BEFORE THE A.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION
AT HYDERABAD.
C.C. 29 of 2009
Between:
Erusu Shanmukha Rao
S/o. Late Lakshmayya Reddy
Age: 67 years, Retd. Professor
Flat No. 302, Sai Mansion
S.R. Nagar, Hyderabad-38. *** Complainant
And
Suggu Raghunadha Reddy
S/o. Late Srinivas Reddy
Age: 62 years,
Retd. Deputy Superintendent of Police
H.No. 49-54-7/4, Ajitha Apartments
Balayya Sastry Lay Out,
Visakapatnam-13. *** Opposite Party.
Counsel for the Complainant: M/s. K. Sarvabhouma Rao.
Counsel for the O.P: M/s. Ravi Cheemalapati.
CORAM:
HON’BLE SRI JUSTICE D. APPA RAO, PRESIDENT
&
SMT. M. SHREESHA, MEMBER
THURSDAY, THIS THE EIGTH DAY OF JULY TWO THOUSAND TEN
Oral Order: (Per Hon’ble Justice D. Appa Rao, President)
***
1) This is a complaint filed by the land owner against the builder claiming various amounts as agreed upon in the development agreement besides providing various amenities, rents etc.
2) The case of the complainant in brief is that he is a retired professor, and an absolute owner of site admeasuring 893.33 sq.yds situated in Visakapatnam. When he intended to develop the property, the opposite party his close relative offered to develop the property on 50:50 ratio and accordingly entered into a development agreement dt. 26.11.2004 at Hyderabad for construction of apartments consisting of stilt floor for parking, ground floor for commercial areas, and four upper floors for residential purposes. A period of three years was allowed for completion of construction. The opposite party agreed to pay the entire sale proceeds of the land to him. The development agreement further reads that the ground floor commercial area shall be shared equally by both the parties, and that he was entitled to flat Nos. 101,103, 201, 202, 203, 204, 402 and 404 in residential area. When he entrusted to the opposite party to sell his share of flats 103, 402 and 404 he sold them on basic cost, however failed to pay charges for utility services amounting to Rs. 2,51,000/-. The construction is of poor quality. He took possession of the five residential flats with several pending and unfinished works. As per the development agreement he was entitled to sale proceeds of land to a tune of Rs. 55,84,000/-. Further he was entitled to Rs. 6,72,500/- towards deficiency in poor quality of marbles in the flats which fell to his share, Rs. 10,000/- paid by him to the Architect, Rs. 1,50,568/- towards property tax paid by him, Rs. 4,159/- towards electricity bills, Rs. 40,000/- towards deficient quality of slabs, Rs. 50,000/- towards failure to provide separate tanks for bore well and municipal water, Rs. 50,000/- towards failure to provide geysers and concealed water connections, Rs. 6 lakhs towards rental value, Rs. 14.40 lakhs towards rental value of commercial area of his share, Rs. 1,80,465/- towards balance of penalization charges paid by him, and Rs. 10 lakhs towards damages for mental agony and furnish occupancy certificate, completion certificate, underground drainage certificate and costs.
3) The opposite party builder resisted the case. He filed his counter denying each and every allegation made in the complaint. However he admitted that the complainant is the owner of land which he intended to develop under the agreement dt. 26. 11. 2004 wherein he was entitled to 50% share. There is no stipulation to pay the sale proceeds of entire land to him. In fact he had completed the construction prior to 31.12.2006 and handed over possession to the owners. The complainant himself leased out the property and collected rents from M/s. Greenway Real Estate Company and other flat owners. He made the construction as per the specifications of the development agreement. He has completed all the works, and handed over the possession to him. None of the flat owners had ever complained about any deficiency either in works or in construction. He purchased the marbles from Rajasthan and laid the same. The complainant did not select the marble. Only after completion of construction he was claiming Rs. 6, 72,500/- which he was not entitled. In fact he had paid 2-1/2 year’s property tax though the flats were kept for sale. When the complainant did not want to sell his property, he must not be directed to pay taxes of his share also. He had paid the electricity bills for four service connections of the complainant on two occasions. He had provided drinking water to each flat from sump to where municipal water is received with the consent of the complainant. He did not deviate from the agreement and therefore no compensation need be paid. In fact, by virtue of conditions stipulated by the municipal corporation, he has provided solar water heater systems dispensing the electrical geysers. In fact he had to receive Rs. 9,16,000/- from the complainant towards main door carving, LPG, electrical transformer, solar panels, taxes and other works. As per the permission accorded by the municipal corporation three years time was stipulated from 1.4.2005 to 31.3.2008. He completed the works and handed over the flats to the owners in 2006 itself. He paid Rs. 5 lakhs to compensate loss of rent to the complainant. The complainant himself let out five flats in the month of July, 2007 at Rs. 15,000/- p.m. for two years and renewed the same for two more years. He got about Rs. 18 lakhs in these two years. He had completed the commercial area by 1.4.2006; however the complainant did not come forward to sell the area, even though he brought prospective buyers who agreed to buy the flats in the range of Rs. 2,500/- per sft to Rs. 4,200/- per sft however the complainant did not agree. Later there was recession. Nobody was coming forward to purchase and therefore he could not sell the commercial area. The complainant had imposed lot of conditions and nobody had shown interest. In the process he sustained loss of rents. The complainant was frequently visiting the project site. At no time any objection was made. When the government has introduced Building Penalization Scheme (BPS) all the flat owners paid the penal amount to their respective flats. In the light of recent judgment passed by the High Court, the authorities of Municipal Corporation (GVMC) had to form a committee to inspect the violations in the premises and issue occupancy, completion and underground drainage certificates. Since no committee was formed as yet, certificates could not be obtained and they were kept pending. The complaint does not come within the ambit of Consumer Protection Act. Neither the complainant is a consumer nor he is a provider of service. Complicated questions of fact and law are involved and therefore not amenable under summary jurisdiction. In fact he was made to suffer mental agony and financial loss to a tune of Rs. 36, 16,000/- viz., Rs. 27 lakhs towards rents and Rs. 9, 16,000/- towards due from the complainant. In order to evade payment he filed the complaint. Therefore, he prayed for dismissal of complaint with costs.
4) The complainant in proof of his case filed his affidavit evidence and got Exs. A1 to A23, while the opposite party filed his affidavit evidence and also filed the affidavit evidence of Gadi Bhaskara Rao, Phaniharam Venkatacharyulu, Lanka Sudha Madhavi, Nidavolu Anil Kumar, Lanka Srinivasa Rao and got Exs. B1 to B14 marked.
5) The points that arise for consideration are:
Whether the complainant was entitled to sale proceeds of the land as per the development agreement?
Whether the complainant is entitled to the amount paid towards utility charges?
Whether the complainant is entitled to compensation towards deficiencies in construction, and for not providing various amenities?
Whether the complainant is entitled to any amount including the rents?
Whether the complainant is entitled to occupancy certificate etc?
Whether the complainant is entitled to his share of amount towards commercial area?
To what relief?
6) It is an undisputed fact that the complainant is the co-brother of opposite party who is a builder. It is also not in dispute that the complainant is the owner of the land for which development agreement was executed in between them under Ex. A3 dt. 26.11.2004. The opposite party agreed among other things “And whereas both the parties hereby agree and that they shall share the built up area alone in 50:50 ratio i.e., fifty percent of build up area for the land owner and fifty percent of built up area for the builder, with sale proceeds of entire land belonging to the owner”
(emphasis supplied)
“that the owner shall retain with him as his absolute property of 50% of built up area from out of total constructed area of the proposed building complex and the developer shall receive and appropriate for his benefit the proceeds of the remaining constructed area i.e., 50% of the built up area as a consideration for his efforts for construction and development of the schedule property into a full fledged residential complex at his cost (at developer’s cost)” As regards the allocation of parking area for the vehicles the owner and developer shall share in 50:50 ratio.
7) It is useful to note clause-13 of the agreement which reads as follows:
The following shall be distribution of built up areas:
a) The ground floor will be the exclusive commercial area and the sale proceeds of commercial area shall be shared equally by the owner and builder.
b) The II floor shall be exclusively ear-marked for the owner of the first part and the III floor shall be exclusively for the builder.
c) In the first and fourth floors, the flats shall be shared diagonally, i.e., the north-east and the south-west flats in the first floor to the owner and the north-east and south-west in the fourth floor to the builder.
d) In the event of any development on the terrace, the built up area shall be shared equally by mutual agreement.
8) Schedule of specifications were given pertaining to foundation, walls, plastering, flooring, kitchen, toilets, electrical, sanitary, paining, and lift facility etc. Pursuant to the agreement, the opposite party sought permission from the municipal corporation of Visakapatnam for construction of these flats in four floors to be completed before three years vide Ex. A13. It is also not in dispute that the opposite party has made the constructions and delivered the flats to him as per the agreement. Admittedly each party has sold the apartments that fell to their respective shares.
9) In regard to each of the claims, it is dealt hereunder:
a) Sale proceeds of land:
For the undivided land sale proceeds of which should be paid to the complainant as per the terms which we have excerpted from Ex. A3 agreement. There is categorical averment that sale proceeds of the entire land belongs to the owner and therefore the opposite party cannot retain this amount on the ground that the agreement does not stipulate. It is also not in dispute that the opposite party has collected Rs. 55.84 lakhs towards sale proceeds of land and did not pay it to the complainant.
(b) Utility Service charges: The complainant has claimed Rs. 2,51,000/- towards utility service charges collected by him for sale of flat Nos. 103, 402 and 404. On the other hand the opposite party alleges that in fact the complainant himself has to pay utility charges for his share of 8 flats which he acknowledged by way of Ex. B5. Ex. B5 is in the handwriting of complainant. The complainant is a retired professor of an engineering college. He made details of the amounts to be received from the opposite party, he did not mention this amount.
c) Inferior marble: The complainant has claimed Rs. 6,72,500/- towards using inferior quality of marbles. It is not the case of the complainant that he did not visit the complex while the premises was under construction. Admittedly marble was used as agreed upon. Whether the marble is of good quality or poor quality, the complainant could not let in any evidence to show that the marble that was used was of inferior quality. He did not take a commissioner or engineer to certify that the marble that was used by the opposite party was of inferior quality. Except making allegation that the marble was not of good quality, no evidence whatsoever was let in. The photographs filed by the complainant did not reveal that they were of inferior quality, more so, when the opposite party asserts by way of affidavit evidence that they were of good quality. He also filed the affidavit evidences of flat owners marked as Exs. B4 & B5 certifying that the quality of marble was good. The complainant could have filed the affidavits of those occupants of flat owners to whom he sold away the flats to prove that the marble that was laid was of poor quality. Therefore the complainant was not entitled to any amount under this head.
(d) Architect fee: There is no stipulation as to who should pay the amount to the architect. The complainant contends that he had paid Rs. 10,000/- to the architect at Hyderabad. Since it is not evidenced by any document, we are unable to grant this paltry amount.
(e) Property Tax: The complainant claimed Rs. 1,50,568/- towards property tax. Clause- 9 of the agreement reads as follows :
“9. That there are no dues payable towards, tax, cess, non-agricultural taxes, etc. to municipality and other departments in respect of the schedule property. However, the said liability rests solely with the developer till the date of completion of the proposed complex. The owner’s liability shall be confined only to the extent of his share only from the date of completion and handing over of the proposed complex. The liability for the rest of the proposed complex shall be borne exclusively by the developer or his prospective buyers.”
Evidently possession of the flats was handed over to the complainant on 1.4.2006. In fact the complainant has sold away his share of flats and the owners who purchased them had been paying the amounts. The tax receipts Ex. A5 filed by him would show the taxes paid by him subsequent to the delivery of possession. It is not known how he can claim for re-imbursement of amount paid towards property tax. Therefore, we decline to award any amount under this head to the complainant.
f) Electricity Bills: We may state that assuming without admitting that the complainant had paid Rs. 4,159/- towards electricity bills, they pertain to the year 2008. It is not known how the complainant could claim this amount on the ground that he paid the amount. The opposite party asserts that as per the agreement he had to pay the electricity bills till completion of the building but not for indefinite period. We are also of the opinion that the complainant having failed to prove that this amount had to be paid by the opposite party, we are not inclined to grant any amount under this head.
g) Differential cost of slabs: The complainant has claimed Rs. 40,000/- towards differential cost of uniform slabs. It is his contention that instead of marble the opposite party used tiles in the corridor between flat Nos. 103 and 104. The opposite party asserts that small slabs are used in the corridor as 3” water line obstructed laying of slabs. The contention that in the development agreement at page 5, item No. 4 it was mentioned that the entire flooring has to be of marble slabs but not of tiles which includes common areas. When a huge complex was constructed, undoubtedly use of tiles in place of slabs are justified. At any rate, the complainant could not prove the difference in rate was Rs. 40,000/- by filing any documents or receipts obtained from any seller. Therefore the complainant is not entitled to any amount under this head.
Separate tanks for bore well water and municipal water:
The complainant claimed Rs. 50,000/- towards failure to provide separate tanks for bore well water and municipal water with concealed pipelines to the individual flats. The opposite party admittedly provided direct supply line of drinking water drawn to each flat from the sump to where municipal water is received. Obviously the complainant did not question for not providing separate water tanks, for all these years, though he had taken possession in 2006. Therefore we do not intend to grant any relief under this head.
i) Geyser Points: The complainant had claimed Rs. 50,000/- towards failure to provide geyser points and concealed water connections to the flats. It is not in dispute that the opposite party has provided solar water heating facility as the GVMC made it compulsory. Since he installed the said system the question of providing geyser points will not arise. In fact in the development agreement provision for solar water heating system was not made. Despite the fact the opposite party had installed the system for which he did not collect any amount from the complainant. The complainant could have assessed the value of solar water heating system and let in evidence as to the amount that could be incurred for providing geyser points. Since GVMC has made it mandatory for providing solar water heating system for flats, we are of the opinion that the complainant is not entitled to any amount under this head.
j) Rental value for five flats: The complainant has claimed Rs. 6 lakhs towards the rental value for five residential flats which fell to his share for the period from 1.4.2006 to 1.4.2007. In fact the opposite party in his counter affidavit stated that the complainant had been receiving Rs. 75,000/- per month towards rent from five residential flats. It was not denied by the complainant. In fact there was no condition in the agreement to compensate for loss of rent. The complainant alleges that he had paid Rs. 5 lakhs despite the fact that he need not pay, in view of the relationship between them. By virtue of permission granted by GVMC the opposite party had completed the construction by 2006 itself before the stipulated period of three years viz., from 1.4.2005 to 31.3.2008. The complainant cannot claim these rents on the ground that he had sustained loss. Therefore, we are not inclined to grant any amount under this head.
K) Notional Rental Value: The complainant has claimed Rs. 14.40 lakhs towards notional rental value towards the commercial area. The opposite party alleges that the commercial area was also completed by 1.4.2006. When he brought the prospective buyers to purchase the same at Rs. 2,500/- to Rs. 4,200/- per sft the complainant imposed lot of conditions. In fact nobody had shown interest to purchase. In fact in the said deal he had sustained a loss of Rs. 18 lakhs towards rents due to his share. To prove the said fact he filed the affidavit evidence of Gadi Bhaskara Rao stating that
“I came to know that the complainant and the opposite party are intending to sell their commercial space in ground floor of ELR vision, Dwarakanagar. I held mediation between the owner and the intending purchaser Sri P. Venkata Subbaiah who offered the sale price @ Rs. 2,500/- per sft to both the complainant and the opposite party as they are the owners of the said commercial space. In the month of April, 2007 the said Venkata Subbaiah offered the above price and in fact he has also paid an amount of Rs. 5 lakhs to the opposite party under acknowledgement, but subsequently the complainant refused to sell the said commercial space along with the opposite party by raising some queries and having no other go, the above said intending purchaser has taken back his advance lying with the opposite party”
In the light of affidavit evidence of this witness, he could have filed equally the affidavits to show that the opposite party was not keen in selling the commercial space. He could have issued publication inviting the prospective purchasers by mentioning the rate of sft, which he intends to sell the commercial space. The complainant has been making all untenable claims without substantiating any fact. In the circumstances, the complainant would be entitled to the amount only on sale of said establishment. Without disposing of the said property, he may not be able to claim any amount from the opposite party.
L) Penalization charges: The next claim is for realization of Rs. 1,80,465/- being the balance due towards BPS to GVMC for commercial units. The opposite alleges that when the complainant himself got the plan at Hyderabad prepared, and since the GVMC has regularized the flats and that the complainant did not complain those deviations at any time, and on the other hand having known the deviations the purchasers had paid the regularization charges to GVMC to regularize their respective flats, he need not pay the said amount to the complainant. Evidently the opposite party has paid Rs. 89,760/- towards his share of 50% of commercial area. The complainant has taken the possession of the flats. He paid Rs. 1,80,466/- towards penalization charges for his five flats and his 50% share of commercial area. Having got those deviations regularized and having been enjoying the property he ought not to have claimed the said amount from the respondent. There is no proof that the complainant did not agree for the so called deviations for which the GVMC claimed the amount. Therefore, we are of the opinion, that he was not entitled to any amount under this head having got the regularization of the flats. In fact some of the purchasers had paid regularization charges to the GVMC to regularize their respective flats. The claim is unjust.
m) Damages: The complainant has claimed Rs. 10 lakhs towards damages for mental agony and strain for frequently travelling from Hyderabad to Visakapatnam. In fact right from 2006 the complainant has been collecting rents, paying electricity charges, property tax etc., for the flats that fell to his share. We do not see any deficiency in service on the part of opposite party except the one which we have mentioned for non-returning of the amount of Rs. 55.84 lakhs towards sale proceeds of land. Obviously, as the opposite party who is none other than his co-brother he made each and every claim. The opposite party equally claimed Rs. 9,16,000/- for the following works:
Main door carving 16,000/-
Grills 39,500/-
LPG 1,20,000/-
Electrical Transformer 1,82,000/-
Solar Panels 1,08,000/-
Corp. Drinking water 25,000/-
Under ground drainage 9,000/-
House tax commercial area 24,000/-
Room on terrace 1,00,000/-
Show cases 40,000/-
Putty work 1,20,000/-
Front elevation 50,000/-
Exterior emulsion paint 50,000/-
Main gates Spl. 50,000/-
-- ----------------
Total Rs. 9,16,000/-
--------------------
Equally the opposite party could not prove that he spent all those amounts for which he was entitled to. At any rate, the opposite party did not take any proceedings for recovery of these amounts. The opposite party did not file any documents evidencing the expenditure incurred by him for the above said purpose. Therefore both the parties are not entitled to any damages.
n) Occupancy, completion certificates:
Finally the complainant sought occupancy and completion certificate etc. The opposite party contended that High Court by its order directed the authorities of Municipal Corporation had to form a committee to inspect the violations in the premises and issue occupancy, completion and underground drainage certificates. Since no committee was formed as yet, certificates could not be obtained and they were kept pending. The complainant could have obtained information whether such certificates have been issued by the GVMC by resorting to Right to Information Act. The complainant undoubtedly entitled to them provided the GVMC issues the certificates to all the occupants. We may also state that as and when the said committee is constituted and started giving the certificates the complainant could as well issue notice to the opposite party and obtain certificates.
10) Learned counsel for the opposite party contended that the complainant being the owner and he being the builder there was no consumer dispute and therefore the provisions of the Consumer Protection Act has no application.
11) Learned counsel for the complainant relying a decision of Supreme Court in Fakir Chand Vs. Uppal Agencies reported in SCC 10 (2008) 345 contended that the dispute comes within the ambit of the Consumer Protection Act. In the said decision their Lordships’ made it clear that:
“In case of development agreement called by whatever name, the important aspect is the availment of services of the builder by the land owner for a house construction (construction of owner’s share of the building) for a consideration. To that extent the land owner is a consumer, the builder is a service provider and if there is deficiency in service in regard to construction, the dispute raised by the land owner will be a consumer dispute.”
Yet another contention of the learned counsel for the opposite party is that in view of complicated questions of fact and law are involved the matter could be relegated to Civil Court. In the above referred decision their Lordships considered this question and observed :
“that if there is a breach by the land owner of his obligations, the builder will have to approach a Civil Court as the land owner is not providing any service to the builder but merely undertakes certain obligations towards the builder, breach of which would furnish a cause of action for specific performance and/or damages. On the other hand, where the builder commits breach of his obligations, the owner has two options. He has the right to enforce specific performance and/or claim damages by approaching the Civil Court. Or he can approach the Forum under Consumer Protection Act, for relief as consumer, against the builder as a service-provider. Section 3 of the Act makes it clear that the remedy available under the Act is in addition to the normal remedy or other remedy that may be available to the complainant.
Therefore, we are of the opinion that there is no need for relegation of this matter to Civil Court.
12) In the result the complaint is allowed in part directing the opposite party to refund Rs. 55.84 lakhs to the complainant with interest @ 6% p.a., from April, 2007 till the date of realization together with costs of Rs. 5,000/-. Rest of the claims are dismissed. Time for compliance four weeks.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
*pnr
APPENDIX OF EVIDENCE
WITNESSES EXAMINED FOR
COMPLAINANT: OPPOSITE PARTY
None None
DOCUMENTS MARKED FOR COMPLAINANT:
Ex A-1 Sale Proceeds of undivided share of land allotted to each flat.
Ex A-2 Development agreement dat:26-11-2004.
Ex A-3 Development agreement dat:24-11-2005.
Ex A-4 Photographs showing different shades of marbles from different sources.
Ex A-5 Receipts of Property tax for Ground Floor Commercial Area.
Ex A-6 Receipts of electricity bills for Ground Floor Commercial Area.
Ex A-7 Payments made to GVMC under Building Penalization Scheme
for Ground Floor Commercial Area.
Ex A-8 Lease Agreement for Flat No.101 with Greenways Infrastructure Pvt Ltd.
Ex A-9 Legal Notice dt. :31.1.2009 given to opposite party.
Ex A-10 Reply notice dt. : 10.2.2009 received from opposite party
by the complainant.
Ex A-11 Eenadu Newspaper dt. : 16.2.2006
Ex A-12 Eenadu Newspaper dt : 1.4.2006
Ex A-13 Approved plan by GVMC Visakhapatnam dt. 1.4.2005
along with proceedings.
Ex A-14 Sale Deeds of 10 flats sold by the opposite party.
To
Ex A -23
DOCUMENTS MARKED FOR OPPOSITE PARTY :
Ex B-1 Legal notice dt.: 31.1.2009
Ex B-2 Reply to notice dt. 1.2.2009
Ex B-3 Affidavit of Lanka Sudha Madhavi (Third party)
Ex B-4 Affidavit of Nidavolu Anil Kumar(Third party)
Ex B-5 Affidavit of Lanka Srinivasa Rao (Third party)
Ex B-6 Settlement statement written by the complainant.
Ex B-7 Broucher
Ex B-8 Statement showing flats sold by complainant.
Ex B-9 Service charges statement showing the amount to be received
from the complainant
Ex B-10 Statement with regard to flats sold by opposite party in Girija residency
Ex B-11 Affidavits by third parties.
Ex B-12 Photograph showing marble Flooring between Flats No.103, 104
Ex B-13 Photographs showing marble flooring of complainant’s flats
Ex B-14 Photographs showing completed commercial area.
1) _______________________________
PRESIDENT
2) ________________________________
MEMBER
Dt. 08.07.2010.
