MANOHARA CONSTRUCTION COMPANY & ANR. vs YOUNG WOMENS CHRISTIAN ASSOCIATION & ANR.

This first appeal has been filed under section 19 read with section 21(a)(ii) of the Consumer Protection Act, 1986 against the impugned order dated 19.08.2015, passed by the Kerala State Consumer Disputes Redressal Commission (hereinafter referred to as ''the State Commission'') in consumer complaint No. 20/13, filed by the present respondent, Young Women''s Christian Association (YWCA) against Manohara Construction Company, vide which, the said complaint was allowed.

The facts of the case are that the complainant YWCA invited pre-qualification tenders from registered civil contractors for constructing the building of a Senior Citizens'' Hostel, in response to which, the appellants/opposite parties (OPs) submitted their tender, which was accepted by the complainants on 04.08.2011.An agreement No. 1/2011 dated 18.08.2011 was entered between the parties for construction of the said hostel.The complainant paid a sum of 30,00,000/- as mobilisation advance to the appellants / OPs on 22.08.2011 against an indemnity bound executed by the OPs.It has been stated in the consumer complaint that the OPs had promised to complete the construction in all respects by 30.08.2012, and the time-schedule was the essence of the said agreement.The OPs also furnished a schedule dated 17.12.2011, giving break-up of the works to be completed within each of the 12 months, commencing from 1.09.2011 and ending on 30.08.2012.The OPs started the construction work on 01.09.2011, but by the middle of Jan. 2012, even 15% of construction had not been completed, as alleged by the complainant.The complainant has stated that the demand for payment of additional amount by the OPs was contrary to the agreed terms of the contract.The complainant issued a termination notice to the OPs on 10.05.2012, demanding refund of the mobilisation advance of 30 lakh.Since there was no reply to the notice, the complainant proceeded to retender the contract.The consumer complaint was then filed by them, alleging deficiency in service and unfair trade practice on the part of the OPs and seeking refund of the mobilisation advance made by them after deducting 15% from the same, and making payment of the balance amount of 26,73,147/- alongwith interest @18% p.a. The complainant also demanded a sum of 1 lakh as compensation for retaining the amount given by them to the OPs and to provide litigation cost of 25,000/-.

The complaint was resisted by the appellants/OPs by filing a written statement before the State Commission, in which they stated that the complainant does not fall under the definition of ''consumer'' as given in the Consumer Protection Act, 1986.The matter between the parties was essentially in the nature of a civil dispute and hence, only a civil court of competent jurisdiction could take cognisance of the same.The OPs alleged that the complainant wanted to have the Hostel constructed for commercial purpose only.They were already running other similar institutions like the Working Women''s Hostel and earning profit from the same.The OPs also stated that at the time of quoting the tender itself, there was an understanding between the parties that a sum of 1 crore will be given to the OPs to stock the entire raw material for the work, so as to avoid escalation in prices at a later stage.The OPs had made all arrangements for raw material, tools, machinery and manpower.There was, therefore, no deficiency in service on their part and they were willing to do the work, provided prompt payment was made by the complainant.

The State Commission, after considering the averments of the parties, allowed the complaint and directed that refund of 26,73,147/- be made to the complainant alongwith interest @12% p.a. with effect from 22.08.2011 till realisation and a cost of 10,000/- be also paid to them.Being aggrieved against the order of the State Commission, the OPs are before this Commission by way of the present first appeal.

It was contended by the learned counsel for the appellants/OPs that as per the agreement entered between the parties, the work was to be executed in accordance with the terms and conditions set forth in the tender document.An indemnity bond was executed by them on 22.09.2011, in which it was stated that the estimated project cost was 3,22,67,455/-.It was also stated that an advance of 30,00,000/- had been paid to them.The learned counsel argued that the demand of the OPs for additional funds was never met by the complainants, and hence, the work could not be taken in hand in time.The OPs could not be expected to complete the project worth 3.22 crores against an advance payment of 30 lakh only.The learned counsel further argued that the construction of the project was for a commercial purpose, as the complainants were already running a guest house and a working women''s hostel and charging huge sums of money from the occupants.The learned counsel submitted that the proper forum for adjudication of the matter was the civil court and they had already filed a civil suit against the complainant in the civil court.

In reply, the learned counsel for the complainant stated that the order passed by the State Commission was in accordance with law and the same should be upheld.Despite an agreement having been entered between the parties, the OPs failed to construct the building as per schedule and hence, there was deficiency in service on their part.

I have examined the entire material on record and given a thoughtful consideration to the arguments advanced before me.

The contention of the OPs that the total estimate for the project was about 3.22 crores, against which, only an advance payment of 30 lakh had been made as mobilisation advance by the complainant, has not been denied by the respondent/complainant.The learned counsel for the respondent/complainant was also not able to explain the schedule of payments to be made for the construction work.On the other hand, the appellants/OPs have placed copies of letters on record, addressed by them to the complainant including reminders, according to which, they requested for an advance of 1 crore, so as to enable them to stock the raw material.In the absence of any concrete information about the schedule of payments etc., it is not possible, therefore, to conclude, if there has been any deficiency on the part of the OPs, in delaying the construction of the project.Further, a copy of the letter dated 27.03.2012 addressed by the complainant to the contractors/OPs has been placed on record, saying that the complainant had already paid part bills to the OPs.From the impugned order

passed by the State Commission, it is not clear as to how much construction had been made by the appellants/OPs before the contract with them was terminated by the complainant.It was the duty of the State Commission to make an endeavour to find out, as to how much amount had already been spent by the appellants/OPs for part construction etc.

The next issue for consideration in the matter is that as stated by the appellants/OPs in their written statement before the State Commission, as well as in the grounds of the appeal and oral documents, that the complainant did not fall under the definition of ''consumer'', because the construction of the hostel was a commercial activity undertaken by them to earn profit.The State Commission should have examined this issue as well, after asking the parties to lead appropriate evidence to that effect and then give findings on the same.However, while passing the impugned order, the State Commission has not touched upon this issue at all.

It is evident from the above facts that the impugned order passed by the State Commission does not reflect a correct appreciation of the facts and circumstances of the case.The order passed by the State Commission is, therefore, set aside, being perverse in the eyes of law.The matter is remitted to the State Commission with the direction that they should examine all the issues raised in the pleadings by the parties and then give their conclusion on each issue.It should be clearly brought out, whether the complainant falls within the definition of ''consumer'', as per the Consumer Protection Act, 1986 or not.It should also be stated whether the OPs have spent any amount on part construction of the building etc. and after the termination of the contract, how much amount is required to be paid back by them to the complainant. The parties have been directed to appear before the State Commission for further proceedings on 17.05.2017.