Vinod Bhutani vs Shuchi Chaudhry

Avm J. Rajendra, Avsm, Vsm (Retd.), Member

The present Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 05.07.2017 passed by the learned State Consumer Disputes Redressal Commission, New Delhi (hereinafter to be referred to as “State Commission) in Complaint No. 206 of 2010, wherein the Complaint filed by the Complainant (Respondent herein) was allowed.

For the Convenience the parties are being referred to as mentioned in the Complaint before the State Commission. Ms. Suchi Chaudhry, an Engineer-Management professional, is the Complainant. While Mr. Vinod Bhutani, Proprietor of New Delhi Construction Co. Pvt. Ltd. is referred to as the Opposite Party.

The Complainant owned a plot admeasuring of 9100 sq. ft. (1000 Sq. Yds.) at Sector-21-A in Faridabad. To construct a house, she entered into a contract with the Opposite Party. The project involved building a house as per approved plan, at an estimated cost of Rs. 65 lakhs. The OP assured completion of construction within 18 months (September 2004), the timeline determined in consultation with the architect.

An agreement was executed in March 2001, outlining various terms and conditions. The actual construction work commenced in April 2002. However, due to unforeseen delays, the project could not be completed as per the originally stipulated deadline. Acknowledging this delay, the OP communicated through letters dated 26.09.2002, 22.10.2003, 05.03.2004 & 15.03.2004. Subsequently, work came to a halt in April 2005 and was not resumed by the OP, despite a payment made in August 2005. Due to lack of progress, a fresh agreement was entered into on 24.06.2006. To facilitate the renewed construction efforts, the Complainant provided a rolling advance payment of Rs.10,00,000/-. Despite this, the work remained incomplete and unsatisfactory. Owing to these main deficiencies and concerns about the quality of work, the Complainant sought a refund of Rs.7,87,550/- as the project did not progress as expected even after execution of the second agreement and making payment to the Opposite Party. The Complainant's request for a refund was due to inadequacies and persisting issues with the construction work as follows: -

(a) Poor Substandard craftsmanship and quality of kitchen cabinets. Many door frames were broken and inadequately repaired. Doors have improper alignment in many instances.

(b) Uneven grinding of the Kota stone flooring and significant seepages in the basement walls.

(c) Incomplete electrical work. Unfinished plumbing work, including connections of overhead tanks, servant quarters, water drains to the rainwater harvest pit etc.

(d) No sewer covers, inadequate waterproofing.

(e) Brick tiles falling off the building. Glazing work was not done at basement. The glass used was thinner than specified and billed. Lack of handles on glazed shutters.

(f) Incomplete work on two skylights and water leakage. Wire mesh not properly fitted in multiple shutters.

Being Aggrieved the Respondent filed a Complaint No. 206 of 2010, before the State Commission, with prayer as under: -

(i) Refund Rs. 23,40,700 towards escalation claimed by the Respondent and the extra rent incurred by the Claimant due to wanton and inordinate delay in execution of the work by the Respondent.

(ii) Refund Rs.7,87,550 on account of the Respondent leaving the site unilaterally without completing the work for which payments already made and the Complainant had to incur extra expenditure to complete the same;

(iii) Refund Rs. 8,50,000 due to inferior quality of work on which the complainant had to incur extra expenditure to rectify the same;

(iv) Refund Rs.19,342 towards non payment to 3 vendors for items for which payment had been taken by the Respondent from the Claimant; and

(v) Pay Rs. 5,00,000 as compensation for harassment and inconvenience suffered by the Complainant due to unethical behaviour of the Respondent.

The Opposite Party, in its written version before the State Commission, raised preliminary objections that the Complaint was vexatious, malicious, frivolous, and abuse of the Act. They entered into a work contract with Complainant, subject to certain conditions, which included timely supply of architect-approved drawings, provision of utilities like water, electricity, and telephone connections. The Complainant agreed to payment conditions specified, which involved an interest - free mobilization of advance of 10% of the total cost, recoverable from the Respondent's bills on a pro-rata basis. Additionally, she was to provide a secured advance equivalent to 80% of the material at the site and make payments of 75% within seven days and the balance within 15 days of submission of R/A bills. These obligations were not met by the Complainant. Further, the architect's decisions with respect to BOQ, rates, and compliance with specifications were deemed final and binding. However, the Complainant did not adhere to these terms. Due to her failure to release payments, the OP had no choice but to discontinue the project. The delay is not attributed to them.

The learned State Commission partly allowed the Complaint vide order dated 05.07.2017 & directed as follows:-

“…After having given a careful consideration I am of the opinion that the refund claimed by the complainant to the extent of Rs.7,87,550/- is just an proper and would meet the ends of justice. In fact the complainant in her letter of 25.06.08 has requested for refund of the amount of Rs.7,87,550/-. Additionally, Rs.1,00,000/- is awarded as compensation for harassment and inconvenience caused to the complainant due to the deficiency of service.”

Aggrieved by the Order of the State Commission, the Appellant / Opposite Party filed the present Appeal before this Commission with the following prayer:

(a) Allow the present Appeal and quash and set aside the Judgment and Order dated July 5, 2017, passed by the State Commission, Delhi in Complaint No 206 of 2010; and

(b) Dismiss the Complaint No. 206 of 2010; and

(c) pass any other/further order/s as this Hon'ble Court may deem fit and proper in the facts and circumstances of the present case and for the ends of Justice.

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

(a) The impugned Order is invalid in law and has no force being contrary to Section 14 read with Section 18 of the Consumer Protection Act, 1986 mandating that the State Commission proceedings must involve the President of the State Commission and at least one member sitting together.

(b) The State Commission failed to consider the failure of the Respondent to fulfill its own obligations. The Respondent did not provide designs, drawings, and decisions in time. Further, the Respondent's site inspection on 23.01.2008 revealed non delivery of certain drawings promised by architects.

(c) The State Commission failed to note that the Appellant’s letter dated 26.09.2022 explained reasons for project delays, citing circumstances beyond their control. Additionally, it also attributed the delays to failure of the Respondent to make payments against the R/A Bills within the time agreed.

(d) The State Commission overlooked crucial evidence that the delay by the Respondent in providing necessary facilities such as water and electricity. Moreover, the designs and drawings were not made available till January 2008.

(e) The State Commission erroneously relied on the letter of the Respondent 25.06.2008, arbitrarily claiming refund of Rs.787,550/- based on Respondent’s excess payment of Rs.3,17,550 in advance for uncompleted work, Rs.100,000 towards the cost of 30 coils of cables and the remaining Rs.370,000 towards discount, cleaning of mess, etc.

Upon notice on the Memo of Appeal, the Respondent/ Complainant submitted a Reply/objections to the present Appeal and reiterated the factual background and highlighted that she had expended over Rs. One Crore, depleted her savings, taken a loan of 50 lakhs and were facing the expiration of a rent lease. The Appellant's breach of contract compelled her to move into an incomplete and uninhabitable house without basic amenities like electricity, functional washrooms and a kitchen. The house lacked a main door and gate as well. To make the house minimally liveable. The Respondent had to invest about Rs. 16 Lakhs and spend 8-9 months for repairs. She conveyed her distress over enduring harassment spanning more than 6 years, from April 2002 to May 2008. This situation forced her to move the State Commission and filed her Consumer complaint in July 2010. Unfortunately, the case prolonged for over 7 years till August 2017. She contended that her claim for compensation stems from the significant delay in project execution by the Appellant, who abandoned the site without completing the work even after 6 years. This was compounded by various deficiencies in the work. Therefore, the Respondent again prayed for the dismissal of the present Appeal and urged the court to uphold her claims, seeking enhanced compensation for the Appellant's "deficiency in service."

The learned Counsel for the Appellant has stated that the Appellant entered into an item-rate based work contract with the Complainant for construction of a house on a plot measuring 1000 Sq Yards at 455, Sector 21, Faridabad, on 01.04.2002. The contract did not specify any duration for project completion. The Complainant was responsible for timely supply of drawings and adherence to payment schedule, which the Complainant failed. The estimates were provided solely by architects and he disputed the handwriting on a letter dated 04.02.2002, wherein the estimated project costs were mentioned. He argued that the costs were not estimated accurately. The delay was largely due to the Complainant's failure to provide timely drawings, water supply, and electricity, leading to increased material and labor costs. This was explicitly acknowledged in a meeting on 02.03.2006, where she agreed to pay damages for delay. Despite this, she failed to pay the agreed amount, exacerbating the delays. The Appellant's letters highlighted these issues, asserting that these delays were beyond their control and were due to non-payment by her. However, the State Commission erroneously interpreted these letters as acceptance of the delay. Further, she relied on certain unverified and contradictory documents showing incomplete work.

The learned Counsel further argued that the Appellant suffered significant financial losses due to the Complainant's indecisiveness and non-cooperation. Her false allegations led to loss of about Rs. 3 lakhs due to unscheduled work stoppages, material wastage and overheads. Her claim of non-payment to third parties is baseless. Her misrepresentation of facts damaged their reputation. Further, the complaint was filed in July 2010 was well beyond the two-year limitation period, making it time barred.

The learned Counsel for the Appellant has also challenged the validity of the Impugned Order, asserting it contradicts the Consumer Protection Act's Section 14 and 18. These sections mandate that hearings before the State Commission must involve the President and at least one member together. The appellant's case had been initially argued with the full Commission present on 20.02.2014. Due to administrative issues, the order couldn't be issued then and was rescheduled for brief arguments on 16.04.2014. Multiple hearings followed, sometimes adjourned due to the absence of the President. However, on the day the complaint was heard without the President, the order was passed solely by a member, violating statutory requirements and rendering it illegal.

The Respondent appearing in person reiterated the facts of the complaint and reply filed by her and argued that Hon’ble State Commission, very rightly in its order dated 05.07.2017, categorically stated, " Opposite party (current Appellant) has not acted in conformity with the terms of the contract (both first and subsequent), and Deficiency is therefore established." Despite this categorical finding, and upholding Deficiency in Service, the Hon’ble State Commission arbitrarily reduced the compensation to merely 20% of the amount claimed by the Complainant on her various counts. There is, therefore, a strong case for this Commission to allow the various claims of the Complainant, and enhance the amount of compensation claimed in the case, to deter the Appellant in this case, from exploiting other consumers in similar manner.

We have examined the pleadings placed on record, the Order dated 05.07.2017 passed by the learned State Commission and associated records. We have also thoughtfully heard the detailed arguments made by the learned Counsel for the Appellant and the Respondent in person.

As regards the contention against a single Member passing the order, perusal of the Order dated 05.07.2017 passed by the learned State Commission in Consumer Complaint No. 206/2010 reveals that, the same was heard by Hon’ble Shri Anil Srivatsava, learned Member of the State Consumer Disputes Redressal Commission, Delhi on 25.05.2017 and the Order passed on 05.07.2010 bears the signature of Hon’ble Shri Anil Srivatsava, Member of the said State Commission. The learned Counsel relied on the judgment of the High Court of Rajasthan at Jodhpur in Divisional Manager NIC Ltd., Jodhpur vs Rajasthan State Consumer Disputes Redressal Commission and Ors., in S.B. Civil Writ no.1972 of 2012, decided on 25.10.2018 holding that a Member of the State Commission sitting singly does not have the jurisdiction to decide matters. It was further contended by the Appellant that the same issue was upheld by the Hon’ble Supreme Court in SLP (C) no. 4969 of 2020 in State of Rajasthan & Ors. Vs. Kamal Travels and Ors, decided on 30.09.2021. Therefore, it was argued that a jurisdiction issue can be raised at any point and since the jurisdiction of the State Commission comprising of single Member Bench was no longer res integra, the impugned order should be set aside being without jurisdiction and thus void ab-initio.

Examination of the same reveals that, the order was passed by the Hon’ble Rajasthan High Court in Divisional Manager NIC Ltd., Jodhpur Vs Rajasthan State Consumer Disputes Redressal Commission and Ors., in S.B. Civil Writ No. 1972 of 2012 on 25.10.2018. It has been specifically made effective prospectively. The same issue in Appeal was upheld by the Hon’ble Supreme Court in SLP (C) No. 4969 of 2020 in State of Rajasthan & Ors. Vs. Kamal Travels and Ors, decided on 30.09.2021. The order of the Hon’ble Rajasthan High Court is, therefore, effective from 25.10.2018. However, in the present case, the order was passed by the learned State Commission in C.C. No. 206/2010 on 05.07.2017. Therefore, the contention of the Appellant in this regard is untenable.

It is an admitted position that the Complainant and OP have entered into a contract in March 2001 for building of a house on a plot of the Complainant admeasuring of 9100 Sq Ft at Sector-21A, Faridabad at an estimated cost of Rs. 65 lakhs within 18 months. The Agreement outlined the terms and conditions. While the actual work commenced in April 2002 it was not completed in time stipulated. Acknowledging this delay, the OP informed vide letter dated 26.09.2002. The work was stopped by the OP in April 2005, despite payment. Due to lack of progress, a fresh agreement was entered into on 24.06.2006 to renew the work. The Complainant provided a rolling advance payment of Rs.10,00,000/-. Even then, the work remained incomplete and unsatisfactory. Owing to main deficiencies stated, delay and the concerns on quality of work, the Complainant sought a refund of Rs.7,87,550/-. On the other hand, the OP insisted that the contract was subject to certain conditions, including timely supply of architect-approved drawings and utilities like water, power and telephone connections. Specific payment conditions, involving interest-free 10% advance of the total project cost, recoverable on pro-rata basis was agreed by her. Further, she was to provide a secured advance of 80% of the material present at the site and make payment of 75% within seven days and balance within 15 days of submission of R/A bills. However, these were not met. As agreed, the architect's decisions regarding BOQ, rates and compliance with specifications were deemed final and binding. However, the Complainant did not adhere to the terms mutually agreed upon. Due to failure to release payments, the Appellants had no choice but to discontinue the work. Therefore, the delay not attributable to the Opposite Party.

Perusal of the pleadings and records reveal that the OP had not acted in conformity with the terms of contract in as much as they have neither abided by the terms and conditions envisaged in the first contract executed between the parties nor adhered to the terms and conditions stipulated in the subsequent contract. While the Complainant has substantially brought out the grievances, issues in dispute as well as the deficiency in service by the OP, on the other hand the OP has not brought out anything substantial on record to resist the same or establish anything to the contrary that there were violations and certain losses incurred which are attributable to the Complainant. Therefore, we do not consider it necessary to interfere with the order of the learned State Commission, Delhi other than certain modifications.

In view of the foregoing, the Order dated 05.07.2017 passed by the learned State Commission, Delhi in Consumer Complaint No. 206/2010 is partially modified as under:

ORDER

I. The Appellants/Opposite Parties shall refund Rs.7,87,550/- to the Complainant/Respondent with interest @ 9% per annum from the date of deposit till the date of payment. This payment shall be made within a period of one month from the date of this order. In the event of delay beyond one month, the rate of interest applicable for such additional period shall be @ 12% per annum.

II. The order for payment of Rs.1,00,000/- as compensation for harassment and inconvenience caused to the complainant due to the deficiency of service is set aside.

There shall be no order as to costs. All pending Applications, if any, are disposed of accordingly.

The Registry is directed to release the Statutory deposit amount, if any, in favour of Appellant, after due compliance of this order.