STATE CONSUMER DISPUTES REDRESSAL COMMISSION
OF TELANGANA : AT HYDERABAD
CC NO.244 OF 2013
Between :
Mr.Rajeshwar V.Surabhi S/o S.Thirupathi Rao,
aged about 39 years, Occ: Private Employee,
R/o 42890, Conquest Circle, Ashburn
VA-20148, USA.
Rep. by her 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.
Complainant
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)
(Opposite parties No.5 to 17 are not
necessary parties to the complaint)
18) State Bank of India,
Rep. by its Manager,
Abids Road branch, Hyderabad.
Opposite parties
Counsel for the Complainant : Sri Prabhakar Sripada
Counsel for the Opposite parties : M/s K.Visweswara Reddy-OP No.1
Sri K.B.Ramanna Dora, OP No.18
Coram :
Hon’ble Sri Justice B.N.Rao Nalla, President
&
Sri Patil Vithal Rao, Member
Thursday, the Nineth 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 Complainant complaining deficiency in service against the Opposite parties and praying to direct the Ops 1 to 18 to pay Rs.39,89,818.62 ps to the Complainant for diverting the loan amount of Rs.73,88,553/- for non construction purposes and thereby illegally enjoying the aid amount violating the provisions of Rule-9 of the A.P. Apartments (promotion of construction and Ownership) Rules, 1987; award future interest @ 12% p.a. on Rs.73,88,553/- from the date of filing complaint till the delivery and possession of the Apartment No.6A, 6th floor, Type-2, Khandala Block, situated in the lay-out known as Hill County, Bachupally village, Qutbullapur mandal, Ranga Reddy district along with Occupancy Certificate; to award Rs.5,00,000/- towards mental agony and harassment caused to complainant and 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.6A, 6th floor, Type-2, Khandala Block together with built-up area admeasuring 3164 sft and undivided share of land measuring 146 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 18.12.2006, which is agreed to be delivered on or before 18.12.2008 with a grace period of 6 months.
3. The Ops 1 to 17 abandoned the project after receiving an amount of Rs.93,22,000/-. The deficiency of OP No.18 consists of collusively disbursing the home loan of complainant to the tune of Rs.73,88,553/- directly to OP No.1 out of sanctioned amount of Rs.87-00 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.95,74,780/- and the complainant paid the amount of Rs.93,22,000/-. 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 18.12.2006, the unit was to be delivered on 18.12.2008, therefore, the complaint is barred by limitation, hence, cause of action for filing the complaint arose on 18.12.2006 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 Complainant 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 Complainant is kept continuously informed about the status of construction, its completion apart from letters and e-mails.
11. Complainant 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 Complainant 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 No.1 intimated the complainant about the completion of her apartment and to take possession of the unit vide letters dated 31.12.2012, 04.,02.2013 and 06.12.2013 respectively. The complainant is 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 resisted the claim. 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.87,00,000/- under arrangement letter dated 15.02.2007 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 Complainant as per the terms of the tripartite agreement dated 15.02.2007. 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.
16. A total debt of Rs.18,76,931/- 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 OASR No.548/2014 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 Complainant, her GPA holder viz., B.Purushotham Rao had filed evidence affidavit and the documents, Exs.A1 to A8. 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 B33 and on behalf of the Opposite party No.18, one Y.Raju, its Chief Manager filed his affidavit and the documents Ex.B34 to B39.
18. The counsel for the complainant 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 Complainant and OP No.1 have filed written arguments. Heard both sides.
19. The points that arise for consideration are :
i) Whether the complainant is 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 complainant is entitled to compensation?
iv) To what relief?
20. The Complainant entered into “Agreement of Sale” on 18.12.2006 with the Opposite party No.1 for purchase of flat bearing flat No.6A, 6th floor, type-2 in Shimla block comprising of 3164 square feet super built-up area, with covered car parking and undivided share of land measuring 146 square yards in Sy.Nos.194/P, 196/P and 197/P, situated at the project by name Hill County, Bachupally village, Qutbullapur mandal, Ranga Reddy district for a sale consideration of Rs.95,74,780/- and paid the sale consideration amounting to Rs.93,22,000/-, proposed to be constructed by the Opposite party No.1, which is not in dispute. The agreement of sale provides for completion of the construction of flat within 24 months from the date of agreement with grace period of 6 months, which concludes on 18.06.2009.
21. Unfortunately, the developer stopped 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 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 in fact, they intimated the Complainant to take delivery of the possession of the flat No.6A through their letters dated 31.12.2012, 04.02.2013 and 06.12.2013, but the Complainant did not come forward for registration. There is no denial from the side of Complainant for the same.
22. As against the same, the counsel for Complainant would contend that the due date for completion of the flat is 18.06.2009 and as on the date of filing the complaint, the flat is not complete and not delivered, hence, it is a continuing cause of action and cannot be said to be barred by limitation. Admittedly, the complaint is filed on 18.11.2013.
23. A perusal of letter dated 31.12.2012, 04.02.2013 and 06.12.2013 would go to show that the subject flat is ready for fit-outs. However, the final coat of painting, plumbing fixtures, shower cubicles and modular kitchen would be completed after the fit-outs are carried-out, which mean the flat is not complete.
24. The condition No.7(d) of terms and conditions of Ex.A1 Agreement for sale, reads as follows:
“In the event of any further delay beyond the time stipulated in Clause 7(a), 7(b) and 7(c), the Developer and the Land Owner shall pay the Purchaser an amount of Rs.5/- per sft of contracted built-up area for every month of delay upto a maximum of 8 months.”
The Developer did not dispute as to non-compliance with the above provision. Admittedly, as per the OP No.1, the flat was complete and ready for handover as on 06.12.2013. As per the terms of Agreement of sale dated 18.12.2006, the flat was agreed to be constructed within 24 months from the date of agreement with a grace period of 6 months, which would conclude on 18.06.2009. Admittedly, the flat was stated to be complete and ready for handing over as on 06.12.2013 with a delay of nearly four years. However, in this regard, we may state that there were some items which were yet to be completed which necessitated the Complainant to file the present complaint. From the above discussions, it is clear that there is gross negligence on the part of the OP No.1 in non-completion of the flat within the time stipulated.
25. 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.”
26. Not keeping-up promise to complete construction of the flat within the stipulated period and failure to deliver possession of the flat constitutes deficiency in service on the part of the Developer. The contention of the Developer that the complaint is barred by limitation and that it is not maintainable is not sustainable. To the averment that complaint of Complainant is barred by limitation, the learned counsel for Complainant would contend that since the Developer failed to hand over the possession of the flat within the stipulated time, it is a continuing cause of action. In that regard, he relied on the Judgment reported in (2007) 3 SCC 142, decided on 22.02.2007 by the Hon’ble Supreme Court of India, in the matter of Transport Corporation of India Ltd., Vs. Veljan Hydrair Ltd., wherein it is observed as follows:
“Limitation – Whether complaint barred by time – Section 24A of Consumer Protection Act, 1986 – Held, limitation for an action would not start to run until there was a communication from Appellant, either informing about loss or expressing its inability to deliver or refusal to deliver, or until Respondent makes a demand for delivery or payment of value of the consignment after waiting for a reasonable period and there was non-compliance – Hence complaint not barred under Section 24A.”
27. The Complainant entered into agreement for sale dated 18.12.2006 for purchase of flat on her name for her occupation and enjoyment, as such, she falls within the meaning of ‘consumer’ as defined under the Act and the present dispute raised by the Complainant is a consumer dispute. As stated above, though the OP No.1 alleged to have made ready the flat for handing over on 06.12.2013, some items are yet to be completed, which constitutes cause of action which is continuing one. Admittedly, the complaint is filed on 18.11.2013, which is within limitation as the cause of action is continuing one.
28. It is an undisputed fact that the complainant 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 complainant 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, complainant and bank whereby the bank undertook to disburse the loan amount to the builder as agreed upon.
29. 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. However, there is huge delay in completion of the project, Hence, complainant, therefore, seeks delivery of possession together with interest on the monies paid, compensation and costs.
30. 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.
31. 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 Complainant to seek delivery of possession through this Commission. The developer except contending that the construction has been taken up and is in progress could not deny the statement of the complainant when she contended that no work was taken up. It could have sought for appointment of Commissioner or filed documents evidencing the construction activity.
32. 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 complainant had been paying EMIs to the bank, we are of the opinion that it would be unjust that the complainant be directed to go on paying the amounts to the bank without there being any hope of delivering the flat duly completed in all aspects.
33. The complainant by the present complaint seeking delivery of possession together with interest, costs and compensation as construction was not completed. Equally the complainant 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 Complainant 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 Complainant 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.
34. It is an undisputed fact that agreement for purchase of apartment is between the complainant and the developer. It is also not in dispute as per the above said agreement, the amount is to be paid and accordingly the Complainant paid the amount by contributing her 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 complainant alleges 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 she (complainant) 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.
35. 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 18.12.2006, the unit was agreed to be delivered on or before 18.12.2008 with a grace period of six 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 Complainant is seeking delivery of possession of the flat on account of non-compliance of the terms of the agreement. The monies paid by the Complainant is lying with the OP No.1, which is nothing but a debt repayable to the Complainant. 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 B19 and B21 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.
36. The complainant 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 her 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). She contends 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.
37. 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 complainant is jointly liable for any of the claims for the loan amount disbursed. In the light of above clause, she is 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.
38. 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 complainant. 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 Complainant, it released the loan amount.
39. 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 complainant, 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 complainant. 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.
40. 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.
41. However, the very property which the complainant 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 complainant intends 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 complainant 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.
42. 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.
43. 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.
44. 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 complainant in jeopardy. The banks are picking and choosing certain clauses and contending that the very complainant had 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 complainant 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 complainant is 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 complainant. 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.
45. 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 complainant is not liable to pay the EMIs.
46. The bank has to collect the loan amount plus whatever interest and other legally permissible charges from the developer and credit it to the complainant 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 her. 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.
26. Hence, in view of the discussions made above, we answer the points (i) to (iv) in favour of the Complainant and against the Opposite parties.
27. In the result, the complaint is allowed directing the Opposite party No.1:
(a) to complete the construction of the flat bearing No.6A, type-2 on 6th floor in Khandala block comprising of 3165 square feet of super built-up area, with one covered car parking thereon and undivided share of land admeasuring 146 square yards out of total land measuring Ac.16-95 in Sy.Nos.194/P, 196/P and 197/P, situated at the project Hill County, Bachupally village, Qutbullapur mandal, Ranga Reddy district in all aspects, execute the sale deed conveying the above property and also to handover the copy of Occupancy Certificate to the complainant
(b) to pay an amount of Rs.1,26,600/- (i.e., @ Rs.15,825/- per month for 3165 square feet as compensation for a period of 8 months);
(c) The Complainant shall pay the balance sale consideration on calculation, if any, in addition to the stamp duty and registration charges to the Opposite party No.1.
(d) Further, the developer OP No.1 is directed to refund the amount of 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.
(e) to pay to the complainant an amount of Rs.5,000/- towards costs.
Time for compliance four weeks.
PRESIDENT MEMBER
Dated: 09.02.2017
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 Complainant 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 18.12.2006 executed by OP No.1 in favour of the Complainant.
Ex.A2 is copy of General Power of Attorney, dated 25.11.2006 executed by the Complainant in favour of B.Purshotham Rao.
Ex.A3 is copy of the term Arrangement letter-Housing Finance, dated 15.02.2007 of OP No.18 addressed to the complainant.
Ex.A4 is the copy of e-mail addressed by the OP No.1 personnel to the complainant, dated 26.03.2009 appraising the progress of construction.
Ex.A5 is the copy of statement of account of the complainant bank account for the period from 15.02.2007 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.
Ex.A7 is the copy of orders dated 01.08.2012 passed in Company Petition Nos.70/2010 and batch in Company application Nos.48/2012 and batch in CP No.172/2010 on the file of Hon’ble High Court of A.P.
Ex.A8 is the copy of the balance sheet of the OP No.1 company,dated 31.03.2013.
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 the copy of letter dated 31.12.2012 addressed by the OP No.1 to the complainant informing for interior fit-outs and inspection of the unit.
Ex.B18 is the copy of letter dated 04.02.2013 addressed by OP No.1 to complainant to take possession and complete the handover formalities of the unit.
Ex.B19 is copy of letter dated 06.12.2013 addressed by OP No.1 to the complainant to take possession and complete the handover formalities of the unit.
Ex.B20 is the copy of Occupancy Certificate obtained for Khandala tower, from the Executive Officer, Gram Panchayat, Bachupally dated 07.11.2015.
Ex.B21 is the copy of letter dated 23.08.2013 addressed by OP No.1 to its customers regarding compensation for delay in construction.
Ex.B22 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.B23 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.B24 is the copy of letter dated 12.12.2012 addressed by the OP No.1 to its customers with respect to progress of construction, lifting of IT attachment and commencement of registrations.
Ex.B25 is the copy of Orders dated 31.03.2015 in OSA Nos.1/2014 and batch passed by the Hon’ble High Court of Judicature at Hyderabad.
Ex.B26 is the copy of letter dated 31.05.2013 addressed by OP No.1 to its customers regarding progress of construction of the project.
Ex.B27 are copies of letters dated 17.01.2014 and 27.05.2014 addressed by OP No.1 to its customers regarding developments like club house, etc., of the project.
Ex.B28 is copy of letter dated 22.08.2014 addressed by OP No.1 to its customers regarding developments of the project.
Ex.B29 are the copies of letters dated 16.05.2015 and 14.09.2015 addressed by OP No.1 to its customers regarding developments like mini cricket stadium facilities (click, super market, e-seva, ATM etc.,) at the project.
Ex.B30 are copies of the Occupancy Certificates issued by the District Panchayat Officer, dated 28.08.2013.
Ex.A31 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.A32 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.A33 are the copies of photographs of Unit No.A229-6A and Khandala tower at Hill County.
PRESIDENT MEMBER
Dated: 09.02.2017
