STATE CONSUMER DISPUTES REDRESSAL COMMISSION
OF TELANGANA : AT HYDERABAD
CC NO.6 OF 2015
Between :
T.V.S.S.Chakravarthy
S/o T.Venkata Rama Mohana Rao,
Aged about 39 years, R/o 1831,
W.Golf Road, APT-162,
Mount Prospect IL – USA;
Rep. by his GPA G.V.S.Prasad
S/o Veera Swamy, aged about 54 years,
R/o 9-42, Achanta village & Mandal,
West Godavari district – 534 123.
Complainant
And
1) M/s Hill County Properties Limited,
Formerly known as M/s Maytas Properties (P) Ltd.,
Rep. by its Managing Director
Mr.Muralidhar Khattar
S/o Jugalram Khattar, aged about 75 years,
O/o Customer Support Department,
Hill County, Bachupally, Miyapur,
Hyderabad – 500 072.
2) Muralidhar Khattar S/o Jugalram Khattar,
Aged about 75 years, Managing Director,
M/s Hill County Properties Ltd.,
O/o Customer Support Department,
Hill County, Bachupally,
Miyapur, Hyderabad – 500 072.
3) Arun Kumar Saha S/o Brindavan
Chandra Saha, aged about 60 years,
Chairman/Director M/s Hill County
Properties Ltd., O/o Customer Support
Department, Hill County, Bachupally,
Miyapur, Hyderabad – 500 072.
4) The Branch Manager,
M/s ICICI Bank Limited,
Road No.1, 2nd Floor, East Wing,
ICICI Towers, Begumpet,
Hyderabad – 500 016.
5) M/s ICICI Bank Ltd.,
Rep. by its Managing Director,
Race Course Circle,
Vadodara – 390 007, Gujarat State.
Opposite parties
Counsel for the Complainant : M/s V.Appa Rao
Counsel for the Opposite parties : M/s K.Visweswara Reddy-Ops 1 to 3
Sri S.Nagesh Reddy-Ops 4 & 5
Coram :
Hon’ble Sri Justice B.N.Rao Nalla, President
&
Sri Patil Vithal Rao, Member
Wednesday, the Fourth day of January
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 1 to 3 and claimed refund of Rs.60,53,507/- with interest @ 12% per annum amounting to Rs.36,50,000/- for the period from 05.01.2007 to 31.01.2015 and further interest from 01.02.2015 @ 12% p.a.; to pay Rs.2,00,000/- as compensation for causing mental agony, suffering and escalation of cost; to have consequential relief by directing the Ops 1 to 3 to repay the amounts received from M/s ICICI Bank, Begumpet, Hyderabad with interest and other charges levied into the home loan account of the complainant; to pay legal charges of Rs.50,000/- and pass such other order or orders.
2. That the Opposite party No.1 claimed that they entered into various development agreements with the owners of properties admeasuring Ac.98-16 guntas of land in Sy.No.192/P to 198/P and 282/P, Bachupally village, Quthbullapur mandal, Ranga Reddy district and that they would develop the said property and would offer for sale to prospective purchasers. The representatives of Opposite party No.1 made representations to the Complainant that they obtained permissions for the layout as well as buildings for construction of residential apartment flats vide letter No.5876/MO2/Plg/H/ 2005 dt.21.03.2006 and vide Lr.No.5871/P4/Plg/HUDA/2007, dated 29.08.2007 from HUDA.
3. On the basis of warranties and representations, the Complainant was induced into entering into an Agreement of sale with the OP No.1 on 05.01.2007, where OP No.1 agreed to sell Flat No.2B on 2nd floor, type-5 of Munnar block in Maytas Hill County, comprising of 1648 square feet super built-up area, two covered car parking together with undivided share of land admeasuring 73 sq.yards, out of total extent of Ac.16-95 forming part of Sy.No.194/P, Sy.No.196/P and Sy.No.197/P, situated at Bachupally village, Qutubullapur mandal, Ranga Reddy district for a sale consideration of Rs.59,03,506/-. The Complainant, OP No.1 and the OP No.4 executed the tripartite agreement on 19.01.2007 and in pursuance of the same, paid 100% sale consideration amount. In pursuance of the same, sale deed dated 07.11.2008 registered as document No.13876 of 2008 was executed and another document styled as construction agreement dated 07.11.2008 registered as document No.13877 of 2008 was also executed.
4. The Opposite party No.1 specifically agreed to complete the construction of the flat in all respects and handover the same to Complainant on or before 05.04.2009 including the grace period of three months and on failure, agreed to pay Rs.5/- per sft. for the contracted built-up area for every month of delay w.e.f. 01.05.2009.
5. To the utter surprise and shock of Complainant, the Opposite party No.1 failed to complete the construction of the flat in all respects compelling the Complainant to cause notice dated 26.12.2014 on Ops 4 and 5 requesting to initiate steps for recovery of home loan. That, the OP No.4 released the loan amount without taking proper care and caution and without physically verifying the progress at the site and thereby committed unfair trade practice, giving a go-bye to the terms and conditions of the tripartite agreement and the guidelines issued by the RBI from time to time, in clear violation of the A.P. (promotion of constructions and ownership of apartments) Act, 1987.
6. The OP No.4 bank charged interest and other charges towards the home loan account from 20.01.2007 to 31.12.2014, as such, complainant stopped payment of EMIs and interest resulting which, the loan account became NPA. On one side, the complainant paid large extent of amount to the developer and on other side, left without flat and he is not in a position to meet the payment of home loan unless the same is recovered from the developer company. As the developer failed to complete the flat within the time stipulated, a notice was issued on 26.12.2014 to the developer and the bank seeking cancellation of the agreements. Hence the complaint with the reliefs as stated supra, at paragraph No.1.
7. 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 05.01.2007, they registered the unit on the name of complainant on 07.11.2008 and hence, cause of action for filing the complaint arose on 05.01.2009 and the present complaint is lodged after 6 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.
8. 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.
9. 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 was kept continuously informed about the status of construction, its completion apart from letters and e-mails.
10. Complainant appears 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.
11. 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.
12. 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 complainant 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 complainant is not entitled to any of the amounts. Therefore, it prayed for dismissal of the complaint with costs.
13. Though OP No.2 served with notice, has not chosen to file any written version, while, OP No.3 had filed an application seeking to strike him off from the array of the parties. Since the main complaint is being under consideration, consideration of the said application may not arise at this juncture.
14. The OP No.4 and 5 banks filed counter resisting the case. They contended that the complaint is not maintainable either on law or on facts. They sanctioned and disbursed the home loan to the OP No.1 from time to time, upon receipt of the disbursal request form duly signed by the Complainant as per the terms of the tripartite agreement. They were not aware that the OP No.1 had without construction registered the sale deed and committed deficiency of service. As per agreement, they have to make disbursement directly to the developer, as such, disbursement shall be considered as disbursement made to the borrower and it is the responsibility of the complainant and OP No.1 to repay the amounts disbursed.
15. The complainant being the borrower was having every right to ask the bankers to stop disbursal amounts to the developer quoting incompletion of construction as per the schedule, as such, complainant is estopped from making such allegation. They charged interest and other charges as per the terms of the agreement and they cannot be fastened with any responsibility with regard to the progress of construction. As per the terms of the tripartite agreement, the complainant agreed to indemnify them. There was no deficiency in service on their part. The complainant 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.
16. On behalf of the Complainant, the GPA holder had filed evidence affidavit and the documents, Exs.A1 to A10. On behalf of the Opposite parties 1 to 3, its authorized signatory by name Neerav Kapasi has filed the affidavit and the documents, Ex.B1 to B30 and on behalf of the Opposite parties 4 and 5, its GPA holder, Ananth Bhatt filed his affidavit and the documents, Ex.B31 to B43.
17. 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 on both sides filed written arguments. Heard both sides.
18. 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?
19. 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.4 and 5 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.
20. 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 complainant, therefore, seeks refund of the amount paid together with interest, compensation and costs.
21. 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.
22. Though the Opposite parties 1 and 2 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 parties 1 and 2 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 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 complainant when he contended that no work was taken up. It could have sought for appointment of Commissioner or filed documents evidencing the construction activity.
23. 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 getting the project completed.
24. The complainant by issuing notice dated 26.12.2014 to the developer, 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. Equally the complainant had issued same notice to the bank alleging that the entire loan amount was released contrary to the tripartite agreement; wherein it had agreed to disburse stage wise. It was contrary to the agreement besides the guidelines under home loans scheme. 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 and return the loan amount recovered from them with ‘no due certificate’. They have enclosed the termination notice issued to the developer while sending notice to the bank. Neither of them had given any reply. However, the bank initiated recovery proceedings against the Complainant by way of filing O.A. before the Debts Recovery Tribunal, Hyderabad, and subsequently after following due procedure had sold away the attached flat (subject flat) to the third party. To that extent, the bank had exhibited documents marked as Ex.B31 to B44. The said proceedings will not come in the way of Complainant’s 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.
25. We may also state that recovery of money by the complainant 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 complainant, and thirdly, that the retention of the enrichment be unjust. This justifies restitution.
26. 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.
27. 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.
28. 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 his own funds as well as obtaining loan from the OP No.4 and 5 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.4 and 5 bank cannot resile from the tripartite agreement and terms thereof by alleging that he (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.
29. We may refer herein some of the important terms of the tripartite agreement:
“1. The developer undertakes to complete the construction/development of the property in a timely manner as per the time schedule for construction as specified by the developer to ICICI bank and undertake to keep ICICI Bank suitably informed at every stage of the progress of construction and payments from ICICI Bank Ltd., will be made at stage wise as agreed………..
4. The developer agrees and confirms that ICICI Bank shall have a right to inspect the project with respect to the progress in construction so as to arrest any delays or diversion of funds by the developer/s…….
6. It is agreed between the parties that the developer shall intimate the factum of the completion of construction of apartment to ICICI bank. Upon hearing from ICICI bank Ltd., the developer undertakes to execute the necessary sale deed and till such time, the developer shall retain the possession of the apartment as a trustee for and on behalf of ICICI bank……..”
30. The Ops 1 and 2 would contend that the complaint is barred by limitation in view of the fact that as per agreement of sale dated 05.01.2007, the unit was agreed to be delivered on 05.04.2009, 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 refund of amount on account of non-compliance of the terms of the agreement. The monies paid by the Complainant are lying with the Ops 1 and 2, 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 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 Ops 1 and 2. Be that as it may, the Ops 1 and 2 though acknowledged the receipt of notice got issued by Complainant as long back on 26.12.2014, but they failed to respond. Admittedly, it is not denied that the Ops 1 and 2 have been addressing letters under Ex.B8 to B21 appraising the progress of construction, by which, they submitted to the cause of action and the present complaint is filed on 22.01.2015. Viewed from any angle, the complaint is not barred by limitation.
31. The complainant contends 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 his 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.4 and 5 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 developer and borrower hereby declare and undertake to keep ICICI bank indemnified, saved, and kept harmless from or against risk that might arise on account of any defect in title to the property, claim or demand being made on such property on incomplete construction/ development work by the developer and in the event of ICICI bank, suffering any claim, risk, damage etc., the borrower and the developer shall jointly undertake to forthwith reimburse/refund the amount of any such claim, demand, damage, risk, etc., together with cost, interest and penalty etc., as the case may be and the developer undertakes to reimburse/refund the principal amount to ICICI bank within 30 days from the date of receipt of notice from ICICI bank to the developer about the cancellation of the loan agreement with the borrower, along with the interest thereon for the default period and also the margin money payable to the borrower, after adjusting any monies due to the developer from the borrower out of the monies, if any payable to the borrower.”
The developer and complainant 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 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.
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 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.
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 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.
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 issuing notice dated 24.12.2014, 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.4 and 5 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 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 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 complainant amounts 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 complainant. 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.
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 complainant’s 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. The counsel for OP No.3 would contend that there is no privity of contract between the Complainant and OP No.3 on the premise that OP No.3 was not even on the Board of Directors of OP No.1 company. The deficiency of service alleged was only being against the contracting party which is the OP No.1 company. There cannot be individual deficiency of service on the part of the Directors. There is no separate liability of the members or Directors. Admittedly, Ex.A1 was executed on 05.01.2007 by which time, the Opposite party No.3 was not on Board as is evident from the Form-32. From-32 depicts that OP No.3 was appointed as Director of M/s Maytas Properties Limited w.e.f. 22.01.2011. As such, there is no privity of contract between the Complainant and OP No.3 and as such, OP No.3 is no way liable and responsible for the acts of the OP No.1.
45. It is very pertinent to mention here that both the borrower and the bank have failed to mention the specific amount which is stated to have been paid to the developer either in the complaint or in the written version and also failed to bring on record by way of exhibiting documents.
46. In the above facts and circumstances, the points (i) to (iv) are answered accordingly holding that the OP No.1 and 2 are liable to pay the amounts to the Complainant.
47. In the result, the complaint is allowed in part in following terms:
i) The developer Op1 and Op2 are directed to refund the amount paid by the complainant with interest @ 12% p.a., from respective dates till the date of payment, together with compensation of Rs.1,00,000/- and costs of Rs.5,000/-.
ii) Further, the developer Op1 and Op2 are directed to refund the amount disbursed by the bank to it along with interest, penal charges etc. levied by the OP No.4 and 5 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 OP No.3 is dismissed but without costs.
iii) In case sale deed was executed, the complainant 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 Op1 and Op2.
Time for compliance eight weeks.
MEMBER PRESIDENT
Dated: 04.01.2017
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For Complainant : For Opposite parties :
Affidavit evidence of GVS Prasad Affidavit evidence of Neerav
GPA holder of Complainant as PW1. Kapasi as RW1.
Affidavit evidence of Ananth
Batt as RW2.
EXHIBITS MARKED
For Complainant :
Ex.A1 is copy of Agreement for sale, dated05.01.2007 executed by OP No.1 in favour of the Complainant.
Ex.A2 is copy of Tripartite Agreement dated 19.01.2007 executed by OP No.1, OP No.4 and the Complainant.
Ex.A3 is copy of sale deed dated 07.11.2008 executed by the OP No.1 in favour of the Complainant conveying the subject flat.
Ex.A4 is copy of Agreement for Construction dated 07.11.2008 executed by OP No.1 and the Complainant.
Ex.A5 is copy of loan account details of the Complainant for the period from 20.01.2007 to 04.12.2014.
Ex.A6 is copy of General Power of Attorney executed by the Complainant in favour of one G.V.S.Prasad.
Ex.A7 are the office copy of legal notice, dated 26.12.2014 addressed to the Ops 4 and 5 marking copy to OP No.1and office copy of notice dated 26.12.2014 addressed to the Ops 1 to 3 marking copies to the Ops 4 and 5.
Ex.A8 are original postal receipts (4) numbers and original postal acknowledgements (2) numbers.
Ex.A9 is copy of Fresh Certificate of Incorporation consequent upon change of name of M/s Maytas Properties Limited to M/s Hill County Properties Limited, dated 16.08.2013 issued by the Registrar of Companies, Andhra Pradesh.
Ex.A10 is copy of Form-32 showing the appointment of Sri Murlidhar Khattar as Director of Maytas Properties Limited w.e.f. 30.09.2011 and as Managing Director w.e.f. 24.12.2011 and the appointment of Sri Arun Kumar Saha as Additional Director of Maytas Properties Limited w.e.f. 22.01.2011.
For Opposite parties 1 to 3 :
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 12.11.2013 addressed by OP No.1 to complainant informing ready to handover of the flat.
Ex.B18 is copy of e-mail, dated 07.07.2014 addressed by OP No.1 officials to complainant to complete the final inspection.
Ex.B19 is copy of e-mail, dated 22.07.2014 addressed by OP No.1 officials to the complainant to take over the unit.
Ex.B20 are copies of Occupancy Certificates dated 05.08.2013 furnished by the Executive Officer, Gram Panchayat, Bachupally, in respect of Munnar block.
Ex.B21 is Photostat copy of letter dated 23.08.2013 addressed by OP No.1 to its customers.
Ex.B22 is copy of letter dated 20.07.2012 addressed by the Executive Officer, Gram Panchayat, Bachupally to OP No.1 informing the fair market 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 Photostat copy of letter dated 12.12.2012 addressed by the Ops 1 and 2 to its customer.
Ex.B25 is the Photostat copy of letter dated 31.05.2013 addressed by the Ops 1 and 2 to its customer.
Ex.B26 is the Photostat copy of letter dated 17.01.2014 addressed by the Ops 1 and 2 to its customer.
Ex.B27 is copy of letter dated 22.08.2014 addressed by OP No.1 to its customers appraising the construction activitiy.
Ex.B28 is copies of letters dated 16.05.2015 and 14.09.2015 addressed by OP No.1 appraising the features of the project.
Ex.B29 is copy of attendance-cum-order sheet of the hearing of Principal Bench of the Company Law Board on 24.01.2014.
Ex.B30 is copy of Form-32 showing appointment of Arun Kumar Saha as Director to Maytas Properties Limited from 28.01.2011; Vimal Kishore Kaushik as Director w.e.f. 28.01.2011, Ramesh Chander Bawa as director w.e.f. 28.01.2011 and Ramchand Karunakaran as Director w.e.f. 28.01.2011 and Form-32 showing resignation of Vimal Kishore Kaushik as Managing Director w.e.f. 24.12.2011; Murlidhar Khattar as Managing Director w.e.f. 24.12.2011.
For Opposite parties 4 and 5 :
Ex.B31 is copy of General power of Attorney executed by Complainant in favour of Gadde Venkateswara Srinivas Prasad, for availing financial facility.
Ex.B32 is copy of Letter of Indemnity executed by the Complainant in favour of the OP No.4 bank.
Ex.B33 is copy of Facility Agreement executed by the Complainant and OP No.4 bank.
Ex.B34 is copy of declaration executed by the Complainant in favour of OP No.4 bank.
Ex.B35 is copy of loan recall notice dated 18.09.2009 issued by the OP No.4 bank to the complainant.
Ex.B36 is copy of demand notice dated 26.09.2013 addressed by the OP No.4 bank to the Complainant.
Ex.B37 is copy of symbolic possession notice issued by the OP No.4 bank.
Ex.B38 is copy of post-possession intimation notice, issued by OP No.4 bank.
Ex.B39 is copy of pre-sale notice, issued by OP No.4 bank.
Ex.B40 is copy of notice for sale, dated 16.09.2015 issued by OP No.4 bank.
Ex.B41 is copy of paper publication dated 16.09.2015 made by the OP No.4 bank.
Ex.B42 is copy of provisional sale certificate, dated 21.11.2015 issued by OP No.4 bank.
Ex.B43 is copy of sale certificate issued by the OP No.4 bank, dated 23.11.2015.
Ex.B44 is copy of minutes of auction proceedings dated 27.10.2015 recorded by the OP No.4 bank.
MEMBER PRESIDENT
Dated: 04.01.2017
