BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD.
C.C.No.16 of 2012
Between
Smt.Krati Rungta, aged 30 years,
W/o.Sri Vikas Rungta. Earlier resident
Of Hyderabad, at present r/o.1st floor 19 KN
Govinda Reddy layout, Arekere Micro layout
Bannerghatta Road, Bangalore-560 076
Hulimayu Police Station, Hulimavu, Bannerghatta
Road, Bangalore-560 076, Karnataka,
Rep. through her authorized representative
Sri Navin Kumar Rungta, aged about 38 years,
S/o.Sri Girdhari Lal Rungta, aged 66 years
S/o.late Mathura Prasad Rungta, all resident
Of said flat at Bangalore.560 076.
Address for communication: 1st floor 19 KN
Govinda Reddy layout, Arekere Micro layout
Bannerghatta Road, Bangalore-560 076
Hulimayu Police Station, Hulimavu, Bannerghatta
Road, Bangalore-560 076, Karnataka,
..Complainant
And
M/s.Aliens Developers (P) Ltd.,
Having its registered office at
Flat No.910, Teja Block
My Home Navadweepa, Hi-tech City,Madhapur
Hyderabad -500 081 rep. by its Managing Director,
Mr.Hari Challa S/o.C.V.R.Chowdary,
Managing Director, aged about 33 years,
Residing at said Regd. Office Flat No.910 of the said company. ..Opp. party
Counsel for the complainant : M/s V.Gourisankara Rao
Counsel for the opposite party: M/s A.Krishnam Raju
QUORUM: SMT.M.SHREESHA, HON’BLE Incharge President
AND
SRI S.BHUJANGA RAO, HON’BLE MEMBER.
TUESDAY, THE EIGHTH DAY OF OCTOBER,
TWO THOUSAND THIRTEEN
Order (Per Smt.M.Shreesha, Hon’ble Incharge President)
***
The brief facts as stated in the complaint are that the complainant entered into an agreement with the opposite party for reservation of a flat in residential complex known as “Space Station” in SyNo.384, Tellapur Village, R.C.Puram Mandal,Medak on 18-11-2006 and paid Rs.1,00,100/- and thereafter 4,36,339/- on 27-11-2006 as booking advance out of a total sale consideration Rs.44,70,325/- for 1500 sq. ft. flat in the 4th floor of Alien Space Station which was to be completed within three years with a grace period of six months ending on 18-5-2010. Another amount of Rs. 4,47,033/- was paid on 19-1-2007 and the complainant submits that the allotment was confirmed vide allotment confirmation sheet dated 14-1-2008 revising the flat area to 1597 sft. for a total cost of Rs.47,27,123/- and therefore a sum of Rs.56,495/- was paid on 01-3-2008 and Rs.13,23,594/- on 17-9-2008 totalling to Rs.23,63,561/-.
The complainant submitted that the opposite party failed to complete the project and as per clause 2 of the agreement, the builder has to pay Rs.3/- per sft. per month after the stipulated period of 3 and half years. The complainant submits that 17 months have passed beyond the stipulated period and therefore she is entitled to 17 x 3 x 1597 sft.=Rs.81,447/-. The complainant cancelled the booking of the said flat demanding refund of the amount vide legal notice dated 25-7-2011 followed by an email on 20-8-2011. Another notice was sent on 30-8-2011 to refund Rs.50,19,211/- which is Rs.23,63,561 plus interest. Notices were sent on 30/8/2011 and 07-9-2011 and the opposite party did not respond to any of the notices. Hence the complaint seeking directions to the opposite party to refund the sum of Rs.23,63,561/- paid by her and Rs.52,37,707/- towards compensation on account of interest on money blocked from the date of payment till the date of actual payment to pay Rs.81,447/- towards penalty and Rs.1,00,000/- towards costs.
It is observed from the record that inspite of receipt of notice, there was no representation from the opposite party, written version was not filed and therefore the step for written version was closed and the matter was posted for filing Affidavit Evidence of the complainant. Then the opposite party made an appearance and filed vakalath on 11-7-2012 and filed a petition to give him an opportunity to file written version which was dismissed on 27-11-2012 by this Commission on the ground that this Commission had no powers of review as laid down by the Apex Court in Rajeev Hitendra Pathak v. Achyut Kashinath Karekar reported in 2011 STPL (web) 717 SC . Thereafter the opposite parties filed their Affidavit Evidence and also preferred an RP 810/2013 before the Hon’ble National Commission and the NC vide its order dated 30-4-2013 dismissed the said revision petition with costs of Rs.15,000/-.
Thereafter the opposite party filed their written arguments.
The complainant filed affidavit evidence reiterating the facts stated in the complaint and Exs.A1 to A17 were marked on her behalf.
The opposite party submitted in his affidavit evidence that the land in Sy No.384 is originally agricultural land and opposite party made an application for conversion of land from agricultural into non agricultural land on 23-10-2006 for clearance and the opposite party obtained clearance vide letter dated 30-12-2006 and the land was converted into agricultural land on 14-4-2007. Thereafter the opposite party applied to HMDA for conversion of land in Sy.No.384 from agricultural to residential and commercial use but as per the Master plan approved by the Development Authority there was a proposal of 30 metres road passing through Sy. No.384, 385, 386 and 387 of Tellapur village consequent to the said proposed road, the project could not be commenced until there is realignment to the said proposed road without affecting the land in Sy.No.384 and 385 on which Space station I is being developed by the opposite party and thereafter approval was given to the building plans on 11-4-2008. The opposite party also made applications for issuance of NOC by AP Fire Services Department upto height of 91.40 metres which was issued on 15-12-2007 but subsequently reduced to 90.40 metres on 17-8-2008 and also obtained NOC from Airport authority on 05-6-2007 and 10-7-2009. The opposite party submitted that as there was an embargo under law to grant permissions for construction of buildings in agricultural lands as per the development plan and as such until the variation is approved by the statutory authorities and concerned departments of State Governments, no steps could be taken by opposite party and thereafter opposite party obtained technical approval upto ground + 20 floors and permission for above 20 floors upto 29 floors is awaited. Opposite party submitted that it has taken all necessary steps to complete the project at the earliest but as the project is massive and due to reasons beyond the control of the opposite party, it could not complete the same within the time frame. Opposite party submitted that the said fact was informed to the complainant and even mentioned in the agreement of sale dated 03-8-2008 under clause No.XIV and described as ‘force’ majure’ and therefore the present complaint is not maintainable and there is no deficiency in service on behalf of the opposite party. The opposite party also submitted that in view of the arbitration clause between the parties as per agreement dated 3-8-2008, no court is having jurisdiction to adjudicate the dispute and the same shall be referred for arbitration as per the provisions of Arbitration and Conciliation Act, 1996.
Opposite party submitted that as per para VIII (g) of the complaint it is agreed between the parties that for any delay in delivering possession of the flat, the opposite party shall pay compensation charges at Rs.3/- per sq.ft. and the said amount would be adjusted from dues payable by the complainant and the opposite party agreed to adhere to pay the said compensation though the delay was beyond the control of the opposite party. The opposite party submitted that the agreement for reservation of flat was entered into on 18-11-2006 for 1500 sft at Rs.44,70,325/- and the payments of Rs.1,00,100/- and Rs.4,36,339/- made by the complainant basing on the super built up area of the flat at Rs.2400/- per sft. were agreed and after the allotment was confirmed by the opposite party on 14-1-2008, the flat area was revised to 1597 sft. and the total cost of the flat was arrived at Rs.47,27,123/- and submitted that the opposite party could not complete the project in time due to reasons beyond its control and assured that it will pay penalty of Rs.3/- per sft. per month and the same would be set of out off the balance sale rice to be paid by the complainant. Opposite party submitted that it is not liable to refund the amounts paid by the complainant on the ground that the project was delayed and further if the complainant intends to cancel the allotment of the flat, she is liable to forego 20% of the total amount paid to the opposite party and submitted that there is no deficiency in service on its behalf and prayed for dismissal of the complaint with costs.
The brief point that falls for consideration is whether there is any deficiency in service on behalf of the opposite party and if the complainant is entitled for the relief claimed for in the complaint?
The opposite party stated that this Commission has no jurisdiction in view of the clause of arbitration in agreement of sale. At the outset, we may state that the Supreme Court has consistently opined that existence of arbitration clause in the agreement is not a bar for entertaining the complaint by the Consumer Fora. It held it is an additional remedy as provided u/s 3 of the Consumer Protection Act.
In fact in Fair Air Engineers Pvt. Ltd. Vs. N.K. Modi (1996) 6 SCC 385 rejecting the contentions of the opposite party that the proceedings under the Consumer Protection Act, 1986 could not continue in view of the Arbitration Clause in the agreement entered into between the parties, Supreme Court observed as under:
“It must be held that the provisions of the Act are to be construed widely to give effect to the object and purpose of the Act. It is seen that Section 3 envisages that the provisions of the Act are in addition to and are not in derogation of any other law in force. It is true, as rightly contended by Shri Suri, that the words “in derogation of the provisions of any other law for the time being in force” would be given proper meaning and effect and if the complaint is not stayed and the parties are not relegated to the arbitration, the Act purports to operate in derogation of the provisions of the Arbitration Act. Prima facie, the contention appears to be plausible but on construction and conspectus of the provisions of the Act we think that the contention is not well founded. Parliament is aware of the provisions of the Arbitration Act and the Contract Act, 1872 and the consequential remedy available under Section 9 of the Code of Civil Procedure, i.e., to avail of right of civil action in a competent Court of civil jurisdiction. Nonetheless, the Act provides the additional remedy.”
This judgment of the Supreme Court has been followed in a number of subsequent cases. Similarly, Supreme Court in Indochem Electronic and Another Vs. Additional Collector of Customs, A.P. reported in (2006) 3 SCC 721 , Secretary, Thirumurugan Cooperative Agricultural Credit Society reported in (2004) 1 SCC 305, CCI Chambers Coop. Hsg. Society Ltd. reported in (2003) 7 SCC 233 and State of Karnataka Vs. Vishwabharthi House Building Coop. Society and Others reported in (2003) 2 SCC 412, has held that Consumer Protection Act, 1986 seeks to provide remedy in addition to the remedy provided under other Acts.
In Hindustan Petroleum Corporation Ltd. Vs. Pinkcity Midway Petroleum reported in (2003) 6 SCC 503 the Supreme Court held that Section 8 of the 1996 Act in clear terms mandates that a judicial authority before which an action is brought in a matter which is subject matter of an arbitration agreement to refer such parties to arbitration, and that the language of the said Section is unambiguous. The Supreme Court also held that the Civil Court discharges administrative function and, therefore, it cannot go into the question whether the Arbitral Tribunal has jurisdiction to decide the said issue. This conclusion is based on the Constitution Bench judgment of the Supreme Court in Konkan Railway Corporation Ltd. Vs. Rani Constructions Pvt. Ltd. (2002) 2 SCC 388. A seven Judge Bench of the Supreme Court in M/s. S.B.P. & Co. Vs. M/s. Patel Engineering Ltd. AIR 2006 SC 450 however, overruled the decision in Konkan Railway Corporation Ltd. by holding that the power exercised by the Chief Justice of the High Court or the Chief Justice of India under Section 11(6) of the 1996 Act is not an administrative power but it is a quasi judicial power and in case of designation of a judge of the High Court or of the Supreme Court, the power that is exercised by the designated judge would be that of the Chief Justice as conferred by the Statute.
In fact in W.P. No. 4205/2008 of the High Court of A.P. wherein his Lordship has considered all these decisions and opined that :
“Having regard to the interpretation given by the Supreme Court in FAIR AIR ENGINEERS PVT. LTD with regard to Section 3 of the 1986 Act and the ratio in LUCKNOW DEVELOPMENT AUTHORITY, I am of the view that the 1986 Act, being a special enactment, which created an additional remedy in favour of the consumers by raising consumer disputes before the Fora constituted under the said Act, Section 8 of the 1996 Act does not have the effect of taking away such a remedy from the consumers as in the case of civil suits, which are in the nature of common law remedies. To my mind, the true purport of Section 3 of the 1986 Act is that if a party chooses to avail a remedy other than the consumer dispute, he shall be free to do so because the remedy under the 1986 Act is not in derogation of the other remedies available to such a party. But, conversely if he chooses to avail the remedy before the Consumer Fora, such a right cannot be denied to him on the ground of availability of an alternative remedy, such as arbitration. Put it briefly, Section 3 of the 1986 Act is intended to provide an additional remedy to a party and the same is not meant to deny such a remedy to him. In this view of the matter, in my opinion, the order passed by the District Forum does not suffer from any legal infirmity and it cannot be said that the District Forum has inherent lack of jurisdiction to entertain and adjudicate the complaint.”
It upheld the order confirming the jurisdiction on the consumer fora despite arbitration clause in the agreement. We may aslo state that consistently the Hon’ble Supreme Court is of the opinion that arbitration clause in the agreement would not debar the consumer fora from entertaining the complaint.
Coming to the question of jurisdiction, admittedly the opposite party has been engaged in housing construction activity at Hyderabad. It comes under ‘Service’ as defined u/s 2(1)(o) of the Consumer Protection Act which reads as follows :
(o) "service" means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;
By virtue of Section 2(1)(O) of the Consumer Protection Act the complainant is undoubtedly entitled to prosecute this case before this Commission in the light of housing activity taken upon by the petitioner. Importing the provisions of C.P.C to oust the jurisdiction of the Consumer Fora would not hold good.
The facts not in dispute are that the complainant entered into an agreement with the opposite party for purchase of a flat in their Space Station evidenced under Ex.A1 dated 18-11-2006 in which it is stated that the complainant has paid an initial advance of Rs.4,36,399/- and a booking advance of Rs.1,00,100/- and a final advance of Rs.4,47,033/-, the rest of payment schedule is as follows:
12% of the Total cost : within one week from the date of booking
10% of the Total cost : Before 2nd weeks of January, 2007
28% of the Total cost : Within 25 days from the day of Permission
20% of the Total cost : At the time of structure
15% of the Total cost : At the time of brick work
10% of the Total cost : After the time of plastering
5% of the Total cost : At the time of flooring.
The opposite parties submitted in their written arguments, they had agreed to pay a penalty of Rs.3/- per sft. per month for the total area of the flat in the event of any delay extending beyond 3 and half years from the date of agreement. They admit that a priority number was allotted to the complainant and that the flat area was revised to 1597 sft. and the total cost of the flat was arrived at Rs.47,27,123/-. They also admit that the complainant has paid an amount of Rs.23,63,561/- but submit that the complainant cannot ask for interest as they are ready and willing to pay the penalty amount as per the clause in the agreement and even if the complainant chooses to cancel the agreement, it is the opposite party’s case that she is not entitled for the entire amount but with a deduction of 20% of the flat cost. Ex.A2 is the agreement of sale and Ex.A3 is the allotment confirmation sheet. Exs.A4 to A8 are the receipts confirming the payment made by the complainant. Ex.A9 are the emails between the parties. Exs.A10 to A16 are the notices and correspondence dt.25/7/2011, 20/8/2011, 23/8/2011, 30/8/2011, 7/9/2011 between the complainant and the opposite party. Ex.A17 is the calculation statement made by the complainant with respect to the payment made and also the interest demanded.
While it is an admitted fact with respect to allotment of flat, the payments made and the non-delivery of the flat, we observe from the record that the opposite party has not given any time frame for completing the construction. It is the complainant’s case that no progress was made in the construction at all for which the opposite party except for stating unavoidable circumstances and change in government policies and causes of ‘force majeure’ has not stated by way of any documentary evidence, any reliable reasons and it is pertinent to note that they also have not stated any time frame as to when they would be able to complete the construction and hand over the possession of the flat to the complainant. They have not filed a single document before this Commission either with their affidavit or written arguments to evidence the stage/progress of construction. Vexed with the attitude of the opposite parties, the complainant herself has sought for cancellation of the allotment and sought for refund of the amount paid, which we are of the considered view that she is entitled to without the forfeiture of 20% as the deficiency in service in non-completion of the flat and not adhering to their terms of the contract, is on behalf of the opposite party and hence claiming 20% of forfeiture of the flat amounts to unfair trade practice. Having entered into an agreement of sale way back in 03-8-2008 and admittedly the amounts paid by the complainant are blocked with the opposite party, we are of the considered view that the complainant is entitled to interest at 15% p.a. keeping in view the judgement of the apex court in Brij Pal Sharma Vs. Ghaziabad Development Authority reported in III (2005) CPJ 43 (SC) opined that grant of interest @ 18% p.a., by way of damages and compensation is justified. Their lordship referring to an earlier decision in Ghaziabad Development Authority Vs. Balbir Singh reported in II (2004) CPJ 12 held by stating that “ in our view, irrespective of whether there was genuine reason to cancel or not, the monies must be returned with interest at the rate of 18%. We say so because it is clear that even if the body has not already floated another scheme on the same land it is clear that the body is going to derive great profit from the land and therefore compensating the allottee with interest @ 18% p.a. is just and fair.”
The entire amounts were paid in those cases and the subject matter is that of a plot where the market price escalation is high. In the instant case the subject matter is that of a flat where the opposite party claims that there was market recession as a reason and obtaining permissions for non completion. Keeping in view the facts and circumstances, we find it a fit case to award interest at 15% p.a. and also a fit case to award compensation of Rs.1 lakh for the mental agony suffered by the complainant and also towards penalty. This compensation is being awarded for the mental agony and inconvenience caused to the complainant and also towards penalty for having booked a flat and paid 1/3rd of the total cost and the flat has not seen the light of the day till the date of filing of the complaint together with costs of Rs.5,000/-.
In the result this complaint is allowed in part directing the opposite party to refund the amount paid i.e. Rs.23,63,561/- to the complainant with interest at 15% p.a. from the date of last payment i.e. 17/9/2008 till the date of realization together with compensation of Rs.1,00,000/- and costs of Rs.5,000/- within four weeks from the date of the order.
INCHARGE PRESIDENT.
MEMBER.
JM Dt.08/10/2013
APPENDIX OF EVIDENCE
For the complainant: For Opp.parties:
Affidavit evidence of authorised Affidavit evidence of Mr. Hari
Representative of complainant i.e. Challa filed on behalf of OP
Mr.Navin Kumar Rungta Filed.
Exhibits marked on behalf of the complainant:
Ex.A1-Agreement for reservation of flat, dt.18-11-2006
Ex.A2-Agreement of sale, dt.03-8-2008
Ex.A3-Allotment Confirmation sheet.
Ex.A4-Receipt (MR) No.030 dt.18/11/2006
Ex.A5-Receipt (MR) No.1364 dt.18/11/2006
Ex.A6-Receipt (MR) No.010 dt.27/11/2006
Ex.A7-Receipt (MR) No.1506 dt.19/1/07
Ex.A8-Receipt (MR) No.02195 dt.01/3/2008
Ex.A9 Email confirmation of Rs.13,23,594/- deposited in bank vide che que
No.11639.
Ex.A10-Notice dt.25/7/2011
Ex.A11-Notice sent by emaildt.20/8/2011
Ex.A12-Reply Notice of OP dt.23/8/2011
Ex.A13-Notice, dt.30/8/2011
Ex.A14-Notice sent by email, dt.30/8/2011
Ex.A15-Notice, dt.07/9/2011
Ex.A16- Notice sent by email, dt.07/9/2011
Ex.A17-Calculation of interest, compounded quarterly.
Exhibits marked on behalf of opposite party:
-Nil-
INCHARGE PRESIDENT.
MEMBER.
JM Dt.08/10/2013
