Svm Engineers Pvt Ltd vs Royal Palms (I) Pvt Ltd

THE key question which revolves round this case is, "Whether, parallel proceedings before Civil Court and this Commission can continue? Is it desirable to entertain the case under the Consumer Protection Act, when the subject matter of the complaint is already pending before the Civil Court. Moreover, whether, the complainant has the characteristics of a ''consumer'' under the C.P.Act, 1986, to become a ''consumer''.

THE complainant is a private limited company registered under the Companies Act, 1956. It is carrying on the business of civil engineering and construction works in major projects and was executing such contracts for the last about more than seven years from the date of filing of this complaint, on 11.12.2002. The complaint is filed through its Directors, Sh. Sameer R. Shah, Sh.Vijay C. Mehta and Sh. Mukesh C. Vohra. The complainant is a Member of the Builders'' Association of India and two of its Directors are Members of Maharashtra State Chamber of Housing Industry. They applied for a flat bearing No. 304 in the Project, known as, Royal Palms Estate, floated by the OPs, in the building ''Moroccan'' for the use and occupation and for the purpose of residential accommodation to the Directors of the Complainant Company. M/s. Royal Palms (India) Pvt. Ltd. and M/s. Amir Constructions Motel Pvt. Ltd. OP Nos. 1 and 2, respectively, are Companies and Mr.Amir Ahmed Nensey, Mr. Muhammed Nensey and Mr.Dilawar Nancy, OP Nos. 3 to 5, are the Directors of OP Nos.1 and 2. The OPs advertised and in their words it would be "Truly", the "Wonder of Mumbai" and that it would be one of the most modern and prestigious project.

AS a matter of fact, the complainant met the OPs as they were in need for Civil Engineers and Contractors to understand the construction work in their slum, rehabilitation advertisement projects in the Royal Palms Estate. After various discussions, the OPs told the complainant that it could make the payments in two modes, i.e., partly by money and balance by ''Barter System'' i.e., giving the flats constructed in their projects. The complainant agreed to their suggestion. The complainant addressed a letter dated 25.09.2000 incorporating the terms and conditions peremptorily discussed between the parties. The amount of Rs. 252/ - sq.ft. was stated, thereby a work order dated 26.09.2000 was sent stipulating an amount of Rs. 202 per sq.ft. following which a Memorandum of Understanding outlining the terms to be incorporated in the work order, was made on 28.09.2000. It was agreed that the total value of the work will be more than the work order initially contemplated and further works would be given by the OPs to bring the ''Barter amount to cover the value of two flats. Further, work orders were issued and initial work order dated 26.09.2000 was subsequently amended on 31.10.2000. All these documents, Memorandum of Understanding, amended work, etc., were appended as Exbs. A1 to A7. Thereafter, the complainant commenced the work pursuant to the said agreement dated 28.09.2000. As per the agreement, the ratio of barter and cash was 42.5% and 57.5%, respectively. The barter amount was to be paid by transferring property viz., flat or other premises in the name of M/s. SVM Engineers Pvt. Ltd., 42.5% amounting to approximately, Rs.67.00 lakhs was to be adjusted against two flats allotted to the complainants under the barter scheme and the balance of 57.5% amounting to approximately Rs. 91.00 lakhs was to be paid to the complainants, vide post -dated cheques with 40 -45 days'' from the date of bills which were to be honoured on presentation as per the due dates.

THE construction work was carried out and 85 bills were raised during the period from 06.11.2000 to 28.03.2001 and two bills were raised in the month of May, 2001, all totaling to Rs.1,78,67,476.35. The work was carried out with great efficiency by the complainants and was appreciated by the OPs, who also paid incentives completing the work efficiently. After the submission of the aforesaid bills to the OPs, the same were processed by procedure of verification, scrutiny of Site Engineer, Quality Surveyor and Project Manager, after verification, the same was sent to the Joint Managing Director, who, after scrutiny, sent them to Mr. Amir Nensey, CMD of OP1, for final approval. After approval of CMD, the PDCs, were issued and also the credit for barter was given. Against the said 87 bills submitted, a sum of Rs. 99,13,983.82 was to be paid by cheques and the remaining amount of Rs. 74,19,882.30 was to be given by way of barter by giving premises in the building equivalent to the barter amount. Copies of the bills have been placed on the record. As per the agreement, the OPs were to execute the sale agreement of the flats given under the barter value.

ACCORDING to the complainant, 60 bills for the value of Rs. 1,39,56,226.21ps between December, 2000 to March, 2001, 60 deposited post -dated cheques towards the cash component were issued by the OPs for a total sum of Rs. 7,33,41,604.04, all duly signed by Amir Ahmed Nansey and against barter for a sum of Rs. 57,57,218.83 as per the MOU, dated 28.09.2000, the OPs agreed to give two flats in Golden Isle, however, later, upon request of the complainants to give flat in Moroccan, in lieu of flats in Golden Isle Building, one flat No. 304, in lieu of two in Golden Isle as and when barter value executed a sale agreement for flat no. 304 Morocco building which was valued at Rs. 80,19,000/ - was divided in two parts, a) value of flat @ Rs. 35,64,000/ -, value of amenities at Rs. 44,55,000/ - to be provided by OP2. Therefore, two separate agreements were executed, one for the flat to be provided by OP1 and another for the amenities to be provided by OP2. At the time of execution of the agreement, the total value of barter credit against 60 bills being Rs. 57,57,219/ - was adjusted against the above two agreements in the following manner : - i) Rs. 35,64,000/ - being the total value of the flat, was first adjusted out of the barter credit of Rs. 57,57,219/ - ii) remaining barter credit of Rs. 21,93,219/ - was adjusted against the value of amenities i.e. Rs. 44,55,000/ -. iii) balance of Rs. 22,61,871/ - was due and payable towards the amenities which was to be adjusted with the barter credit against the remaining 27 bills and if there was any shortfall, the same was to be paid in cash by the complainant on or before possession, as provided in Clause 2 of the Agreement for Amenities, dated 21.03.2001. Copies of the Agreements have been placed on record as Exhibits B1 and B2.

THE complainant alleges that when the construction was in progress, the OPs, after considerable delay, honoured only 18 cheques after repeated presentation. The OPs reiterated that they were facing financial difficulty and therefore, honouring of the cheques was getting delayed. The complainant was not aware of the malafide intentions of the OPs. The OPs addressed a letter dated 23.05.2001 assuring that the cheques will be cleared by second week of July, 2001. The complainant also wrote a letter dated 26.05.2001 stating all the facts. Copies of these letters have been annexed as Exs. C and D. The OPs, on one pretext or the other, delaying the same stating that they were having financial crisis and assured that they would clear the dues of the complainant as soon as the flat in the Building Emerald Isle were sold. The complainant subsequently came to know that the OPs cheated , several others, by first getting the work done and after getting the work done, defaulted the payments. The complainant received back all the cheques given by it, with remarks "Accounts closed on advice".

THE complainant issued legal notices under Section 138 of the Negotiable Instruments Act and also filed criminal complaints against the OPs before Economic Offences Wing, Commissionerate of Police, Mumbai. As per the agreement, they are liable to refund the amount. In pursuance of the terms of the Agreement, dated 31.03.2001, which clearly stipulates that if the OPs fail to deliver the possession of the flat No. 304 by July, 2001, the OP shall be liable to refund the complainants, the amount received by them in respect of the said premises with interest @ 22% p.a., from 17.11.2001, till the date of repayment. A legal notice dated 17.11.2001 was issued by the complainants to the OPs to pay the amount of Rs. 74,19,882.31 commissioning the rent till July, 2001. It is averred that the OPs have committed a criminal conspiracy and have failed to fulfill the various representations. All their representations proved to be false. The building constructed is not more than nine floors nor there are laundermat services provided. Due to non -delivery of timely possession of flat No. 304, as per the agreement, the complainant suffered irreparable loss and damage amounting to Rs. 1,00,00,000/ -. The complainant submits that the flat in question was purchased for the residential accommodation of its Directors and due to breach of the agreement, the OPs are liable to compensate and make good.

ULTIMATELY , the present complaint has been filed with the following prayers : - "a) That this Hon''ble court be pleased to direct the OPs jointly and severally to pay to the complainant, a sum of Rs. 74,19,882.31 together with interest @ 22% p.a., by way of refund of the amounts received by them towards the purchase price of flat No.304 in Moroccan, Royal Palms, Aarey Colony, Goregaon (E), Mumbai. b) That this Hon''ble Court be pleased to direct the OPs jointly and severally to pay a sum of Rs. 1,00,00,000/ - by way of compensation for the loss and damage suffered by the complainant on account of the OPs having failed to fulfill the promises / representations made by the OPs c) That this Hon''ble Court be pleased to attach by an order of Attachment before Judgment the Flat No.304 and other flats in the Building, viz., Moroccan in Royal Palms, Aarey Colony, Goregaon, (E), Mumbai. d) For the costs of this complaint. e) Such other and further reliefs as this Hon''ble Court may deem fit and proper in the facts and circumstances of this case, and in the interest of justice and fairness".

DEFENCE :

THE OPs have resisted the claim of the complainant and listed the following defences. As a matter of fact, the filing of the complaint by the complainant is a counter blast to the complaints filed by the OPs against the complainant for their defective workmanship and acts of cheating committed by the complainant in the course of construction work awarded to them by the OPs. They have filed the instant complaint by isolating certain transactions from the context of the overall disputes between the parties. The actual facts would put in the correct perspective and clearly establish that the complainant is entitled to nothing. They have committed defaults and irregularities while constructing the building.

THE OPs, however, admitted that they are the owners of the above said 240 acres at Goregaon. The OPs have set up a Golf and Country Club in the suburbs of Bombay, which is considered as one of the premier clubs in the city of Bombay and is well maintained and is having all the facilities like, club house, swimming pools, including 18 holes golf course, billiards, Table Tennis, etc. It has a restaurant and a bar. Apart from establishment of fully functional Golf and Country Club and creation of highly unique ambience, the OPs have already started their work on their proposed star hotels with convention centres on their property and is expecting to be ready by April, 2014. The OPs have already constructed a shopping centre and have sold the said shopping centre to a party which is unfortunately not operating the same. The OPs have in keeping with the laws relating to the Wild Life Protection given up their plan for establishing a bird Aviary. The OPs have planted 1000s of plants and trees to beautify the place and maintain a properly manicured greens and ground required for the golf course and have also made and maintained exotic garden in the area. The OPs have completed all the projects earlier which fact was not disclosed by the complainant.

IT is explained that as a matter of fact, the OP1 had appointed the complainants to carry on certain works of construction in respect of certain buildings on their above said property in question. The said construction was mainly for building for rehabilitation of slum dwellers under the Slum Redevelopment Scheme contemplated by Development Control Regulation for Greater Bombay, 1991. As per the said Scheme, known as, SRD Scheme, the Developers are required to construct buildings to accommodate the slum dwellers and are as an incentive allowed to construct building of compensatory area and the flats in such other building can be sold by them in the open market. This Scheme was to give the incentive to the Developers to develop slum area and has a precondition for construction of the building for slum dwellers. The necessary permission was taken. OP1 also desired to construct a Three -Star Hotel on the said property.

TWO Memorandums of Understanding dated 28.09.2000 and 01.12.2000 were entered into between OP1 and the complainants agreed to carry out certain construction for OP1. Vide MOU dated 28.09.2000, the complainants agreed to construct 78,200 sq.ft. of area @ Rs. 202/ - per sq.ft. for an aggregate price of Rs. 1, 58,00,000/ -. Under the MOU dated 01.12.2000, the complainants had agreed to construct 1,78,000 sq.ft. of area @ Rs. 250/ - , aggregating price of Rs. 4,45,50,000/ -. The complainants agreed to take a part of the price under both the MOUs under a barter arrangement by way of purchase of four flats, i.e., two flats under each MOU. Both MOUs have been placed on record as Exs.A and B. Thereafter, the complainants commenced construction work. The drawings, inter alia, spelt out the fitness of the slabs for the buildings. The complainants have, till the filing of the written version had completed construction of RCC Frames for an area of 52,566 sq.ft, but they wrongfully claimed that they have constructed the area upto 56,510.4 sq.ft. The grouse of the OPs is that the said work was not completed. The complainants have raised 87 bills in respect of the work done by it claiming a sum of Rs.1,78,67,476.35. The bills were checked by the Quality Surveyor and Product Engineer in the Office of the OP1. It transpired that those persons were either negligent or working in cahoots with the complainant. The said persons passed the bills who were subsequently removed from their jobs. The complainant was negligent in doing the above said job.

HOWEVER , the Agreement of Sale in part performance of MOU dated 21.03.2001 wherein the OP agreed to sell to the defendant (complainant) Flat No.304 in building known as Moroccon for price of Rs. 35,64,000/ - in addition, a sum of Rs. 44,55,000/ is payable towards the amenities in respect of the said flat. The total consideration was Rs. 80,19,000/ -, in respect of the said flat which is the subject matter of this complaint. The complainant was not to pay the said price but the same was to be adjusted against the amount of the bills for the work that was expected to be done by the complainants on OP1. Copy of the said agreement, Ex.C, has been annexed with the written version. OP1 has paid the complainants an aggregate sum of Rs. 44,20,902/ - as per the details contained in the statement, annexed as Ex. D. Post -dated cheques were also given as a security. Thereafter, it came to light that : - i) the complainant had seriously compromised on the quality of construction by materially and substantially reducing the thickness of the slabs of the buildings constructed by them; ii) the bills raised by the complainant on the OP1 were not carried out.

OP 1 got the buildings inspected by M/s. Mistry and Associates, Architects and M/s. Hanware Consultants, Structural Engineers. Both of them, vide their letter dated 18.03.2002, have opined that the buildings are not safe and stable and have recommended demolition of the buildings. The Slum Rehabilitation Authority had, by its letter dated 27.08.2002 directed the OP1 to suspend the work of the buildings in question immediately and to carry out the work strictly as per the approved plans, designs and drawings of registered structural engineering. The above said copies of the reports and the said letters have been placed on record as Ex. E, F and G. OP1 received another letter dated 27.09.2002 from the Slum Rehabilitation Authority to carry out thorough inspection of the buildings. OP1, with a view to confirm the findings of the said Architects and Structural Engineers, appointed M/s. Shah Structural Pvt. Ltd. and M/s. F.K. Consultants. The said Shah Structural Pvt. Ltd. and F.K. Consultants have opined that the building is not safe and stable for which they are intended. Copies of their letters dated 22.01.2003 and 06.01.2003 have been marked as Exs. I and J.

A criminal complaint was filed and one of the Directors of the complainant company, Sh. Sameer Shah was arrested and thereafter was released on bail. The said criminal complaint case is still pending. The cheques issued by OP1 in favour of the complainant were dishonoured and case under Section 138 of the Negotiable Instruments Act is still pending. The complainant has committed breach of MOUs as explained above. The complainant itself has wriggled out of the contract. The OPs will have to incur costs of demolition and removal of massive debris. The complainant is not entitled to the amount of Rs.44,20,902, as alleged. The complainant is also not entitled to receive the said flat. No amount is due or payable by OP1 to the complainant. The complainant has committed breach of contract. All other allegations have been denied. It is averred that this is a clear case of ''ex turpi causa non oritur action'' and the complaint deserves to be dismissed.

THE pleadings are complete and evidence has been led in this case. At the eleventh hour, we were informed that a civil case on the same cause of action is pending before the Bombay High Court. The said civil case was filed subsequently. We passed the following order on 16.07.2014 : - "PRONOUNCED ON 16.07.2014 ORDER Arguments were heard at length, however, we need clarification on two points : - a) The main argument urged by the Counsel for the OPs is that this case includes complicated and intricate questions. A clear picture will emerge when the copy of the complaint filed before the learned Magistrate and the copy of the Revision Petition filed before the Hon''ble High Court, Mumbai, is submitted before us. Secondly, this is an indisputable fact that parallel case is pending before the Hon''ble High Court. We need the copy of the same to go through the pleadings submitted before the Hon''ble High Court. b) Above all, parallel proceedings are not permissible as per law and Section 3 of the C.P. Act, 1986. It is well settled that proceedings before this Commission under the said Act, cannot be equated to proceedings before the regular Civil Court and the litigants cannot take a chance by initiating parallel proceedings. It is regrettable that none of the counsel made an effort to lock horns on this key issue. It further appears that the complainant was misguided and ill -advised. The complainant is hereby granted an option to withdraw the case before the Civil Court so that further proceedings may be taken up before this Commission, subject to the condition that no intricate and complicated questions are involved herein with.

Notice be issued to all the parties, immediately, to give response to the above said clarifications, returnable on 31.10.2014".

THEREAFTER , on 31.10.2014, counsel for the complainant submitted that the civil suit filed for the larger claim included the claim filed before this Commission. Copy of the plaint has been filed before this Commission. However, he insisted that this case be decided on merits. Thereafter, we have heard the arguments on behalf of both the parties.

COUNSEL for the complainant vehemently argued that parallel proceedings are not barred. He has cited a judgment rendered by this Bench, Malti Construction Vs. Arun k. Hirulkar & Ors., 2014 2 CPJ 590 . The facts of the said case are entirely different. Para Nos. 7, 8 and 11, run as follows : - "7.The second argument raised by the counsel for petitioner was that this Court has no jurisdiction. It involves complicated questions, therefore, the civil court should decide the matter. 8. We clap no value with this argument. As per Section 3 of the Consumer Protection Act, 1986, this Court has got parallel additional jurisdiction. Moreover, from the pleadings of opposite parties 2 and 3, it is apparent that civil suit No. 11 of 2006 is pending inter se the opposite parties. The only question raised by learned counsel for the petitioner was that he has constructed the entire house and the additional payment should be made to him alone.

It clearly goes to show that civil case is pending inter se the opposite parties. This dispute has nothing to do with that civil dispute. The civil court will decide which of the opposite parties is entitled to have the amount. That is not a consumer dispute".

HE has also cited another judgment of this Commission reported in Kushal K. Rana Vs. DLF Commercial Complexes Ltd., 2014 4 CPJ 287 .

ON the other hand, counsel for the OP has cited an authority reported in Dr.Dinesh Vs. Swastic Builders and Ors., Consumer Complaint No. 188 of 1995, decided on 14.08.2001, by this Commission by 5 -Judges'' Bench, headed by Hon''ble Mr. Justice D.P. Wadha, with Hon''ble Mr. Justice C.L. Chaudhary, Hon''ble Mr. Justice J.K. Mehra, Hon''ble Mrs. Rajyalakshmi Rao and Hon''ble Mr. B.K. Taimni, as Members, wherein it was held, at Para Nos.6,7 and 8, as under : "6. The two preliminary objections have been raised by all the opposite parties except the second, who owned land (and as would appear from the prayer no claim has been made against opposite party No.2). These are, (i) that in view of pendency of civil suit which is based on the same cause of action and the complainant has prayed for specific performance of contract and also damages, this complaint would not lie; and (ii) the complaint is barred by limitation. To understand these very preliminary objections we have set out above in detail the reliefs claimed and the cause of action both in the civil suit and the present complaint. 7. During the course of arguments, complainant who

appeared in person stated that he will withdraw the civil suit filed by him. However, earlier he had stated that he would withdraw that civil suit after decision of the present complaint. Whether the complainant withdraws the civil suit or not, it is his affair and decision on preliminary issues does not turn on that as the fact remains that he had knocked the doors of civil court whose jurisdiction is more comprehensive than ours, whereas we are limited by the provisions of the Consumer Protection Act. 8. The fact remains that when we examine the reliefs claimed in the civil suit and in the present complaint, these overlap and if some reliefs which are claimed in the complaint are not in the civil suit, that could be claimed in the civil suit as well. As a matter of fact, civil suit is more comprehensive. In effect, when a civil is pending on the same subject matter, it is not for this Commission to entertain any complaint. If we see para 8 of the complaint which we have reproduced above, no arguments are needed to show that this complaint filed on 08.11.1995 is clearly barred by limitation. There appears to be no jurisdiction for the complainant to file this complaint when matter was already sub judice before a civil court. We would, therefore, dismiss this complaint with costs amounting to Rs.10,000/ -".

WHEN we asked the counsel for the complainant as to what is the difference between the two, he answered that the civil suit has been filed by three individuals who can only enforce the agreement.

WE see no merit in this argument. Even in this case, the present complaint has been filed by SVM Engineers Pvt. Ltd. through its three Directors, Mr. Sameer R. Shah, Mr. Vijay C. Mehta and Mr. Mukesh C. Vora. It must be borne in mind that vide order dated 13.10.2014, the counsel for the complainant stated at Bar that the "civil suit was filed for the larger claim including the claim filed before this Commission".

WE have also perused the copy of the plaint. It is more comprehensive and the contains the same subject matter. Consequently, we have no option but to dismiss the complaint. Let the civil court pass the order as per law. Moreover, the complainant does not qualify to be a ''consumer'', as per the CP Act, 1986, even prior to the amendment of 2003. The entire case is littered with the evidence of ''commercial activities''. There is inter se dispute between two business persons. The service was to be provided by the complainant itself. The services provided by it has been called into question. The complainant has averred in para No. 21, which is reproduced, as under : - "21.The complainants state that they are consumers and are protected under the provisions as provided under the Consumer Protection Act, 1986, and the respondents have in the aforesaid facts and circumstances committed willful default in fulfilling the promises made to the complainants and have also failed to render the services as promised, furthermore, as stated hereinabove, the respondents have become liable to compensate the complainant as provided under the provisions of the Consumer Protection Act, 1986. The complainants submit that the respondents are liable to refund the amounts received towards the purchase price of flat No.304 i.e., Rs.74,19,882.31 received by the respondents together with interest at the rate of 22% p.a. The complainants further state that the respondents are also liable to pay a compensation of sum of Rs.1,00,00,000/ - as and by way of damages for the loss / damage suffered by the complainants. The complainants submit that it is just, convenient and necessary in the interests of justice to attach the flat No.304 and the other flats in the said building of Moroccan by way of an order of Attachment Before Judgment to secure the rights of the complainants, which has been expressly provided under the terms of the Agreement dated 21.03.2001 at clause No. 14 page No.13".

IT is note -worthy that the complainant is a service provider. The flat was to be given as ''barter'' for services rendered by the complainant. It is not clear as to who is the ''consumer'' and for whose use the flats were taken. The requisite Resolution/Power of Attorney in this context, did not see the light of the day. It is not explained as to what the complainant was to do with these flats. This is certainly a ''commercial'' transaction which is not covered by the authority of Laxmi Engineering Works Vs. P.S.G. Industrial Institute, 1995 3 SCC 583. There is no evidence that these flats were to be used by the Directors themselves, or they did not have any other house.

UNDER these circumstances, the presumption is that these flats are to be sold by them. The qualifications of ''consumer'' are conspicuously missing in the whole complaint. However, for that reason too, the complaint deserves dismissal. Consequently, on the above said grounds, we refrain from speaking our piece, on other issues. We hereby dismiss the complaint case. No order as to costs.