M/s. Big Banyan Roots vs Manu Sharma

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 27.02.2018 passed by the Karnataka State Consumer Disputes Redressal Commission, Bangalore (hereinafter to be referred as “the State Commission”), in Consumer Complaint No.146 of 2017, wherein the Complaint filed by the Complainant (Respondent herein) was partly allowed.

There was 13 days delay in filing of this First Appeal. For the reason stated in IA 8496/2018, the same is condoned.

For Convenience, the parties in the present case are being referred to as mentioned in the Complaint before State Commission.

Brief facts of the case, as per the Complainant, are that Mr. VK Ravindra and his family applied for land conversion and subsequently entered into a Joint Development Agreement (JDA) and General Power of Attorney (GPA) with Opposite Party (OP) on 30.08.2010. The OP intended to develop the property by constructing a housing complex named "RK Big Banyan Roots," comprising multi-storied apartments, common entrances and other amenities.

The Complainant agreed to purchase an apartment along with a proposed undivided share in the property and entered into a sale agreement and construction agreement with the OP on 06.09.2014, agreeing to purchase the land for Rs. 80 lakhs. He made an initial payment of Rs. 1,08,000/-. The OP promised to deliver possession of the flat by September 2015, with a six-month grace period. The Complainant paid a total of Rs. 75,58,000/- by cheques, which the OP acknowledged. However, the OP failed to deliver the flat, offering various excuses and repeatedly deferring the possession date. The OP intentionally delayed the project. Since The Complainant had raised loans from banks, relatives, and friends to make the payments. He alleged that the OP cancelled the agreement without his consent. When the Complainant sought a refund, the OP gave false assurances and failed to repay the amount. On 14.01.2016, the Complainant had forwarded an email to the OP, who responded by suggesting that he should file a case. Consequently, feeling aggrieved, he filed Consumer Case No. 146 of 2017 before the learned State Commission, seeking a direction to the Opposite Parties to refund Rs. 75,58,000/- with interest at 18% per annum from the date of payment until the date of actual realization, to cancel the sale and construction agreements dated 06.09.2014, and to pay damages of Rs. 10 lakhs.

Upon notice duly served to the Opposite Party by RPAD, the OP failed to appear. Consequently, the Opposite Party was proceeded ex-parte.

The State Commission, in its Order dated 27.02.2018, partly allowed the Complaint with the following directions:-

“The complaint is hereby allowed with costs of Rs. 10,000/-

The Opposite Parties are directed to return a sum of Rs.75,58,000/- to the complainant along with interest at 18% p.a. from the date of payment of the amount, till the date of actual realization within three months from the date of this order. Failing which, the complainant is at liberty to recover the same by filing an application u/s 25 and 27 of the Consumer Protection Act, 1986 against the Opposite Party.”

Aggrieved by the Order of the State Commission, the Appellant/ Complainant filed FA No. 710 of 2018 seeking the following:

“a) Set-aside the impugned ex-parte order dated 27.02.2018 passed by the Karnataka State Consumer Disputes Redressal Commission, Bangalore in Complaint No.146 of 2017 and consequently allow the Appellant to come on record contest the matter Complaint No.146 of 2017;

b) To issue any other order or direction as this Hon'ble Forum may deem just and fit under the facts and circumstances of the case, in the interest of Justice and equity.”

In the Appeal, the Appellant mainly raised following grounds: -

a) The Appellant remained unrepresented before the KSCDRC due to circumstances beyond their control, which were not due to any default or negligence. They have a good case on merits and were prevented from defending their cause.

b) The impugned Order was passed by a single judge of the learned KSCDRC, who is only a judicial member. The Order was issued without proper coram.

c) The Appellant is willing to refund Rs.40,79,000, which due to the Respondent after due deductions. The claim made by the Respondent is inflated, unfounded, and unsubstantiated.

Upon being served notice regarding the Memo of Appeal, the Respondent (Complainant) has not submitted any reply or objections to the present Appeal. However, he filed his written submission and appraised the Impugned order passed by the Ld. State Commission.

During the pendency of the present Appeal, the Respondent/ Complainant filed an IA No. 20257/2018 for the release of the sum of Rs.61,57,876/-. While vide IA No. 8495/2018 the Appellant consented to refund this amount to the Respondent, the learned Counsel for the Appellant stated that certain statutory dues, including VAT are required to be deducted from this amount. The Appellant deposited Rs.75,58,000/- before the State Commission and consented for release of Rs.61,57,876/- to the Respondent from this amount. Vide Order dated 07.03.2019, this Commission disposed of the said IAs directing the State Commission to release Rs.61,57,876/- to the Complainant from this amount within one week.

Subsequently, on 03.10.2023, the Respondent/Complainant filed an Affidavit for submitting additional documents, asserting that the Appellant had concealed the existence of a third contract, referred to as the Finishing Contract. A copy of the Appellant's letter dated 06.09.2014 was attached, indicating that the value of this contract was Rs.15,00,000/-. The affidavit further highlighted that the total sale consideration for the flat was Rs.81,00,000/-. The Respondent stated that he made a total payment of Rs.75,58,000/- to the Appellant, with receipts already submitted to the State Commission. However, a receipt for one payment of Rs.3,00,000/- was not issued by the Appellant. Additionally, Rs.1,00,000/- was paid for purchase of tiles, bringing the total to Rs.75,58,000/-. The Respondent provided copies of his bank statements to support his claims. Further, he noted that the payment for the Finishing Contract was collected under different names as per Clause 4.4 at Page 51 of the paper book which reads as under:-

“4.4. The “PURCHASER/S” authorize/s, the “VENDOR PARTY-II” to adjust/appropriate all payments made by him/her/them under any head(s) of dues against outstanding, if any, in his/her/their name/s as the “VENDOR PARTY-II” may in its sole discretion deems fit and the “PURCHASER/S” undertakes not to object/demand/direct the “VENDOR PARTY-II” to adjust his/her/their payments in any manner otherwise than as decided by the his/her/their in its sole discretion;”

Per contra, in response to the Affidavit filed by the Respondent/ Complainant on 03.10.2023, the Appellant Builder countered that the Respondent had agreed to purchase Flat No. 203 in the Appellant’s Project for a total sale consideration of about Rs.66,00,000/-. This amount did not include the execution of finishing works by the Appellant, unlike other apartments in the complex. An additional sum of Rs.15,00,000/- was payable towards finishings such as painting, flooring, sanitary wares, electrical, and hardware, if the Respondent desired the same to be executed by the Appellant. The Respondent was given the choice to avail this service through the Appellant or any third party of their choice, and it was acknowledged that the Respondent chose not to avail this service from the Appellant. Notably, Rs.15,00,000/- was never paid to the Appellant. Consequently, the affidavit dated 03.10.2023 deserves dismissal.

The Respondent filed a Rejoinder to counter the Appellant's aforesaid assertions, categorically denying all contentions. It was contended that Annexure R1, enclosed by the Respondent, clearly indicates a third contract for Rs.15,00,000/-. Additionally, at Page 3 of the Memo of Appeal, the total consideration is stated as Rs. 81 lakhs, comprising Rs. 66 lakhs and additional Rs. 15 lakhs. The Respondent affirmed that services under the third contract were indeed availed and the corresponding payments were made. The Respondent alleged that the Appellant engaged in fraudulent practices by falsely creating a third contract under the guise of a finishing contract. Referring to Clause 4.4 at Page-51, it was contended that the cheques issued by the Respondent bore different names, yet payments were received solely by the Appellant. Upon examining the payment receipts filed before the State Commission, it became evident that the signatures on these receipts matched those on receipts for the main contracts. Therefore, the Respondent contended that the Appellant had collected payments but deceitfully allocated these funds under different names for reasons known only to them.

In his arguments, the learned counsel for Appellant reiterated the facts of the case and the grounds of Appeal. He argued that the impugned order passed by the State Commission violates the principles of natural justice. Records establish that the Complainant deliberately mentioned the old address in the memo of parties of the Consumer Complaint, despite being aware that the Appellant had changed the office address in 2015 itself i.e. two years prior to filing the complaint. Even on the merits, clearly, the Appellant terminated the contract at the request of the Respondent vide email dated 17.01.2016 and requested the Respondent to come over and settle the accounts, which he failed to do. The Counsel highlighted that the Appellant's absence in the proceedings was not deliberate but was solely due to the mischief played by stating the incorrect address, for which they cannot be held responsible. Therefore, without prejudice, the Appellant was willing to refund a sum of Rs.40,79,000/-. However, by the order of this Commission, the Respondent has already withdrawn Rs.61,57,876/-, which is also more than he is entitled to. In view of these submissions, the present appeal may be allowed.

On the other hand, the learned counsel for Respondent argued that, despite repeated requests the Appellant failed to provide a possession date. He paid Rs.61,57,876/-+ Rs.14,00,000/-, amounting to Rs.75,57,876/- rounded off to Rs.75,58,000/-. The Appellant deliberately concealed the existence of a third contract, namely the finishing contract for Rs.15,00,000/-, apart from the two documented contracts: the Construction Agreement dated 06.09.2014 for Rs.33,60,000/- and Sale Agreement dated 06.09.2014 for Rs.22,40,000/-. It was asserted that the Respondent made payments amounting to Rs.61,57,876/- as agreed upon in the appeal, while the Appellant received cheques totaling Rs.13,00,000/- for the third contract, which were deposited under a different name. He further pointed to discrepancies such as receipts for cheques for Rs.4 Lakhs and Rs.6 Lakhs issued on plain paper, without a receipt for the Rs.3 lakhs by cheque. The Appellant issued duplicate receipts for same cheque on different dates, signed by the same authority as other receipts. Additionally, the Respondent purchased Rs.1,00,000/- Tiles from their own funds and provided them to the Appellant for the finishing contract, as instructed. Due to Appellant's failure to complete the project on time, there is no justification for any deductions during the refund process. He contended that the total sale consideration is Rs.81,00,000/-, which includes all three contracts, and he made total payment of Rs.74,58,000/- and submitted the receipts before State Commission. Out of this amount, receipt for one payment of Rs.3 Lakhs was not issued by the OP. He also paid Rs.1,00,000/- for purchase of tiles. Thus, the Complainant made a total payment of Rs.75,58,000/-. He asserted that the Appeal lacks merit, constitutes misuse of the legal process, and should be dismissed.

We have examined the pleadings and associated documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned Counsels for both the Parties.

It is an admitted position that the Complainant and the OP have entered into a contract for purchase an apartment and the undivided share of the property vide a Sale Agreement and a Construction Agreement both dated 06.09.2014. The total sale consideration was Rs.81,00,000/-. The OP promised to deliver possession of the flat by September 2015, with a six-month grace period. However, the OP failed to deliver the flat, citing various reasons. The OP cancelled the agreement and, thereafter, despite repeated approaches, the OP failed to return the amount paid.

It is the contention of the Appellant that against the affidavit filed on 28.11.2023 that the the payments were made to persons who are not associated with Appellant. The Appellant deposited 75,58,000/- before the State Commission and, out of this, Rs.61,57,876/- has been permitted to be withdrawn and released to the Complainant. On the other hand, the learned Counsel for the Respondent contended that the Appellant had collected cheques from him and asked the space of the payee in the cheque to be left blank and that he paid the amounts accordingly. That was the reason due to which the credits were into different accounts, while he did not know who they are.

Examination of summary of payments made by Complainant and his bank account statements reveal that the Complainant made a total of 21 payments. These included 3 payments through online, 17 payments by cheques and one payment stated to be in cash. However, upon careful scrutiny of these payments, there is no specific single payment detail of Rs.15,00,000/-. Further, reviewing of Annexure R-1 dated 06.09.2014, which pertains to the third Contract or finishing contract reveals that the value of this contract was Rs.15,00,000/-. Moreover, it is the pointed contention of the Appellant in the Memo of Appeal that the total sale consideration for the flat in question was Rs.81,00,000/-. Considering the documented evidence on record, the contention of the Appellant that the amount of Rs.15,00,000/- was never paid to them is untenable. Therefore, the learned State Commission appropriately determined the amount paid by the Complainant to the OPs towards the flat in question.

It is undisputed that there has been delay in the handing over possession of the Flat as per the Agreement and the OP had cancelled the allotment to the Complainant. In these circumstances, the OP is bound to refund the amount paid by the Complainant as consideration towards the purchase of the Flat in question. In number of cases, the Hon’ble Supreme Court and this Commission have decided favorably on the right of the buyers to get a refund of their money in case of delay by the Developer in giving possession in terms of the Agreement and cancellation of allotment.

In the case of Emmar MGF Land Ltd. & Ors. Vs. Amit Puri- {(II 2015 CPJ 568 (NC)}, decided on 30.03.2015, this Commission has held as under:

“After the promised date of delivery, it is the discretion of the Complainant whether to accept the offer of possession, if any, or to seek refund of the amounts paid by him with some reasonable compensation and it is well within his right to seek for refund of the principal amount with interest and compensation.”

As regards the rate of interest applicable and the scope for compensation in such matters, the Hon’ble Supreme Court in Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor, in Civil Appeal No.6044 of 2019 decided on 07.04.2022 has held that:-

“We are of the opinion that for the interest payable on the amount deposited to be restitutionary and also compensatory, interest has to be paid from the date of the deposit of the amounts.  The Commission in the Order impugned has granted interest from the date of last deposit.  We find that this does not amount to restitution. Following the decision in DLF Homes Panchkula Pvt. Ltd. Vs. DS Dhanda and in modification of the direction issued by the Commission, we direct that the interest on the refund shall be payable from the dates of deposit. Therefore, the Appeal filed by purchaser deserves to be partly allowed. The interest shall be payable from the dates of such deposits.

At the same time, we are of the opinion that the interest of 9% granted by the Commission is fair and just.”

In view of the foregoing, the Appellant has not brought anything substantial in facts or question of law or established any legal infirmity in the Order of the State Commission. The deficiency in service of the Appellant in its contractual obligations with the Complainant has also been established. Therefore, the Order of learned State Commission dated 27.02.2018 is modified as under: -

ORDER

1) The Appellant is directed to refund Rs.75,58,000/- along with interest @9% p.a. from the respective dates of deposit till its realization, within one month from the date of this order. In the event of delay, the amount payable shall carry interest at the rate of 12% per annum from the date of expiry of one month until the realization of the entire amount. Of the total amount payable, the sum of Rs.61,57,876/- already paid to the Complainant is liable to be excluded.

2) The Appellant shall also pay Rs.30,000/- as cost of litigation, within a period of one month from the date of this order.

With above directions, the instant First Appeal No. 710 of 2018 is disposed of.

All the pending Applications, if any, also stand disposed of accordingly.

The statutory amount deposited by the Appellant, if any, be refunded after due compliance of the order.