STATE CONSUMER DISPUTES REDRESSAL COMMISSION
OF TELANGANA : AT HYDERABAD
CC NO.243 OF 2013
Between :
1) K.Mrudula W/o B.Uttam Kumar
aged about 32 years, Occ: private employee,
2) B.Uttam Kumar S/o B.Purshotham Rao,
aged about 42 years, Occ: Private employee,
Both are R/o 89-A, Ferry Street,
Floor-II, Jersey City, New Jersey-07307, USA.
Rep. by their GPA holder B.Purushotham Rao
S/o B.Venkat Rao, aged 66 years, Occ: Retired
Employee, Flat No.403, Nirmal Towers,
Anand Nagar, Bowenpally, Secunderabad.
Complainants
And
1) Maytas Properties Limited,
Regd. Office at Maytas Properties Limited,
Hill County, Bachupally, Miyapur,
Hyderabad – 500 072, rep. by its Managing Director.
2) Datla Gopala Krishnam Raju,
Ex-Director, Maytas Properties Limited,
Hill County, Bachupally, Miyapur,
Hyderabad – 500 072.
3) Byrraju Rama Raju, Ex-Wholetime
Director-cum-Vice-Chairman,
Maytas Properties Limited, Hill County,
Bachupally, Miyapur, Hyderabad – 500 072.
4) Byrraju Teja Raju, Ex-Director,
Maytas Properties Limited,
Hill County, Bachupally,
Miyapur, Hyderabad – 500 072.
5) M/s Himagiri Bio-Tech Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.No.B-55,
Flat No.202, Sai Vaishnavi Vihar,
Vengalrao Nagar, S.R. Nagar Post,
Hyderabad – 500 038.
6) M/s Sindhu Greenlands Pvt., Ltd.,
a Company incorporated under the provisions
of Indian Companies Act, 1956, having its
registered office at Flat No.102,
Dhanunjaya Nest, Rajiv Nagar,
Yousufguda, Hyderabad – 500 045.
7) M/s Goman Agro Farms Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at Plot No.392,
HMT Hills, 2nd Venture, Opp: JNTU College,
Kukatpally, Hyderabad – 500 072.
8) M/s Himagiri Green Fields Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at Flat No.102,
Dhanunjaya Nest, Rajiv Nagar,
Yousufguda, Hyderabad – 500 045.
9) M/s Nagavali Greenlands Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at Flat No.102,
Dhanunjaya Nest, Rajiv Nagar,
Yousufguda, Hyderabad – 500 045.
10) M/s Swarnagiri Green Fields Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.No.2-13/31,
S.S. Nagar, Opp: Hyder Nagar, Hyderabad-72.
11) M/s Konar Greenlands Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.No.2-13/31,
S.S. Nagar, Opp: Hyder Nagar, Hyderabad-72.
12) M/s Medravati Agro Farms Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.No.B-79,
Madhura Nagar, Hyderabad – 500 038.
13) M/s Yamuna Agro Farms Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.No.B-79,
Madhura Nagar, Hyderabad – 500 038.
14) M/s Wardha Green Fields Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.no.2-13/31,
S.S. Nagar, Opp: Hyderabad Nagar,
Hyderabad – 500 072.
15) M/s Vindhya Greenlands Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.No.B-79,
Madhura Nagar, Hyderabad – 500 038.
16) M/s Vamsadhara Agro Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.No.B-79,
Madhura Nagar, Hyderabad – 500 038.
17) M/s Uttarashada Bio-Tech Pvt., Ltd.,
a Company incorporated under the
provisions of Indian Companies Act, 1956,
having its registered office at H.No.2-13/31,
S.S. Nagar, Opp: Hyder Nagar,
Hyderabad – 500 072.
(Addresses 5 to 17 are represented by their
regd. GPA i.e., Maytas Properties Limited)
18) State Bank of India,
Rep. by its Manager,
Abids Road branch, Hyderabad.
Opposite parties
Counsel for the Complainants : Sri Prabhakar Sripada
Counsel for the Opposite parties : M/s K.Visweswara Reddy-OP No.1
Sri K.B.Ramanna Dora, OP No.19
Coram :
Hon’ble Sri Justice B.N.Rao Nalla, President
&
Sri Patil Vithal Rao, Member
Wednesday, the Eighth day of February
Two thousand Seventeen
Oral Order : (per Hon’ble Sri Justice B.N.Rao Nalla, 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.34,25,000/- with interest @ 24% per annum; to direct OP No.18 not to collect the principal loan amount of Rs.18,05,000/- or interest on the same from the complainants, till the completion of the apartment No.1D, 1st Floor, Type-5, Shimla Block, situated in the lay-out known as Hill County, Bachupally village, Qutbullapur mandal, Ranga Reddy district or till refund of the amount by Ops 1 to 17; to pay Rs.5,00,000/- towards mental agony and harassment and also to award costs of the complaint.
2. The complaint pertains to deficiency of service on the part of the Ops 1 to 17 in not completing the construction of the apartment No.1D, 1st floor, Type-5, Shimla Block together with built-up area admeasuring 1578 sft and undivided share of land measuring 73 sq. yds, out of Ac.16-95 guntas, forming part of Sy.No.194/P, 196/P and 197/P for the construction of apartment complex, out of total extent of Ac.85-36 guntas, situated in the lay-out known as Hill County, Bachupally village, Qutbullapur mandal, Ranga Reddy district pursuant to the agreement of sale dated 18.10.2006, which is agreed to be delivered on or before 31.08.2008.
3. The Ops 1 to 17 abandoned the project after receiving an amount of Rs.34,25,000/-. The deficiency of OP No.19 consists of collusively disbursing the home loan of complainants to the tune of Rs.18,05,000/- directly to OP No.1 out of sanctioned amount of Rs.19-00 lakhs in respect of a semi-finished apartment, without obtaining any performance guarantee for the due performance of the Agreement of sale though agreed to disburse the loan as per stage-wise construction.
4. The OP No.1 had obtained lay-out permission from HUDA under letter No.5876/MP2/Plg/H/2005, dated 21.03.2006 for the development of a township called “MAYTAS HILL COUNTY” consisting of independent houses and multistoried residential apartments together with facilities like club apartment, parks, open spaces, gymnasium, health-clubs, play-grounds, shopping centres, etc., It also obtained approval from HUDA vide letter No. 5871/P4/Plg./HUDA/2007, dated 29.08.2007 for construction of Cellar + Sub-Cellar + 13 upper floors. It gave wide publicity in the print and electronic media for its project representing that it was constructing eleven apartment towers of 13 floors each excluding basement parkings, viz., Coonoor, Dalhousie, Darjeeling, Khandala, Kodai, Shimla, Ooty, Nainital, Mussorie, Munnar and Manali.
5. The total sale consideration of the flat was Rs.48,78,112/- and the complainants paid the amount of Rs.34,25,062/-. Though considerable period had elapsed, the OP No.1 failed to complete the construction of the flat, however, through e-mail dated 26.03.2009 it communicated for the first time that only the outer structure/shell of Khandala tower was completed and that works specified in Schedule-4 of the agreement of sale had not even started which include walls, wall finishes, flooring, doors and windows, kitchen, electrical installations, sanitary and plumbing works, laundry area, double height entrance lobbies, sky lounges, private hanging garden decks, basement covered car parking, centric central telecom exchange and centralized gas connection to individual kitchens, environment deck consists of Gymnasium, aerobics/Yoga, mini home theatre, children’s play area, etc.,
6. The delay in construction of the flat is purely on account of a glaringly deficiency in service on the part of OP No.1. OP No.1 cannot collect more than 20% advance from any intending purchaser of the flat as per Section-5 of the A.P. Apartments (promotion of construction and ownership) Act, 1987, which is blatantly violated by the OP No.1. It also failed to file the declaration as required under Section-4 of said Act and also failed to maintain separate account in the schedule bank. It committed fundamental breach of its obligations by diverting funds meant for construction of apartments to other purposes.
7. The OP No.18 has not at all conducted itself as professional banker and it had acted as mere middleman of OP No.1. It has not filed a criminal complaint against the OP No.1 for diverting the funds meant for residential purposes. It also failed to take any steps for recovery of any dues against the OP No.1. It disbursed the loan amount without any valuation report of its approved valuer and without conducting any physical verification. The Ops 1 to 17 are guilty of delay of more than 4 years in completion of the apartment. Hence the complaint with the reliefs, as stated supra, at paragraph no.1.
8. The OP No.1 resisted the claim by way of written version contending that the above complaint is not maintainable and that there is no deficiency of service on its part. As per agreement of sale dated 18.10.2006, they delivered the unit on 18.10.2008, therefore, the complaint is barred by limitation, hence, cause of action for filing the complaint arose on 18.10.2006 and the present complaint is lodged after 5 years as an arm-twisting method to make the OP to come to its terms. Section 24A clearly specifies the time limit for filing a consumer complaint is 2 years from the date of cause of action. The complaint filed by the Complainants is hopelessly barred by limitation and is liable to be dismissed. There is no deficiency in service on its part.
9. The OP No.1 is a limited company incorporated under the provisions of Companies Act, 1956, inter-alia, engaged in the business of construction and has changed the name from M/s Maytas Properties Limited to M/s Hill County Properties Limited. The project commenced as per schedule and was proceeding as per the projected rate but on a wholly incorrect understanding of its association with Satyam Group of Companies, various investigations and proceedings were instituted against it. The resulting adverse media reports and other reports led to doubts and wrongful perceptions about its independent and unrelated status. Resulting which, the investors and lenders which had committed to funding the Hill County project of OP No.1, sought to resile and withdraw from the project causing serious and acute shortage of funds. On account of the fall-out of the events following enquiries against Satyam Computers Ltd., the OP No.1 was subjected to series of compelling economic circumstances which derailed the Hill County Project.
10. Various attachments and court orders had also delayed the project. The various steps taken by it brought back the project on track. In compliance of the Company Law Board orders dated 13.01.2011 IL&FS, the new management of OP No.1 commenced the construction at Hill County project and infused about 1072 crores into the OP No.1 to complete Hill County project. The customers were also invited to visit for completing the final inspection of their respective units and Complainants were kept continuously informed about the status of construction, its completion apart from letters and e-mails.
11. Complainants appear to have developed a wrongful motive and intention to make an immoral and unlawful gain and have therefore, filed the present complaint seeking refund of the amount on wholly incorrect, untenable and illegal basis. In fact, the unit purchased by the Complainants has been completed in all respects and possession is delivered. The infrastructure of the project like power sub-stations, permanent sewage plant (STP), supply of manjeera water for 24 hours, storm water drainage, club house, gas pipeline connection, e-deck environment, security systems, etc., are completed.
12. The OP No.1 negotiated with SRS Investments Limited and JM Financial Trustees Company Private Limited and arrived at a settlement and also obtained regulatory approvals. The management of OP No.1 proposed compensation @ Rs.5/- per sft for the period of delay caused in delivering the apartment i.e., from the date of possession promised under the Agreement of sale, till the date of possession is actually offered to the customer. As on date, out of 840 apartments, 655 are sold out and 506 have been handed over to the respective customers.
13. The delay in completing the project is only because of above force majeure events, which are beyond the control of OP No.1. As such, there is no wilful default or deficiency of service on its part. This OP intimated the complainants about the completion of his apartment and for inspection of the apartment and taking handover of the same on 22.07.2014. The OP No.4 bank already initiated proceedings under SARFAESI Act against the flat of the complainant, got attached the same and sold-out to the third parties, in auction. The complainants are not entitled to any of the amounts. Therefore, it prayed for dismissal of the complaint with costs.
14. Though Ops 2 to 4 served with notice, have not chosen to file any written version nor entered into defence. The Ops 5 to 17 are not necessary parties.
15. The OP No.18 bank filed its written version resisting the case. It contended that the complaint as filed and framed is not maintainable either on law or on facts. The dispute raised is not at all a consumer dispute, hence, liable to be rejected at the threshold. It sanctioned the home loan amount of Rs.19,00,000/- to the Complainant on personal guarantee and on offering mortgage of acquiring flat and disbursed the amount to the OP No.1 from time to time, upon the request from the Complainants as per the terms of the tripartite agreement dated 04.06.2007. As per tripartite agreement, the OP No.1 is under an obligation to refund the amount with interest in case of any cancellation or any other consequence. OP No.1 is bound to execute the sale deed and deposit the title deeds in its favour, as security. In spite of repeated demands, mails and conversations, the complainant did not turn-up to deposit the title deeds. It got issued notice dated 09.05.2013 to the Complainants to pay the outstanding amount.
16. A total debt of Rs.31,91,646.73 along with future interest is due from the complainant and OP No.1 jointly and severally, which it is entitled to recover, accordingly, it filed OA No.841/2013 before the Debts Recovery Tribunal, Hyderabad. In spite of the same, instead of clearing the dues, filed the present complaint with false and baseless allegations with an ulterior motive to avoid payment. As per the terms of the tripartite agreement, the complainants agreed to indemnify it. There was no deficiency in service on its part. The complainants filed this false case in order to avoid repayment of loan amount and make wrongful gain. Therefore, it prayed for dismissal of the complaint with costs.
17. On behalf of the Complainants, their GPA holder viz., B.Purushotham Rao had filed evidence affidavit and the documents, Exs.A1 to A6. On behalf of the Opposite party No.1, its authorized signatory by name P.Vasudeva Rao has filed the affidavit and the documents, Ex.B1 to B31 and on behalf of the Opposite party No.18, one Y.Raju, its Chief Manager filed his affidavit.
18. The counsel for the complainants and the Opposite parties have advanced their arguments reiterating the contents of the complaint and the written version. In addition to the same, the counsel for Complainants and OP No.1 have filed written arguments. Heard both sides.
19. The points that arise for consideration are :
i) Whether the complainants are entitled for 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?
20. It is an undisputed fact that the complainants had booked the subject flat and paid entire sale consideration to OP No.1 by borrowing loan from the OP No.18 bank basing on the agreement entered into between the complainants and the developer. The developer had agreed to complete the construction and hand over possession within stipulated period from the date of execution of agreement. It also agreed to pay Rs.5/- per sft. for the delayed construction up to a maximum of 8 months. Pursuant to the above agreement of sale, tripartite agreement is also entered into between the developer, complainants and bank whereby the bank undertook to disburse the loan amount to the builder as agreed upon.
21. Unfortunately, the developer stopped the construction and it has come to a standstill, when Satyam group of companies in which developer is one of the constituent company, went into liquidation. The complainants, therefore, seeks refund of the amount paid together with interest, compensation and costs.
22. The developer resisted the complaint on the ground that on account of ‘force majeure’ problems, the project could not be completed on time and thereafter they took every care to complete the project and therefore, the complaint is not maintainable before this Commission.
23. Though the Opposite party No.1 contended that various steps were taken to complete the project on time, no evidence is placed to show the exact stage of the project. Affidavit of none of the directors of the company was filed to show the stage of construction, nor the fact that any of the projects were completed. However, the learned counsel for the Opposite party No.1 while advancing arguments stated that there is change in circumstance as the subject apartment is completed now. In this regard, we may state that as on the date of filing of the complaint, the subject flat was incomplete which necessitated the Complainants to seek refund the amount. The developer except contending that the construction has been taken up and is in progress could not deny the statement of the complainants when he contended that no work was taken up. It could have sought for appointment of Commissioner or filed documents evidencing the construction activity.
24. Since the developer 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 had 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 bank without there being any hope of getting the project completed.
25. The complainants by the present complaint seeking to refund the amount, cancelled the above said agreement and demanded the developer to pay the consideration received so far, as no construction was taken up nor completed, and sought for refund of the amount paid by the bank to it in view of non-completion of the flat as on date of filing of the complaint. Equally the complainants had made the bank as party to the complaint. It was also mentioned that since the developer had failed to complete the construction as per the terms of agreement of sale as well as tripartite agreement, the bank has to initiate the proceedings and recover the amount. However, the bank initiated recovery proceedings against the Complainants by way of filing O.A. before the Debts Recovery Tribunal, Hyderabad, which is pending. The said proceedings will not come in the way of Complainants right to file the present complaint as the proceedings initiated before the Consumer Fora are in addition to and not in derogation of the provisions of any other law for the time being in force.
26. We may also state that recovery of money by the complainants against the developer depends on the principle of unjust enrichment. This principle requires first that the developer has been enriched by receipt of a benefit, secondly, that this enrichment is at the expense of the complainants, and thirdly, that the retention of the enrichment be unjust. This justifies restitution.
27. We may also quote herein the words of Lord Mansfiel C.J.
This kind of equitable action to recover back money which ought not in justice to be kept….. lies only for money which ex acquo et bono the defendant ought to refund ….. It lies for money paid by mistake, or upon a consideration which happens to fail, or for money got through imposition (express or implied) or extortion, or oppression, or undue advantage taken of the plaintiff’s situation, contrary to laws made for the protection of persons under those circumstances. In one word, the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.
(emphasis supplied)
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.
28. We may also state herein that the orders of this Commission against the very same developer (vide C.C.30/2009) directing to refund the amount with interest @ 12% p.a., has been upheld by the National Commission in F.A. No.189/2010 while reducing the compensation from Rs.5 lakhs to Rs.1 lakh. The SLP moved by the developer before the Hon’ble Supreme Court in Appeal (Civil) No.26256/2010 was dismissed on 27.09.2010. Therefore, these matters are covered by the above decisions and there is no need for any distinction to be made between these cases.
29. It is an undisputed fact that agreement for purchase of apartment is between the complainants and the developer. It is also not in dispute as per the above said agreement the amount is to be paid and accordingly the Complainants paid the amount by contributing their own funds as well as obtaining loan from the OP No.18 bank, which is not in dispute. Recoursing the above agreement, a tripartite agreement was executed in between the complainant, developer and the bank. The complainants allege that contrary to the terms of the above-said agreement, the amount was disbursed. In fact, it was duty bound to review the progress of construction before disbursing the amount as mentioned in the tripartite agreement. The OP No.18 bank cannot resile from the tripartite agreement and terms thereof by alleging that they (complainants) had made written requests to them to release the amount to the developer in one go. No security was taken from the builder before release.
30. The OP No.1 would contend that the complaint is barred by limitation in view of the fact that as per agreement of sale dated 18.10.2006, the unit was agreed to be delivered on or before 17.08.2008 with a grace period of three months, therefore, the complaint is barred by limitation. In that regard, they relied on the Judgment rendered by Hon’ble Supreme Court of India, reported in (2009) 5 SCC 121 in the matter of State Bank of India Vs. B.S. Agricultural Industries. We have perused the said Judgment. The facts in the said case and on the facts in the case on hand are different and distinct. In the present case, the Complainants are seeking refund of amount on account of non-compliance of the terms of the agreement. The monies paid by the Complainants is lying with the OP No.1, which is nothing but a debt repayable to the Complainants. In this regard, we may state that limitation does not extinguish the debt or preclude its enforcement, unless the debtor chooses to avail himself of the defence and specially pleads it. An indebtedness does not lose its character as such, merely because, it is barred; it still affords sufficient consideration to support a promise to pay, and gives a creditor an insurable interest." The general rule, at least with respect to debts or money demands, is that a statute of limitation bars, or runs "against, the remedy and does not discharge the debt or extinguish or impair the right, obligation, or cause of action." The position then is that under the law a debt subsists notwithstanding that its recovery is barred by limitation. The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act, 36 of 1963, only bars the remedy, but does not destroy the right to which the remedy relates. The right to the debt continues to exist notwithstanding that the remedy is barred by limitation. The only exception in which the remedy also becomes barred by limitation is when the right is destroyed. Except in such cases which are specially provided under the right to which the remedy relates, in other cases the right subsists. Though the right to enforce the debt by judicial process is barred under Section 3 read with the relevant article in the Schedule, the right to the debt remains. The time barred debt does not cease to exist by reason of Section 3. That right can be exercised in any other manner than by any means. The debt is not extinguished, but the remedy to enforce the liability is destroyed. What Section 3 refers to is only the remedy but not the right of the creditors. Such debt continues to subsist so long as it is not paid. Under these circumstances, we do not accept the contention of the learned counsel for OP No.1. Admittedly, it is not denied that the OP No.1 had been addressing letters under Ex.B8 to B20 appraising the progress of construction, by which, they submitted to the cause of action and the present complaint is filed on 18.11.2013. Viewed from any angle, the complaint is not barred by limitation.
31. The complainants contend that contrary to the terms of agreement and also various guidelines for releasing loan amounts, the bank has released the entire amount in one go without considering the stages of construction to the detriment of their interest. The bank can directly pay the amount to the developer as agreed upon but not whole of the amount without even verifying the stages of construction and existence of property. It could not have released the amount without verifying the progress of construction jeopardising their claims. By referring to project programme guide lines where there was specific reference that the developer should be in business for not less than 5 years and the builder/developer has history of due completion of 3 projects and it should have completed at least 1,00,000 sft. of built up area, and that without satisfying the eligibility criterion, the bank could not have sanctioned Advance Disbursement Facility (ADF for short). They contend that the developer was incorporated on 20.01.2005 and the amount was released without completion of 5 years to avail ADF contrary to stipulations.
32. The OP No.18 bank contends that by virtue of tripartite agreement, the developer has to indemnity the bank in cases of this nature, whereunder, it was specifically mentioned that :
“The Builder agrees to demand payment from the Bank towards the cost of the Flat strictly as per the stage of construction of the Flat agreed to be sold to the Borrower and it will be responsibility of the Borrower to verify the stage of construction.
Immediately upon receipt of the loan amount sanctioned to the Borrower, the Builder agrees to execute and register a valid conveyance in favour of the Borrower and deliver the original Sale Deed after its registration directly to the Bank. In this context, the Borrower irrevocably authorises the Builder to deliver the original Sale Deed directly to the bank.”
The developer and complainants are jointly liable for any of the claims for the loan amount disbursed. In the light of above clause they are estopped from making any claim. In order to get over the payment of the amount towards EMI they were impleaded as parties. It is only a financial institution facilitating funding of the project and purchase thereof. It has nothing to do with the completion of construction.
33. Admittedly, the bank initiated proceedings under the provisions of The Recovery of debts due to Banks and Financial Institutions Act, 1993 (RDDB Act, for short) against the complainants. In contravention of the guidelines issued by Reserve Bank of India from time to time and tripartite agreement, the bank disbursed the loan amount. It is not known why the bank had taken such a stance when the guidelines as well as its own agreement stipulate to release the amount stage wise. The fact remains that the bank released the amounts to the developer contrary to guidelines as well as tripartite agreement to non-existent apartment. On the contrary, it contended that at the written requests of the Complainants, it released the loan amount.
34. There would be no meaning in releasing the entire amount in one go, the bank having agreed to release the amount in a phased manner. Solely basing on the letter taken from the complainants, the bank cannot give a go-bye to tripartite agreement and release the entire amount. This would cause unjust enrichment to the developer, and loss to the complainants. The terms of the agreement in between three parties were made in order to see that no party suffers from non-implementation of terms of the agreement. The bank cannot act at its own whims and fancies, and release the amount. It cannot defend that by virtue of letters of the complainant, it was entitled to release the amount in its entirety.
35. If the bank acts contrary to the agreement and guidelines, the complainant is not liable to refund the amount paid to the developer. The bank can as well recover from the developer by recoursing the above clauses. The courts will not come to the rescue of the party which violates the terms and conveys benefits to one party in preference to another. It intends to cause loss to a genuine borrower by unduly favouring a defaulting and unfair customer. All this amounts to unfair trade practice.
36. However, the very property which the complainants sought to purchase was a non-existent property kept as primary security. It also extended the loan on deposit of equitable mortgage though there was a mention that if equitable mortgage is not possible it would be by registered mortgage deed. The bank alleges that loan was sanctioned taking the property as security which the complainants intend to purchase from the developer besides on the instruction of the complainant. When the bank knew full well that the property was non-existent and no doubt document was executed in favour of the complainants by the developer in order to create equitable mortgage, disbursing the loan amount to the developer cannot be said to be valid. Considering the nature of transaction between the parties, we are of the opinion that the bank could not have disbursed the amount without taking proper care and caution to find out the non-existence of the flat for which loan was sanctioned. The bank is estopped from contending that at the instance of the complainant it has disbursed the loan amount.
37. The banks and financial institutions promising to lend monies or sanctioning loans and the borrower investing in the project will be clothed by the principles of Promissory Estoppel. The doctrine of promissory estoppel is an evolving doctrine, contours of which are not yet fully and finally demarcated. Being an equitable doctrine, it should be kept elastic enough in the hands of the court to do complete justice between the parties. If the equity demands that the promissor is allowed to resile and the promisee is compensated appropriately that ought to be done. If, however, equity demands that the promissor should be precluded in the light of things done by the promisee on the faith of representation from resiling and that he should be held fast to his representation, that should be done. It is a matter holding scales even between the parties to do justice between them. This is the equity implicit in the doctrine vide State of H.P. Vs. Ganesh Wood Products reported in 1995 (6) SCC 363.
38. It is legally open to the bank to take a decision in good faith in the exercise of its bonafide discretion as to whether it was safe to make advances of public monies to any particular party and arrive at a decision after examining the relevant facts and circumstances.
39. However, in the present case, the complainant by filing the present complaint had put an end to the contract as the developer disabled itself from performing its obligations. The bank did not act in good faith nor had it exercised bonafide discretion while releasing the funds.
40. Recourse can be had to a decision in Nannapaneni Venkata Rao Co-operative Sugars Ltd. Vs. State Bank of India reported in AIR 2003 AP 515 (DB) it was held :
“Refusal on the part of the respondent bank to pay interest on the ground that opening of such account and crediting of the interest is not in accordance with the guidelines of RBI is not tenable as the respondent is solely responsible for suppressing the fact while entering into the contract.”
41. This Commission can take judicial cognizance of the fact that the OP No.18 bank had financed the builder obviously in view of reputation the developer was having by then, and the bank contrary to the terms of the agreement as well as guidelines, disbursed the amounts keeping the interests of the complainants in jeopardy. The banks are picking and choosing certain clauses and contending that the very complainants have given authorization to them to release the amount and therefore they have released, forgetting the fact that the very financing of the project was contrary to the scheme issued in this regard. Evidently, the bank as well as the developer benefitted from these transactions. The developer has taken the amount without constructing the flat, and equally the bank has been collecting the amounts from the complainants towards EMI. It is a case of double jeopardy. Necessarily all this amounts to unfair trade practise as well as deficiency in service on the part of developer as well as the bank. Necessarily the complainants are to be compensated. Since terms of the agreement enable the bank to collect from the developer, it can as well recover the same. The bank by violating its own rules cannot take advantage and recover the same from the complainants. This suppression of rules at the time when so called authorization taken from the complainants amount to unfair trade practise. This cannot be allowed to happen.
42. The bank has undoubtedly violated the terms of the tripartite agreement, and released the amount even without bothering to verify as to the stage and nature of construction. In other words, the bank financed a non-existent project or incomplete project, duping its own customer. If the bank releases the amounts contrary to tripartite agreement it has to suffer for the consequential losses. Whatever loss caused thereby it could as well approach appropriate forum for recovery of the amount from the developer, to which it has released the amount in one go. The bank under the terms entitled to recover from the developer to which it had paid the amounts. It cannot turn round and claim against the complainants. It is not under original stipulation that the bank had to pay the entire amount to the developer. The developer also agreed to refund the amount if there are cancellations of the agreements or failure to fulfil its commitments. The agreement that was arrived at earlier was fair and no party would benefit from the lapses or mistakes of the other. Therefore, the complainants are not liable to pay the EMIs.
43. The bank has to collect the loan amount plus whatever interest and other legally permissible charges from the developer and credit it to the complainants loan account. It shall not collect further EMI’s nor entitled to any more amount except the amount, if any, remained unpaid by the complainant towards loan granted to him. The bank has no authority to complain to CIBIL. In fact, if there is a provision, the CIBIL has to enter the name of the bank, as one of the violators of guidelines of the banks.
44. In the above facts and circumstances, the points (i) to (iv) are answered accordingly holding that the OP No.1 is liable to pay the amounts to the Complainants.
45. In the result, the complaint is allowed in part in following terms:
i) The developer OP No.1 is directed to refund the amount paid by the complainants with interest @ 12% p.a., from the date of last payment till the date of payment, together with compensation of Rs.1,00,000/- and costs of Rs.5,000/-.
ii) Further, the developer OP No.1 is directed to refund the amount disbursed by the bank to it along with interest, penal charges etc. levied by the OP No.18 bank, if any, failing which the bank is liable to collect, and credit the same to the loan account of the complainant. The complaint against Ops 2 to 17 is dismissed but without costs.
iii) In case sale deed was executed, the complainants shall re-convey the same to the developer on compliance of above directions. The registration charges and stamp duty etc., shall be borne by the developer OP No.1.
Time for compliance eight weeks.
MEMBER PRESIDENT
Dated: 08.02.2017
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For Complainant : For Opposite parties :
Affidavit evidence of B.Purushotham Affidavit evidence of P.Vasudeva Rao
Rao, GPA holder of Complainants as PW1. as RW1 (on behalf of OP No.1)
Affidavit evidence of Y.Raju as
RW2 (on behalf of OP No.18).
EXHIBITS MARKED
For Complainant :
Ex.A1 is copy of Agreement for sale, dated 18.10.2006 executed by OP No.1 in favour of the Complainants.
Ex.A2 is copy of General Power of Attorney, dated 17.08.2013 executed by the Complainants in favour of B.Purshotham Rao.
Ex.A3 is copy of the term loan sanction intimation dated 25.05.2007 given by the OP No.18 to the complainants.
Ex.A4 is the copy of e-mail addressed by the OP No.1 personnel to the complainants, dated 26.03.2009.
Ex.A5 is the copy of statement of account of the complainants bank account for the period from 25.05.2007 to 11.06.2010.
Ex.A6 is the copy of Independent Auditor’s Report, furnished by SRBC & CO LLP, in respect of the OP No.1 company, dated 15.06.2013.
For Opposite party No.1:
Ex.B1 is Photostat copy of extract of minutes of the meeting of the Board of Directors of M/s Hill County Properties Limited, dated 24.08.2013.
Ex.B2 is Photostat copy of the Fresh Certificate of Incorporation, dated 16.08.2013 issued by Registrar of Companies, Andhra Pradesh with respect to change of name of Maytas Properties Limited as Hill County Properties Limited.
Ex.B3 is the Photostat copy of Orders dated 05.03.2009 passed in CP No.4/2009 by the Company Law Board, New Delhi.
Ex.B4 is the Photostat copy of Attendance sheet of the hearing of the Company Law Board, dated 13.01.2011 in CP No.04/2009.
Ex.B5 is the Photostat copy of Form 32 showing resignation of Byrraju Rama Raju as whole-time director of Maytas Properties Limited w.e.f. 07.02.2011; and of Datla Gopala Krishnam Raju as Director w.e.f. 07.02.2011 and of Datla Venkata Satya Subba Raju as Director w.e.f. 07.02.2011; appointment of Sri Aun Kumar Saha as additional director w.e.f. 22.01.2011; Vimal Kishore Kaushik as additional director w.e.f. 22.01.2011, Ramesh Chander Bawa as additional director w.e.f. 22.01.2011 and Ramchand Karunakaran as additional director w.e.f. 22.01.2011.
Ex.B6 is copy of attendance-cum-order sheet of hearing of principal Bench of the Company Law Board, dated 12.03.2013.
Ex.B7 is copy of attendance-cum-order sheet of hearing of principal Bench of the Company Law Board, dated 10.07.2013.
Ex.B8 is the Photostat copy of letter dated 25.02.2011 addressed by Ops 1 and 2 to its customers appraising the progress of construction.
Ex.B9 is the Photostat copy of letter dated 08.04.2011 addressed by the Ops 1 and 2 to its customers appraising the progress of construction.
Ex.B10 are the Photostat copy of letter dated 17.06.2011 and 28.07.2011 addressed by the Ops 1 and 2 to its customers appraising the progress of construction.
Ex.B11 is the Photostat copy of letter dated 08.09.2011 addressed by the Ops 1 and 2 to its customers appraising the progress of construction.
Ex.B12 is the Photostat copy of letter dated 25.10.2011 addressed by the Ops 1 and 2 to its customers appraising the progress of construction.
Ex.B13 is the Photostat copy of letter dated 29.12.2011 addressed by the Ops 1 and 2 to its customers appraising the progress of construction.
Ex.B14 is the Photostat copy of letter dated 02.03.2012 addressed by the Ops 1 and 2 to its customers appraising the progress of construction.
Ex.B15 is the Photostat copy of letter dated 16.05.2012 addressed by the Ops 1 and 2 to its customers appraising the progress of construction.
Ex.B16 is the copy of letter dated 26.09.2012 addressed by OP No.1 to its customers appraising the progress of construction.
Ex.B17 is copy of letter dated 16.07.2013 addressed by OP No.1 to the complainants to carry-out fit-outs and inspection of the unit.
Ex.B18 is copy of letter dated 06.12.2013 addressed to the complainants by the OP No.1 to take possession for interior fit-outs and complete handover formalities of the unit.
Ex.B19 is copy of Occupancy Certificate obtained from Executive Officer, Gram Panchayat, Bachupally, dated 07.11.2015 for shimla tower.
Ex.B20 is copy of letter dated 23.08.2013 addressed by OP No.1 to its customers.
Ex.B21 is copy of letter dated 20.07.2012 addressed by the Executive Officer, Gram Panchayat, Bachupally to the OP No.1 informing the fair rental value.
Ex.B22 is the Photostat copy of the Common Orders, dated 05.12.2012 passed in WP No.9227/2010 and batch by Hon’ble High Court of Andhra Pradesh.
Ex.B23 is the Photostat copy of letter dated 12.12.2012 addressed by the Ops 1 and 2 to its customer.
Ex.B24 is the Photostat copy of letter dated 31.05.2013 addressed by the Ops 1 and 2 to its customer.
Ex.B25 is the Photostat copy of letter dated 17.01.2014 and 27.05.2014 addressed by the Ops 1 and 2 to its customer.
Ex.B26 is copy of letter dated 22.08.2014 addressed by OP No.1 to its customers appraising the construction activitiy.
Ex.B27 is copies of letters dated 16.05.2015 and 14.09.2015 addressed by OP No.1 appraising the features of the project.
Ex.B28 are copies of the Occupancy Certificates issued by the District Panchayat Officer, dated 28.08.2013.
Ex.A29 is the copy of orders dated 02.12.2014, passed by Hon’ble High Court of A.P. in WVMP No.3074/2014 in WPMP No.31171/2014 in WP No.24914/2014.
Ex.A30 is the copy of proceedings No.63/EO/BP/2015, dated 07.11.2015 regarding revised Occupancy Certificates furnished by the Executive Officer, Gram Panchayat, Bachupally,d ated 07.11.2015.
Ex.A31 are the copies of photographs of Unit No.A344-1D and Shimla tower at Hill County.
MEMBER PRESIDENT
Dated: 08.02.2017
