DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

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Swaranjit Singh Khurana son of Sh. Parduman Singh, resident of House No. 126, Type 4, GGSSTP, Nuhon Colony, District Roop Nagar, Punjab.

                                                        ---Complainant

V E R S U S

Abdul Khan, Proprietor or Partner of M/s A.K. Builders, SCO No. 2443-44, Cabin No. 11 (1^st Floor), Sector 22-C, Chandigarh.

IInd Address:

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Abdul Khan s/o Sh. Jhuni Khan, resident of House No. 1100, Sector 52, Chandigarh.

---- Opposite Party

BEFORE:          SH.LAKSHMAN SHARMA               PRESIDENT

MRS.MADHU MUTNEJA                        MEMBER

                    SH.JASWINDER SINGH SIDHU          MEMBER

Argued By:    Sh. V.M. Sharma, Adv. for Complainant.

Sh. Rajiv Joshi, Adv. for the OP.

PER MADHU MUTNEJA, MEMBER

1.             The Complainant had entered into an Agreement dated 12.03.2010 with the Opposite Party for constructing his house on Plot No. 1332, Sector 80, SAS Nagar, Mohali. All parameters of construction along with specific material to be used had been put down in detail in this Agreement. The cost of construction was fixed at Rs.850/- per sq. ft. for inside and Rs.425/- per sq. ft. for verandah area. The total payment agreed was Rs.25.00 lacs. At a later stage, as extra work was also executed by the Opposite Party beyond the Agreement, the Complainant also paid an additional amount of Rs.11.00 lacs to him.

                Clause 7 of the agreement provided for completion of work within 08 months, clause 8 provided that in case the Opposite Party failed to complete construction within the stipulated period, he would pay Rs.1000/- per day as damages to the Complainant. The work has not yet been completed and the Opposite Party has not made any payment as per Clause 8 to the Complainant. In fact, the Opposite Party has issued a bill of Rs.43,83,283/- dated 22.02.2011 which according to the Complainant is an excessive demand. The Complainant has stated that the delay in construction has caused him a huge financial loss as he was expecting to rent out the premises. He had taken a loan for the construction which he had planned to repay from the rental income.

                The Complainant has thus filed the present complaint with the allegation that the acts and conducts of the Opposite Party have caused him immense financial loss, harassment and mental agony. The Complainant has prayed that the Opposite Party be directed to pay the penalty of Rs.1000/- per day in accordance with Clause No. 8 of the Agreement as well as hand over the possession of the completed house as per the agreement. He has also prayed for compensation for mental agony, harassment and inconvenience, besides cost of litigation.

2.             At the time of filing complaint, the Complainant also filed an application for appointing a Local Commissioner for submitting the detailed status report of the construction work for the same house. The application was disposed off vide order dated 06.06.2011 and Er. G.S. Rosha, Chief Engineer, Chandigarh Housing Board was appointed as Local Commissioner to inspect the premises. As per the report of the Local Commissioner the dwelling unit is almost complete barring a few deficiencies as indicated by photographs which mainly include final coat of painting on walls and joinery work, polishing of the floors and provision of fitting and fixtures in the toilets and kitchen. These fittings were earlier fitted by the Contractor, but were later removed due to the fear of being stolen. The major defects pointed out in the building are as under: -

i)                  Incompletions of the Modular equipment/ fittings to be provided in the Kitchen;

ii)                Setting right of wash hand basin counters provided in the Bathrooms, which are not only disproportionate to the size of the toilets but are also obstructing the complete opening of the entrance door as well as the general utility of the toilet area;

iii)              Deficiencies in the flooring work with regard to the levels of the floors are water accumulation was seen in certain areas during the course of inspection.

iv)              General defects in the joinery work pertaining to improper closing and opening of the door/ window shutters and improper fixing of stainless steel railing around the stairs;

v)                Improper operation of front entrance gate;

vi)              Final course of Granite Polishing over the floors and Melamine Polish on the joinery work;

                The Local Commissioner has stated that the work was required to be completed within a period of 08 months from the date of Agreement which id March 12, 2010 and the contract was signed for Rs.25,00,000/-. The Complainant has already paid Rs.35,00,000/- to the Contractor which is evidently on account of certain additions/ alterations in the building at the behest of the owner. The Local Commissioner has recommended that the contractor has done a fairly good job within the available time frame at the agreed rate of Rs.850/- per sq. ft. and as such to resolve the issue a fixed time frame of about 30-45 more days be given to the Contractor for completing the work. In case of deficiencies which continue to exist at the time of actual handing over the possession, recoveries at a mutually agreed rate be made from the final dues payable rather than clinging on minor issues/ incompletions, as such type of differences of opinion between the owner and contractor are not uncommon in building contracts. After the receipt of the report of the Local Commissioner, notice was issued to the Opposite Party.

3.             Meanwhile, on receipt of a copy the Complainant has filed his objections to the report of the Local Commissioner.

                As per the Complainant the Local Commissioner has submitted his report in violation of the specific directions given to him vide order dated 6.6.2011. The only purpose for appointing the Local Commissioner was to know the actual status of the construction work carried out by the Opposite Party. The Local Commissioner has in fact acted as a recommending authority. Even though he has pointed out various defects in the building, he has given a finding that the question of imposition/ recovery of penal amount as per clause 8 of the agreement does not arise. The Local Commissioner has also mentioned that the Complainant has paid a sum of Rs.35.00 lacs when in fact the Complainant has paid Rs.36.00 lacs. The Complainant has thus, prayed that the recommendations of the Local Commissioner may kindly not be considered for deciding the dispute.

4.             Opposite Party in its reply, by way of affidavit has stated that the Complainant is not a Consumer as per the definition of the Consumer Protection Act, 1986 as the construction of the building was got done for commercial purpose. Further, the Complainant is also guilty of withholding payments due to the Opposite Party, besides certain cheques issued by the Complainant have also bounced, for which the Opposite Party has proceeded against the Complainant under Section 138 of the Negotiable Instruments Act (Annexure R-1 & R-2). The criminal proceedings are still pending.

                The Opposite Party has stated that as per the terms and conditions of the agreement the Complainant is still liable to make payment as per the calculations furnished to him. Also work done outside the purview of the agreement has also been specifically calculated and duly reflected in the bills supplied to the Complainant. As per the Opposite Party, the work has been completed within the stipulated period but the Complainant is guilty of withholding payment. In fact, certain work executed on the first and second floor of the building have even been executed at the behest of the Complainant in violation of the sanctioned plan. The completion certificate from the govt. authorities has also been obtained and handed over to the Complainant.

                On merits, Opposite Party has admitted the execution of agreement between the Complainant and the Opposite Party as the Proprietor of M/s A.K. Builders. The amount of Rs.25.00 lacs was mentioned as per approximate cost and the final amount was to be calculated as per measurements and rates mentioned in the agreement. An excess amount of Rs.7,83,282/- still remains to be paid by the Complainant which is on account of extra work executed on the premises as per the bill supplied to the Complainant.  All other allegations of the Complainant have been denied and Opposite Party has prayed for dismissal of the complaint.

5.             Parties led evidence in support of their contentions.

6.             We have heard the learned counsel for the parties and have perused the record.

7.             During the course of proceedings, the Opposite Party also filed a Civil Suit in the Court of Civil Judge (Senior Division), Chandigarh for recovery of Rs.7,34,607.40/- along with interest against the Complainant. A copy of the same has been placed on record.  However, the Complainant has stated that the Opposite Party has already taken excessive payment from him, but has not yet handed over the possession of the premises. The Complainant thus feels that he is entitled to compensation of Rs.1000/- per day beyond 8 months as per clause 8 of the Agreement.

8.             Before we go into the merits of the case, we need to peruse the agreement at Annexure C-2. The agreement dated 12.3.2010 was for construction of a house on an 8 marla plot upto ground and first floor and store & bath room on the top floor. The building contract was fixed for Rs.25,00,000/- with part payments payable at different stages of construction. Unfortunately, clause 3 detailing the approximate area of the construction of building has been left blank. In such a situation excess area or extra work cannot be calculated as the exact specifications are not a part of the agreement. The completion of the work within period of 8 months would obviously relate to a specific area which has not been mentioned. Hence the penalty of Rs.1000/- per day cannot be imposed.  There is no averment by either of the parties even in the pleadings about the specific area agreed to be constructed on each floor or even cumulatively. The Complainant has himself stated that he has got extra work done beyond the contract by the contractor for which he has paid him an excess amount. Hence delay for the said specific area can not be calculated.  The Contractor has averred that as per calculations submitted to the Complainant, some more amount is still outstanding for which he has filed a Civil Suit for recovery against the Complainant.

9.             The Complainant in his allegation has stated that the house has been constructed in utter disregard of the specifications mentioned and the quality of material used is not as agreed upon. A perusal of the averments shows that the make and quality of all items including bricks, cement, wood, iron, flooring (inside & outside), stair cases, fittings in bath rooms, wooden fittings etc. etc. have been specified along with the make and quality of product to be used. The report of the Local Commissioner specifically points out the discrepancies in the fittings, flooring and incompletion of work in different areas. The defects have already been mentioned in Para 2 above.

10.           The bills submitted by the Opposite Party to the Complainant and placed at Annexure C-4 & C-5 respectively do not refer to the exact quality and detail of material used. Also the bill has been issued by M/s A.K. Builders. The Opposite Party has stated that he is the sole proprietor of A.K. Builders. The agreement was entered into by the Complainant with Abdul Khan and not A.K. Builders. 

11.           The Consumer Protection Act, 1986 provides for summary proceedings, so that disposal of cases is quick. Looking at the entirety of the situation, it is evident that the property has not been constructed by the Builder in accordance with the agreement, which fact has been highlighted by the Local Commissioner who had been asked by this Forum to give a status report with regard to the construction carried out till date and the position of the construction work. In a situation where the work has not yet been completed, we do not understand how the Opposite Party is demanding more payment from the Complainant. The Opposite Party has also stated that the Complainant is not a “consumer” under the Consumer Protection Act, 1986, because the Complainant has mentioned that he intended to let out the residential premises.  In our opinion, letting out a residential building for the purposes of residence would not amount to a ‘commercial activity’ even though the owner would earn rent because no commercial transaction of buying or selling is involved. 

                In case LAXMI ENGINEERING WORKS VS. P.S.G INDUSTRIAL INSTITUTE, (1995) 3 Supreme Court Cases 583, the Hon’ble Apex Court has held as under:-

“……….The expression ‘commercial purpose’ is not defined in the Act. The ordinary meaning of ‘commercial purpose’ is not defined in the Act. The ordinary meaning of ‘commercial’ is pertaining to commerce; it means “connected with, or engaged in commerce; mercantile; having profit as the main aim” whereas the word ‘commerce’ means “financial transactions especially buying and selling of merchandise, on a large scale.”

(Para 11)

“………..The idea was to provide an additional forum providing inexpensive and speedy resolution of disputes arising between consumers and suppliers of goods and services. It was intended to help the consumers get justice and fair treatment in the matter of goods and services purchased and availed of by them in a market dominated by large trading and manufacturing bodies. Indeed, the entire Act revolves round the consumer and is designed to protect his interest. The Act provides for “business-to-consumer” disputes and not for “business-to-business” disputes.

(Para 10)

                Even in case LUCKNOW DEVELOPMENT AUTHORITY VS. M.K. GUPTA, (1994) 1 Supreme court Cases 243, the Hon’ble Supreme Court has held that where services regarding developing and construction of houses for common man are involved then any defect or deficiency in such service would be unfair trade practice and would amount to denial of service. A complaint regarding use of sub-standard material or delay in delivery of house cannot be rejected.

                In case MABEL VALERINA OBAID VS. FALCON RETREAT PVT. LTD. & ANR., I(2008) CPJ 221 (NC), the Hon’ble National Commission has held as under:-

“Consumer – Commercial purpose – Complaint based on deficiency in service – Complainant consumer – O.Ps. undertaken to construct villa for residence – Mere execution to Rent back facility agreement will not make transaction commercial – Complaint maintainable.”

(Para 3)

12.           Opposite Party has filed a separate Civil Suit against the Complainant also. In our opinion, the final bill can only be made after the work is complete as per the agreed rate of Rs.850/- per sq. ft. for covered area inside and Rs.425/- per sq. ft. for veranda and outer area as per clause 10 of the Agreement. No party should claim any amount from the other till the final preparation of bill as per these rates. It is obvious that the work has to be completed before the preparation of the final bill. 

13.           We accordingly allow this complaint in favour of the Complainant and direct the Opposite Party to complete the work as per specifications in the agreement within 03 months from today. The defects pointed out by the Local Commissioner and already mentioned in Para 6 above, be specifically adhered to and rectified. The Complainant shall then pay the Contractor any amount due to him as per the agreed rates given in clause 10 beyond Rs.36.00 lacs already paid.  In case he does not complete the construction and remove the defects, then no further amount shall be payable to him. The Complainant can then get the work completed at his own cost.

                However, the prayer of the Complainant for payment of Rs.1000/- per day as penalty beyond 08 months as per clause 8 of the Agreement is not tenable because the exact measurement of agreed area has not been mentioned in clause 3 of the Agreement.

                The Opposite Party will also pay a cost of Rs.50,000/- for deficiency in service, mental agony and harassment, besides  litigation.  This amount be adjusted in favour of the Complainant at the time of final bill.  In case the Opposite Party fails to undertake the work as per the defects pointed out by the Local Commissioner, then he shall be liable to pay a further additional cost of Rs.50,000/- to the Complainant.

14.           Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

17^th February, 2012.                                               

Sd/-

 (LAKSHMAN SHARMA)

PRESIDENT

Sd/-

 (MADHU MUTNEJA)

MEMBER

Sd/-

(JASWINDER SINGH SIDHU)

MEMBER