Between

1.   Mr.Vijjai Chennupati S/o.Narasimha Rao

Chennupati, aged about 36 years,

Occupation: Service, R/o. Plot No.158,

H.No.5-4-1286, Phase III, Sharada

Nagar, Vanasthalipuram,

Hyderabad-500 070.

2.   Mr.Narasimha Rao Chennupati

S/o.Sri Seetharamaiah, aged about

68 years, Occ:Retired R/o.Plot No.158,

H.No.5-4-1286, Phase III,

Sharada Nagar, Vanasthalipuram

Hyderabad-500 070.                                                                                            Complainants

A N D

1.   M/s.Aliens Developers Private Limited,

Having its office at Plot No.56 & 57,

Vittalrao Nagar, Madhapur,

Hyderabad-500 081

Rep. By its Managing Director

Mr.Hari Challa S/o.CVR Chowdary

& Joint Managing Director

Mr.Venkata Prasanna Challa S/o.CVRChowdary.

2.   Axis Bank Limited,

Home Loan Department,

Having its Branch Office at

Modi square, 3^rd floor,

R.P.Road, Secunderabad-3.

Rep. By its Managing Director

Mrs.Shikha Sharma

        D/o.Surendra Kumar Lakshaman

        Prasad Bharadwaj Sanjaya Sharma,

        Aged about 54 years.                                                                                           ..Opposite parties.

Counsel for the Complainant          :M/s. B.Ravindra Reddy

Counsel for the Opposite parties    Mr.A.Krishnam Raju-OP1

                                                M/s Lakshminarayana & Associates-OP2

QUORUM:        SRI R.LAKSHMINARSIMHA RAO, HON’BLEI/C PRESIDENT

SRI T.ASHOK KUMAR, HON’BLE MEMBER.

&

                        SRI S.BHUJANGA RAO, HON’BLE MEMBER

                FRIDAY, THE TWENTY SEVENTH DAY OF DECEMBER

    TWO THOUSAND THIRTEEN

        Order ( As per R.Lakshminarsimha Rao, Hon’ble I/c.President)
                                                    ***

        The complaint is filed seeking the following directions:

i)             To direct opposite party No.1 to comply with the terms of Tripartite agreement dated 30-7-2008 and give effect to the withdrawal of the complainants from financing scheme.

ii)           To direct opposite party No.1 to refund the amount of Rs.6,99,515/- paid by complainants towards advance money with interest at 18% p.a. from the date of payment i.e. 25-8-2007 till its realization.

iii)          To direct opposite party No.1 to refund the amount of Rs.18,45,000/- loan amount advanced by OP 2 to OP 1 to the complainants together with future interest @ 18% per month from the date of payment i.e 01-8-2008 till its realization.

iv)         To direct opposite party No.1 to pay Rs.5,00,000/- to complainants towards compensation for suffering mental agony and loss suffered by the complainants

v)           To direct opposite party No.1 to pay Rs.20,000/- to complainant towards costs.

vi)         And pass such other order or orders as this Hon’ble Commission deems fit and proper.

The averments of the complaint are that the complainant No.1 is son of the complainant No.2 and the representatives of opposite party No.1approached the complainants in July, 2007 for sale of apartments in the name and style of ‘ALIENS SPACE STATION-1’ in land admeasuring 82976 sq. yds. forming part of Sy.Nos.384, 385 and 426/A situated at Tellapur Village, Ramachandrapuram Mandal, Medak District with unique features and that the residential apartments would be constructed in Blocks/Towers/Stations and also promised that specifications and amenities to be provided of world class standards. 

The complainants submitted that the representatives of the opposite party No.1 informed them that they extend support to the customer to provide an attractive finance scheme without any risk to buyers for purchase of flat in ‘Aliens Space Station-1’  and that the opposite party No.1 would construct and deliver the flat within the stipulated time failing which opposite party No.1 would refund the total amount paid by the complainants together with interest and being induced by the  representations, the complainants agreed to purchase flat in ‘Aliens Space Station-1’ and paid an advance amount of Rs.6,99,615/- towards booking of the flat in July/August, 2007. 

The complainants submitted that opposite party No.1 initially offered flat in 9^th floor on 21-7-2007 and issued a sale acknowledgement and executed an agreement for reservation of flat and  due to changes in the flat layout in the sanctioned plan, the opposite party No.1 offered flat No.635 in 6^th floor having super built up area of 1504.13 sq. yds. along with two car parking spaces with 32.49 sq. yds. of undivided share of land total sale consideration of Rs.50,88,143/-.  The complainants submitted that the opposite party No.1 informed them that the project is approved by opposite party No.2 and they ensured hassle loan would be extended by the opposite party No.2. 

The complainants submitted that as per representations of the opposite party No.1, they approached the opposite party No.2 for availing home loan and as per the finance scheme upon allotment of a flat to the complainants by the opposite party No.1, the opposite party No.2 will provide a housing loan and the actual release of loan amount in instalments will be the done by opposite party No.2 directly to opposite partyNo.1. 

The complainants submitted that the opposite party No.1 would maintain a separate account for the complainant and adjust the amounts made by the opposite party No.2 against the cost of construction and in the event of opposite party No.1 failing to complete the project within the stipulated time, the complainant could withdraw from the financing scheme at any time without any liability and the amount would be adjusted between the opposite parties.  The complainants submitted that the opposite parties promised that a Tripartite Agreement would be entered into after allotting a flat and assured that the complainants are at liberty to withdraw from the financing scheme and upon such withdrawal all payments advanced by the opposite party No.2 to the opposite party No.1 would be refunded by the opposite party no.1 to the opposite party No.2 directly and the loan account will be closed.

        The complainants submitted that as per terms of the agreement, the complainants paid margin money of Rs.6,99,615/- and the balance sale price of Rs.43,88,528/- will be released to the opposite party No.1 directly by the opposite party No.2 in instalments as per progress of construction.  The complainants submitted that the opposite party No.1 agreed to complete the construction and handover possession of the flat by December, 2010 within three years from the date of booking together with six months grace period and on 22-6-2008 an agreement of sale was executed between the complainant and opposite party No.1 and on 30-7-2008 the complainants and both the opposite parties signed the tripartite agreement according to which the finance amount is Rs.43,88,528/-. 

The complainants submitted that the opposite party No.2 prepared loan agreement and made the complainants sign  the loan documents and assured that there would not be any risk as per the terms of the tripartite agreement dated 30-7-2008.  Out of sanctioned loan amount, the opposite party No.2 released Rs.18,45,000/-  to the opposite party No.1 vide statement of account dated 22-10-2008 and in April, 2010, the opposite party No.1 issued a letter to the complainants that the price of the flat has been reduced to Rs.45,40,293/-.

        The complainants submitted that as per the terms of the agreement, the opposite party No.1 had to complete the construction by December, 2010 and handover possession of the flat and as per the terms, the complainants have totally paid an amount of Rs.25,44,615/- ( i.e. margin money of Rs.6,99,615/- and Rs.18,45,000/- paid by OP 2 to OP 1)  and they came to know that the opposite party No.1 is unable to meet the commitment of completing the construction and deliver possession of the flat.

The complainants submitted that from August, 2010 onwards by sending emails and oral correspondence they insisted the opposite party No.1 for cancellation of the allotment and for refund of the amount paid by them with interest and informed the opposite party No.2 about the same.  After repeated requests, the opposite party No.1 promised to refund the entire amount at the earliest  and as per clause 9 of Tripartite Agreement, the opposite party No.1 has to refund the amount received from the OP 2  and also refund the amount paid by the complainants.

The complainants submitted that they are not liable to pay instalments to the opposite party No.2 for default on the part of the opposite party No.1, as they  regularly paid the instalments to avoid being treated as defaulters under the loan.  The complainants submitted that as the opposite party No.1 has failed to refund the amount within time, the opposite party No.1 is liable to pay interest and damages and further submitted that as per the terms of agreement, the opposite party No.2 has to demand the opposite party No.1 to return back the loan amount paid by them directly on behalf of the complainants and recover the loan amount advanced to the opposite party No.1 and close the loan account No.PH00080100085338.

        The complainants submitted that the opposite party No.1 had not  completed the construction nor refunded the amount by cancelling the allotment and till date and the complainant insisted for cancellation of the allotment and requested for refund of the amount.  The  opposite party No.1 failed to refund the amount and the act of the opposite party No.1 amounts to deficiency in service and unfair trade practice.  Hence the complaint.

The opposite party No.1 resisted the case contending that the land in Sy.No.384 is originally an agricultural land and the opposite party no.1 made an application for conversion of agricultural land into non-agricultural land and an application was made on 23-10-2006 for clearance from FTL of Medlacheru.  The opposite party No.1 submitted that an application dated 20-3-2007 was made to authorities for conversion of agricultural land into non agricultural purpose and vide proceedings No.C1/1264/2007 permission was accorded for conversion of land in Sy No.384 and the land in Sy No.385 was converted into non agricultural land vide proceedings No.C1/1263/2007.

 The opposite party No.1 submitted that the land was earmarked as agricultural use zone by HUDA now HMDA and the opposite party No.1 approached HMDA for change of land use in Sy.No.384 and the authorities made favourable recommendation and thereby the land in Sy.No.384 was notified as residential use zone. 

The opposite party No.1 submitted that as per the Master Plan approved by the Development Authority, there was a proposal of 30 Meters road passing through Sy Nos.384, 385, 386 and 387 of Tellapur village and consequent to the said proposed road, the project could not be commenced until there is a realignment to the said proposed road without affecting the land in Sy. No.384 and 385 on which Space Station –I project is developed by the opposite party No.1 and the fact is evident from letter dated D1/3601/2007 dt.5-5-2007 issued by HUDA. 

The opposite party No.1 submitted that an application was made with the concerned authorities and after adopting the procedure laid down under law, the realignment of the said proposed road was approved and G.O.Ms.No.288, dt.3-4-2008 was issued and thereafter they have given approval for building plans on 11-4-2008.  

The opposite party No.1 submitted that he also made applications for issuance of NOC by AP Fire Services Department  and permission for construction upto height of 90.40 metres was issued on 15-12-2007 and also obtained NOC from Airport authority of India for construction of residential complex in Sy.No.384 and 385 and the same were issued vide letters dated 5-6-2007 and 10-7-2009. 

The opposite party No.1 submitted that there is an embargo under law to grant permission for construction of buildings in the agricultural zone and until the variation is approved by the statutory authority and concerned departments of State Government, no steps could be taken by it for seeking approval of building plans.  They prepared designs and plans and submitted to HUDA on 09-1-2008 for technical approval  on 11-4-2008 and subsequently vide letter dated 14-10-2009 HUDA released technical approval upto ground + 20 upper floors and release of building permission for above 20 floors upto 29 floors is awaited.

The opposite party No.1 submitted that it is committed to the project and taking all necessary steps to complete the project at the earliest and as the project is massive and due to reasons beyond its control like required clearance from statutory authorities, the project was delayed.  This fact was also mentioned in the agreement of sale dated 3-8-2008 and described as ‘force majure’ and therefore the complaint is not maintainable and if the complainants wants to cancel their booking, they can do in conformity with terms of agreement only.

The opposite party No.1 submitted that the complaint is liable to be rejected in view of arbitration clause No.18 between the parties as per agreement dated 22-6-2008and that as per agreement para VIII (g) of the complaint, it is agreed that if there is any delay in delivering the possession of the flat, the opposite party No.1 would compensate charges at Rs.3/- per sq. ft. per month that too after payment  of dues by the complainants and prayed for dismissal of the complaint with costs.

The opposite party No.2 resisted the case contending that no relief was sought for against it and that no cause of action arisen against it and the complaint is not maintainable either in law or on facts and devoid of merits and hence liable to be dismissed.  The opposite party No.2 submitted that the complainant and the opposite party No.1 approached it for sanction of loan for purchase of the property and entered into tripartite agreement and the complainant  undertook to pay the loan amount in accordance with the loan agreement and it has power to recall the loan amount in default and it is not concerned with the alleged defaults of opposite party No.1 and it has been unnecessarily made a party to the complaint. 

The opposite party No.2 relied on clause 4 of Tripartite agreement that it can recall the entire loan amount in accordance with the loan agreement.

The opposite party No.2 admitted that the complainant approached it for housing loan for purchase of flat No.635 in 6^th floor and that an Tripartitle agreement dated 30-7-2007 was entered into.  It denied the allegation that the complainant is at liberty to withdraw from finance scheme at any point of time in the event of any breach committed by the opposite party No.1 and that upon such withdrawal all payments advanced by the opposite party No.2 to the opposite party No.1 would be refunded by the opposite party No.1 to the opposite party No.2 directly and the loan account will be closed. 

The opposite party No.2 submitted that it sanctioned loan amount of Rs.45,08,450/- to the complainant in terms of the loan agreement dated 22-6-2008 on payment of interest, processing fee, administration fee etc. and as per the terms of Tripartite agreement, the complainant authorized the opposite party No.2 to pay the loan amount directly to the opposite party No.1 and the complainant will pay the entire loan to the opposite party No.2 in accordance with the terms of the agreement. 

The opposite party No.2 submitted that it released Rs.18,45,000/- to the opposite party No.1 and that it is no way concerned with completion of construction and terms agreed upon by the opposite party No.1 and complainant.  The opposite party No.2 submitted that if opposite party No.1 fails to refund the amount, in terms of clause 9, the complainant is entitled to initiate proceedings against the opposite party No.1 and seek relief against opposite party no.1.  The opposite party No.2 is under no obligation to demand the opposite party no.1 to return back the amounts paid to them directly on behalf of the complainants and recover the loan amount advanced to the opposite party No.1 and close the account and prayed for dismissal of the complaint with costs.

        The complainant No.1 filed his affidavit and relied on the documents, Exs.A1 to A14.  The  MD of the opposite partyNo.1 filed his affidavit and authorized representative of OP 2 filed his affidavit in support of their case and no documents were marked on their behalf.

          The learned counsels for the complainants and the opposite party No.2 have filed written arguments.

        The points that arise for consideration are :

i.     Whether the complainants are entitled for possession and registration of flats or in the alternative  refund of the amount, if so, to what amount?

ii.    Whether  the bank was justified in releasing  the entire amount, contrary to the terms of agreements?

iii.  Whether the complainants are  entitled to compensation?

iv.  To what relief?

It is an undisputed fact that the complainants  had  booked the flats and entered into  an Agreement of sale on 22-6-2008 for flat No.635 on 6^th floor having super built up area of 1504.13 sq. ft. along with two car parking spaces  for sale consideration of Rs.50,88,143/- and paid Rs.6,99,615/- in advance and for the balance loan amount of Rs.43,88,528/- entered into a tripartite  agreement  with the opposite parties on 30-7-2008.    The opposite party No.1 had agreed to complete the construction and hand over possession of flat by December, 2010 from the date of execution of agreement.    It also agreed to pay Rs.3/- per sft. in case there is delay in handing over possession of flat to the complainant.  Pursuant  to  the tripartite agreement  the opposite party No.2 undertook to  disburse the loan amount to the opposite party No.1 as agreed upon.

Unfortunately,  the opposite party No.1 could not complete the project within the time frame as it could not get the required clearance from statutory bodies and it takes shelter under clause No.XIV ‘force majure’   The complainants, therefore, seek  possession of the completed apartments or in the alternative refund of  amounts  together with interest, compensation and costs.

The learned counsel for the opposite party no.1 contended that the agreement provides for reference to an Arbitrator in case of dispute and therefore the complaints are not maintainable before this Commission.  We hold that the Commission has jurisdiction in the light of various decisions of the Apex Court.  We rely on the judgement of the Apex court in National Seeds Corporation Ltd., V. M.Madhusudhan Reddy reported in (2012) 2 SCC 506 the Supreme Court  has considered the jurisdiction of the Consumer Fora and Commissions while adjudicating matter wherein there is an arbitration clause in the contract and held as follows:

“The remedy of arbitration is not the only remedy available to a grower. Rather, it is an optional remedy. He can either seek reference to an arbitrator or file a complaint under the Consumer Act. If the grower opts for the remedy of arbitration, then it may be possible to say that he cannot, subsequently, file complaint under the Consumer Act. However, if he chooses to file a complaint in the first instance before the competent Consumer Forum, then he cannot be denied relief by invoking Section 8 of the Arbitration and Conciliation Act, 1996 Act. Moreover, the plain language of Section 3 of the Consumer Act makes it clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force.”

It is pertinent to note that the complainants had not approached or appointed an arbitrator on his behalf and they have instead chosen to file the case before this Commission and it is also pertinent to note that no Arbitration Award has been passed.   Therefore we hold that the complaint is maintainable before this Commission.

The complainants submitted that they have no hopes that the project would be completed within a reasonable time so that they  could wait for the project to be completed and then take possession of the apartments.   They insist that their amounts be refunded with interest, together with compensation and costs.

        The learned counsel for  the opposite party No.1 contended that as per para No.VIII (g) of the agreement, it is agreed between the parties that in case of any delay in delivering the possession of the flat, the opposite party No.1 would pay compensation charges of Rs.3/- per square feet per month and that too after payment of dues payable by the complainant and therefore the complainants  cannot seek for refund of the amount paid by them.   

The opposite party No.1 could not prove the stages of  construction or  that it would hand over possession within a reasonable period,  and the period that was originally stipulated was already expired,  and all through the complainants  have  been paying EMIs to the bank, we are of the opinion that it would be unjust that the complainants be directed to go on  paying the amounts to the banks  without there being any hope of  getting the project completed. 

        The complainants  by issuing  notice to the opposite party No.1 on 05/10/2012  cancelled the agreement  and  demanded   the opposite party No.1 to pay  the consideration received  from them,  as the construction was not  completed,  and  sought for  refund of the amount paid by the bank to it with interest.  It was also mentioned that  since the opposite part No.1 had  failed to complete the construction as per the terms of agreement of sale as well as tripartite agreement,   the opposite party No.2 has to initiate  the proceedings and recover the amount and recover the loan amount from the opposite party No.1.   

        Section 72 of the Indian Contract Act runs as follows :

A person to whom money  has been paid, or anything delivered, by mistake or under coercion, must repay or return it.    There must be some undue pecuniary  inequality existing in the one party relative to the other which the law recognizes  as requiring compensation upon equitable principles. 

The amount received by the opposite party No.1 from the complainant and the opposite party No.2 without the opposite party No.1  making efforts to construct the flat as per the terms of the agreement would amount the opposite party No.1 unjustifiable enrichment of the opposite party No.1.

It is an undisputed fact that  agreement for purchase of  apartment is between  the complainants and the opposite party No.1.    It is also not in dispute as per the above said agreement the amount is to be paid as per the Annexure -A.   Recoursing the above agreement,  a tripartite agreement was executed in between the complainant, opposite party No.1  and the opposite party No.2.  

        It is the case of the complainants that the opposite party 2 bank despite the notice of cancellation  of agreement and even after filing the complaint before this Commission did not try to recover the amount paid by it to the opposite party No.1.

        The opposite party no.1 failed to complete the construction of the flat as per the terms of the agreement of sale dated 22-6-2008 and the reasons assigned therefor, viz. force majure is not applicable to the facts of the case.  It is pertinent to note that the terms of the agreement provide for time as the essence of the contract which is applicable to both the complainant and opposite party no.1.  The opposite party no.1 failed to substantiate its plea that some of the flats were already constructed and delivered and some other flats are ready for delivery as also that construction of rest of the flats is yet to be completed.        

In terms of the tripartite agreement, the opposite party No.1 is liable to refund the amount received from the complainant and opposite party no.2 on termination of the contract.  The complainant terminated the contract and requested the opposite party no.1 to refund the amount in the month of June, 2011.  The opposite party no.1 has not denied the contents of the notice issued by the complainant and thus the opposite party no.1 failed to complete the construction of the flat, refund the amount paid by the complainant as also that it failed to refund the amount received from opposite party no.2.  Thus there has been deficiency in service on the part of opposite party no.1.  The complainant has failed to establish any deficiency in service on the part of opposite party No.2.

For the foregoing reasons and in the facts and circumstances of the case, this Commission is of the considered view that the opposite party no.1 is liable to refund the amount paid by the complainant and opposite party no.2.

In the result the complaint is  allowed   directing the opposite party No.1 to refund the amounts paid by the complainants  with interest @ 12% p.a., from 21-7-2007 till payment and to refund the amount, Rs.18,45,000/- disbursed by the opposite party No.2 bank  to  it  along with penal charges etc. levied by the bank if any, failing which the bank  is liable to collect the amount from opposite party no.1,  and credit the  same to the loan account of the complainants.  The opposite party no.1 is directed to pay compensation of Rs.25,000/- together with costs of Rs.5000/-.  Time for compliance four weeks.  Complaint against opposite party No.2 is dismissed.

                                                                                                                                                          Sd/-INCHARGE PRESIDENT.

                                                                                                                                                          Sd/-MEMBER.

                                                                                                                                                          Sd/-MEMBER.
JM                                                                                                                                                      Dt.27-12-2013

//APPENDIX OF EVIDENCE//

Witnesses examined for

For complainant                                                                     For Opp.party

Affidavit of the complainant No.1 filed.                     Affidavit of the MD of OP 1 filed.

                                                                                      Affidavit of auth. Representative of OP 2

                                                                                      filed.

Exhibits marked on behalf of the Complainant:                                                       

Ex.A1- Copy of sale acknowledgement and receipt along with agreement

            for reservation of flat dated 21-7-2007.

Ex.A2-Copy of receipt for Rs.3,66,410 dated 25-8-2007.

Ex.A3-Copy of receipt for Rs.2,33,205/- dated 25-8-2007.

Ex.A4-Copy of agreement of sale dated 22-6-2008.

Ex.A5-Copy of Tripartite Agreement dated 30-7-2008.

Ex.A6-Statement of account dated 22-10-2008.

Ex.A7-copy of letter for price correction dated 22-10-2008.

Ex.A8-copy of email dated 4-6-2011.

Ex.A9- copy of email dated 17-8-2011.

Ex.A10- copy of email dated 09-11-2011.

Ex.A11-Letter demanding for refund of amount dated 18-7-2012.

Ex.A12-Copy of notice dated 05-10-12.

Ex.A13-Postal receipts dated 05-10-2012.

Ex.A14-Form 32 of OP 2

Exhibits marked on behalf of the Opp.parties:

-Nil-

                                                                                                                                                          Sd/-INCHARGE PRESIDENT.

                                                                                                                                                          Sd/-MEMBER.

                                                                                                                                                          Sd/-MEMBER.
JM                                                                                                                                                      Dt.27-12-2013