulshrestha Vs. Sambhajirao and Anr. (2008) 5 SCC 58. It has been held that:

"18. It is no doubt true that ordinarily an endeavour should be made by the court to give effect to the terms of the agreement but it is also a well settled principle of law that an agreement is to be read as a whole so as to enable the court to ascertain the true intention of the parties. It is not in dispute that no plan was prepared. A purported sketch mark was attached with the plaint, which was not proved. Evidences brought on record clearly lead to the conclusion that the appellant was not the tenant in respect of the entire house. She, in her deposition, even did not claim the same. Another tenant was occupying some rooms in the same premises. Appellant herein in her evidence also admitted that no map was attached to the agreement.

It is in the aforementioned context, the meaning of the words used in the agreement must be determined. It refers to the property where the appellant was living and not any other property. If the appellant was living in a part of the property, only the same was the subject matter of sale and not the entire premises.

Reliance, has been placed by Mr. Narasimha on a decision of the House of Lords in Hillas & Co. Ltd. Vs. Arcos, Ltd. [(1932 All. E. R. 494], wherein it was held;

"It is the duty of the court to construe agreements made by business men - which often appear to those unfamiliar with the business far from complete or precise- fairly and broadly, without being astute or subtle in finding defects; on the contrary, the court should seek to apply the maxim verba ita sunt intelligenda ut res magis valeat quam pereat. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as, for instance, the implication of what is just and reasonable to be ascertained by the court as matter of machinery where the contractual intention is clear but the contract is silent on some detail. Thus in contracts for future performance over a period the parties may not be able nor may they desire to specify many matters of detail, but leave them to be adjusted in the working out of the contract."

An agreement of sale must be construed having regard to the circumstances attending thereto. The relationship between the parties was that of the landlord and tenant. Appellant was only a tenant in respect of a part of the premises. It may be that the boundaries of the house have been described but a plan was to be a part thereof. We have indicated hereinbefore that the parties intended to annex a plan with the agreement only because the description of the properties was inadequate. It is with a view to make the description of the subject matter of sale definite, the plan was to be attached. The plan was not even prepared. It has not been found that the sketch of map annexed to the plaint conformed to the plan which was to be made a part of the agreement for sale. The agreement for sale, therefore, being uncertain could not be given effect to."

On the other hand, learned counsel for the respondent No.3 stated that the flat which was meant for the complainants has been sold by present appellant and has pocketed the total consideration of the said sale, whereas all the major expenditure on construction was incurred by opposite party No.1/respondent No.3. Thus, opposite party No.2/present appellant has earned profit in the sale of the said flat, which was to be given to the complainants.

Learned counsel for the respondent Nos.1 & 2/complainants stated that the complainants are not concerned who gives the refund to the complainants. However, it is to be seen that the left over work of construction was given to the appellant by opposite party No.1/respondent No.3. The appellant demanded further amounts from the complainants even though the complainants had already paid the requisite amount to opposite party No.1/respondent No.3. The State Commission has examined the issue in great detail and has reached to the conclusion that both the opposite parties are responsible for the refund of the amount paid by the complainants.

Learned counsel for the complainants further stated that no consent was taken by the opposite party No.1 for assigning the work to the opposite party No.2. The complainants came to know this assignment when they received demands from opposite party No.2. As no consent was taken from the complainants, the assignor and assignee both are liable for any damage occurred to the allottees/complainants. In support of his arguments learned counsel referred to the judgment of the Hon'ble Supreme Court in Indu Kakkar Vs. Haryana State Industrial Development Corporation Ltd. & Anr., (1999) 2 SCC 37, wherein the following has been observed:

"19. In fact, the question is not whether there is any legal bar for the allottee to make assignment of the plot. The real question is whether the assignee has a legal right to claim performance of any part from the allottor. Answer of the said question depends upon the terms of allotment. Assignment by act of parties may cause assignment of rights or of liabilities under a contract. As a rule a party to a contract cannot transfer his labilities under the contract without consent of the other party. This rule applies both at the Common Law and In Equity (vide para 337 of Halsburys Laws of England , Fourth Edition , part 9). Where a contract involves mutual rights and obligations an assignee of a right cannot enforce that right without fulfilling the co-relative obligations. The aforesaid principle has been recognized by a Constitution Bench of this Court In Kkardah Company Ltd. vs. Raymon and Co. India (Pvt) Ltd [AIR 1962 SC 1810]. T.L. Venkataramiah J. who spoke for the Bench has observed thus:

"The law on the subject is well settled and might be stated in simple terms. An assignment of a contract might result by transfer either of the rights or of the obligations thereunder. But there is a well-recognised distinction between these two classes of assignments. As a rule obligations under a contract cannot be assigned except with the consent of the promisee, and when such consent is given, it is ready a novation resulting in substitution of liabilities. On the other hand rights under a contract are assignable unless the contract is personal in its nature or the rights are incapable of assignment wither under the law or under an agreement between the parties."

I have carefully considered the arguments advanced by the learned counsel for the parties and have examined the material on record. It is seen that the State Commission has critically examined all the aspects of the case in respect of liability of the appellant/opposite party No.2. The State Commission has observed:

"20. Admittedly, O.P. No.1 could not complete the project in which O.P.No.1 was required to sell the flat F/6 to complainants and therefore O.P. No.1 had assigned the completion of the said project to O.P.No.2 by virtue of agreement dated 28/7/1999. The entire project was assigned by O.P.No.1 to O.P.No.2 as it where is basis and it was agreed between O.P.No.1 and O.P.No.2 that O.P.No.2 was entitled to complete the whole building at his own costs and sell the entire flats and shops in the same rates and in the manner he deemed fit and proper and the entire sale receipts were to be appropriated by O.P.No.2 to himself towards recovery of his dues payable by O.P.No.1. However an exception was made as regards the six flats, including flat No.F/6, which was agreed to be sold to the complainants. As regards these flats it was stipulated by and between O.P.No.1 and O.P.No.2 that O.P.No.2 would complete the said flats and hand over the said flats to O.P.No.1 to enable O.P. No.1 to fulfil his commitments with the buyers provided that the amounts remaining payable by the said buyers would be paid to O.P.No.2 by the O.P.No.1 before taking possession of the said flats from the O.P.No.2. It was further stipulated that the responsibility and liability of honoring the commitments under the respective agreements with the buyers of the said six flats would remain exclusively on O.P. No.1 and O.P. No.2 was to have no connection whatsoever in any manner with the buyers of the said six flats nor O.P.No.2 was to have any commitments, liability or responsibility to the said buyers.

O.P. No.2 has taken the plea that there was no contract to sell any flat to the complainants. If that be so under which contract did O.P.No.2 demand Rs.3.3 lacs from the complainants to be paid on or before 31/12/2000 more so when O.P. No.2 was required under the contract dated 28/07/99 to complete the flat and hand over the same to O.P.No.1 to be handed over to the complainants? The defence taken by O.P. No.2 is contrary to the stipulations in the agreement dated 28/07/99.

Admittedly, the complainants had paid to O.P.No.1 more than the amount agreed upon to be paid by the complainants. In other words, the complainants had paid the entire amount due and as such there was no amount to be paid by O.P.No.1 to O.P.No.2 on flat F/6. O.P.No.2 was therefore not right in demanding further payment of Rs.3.3 lacs from the complainants to deliver flat F/6 to the complainants which O.P.No.2 could also not do in terms of the agreement dated 28/07/1999. The complainants therefore were not bound to accede to the said illegal demand of O.P.No.2 to pay the said sum of Rs.3.3. lacs over an above the amount paid by them to O.P.No.1. The complainants having paid the entire sale price to O.P.No.1, O.P.No.2 was not entitled to receive any further amount from O.P.No.1 in terms of clause 2 of the agreement dated 28/07/1999 but on the contrary was bound to complete the flat and hand over the same to O.P. No.1 to be delivered to the complainants. O.P.No.2 could not have sold the suit flat under the agreement dated 28/07/1999 either because the complainants had failed to pay to O.P.No.2 the said sum of Rs.3.3. lacs nor could have sold the same without the consent of O.P.No.1 on the specious plea that O.P.No.1 owed him some money in as such as the agreement dated 28/07/99 did not provide for such a sale. The action of O.P.No.2, in selling the suit flat, if at all it has been sold, is in breach of the said agreement dated 28/07/1999. O.P.No.2 has sold the Flat F/6 for which the complainants had paid the entire amount due and has appropriated the amount to itself or rather misappropriated the same. We have already noted that O.P.No.2 has failed to disclose the Commission the amount for which the suit flat has been sold. The O.P. No.1 has with him Rs.6.4 lacs paid by the complainants and O.P.No.2 now has the money of the flat which he claims he has sold which flat was to be delivered to the complainants through O.P.No.1 upon its completion. O.P.No.2 is not entitled to the said sale proceeds. Although the complainants had agreed to purchase the suit flat from the O.P.No.1, by virtue of agreement dated 31/06/1996, the complainants were the beneficiaries of the agreement dated 28/08/99 between O.P.No.1 and O.P.No.2 within the meaning of Section 2(d)(ii) of the C.P. Act, 1986 and thus the complainants were entitled to implead. O.P.No.2 alongwith O.P.No.1 for reliefs claimed by them. Since O.P.No.2 has now got the money of the flat which was agreed to be built and given to the complainants, the liability to pay the amount, paid by the complainants to O.P.No.1 was rightly saddled on both the O.Ps. jointly and severally by order dated 16/09/05."

From the details given by the State Commission, it is brought out that the complainants had paid Rs.6.4 lacs. The opposite party No.2/appellant herein had sold the said flat, but the amount has not been disclosed before the State Commission. The appellant was not entitled to sell the said flat because as per the agreement between the opposite party No.1 and opposite party No.2, the flat was to be handed over after completion by the opposite party No. 2 for handing it over to the complainants. Thus, the opposite party No.2 must have earned profit by selling the said flat illegally to another party. Apparently, it seems that only the opposite party No.1 is liable to pay because the money was paid to them. As the money was invested in the building and later on the work was assigned to opposite party No.2 by opposite party No.1, therefore, it is not clear as to what really happened to this Rs.6.4 lacs whether this amount stood invested in the building or some part of the building was transferred to opposite party No.2. From the assignment agreement, it is not possible to know the exact details of the understanding and position of fund transfer between the two parties. Hence, as both the parties have benefited at the cost of the complainants, both the opposite parties are liable to pay the money paid by the complainants along with interest.

So far as the argument of the learned counsel for the appellant that Clause 2 of the agreement dated 28.7.1999 should have been appreciated by the State Commission in the context of the whole agreement and understanding reached between both the parties is concerned it has been stated by the learned counsel that there was an understanding that remaining amount to be paid by the buyers would be paid to the assignee by the assignor before taking possession of the flat. In this regard, in my view, the written clause of the agreement has to be given more importance as compared to the understanding and particularly when one party is denying the understanding. Clearly, the State Commission could not have based its decision on the understanding reached between the parties when a clear agreement with specific clauses was available on file. An understanding which is against the written contract cannot be given any weightage while appreciating the provisions of the contract. The understanding is not flowing naturally from the written contract and therefore, the State Commission could not have interpreted the contract in terms of the understanding, therefore, the reliance of the learned counsel in Vimlesh Kumari Kulshrestha Vs. Sambhajir Rao and Anr. (supra) is misplaced in the context of the assignment.

Based on the above discussion, I do not find any merit in the present appeal. Accordingly, First Appeal No.734 of 2012 is dismissed.