1.         Challenge in these First Appeals filed by the Opposite Party No.2, C.P. Kukreja Associates (P) Ltd., Opposite Party No.3, Hindustan Construction Co. Ltd. and Opposite Party No.1, The Director General, Air Force Navel Housing Board respectively, is to the Order dated 28.07.2011, passed by the State Consumer Disputes Redressal Commission, Delhi (for short, “the State Commission”) in Complaint Case No.107 of 2005. By the Impugned Order, the State Commission while partly allowing the Complaint, has directed the Opposite Parties to carry out repairs/renovation of the Gulab Building in  Jalvayu Enclave, Plot No.20, Sector-20, Kharghar, Navi Mumbai and to pay ₹25,000/- to each of the Complainants towards compensation and costs of  ₹50,000/-.

2.         Since the facts and circumstances as well as the impugned order giving rise to these First Appeals are the same, we are proceeding to dispose of these Appeals with this common order.  

3.         Facts giving rise to the filing of the Consumer Complaint before the State Commission, are that the Complainants, who were either serving or retired defence service personnel, were offered dwelling units under “Self Finance Housing Scheme” in May, 1994 in the  proposed building known as “Gulab Building” to be developed near a proposed Railway Station in Khargar, Navi Mumbai as per the terms & conditions enumerated in 097 IG message originated by Naval Headquarters under the instructions of Air Force Naval Housing Board (for short, “the Housing Board”). The Housing Board was constituted in the year 1979 with the objective to plan, build and allot dwelling units on ‘No profit, No Loss Basis’ to Air Force and Naval Personnel from all over India. Under the scheme, two Types of Flats were offered, Type 1 for Officers with approximate total area of 900 Sq. Ft. with initial estimated cost of ₹7.68 lakh and Type 2 for Sailor and Airmen with approximate area of 600 Sq. Ft. with initial estimated cost of ₹5.12 lakh. The 33 Complainants joined the Scheme and started paying instalments. The Housing Board appointed Opposite Party No.2, M/s. C.P. Kukreja Associates (P) Ltd as Architect (hereinafter referred to as the “Architect”) and the Opposite Party No.3, M/s. Hindustan Construction Co. Ltd., (hereinafter referred to as the “Builder”) for construction of the “Gulab Building”. Subsequently, in August, 1995, the Housing Board, vide 175 IG Message, raised the area of the Type 1 and Type 2 Flats to 935 Sq. Ft. and 685 Sq. Ft. and the corresponding cost was also raised to ₹8.2 lakh and ₹5.8 lakh respectively. Vide Allotment Letter dated 1.11.1996, the cost of Type 2 Flats was further enhanced to ₹6.8 lakh. The area of Type 1 & 2 Flats was again increased to 1005 Sq. Ft and 710 Sq. Ft. and as a result the cost of both the Flats was also increased to ₹10.05 lakh and ₹7.6 lakh respectively. By another letter, dated 17.03.1998, the Housing Board informed the Complainants that the Carpet Area of the Type 2 Flats including the Balcony Area, would be 554  Sq. Ft. By letter dated 28.01.1998, the Housing Board also imposed penalty for withdrawal from the Scheme. Further, vide its letter dated 19.02.1999, the Housing Board made it compulsory for all the allottees to pay ₹32,000/-, ₹52,000/- and ₹90,000/- for Scooter Parking Space, Open Car Parking Space and Car Parking Space respectively, though originally the requirement for Parking Space was not made compulsory, but optional. The Complainants pointed out to the Housing Board that they cannot charge any amount for Parking Space in view of the Judgement of the High Court of Maharasthra and the provisions contained in the Maharashtra Ownership of Flats Act 1963 (hereinafter referred to as MOFA, 1963). The possession of the Dwelling Units was promised to the Complainants to be handed over in October, 1998, which was subsequently informed to commence from 06.12.1999. Vide letter dated 15.02.2000, the Housing Board admitted that basic amenities were not yet available at the site. The Complainants averred that vide Clause 9 of the Allotment Letter dated 1.03.1996, the Housing Board chose to exclude liability for failing to deliver possession within the agreed period for construction, which prima facie constituted Unfair Trade Practice because they cannot contract out of their liability under Section 8 of the MOFA, 1963. The Complainants also informed the Housing Board about the defects in the Flats like water seepage, broken wooden fittings, etc., due to use of inferior quality material in construction and made repeated requests for rectification of the same, but nothing constructive was done in this regard by the Housing Board. It is alleged that there was a delay of more than two years in handing over possession as actual handing over was commenced only from November, 2000 onwards, which resulted in financial loss, anxiety and damage to the Allottees. The last instalment was collected by the Housing Board on 18..01.1999 and on every delayed payment the Housing Board charged the penal interest @15% p.a. Further, they also collected the Long Term Maintenance Fund from the Complainants with interest on delayed payment, if any, but the Allottees were never paid any compensation for delay in handing over the possession of the Dwelling Units. It is alleged that the Building in question soon developed major cracks on structure and stair case, major leakage and seepage in the Units from the outside walls of the whole Building and in the stair case loft, major seepage from sunken floors of toilets, leakage from plumbing shaft, etc., which were not rectified despite complaints sent by the ad-hoc Welfare Association formed by the Residents of the Gulab Building. It was averred that the excessive leakage and seepage had led to degrading of the strength of the structure and reduced the life expectancy of the Building and further led to unhygienic conditions. The several complaints were lodged regarding seepage, leakage and poor quality of construction, cracks with the Opposite Parties but to no use. It is stated that as per the provisions of Section 7 of MOFA, 1963, the Architect and the Builder was under a statutory obligation to repair and remove the defects noticed within three years from the date of possession. Vide letter dated 09.08.2001, the Housing Board confirmed the seepage and leakage and committed to rectify the seepage and leakage but nothing was done. Feeling aggrieved, Complainants have filed the Complaint before the State Commission praying following reliefs:-

(a)        direct the Opposite Parties to pay compensation of ₹25,000/- to each of the Complainants for physical and mental hardship, anxiety and mental harassment suffered;

(b)        direct immediate repair/renovation of the building under the supervision of the Hon’ble State Commission and at the expense of the AFNHB, Architect and the Construction Company, without diverging or diluting the Project Fund or the Long Term Maintenance Fund,

or, in the alternative

(c)        direct the Opposite Parties to jointly and severally pay an amount of ₹37,00,000/- being the estimated expenses for rectification of the defects, which the Complainants could get done, including suffer any additional costs if found beyond ₹37,00,000/-.

(d)        direct payment at the rate of 9% p.a. on the amount paid for the period 01/10/1998 till date of handing over of possession to the respective allottees as compensation for delay in handing over of the flats;

(e)        direct to return to each of the Complainants, the amount wrongly and coercively collected for parking space;

(f)         direct the reimbursement of legal charges of ₹50,000/-

(g)        that the AFNHB, be ordered and directed to give a complete and proper final account of the amount collected as maintenance charges are still not made and given to the Allottees therefore the OP 1 may be directed to give the proper account of the money as collected to allottees;

(h)        to direct the reimbursement of extra charges of ₹70/- per sq. ft charges from sailors flats with 15% interest;

4.         Written Version, if any, filed by the Opposite Party No.1 Housing Board has not been placed on the record.

5.         The Opposite Party No.2, Architect contested the Complaint by filing its Written Statement, inter alia, raising the Preliminary Objections that there was no privity of contract between the Complainants and them and that they had not provided any services to the Complainants; the Complainants were not ‘Consumers’ as defined under Section 2(1)(d)(i) of the Act; since the Building in question is situated at Mumbai, the Complaint was bad for lack of Territorial Jurisdiction, the Complainants had not divulged the date of allotment to come out of limitation, the determination of facts cannot be established without detailed evidence and as such the parties are to be relegated to the Civil Court; since the possession of the Flats was given way back in the year 2000 and the defect liability period had also over, therefore, the Complaint is barred by limitation and the same be dismissed on this sole ground;

6.         On merits, it was, inter alia, pleaded that the Opposite Party No.2 was not concerned with enhancement in the Area of Flats, escalation in the cost of the Flats, issue of parking space or delay in handing over the possession. There was no allegation of deficiency in service against the Opposite Party No.2 and it was not a party to the terms & conditions enumerated in 097 IG between the Opposite Party No.1 and the Complainants. As per Allotment Letter, the property was sold on ‘as is where is basis’ and the Contractor’s liability for repairs/rectification of defects expired after one year of the completion of the Project. No sub-standard material was used in the construction of the Building. The Opposite Party No.2 being an Architect by profession had provided consultancy services for design of Buildings and allied services and in terms of Agreement dated 10.04.1996 between the Housing Board and them, they had done whatever was required to be done by them to remove the defects. The possession of the Flats was given in November, 2000 and the defects were noticed in the year 2001, hence, the Complaint filed in the year 2005 is time barred.

7.         The Opposite Party No.3 Builder has filed its Written Statement raising the same Preliminary Objections as have been raised by the Opposite Party No.2 in its Written Statement. It is further contended that after completion of the construction work the Virtual Completion Certificate was handed over by the Housing Board on 11.11.2000 and as such the Complaint filed in the year 2005 is time barred. Under the Defect Liability Clause, the Builder was liable to repair and rectify the defects for a period of two years from the date of the Virtual Completion Certificate which ended on 13.09.2002. The Builder is not liable for any repairs/rectifications subsequent to the ending of the Defect Liability Period. It is submitted that the Builder had took every step to rectify all defects within its Defect Liability Period and was not deficient in providing service under the Contract. Therefore, the Complaint is not maintainable as against the Opposite Party No.3 Builder.    

8.         On merits, it was, inter alia, denied that the Opposite Party No.3 Builder has contracted out of its liability under the MOFA 1963 and that inferior quality of material was used for construction. The requests of the Complainants for rectification/repairs of all defects were attended promptly and rectification work was carried out for a period of two years from the date of Virtual Completion Certificate under the Defect Liability Period and even satisfactory work completion signatures were obtained from the Complainants. The contention of the Complainants that the Opposite Party No.1 Housing Board should have invoked Indemnity or Guarantee Clause with the Opposite Party No.3 is misplaced and baseless since the Opposite Party No.3 was already rectifying the defects on time under the Defect Liability Period. That the Opposite Party No.3 has constructed the building with proper structural design made by Opposite Party No.2 Architect and the quality of material and construction was ensured as per specifications. That no cause of action exists against the Opposite Party No.3 since no contract was entered into between the Opposite Party No.3 and the Complainants. The contract was entered into between the Opposite Party No.1 and Opposite Party No.3. As such Complainants were not the consumers of the Opposite Party No.3. All other averments made in the Complaint were specifically denied by the Opposite Party No.3 alleging that most of them do not pertain to the Opposite Party No.3 and need no reply. The Opposite Party No.3 prayed for dismissal of the Complaint with costs.

9.         After perusing the material available on record and the evidence adduced by the parties, the State Commission came to the conclusion that the claims made by the Complainants on account of delay in handing over the possession of the allotted Flats; wrong collection of charges for maintenance and parking space and reimbursement of extra charges of ₹70/- per sq. ft from sailors Flats with 15% interest were time barred.  However, with regard to various defects in the Flats, the State Commission held that all the Opposite Parties are guilty of deficiency in service. Accordingly, the State Commission has directed all the Opposite Parties to carry out repairs/renovation of the Gulab Building in question and to pay ₹25,000/- as compensation to each of the Complainants.  The State Commission has observed as under:-

“12.      As regards relief of direction to the OPs to carry out repair/renovation, it is evident from pleadings and evidence led by the OPs that receipt of complaints of leakage/seepage etc is not disputed but it is pleaded that guarantee period that is defect liability period was upto 30-09-2002. It is alleged that as per contractual provision, the OPs were committed to rectify the defects under two years of defect liability period which has been done free of cost and for which the satisfactory signatures have been given by Gulab flat owners and the complaint is time barred as per 24A of the Consumer Protection Act. This does not come to the rescue of the OPs in view of their own averments in reply and evidence. The version of OP-1 is that the OP-3 was asked to keep its maintenance team to rectify small faults, defects if reported, during the defect liability period, first such work had been done in September/October 2002; the second collective work was done during May/June 2003, the first major preventive measure has been taken up by Society of Gulab Building in April 2006, the OP-1 had done painting work in October/November 2002 and has not released Bank Guarantee of Rs.5,00,000/- of OP-3 till date. Flat of Mr. Kherwal was repaired in October 2002 and later in October 2003.

13.        The OP-3 in its evidence has stated that subsequent to issuance of Virtual Completion Certificate w.e.f. 14-09-2000, it entered into defect liability period for 24 months during which period it was responsible for rectification of the defects that appeared in concerned works: during this period it rectified and carried out repairs diligently and attended to all complaints of the complainants promptly and completed its contractual responsibility with regard to repair and rectification, it promptly attended to the complaints regarding seepage, leakage, cracks etc and kept maintenance team to rectify small faults/defects if reported; even after the completion of defect liability period it rectified and repaired some flats in October 2002 and such collective work of rectification or repair has been done during May/June 2003 and even later in October and November 2003; even though it was decided between OP-1 & 3 that no complaint would be entertained after 26-05-2004, OP 1 & 3 continued to receive new list of complaints, it was only on specific request of OP-1 that OP-3 agreed to go ahead with the repairs of building No. K-202 though the complaint was received after 25-04-2004.

14.        Thus the version of the complainants regarding seepage/leakage/cracks in the building, complaints regarding which continued to be made, is admitted. Though the OP-2 denied its responsibility for quality of construction or to rectify the same after defect liability period stating that it is Architect and provides consultancy services in the field of Design of Building and allied services but as per its Article of Agreement dated 10-04-1996 with OP-1 it had undertaken the preparation of Architectural, structural, sanitary, electrical, external developments and other engineering designs and drawing etc and provide all other consultancy and allied services necessary to the project including the supervision of the work at site for entire duration of project and was fully responsible for the Quality Control as is evident from clause 3.4(i) which is reproduced below:-

“          It shall be the sole responsibility of the Architect to provide correct drawings, designs and specifications and to ensure that work is being done in accordance with approved drawings, designs and specifications and that no substandard material is being used in the project. If as a result of the judgment of Consumer Protection Cell it is proved that the defect in the house/houses are due to faulty design, specification or negligent supervision the entire expenditure of setting right the defects including the cost incurred by the Board for defending the case shall be deducted from any payment due to the Architect or shall be reimbursed to the Board by the Architect”.

            Hence all the OPs are responsible for the defects of leaking/seepage/cracks in the building units provided to the complainant for consideration received. It is evident on record that despite complaints attended to during defect liability period; the problem continued and is still subsisting as pleaded and substantiated by the complainants. Photographs of the building have also been filed.”

10.       Being aggrieved by Order dated 28.07.2011, Opposite Party No.2 Architect has filed the First Appeal No.424 of 2011, Opposite Party No.3 Builder/Constructor has filed the First Appeal No.444 of 2011 and Opposite Party No.1, Housing Board has preferred First Appeal No.451 of 2011.

11.       We have heard the learned Counsel appearing for the parties at some length and have also perused the material available on record as well as the Written Submissions filed by the parties.

12.       Learned Counsel appearing for the Housing Board submitted that the Housing Board was formed with the objective of providing residential houses to the serving Air Force and Navel Personnel and widows of these Service only on “No Profit and No Loss” basis under Self-Financed Housing Scheme. They offered the subject Dwelling Units to the Complainants as per terms & conditions laid down in 097IG message. The area of the offered Flats and the corresponding Cost was enhanced after considering several requests and representations from the allottees to expand the living space and improvements suggested by the allottees. That no specific date for completion of the Building was given by them, however, as per Clause 9 of the Allotment Letter, the Dwelling Units were expected to be ready for possession by October, 1998. They imposed the condition of penalty on withdrawals because they had already invested huge money on purchase of land and construction thereon and, at that stage, they could not afford the withdrawal being a non-profit organization. The Parking Space Charges were levied by them in accordance with the earlier precedence set out for its earlier Projects and as a result of the majority opinion poll. They charged interest on delayed payments from the Complainants to bring them at par with the allottees who had paid in time. The interest so received was also credited to the Project in Project Fund. The Housing Board asked the Opposite Party No.3 Builder to keep its maintenance team ready to rectify any defects reported during the Defect Liability Period, free of cost, and first such work was done in Sept./Oct.2002. Second such collective work was done during May/June, 2003. The Housing Board also carried out the painting work of the Gulab Building in October/November, 2002. That the Opposite Party No.1 carried out the inspection of the building in consultation with Opposite Party No.2 and Opposite Party No.3 in terms of its RCC structure stability and the consultations had given a satisfactory reply. The Housing Board was committed to rectify the defects only for two years according to the Defect Liability Period and the same was done. The amount collected towards Long Term Maintenance Fund to the tune of ₹1,76,96,000/- with interest was paid to the Allottees’ Society, which is responsible for maintenance, upkeep, repairs, etc., after the Defect Liability Period of two years. He further submitted that the construction of the Building was as per ISI standards as certified by the Architect and structural integrity has been reassessed and found to be satisfactory. Out of the 112 Allottees of Gulab Building, there was are 33 Allottees who had filed the Complaint. If there would have been major structural defects in the Gulab Building then all the 112 allottees would have filed the Complaint. Finally, he contended that the Complaint filed in the year 2005 is time barred and deserved to be dismissed on that ground.

13.       Learned Counsel for the Opposite Party No.2, Architect submitted that; the Complaint is not maintainable against them as there was no privity of contract between the Complainants and the Opposite Party No.2 who had only provided the consultancy services to the Housing Board as per the agreement executed on 10.04.1996; there is no deficiency in service nor any unfair trade practice on the part of the Opposite Party No.2; Complainants have no locus-standi to file the Complaint after having taken the possession of the Flats in terms of the Allotment Letter under the Self Financing Scheme on “No Profit No Loss” basis and on “as is where is” basis; the Complaint is bad for want of territorial jurisdiction as the Building in question is situated in Navi Mumbai and the Complainants are also residing in Mumbai; Complaint filed in the year 2005 is hopelessly barred by limitation as the allotment of the Flats was done in the year 2000 and the Defect Liability Period had expired on 13.09.2002; No liability can be fasten on the Opposite Party No.2 for raising of flat area, escalation of price of flat, dispute regarding parking space and  delay in handing over possession in view of the allotment letter as the Opposite Party No.2 was not a party to 097 IG message between the Housing Board and the Complainants; the Supervision charges of the construction of the residential complex were handed over to the Project Director of the Housing Board and after relinquishing the supervision of construction activity in May 2001, under no circumstances, the responsibility of supervising the rectification work was with the Opposite Party No.2.

14.       Learned Counsel for the Opposite Party No.3 Builder contended that; the complaint filed in the year 2005 was barred by limitation period of two years as the Virtual Completion Certificate was handed over on 10.11.2000 and the Defect Liability Period of 24 months from the date of Virtual Completion Certificate expired on 13.09.2002; No application for condonation of delay has been filed along with complaint; no cause of action has arose against the Opposite Party No.3 as there was no privity of contract between the Complainants and the Builder and action of rectifying the defects was undertaken by them in terms of contract entered into by the Builder and the Housing Board; in all construction contracts, a Defect Liability Period is generally provided which imposes the liability on the Contractor to rectify the defects which are pointed out during the said period and as and when such Defect Liability Period ends, the liability of Contractor to rectify the pointed defects also ends; during the Defect Liability Period, the Contractor has rectified all the defects to the satisfaction of the owner of the Flats; the defects were rectified after the Defect Liability Period only on the request of the Housing Board; there was poor maintenance of the flats by the flat owners of the Gulab Building which was pointed out to the Housing Board vide letter dated 30.06.2004; the entire work of construction was done as per the drawings and the Opposite Party No.2 Architect had supervised all the works and approved it;

15.       Per contra, Learned Counsel for the Complainants submitted that on 08.01.2019, counsel appearing for the Opposite Parties made a statement at bar that they were not press the point regarding pecuniary jurisdiction as also the filing of the complaint by 33 persons before the State Commission.  He further submitted that with regard to the objection raised by the Opposite Party on territorial jurisdiction of the State Commission, in para 23 of the Allotment Letter dated 01.03.1996 it is mentioned that in case of any dispute between the parties, the same shall be subject to the jurisdiction of the District Court a Delhi, or High Court of Delhi. Placing reliance upon the judgments of the Hon’ble Supreme Court and this Commission in the case of Lata Construction Vs. Rameshchandra Ramniklal Shah – (2000) 1 SCC 586, Vivekanand Construction Company Vs. Suraj Ratan Mundra – (2013) 3 CPJ 111, (NCDRC), Kalidas Sangar Vs. Mati Anjali Chakraborty – 2016 SCC Online NCDRC 1454 and Vora Home Makers Pvt. Ltd. Vs. Ismail Hasan Damudi – 2017 SCC Online NCDRC 1186, It is vehemently urged by the learned Counsel for the Complainants that there was a continuing cause of action as the complaints regarding cracks, seepage and leakage were continuing even after repairing by the Opposite Parties.  Some of the Complainants have made complaint of seepage in the wash basin to the Housing Board on 25.04.2004 and 13.06.2004 even after the repair work was done by the Opposite Parties. He further argued that in terms of clause 3.4 (i) of the Agreement dated 10.04.1996 entered between the Housing Board and the Opposite Party No.2, Architect, they are also responsible for the quality control of the material used in the construction of the Building as well as the supervision of the work at the site for the entire duration of the Project and they cannot be exonerated from their liability towards the Complainants.  It is contended by him that in compliance of the Order dated 25.04.2011 passed by the State Commission, Delhi a joint inspection of the Building was conducted and the report was submitted to the State Commission pointing out the Architectural defects and the poor quality of the construction by the Opposite Parties. It is rigorously pleaded by him that the total ceiling plaster along with concrete started detaching and falling down. There is also imminent danger for the building as cracks in the columns and beams are of serious nature.  In support of his contention, he has strongly relied upon the photographs placed vide I.A.No.13257 of 2017 which was allowed by this Commission vide order dated 24.04.2018.  He further submitted that the Society had appointed a Consultant, M/s. United Engineers & Consultants to access the degree of damage and costs of repair work and the said Consultants had assessed an expenditure of ₹68,56,000/- for immediate repair of the Building.

16.       We have given our thought consideration to the submissions made by the learned Counsel for the parties.

17.       So far as, the questions with regard to compensation for delay in handing over the possession; increase in the area of the Flats and costs thereof; wrong collection for maintenance and parking spaces as well as reimbursement of extra charges of ₹70/- from Sailors Flats with interest @15% are concerned, the State Commission has observed that the claims are time barred and the said finding has not been challenged by the Complainants by filing any Appeal and as such the Order dated 28.07.2011 passed by the State Commission has attained finality qua the Complainants.  Even otherwise, we fully agree with the State Commission that period of handing over the possession of the Flats and the costs of the Flats were tentative as mentioned in Allotment Letter. In the para 7 of the Pamphlet, it was mentioned that the Housing Board may provide parking spaces for the Complainants and as per the Allotment Letter, the costs of parking space and maintenance charges was to be charged extra.

18.       Now, coming to the substantive issue with regard to liability of the Opposite Party No.2 and 3 qua the Complainants as there was no privity of contract between the Complainants and them and the Contract was entered into with only the Housing Board, recently, the Hon’ble Supreme Court has held that even a subsequent purchaser is entitled for the same relief as are available to the original Allottees even in the absence of any privity of contract. In this regard, a reference can be made to the recent decision of the Hon’ble Supreme Court in “Laureate Buildwell Pvt. Ltd. vs. Charanjeet Singh” [2021 SCC OnLine SC 479], in which it has been held that absence of privity of contract is not a bar for maintaining a Complaint against a service provider, by observing as under:-

25.       In another decision, Canara Bank v. United India Insurance Co. Ltd. (2020) 3 SCC 455, the issue which this court had to consider was whether the insurer could repudiate liability in respect of a fire which destroyed farm produce kept in a cold storage, when the farmers had no privity with the insurer, but with the cold storage, and who availed credit on the security of the crop. The court held as follows:

“28. Taking the issue of privity of contract, we are of the considered view that as far as the Act is concerned, it is not necessary that there should be privity of contract between the Insurance Company and the claimants. The definition of “consumer” under Section 2(d) quoted hereinabove is in two parts. Sub-clause (i) of Section 2(1)(d) deals with a person who buys any goods and includes any user of such goods other than the person who buys such goods as long as the use is made with the approval of such person. Therefore, the definition of consumer even in the first part not only includes the person who has purchased but includes any user of the goods so long as such user is made with the approval of the person who has purchased the goods. As far as the definition of “consumer” in relation to hiring or availing of services is concerned, the definition, in our view, is much wider. In this part of the section, consumer includes not only the person who has hired or availed of the services but also includes any beneficiary of such services. Therefore, an insured could be a person who hires or avails of the services of the Insurance Company but there could be many other persons who could be the beneficiaries of the services. It is not necessary that those beneficiaries should be parties to the contract of insurance. They are the consumers not because they are parties to the contract of insurance but because they are the beneficiaries of the policy taken out by the insured.

29. The definition of “consumer” under the Act is very wide and it includes beneficiaries who can take benefit of the insurance availed by the insured. As far as the present case is concerned, under the tripartite agreement entered between the Bank, the cold store and the farmers, the stock of the farmers was hypothecated as security with the Bank and the Bank had insisted that the said stock should be insured with a view to safeguard its interest..”

26.        If one also considers the broad objective of the Consumer Protection Act, which is to provide for better protection of the interests of consumers and for that purpose, provide for the establishment of Consumer Councils and other authorities for the settlement of consumer disputes and for matters connected therewith, as evident from the Statement of Objects and Reasons of the Act. The Statement further seeks inter alia to promote and protect the rights of consumers such as—

“(a)  The right to be protected against marketing of goods which are hazardous to life and property;

(b)    the right to be informed about the quality, quantity, potency, purity, standard and price of goods to protect the consumer against unfair trade practices;

(c)    the right to be assured, wherever possible, access to variety of goods at competitive prices;

(d)    the right to be heard and to be assured that consumers' interests will receive due consideration at appropriate forums;

(e)    the right to seek redressal against unfair trade practice or unscrupulous exploitation of consumers; and

(f)     right to consumer education.”

27.       In Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC 243, this Court held:

“The importance of the Act lies in promoting welfare of the society by enabling the consumer to participate directly in the market economy. It attempts to remove the helplessness of a consumer which he faces against powerful business, described as, ‘a network of rackets’ or a society in which, ‘producers have secured power’ to ‘rob the rest’ and the might of public bodies which are degenerating into storehouses of inaction where papers do not move from one desk to another as a matter of duty and responsibility but for extraneous consideration leaving the common man helpless, bewildered and shocked.”

28.        It was further held that:-

“The Act thus aims to protect the economic interest of a consumer as understood in commercial sense as a purchaser of goods and in the larger sense of user of services. … It is a milestone in history of socioeconomic legislation and is directed towards achieving public benefit.”

29.       This court has further observed in State of Karnataka v. Vishwabharathi House Building Coop. Society, (2003) 2 SCC 412, that (the) “provisions of the said Act are required to be interpreted as broadly as possible. It has jurisdiction to entertain a complaint despite the fact that other forums/courts would also have jurisdiction to adjudicate upon the lis”

30.       It is therefore evident that the Consumer Protection Act, 1986 was conceived as a legislation to address complaints of consumers (an expression defined and interpreted widely) and provide a forum for their quick redressal, and, furthermore, wherever third parties have claimed relief, technicalities have been brushed aside consistently, by this court. Thus, even after an original consumer is indemnified for a fire accident, the insurer can maintain a complaint against the carrier/service provider, and claim damages (of course along with the insured party). Likewise, absence of privity of contract is not a bar for maintaining a complaint against a service provider, by a third party who suffers an incident, which is otherwise covered by an agreement…...”

19.       As per the law laid down in the above extracted case by the Hon’ble Supreme Court, we are of the considered view that the Complainants are Consumers and the Opposite Parties are under an obligation to indemnify them for any loss suffered by them even in the absence of any privity of contract. 

20.       With regard to the objection of Territorial Jurisdiction of the State Commission to entertain the present complaint, we find merit in the contention of the Learned Counsel for the Complainants that as per para 23 of the Allotment Letter dated 01.03.1996, any dispute between the parties was subject to jurisdiction of the District Court or High Court in Delhi.

21.       We also do not find any merit in the submission of the Learned Counsel for the Opposite Party No.2 that being Architect, it had provided only consultancy services to the Housing Board as per Agreement executed on 10.04.1996. As per Clause 3.4 (i) of the Agreement dated 10.04.1996, the Opposite Party No.2 was responsible to provide correct drawings, designs and specifications and to ensure that work is being done in accordance with approved drawings, designs and specifications and no sub-standard material is being used in the Project. They were also liable for the quality control of the material used in the construction of the Building as well as the supervision of the work at the site for the entire duration of the Project. Under these circumstances, the Opposite Party No.2 Architect cannot be absolved from its liability for and loss or damage suffered by the Complainants due to defects in the construction work.

22.       We also find substance in the contention of the Learned Counsel for the Complainants that there was continuing cause of action as the complaints regarding cracks, seepage and leakage were continuing even after repairing work by the Opposite Parties. The construction of the Building was completed in the year 2000 and accordingly Virtual Completion Certificate was handed over to it on 10.11.2000.  As per the Defect Liability Period for two years from the date of Virtual Completion Certificate i.e 10.11.2000, the Builder was under an obligation to rectify/removed all the defects pointed out by the Complainants free of costs till 13.09.2002.  It is not disputed that the complaints regarding leakage/seepage/cracks were immediately pointed out to the Housing Board after the completion of the Project. The defects were rectified/cured by the Maintenance Team of the Builder during the Defect Liability Period but still the defects persisted in the building and numbers of complaints were made by the Complainants to the Maintenance Team of the Builder. In its letter dated 30.06.2004 addressed to Sqn. Ldr. A.V. Padnekar, Project Director, Airforce Navel Housing Board, the Builder has admitted that as per the discussion with him and Mr. Sambit Das the Complaints would not be entertained after 24.05.2004 which means the Default Liability Period was extended till 24.05.2004 as there were lots of complaints from the Complainants regarding seepage/ leakage/cracks in the Building even after expiry of the said period and making the rectification of the defects by the Builders. Moreover, even after 24.05.2004, the repair work was done by the Contractor in Building No.K202. As such, in our considered view, the complaint filed in the year 2005 was not barred by limitation.

23.       Now, adverting to the main issue regarding defects in the Building and its rectification, we are of the opinion that the State Commission has rightly observed that all the Opposite Parties are responsible for the defects of leakage/seepage/cracks in the Building Units provided to the Complainants. Despite the complaints attended to by the Builder during the Defect Liability Period, the problems continued and are still subsisting in the Building as has been established by the Complainants by producing the photographs of the Building.  As per the direction of the State Commission on 25.04.2011, a joint inspection of Gulab Building in question was conducted and the joint inspection report was submitted pointing out the major defects as under:-

“ARCHTECTURAL DEFECTS-

a)        The overall architectural design seems to lack proper study of soil conditions, weather pattern of Navi Mumbai, the direction of wind and rain, selection of building materials and mix of concrete, etc;

b)        No chajjas/shades are provided over windows in bedrooms, over ventilator in staircases, over the topmost fire escape gallery provided at level 12, thereby the building faces direct hitting of rainwater on all walls of the dwelling units, full ingress of rainwater through the staircase ventilators and walls, and seepage from the floor of fire escape gallery at level 12 etc.

c)        Two flower beds/ service galleys provided in all dwelling units are inaccessible, proper leveling or waterproofing not carried out and no facility of  proper drainage of rainwater has been provided, thereby causing severe uncontrollable leakages to all the dwelling units through these locations.

d)        The plumbing shafts catered on the bathroom and kitchen sides are provided inside the main outer wall and are of very small sizes and covered at palaces by beams, making the same unapproachable and making it impracticable to  carry out any repair/ maintenance.

e)        The extended part at level 5, which are un-repairable and leads to severe leakage in all the adjoining walls of master bedrooms of all the five floor below.

f)         Common spout outlet provided between kitchen has not been properly designed and not leveled properly thus leading to overflow of water and damage to structure;

POOR QUALITY OF CONSTRUCTION

a)        In spite of the fact that the AFNBH had collected excess rates from the members for catering block masonry walls, and external plaster in cement mortar (1.4) with water proofing compound so as to deliver quality dwelling units vide their letter No. AFNHB/ ADM/Kharghar dated 28 Jan 1998, it seems that the same had not been undertaken, leading to severe seepage/ leakage from the external walls, as evident in staircase wall from 12th floor onward, and all external walls of dwelling units and lift machine room, RCC walls in balcony of dwelling units and fire escape galleries.

b)        Sunken floors of toilet and floor of bath not properly catered with required water proofing and hence severe floor leakage/seepage in toilet/bath area in all the floors is experienced (as can be seen at the ground floor in balcony units 101, 103 and 104)

c)        All the columns, beams, pergolas and staircase soffit have developed severe cracks endangering the safety of the building and its residents. The cause of which could be usage of improper building materials, concrete mixes and lack of requisite supervision. (all columns at level 0 and in dwelling unit Nos. 102, 303, 401, 503, 603, 1101, 1101,1202,etc, pergolas at level 1 & 2 floor and roof beams, staircase waist slabs at 10th ,11th and 12th floors).

d)        Joints of RWPs and sewage pipes have not been properly done leading to severe leakage in adjoining walls.

e)        All the shaft walls have not been properly plastered and water proofed before & after fixing of pipelines, thereby causing severe leakages/ seepage inside the dwelling units

f)         Severe leakage/ seepage  to all walls and ceiling of lift machine room are experienced during monsoons. Even the complete lift shaft gets severely wet and water drips dangerously over the electrical installations.

24.       Since, despite undertaking various measures and expending a huge amount for the upkeep and maintenance of the building, no fruitful results were achieved due to construction problems, the Society appointed another Consultant M/s. United Engineers & Consultants to access the degree of damage and costs of repair works. The said Consultants assessed an approximate estimate of ₹84,39,980/- The brief summary of the report submitted by the said Consultant is as under:-

“i)        After inspecting (visually) the entire structure and non structure member of society building, the undersigned is of the opinion that the structural frame of the building is undergoing second degree of deterioration.  Some repairs are required to columns and beams, plumber work and patch plaster and painting.  It is felt that the owner should start the repair work with right earnest to avoid further deterioration of the structure.

ii)         Most of the members are facing the external leakage problem from their external facing walls (mainly from dead wall).   Most of the Members are facing internal leakage from upper floor W.C. bath and kitchen.  Various cracks like shear cracks, separation cracks, thermal expansion cracks and structural cracks are major defects in plaster; also in most of the place plumbing pipe’s joints are fail that is causing of external and internal leakages problem to the members.

iii)        Dry monsoon leakage patches were observed on ceilings in flats below the terrace below and the member below the terrace reported leakages from terrace during monsoon.  Monson leakage noticed on ceiling in balconies.”

25.       It is submitted by the learned Counsel for the Opposite Parties that the joint inspection of Gulab Building was carried out in the year 2011 after a long gap of construction of the Building in the year 2000 and the photographs have also been taken in the year 2011.  The defects in the building as noticed during the Joint Inspection are due to ill maintenance of the building by the Complainants and not on account of any deficiency in service on their part.  However, the said contention of the Opposite Parties does not hold any water as it is not disputed that immediately affect the construction of the Building in question, the complaints regarding major cracks on structure and stair case, major leakage and seepage into the Building Units from the outside walls of the whole of the Building and in the stair case loft, major seepage from sunken floors of toilets, leakage from plumbing shafts etc. were made by the Complainants. During the Defect Liability Period, the aforesaid complaints were rectified but the same still subsisted despite the repairs done by the Builder and due to the structural deficiencies the strength and condition of the Building had badly deteriorated just in a span of 10 years of the construction.

26.       For the aforesaid discussion, we do not find any illegality or perversity in the Impugned Oder passed by the State Commission.  Consequently, all the three Appeals filed by the Opposite Parties are dismissed leaving the parties to bear their respective costs.