BEFORE THE A.P STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT HYDERABAD.
CC 88 of 2011
Between:
1) G. Narayana Reddy
S/o. Late G. Ashi Reddy
Age: 52 years
2) G. Bharath Reddy
S/o. G. Narayana Reddy
Age: 21 years.
Both are R/o. Plot No. 380
Road No. 82, Jubilee Hills
Hyderabad-500 033. *** Complainants
And
1) G. Siva Rama Krishna
S/o. Late G. Sambasiva Rao
Plot No. A-09, Sai Swapna Residency
Road No. 4, Film Nagar
Jubilee Hills, Hyderabad.
2) M/s. Kondapur Towers Pvt. Ltd.
8-2-609/K, Karvey Centre
Road No. 10, Banjara Hills
Hyderabad.
Rep. by its Director *** Opposite Parties
(Not pressed against Op2)
Counsel for the Complainant: M/s. V. Gourishankara Rao
Counsel for the Opposite Parties: M/s. M. Laxmi Prasad (Op1)
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
SMT. M. SHREESHA, MEMBER
&
SRI S. BHUJANGA RAO, MEMBER
TUESDAY, THE THIRTY FIRST DAY OF JULY TWO THOUSAND TWELVE
ORAL ORDER: (Per Hon’ble Sri Justice D. Appa Rao, President)
***
1) This is a complaint filed u/s 17 of the Consumer Protection Act for refund of Rs. 75 lakhs with interest @ 12% p.a., together with compensation of Rs. 5 lakhs and costs of Rs. 25,000/-.
2) The case of the complainant in brief is that complainant No. 2 is the son of complainant. They entered into an agreement of sale for purchase of a flat No. 1702 in Block-E, Type 4BHK in the 17th floor with plinth area of 2925 sft along with two car parking slots including common area and 65 Sq.yds of undivided share of land for a total consideration of Rs. 80 lakhs with Op1 owner of the land, who entered into development agreement with Op2 on 9.5.2009 for construction of residential complex under the name and style ÍCONA’ phase-I. Op1 represented that the municipal corporation accorded permission for construction of G+19 upper floors vide permission dt. 26.6.2008 and that flat No. 1702 fell to his share under memorandum of agreement dt. 17.9.2009. Op1 supplied brochure with designs, specifications etc. They had paid Rs. 75 lakhs on different dates through cheques. On 17.9.2009 Op1 executed agreement of sale for the said flat. Clause-7 stipulates that construction to be made within 17 months from the date of agreement with a grace period of six months by 16.8.2011. After such construction Op1 had to give notice to the complainant to take possession of the flat. By the date of agreement only 11 floors were constructed. Subsequently only two floors were constructed and slab of 14th floor was laid. Thereafter the construction was stopped. They did not even raise the pillars to construct 17th floor. Despite their requests, he is indifferent and despite legal notice to refund the amount, he did not even give reply. Neither commencement of construction was made nor provided basic amenities like water, electricity, roads etc. and the scheduled date having been expired by 16.8.2011, and as there is no possibility of constructing the flat they sought for refund of Rs. 75 lakhs with interest @ 12% p.a., together with compensation and costs.
3) Op1 resisted the case. He filed his written version alleging that the complainant did not come with clean hands, and all of a sudden, one year after cancellation of booking he requested for refund of amount. In fact he had returned the amount without even charging any penalty as a goodwill gesture. As the money was refunded he again sought for allotment of very same flat. At the instance of common friends and well-wishers after giving a heavy discount of Rs. 31 lakhs, actual price being Rs. 1,11,06,855/- he agreed to sell for Rs. 80 lakhs on the condition that he would pay the entire amount on or before 31.10.2009. He did not pay balance of Rs. 5 lakhs. He filed a frivolous case for refund of amount. He did not issue any cancellation notice. The complaint is premature. He ought to have issued cancellation notice in terms of clause-X (h) of the agreement of sale dt. 17.9.2009. Since cancellation was not made as per condition Nos. X (f)(h)(j) he had to forego Rs. 10 lakhs for cancellation of flat vide condition No. XI (1.11) of the agreement of sale. It would enable it to refund the amount with interest @ 10% p.a., as per condition No. X(j). The amount paid by the complainant was re-invested in the business. Therefore, conditions were stipulated requiring time for him to arrange refund. The time for completion and handing over possession of the flat is 36 months not 23 months as mentioned. Condition No. 10 (f) stipulates that if the purchaser wants to terminate the agreement of sale he had to complete and hand over possession on or before 16.9.2012. Still there remains a period of 9 months for completion. As of right he cannot claim cancellation. In fact 17th floor has been raised long back, as can be seen from the photographs. Since the complainant did not cancel the agreement he was not entitled to claim refund of the amount. The complaint is pre-mature. Therefore he prayed for dismissal of the complaint with costs.
4) The complainant did not press the complaint against Op2.
5) The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A9 marked, while refuting his evidence Op1 builder filed his affidavit evidence.
6) The points that arise for consideration are :
i. Whether the complainant is entitled to refund of amount? If so, to what amount?
ii. Whether the complainant is entitled to compensation? If so, to what amount?
iii. To what relief?
7) It is an undisputed fact the Op1 is the land owner who has given his land for development to Op2 to construct multi-storeyed complex consisting of 19 towers of 20 floors each vide development agreement dt. 19.8.2009 and brochure Ex. A9. It is also not in dispute that the complainant agreed to purchase flat No. 1702 in Block-E, Type 4BHK in the 17th floor with plinth area of 2925 sft along with two car parking slots including common area and 65 Sq.yds of undivided share of land for a total consideration of Rs. 80 lakhs, evidenced under agreement of sale Ex. A1 dt. 17.9.2009 with Op1 which fell to his share. As on the date of agreement the complainant had paid Rs. 75 lakhs as against Rs. 80 lakhs, and agreed to pay balance of Rs. 5 lakhs by 31.10.2009. It is also not in dispute that the complainant had paid in all Rs. 75 lakhs by 14.11.2009 keeping a balance of Rs. 5 lakhs. The complainant asserts that though he agreed, that within a period of 17 months from the date of agreement with a grace period of 6 months, he would hand over possession of the flat, however, Op1 did not do so, and therefore he got issued a legal notice under Ex. A5 received under acknowledgement Ex. A6, however, did not choose to give any reply. When there was no prospect of handing over possession of the flat within a reasonable time, he filed the complaint seeking refund of amount paid by him.
8) Op1 contends that by virtue of clause X(h) of the agreement of sale he was not entitled for cancellation or refund of the amount. This contention has no legs to stand in the sense that the very notice issued by the complainant seeking refund of the amount paid by him on the ground that OP1 failed to complete construction, hand over possession of the flat by abandoning the project. Having received the said notice Op1 did not choose to give reply nor raise any objection that it does not amount to cancellation of the agreement.
9) Yet another contention is that clause X (f) (h) (j) authorises him to deduct Rs. 10 lakhs. It may be stated herein Clause X (f)(h) (j) reads as follows :
1.10(f): The purchase can terminate this agreement upon the developer/land owner failing to construct the property within the stipulated period of 30 months with a grace period of 6 months in terms of this agreement.
1.10(h): Termination shall be by 30 days written notice by one party to the other and delivered in the manner set out in this agreement.
1.10(j): If the termination of this agreement is by the purchaser due to the developer/land owner’s default, the developer/land owner shall pay back the amounts received from the purchaser within thirty days of the cancellation and if the payment is made after the thirtieth day, the developer/land owner pay an interest of 10% p.a. beyond the thirtieth day up to the date of actual payment.
10) As we have already stated that notice was given by the complainant to Op1, categorically alleging that no construction was made or flat was handed over to him, and therefore entitled to refund of amount paid by him. Clause- 7(1) stipulates that it should be completed within 17 months with a grace period of six months from the date of execution of agreement. From this the complainant alleges that the property has to be handed over to him by 16.8.2011. More over by virtue of clause 8.1 after completion of flat Op1 had to give notice for taking possession of the flat. Since there was neither construction nor any slab to show commencement of construction of 17th floor wherein he agreed to purchase flat No. 1702 he sought for refund of amount.
11) Op1 contends that he had agreed to pay the entire amount of Rs. 80 lakhs by 31.10.2009, and even up till this date he did not pay the remaining balance of Rs. 5 lakhs. Even otherwise, the stipulated period for completion of flat is not 23 months but 36 months from the date of agreement of sale. As per condition No. X(f) if a purchaser terminates the agreement of sale the period stipulated would end by 16.9.2012. Since he had some more time to complete the construction, the complaint is pre-mature.
12) Clause-7.1 in categorical terms stipulates completion of construction within period of 17 months with grace period of six months. If the said period is reckoned from the date of agreement dt. 17.9.2009 it would come to 16.8.2011. while the termination clause 1.10(f) stipulates that the purchase can terminate the agreement upon the developer/land owner failing to construct the property within the stipulated period of 30 months with a grace period of 6 months , contrary to the above said clause of duration which we have excerpted. Clause 1.10(h) stipulates that the termination shall be 30 days written notice by one party to another.
Finally clause 1.10(j) stipulates that if the termination of the agreement is by the purchaser due to the developer/land owner’s default, the developer/land owner shall pay back the amounts received from the purchaser within thirty days of the cancellation and if the payment is made after the thirtieth day, the developer/land owner shall pay an interest of 10% p.a. beyond the thirtieth day up to the date of actual payment.
Undoubtedly these clauses are contradictory. In order to unravel the question it must have to be read harmoniously. The termination clause would only come into effect if notice is to be given. A queer contention was taken that the if the purchaser intends to terminate the agreement on or before
16.9.2012 he cannot claim the right to cancellation or termination of agreement of sale dt. 17.9.2009 until such period expires. It may be stated herein that even from the photographs filed by Op1 there was no likelihood of completion of construction before expiry date. By either invoking first clause or second clause, hardly 1-1/2 months remained for cancellation of agreement in order to enable the complainant to claim the amount. When the very agreement is frustrated by not constructing, the question of invoking clause 10(f) will not arise. This clause is contrary to stipulation under Clause-7 in regard to duration. If a holistic view is taken, it would undoubtedly show that Op1 did neither complete the construction within 17 months with a grace period of 6 months or within 30 months with a grace period of six months. Op1 even did not care to reply to the legal notice got issued by the complainant, when he sought for cancellation and refund of the amount. An adverse inference has to be drawn against his defense.
13) The contention that the complainant did not come up with clean hands and therefore not entitled to refund of the amount has no place. The decision of the Hon’ble Supreme Court in S.P. Chengalvaraya Naidu Vs. Jagannath reported in 1993 LAW (SC) 10-1 relied in this regard has no application. Simply because the complainant did not allege that earlier he entered into an agreement, however got it cancelled, and again a fresh agreement was entered into, it cannot be said that he has not come up with clean hands. There is no connection from the earlier agreement entered into by the complainant with that of the case on hand. It is not case of Op1 that he has constructed the flat as per the terms of the agreement and ready to deliver within the period stipulated in the agreement by 16.8.2011. In view of the fact that there is no scope for Op1 to hand over possession as per terms, we are of the opinion that this amounts to deficiency in service. When there is no prospect of being completed, the question of complainant paying remaining balance of Rs. 5 lakhs will not arise nor Op1 can insist for payment of the said amount. The question of foregoing Rs. 10 lakhs being a pre-mature claim as per clause 11.1 equally will not arise. Op1 cannot make money by collecting consideration, and invest the same for construction and then deduct the amounts as though the complainant was at fault. Had Op1 commenced construction (as far as flat of complainant is concerned) it would have been otherwise. It did not even commence construction, and therefore invoking clause 11.1 cannot be insisted upon. Op1 had the benefit of amount all through for a period of three years without complainant having any advantage viz., either occupation or leasing it out. Since Op1 did not even commence construction, necessarily it was liable to pay compensation.
14) In the result the complaint is allowed in part directing Op1 to pay Rs. 75 lakhs with interest @ 10% p.a., from the date of complaint viz., 14.9.2011 till the date of realization together compensation of Rs. 1 lakh and costs of Rs. 10,000/-. Time for compliance four weeks. The complaint against Op2 is dismissed as not pressed.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
3) ________________________________
MEMBER
APPENDIX OF EVIDENCE
WITNESSES EXAMINED FOR
COMPLAINANT OPPOSITE PARTIES
None None
Documents marked for complainant:
Ex. A1 Agreement of sale dt. 17.9.2009
Ex. A2 Statement of account of HDFC Bank of M/s. Narayana Reddy
Gaddam from 1.7.2009 to 30.12.2009.
Ex. A3 Summary of accounts of ICICI Bank of M/s. Narayana Reddy
Gaddam/Padma Anand Gaddam as on 31.12.2009.
Ex. A4 Photocopy of bank pass book from 21.4.2006 to 22.10.2009.
Ex. A5 Legal notice dt. 4.8.2011 of complainant to Ops
Ex. A6 Postal receipts and acknowledgement
Ex. A7 Courier receipts
Ex. A8 Photo copy of GPA
Ex. A9 Brochure.
Documents marked for Opposite Parties : Nil
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
3) ________________________________
MEMBER
31/07/2012
*pnr
UP LOAD – O.K.
