M/S. Lokhandwala Construction Industries Pvt. Ltd vs Bala K. Ayer

Aggrieved by the Order in CC/10/48 passed by the State Consumer Disputes Redressal Commission, Maharashtra, (hereinafter referred to as 'the State Commission') M/s. Lokhandwala Construction Industries Pvt. Ltd. and its Managing Director, arrayed as Opposite Party No. 1 & 2 in the Original Complaint preferred this First Appeal under Section 19 of the Consumer Protection Act, 1986 (for short the 'Act'). By the impugned order, the State Commission has allowed the Complaint in part with the following directions:

"(i) The complaint is partly allowed.

(ii) Opponent No.1 - M/s.Lokhandwala Construction Industries P. Ltd., do pay to the Complainant compensation of Rs. 25,00,000/- within a period of 45 days from today and failing which, shall pay interest over it @18% per annum till its realization.

(iii) In addition to the above referred compensation, Opponent No.1 - M/s.Lokhandwala Construction Industries P. Ltd., shall pay Rs.43,70,804/-to the Complainant along with interest @18% per annum with effect from the date of consumer complaint i.e. 05/04/2010 till its realization. However, from this amount the amount paid by Cheque No.463930 drawn on Vijaya Bank dated 17/03/2010 for Rs. 41,52,264/-, if said cheque is encashed, be adjusted as on the date of dispatch of the said Cheque i.e.22/03/2010.

(iv) As earlier observed proceeding as against Opponent No.2 - Mr. Siraj Lokhandwala, Managing Director of M/s.Lokhandwala Construction Industries P. Ltd., stands abated.

(v) Opponent No.1 - M/s. Lokhandwala Construction Industries P. Ltd., to bear its own costs and pay Rs.10,000/- as costs to the Complainant. "

The facts in brief are that the Complainant sought to purchase a flat bearing No. 1802 situated on the 18 th floor in 'B' Wing of the Building known as 'Fountain Heights' being constructed at Kandivali (E), Mumbai, by Opponent No.1 M/s.Lokhandwala Construction Industries P. Ltd. (referred as 'the Developer') for a total consideration of Rs.74,16,080/-, out of which the Complainant has paid a sum of Rs.3,17,804/- on 22.09.2007, a sum of Rs.30 lakh on 25.12.2007 and Rs.10 lakh on 05.05.2008, total amounting to Rs.43,70,804/-towards part consideration. It is averred that despite making substantial payment of the total consideration, the Developer neither handed over the copy of any purported Agreement dated 24.10.2007 nor got it registered. It is pleaded that as the Agreement was not registered, CKP Cooperative Bank Limited, Mahim did not extend him the Home Loan, which was necessary for the Complainant to make the payment of the balance sale-consideration. It is averred that the Developer sent letter dated 29.04.2008 to the Complainant demanding part of the sale-consideration of Rs.32,14,633/- as per the terms of the Agreement, but has not supplied the copy of the registered Agreement to the Complainant. It is averred that the Complainant received another letter dated 25.12.2010 and again on 17.03.2010 intimating that the Developer had cancelled the Agreement and intended to refund the consideration paid after deducting 20% of the amount towards processing fee. It is averred that such conduct of the Developer is Unfair Trade Practice and therefore, the Complainant got issued a legal notice dated 31.03.2020 stating that he is ready and willing to pay the balance sale consideration and not to terminate the so-called Agreement. Subsequently, the Complainant reached the State Commission by filing a complaint with the following reliefs:-

a. " Be pleased to allow this application of the complainant

b. Be pleased to direct the Opponents to not to create any third party interest and or to sale the said flat no 1802 on the 18 th Floor, in the proposed Building, "Fountain Heights Wing-B, At Lokhandwala Township, Kandivali (East), Mumbai till the final hearing and disposal of this complaint.

c. Be pleased to pass any fit and proper order against the Opponents for not to part with possession in respect of said flat, bearing flat no. 1802 on the 18 th Floor, in the proposed Building, "Fountain Heights Wing-B, At Lokhandwala Township, Kandivali (East), Mumbai and/or to create any third part interest in respect of the said flat no. 1802 whether by Sale, Lease or Mortgages.

d. Ad-interim reliefs in terms of the prayer (a) and (b) above pending disposal of this application in the above complaint.

e. Be pleased to direct the Opponents to pay the cost of this complaint.

f. Any other relief which this Hon'ble Court deems fit and proper."

The Developer filed their Written Version stating that the second opposite Party Director had expired on 08.02.2008 and that the Developer Company was functioning under the directorship of Mr. D.P. Badani. It is averred that the balance sale-consideration of Rs.51,91,256/- was required to be paid by the Complainant on or before 21.10.2007, the commitment which the Complainant had failed to entertain. It is admitted that the Complainant had paid a sum of Rs.43,17,804/- but has not paid the balance sale-consideration despite letters dated 25.02.2010, and thereafter the provisional booking of the Complainant was cancelled vide letter dated 17.03.2020 requesting the Complainant to visit the office to collect the refund by cheque. The Complainant failed to collect the cheque though he visited the office on 22.03.2010 and hence thereafter the Developer sent the cheque to the Complainant by Registered Post on 22.03.2010.

The State Commission based on the evidence adduced allowed the Complaint with the afore-noted directions. It was observed in the Order that the Developer was directed to produce the documents entered into between the Developer and the Complainant in respect of the disputed flat and the matter was adjourned to 08.06.2011. Thereafter, the matter was adjourned to 25.07.2011. The State Commission with respect to the compliance of the order dated 08.06.2011, observed as follows:-

"There is no reference about any document filed in compliance to the direction dated 22.03.2011. However, on record it is found that as per the letter dated 08.06.2011 (compilation page no.142), the copy of the agreement and documents relied by the builder and the affidavit of Mr.Mustafa H. Rangwala dated 07.06.2011 are introduced on the record. In the course of arguments when the matter was finally heard, parties, particularly the builder made a reference to this affidavit and the documents filed along with it."

The learned Counsel appearing for the Appellant vehemently contended that the State Commission has erred in awarding interest @18% p.a. and also an exorbitant compensation of Rs.25 lakh, despite the fact that the Complainant was a defaulter and there was no deficiency in service on their part as the flat was sold to a third party subsequent to the cancellation of the Agreement. The Respondent/Complainant appeared in person and submitted that the purported Agreement was never given to him and denied that the Agreement was ever revalidated on 31.08.2009, rebutting the submission made by the Counsel for the Appellant. The Complainant argued that the State Commission has rightly awarded interest @18% p.a. and compensation based on the conduct of the Developer as neither the Agreement was registered nor was it given to him to assist him in obtaining the loan and nor was it revalidated contrary to the stand taken by the Developer. He further drew our attention to the fact that the Developer had deducted 20% towards process fee which is Unfair Trade Practice without giving him sufficient notice prior to cancellation. Despite his legal notice dated 31.03.2010 by which the Complainant had communicated his intention to pay the balance sale-consideration, the Developer had sold the flat in question subsequently in the month of April 2010 to a third party which is unjust and unfair.

A brief perusal of the Agreement Copy dated 24.10.2007 relied upon by the Learned Counsel for the Developer details the clause of cancellation in clause 9 which is reproduced as under:-

" 9. In the event of the Allottee committing default in payment on due date of any amount (including his/her proportionate share of taxes, levied by the concerned Local Authorities and other outgoings as provided in this Agreement) the time for payment being the essence of the contract and/or on the Allottee committing breach of any of the terms and conditions herein contained, the Developer shall be entitled and shall have an option to terminate this Agreement.

Provided always that the power and option of termination hereinbefore contained shall not be exercised by the Developer unless and until the Developer shall have given to the Allottee fifteen days prior notice in writing of their intention to terminate this Agreement and of the specific breach or breaches of terms and conditions for which the Developer intended to terminate the Agreement and default shall have been made by the Allottee to remedying such breach or breaches within the time specified in such notice.

Provided further that upon termination of this Agreement as aforesaid, the Developer shall within 60 days of such intimation, refund to the Allottee the instalments of sale price of the said premises which may till then have been paid by the Allottee to the Developer after forfeiting 20% therefrom but the Developer shall not be liable to pay to the Allottee any interest on the amount so refunded and upon termination of this Agreement, the Allottee and/or his/her/their legal heirs as the case may be shall forthwith cease to have any right, title or interest of any nature whatsoever in respect of the contents herein or the said premises, the Developer shall then be at liberty to dispose off and sell the said premises to such persons and at such price as the Developer may in their absolute discretion think fit and proper.

(emphasis supplied) "

It is pertinent to mention that the letter of cancellation which the learned Counsel for the Developer is relying upon, i.e., dated 25.02.2010 and 17.03.2010, viewed from any angle, cannot be construed as sufficient notice or 15 days prior to the date of the cancellation specifically keeping in view that the letter dated 25.02.2010 states that the allotment of the flat in the Complainant's favour has been cancelled and he was called upon to collect the refund. For better understanding of the case, the relevant portion is reproduced as hereunder:-

" We further record that in view of your default in honouring your commitment in time we are left with no other alternative but to rescind the agreement in respect of the said flat and hence we inform to you that the allotment of the flat in your favour has been cancelled and we call upon you to attend our office and collect the refund of Rs.43,70,804/- subject to deduction of Rs.8,74,160/- towards processes as per the terms of the agreement in respect of the captioned flat, hence the refund amount being Rs.34,96,643/-, which please note. "

( Emphasis supplied)

It is pertinent to mention that in this notice, the Complainant has been told that the allotment of his flat has been cancelled without any 15 days notice which is to be given as per clause 9 of the Agreement which the Developer himself placed reliance on. It is also significant to mention that the Complainant was informed that a sum of Rs.8,74,160/- was deducted towards process charges.

A perusal of the letter dated 17.03.2010 clearly states that a reference is made to the earlier letter and that the flat in question is cancelled and the Complainant was asked to collect the cheque of Rs.41,52,264/- after deducting a sum of Rs.2,18,540/- towards process. Both the afore-noted letters evidence that the stipulation of 15 days notice was not adhered to by the Developer and apart from the fact that the cancellation was done unilaterally amounting to Unfair Trade Practice. Further a sum of Rs.2,18,540/- was also sought to be deducted towards process. This conduct of the Developer is deprecated. On a pointed query from the Bench, the Learned Counsel submitted that there were other letters of communication which were not filed before the State Commission. In the absence of any documentary evidence to substantiate the compliance of clause 9, at the cost of repetition, we reiterate that Developer has committed an act not only of Deficiency in service but also Unfair Trade Practice.

With respect to award of 18% p.a. and compensation of Rs.25 lakh the State Commission has observed as follows:-

"In the statement of claim filed along with the complaint it is submitted on behalf of the Complainant that he had agreed to purchase the flat @Rs.5,576/- per sq.ft. and when the consumer complaint was filed, the market rate was accelerated to Rs.7,500/- per sq.ft. and on this basis, he claimed compensation of Rs.25,58,920/-as a difference of price. There is no evidence in rebuttal to this particular fact about the prevailing rates. Further, considering the property value or the rate prevailing in the particular locality, in the instant case at Kandivali, which are published in the Saturday Edition of the Times of India, we find the rate as quoted by the Complainant is just and there is no reason to disbelieve the Complainant on this issue. Therefore, besides refund of consideration paid along with interest 18% per annum payable from the date of complaint subject to adjustment of the consideration, if refunded earlier (as worded in the final order); in addition to it, the Complainant is also entitled to compensation of Rs.25,00,000/-, which, according to us is just and proper to award to cover the loss and the legal injury suffered by the Complainant in not receiving the flat. We hold accordingly."

Though we agree that the observation made by the State Commission keeping in view the lowered interest rates and the real-estate situation and also the rate of interest being awarded by the Hon'ble Supreme Court in a catena of Judgments, we are of the considered view that to meet the ends of justice, rate of interest of 18% be reduced to 12% p.a. and the compensation of Rs.25 lakh be reduced to Rs.5 lakh. The Learned Counsel relied on the judgment passed by Hon'ble Supreme Court in "DLF Homes Panchkula Pvt. Ltd. vs. D.S. Dhanda [2019, SCC online SC 689]" stating that as interest is being awarded as damages, compensation cannot be awarded. The facts in the instant case are different as the conduct of the Opposite Party in not getting the Agreement registered on time which led the Complainants to lose an opportunity of getting a timely home loan; the unilateral cancellation of the subject flat without adhering to the stipulated notice period; the sale of the flat to a third party within a few days of receipt of the Complainants legal notice; not only amounts to deficiency of service but also Unfair Trade Practice and awarding an amount of Rs.5 lakh is justified. Further, the Complainant has lost an opportunity of owning a home, the mental agony suffered by him on account of the flat being sold to a third party despite his submission to pay the balance sale-consideration.

For all the fore-noted reasons this Appeal is partly allowed, modifying the order of the State Commission to the extent indicated above.

Any amount deposited by the Appellant alongwith accrued interest, if any, shall stand released to the Complainant and needless to add, the same shall stand adjusted in the decretal amount.