STATE CONSUMER DISPUTES REDRESSAL COMMISSION
OF TELANGANA : AT HYDERABAD
CC NO. 59 OF 2014
Between :
1) K.R.V. Nagendra Reddy
S/o K.N.Raja Reddy,
Aged about 41 years, Occ: Service,
R/o Plot No.27, Laxmi Enclave,
Vinayaka Nagar, Gachibowli, Hyderabad.
2) K.Sreeranjani W/o K.N.Raja Reddy,
Aged about 61 years, Occ: Housewife,
R/o Plot No.27, Laxmi Enclave,
Vinayaka Nagar, Gachibowli, Hyderabad.
Complainants
And
1) M/s Aliens Developers Pvt., Ltd.,
Rep. by its Managing Director Hari Challa
S/o C.V.R. Choudhary, Regd. Office
at Gachibowli-Tellapur, Hyderabad-502 032.
2) Hari Challa S/o C.V.R. Chowdhary,
Managing Director, M/s Aliens Developers
Pvt., Ltd., Registered Office at Gachibowli-
Tellapur, Hyderabad – 502 032.
3) Mr.Venkata Prasanna Challa,
Joint Managing Director,
M/s Aliens Developers Pvt., Ltd.,
Registered Office at Gachibowli-
Tellapur, Hyderabad – 502 032.
Opposite parties
Counsel for the Complainants : Sri S.Prashanth Kumar.
Counsel for the Opposite parties : M/s Alluri Krishnam Raju & G.Dinesh Kumar
Coram :
Hon’ble Sri Justice B.N.Rao Nalla … President
Friday, the Twenty Nineth day of April
Two thousand Sixteen
Oral Order : (per Hon’ble Sri Justice B.N.Rao Nalla, Hon’ble President)
***
The complaint is filed under section 17(1)(a)(i) of the Consumer Protection Act, 1986 by the Complainants complaining deficiency in service against the Opposite parties and claimed refund of Rs.33,86,400/- along with interest @ 24% from the date of filing of the complaint till realization; to pay Rs.10.00 lakhs towards damages for causing mental tension and agony and to award legal expenses to the tune of Rs.75,000/-.
2. That the Opposite parties entered into Development Agreement under documents bearing Nos.23198 of 2006, 23230 of 2006 dt.07.10.2006 and 13321 of 2007 dt.23.06.2007 with the owners of land for development of their land measuring Ac.19.26 guntas in Sy.No.384 and 385 situated at Tellapur village, Ramachandrapuram mandal, Medak district for construction of residential apartment complex. The Opposite parties made complainants believe that they have undertaken construction of multi-storied apartment complex in the name and style M/s Alien Space Station-I and will obtain necessary permissions for construction of multistoried apartment complex. Believing their version, Complainants entered into an Agreement for Reservation dt.22.10.2010 for reservation of flat No.150 at Station-8, 1st floor, admeasuring 1412 sft. Super built-up area including common areas with one car parking space along with 30.36 square yards of proportionate undivided share of land, for a consideration of Rs.36,80,796/-. The Complainants paid token advance of Rs.20,000/- on 17.10.2010; Rs.9,00,000/- and Rs.1,00,000/- by way of two cheques on 20.10.2010; Rs.2,00,000/- and Rs.1,00,000/- by way of two cheques on 30.10.2010; Rs.2,00,000/- on 03.11.2010, totaling Rs.15,20,000/-.
3. The Opposite parties promised to deliver the possession of the flat to the Complainants on or before November 2011 with a grace period of 9 months and on failure, agreed to pay compensation of Rs.3/- per sft. Per month in any case of delay in possession. However, the Opposite parties failed to complete the construction in November 2011 and also within the grace period, as such, the Opposite parties are under an obligation to pay damages. When the Complainants sought for refund of amount, they were made to run from pillar to post, without any fruitful result. Had the amounts paid by Complainants been invested on some other projects, the Complainants would have got good appreciation on their investment, but because of the false promises and deficient services rendered by the Opposite parties, they suffered and sustained damages to the tune of Rs.20,00,000/-.
4. In spite of repeated requests and demands of the Complainants, the Opposite parties failed to respond and refund the amount. As such, the Complainants got issued a notice dated 18.10.2013 to the Opposite parties seeking refund of the amount together with interest and damages of Rs.20.00 lakhs, which were returned unserved by the postal authorities with an endorsement as “party refused to accept”, which is deemed to have been served. These acts on the part of the Opposite parties amounts to negligence and deficiency in service. Hence, the complaint with the reliefs, as stated, supra.
5. The Opposite parties resisted the claim on the premise that the complainants filed the complaint to gain out of their breach of contract and the complaint is not maintainable in view of there being no consumer dispute and the arbitration clause mentioned in the agreement of sale providing for settlement of disputes by means of arbitration process. The complainants suppressed some facts and camouflaged some facts in order to make out a case. That the complaint is filed with all concocted allegations giving colour as if there is a consumer dispute.
6. The Opposite parties submitted that originally the land in Sy.No.384 was an agricultural land and they filed application for conversion of the same into non-agricultural land on 23.10.2006 and FTL clearance was granted on 30.12.2006. Permission was granted on 14.04.2007 for conversion of agricultural land into non-agricultural land and thereafter HUDA earmarked the land as agricultural zone and the Opposite parties have filed application for change of use of the land as commercial use zone.
7. It is averred by Opposite parties that Municipal Administration and Urban Development (I) Department notified the land in Sy.No.384 as residential use zone. The project could not be commenced in view of proposed road under Master plan, until realignment of the proposed road without affecting the land in Sy.No.384 is made. Realignment of the proposed road was approved on 03.04.2008 and permission was accorded approving the building plan on 11.04.2008. Opposite parties have obtained NoC from the A.P. Fire Services Department on 15.12.2007 and subsequently it was reduced from 91.40 meters to 90.40 meters. After following due procedure and process, the Opposite parties obtained NoC from Airports Authority on 10.07.2009.
8. It is further averred that HUDA accorded technical approval on 14.10.2009 for ground + 20 floors and release of building permission upto 29 floors is awaited. In view of arbitration clause in the agreement the complaint is not maintainable before this Commission and the same has to be referred for arbitration as per the provisions of Arbitration and Conciliation Act, 1996. That they have taken necessary steps to complete the project. The project is a massive project and due to reasons beyond their control, the Opposite parties could not complete the project within the time frame and they informed the complainant that the project required sanction from statutory authorities and mentioned the same as ‘force majeure’ in the agreement of sale. It also agreed to pay compensation at agreed rate to maintain goodwill and relationship with the customers.
9. It is stated that for the delay, the Opposite parties have agreed to pay Rs.3/- per sq.ft. in terms of clause VIII(g) of the Agreement for the delay caused in completing the project and they agreed to adjust the amount towards dues payable by the complainants. The complainants filed the complaint with ulterior motive to defame the opposite parties. The Complainants shall file relevant receipts and documents to prove the payments.
10. The Complainants are not entitled for any compensation and their claim is illegal. The complainants are not entitled for refund of amount and interest thereon and any compensation and costs. There is no deficiency of service on the part of the Opposite parties. Hence prayed for dismissal of the complaint.
11. On behalf of the Complainants, K.R.V.Nagendra Reddy filed his evidence affidavit and the documents, Exs.A1 to A12. On behalf of the Opposite parties, the Managing Director of the OP No.1 Company has filed the affidavit and the documents, Ex.B1 to B18.
12. The counsel for the complainants and the Opposite parties has advanced their arguments reiterating the contents of the complaint and the written version. Heard both.
13. The points for consideration are :
i) Whether the complaint is maintainable in view of arbitration clause in the agreement of sale ?
ii) Whether the complaint is not a ‘consumer dispute’?
iii) Whether there is any deficiency in service on the part of the Opposite parties?
iv) To what relief ?
14. POINT NO.1 : The Complainants entered into “Agreement of Reservation” on 22.10.2010 with the Opposite party No.1 for purchase of flat bearing No.150 in Station-8 on 1st floor and thereafter the Complainants paid the part consideration amount as per the pricing pattern of the flat issued by the Opposite parties, on various dates and the Agreement of Reservation provides reference to arbitration. The learned counsel for the opposite parties has contended that in view of the arbitration clause in the agreement, the Complainants cannot maintain the complaint before this Commission. Clause XVIII of the Agreement of sale provides for deciding the disputes arising under the agreement by arbitration proceeds reads as under:
a) This agreement shall be construed according to the laws of India and the legal relations between the Parties hereto shall be binding accordingly.
b) That all disputes/issues arising out of and/or concerning this transaction will be subject to the exclusive jurisdiction of the Courts at Ranga Reddy district, A.P.
c) That all disputes or differences relating to or arising out of or in connection with this agreement shall be mutually discussed and settled between the parties.
d) However, disputes or differences arising out of and or in connection with and or in relation to this transaction/agreement, which cannot be amicably settled, shall be finally decided and resolved by an Arbitrator appointed by Developer in accordance with the provisions of the Arbitration and Conciliation Act, 1996. Arbitration as aforesaid shall be a domestic arbitration under the applicable Laws.
e) That the venue of arbitration shall be at Hyderabad and the language for the Arbitration proceedings shall be English.
15. In terms of the agreement of sale, the dispute has to be decided by means of arbitration. However, remedy provided under the provisions of Consumer Protection Act is an additional remedy and in the light of law laid in “National Seeds Corporation Ltd., Vs. M.Madhusudhan Reddy reported in (2012) 2 SCC 506 wherein the maintainability of the complaint before consumer forum prior to the complainants having exhausted the other remedy was considered as under:
“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.”
For the above reasons, the Point No.1 is answered in favour of the Complainants and against the Opposite parties.
16. In the arguments, counsel for Complainants reiterated the same facts as averred in the complaint besides stating that the Opposite parties ought to have acted in accordance with the provisions of the Andhra Pradesh (Promotion of Construction and Ownership) Act & Rules, 1987 while undertaking such agreements and hence pleading ‘force majeure’ does not arise. She relied on Section 72 of Indian Contract Act supported by the Judgment of Hon’ble Apex Court in Brij Pal Sharma Vs. Ghaziabad Development Authority reported in III (2005) CPJ 43 (SC) and submitted that the Apex Court opined that grant of interest @ 18% p.a. by way of damages and compensation is justified. She further relied on decision in Ghaziabad Development Authority Vs.Balbir Singh reported in II (2004) CPJ 12 wherein it is stated “in our view, irrespective of whether there was genuine reason to cancel or not, the monies must be returned with interest @ 18%.” This Commission perused the said Judgments. In Ghaziabad Development Authority versus Balbir Singh, the Hon’ble Supreme Court further observed that the interest shall be payable from the dates of deposit of the amounts till the date of repayment.
17. On the other hand, the counsel for the Opposite parties in the arguments submitted that as per agreement, if the Complainants want to cancel the booking of the flat, they shall forego 10% of the total flat cost as charges which is agreed by them and in that regard, relied on Judgment reported in 2009 (2) CPR 197 (NC) : II (2009) CPJ 276 (NC) in Punjab Urban Planning and Development Authority and another Vs. Shyam Sunder Tiwari and others, wherein, it is held that “courts cannot add anything or improve upon the terms of contract between the parties.” Admittedly, in the instant case, no such Agreement is entered into between the parties except the Agreement for reservation of flat. However, this Commission perused the said order. The facts of the said case and facts of the case on hand are different. In the said case, the Petitioner Authority withdrew the scheme and there was provision for refund of earnest money. In the case on hand, there is no provision for refund of earnest money. Admittedly, on failure to comply with terms and conditions of agreed terms by the Opposite parties, the Complainants sought for refund of the amount. Hence, this Commission does not find any merit in the contention put forth by the learned counsel for Opposite parties.
18. POINTS No.2 & 3 : The Opposite parties 1 to 3 entered into Development Agreement with the land owners of the land admeasuring Ac.19.26 guntas in survey numbers 383, 385 and 426/A situate at Tellapur village of Ramachandrapuram mandal, Medak district and they agreed to deliver the residential flat to the Complainants in accordance with the terms and conditions agreed upon and consented thereof and as per specifications given thereto.
19. In pursuance of the development agreement, the opposite parties have obtained permission for construction of the residential building on the land and admittedly there has been abnormal delay in completion of the project in so far as this complaint is concerned. The opposite parties have attributed the delay to the authorities concerned in granting permission and NoC etc., as to the cause for delay in completion of the project. The opposite parties would contend that the cause for delay is beyond their control which is force majeure. The Opposite parties stated the reasons for the delay in completion of the construction of the residential complex as under:
“The reasons, for delay is, project required clearance from statutory bodies which are necessary for execution of the project. The said fact was informed to the complainant and even mentioned in the agreement of sale under clause No.XIV and described as “force majure”. The above referred facts mentioned squarely fall under the said clause. Therefore, the present complaint is not maintainable before the Hon’ble Commission as there is no deficiency of service on the part of the opp.party in executing the project and if the complainant wants to cancel her booking she can do so in conformity with terms of agreement only.”
20. The complainants have submitted that owing to failure of the opposite parties in completing the construction of the flat No.150, they opted for cancellation of the agreement for reservation of flat and the opposite parties have contended that in order to maintain cordial relations with the complainants, they agreed to pay compensation in terms of the agreement which they entered into in normal course with other customers. The complainants got issued the notice on 18.10.2013 setting forth series of events of delay and negligence and false promises made by the Opposite parties seeking for refund of the amount and payment of damages on the premise of inaction on the part of the opposite parties.
21. The opposite parties have promised to complete construction of the flat and hand over its possession to the complainant by November 2011 with a grace period of nine months as agreed and on their failure to perform their part of contract, the opposite parties have proposed to pay rents but failed to pay the same. However, there is no communication from the side of the opposite parties in this regard and the opposite parties have not filed a piece of paper to show their readiness to pay compensation and adjust the same towards the dues payable by the complainants.
22. Not keeping promise to complete construction of the building and failure to deliver possession of the flat constitutes deficiency in service on the part of the opposite parties. The complainants have two options left for recovery of the amount, either by filing suit in court of law or by way of filing complaint before State Consumer Disputes Redressal Commission in view of the amount claimed falling within the pecuniary jurisdiction of this commission. The contention of the opposite parties that the complaint is not maintainable is not sustainable.
23. The complainants claimed refund of amount paid together with interest but failed to mention the period from which they are entitled to besides claim for damages to the tune of Rs.10,00,000/-. The complainants acquiesced to the delay in construction of the project. The complainants have not disputed that the opposite parties have informed them about the cause for delay in obtaining permission and NOC etc., which ultimately was found to be valid. As such, the Complainants cannot claim damages. However, the complainants are entitled to interest @ 12% p.a. on the amount paid from the date of respective payments till realization.
24. From the perusal of Ex.A2 to Ex.A7, it is evident that the Complainants paid an amount of Rs.15,20,000/- to the Opposite parties as against the total sale consideration of Rs.36,80,796/-.
25. In the above facts and circumstances, the points 1 to 4 are answered accordingly holding that the Opposite parties 1 to 3 are jointly and severally liable to pay the amounts to the Complainants.
26. In the result, the complaint is allowed holding that Opposite parties 1 to 3 are jointly and severally liable and they are directed to pay an amount of Rs.15,20,000/- with interest @ 12% p.a. from the date of respective payments till realisation, together with costs of Rs.6000/-. Time for compliance four weeks.
PRESIDENT
29.04.2016
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For Complainant : For Opposite parties :
Affidavit evidence of K.R.V.Nagendra Affidavit evidence of Hari
Reddy as PW1. Challa as RW1.
EXHIBITS MARKED
For Complainant :
Ex.A1 is original Agreement of Reservation entered into by Opposite parties with the Complainant, dated 22.10.2010.
Ex.A2 is original receipt bearing No.05872, dated 17.10.2010 for Rs.20,000/-.
Ex.A3 is original receipt bearing No.05638, dated 30.10.2010 for Rs.2,00,000/-.
Ex.A4 is original receipt bearing No.05640, dated 30.10.2010 for Rs.1,00,000/-.
Ex.A5 is original receipt bearing No.06088, dated 20.10.2010 for Rs.1,00,000/-.
Ex.A6 is original receipt bearing No.06089, dated 20.10.2010 for Rs.9,00,000/-.
Ex.A7 is original receipt bearing No.06122, dated 03.11.2010 for Rs.2,00,000/-.
Ex.A8 is office copy of notice, dated 18.10.2013 got issued by Complainants to the Ops.
Ex.A9 is the original postal receipts (3) Nos., dated 22.10.2013.
Ex.A10 is the original postal returned cover addressed to the Opposite party No.2.
Ex.A11 is the original postal returned cover addressed to the Opposite party No.3.
Ex.A12 is the Certificate of Incorporation of the Opposite party No.1 firm, dated 21.03.2006 issued by the Registrar of Companies, Andhra Pradesh, Hyderabad.
For Opposite parties :
Ex.B1 Copy of Lr.No.252931/4/2007 addressed by Principal Secretary to Government to Vice, Chairman, HUDA, Hyderabad for change of land use.
Ex.B2 Copy of G.O.Ms.No.288, Municipal Administration & Urban Development (I1) Department, dated 03.04.2008 (HMDA revised master plan).
Ex.B3 Copy of (report) Lr.No.D1/3601/2007, dated 05.05.2007 addressed by District Collector, Medak to Vice-Chairman & Managing Director, HUDA along with map.
Ex.B4 Copy of minutes of meeting of multi-storeyed building committee for HUDA area held on 29.02.08 at 3-00 pm in the chambers of Vice-Chairman, HUDA (4 basements + Ground + 13 Upper Floors).
Ex.B5 Copy of Lr.No.1927/Misc/Plg/H/2008, dated 31.03.2008 addressed by HUDA to the Principal Secretary to Government for 30 meters road alignment in Sy.No.384 & 385.
Ex.B6 Copy of Lr.No.621/P4/Plg/HUDA/2008, dated 11.04.2008 addressed by HUDA to OP No.1 approving 4 basements + Ground + 13 upper floors).
Ex.B7 Copy of Lr.No.621/Pr/Plg/HUDA/ 2008, dated 11.04.2008 addressed by HUDA to Executive Authority, Tellapur Gram Panchayat according technical permission of residential apartments.
Ex.B8 Copy of minutes of meeting of multi-storeyed building committee for MSB in HUDA area held on 05.06.2008 at the chambers of Vice-Chairman, HUDA (4 basements + ground + 29 upper floors).
Ex.B9 Copy of Lr.No.621/P4/Plg/HMDA/2008, dated 14.10.2009 addressed by HMDA to the Executive Authority, Tellapur Gram Panchayat according technical permission of residential apartments (4 basements + ground + 20 upper floors).
Ex.B10 Copy of Lr.No.SEIAA/AP/MDK-14/08, dated 12.08.2008 addressed by State Level Enviornment Impact Assessment Authority, Hyderabad to according environmental clearances to Opposite parties.
Ex.B11 Copy of Lr.No.19038/I1/2009, dated 24.11.2009 addressed by Principal Secretary to Government to Ops (clearance of GOMs.No.111).
Ex.B12 Copy of letter addressed by Opposite parties, dated 08.10.2010 to the HMDA, Hyd (revised application and plans for building permission consisting of 3 basement + ground + 29 upper floors).
Ex.B13 Copy of Lr.No.10186/MP1/Plg/HMDA dated 28.03.2011 addressed by HMDA to the Ops to pay publication charges for change of land use from residential to commercial.
Ex.B14 Copy of cash acknowledgement receipt bearing No.825631 for Rs.1,000/- in File No.2011-2-431 for new water connection.
Ex.B15 Copy of Certificate of best compliments issued by Indian Green Building Council in favour of the Opposite parties company.
Ex.B16 Copy of certificate of best compliments awarded by Cityscape in favour of the Opposite parties company.
Ex.B17 Copy of letter addressed by the Opposite parties to the purchaser by name S.Pragathi intimating to take possession of the flat, dated 02.11.2015.
Ex.B18 Copies of photographs of flat occupants occupying the completed flats.
PRESIDENT
29.04.2016
