BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION AT BANGALORE (URBAN)

DATED 18^th DAY OF MARCH 2022

ORDER

SRI.K.S.BILAGI, PRESIDENT

        1. The joint complaint has been filed by husband and wife against the OPs to direct the OPs to refund Rs.20,00,000/- advance amount along with interest at 18% p.a. and award Rs.10,00,000/- as a compensation for causing mental trauma, hardship and incidental loss.         

2. The case set up by the complainantd in brief is as under:-

The complainants being husband and wife entered into an agreement of sale and construction agreement for a total cost of schedule property Rs.82,39,922/- with the OPs and paid Rs.20,00,000/-.  The OPs promised to deliver the possession of schedule property on 31.12.2019 with 12 months grace period i.e. on or before 31.12.2020.  But, OPs failed to deliver habitable possession of the property on or before 31.12.2020.

3. The complainants by issuing legal notice dated 18.09.2020 called upon the OPs to complete the construction as promised or refund the amount.  But, OP No.1 tendered an untenable reply dated 24.11.2020.  The OPs have caused deficiency of service and put the complainants under mental tension and hardship. Therefore, OPs are liable to pay compensation of Rs.10,00,000/-.

4. In response to the notice, the OPs appear and file version. They admit two agreements and receipt of Rs.20,00,000/-.  But, construction was not completed due to heavy rainfall, sand supplier strike, demonetization, implementation of GST, Covid-19 Pandemic, non-payment of dues by all and non-availability of raw materials and labour force.  The OPs have not intentionally committed delay in completion of the project.

5. The complainants make out a case for deficiency of service.  In fact, the OP No.1 got registered under the provisions of Real Estate (Regulation and Development) Act, and obtained certificate getting extension till 29.09.2021.

6. As per Section 4(2)(l)(D) of Real Estate (Regulation and Development Act, 2016), the OP No.1 was supposed to give declaration, open bank account and deposit the amount received from the proposer allottees in the bank. They request to dismiss the complaint.

7. The complainants filed affidavit evidence of complainant No.1 and relies on five documents.  The authorized signatures of OPs filed the affidavit evidence and relies on 5 documents. Heard the advocate for both sides and perused the written arguments.

8. The following points arise for our consideration:-

1. Whether the complainants prove the deficiency of service on the part of OPs?
2. Whether the complainants are entitled to relief mentioned in the complaint?
3. What order?

9. Our answers to the above points are as under:

       Point No.1:  In the affirmative.

      Point No.2:- partly in the affirmative.

      Point No.3: As per final orders

REASONS

10. Point Nos.1 and 2:  Even though, OPs have contested the claim of the complainants by filing affidavit evidence in support of their version.  But, certain facts are not in dispute.  It is relevant to refer the admitted facts.  The OP No.1 and complainants have entered into agreement for construction as per Ex.A.1 admitting the cost of construction at Rs.40,04,000/-.  The payment of Rs.1,00,000/-, Rs.2,00,000/- and Rs.8,00,000/- is proved from the three receipts produced under Ex.A.3.  It is the definite case of the complainants that they have paid Rs.20,00,000/- to the OPs.  The OPs have not disputed this fact.  The complainants have specifically stated that they have paid Rs.20,00,000/- to the OPs.  When this fact is not disputed/denied by the OPs, it can be easily held that the complainants have paid Rs.20,00,000/- as an advance to the OPs.
11. By issuing legal notice dated 18.09.2020 as per Ex.A.4, the complainants called upon the OPs to refund Rs.20,00,000/- with interest at 12% p.a. and compensation of Rs.10,00,000/-.  The OPs have issued reply as per Ex.A.5 stating that the OPs have tried to convince the complainants to shift to another block, where the construction is at advance stage.  Even though, OPs taken such a plea, but they have not produced any documents to prove this contention.
12. The OPs have rely on 5 documents.  Ex.R.1 is the certificate under Section 65(B) of Indian Evidence Act.  Ex.R.2 is the agreement of sale between OP and Gokul Schedules Pvt. Ltd., who are owners of the land. Ex.R.3 is the agreement of construction between OPs and the complainants who agreed for total cost of construction of Rs.40,04,000/-.
13. The OP No.1 got registered its institution under the provision of RERA Act, Karnataka and obtained certificate as per the Ex.R.4.  This registration certificate was in force for 9 months and that was valid till 29.09.2021.  Ex.R.5 is the photo of half built apartments.  The OPs have not produced any document to show that how much time was required to complete the project.  The OPs have taken the plea that they could not complete the project due to heavy rainfall, sand supplier strike, demonetization, implementation of GST, Covid-19 Pandemic, non-payment of dues by all and non-availability of raw materials and labour force.  Even though, representatives of OPs have reiterated these facts in his affidavit evidence.  It is admitted fact that the OPs agreed to deliver the possession of the flat on 31.12.2019 with 12 months grace period on or before 31.12.2020.  Demonetization came into effect in the month of November, 2016.  The OPs had sufficient time of three years in completion of project.  The theory of demonetization cannot be accepted.  Except vague say of OPs, there is nothing on record to show that there was shortage of raw material, labour force, heavy rain fall, sand supplier strike, implementation of GST. It is relevant to note that, the Covid-19 pandemic effect started in the month of March, 2020.  But, immediately, the OPs have not intimated the complainants that they could complete the project due to the reasons mentioned in para 14 of the version.  The OPs never called upon the complainants to extend time for completion of project.  The OPs have taken such untenable contention only to avoid refund of amount.
14. The advocate for the OPs place the reliance on the following judgements:-

1.Bangalore Development Authority Vs. Syndicate Bank – AIR 2007 SC 2198.

2.Ravneet Singh Bagga Vs. KLM Royal Dutch Airlines – (2000) I SCC 66.

3.Alva Aluminium Ltd. Vs. Gabriel India Ltd., - (2011) I SCC 167.

4.Bharati Knitting Co. Vs. DHL Worldwide Express Courier Division of Airfrieght Ltd., - AIR 1996 SC 2508.

5.Secretary, Bhubaneshwar Development Authority Vs. Susanta Kumar Mishra (2009) 4 SCC 684.

15. The advocate for Ops vehemently argues that the Ops had no intention to delay in completing the project and there is no deficiency of service. 
16. We carefully perused the above documents. The terms of agreement are binding on both the parties.  The complainants have specifically pleaded and proved that the OPs failed to comply the terms of agreement.  It is true that except payment of Rs.20,00,000/-, the complainants never paid the balance amount as per the agreement.  But, the OPs never called upon the complainants showing that they completed the each stage and called upon the complainants to pay the amount as per agreed terms.  The silence on the part of the OPs clearly indicates that there is a deficiency of service. 
17. The OPs have also referred Section 4(2)(l)(D) of Real Estate (Regulation and Development) Act, 2016 which read thus:-

4(2) – The Promoter shall enclose the following documents along with the application referred to in sub-section (1), namely:

(l) a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorized by the promoter, stating –

(D) That seventy percent of the amounts realized for the real estate project from the allotees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose.

Provided that the promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project.

Provided further that the amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project:

Provided also that the promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilized for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project.

18. The OPs while referring this provision in para 32 of their version as well as in the affidavit that they have to open bank account and keep 75% of the collected amount in separate account maintained in the schedule bank to cover the cost of construction.  When the OPs referred this provision, but they have not produced any document to show that they complied Section 4(2)(l)(D) of Real Estate (Regulation and Development) Act, 2016 that they have maintained separate account in schedule bank to cover the cost of construction.  It means, the OPs have taken such plea without compliance.  This non-comply such provisions itself indicate OPs have not complied any of the provision of Real Estate (Regulation and Development) Act, 2016.  This is also one of the situation to show OPs have committed deficiency in service.
19. It is also relevant to refer Section 18 of Real Estate (Regulation and Development) Act, 2016 which read thus:-

18 – (1) If the promoter fails to complete or is unable to give possession of an apartment, plot or building, return of amount and compensation.

20. As per the above provision, if the promoter fails to complete or unable to give possession of apartment flat or building in accordance with terms of agreement or due to discontinuation of its business or continuous of business, they shall be liable to demand to the allottees, in case withdraw from the project.  Except production of the photo of building, they are not demonetization to show their seniority in completion of the project within stipulated time.  As per the terms of agreement of construction and admitted by both the site, the project was supposed to completed by 31.12.2019 and in the rarest rare case 31.12.2020.  Even presuming for the sake of arguments, the OPs were not in a position to complete the project within stipulated time for want of raw material, labour problems, GST problem, demonetization, Covid-19 and other things.  But, if any point of time before 31.12.2020, the OPs never requested the complainants to extend time frame for completion of project and execution of regular sale deed.  Apart from this, the OPs have never demanded the complainants to pay balance installment amount.  As per the schedule B construction agreement in 10 installments, the 100% payment shall be made.  As per the schedule B, complainants were liable to pay the installments.  But, the OPs neither demanded the payment of agreed installments nor made a request to the complainants for extension of time. This silence on the part of OPs amounts to deficiency of service.  Therefore, none of the decisions relied on by the counsel for the OPs are applicable and they will not help to the OPs.
21. When the payment of Rs.20,00,000/- is proved when non-completion of project within stipulated time and subsequent to the stipulated time is not established, the complainants are asking refund of Rs.20,00,000/-.  Therefore, OPs are liable to refund Rs.20,00,000/- to the complainants.
22. The complainants have paid Rs.20,00,000/- to the OPs on 15.09.2016 and even though, complainants have produced only 3 receipts.  When the payment of Rs.20,00,000/- is proved, the OPs are liable to refund this amount.
23. The complainants claim Rs.10,00,000/- as a compensation.  Whenever a person wants relief of compensation, they must clear and proof how much compensation is entitled.  The complainants have not laid any foundation to claim of Rs.10,00,000/- as compensation. Under such circumstances, it is proper to award compensation of Rs.2,00,000/- to the complainants.  It means that OPs are liable to pay compensation of Rs.2,00,000/-.  The complainants claim interest at 18% p.a.  But, they have not specifically pleaded or prayed that they are entitled to interest at 18% p.a. from what date.  Whereas as per Ex.A.5 legal notice dated 18.09.2020, the complainants claim interest at 12% p.a., when we are awarding Rs.2,00,000/- as compensation, it is not proper to award interest in addition to compensation.  However, it is necessary to put condition on the OPs for compliance of our direction and even OPs failed to comply, then it is proper to award interest.  Under such circumstances, it is proper to award interest at 8% p.a. on Rs.20,00,000/- from the date of non-compliance. 
24. Point No.3:-Having regard to the discussion made in the preceding paragraph, the complaint requires to be allowed in part.  The OPs are liable to refund Rs.20,00,000/- with compensation of Rs.2,00,000/- and Rs.15,000/- towards cost of litigation to the complainants.  We proceed to pass the following 

  O R D E R

1. The complaint is allowed in part.
2. The OPs shall refund Rs.20,00,000/- with compensation of Rs.2,00,000/- and Rs.15,000/- towards cost of litigation to the complainants.
3. The OPs shall comply this order within 60 days from this date, failing which the OPs shall pay 8% interest p.a. on Rs.20,00,000/- after expiry of 60 days till realization.  
4. Furnish the copy of this order to both the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open Commission on this 18^th day of March, 2022)

Documents produced by the Complainant which are as follows:-