BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION:  AT HYDERABAD.

C.C.NO.51 OF 2009

Between

G.Harsh Vardhan S/o G.V.Ramanaiah
Age 40 years, Occ: Pvt. Employee
R/o # 04-5, Lemarque G.Kengchine Road
Singapore Permanent R/o C-70, Madura Nagar
Hyderabad, rep. by GPA holder Sri G.V.Ramanaiah
S/o G.Penchalaiah, Aged 68 yrs, R/o C-70
Madurangar, Hyderabad.

                                                                        Complainant

        A N D

1.  Maytas Hills County Pvt. Ltd.,
     Regd. Off: 6-3-1186/5/A, 3rd Floor
     Amogh Plaza, Begumpet, Hyderabad-016
     Rep. by its nominee Mr.D.V.S.Subba Raju

2.  B.Rama Raju S/o B.Ramalinga Raju
     Director, Maytas Hill County Pvt. Ltd.,
     Bachupally, Hyderabad-500 072

3.  Mr.D.V.S.Subba Raju S/o late Sri D.V.Krishnam Raju
     R/o Flat No.102, Plot No.97, Dhanunjaya Nest,
     Rajeev Nagar, Yousufguda, Hyderabad-45

4.  M.Theja Pratap Raju S/o M.Hari Prasad Raju
     Age 27 years, Occ: Business, R/o Flat No.302
     Sneha Siri Sampada Apts., B.K.Guda
     S.R.Nagar, Hyderabad-38

                                                                        Opposite parties

Counsel for the Complainant                  Sri C.V.L.Narasimha Rao

Counsel for the opposite parties            Sri A.Venkatesh

QUORUM:               SRI SYED ABDULLAH, HON’BLE MEMBER

&

                            SRI R.LAKSHMINARSIMHA RAO, HON’BLE MEMBER

          MONDAY THE SEVENTH DAY OF JUNE               

                                            TWO THOUSAND TEN

       Oral Order ( As per R.Lakshminarsimha Rao, Member)
           ***

        The complaint is filed u/s 17(a)(1) of the C.P. Act seeking direction to the Maytas Hill County Pvt Ltd., Hyderabad and three others to pay the amount of Rs.77,38,903/- with interest @ 18% per annum and rental loss @ Rs.5/- sft of flat area for every month from February 2009 and Rs.4.5 lakhs towards damages, mental agony and hardship caused to the complainant.

        The averments of the complaint are that the complainant on representation made by the opposite parties that the opposite parties no.3 and 4 entered into development agreement on 30.12.2005 with the land owners for the development area of an extent of ac.85.36 guntas of layout of total area of ac.98.16 guntas of land for the construction of residential apartments, independent houses and multistoried buildings and that NOC from the District Collector vide proceeding NO.E5/1596/2002 dated 6.4.2002 was obtained as also layout permission and approval for construction of apartments from the HUDA, entered into agreement with the opposite parties on 17.02.2007 for purchase of apartment unit No.576-3A, Munnar Type-4, Floor NO.3 for a built up area of 1584 sft with undivided share of land admeasuring 88 sq.yds with two car parking slots in Maytas Hill County Township.  The opposite parties promised the complainant that the flat would be ready for occupation by 26.03.2009 or with a grace period of three months from the date of agreement i.e., 17.2.2007.  The complainant paid the sale consideration to the opposite parties by obtaining loan from the State Bank of India, RACPC Hyderabad. 

The complainant has paid the registration charges, service tax and corpus fund to the opposite parties.  The details of payment of the sale consideration and other amounts is mentioned   in the 14th paragraph of the complaint.       The opposite parties failed to deliver possession of the flat to the complainant even after of expiry of grace period of three months as stipulated in the construction agreement.  The complainant requested the opposite parties to hand over the flat to him.  The complainant addressed letters dated 2.1.2009 and 4.4.2009,  in this regard,  to the opposite parties.  The complainant suffered mental agony, inconvenience, financial loss and hardship due to opposite parties not allowing him to use his flat.  Hence the complainant prayed to allow the complaint.

        The opposite parties no.1 to 4 filed common counter denying the material averments of the complaint and contended that they started the venture at Batchupally Village under the name and style of M/s Maytas Hill County.  The complainant entered into agreement to purchase the flat no.3A from the opposite parties for a total sale consideration of Rs.77,38,903/- excluding other payments such as stamp duty, registration fees, VAT, Service Tax, Development Charges as levied by the authorities, Corpus Fund etc.  The period to handover possession of the flat mentioned in the agreement of sale stands suspended from being computed upon happening of force majeure events or other events like availability of steel, construction material etc.  As per the agreement the opposite parties had to complete the construction by 31.08.2008 excluding the grace period of three months. 

As a consequence of the disclosure made by the then Chairman of Satyam Computers Limited, Government Agencies and statutory bodies have taken up investigation including into the affairs of the opposite parties due to which the entire construction work of the building and the other work has come to standstill.  The opposite parties have been extending their cooperation to the investigating agencies for carrying out the investigation.  For the circumstances which are beyond their control, the opposite parties are not able to deliver possession of the flat to the complainant within the agreed time.  The letters dated 2.1.2009 and 4.4.2009 are manipulated for the purpose of the case.  The complainant is not entitled to the refund of the money.  The opposite parties have not committed any deficiency of service.  Hence, prayed for dismissal of the complaint.

        The complainant has filed his affidavit and the documents Exs.A1 to A11.

        The opposite party no.4 has filed his affidavit in support of their case but no documents are filed on behalf of the opposite parties.

        The points for consideration are:

1)    Whether the complainant is entitled to the refund of the amount paid to the opposite parties?

2)    Whether the opposite parties committed deficiency in service?

3)    To what relief?

POINTS NO.1 AND 2 The complainant has entered into construction agreement  with the opposite parties on 01.03.2008 for construction of flat No.3A in Maytas Hill County; the venture which was undertaken by the opposite parties.  The complainant has stated that he had paid a sum of Rs.77,38,903/- towards the sale consideration, registration charges, VAT and Corpus Fund etc.  The complainant has stated the amount along with the particulars of cheque no. and date of cheque etc.  The opposite parties have stated that the complainant had paid Rs.77,38,903/- towards the total sale consideration excluding the other payments.  The opposite party no.1 acknowledged receipt of Rs.77,38,903/-.  Hence, the complainant has paid the entire amount to the opposite parties towards the entire sale consideration.  Having received the entire sale consideration in respect of the flat no.3A, it is the obligation of the opposite parties to construct the apartment and deliver its possession to the complainant which the opposite parties failed to do citing the reasons mentioned in the 14th paragraph of the counter viz., “ shortage of construction material,  fall out disclosure of then Chairman of M/s Satyam Computers Services Limited”. 

The opposite parties sold the flat no.3A through sale deed dated 1.3.2008 in favour of the complainant.  Subsequently to the execution of the sale deed, the opposite parties have entered into construction agreement dated 01.03.2008 with the complainant.  The opposite parties claim that the flat was in semi-finished condition by the date of execution of the sale deed and the construction agreement as well.  The construction agreement was stated to have been executed subsequently to the execution of the sale deed and it shows that the flat was not in existence at all by that time i.e., the date of execution of the construction agreement. 

The opposite parties contended that the complainant is not a consumer.  The complainant is defined in Sec.2(1)(d) of the C.P.Act as the person who “buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose” (emphasis supplied)  The complainant has paid the amount for the purpose of purchase and construction of the flat in question. According to the opposite parties the flat was under construction.   Therefore, the complainant is a consumer within the meaning of Sec.2(1)(d) of the C.P.Act.

        The opposite parties had collected the amount from the complainant promising to construct and deliver possession of the flat bearing No. 3A , Munnar Type-4 Floor No.3 in their venture “Maytas Hill County”.  The complainant has addressed two letters with a request to complete the construction and hand over possession of the flat to him.  The opposite parties have submitted that the letters dated 2.1.2009 and 4.4.2009 sent by the complainant are fabricated.  Except making a bald statement the opposite parties had not substantiated their contention.  The opposite parties had not taken any steps nor adduced evidence to prove that the letters are fabricated.  The opposite parties executed the sale deed and construction agreement promising the complainant that  the construction of the apartment would be completed by 18.10.2008.  Clause 3 of the Construction Agreement reads as under:

“ a.      Having received the consideration specified in Schedule-2 the First Party agrees to complete the construction of the apartment in a timely manner by 26th March, 2009 subject to the availability of the steel or other construction material and any other causes beyond the control of the firs party.

b.                  The first party shall have a further grace period of three months

c.                  The first party shall be entitled to further periods if the construction is delayed due to flooding due to rains, war, earth quake, fire, stay of construction by any court or authority or any other emergencies including riots and any terrorist activities etc.

d.                  In the event of any amount further delay beyond the time stipulated in clause 3(a), 3(b), 3(c) the first party shall pay the second party an amount of Rs.5/- sft  of contracted built up area for every month of delay or part thereof upto a maximum of 8 months.

e.                  If there is reduction of more than two percent of the actual built up area against the built up area specified in schedule 1(b) due to variation of the design which is not covered under clause 3F, the first party will compensate the second party by paying double the price of the reduced area

f.                    That, in the event of second part requiring any deviation from the said plans and specifications given in the schedule -3, the first party shall be entitled to reject the said changes.  However, in the event of such changes being accepted by the first party the same shall be executed in proper workmanship like manner in all respects according such altered plans, specifications for such additional consideration and such extended period of time as may be agreed upon by the parties and reduced to writing as supplementary agreement to this agreement.

It is the duty of the opposite parties to complete the construction within the stipulated period mentioned in clause three of the construction agreement and inform the same to the complainant in terms of clause 4 of the construction agreement requesting him to take possession of the flat within the prescribed time.  The opposite parties had not shown any justifiable cause for not proceeding with the construction of the flat in spite of request therefor, made by the complainant by letters dated  2.1.2009 and 4.4.2009.  The opposite parties had taken shelter under the force majeure event, availability of steel and construction material.  It is interesting to see the opposite parties contend force majeure and shortage of steel and construction material as the factors restraining them from proceeding with the constriction even after, they entered into the construction agreement and executed the sale deed subsequent to the execution of the agreement of the sale. 

The opposite parties had not given any reply to the letters dated  2.1.2009 and 4.4.2009 nor any response to the request made by the complainant for completion and delivery of possession of the flat to him.  For the first time before this Commission, the opposite parties have taken the plea of shortage of steel and the non-availability of construction material.  They had not adduced any evidence that they had undertaken the construction of the flat and could not proceed with it further due to non-availability of steel and other construction material.  The plea not supported by any evidence cannot be considered as a tenable plea.

The opposite parties have taken the plea that due to fall out of disclosures of then chairman of M/s Satyam Computers Services Limited, they could not complete the construction of the flat.  It is interesting to see that how the disclosure of the then Chairman M/s Satyam Computers Private Limited had obstructed the opposite parties from proceeding with the construction of the flat.  The opposite parties have not substantiated as to how the disclosures of then chairman of Satyam Computers Pvt. Ltd., had the effect of preventing them from proceeding with the construction of the flats. 

The opposite parties though had not taken the plea of termination of the construction agreement in their counter, the opposite partyno.4 in his affidavit had stated that the complainant had not stated in the complaint that he was terminating the agreement due to deficiency in service on the part of the opposite parties.  The construction agreement provides for completion of project at the same cost as was agreed therein, by a reputed construction company in case the opposite parties were unable to complete the work for any reason whatsoever.  The opposite parties, admittedly, had not proceeded to complete the construction work.  This fact is sufficient to hold that the opposite parties had nullified the effect of the construction agreement and literally terminated it.  Apart from that, the inaction on the part of the opposite parties to the letters dated 2.1.2009 and 4.4.2009 issued by the complainant and filing of the complaint by the complainant before this commission is the circumstance indicating the termination of the agreement by the complainant.  There is another circumstance that goes to show that the construction agreement was terminated.  In para 10 of his affidavit RW1 has  stated “the case of the complainant is purely a civil dispute seeking relief of part sale consideration paid under agreement of sale.  Even the said termination is not on account of any breach by the opposite party but because of complainant’s personal reasons”.  Thus there are abundant circumstances to show that the construction agreement was terminated.  As such the contention of the opposite parties that there was no termination of the agreement is not tenable. 

The contention of the opposite parties is that in view of clause 14 of the Agreement of Sale, the dispute between the complainant and the opposite parties in regard to the subject matter has to be decided by way of arbitration proceedings.   The clause relating to the arbitration is mentioned in the agreement of sale which was executed.  The sale deed superceded the agreement of sale.  Once the sale deed is executed, the agreement of sale does not have any binding effect nor is it operative in any manner.  On all aspects the sale deed supercedes the agreement of sale.  Subsequently to the execution of the sale deed, the construction agreement had come into force.  Neither the sale deed nor the construction agreement does not contain any arbitration clause.  Even if it is presumed that there is an arbitration clause with the binding effect on the dispute between the parties in terms of agreement of sale, any arbitration clause in any agreement does not prohibit a consumer forum from proceeding to adjudicate the dispute between the parties thereto.  The Hon’ble supreme Court in “Fair Engineers Vs. V.K.Modi” held that the consumer forum, inspite of an arbitration clause in an agreement between the parties can proceed to adjudicate the dispute between them.  The Hon’ble High Court of A.P. in W.P.No.4205 of 2005 held that the consumer forum has not been prohibited from proceeding to adjudicate the dispute in view of any arbitration clause in any agreement placed on record before it.  Hence, the contention that in view of the Arbitration Clause, the matter has to be relegated to the arbitrator is not sustainable. 

The opposite parties have deprived the complainant of the benefit of the use of the flat promised to be constructed in time stipulated in terms of the construction agreement.  The complainant suffered financial loss on two counts, firstly, his amount as much as Rs.77,38,903/- was blocked with the opposite parties.  The complainant has been compelled to pay the EMI to the bank despite the fact that the purpose of borrowing the loan from the bank is not served.   The complainant by paying the said amount to the opposite parties with the fond hope of residing in his own house suffered mental tension apart from that he has been residing in a rented house by paying the rent.  The opposite parties committed deficient service by not handing over possession of flat and by not making refund of the amount paid by the complainant.  The complainant certainly could have suffered mental tension besides the financial loss.  We hold the complainant entitled to the refund of Rs.77,38,903/- along with interest @ 9% per annum from the date of last payment i.e., 14.11.2008 and the opposite parties are jointly and severally liable to pay the said amount to the complainant. 

In the result the complaint is allowed directing the opposite parties no.1 to 4 to pay the amount of Rs.77,38,903/- with interest @ 9% per annum from 14.11.2008 till payment along with costs quantified at Rs.2,000/-.  Time for compliance four weeks. 

                                                                MEMBER

                                                                MEMBER

                                                             Dt.07.06.2010

KMK*

APPENDIX OF EVIDENCE

WITNESSES EXAMINED

                                                           NIL

EXHIBITS MARKED

For complainant

Ex.A1                GPA dated 12.3.2007
Ex.A2                Agreement of sale dated 17.2.2007
Ex.A3                Sale deed dated 1.3.2008

Ex.A4                Letter dated 29.1.2009 to the opposite parties
Ex.A5                Payment receipts along with acknowledgements

Ex.A6                Brochure

Ex.A7                Letter dated 2.1.2009 addressed to opposite parties
Ex.A8                Letter dated 4.4.2009 addressed to opposite parties

Ex.A9                Agreement for construction dated 1.3.2008

Ex.A10       Letter dated 10.12.2009 from opposite parties

Ex.A11       Letter dated  7.1.2010 from opposite parties

For opposite parties

NIL

                                                                                MEMBER

                                                                                MEMBER