Meena Shyam Bhavsar vs M/s Ankush Enterprises & Anr

AVM J. Rajendra, AVSM VSM (Retd), Member

The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 22.08.2012 passed by the State Consumer Disputes Redressal Commission Maharashtra, (hereinafter to be referred as “the State Commission”), in Consumer Complaint No. 36 of 2011, wherein the Complaint filed by the Complainant (Appellant herein) was partly allowed.

As per Office report, this Appeal has been filed with the delay of three days. In the facts and circumstances of the case, the same is condoned.

For the Convenience the parties are being referred to as mentioned in the Complaint before the State Commission. Smt. Meena Shyam Bhavsar is identified as the Complainant. While M/s. Ankush Enterprises Pvt. Ltd. is referred to as the Opposite Party / Builder.

Brief relevant facts of the case are that the Complainant/ Appellant booked a flat in the residential project of OP/Respondent located in Chincholi village, Malad (W), Mumbai. The OP issued an allotment letter on 20.12.2001, specifying Flat No. 502 on the 5th floor of the A Wing Building, which was to be constructed on a specific plot. The total cost of the flat was Rs. 11,30,500/- out of which the Complainant had paid an earnest amount of Rs.51,000/-. The remaining amount of Rs.10,79,500 was supposed to be paid in installments as per the progress of the construction as stipulated I the allotment letter, until the completion. However, the OP/Respondent, after the alleged collection of the amount, failed to commence the construction of the building as agreed upon in the contract. The construction was only carried out up to the ground plus two floors, and no further progress was made. The Complainant forwarded several written notices to the OP/Builder on several occasions till 2009, but the OP/Builder claimed to have faced hurdles that prevented them from completing the construction and fulfilling their promise.

Being aggrieved due to the deficiency on the part of the OP/Builder, the Complainant filed a consumer complaint no. 36 of 2011 before the State Consumer Dispute Redressal Commission, Maharashtra and prayed for handing over of the flat promised, within six months; or payment of compensation to the tune of Rs.49,00,000/-; or allotment of alternative accommodation in same area; and an amount of Rs.50,000/- for mental harassment on account of non-delivery/possession of the flat booked and damages.

The OP/Builder, in their written response, denied the Complainant's claim. They stated that there is no Agreement executed between the parties. However, the letter of allotment was a xerox copy and not confirmed by the Complainant. They submitted that the building plans were only sanctioned up to the ground plus three floors, while the Complainant had booked a flat on the 5th floor. They claimed that due to the lack of proper sanction for the proposed construction, they were unable to fulfill the Complainant's request. The OP/Builder offered to return the money paid by the Complainant along with interest at a rate of @18% per annum, but the Complainant declined. They further submitted that the contract between the parties is frustrated and cannot be honored due to the absence of sanction for the building plans up to the 5th  floor.

The learned State Commission, upon hearing the parties, and considering the facts and the circumstances, of the case allowed the Complaint as under on 22.08.2012: -

(1) The complaint is partly allowed.

(2) The opponent builder/developer is directed to refund an amount of Rs.51,000/- to the complainant together with an interest @18% p.a. effective from the date of filing of complaint i.e., 22/02/2011 till realization of the amount.

(3) The opponent builder/developer is directed to pay Rs.25,000/- to the complainant for the mental harassment and agony and Rs.10,000/- as costs of litigation.

Being aggrieved by the impugned order of the State Commission, the Complainant (Appellant herein) has filed this present Appeal no. 722 of 2012.

The Appellant/Complainant raised several objections and grounds against the impugned order of the State Commission, which are as follows:

a) The State Commission failed to consider that the OP’s claim of planning to construct a ground plus seven floors was not valid. This claim was raised after the complaint was filed and was not mentioned in any previous correspondence or the allotment letter agreement with the Appellant.

b) The State Commission failed to acknowledge that there was no communication from the Respondents to the Appellant regarding the option to return the money with 18% interest. The Respondents have not provided any proof of such correspondence.

c) It is important to note that the Opponents/ Respondents collected money from the Appellant for over 10 years without disclosing that they did not obtain sanction for the development of floors beyond ground plus three. This action itself is not justifiable.

d) It is crucial to note that there was a continuous subsistence of the contract, as acknowledged by the OP, and the contract was never terminated. Only when the matter was referred to State Commission did the Opponents/Respondents claim that the contract could not be performed due to impossibility, which cannot be accepted at this stage.

The Appellant-Complainant prayed for the following:

(A) that this Hon’ble National Consumer Disputes Redressal Commission may be pleased to quash and set aside the order and judgement dated 22nd August 2012 passed by the Ld. Consumer Disputes Redressal Commission, Mumbai in Complaint Case No.CC/ 11/36;

(B) that the records and proceedings in respect of the Complaint Case No.CC/ 11/36 be called for;

(C) that pending the hearing and final disposal of the present Appeal, this Hon’ble National Commission may be pleased to stay the execution of the order and judgement dated 22nd August 2012 passed by the Ld. Consumer Disputes Redressal Commission, Mumbai in Complaint Case No.CC/11/36 on such terms and conditions as this Hon’ble Court may deem fit and proper;

(D) ad-interim relief in terms of prayer clause (C) may be granted;

(E) such further and other reliefs as this Hon'ble Court may deem fit and proper.

We have gone through the Complaint, pleadings and material brought on record by both the parties as well as the written submission filed by both the parties and heard the learned Counsel for both the Parties.

The Learned Counsel for the Appellant argued that the State Commission made several errors in their decision. Firstly, the refund of the earnest money with interest was awarded from the date of filing the complaint, but the Appellant believed it should have been from the date of initial payment (earnest money) on 20.12.2001. Additionally, exemplary compensation should have been granted. The State Commission acknowledged that the Appellant was wronged, and the balance of convenience favored the consumer, they did not award adequate compensation. The Appellant had endured harassment and agony for the past 20 years due to the actions of the Respondents. The Appellant argued that it would be a travesty of justice if they were not adequately compensated for their suffering.

The Appellant's Counsel also brought up another point, stating that during the pendency of the first appeal, the Appellant discovered that the Respondent, M/s Ankush Enterprises, had sold their rights, title, and interest in the project to M/s Ahimsa Builder. The Appellant filed an Impleadment Application to include M/s Ahimsa Builder in the proceedings, which was granted on 17.10.2019. He argued that this information is significant as it indicates the fraudulent intentions of the Respondent and their attempt to avoid responsibility.

The Appellant's Counsel further argued that due to the delay in possession of the flat, the Appellant had to sell her own house and incurred huge expenses on rent for alternative accommodation. The Appellant's prayer is for the Respondents to provide alternate accommodation to her and enhanced compensation as sought before the State Commission.

The Counsel for the appellant relied upon the following judgments to support their arguments:

a) Wg. Cdr. Arifur Rahman Khan and Aleva Sultana & Others Vs. DLF Southern Homes Pvt. Ltd. (Now Known As Begur Omr Homes Pvt. Ltd.) reported as 2020 SCC OnLine SC 667

b) Haryana Urban Development Authority Vs Raj Laxmi reported as (2005) 9 SCC 509.

c) R.K. Singhal Vs M/s Sudradh Constructions Pvt. decided on 28.08.2020 in First Appeal No. 685 of 2015.

The Learned Counsel for the Respondent No. 1 & 2 argued that during the pendency of the First Appeal, Respondent No. 1 & 2 had already tendered the decretal amount to the Appellant. A letter dated 14.02.2020 was forwarded along with a cheque for the amount calculated up to 29.02.2020. However, the Appellant returned the cheque vide letter dated 22.02.2020. Therefore, according to the Respondents, the Appellants should not be entitled to claim any interest beyond 29.02.2020. The learned counsel also submitted that the reliance placed by the Appellants on the supplementary agreement dated November 2014, filed by the newly added Respondent No. 3 and 4, is irrelevant. He argued that the said document is not part of the record of the State Commission and has no bearing on the present matter. Therefore, the Counsel requested that it should be ignored.

The learned Counsel for the Respondents argued that the Appellant has already been adequately compensated by the State Commission, as she has been granted interest at a rate of 18% per annum on the amount to be refunded. He pointed out that this interest rate is higher than the usual rates granted by consumer forums, which generally range from 9% to 12% per annum. The Counsel referred to specific cases such as Amit Soni & Orrs. vs. Umang Realtech Pvt. Ltd.- CC. No. 2524/2017 and Shree Ostwal Builders Ltd. & Ors. vs. Subhash G Master- FA No. 94/2017, where interest rates of 12% were granted; The Counsel further mentioned the case of Kolkata West International City Pvt. Ltd. vs. Devasis Rudra- Civil Appeal No. 3182/2019, where the Supreme Court reduced the interest rate granted on a refund from 12% to 9%. However, the Respondents have graciously accepted the 18% interest rate granted by the State Commission and have not filed any appeal against it, indicating their acceptance of the decision.

The Counsel for the Respondents further argued that it is an admitted fact that the building, specifically Wing A, in which the Appellant had booked the flats on the 5th floor. Thus, as per Section of 56 of India Contract Act, 1872, the contract became void as it was impossible to complete the building beyond the 3rd floor due to the lack of necessary permissions. The Appellant has already been adequately compensated with the refund of earnest money and the awarded interest at a high rate of 18%. The Respondents' bonafide conduct was highlighted, as they did not demand instalments for floors beyond the 3rd floor due to the lack of permission, showing their good intentions.

We have given careful consideration to the arguments advanced by both the parties and have examined the material on record. The State Commission in its Order dated 22.08.2012 has observed the following: -

…6… “The case of the opponent builder is that they could not fulfil the contract as their project did not meet the approval to construct up to 7th floor. Neither opponent builders adduced any documentary evidence in support of their contention for not completing building project up to 7th floor, nor the Complainant did file any record od completion of the project. On the contrary, the Complainant claimed the compensation at Market rate or alternatively direction to the opponents to allot a new flat in other project. The prayer of the Complainant to issue direction for allotting the flat in other project is not within the jurisdiction of the Commission as it is inconsistent with the provision of Sec. 14 of Consumer Protection Act, 1986.

“7. In the case on hand, neither the builder nor the complainant brought on record any documentary evidence that the building is completed up to 5th floor otherwise. The opponent builder has rendered deficient services by not delivering the promised flat on 5th floor for whatsoever reason. The-builder/developer in such a situation cannot be fully exonerated for not fulfilling his obligations. In such situation, the balance of convenience goes in favour of consumer who is required to be compensated suitably by refunding earnest money together with interest and compensation for mental agony for failure of opponent builder to deliver the flat possession. The complainant also deserves to be awarded suitably by the cost of this litigation for compelling reasons leading to file this complaint for redressal of grievance against opponent builder/ developer…”

It is a matter of record that the Appellant paid Rs.51,000/- as an earnest money to the Respondent on 20.12.2001. There is no agreement other than the Allotment Letter dated 20.12.2001 that has been brought on record. It is also not clear as to what duration within which the construction was to be completed and flat was to be handed over. It is also not part of record as to what is the liability of either of the parties in respect of delays in payment of instalments as well as delay in execution of the construction work.

It is a case where after the initial payment of Rs.51,000/- on 20.12.2001 by the Appellant, no further payment of instalments was either demanded or paid. Whereas, as per the allotment letter dated 20.01.2001, it is specific that the instalments were to be paid at different stages of construction work such as casting slab for each floor from 1st to 7th, and thereafter at each stage of commencement of brickwork, plastering, plumbing, electrical and flooring and at the time of possession.

It is also an uncontested fact that the Appellant was aware of the fact that the construction had in fact commenced, progressed and was completed at three storied building itself. However, at no stage, she was either called upon to pay any instalments or she made any payments during any stage of the construction work. Thus, she was conscious of the fact that the construction of flat allocated to her did not progress. On the other hand, there is no evidence that has been brought on record to indicate that the Appellant was notified by the Respondent of the infeasibility of construction beyond 2nd floor and consequently cancelling her Allotment Letter dated 20.12.2001 as well as immediately making refund of her dues. Thus, she was kept in suspense with hope for commencement of construction beyond 2nd floor and handing over of the flat she booked.

At the same time. the contentions of the Appellant as regards the claims for handing over the flat she booked in the stated circumstances; or allotment of alternative flat in the same area; or payment of Rs. 49 Lakhs; and payment of rent liability alleged have been incurred by her have not been substantiated by the contract between the parties, law or precedents on the subject. Therefore, these claims are rejected.

In view of the foregoing, the order passed by the learned State Commission dated 22.08.2012 to the extent of awarding refund of Rs. 51,000/- paid as earnest money, Rs. 25,000/- towards mental harassment and Rs. 10,000/- towards costs of litigation are endorsed. However, the Respondent failed to forthwith notify the Complainant of the infeasibility of construction of the flat she booked. The Respondent also failed to cancel the allotment letter dated 20.12.2001 and immediately refund her dues. Therefore, the liability of Interest should be made effective from the day it became clear that construction of 5th floor was not possible.

In the absence of any record prescribing the time duration for completion of the construction project, it is being considered as 3 years from the date of issue of the Allotment Letter dated 20.12.2001. Therefore, we consider it appropriate to make the Interest element @ 18% per annum on Rs. 51,000/- to be applicable from 20.12.2004 instead of 22.02.2011.

ORDER

Based on the above discussion, we partly allow the Appeal to the extent that the Order dated 22.08.2012 passed by the learned State Commission is modified to the extent that the Interest @ 18% per annum on Rs. 51,000/- shall be payable from 20.12.2004, instead of 22.02.2011.

No order as to costs.

All the pending Applications, if any, are disposed of accordingly.