1.       The present First Appeal (FA) has been filed by the Appellant against Respondent(s) as detailed above, under section 19 of Consumer Protection Act 1986, against the order dated 31.10.2019 of the State Consumer Disputes Redressal Commission, Odisha, Cuttack (hereinafter referred to as the ‘State Commission’), in Consumer Complaint (CC) no. 34/2014 inter alia praying to set aside the order passed by the State Commission; direct Respondents to pay Rs. 2,00,000/- to OP-1 towards mental agony;  direct Respondents to pay Rs. 2,00,000/- to OP-1 for litigation expenses

2.       The Appellant was OP-1, respondent-1 was Complainant, and the respondent-2 was OP-2 in the said CC/34/2014 before the State Commission. Notice was issued to the Respondents. Parties filed Written Arguments/ Synopsis on 12.08.2021 (Complainant/Respondent-1), 05.07.2021 (Respondent-2/OP-2) and 30.09.2021 (Appellant/OP-1) respectively.

3.       Brief facts of the case, as emerged from the FA, Order of the State Commission and other case records are that:-

The complainant applied for a C type dwelling house and deposited a booking cost of Rs.1,01,100/-. They received an allotment letter for a specific house unit and were directed to deposit Rs. 6,80,000/- for the 13th installment. The complainant took a loan of Rs. 21,40,000/- at an 8.5% annual interest rate from OP-2. A tri-party agreement was signed between the complainant and the two OPs, wherein OP-1 agreed to complete the house construction within 30 months, starting from October 2010. OP-1 allegedly failed to start construction, citing lack of available contractors. Subsequently, on 15.12.2011, OP-1 offered the complainant the option to either continue with the revised project or withdraw and receive a refund with interest. The complainant chose to continue with the scheme. Despite the agreement terms, OP-1 increased the house's cost arbitrarily from Rs.23,60,000/- to Rs.38,22,552/-, demanding                  Rs. 5,73,383/- for confirmation of the allotment. The complainant asserts that this cost escalation and the subsequent actions by OP- 1 constitute unfair trade practices and harassment.

4.       Vide Order dated 31.10.2019, the State Commission has allowed the complaint and directed OP-1 to provide a ‘C’ type flat in the vicinity or in any other project or in alternative to refund the entire amount of Rs. 27,07,167/-; to pay Rs. 35,00,000/- towards compensation and to pay Rs. 10,000/- towards litigation cost.

5.       Appellant has challenged the Order dated 31.10.2019 of the State Commission mainly on following grounds:

1. The State Commission did not correctly appreciate the facts and circumstances of the case and passed the judgment based on surmises, conjectures, and wrong assumptions. The case does not fall under the Consumer Protection Act, making the judgment untenable. The State Commission did not consider the status and the nature of the housing scheme  as the appellant/OP-1, being an autonomous body under the Ministry of Housing and Urban Affairs, which operates on a no-profit-no-loss basis.

2. The housing scheme was abandoned in 2011, and beneficiaries were given the option to opt out with a 5% interest; the State Commission failed to acknowledge this aspect. The intending allottees were informed about the option to withdraw from the scheme, subject to certain deductions. This option was exercised by some beneficiaries, and refunds were made.

3. The escalation in costs aligned with the price index and remained more restrained compared to market rates due to the non-profit nature of the organization. The complainant had explicitly chosen to continue with the revised scheme, thereby accepting the new terms and conditions. Despite repeated reminders, the complainant failed to make payments, leading to the cancellation of the allotment in accordance with the scheme's rules. The termination of membership ensued due to non-payment, following the stipulated 120-day period as outlined in the scheme rules. The revised rate was temporarily suspended pending the establishment of a committee to deliberate on the advantages and disadvantages of the revision.

4. The cost escalation in the project wasn't arbitrary but emerged from concerns voiced by beneficiaries. A committee was constituted to investigate these concerns, eventually recommending a revised cost estimate. The State Commission failed to properly consider crucial aspects, notably the committee's findings and suggestions, along with multiple notices sent to the complainant for payment, including equalization charges. The complainant's allotment faced cancellation due to non-payment, a decision unchallenged by the complainant. Subsequently, a draw of lots was conducted for other beneficiaries following the cancellation of the complainant's allotment. The refund due to the complainant encompasses the amount paid towards earnest money, application fees, and installments. The project's brochure had indicated the tentative nature of the mentioned cost, signalling the potential for revision under specified circumstances.

5. The organization functions under a "no profit, no loss, self-financing" model, aiming to offer affordable housing solutions to government employees or public servants. Detailed information was presented regarding the approval, division, and phasing of the housing project, including meeting dates and decisions concerning the project's progression. Delays, primarily caused by the contractor, impacted both the timeline and cost of the project. To mitigate this, the organization undertook measures, such as providing explanations and offering alternatives to beneficiaries affected by the delays. Despite these delays and increased costs, the complainant chose to continue as a beneficiary, having understood the circumstances. Claims of mental distress due to property handover delays are unfounded, as the organization acted based on expert advice and provided options in line with recommendations from the technical board.

6.       Heard counsels of both sides.  Contentions/pleas of the parties, on various issues raised in the FA, based on their FA/Reply, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

1. The counsel for Appellant/OP-1 argued that the project encountered difficulties and was abandoned in 2011; an offer was extended to allottees via a letter dated 15.12.2011. They were given the choice to opt out of the scheme or continue by paying 5% interest, calculated based on a fair price index. The cost per square foot escalated from Rs. 1712 to Rs. 2776, which, considering the nature and goals of the Appellant body, was deemed reasonable compared to market costs. The complainant consented on 19.12.2011 to continue with the revised cost and payment schedule, fully understanding the revised costs. Despite being aware of the revised costs and payment obligations, the complainant failed to make the monthly payments on time, despite receiving reminder notices. Eventually, their allotment was canceled due to non-payment and on 20.03.2014, beneficiaries were given another chance to opt out with a full refund, but the complainant chose to continue despite not fulfilling the payment obligations. A committee, comprising members from HUDCO, CPWD, and CGEWHO, reviewed the cost estimate for the project and recommended completion by June 16 and a cost of Rs. 2631 per sq. ft.

2. The subsequent actions involved several reminders and orders demanding payment of outstanding dues and equalization charges as per CGEWHO rules. Despite notifications and reminders, the complainant didn't make further payments, leading to the cancellation of their allotment on 09.03.2016, approved by the Competent Authority. Post-cancellation, the scheme's completion processes with other allottees were undertaken, excluding the complainant, as their allotment stood cancelled. Additionally, notices dated 06.04.2017 were issued for document submission, and refunds were processed to the complainant in line with CGEWHO Rules.

3. The counsel further contended that the State Commission didn't consider common cost increments in construction projects, which were also indicated as tentative in the project brochure. The OP-1 made efforts to minimize cost hikes after expert consultations and offered opt-out options that the complainant didn't exercise. Moreover, the OP-1's operations supposedly follow a no-profit-no-loss model and delays or cost increments don't benefit them. It's argued that the OP-1 kept allottees informed, sought their consent at relevant stages, which the complainant willingly provided. The complainant's failure to pay monthly installments, followed by raising issues before the State Commission and filing numerous cases, is a dubious intent to seek undue and unjustified compensation.

4. The counsel for Respondent-1/Complainant argued that the complainant purchased a flat with an agreement promising completion within 30 months, starting in October 2010. However, the project wasn't initiated until 2014, leading to increased costs, delayed completion, and subsequent mental distress for the Complainant. The Appellant/OP-1 exerted undue pressure by increasing rates and coercing the Complainant to agree to revised terms three times, significantly raising the originally advertised cost.  As a government employee, the Complainant took loans from various financial institutions, including LIC Housing Finance Limited (OP-2/Respondent-2), to purchase the flat. The failure of the OP-1 to deliver the promised dwelling unit caused severe financial strain.
5. The counsel further asserted that due to the OP-1's failure to provide the housing unit, the Complainant was compelled to purchase another house at a substantially higher cost, incurring mental agony and substantial financial damages. The OP-1 only partially fulfilled the State Commission's order, paying a portion of the compensation but failing to deliver the specified house or complete payment. Additionally, the OP-1 illegally increased the flat price, causing financial loss to the Complainant. Despite the ongoing dispute, the Complainant continued to pay installments and interest to LIC Housing Finance Ltd. (OP-2). The OP-1's filing of the present appeal is a move with wrongful intent, lacking transparency and possibly intending to evade responsibilities.

6. The counsel for OP-2/Respondent-2 argued that the present appeal before the National Commission stems from an Order dated 31.10.2019 by the State Commission, Odisha in which Appellant/OP-1 was directed to provide a 'C' type flat to the Respondent-1/Complainant in a specified project or in the vicinity of Bhubaneswar. In the absence of the specified flat, a refund of Rs. 27,07,167/- was to be provided to the Complainant along with compensation of Rs. 35,00,000/- and litigation costs of Rs. 10,000/-. The Respondent-2, a lending institution, provided a housing loan to the complainant against a flat allotted by the OP-1. The loan disbursements were made as per the Tripartite Agreement between the parties.

7. The counsel further asserted that the alleged delays and cost escalations led to a consumer complaint against the Appellant/OP-1, with Respondent-2 being a nominal party with no allegations or relief sought against them. The State Commission's order, challenged by the OP-1 in the present appeal, primarily concerns the relief directed against the Complainant, and not against Respondent-2. It's emphasized that the loan repayment by the complainant is up-to-date, with a remaining outstanding amount of Rs. 88,821.33/- and in light of these circumstances, the National Commission must dismiss the appeal concerning Respondent-2, as the primary grievances are related to the Complainant.

7.       We have carefully gone through the orders of the State Commission, other relevant records and rival contentions of the parties.  It was held by Hon’ble Supreme Court in Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and Ors. vs DLF Southern Homes Pvt. Ltd. & Ors. (2020) 16 SCC 512, “failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within the contractually stipulated period, amount to deficiency”. In Ireo Grace Realtech Pvt.Ltd. Vs. Abhishek Khanna & Anr. (2021) 3 SCC 241, Hon’ble Supreme Court held that “allottees who have not been given possession, cannot be made to wait indefinitely for possession, nor they can be bound to take possession in other phase of the project. Such allottees are entitled to refund of entire amount deposited by them”. In Wg. Cdr. Arifur Rahman Khan (Supra), the Hon’ble Supreme Court observed “The word "Compensation" is of a very vide connotation. It may constitute actual loss or expected loss and may extend to compensation for physical, mental or even emotional suffering, insult or injury or loss. The provisions of CPA enable a consumer to claim and empower the commission to redress any injustice done”. 

8.       As in this case, State Commission has given refund direction in the alternative, along with compensation of Rs.35.00 lacs, we endorse the order of the State Commission with respect to the refund of the entire principal amount paid by complainant/ respondent.  However, we are of the considered view that  interest of justice will be served if the compensation is paid to the complainant / respondent in the form of interest @ 9% p.a. w.e.f. date of each deposit till the date of refund.  In addition, the complainant / respondent will be entitled to litigation cost of Rs.25,000/- ( including Rs.10,000/- awarded by the State Commission).  Accordingly, we modify the order of the State Commission to this extent and direct OP-1/Petitioner herein to refund the entire principal amount paid by the complainant / respondent herein alongwith interest @ 9% p.a. from the date of each deposit till the date of refund, alongwith litigation cost of Rs.25,000/-, within 30 days of this order, failing which it shall carry interest @ 12% p.a.

9.       The pending IAs in the case, if any, also stand disposed off.