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Judgment
V.K. Jain, Presiding Member
The complainants/respondents entered into a transaction with the appellants for purchase of a residential apartment which the appellants were to construct in Tharangini Jn, Karakulam. The sale consideration of the apartment was agreed at Rs.70 lakhs and the complainants made part payment of Rs.25,50,000/- to the petitioners. The parties also executed an agreement for sale and construction dated 18.07.2013, incorporating their respective obligations in respect of the said transaction. In terms of Clause 10 of the agreement, the construction was to be completed by 31.12.2016 unless it was delayed due to reasons beyond the control of the developer.
(2) The case of the complainants is that the project was completely abandoned by the petitioners after constructing only block 1 and the construction of block 2 in which allotment was made to the complainants was not started. The complainants therefore approached the concerned State Commission by way of a consumer complaint seeking the following reliefs :
"RELIEFS
(i) To direct the opposite parties to pay interest @ 18% for the amount of Rs.25,50,000/-from the date of respective payments till payment;
(ii) to direct the opposite parties to pay Rs.10 lakhs towards compensation for the loss, mental agony and hardships suffered by the complainants due to the deficiency in service and unfair trade practice committed by the opposite parties;
(iii) To direct the opposite parties to pay Rs.25,000/- towards the cost of proceedings before this Hon'ble Commission;
(iv) To pass appropriate orders as this Hon'ble Commission may deem fit and proper in the circumstances of the case."
(3) The appellants did not appear before the State Commission. The State Commission vide order dated 02.12.2016 directed refund of the amount paid by the complainants to the appellant's alongwith interest @ 12 % per annum from the date of each payment. Being aggrieved from the order passed by the State Commission, the appellants are before this Commission by way of FA No.1671/2019.
AE No.68 of 2019 is directed against the order passed by the State Commission in the execution proceedings on 25.07.2019. It was contended by the appellants, during the execution proceedings, that no proceedings under Section 27 of the Consumer Protection Act could be initiated against the functionaries of the Private Limited Company. Reliance was placed on the decision of the Hon'ble Supreme Court in Standard Chartered Bank and others -vs- Directorate of Enforcement and others, AIR (2005) SC 2622, (2005) (4) SCC 530 and S.K. Singla -vs- Avtar Singh Saini and others 1(2019) CPJ 3 (SC). The State Commission noticed that the first judgement debtor was the Company itself whereas the second judgement debtor was its Managing Director who had not contested the complaint.
(4) Being aggrieved from the order passed by the State Commission, the appellants are before this Commission by way of AE No.68/2019.
(5) As far as FA No.1671/2019 is concerned, it is not in dispute that as per the agreement between the parties, the construction was to be completed by 31.12.2016 it is not in dispute that even today the construction is not complete though according to the learned counsel the construction of the flat is going on. However, the fact remains that more than two years and seven months from the last date committed for completion of the construction have already expired. It is not known when the construction would be complete and when the requisite occupancy certificate will be obtained by the appellants. Therefore, the complainants cannot be compelled to wait indefinitely for the possession of the allotted flats and are entitled to refund of the amount paid by them to the appellant's alongwith appropriate compensation in the form of interest. A reference in this regard can be placed upon a recent decision of the Hon'ble Supreme Court in Kolkata West International City Pvt. Ltd. -vs- Devasis Rudra in Civil Appeal No.3182 of 2019 decided on 25.03.2019 where the Hon'ble Supreme Court inter-alia held as under :
"It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund."
A reference in this regard can also made to a recent decision of the Hon'ble Supreme Court in Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan (2019) 5 SCC 725.
In Pioneer Urban Land & Infrastructure Ltd. (supra), the builder obtained the occupancy certificate on 23.7.2018 during pendency of the consumer complaint and offered possession on 28.8.2018. This Commission vide its Judgment dated 23.10.2018, held that since the last date stipulated for construction had expired about three years before the issuance of the occupancy certificate, the flat purchasers could not be compelled to take possession at such a belated stage. Rejecting the appeal filed by the Pioneer Urban Land & Infrastructure Ltd. (supra) against the decision of this Commission, the Hon'ble Supreme Court inter-alia held as under:
"6.1 In the present case, admittedly the appellant - Builder obtained the Occupancy certificate almost two years after the date stipulated in the Apartment Buyer's Agreement. As a consequence, there was a failure to hand over possession of the flat to the respondent - Flat Purchaser within a reasonable period. The Occupancy Certificate was obtained after a delay of more than two years on 28.8.2018 during the pendency of the proceedings before the National Commission.
In Lucknow Development Authority V. M.K. Gupta, this court held that when a person hires the services of a builder, or a contractor, for the construction of a house or a flat, and the same is for a consideration, it is a "service" as defined by Section 2(o) of the Consumer Protection Act, 1986. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service.
In Fortune Infrastructure & Anr. Vs. Trevor D'Lima & Ors., this Court held that a person cannot be made to wait indefinitely for possession of the flat allotted to him, and is entitled to seek refund of the amount paid by him, along with compensation.
6.2 The Respondent - Flat Purchaser has made out a clear case of deficiency of service on the part of the Appellant - Builder. The respondent - flat purchaser was justified in terminating the Apartment Buyer's Agreement by filing the Consumer Complaint, and cannot be compelled to accept the possession whenever it is offered by the Builder. The Respondent - Purchaser was legally entitled to seek refund of the money deposited by him along with appropriate compensation.
(6) For the reasons stated herein, I find no merit in FA No.1671/2019.
(7) Coming to the Appeal Execution No.68/2019, as far as the Managing Director of the company is concerned, he being a party to the consumer complaint and having suffered an order is bound to comply with the said order. In case of his failure to comply with the order passed by the State Commission, he could be preceded under Section 27 of the Consumer Protection Act.
(8) A reference in this regard can be made to the decision of three Members Bench of this Commission in Rajnish Kumar Rohatgi & Anr. -vs- M/s Unitech Limited & Anr., EA No.80/2016 in CC No.14/2015 dated 08.01.2019 wherein the Larger Bench of this Commission inter-alia held as under :
"40. For the reasons stated hereinabove, we answer the reference and related questions as under:
(1) A company, or a partnership firm, which fails or omits to comply with any order made by a District Forum, State Commission or National Commission, as the case may be, will be liable to the penalty prescribed in Section 27 of the Consumer Protection Act.
(2) The date on which the order is passed by the District Forum, State Commission or the National Commission, as the case may be shall be deemed to be the date on which the offence under Section 27 of the C.P. Act is committed. The said offence will be deemed to continue till the order passed by the District Forum, the State Commission or the National Commission is complied in all respects.
(3) If the offence, punishable under Section 27 of the Consumer Protection Act is committed by a company, with the consent or connivance or is attributable to any neglect on the part of any Director, Manager, Secretary or other officer of the company such Director, Manager, Secretary or other officer shall also be deemed guilty of that offence, even if he was not in-charge of and responsible to the company for conduct of its business, at the time offence was committed.
(4) All the persons who were in-charge of and responsible to the company for the conduct of its business at the time the offence under Section 27 of the C.P. Act is committed shall be liable to punishment under the aforesaid Section.
(5) The persons mentioned in Para-25 above shall be deemed to be the persons in-charge of and responsible to the company for the conduct of its business.
(6) If a person who was in-charge of and responsible to the company for the conduct of its business at the time the offence was committed, proves that the said offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of the offence, he shall not be liable to punishment under Section 27 of the C.P. Act.
(7) A person nominated as Director of the company by virtue of his holding any office or employment in the Government or a Financial Corporation owned or controlled by the Government, shall not be liable for punishment under Section 27 of the CP Act.
(8) The vicarious criminal liability of a Director in a company shall apply to a partner in a firm where the offence under Section 27 of the CP Act is committed by a partnership firm.
(9) The procedure as outlined in paras 29 to 34 hereinabove shall be followed in the proceedings under Section 27 of the CP Act.
(10) Unless permitted by the Hon'ble Supreme Court, the proceedings instituted under Section 27 of the Consumer Protection Act, against Unitech Ltd., and its subsidiary companies of as well as against the persons incharge of and responsible to the company for the conduct of its business shall be kept in abeyance, so long as the orders pertaining to them and mentioned in para 35 hereinabove remain in force.
(11) Unless permitted by the Hon'ble Supreme Court, the proceedings instituted under Section 27 of the C.P. Act, against Pioneer Urban Land & Infrastructure Limited and other applicants in Crl. M.P. No.29029/2018 before the Hon'ble Supreme Court, shall remain stayed so long as the order dated 05.3.2018 is in force."
(9) In view of the above referred binding decision of the Larger Bench, it cannot be said that the State Commission could not have proceeded against the Managing Director of the Company or against such other Directors who were found to be persons in-charge of and responsible to the company for the conduct of its business. The company in question Samson & Sons Builders & Developers (Pvt.) Ltd. is a private Company. This is not the case of the appellants that Mr.Samuel Jacob who is a Director of the company was not involved in the management of the said company and was not a person in-charge and responsible to the company for the conduct of its business. There are stated to be only three directors in the above referred company. This being a private company, all the Directors would normally be associated with the management and the business of the company. In any case, as noted earlier, there is no averment in the appeal also that Mr.Samuel Jacob was not associated from the business of the company and had no connection with the management and running of its business. Therefore, the proceedings under Section 27 of the Consumer Protection Act could be initiated against him as well.
(10) For the reasons stated herein above, both the appeals are hereby dismissed with no order as to cost.