Tamil Nadu

StateCommission

CC/32/2011

ARUN PANEERSELVAM AND ANANDHI BALACHANDRAN - Complainant(s)

Versus

MANTRI DEVELOPERS PVT. LTD., MANAGING DIRECTOR - Opp.Party(s)

V. BALAJI

29 Jun 2022

ORDER

IN THE TAMIL NADU STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI.

 

Present: Hon’bleThiru Justice R.SUBBIAH ... PRESIDENT

     Thiru.R.VENKATESAPERUMAL … MEMBER

 

C.C. No.32 of 2011

                                                    

                               Orders pronounced on: 29.06.2022

 

1. Mr. ArunPaneerselvam,

 

2. Mrs. AnandhiBalachandran,

 

   Both residing at:

No.50 L, Mettu Street,

Babu Khan Square,

Kancheepuram.      

Duly represented by their Power of Attorney

V. Paneerselvam.                                     … Complainant

 

vs.

 

1.M/s.Mantri Developers Pvt. Ltd.,

Old Mahabalipuram Road,

Next to Hindustan College of Engineering,

Padur, Chennai,

rep. by its Managing Director.

 

2.HDFC Ltd.,

No.760, Anna Salai,

Chennai - 600 002,

rep. by its Manager.

(amended as per order in MP

No.222/13, dated 13.03.2014).                    ... Opp. Parties

 

 

             For Complainant      :  M/s.S.Umapathy

             For OP No.1             :  M/s.Sarvabhauman Associates

             For OP No.2             :  M/s.Sampathkumar Associates

This Complaint came up for final hearing on 07.06.2022 and, after hearing the arguments of the counsels for the parties and perusing the materials on record and having stood over for consideration till this day, this Commission passes the following:-

 

O R D E R

 

R.Subbiah, J. – President.

 

             Alleging deficiency in service and unfair trade practice against the Opposite Parties/Developer and Bank respectively, the complainant has filed this case, seeking to direct -

             i) the 1st OP to refund Rs.6,79,544/- with 18% interest per annum to the complainant from 15.11.2007,

             ii) the 2nd OP to recall the loan amount of Rs.54,92,700/- from the 1st OP and consequently, direct the 2nd OP to issue No Due Certificate;

             iii) the OPs to pay Rs.3,00,000/- as compensation for mental agony, deficiency in service and indulging in unfair trade practice; and

             iv) the OPs to pay a sum of Rs.25,000/- towards the costs of the complaint.

            

             2. In brief, the case of the complainant, as projected in the Complaint, is as follows:-    

             The complainant herein approached the 1st OP/Realtor, who made wide publicity in Papers about their construction project called Mantri Synergy,  to purchase a Flat and booked Flat No.405, 4th Floor, G Block, with 1550 sq. ft. built up area.  A Construction Agreement was executed between the complainant and the 1st OP on 15.11.2007. Apart from that, they also entered into an Agreement for Sale which was also executed on the same date. Under clause 6.1 of the Construction Agreement, the 1st OP undertook to hand over possession subject to receiving occupancy certificate from statutory authorities.  Since the 2nd OP was willing to grant housing loan to the complainant, a Tripartite Agreement was entered amongst the complainant and the OPs during January, 2008.   As per clause-e of the said agreement read with clause-18 of the Construction Agreement read with clause-12.8 of the Sale Agreement, the complainant has got no right to terminate the agreements. Total cost of the construction being Rs.67,97,447/-, the complainant paid the pre-EMI sum of Rs.6,79,544/- to the 1st OP and receipt of the said amount was acknowledged by the said OP in the sale agreement itself. The balance sum of Rs.61,15,000/- was financed by the 2nd OP.  As per Annexure-B1 of the Construction Agreement, the 1st OP agreed to hand over possession during December, 2009.  The 2nd OP/Bank was also willing to disburse the loan to the extent of Rs.61,15,000/- to the 1st OP directly on the account of the complainant.  Thus, the 1st OP has received substantial payment as per the Sale and Construction agreements. Only a paltry balance was pending on the side of the complainant and that too was to be paid only at the time of handing over possession of the flat.  Thus, the complainant has performed his part of the obligation under the agreement. 

             While so, on 19.02.2011, the complainant received a communication from the 1st OP that the flat booked by the complainant has reached the completion stage and is ready for possession.  Thereupon, he visited the flat only to observe that the project and flats were not complete in all aspects and there was complete absence of common amenities, apart from several defects in the individual flat.  Though the 1st OP undertook to hand over possession of the flat during December 2009, there was a delay of 1 year 5 months in offering possession.  Completion Certificate by the CMDA is mandatory for multi-storied buildings before occupation.  In the event of deviation, there is always a threat of demolition.  Only after the 1st OP getting completion and occupancy certificates, the complaint canenjoy the statutory benefits. The CMDA usually issue the completion certificate only on completion of the entire project as per the sanctioned plan.  The complainants state that the suit property absolutely belongs to one Gurusamy Nadar.  After his death the property was partitioned among the male legal heirs excluding female legal heirs.  Hence, the suit property doesn’t have marketable title.  The Revenue Department has taken action under the Land Encroachment Act.  Civil suit is pending in respect of the suit property.  All the title deeds relating to Mrs. Varalakshmi is found missing which is suspicious. The 1st OP is pressurizing the complainant to take paper possession without providing the basic amenities.  As the Flat is not fit for possession, the 1st OP is under a legal obligation to get back the flat with undivided share of the land from the complainant, who is always willing to execute re-conveyance deed for the undivided share of land to the 1st OP. By virtue of clause-e in the Tripartite Agreement and clause18 of the Construction Agreement and clause-12.8 of the Sale Agreement, the complainant lost the right of termination.  Those clauses are heavily loaded in favour of the builder and against the purchaser; as such, it clearly amounts to unfair trade practice within the meaning of the CP Act.  The project loan was sanctioned by the Punjab National Bank and thus, they  have got right over the entire properties constructed by the 1st OP.  That being so, the 2nd OP, who released the housing loan, before sanctioning the loan, should have directed the 1st OP to discharge the mortgage over the property.  The 2nd OP, before granting the loan, ought to have informed the complainant about the legal consequences arising from the above mortgage. Failure in that regard amounts to deficiency in service on the part of the 2nd OP.  By the above acts of both the OPs, the complainant is subjected to much pain and suffering.  Hence, the present Complaint for the reliefs as aforementioned.

             3. The 1st OP resisted the Complaint by filing a Written Version, wherein, among other things, it is stated thus:-

             The complainant, being an educated person, has entered into the Agreements with them and having signed on the dotted lines, he cannot renege from the contract.  The 1st OP is a reputed company engaged in the business of realty for over a decade and their hallmark is the values of punctuality, quality, reliability, speed and transparency.   This OP had announced a special credit scheme to prospective purchasers, who proposed to avail housing loans, and as per the said scheme, the interest amount on the home loan availed by the purchasers from banks/financial institutions of their choice would be paid by this OP for the first two years or till the date of possession is announced.  Payment of this pre-EMI interest was to be treated as a discount on the saleprice.  The purchasers were only required to pay the EMI from the date on which possession was handed over to them.  This scheme was offered to those purchasers, who had decided to fund their purchase through home loans.

             The complainant herein had responded to their invitation to purchase a 1550 sq. ft. flat in the 4th floor of the G Block at Phase-I of the proposed construction project 'Mantri Synergy'.  The complainant had decided to avail housing loan from the 2nd OP and, in keeping up the promise for special credit scheme, this OP had entered into the tripartite agreement on 27.11.2007 with the complainant and the 2nd OP in respect of the proposed loan of the complainant.  Having regard to the fact that the pre-EMI interest was being paid by this OP, it was clearly understood by the parties that the complainant would not cancel the contract. On 15.12.2008, the undivided share of the land measuring 568.48 sq.ft. was sold to the complainant under a registered sale deed bearing Document No.8900/08 on the file of the SRO, Tiruporur. In the interregnum, there was a slide in the real estate market as a result of which this OP's project was also affected, whereupon, they had to re-work the cost of the building by bringing down the price and, in order to woo customers, they introduced further facilities in addition to the ones already provided.  It was made clear that it would not be possible to reduce the price further in respect of the flats that were already sold out particularly when this OP had commenced the payment of pre-EMI interest.  The complainant and few other purchasers issued a legal notice, inter alia, alleging that the housing loan stood in the name of the customer and that the purchasers were not consulted when the price was slashed, and demanded that this OP should accept their option to exit from the Project and to repay the amounts due to them in accordance with their account together with interest @ 18% p.a.  This OP responded to the above notice through a reply, stating that the entire transaction proceeded in a proper perspective.  During January & February, 2011, this OP informed the purchasers including the complainant that they could take possession of their respective apartments.  On receiving the said information, the purchasers issued another notice, dated 28.02.2011, making more demands which indicated that they were not willing to take over the payment of the EMI & interest and that they were searching for excuses only to renege from the contract.  The OP sent a detailed reply, dated 28.04.2011, and, without even waiting for the said reply, the complainant has rushed to this Commission. The allegation that the flat allotted to the complainant is uninhabitable is absolutely false and a perusal of the photographs submitted by the OP would prove the falsity of the allegation.  The tripartite agreement is in the nature of a Bank Guarantee whereby the 2nd OP/Bank has paid the sale consideration to this OP on behalf of the complainant and, with the execution of the sale deed in favour of the complainant, the contract is deemed to be complete.  The project covering two phases called Synergy-I & II are fully complete.  Over 260 purchasers have taken possession of their respective flats in both phases and 70 families have started living there.  The Club House, Swimming Pool, etc. are all functional.   Without prejudice to their contentions, the OP states that, in line with clause 14.5 of the construction Agreement, they are willing to pay a sum of Rs.3/- per sq. ft. of saleable area per month, from December 2009 to February, 2011 for the delay in handing over possession.   There being no scope to allege any service deficiency against the 1st OP, the complaint is liable to be dismissed with exemplary costs. 

 

             4.  In their written version filed, the 2nd OP/Bank inter alia states that the complainant is bound by the construction agreement, dated 15.11.2007. The undivided share of the land, having been registered in favour of the complainant as early as on 15.12.2008, the contract has been partly performed; hence, the complainant cannot now go back from it.  The complainant has admitted in his averments that the balance amount of Rs.61,15,000/- was financed by this OP; as such, he is bound to re-pay the same.  If at all he is aggrieved by any act or omission of the 1st OP, it is for him to deal with the 1st OP and, for that, he cannot stop payment of the EMI.  As a prudent purchaser, he ought to have verified the documents before signing the agreements with the 1st OP and even if his contentions are to be accepted, this OP cannot be blamed.  It is meaningless to state that the property can be taken possession only after issuance of occupancy certificate from the statutory authorities and that the completion certificate is mandatory. Similarly, there is nothing known as paper possession and when key for the flat is handed over, it amounts to delivery of possession. None of the wordings and clauses in the agreement for construction is against law/Consumer Protection Act.  For any grievance over the alleged delay, the complainant can very well seek for damages as per the contract. 

5.  The borrowing being admitted by the complainant, interest needs to be paid for the amount borrowed.  The complainant had not been paid pre EMI interest for the last 7 months and the account has become a Non performing asset (NPA).  This opposite party has in fact initiated legal proceedings under the SARFAESI Act because of the default committed by the complainant. Thus, this opposite party is no way connected with the construction activity and as such the 2^nd opposite party cannot be put to hardship for no fault of their.  Therefore, the Complaint is liable to be dismissed with costs.

            

             6. To substantiate the claim made by him, the complainant has filed proof affidavit and marked 7 documents as Exs.A1 to A7.  On the side of OPs, separate proof affidavits have been filed but no document was filed on the side of the 1^st OP and on the side of the 2^nd OP 2 documents as Ex.B1 & Ex.B2 has been marked as his evidence.

 

             7. Learned counsel for the complainant, at the outset, refers to clause-6.1 of the Construction Agreement, dated 15.11.2007, marked as Ex.A1 to point out that, in the said clause, the 1^st OP undertook to hand over possession of the Apartment as mentioned in the Annexure subject to receiving occupancy certificate from statutory authorities.  According to the learned counsel, in the event of any deviation in the construction, there would be a risk of facing demolition and that is why, in terms of the above clause, the complainant was throughout insisting the 1st OP to get completion/occupancy certificates but in vain.  Failure in this regard on the part of the OP is a clear service deficiency.  Further, in Annexure-B1 under Ex.A1, the OP has clearly specified the date of possession as 'December-2009', whereas, the Possession Offer Letter dated 19.02.2011, emanated from the OP spells out that, only then, the flat booked by the complainant has reached the completion stage.  According to the learned counsel, thus, the 1st OP failed to complete the construction within the time-frame fixed by them in the construction agreement as December, 2009, and at the time of filing the complaint, there was a delay of 1 Year and 5 Months.  Even in the possession letter without pointedly mentioning that the construction has been completed, it is bluntly stated that it reached the completion stage.   Learned counsel adds that a combined reading of possession letter and  Ex.A1 would go to show that, at no stage, the OP has acted as per the contract, in that, they never followed up properly with the statutory authorities in procuring the clearance certificates and further, they miserably failed in completing the construction within the fixed time-limit.  According to the learned counsel, the inordinate delay in completing the construction of the Flat that still lacks amenities and has multiple defects would legally entail the complainant to exit from the contract and to get back the amount deposited with the OP along with interest @ 18% p.a..  Due to the total failure on the part of the 1st OP both in timely delivering possession of the flat with all amenities and also in getting clearance certificates from the statutory authorities, service deficiency is rampant that would dilute the one-sided clauses in the agreements to the effect that the complainant cannot terminate the contract.  By referring to clause 11.1 in the Sale Agreement under Ex.A2, dated 15.11.2007, in particular the text that runs to the effect that the Developer has taken Project loan for the Construction of the Scheme by creating security on the schedule property from Punjab National Bank, learned counsel states that Punjab National Bank, having released the project loan to the 1st OP, has got right over the entire properties constructed by the 1st OP; while so, the 2nd OP, which sanctioned/released the housing loan, before doing so, ought to have directed the 1st OP to discharge the mortgage over the project property and similarly, it should have apprised the purchasers like the complainant about the legal consequences that would arise from the mortgage in existence between the developer/1st OP and the Punjab National Bank.  Failure in that regard on the part of the Bank/2nd OP is a clear act of service deficiency, for which, they are liable under the consumer law. In the given scenario, in all fairness, the 2nd OP ought to have recalled the loan amount of Rs.54,92,700/- from the 1st OP and consequently issued No Due Certificate in favour of the complainant.  Learned counsel has cited a Master Circular, dated 01.07.2010, on Housing Finance, issued by the RBI and read out clause-12(1)(A)(iii) thereof, that says an Architect appointed by the bank must also certify at various stages of construction of building that the construction of the building is strictly as per sanctioned plan and shall also certify at a particular point of time that the completion certificate of the building issued by the competent authority has been obtained. While so, in the present instance, the 2nd OP/Bank neither followed up the stages of construction nor availed the services of an Architect to certify the above aspects.  Further, as per the circulars and guidelines issued from time to time by the RBI, a clear advice is given to the Banks that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing projects/houses and upfront disbursals should not be made in cases of incomplete/under construction/green field housing projects.  But, in the present case, a single disbursal was done without even verifying the stages of construction that would clearly depict the great degree of service deficiency on the part of the 2nd OP/bank. Further, as per Clause-6(f) of the Tripartite Agreement under Ex.A3, in the event of the borrower cancelling the allotment, the developer undertakes to refund the entire amount to the 2nd OP directly.  Learned counsel states that this sort of clause was considered by the National Commission in the Orders passed in F.A. No.327 of 2012, wherein, it was observed that, in the event of cancellation of allotment on the borrower by the Developer for any reason whatsoever the developer shall refund to SBI only. Since the present Tripartite Agreement also is similarly worded, there cannot be any objection for grant of suitable relief in that regard.  According to the learned counsel, since orders were issued by the National Commission under similar circumstances directing the developer to pay the entire loan amount disbursed along with the rate of interest as mentioned in the Tripartite Agreement to the financial institution, this Commission may also grant such relief.  Inasmuch as the complainant has made out a clear case of service deficiency and unfair trade practice against both the OPs, the other reliefs sought for may be granted along with costs, he pleaded ultimately.

 

             8. Countering the above submissions, learned counsel for the 1st OP/Developer at the outset states that absolutely no case of service deficiency or unfair trade practice has been made out by the complainant as against the 1st OP.  Though it is a rudimentary principle that the burden of proof always lies upon the person who makes allegations against the opponent, here, the complainant obviously failed to prove the allegations levelled by him in the manner known to law.  No doubt, as per the agreement of sale, possession has to be handed over by December, 2009. After the project was taken up, in the interregnum, there was a slide in the real estate market  that adversely affected various housing projects all over the City and the 1st OP was not an exception to such phenomenon that impelled them to re-work the cost of the building by slashing the price and further, in order to woo the customers, they introduced further facilities in addition to the ones previously provided. As soon as the prices crashed, the complainant no longer found the project economically attractive and came up with a demand to reduce the price of his apartment.  Such demand was negatived by clearly stating that it would not be feasible to reduce the price of the sold out flat for the reason that the 1st OP had already commenced the payment of pre-EMI interest.  Even if there was any delay, as per clause-14.5 of the Construction Agreement, he is entitled to a compensation of Rs.3/- per sq. ft. of saleable area per month and not beyond that. At any rate, he is not entitled for refund of the amount.  Learned counsel states that, even today, they are ready to hand over possession of the Flat and also prepared to pay compensation to the complainant for the period of delay at the rate of Rs.3/- per sq. ft. as provided in the abovementioned clause.  Regarding the case laws relied upon by the complainant's side, it is replied that those rulings are distinguishable on facts; for, in those instances, admittedly, the developers either chose not to commence the project or abandoned it, but here, the 1st OP has completed the construction and also duly informed the complainant on 19.02.2011, calling upon him to take possession of his apartment.  Therefore, the question of re-paying the entire loan amount does not arise in this case. The 1st OP neither committed any service deficiency nor indulged in any unfair trade practice and all of their acts are within the framework of the contracts and agreements and hence, the present complaint filed with ulterior motives may have to be dismissed at the threshold, he  argued.

 

             9. Learned counsel for the 2nd OP, by straight away drawing our attention to clause-5 of the Tripartite Agreement under Ex.A3 that states 'Whereas Developer has offered a specific scheme of front ended payment to Borrower & Borrower opted for front ended payment scheme and have requested HDFC to release sanctioned loan. Whereas the execution, registration and taking delivery of the registered sale deed for being submitted to HDFC involve considerable amount of time, as such the Borrower and Developer have requested HDFC to release the sanctioned loan.', submits that disbursement of entire loan amount by the 2nd OP at one stroke to the Developer was thus done only afterthe request made by none else than the Borrowers like the complainant and the said aspect is clearly reflected in the Tripartite Agreement. The Developer/1st OP has also agreed to pay the pre-EMI Interest till handing over  possession of the Flat.   In that line, the Developer had also paid the pre-EMI interest upto March, 2011, for which, the 2^nd OP has filed a Memo, dated 25.01.2022, with the statement of account reflecting the payments made.  As per the Tripartite Agreement, the borrowers like the complainant are bound to pay the further EMIs from the date of handing over possession which the complainant failed to do because of which his loan account had turned into NPA.  The reason stated by the complainant for non-payment of EMI that it was due to the delay in handing over possession of the flat by the Developer runs against the Tripartite Agreement which specifies under clause-k and clause-m that the borrower is fully aware of the fact that there could be chances of delay in getting possession of the apartment notwithstanding the schedule given by the Developer and no such instance will affect the repayment of monthly installments by borrower to HDFC from time to time and performance of covenants as agreed and signed by the borrower with HDFC.   As regards mortgage of the project property with Punjab National Bank, learned counsel states that it is not a hidden transaction as sought to be projected by the complainant, rather, the said factum is incorporated in Clause-III (c) of the sale deed, dated 15.12.2008, executed by the 1st OP in favour of the complainant, to the effect that the Developer assures that it shall discharge all the loans including the one availed from Punjab National Bank before completion of the project.  Further, as per the said assurance, the Developer discharged the mortgage loan and to that effect, the Punjab National Bank also  issued a Certificate under Ex.B1, dated 23.02.2011.  As such, the allegation of the complainant that the title to the property is not clear and that the 2nd OP overlooked such flaw in the title while sanctioning the housing loan is absolutely false and imaginary.  In fact, only after obtaining legal opinion and being satisfied with the title of the property, the 2nd OP released the loan.  The 1st OP completed the project and the apartments were ready for possession as early as in February 2011 and further, the builder was paying the pre-EMI interest  to the 2nd OP until March, 2011, as per the terms and conditions of the agreement.   While so, for the delay in handing over possession, the complainant has to work out his remedy independently by filing appropriate suit against the Developer.  Since the complainant is obliged to pay the future EMIs to the 2nd OP as agreed by them in the Tripartite Agreement as well as the Home Loan Agreement independently with the 2nd OP, he cannot maintain any valid claim against this OP.  So submitting, learned counsel seeks for dismissal of the Complaint.

 

             10. In the light of the rival submissions advanced, the following issues arise for consideration:-

                i) Whether the complainant has made out a case for cancellation of the Flat booked by him and for consequently directing the developer/1st OP to refund a sum of Rs.6,79,544/- that was deposited by the complainant with the 1st OP at the time of entering into the contract?

                ii) Whether the contention of the complainant that,  despite mortgage of the project property with the Punjab National Bank and without verifying the stage of construction, release of the housing loan at one stroke by the 2nd OP/Bank in favour of the Developer/1st OP is an act of service deficiency, is factually sustainable so as to direct the 2nd OP/Bank to recall the loan amount from the 1st OP and to issue a No Due Certificate in favour of the complainant?

                iii) Whether the complainant is entitled for a compensation of Rs.3 lakh for the failure of the OPs in properly apprising him of the legal consequences arising from the mortgage entered into with Punjab National Bank by the 1st OP for the Project?

 

             11. Coming to the first issue, at the outset, it would be of relevance to quote below clause-6.1 of the Construction Agreement under Ex.A1:-

                     " ... The developer shall hand over the possession of the Apartment as mentioned in Annexure subject to receiving Occupancy Certificate from statutory authorities and subject to receipt of all the payments and the limitations ..."

The Annexure referred to in the above clause mentions the 'Date of Possession" as 'December 2009".  Therefore, as per the agreed terms between the parties, the 1st OP shall hand over the flat anytime during December, 2009.   But, admittedly, the said term was not complied with by the 1st OP.   On 19.02.2011, the 1st OP informed the complainant that the flat booked by him had then reached the completion stage and is ready for possession.  It is the grievance of the complainant that even at that belated point of time, the construction was not complete in all aspects, for, the 1st OP himself had stated therein that the flat was nearing completion stage.  It is the defence of the 1st OP that, while the project work was taken up as per schedule and it was at progress, in the interregnum, there was a slide in the real estate market that affected almost all projects without any exception and thus, the delay had occurred, for which, they are willing to pay a sum of Rs.3/- per sq. ft. of saleable area per month covering the period of delay. But, in our opinion, such a clause in the construction agreement seems to be totally unjust in nature.  When the Developer failed to comply with the contractual obligation to deliver the flat within the contractually stipulated period, the same would amount to service deficiency and, by taking shelter under the above clause which is random in nature, he cannot escape from the liability.   Further, the wordings in the possession letter suggested that the flat was not complete in all aspects since it  also states that the flat booked by the complainant has then reached completion stage.  It seems, coupled with the delay of more than one year, there is also failure on the part of 1st OP in getting necessary clearance certificates from various statutory authorities that has ultimately driven the complainant to think of exiting the contract. In our view, having extended special discount in the form of bearing the pre-EMI interest, only if they had  duly complied with their part of contractual obligations on the core aspects of prompt delivery of possession with all promised amenities, getting clearance certificates from the authorities, etc., the Developer shall have a lawful right to seek advantage/shelter under the clauses that prevent the complainant/purchaser from terminating the agreement.  Since the Developer failed to perform the core aspects of the contract that amounts to service deficiency, jeopardizing the interests of the complainant,  the latter has every right to cancel the contract and he is entitled  for refund of the deposit made with the 1st OP towards part payment of the sale consideration, of course, he is equally required thereupon to re-convey the undivided share of the land to the Developer. Accordingly, the issue is answered in favour of the complainant.

 

             12. Coming to the second issue that involves the complainant and the 2nd OP/Bank, it is the grievance of the complainant that the project property was mortgaged with Punjab National Bank, thereby, there is a flaw in title which aspect was overlooked by the 2nd OP while processing the housing loan disbursal.  Further, without verification of the stages of construction, release of the housing loan at one stroke is absolutely improper on the part of the Bank that would suggest clear service deficiency.  In this regard, it must be pointed out that the complainant himself was aware about the factum of mortgage with the Punjab National Bank since the sale deed under Ex.A4, dated 15.12.2008,  clearly says in clause-III (c) that the vendor shall discharge all the loans including the one availed from the Punjab National Bank before completion of the Project.  Further, the No-lien Certificate issued by the Punjab National Bank under Ex.B1, dated 23.02.2011,  shows that the entire mortgage loan was discharged.   Thus, there is no point made out in that regard.   As regards the release of loan at one stroke, learned counsel for the complainant cited the decision reported in III (2018) CPJ 1 (NC) (IDBI Bank Ltd. v. Prakash Chandra Sharma) wherein it was held that the genesis of the entire dispute lies in the advance disbursement of the loan amount by the Bank to the Developer against the regulations stipulated by the RBI.  We find, in that case, it was fraudulently misrepresented in the Tripartite Agreement that the Builder had assured that it had a clear title to the lands without any lien or encumbrance, whereas, here, there is no instance of fraud that could be connected to the one stroke release of the loan amount.  Learned counsel for the complainant next relied upon a decision, dated 08.07.2013, of the National Commission, rendered in F.A. No.327 of 2012 (M/s.MaytasProperties Ltd. vs. BharatiKhurana), and drew our attention to the following passages therein:-

     " The Appellant Bank disbursed the entire loan amount to the Developer even before the commencement of construction at the project site contrary to the provisions of the Tripartite Agreement. The Appellant Bank could not have disbursed the loan amount without taking proper care and caution to find out about the existence/start of construction of the flats for which loans were sanctioned. Due to the lack of supervision on part of the Appellant Bank, the Developer diverted the funds of the project to the Satyam Computers. The Appellant Banks having acted contrary to the terms of the tripartite agreement, its own sanctioned terms and provisions of Section 5 of the Andhra Pradesh Apartments (Promotion of Construction and Ownership) Act, 1987 by disbursing the entire loan amount without any construction being made, cannot be absolved of their responsibility.

     The tripartite agreements executed between the Bank, Developer and the Respondents contemplate that in the event of cancellation of allotment of flat, the Developer was liable to refund the entire loan amount to the Appellant Banks within 60 days. Respondents terminated the contracts by filing the complaints. The Appellant Banks in spite of having notice of termination of the contracts did not take any steps for recovery of the loan amount from the Developer. The contention of the Bank that as per tripartite agreements the Bank was bound to review the progress of the construction only to protect its own interest otherwise no duty was cast upon it does not hold water and appears to be a fallacious argument and a lame excuse. The progress of construction and the manner in which the loan amount was to be disbursed by the Bank were inter-connected issues and the Appellant Bank being the home loan banker who has lien over the flats should have acted cautiously and taken reasonable care to ensure that its money is safe and secure. Moreover, the Appellant Bank cannot have any grievance against the order passed by the State Commission directing it to recover the loan amount from the Developer as the interest of the Bank has been adequately protected by the State Commission."

According to the learned counsel, in line with the above case law, a similar direction may be issued to the Bank to recall the loan amount from the Developer. In this regard, he also referred to clause-6(f) of the Tripartite Agreement under Ex.A3 that says 'In the event the borrower canceling his allotment/booking/allocation of the said flat, the developer undertakes to refund the entire amount (loan amounts received from HDFC) with the developer (loan facility together with any interest due) to HDFC directly...' But, these contentions are not convincing enough.  The reason is, the factual aspects involved in the case law cited above are different from the case on hand.  In the said case, the loan sanctioned by the Bank was diverted to another project by the Builder, thus, they violated the terms of the Tripartite Agreement.  Only in such a situation, a positive direction came to be issued. Further, the case laws cited on the complainant's side  pertain to the builders either abandoning the project or diverting the loan amount or not commencing the construction.   Here, the Builder took up the construction and he also discharged the mortgage with the Punjab National Bank, however, he failed to complete the construction within the period fixed by him.  It is now stated that, after completion of the project, 260 purchasers have taken possession and 70 families started living there.   More importantly, as could be seen from clause-5 of the Tripartite Agreement, the 1st OP offered a specific scheme of 'front ended payment' to the borrowers including the complainant, who opted for the front ended payment and as such, both the complainant as well as the 1st OP requested the 2nd OP/Bank to release the sanctioned housing loan which was complied with.  When this aspect is borne out by records, there is no point in finding fault with the Bank for releasing the loan amount at one stroke.  Further, clause-6(f) now cited by the complainant's side also says further that, in case of  cancellation, the borrower/complainant agrees to bear the entire pre-EMI paid by the developer till that date and also the cancellation charges. It has to be kept in mind that the 1st OP continued to pay the pre-EMI interest to the 2nd OP till March, 2011.  Since the complainant has availed the specific scheme of front ended payment offered by the 1st OP and so far, he has not paid any EMI and as per clause 6 (f) of the Tripartite Agreement, in the event of cancellation, he agreed to bear the entire pre-EMI paid by the developer till date and also the 'cancellation charges', this Commission cannot issue a blanket direction as sought for by the complainant for recalling the loan amount from the Developer particularly when comprehensive calculation is not available before us. Further, the cancellation here is not at the instance of the Developer, rather, it is at the instance of the complainant.  In our considered opinion, the complainant, who is the borrower of the loan and who also requested the 2nd OP to release the housing loan at once, by putting blame on the Developer, cannot avoid payment of EMI to the Bank that deals with public's money.   In the given factual circumstances, if the complainant feels, he had suffered any loss, he has to work out his remedy by way of appropriate proceedings against the Developer, who, as per the tripartite agreement, undertook to refund the loan amount to the Bank in the event of cancellation subject to claiming cancellation charges, etc. from the complainant.  As such, he cannot expect this Commission to direct the Bank to recover the  loan amount from the Developer and to issue a No Due Certificate.  The issue is answered accordingly against the complainant.

 

             13. Coming to the 3rd issue, from the averments in the complaint, it is seen that the complainant seeks a compensation of Rs.3 lakh aggrieved over the act of the OPs in not properly apprising him of the mortgage entered into by the 1st OP with Punjab National Bank, lien created thereby over the project properties and the legal implications arising there-from on the customers like the complainant.  Since we have already held that the complainant was well aware of the existence of mortgage while purchasing the flat and that subsequently, the mortgage was also discharged by the 1st OP, the present contention has lost its relevance.  By holding that the complainant is not entitled to any compensation in that regard, we answer this issue against the complainant.

             In the result, the complaint is allowed in part.  The 1st OP is directed to refund Rs.6,79,544/- (Rupees Six lakhs seventy nine thousand five hundred and forty four only), the margin money deposited with him by the complainant towards part payment of the sale consideration, along with interest @ 9% p.a. from the date of deposit till 19.02.2011 which is the date of Possession Offer Letter, whereupon, the complainant shall forthwith re-convey the undivided share of the land to the 1st OP at the latter's cost. For the reasons assigned above, the complainant is not entitled to the other reliefs sought for by him to direct the 2nd OP to recall the loan amount from the 1st OP and to award a sum of Rs.3 lakh as compensation.  There shall be no order as to costs.        

                    

 

Sd/-                                                                Sd/-

R VENKATESAPERUMAL                                                                         R.SUBBIAH                        

             MEMBER                                                                                         PRESIDENT

 

 

LIST OF DOCUMENTS MARKED ON THE SIDE OF THE COMPLAINANT

•       Date            Description of Documents

Ex.A1       15.11.2007   Construction Agreement

Ex.A2       15.11.2007   Agreement for sale

Ex.A3       27.11.2007   Tripartite Agreement

Ex.A4       15.12.2008   Sale Deed

Ex.A5       20.02.2011   The complainant reply

Ex.A6       19.02.2011   Statement of Accounts

Ex.A7        06.11.2007  General Power of Attorney

 

LIST OF DOCUMENTS MARKED ON THE SIDE OF THE 1^st OP

•  

 

LIST OF DOCUMENTS MARKED ON THE SIDE OF THE 2^nd OP

 

•       Date            Description of Documents

Ex.B1       23.02.2011   No lien certificate issued by Punjab National Bank

Ex.B2                          Loan Agreement

 

 

 

 

Sd/-                                                                Sd/-

R VENKATESAPERUMAL                                                                         R.SUBBIAH                        

             MEMBER                                                                                         PRESIDENT

 

 

 

ISM/TNSCDRC/Chennai/Orders/JUNE/2022.