C.C.No.30/2009

Between:

Srinivas Mopuri, S/o.Mobanna,

aged about 33 years,

R/o.1509 Weatherford Drive,

Austin, Texas-78753, Rep. by his

G.P.A.Holder Mopuri Obanna ,

S/o.M.C.Kondaiah, aged about 63 years,

The R/o.11-3-155 Venkateswara Colony,

Road No.13,  Saroor Nagar, Hyderabad-35.              … Complainant

                    And

M/s. Maytas Properties Ltd.,

(Earlier Maytas Hill County Pvt. Ltd),

Registered Office 6-3-1186/5/A 3^rd floor,

Amogh Plaza, Begumpet,

Hyderabad , rep. by its Directors.                          … Opposite party             

Counsel for the Complainant       :       M/s. Manne Haribabu                  

Counsel for the Opposite party    :        M/s.A.Venkatesh.              

CORAM:HON’BLE JUSTICE SRI D.APPA RAO, PRESIDENT,

AND

SMT. M.SHREESHA, HON’BLE MEMBER

                   FRIDAY, THE THIRTIETH  DAY OF APRIL,

                                TWO THOUSAND TEN.

Oral Order :(Per  Smt. M.Shreesha, Hon’ble Member)

                                                   ***

        The brief facts as out in the complaint are that the complainant  entered into an agreement of sale  dt.16.2.2007   for  flat No. 8A, 8^th floor, Type 4  in Simla Block having built up area of 1584  sq.ft., common area of  396  sq.ft.  and one car parking area  with 88 sq. yards of undivided share  in the common land  in Sy.No.194/P, 196/P, 197/P for the total consideration of Rs.74,49,352/- payable   in a phased manner  from 1.12.2006 to 15.3.2008  and as per the agreement of sale the opposite party has to complete the construction  by 31.8.2008  or 24 months from the date of execution of the sale agreement which ever is later.

        The complainant  submits that he paid  total amount of Rs.63,37,984/- , the details of which are as follows:

Though the said amounts were paid  by 4.8.2008   the opposite party did not complete the structure.  Recently  the government  ordered CBI enquiry and the  Company Law Board appointed Special Director along with two Directors of the Company   to the opposite party company . The Special Director  conducted a meeting on  25.3.2009  at  Hill County  with the flats and  house purchasers of Hill County. At that time the complainant requested to cancel the agreement and to refund the amount  as he lost the confidence  on the opposite party company  but there was no response.  As per the Termination Clause  of the Agreement, the opposite party promised to pay  the amount within  a month from the date of termination failing which they agreed to pay interest at 10% p.a.  The complainant gave termination letter  dt.25.3.2009 to cancel the agreement but there was no response. The complainant got issued a legal notice dt.28.4.2009 for which opposite party replied  on 13.5.2009  in which they  have stated  that as per clause 6  of the agreement  construction of flats (from 5^th to 12 floors) depends  upon the  High Court order in W.P.No.23635/2005  as such it could not get approval for additional floors construction. The complainant submits that opposite party never stated that they did not have approval for  5 to 12 floors and had they  informed him  the  same he would not have purchased a flat in the 8^th floor.   Even in their allotment letter dt.18.11.2006   they did not mention that there is no approval for 5^th to 12^th  floors.   The PIL and W.P.No.23635/2005   are in the year 2005 whereas the agreement was arrived in the year 2007.  Opposite party in their letter dt.18.9.2007  stated that “ this project as now  got all approvals, more particularly HUDA approval for all the  13 floors  its sub cellars and the fire department approval for the same.”.   It is also stated that    this approval copies were sent to the Home Loan Bankers, which means that HUDA  had already approved the construction of 13 floors. 

        If  opposite party is not constructing the said floors the complainant is compelled  to pay heavy interest on the loan taken and moreover the if  opposite party constructed all the 13 floors, four blocks fully and 60%  in other blocks  basing  on the HUDA  approval and  there  would  be no constraints  in the complainant’s case   and there is no legal hurdle  since these 13 floors in four complexes were constructed after 2005 when the matter  was subjudiced  and there was no direction from the High Court   to stop  these works.  Thereafter the opposite party sent a letter dt.10.1.2009   mentioning  HUDA  approval.  The newly appointed   Special Director  Mr.Ved Jain   conducted a  meeting  on 25.3.2009   and only  explained financial constraints for the completion of project, but never contended that there was any legal hurdle.  Vexed with their attitude the complainant  cancelled the agreement and as per the  schedule II  in the Agreement  total amount  of Rs.74,,49,352/-  is to be paid on the dates  indicated in the schedule  as sale consideration.  The schedule of payment was made without indicating any progress of the works.  However the complainant paid  90% of the amount and the  structure  was completed only upto 6 floors where as the complainant’s flat is in the proposed 8^th floor.  Hence the complainant submits that there is deficiency in service on behalf of the opposite party and seek the following  directions to the opposite party:

        a).  to direct the opposite party to return an amount of Rs.63,37,984/-  which was paid towards sale consideration of flat No. 8A , 8^th floor, type-4 in Simla Block having built up area of 1584  sq. ft.  common area of 396  sq.ft. and one car parking with 88 sq. yards of undivided  common land share in Sy.No.194/P, 196/P, 197/P with interest at 24%  p.a. from the  date of receipt of the amount till realization

        b).  to award an amount of Rs.10 lakhs as compensation  to the complainant for the inconvenience,  pain and suffering,

        c) to pay an amount of Rs.20,000/-  towards costs and incidental expenses.   

         The opposite party filed counter  stating that they started a new venture  at  Bachupally  under the  name  and  style of  M/s.Maytas Hill County  and the complainant approached the opposite party with a request  for  purchase of   flat bearing no.8(A) , 8^th floor, Type IV  in Shimla Block  having a built up area of 1584 sq. ft. with common area of 396 sq. ft.   together with undivided share of land of  88 sq.yds.  in the opposite party project ‘Hill County’.   After discussions and deliberations the complainant agreed to purchase the above flat for a total sale consideration of Rs.74,49,352/-  excluding    stamp duty, registration fee,        VAT, service tax  etc. The complainant entered into an agreement  of sale on 16.2.2007. As per the said  agreement,    opposite party had to complete the construction on or before 31.8.2007  or 24 months  from the date of execution of the agreement  whichever is later  excluding  the grace period of 3 months.  However the said period stands suspended  from the period  of computation    because of a).Force Majure Event, b).availability of steel  and construction material, c).result of W.P. 26365/05 .  The clause 6 of the Agreement of Sale clearly   stipulates that in view of the Interim direction of the A.P.High Court   in W.P.No.26365/2005  the approval  for plans from 5^th to 12^th  floors would be granted after disposal of the Writ Petition  wherein it is stated as follows:

        “Whereas in view of the interim directions of the Hon’ble  High Court of Andhra Pradesh in W.P.No.23635 of 2005  in suo-moto PIL (PIL is not against Maytas Hill County Private Limited or the property in question), the approval for plans form floor  five to twelve is expected only after necessary directions from the Hon’ble  High Court of  Andhra Pradesh and this is likely to have a impact on the likely date of completion of the  said floors. “  

The complainant   being fully aware  and conscious  about the Writ Petition agreed to  purchase the flat in the 8^th floor and the construction could  not be completed for certain events  beyond the control of the opposite party  and government and other  agencies have taken up   investigation on  the affairs of the opposite party and they are extending full cooperation.  Opposite party denies  that the complainant made a request to cancel the agreement and for refund of the amount. Opposite party denied that they promised to pay amount within a month from the date of termination failing which  agreed to pay interest at 10%. They deny  that the complainant had given termination/request letter to cancel the agreement.  The letter dt. 18.9.2007   is  fabricated and the complainant was informed that the amounts were due to be paid and because of Clause  6 of the Agreement which states that  because  of  any force maejure events  if the completion  is delayed there is no violation of terms of the agreement.  The opposite party has started the venture with bonafide intention to construct the  world class township  and because of writ petition  and unavoidable  circumstances it could not complete the construction and they seek for dismissal of the complaint with costs  on the ground that there is no deficiency in service on their behalf .

         The complainant filed  his affidavit by way of evidence and Exs.A1 to A18  are  marked  on his behalf.  The opposite party also filed  affidavit by way  of evidence and Exs.B1 and B2 are marked on  their behalf.    The opposite party also filed written arguments.   

        The brief fact that falls for consideration is whether there is any  deficiency in service on behalf of the opposite party and   whether  the complainant is entitled for the relief sought for in the complaint. ?  

        It is the case of the complainant that   he entered into an Agreement of  Sale dt.16.2.2007 for flat No. 8A, 8^th floor, Type-4  in Simla Block having built up area of 1584  sq.ft., common area of  396 sq.ft.   and one car parking area  with 88 sq. yards of undivided share  in the common land  in Sy.No.194/P , 196/P, 197/P for a  total consideration of Rs.74,49,352/-   to be paid in a phased manner  from 1.12.2006 to 15.3.2008   which evidences  under Ex.A4. On perusal of Ex.A4 shows that the  completion of construction should be  by 31.8.2008   or  24 months from the date of  execution of sale agreement  which ever is later. Clause 7 (a) and (f) of the agreement     states as follows:

        “(a).The Developer and  Land Owner assures to complete the construction of the Scheduled Apartment  by 31^st August, 2008 or 24 months from the date of execution of this Agreement which ever is later as corrected to any time overrum consequent upon actions arising out of recital 6 and subject to the availability of steel or other construction material and any other causes beyond the control of the Developer”  

“(b).Where  construction of Scheduled Apartment is not yet complete on execution of this Agreement for Sale, it is the responsibility of the Developer to complete construction of the Apartment. It is fully understood by the Purchaser that any construction in Hill County shall be solely arranged by the Developer and the purchaser has agreed to the same.”    

The case of the complainant is  that he has paid an amount of Rs.63,37,984/-  from 18.11.2006 to 4.8.2008 but the opposite party  has not completed  the structure and have built  only upto  6^th floor and the Company  Law Board appointed a Special Director   who conducted meeting on 25.3.2009   at  Hill County  at which time the complainant made a request to cancel the agreement and to get his money refunded, but there was no response.  He even got issued a legal notice  dt.28.4.2009 which was served on the opposite party and they gave a reply  dt.13.5.2009. 

The learned counsel for the opposite party submitted that it is only because of the pending  W.P.No.23635/05  in the High Court   they could not get  permission for 5^th to 12^th floors and because  of force maejure  conditions  and other unforeseen  conditions  in the   company  which necessitated  investigation by the Government and statutory authorities, the  construction could not be completed and denied the receipt of the termination letter of the complainant. 

 The contention of the opposite party  that it is only because of W.P.No.23635/2005   that they could not get permission for 5^th to 12^th  floors and therefore could not  complete the construction is unsustainable.   The complainant filed Exs.A16 and A17  which are the copies of orders of A.P.High Court in W.P.No.23635/2005  and 26365/2005 respectively.   We  observe from the  record that W.P.No.23635/05  i.e. Ex.A16  has nothing to do with the opposite party and is a  case with respect to Co-operative Societies  and W.P.No.26365/2005 (Ex.A17 )  is with respect to fire approvals and precautions to be  taken in buildings for which the opposite party is not even a party.  Therefore to take umbrage under the pendency of afore mentioned W.Ps is totally unsustainable.

        The contention of the opposite party that as per the agreement dt. 16.2.2007 there is an arbitration clause no.14  which has to be adhered  to and therefore the Commission has no jurisdiction  to entertain  the complaint is also unsustainable  since the opposite  did not raise this question of arbitration  by filing  an application as per Sec.8(1)  of the Arbitration and Conciliation Act  to refer it to an arbitrator prior to filing his written version .   The opposite party  filed an application  to refer the  complaint on the ground that it is contrary to Sec.8 of the  Arbitration and Conciliation Act,1996 which reads as follows:

“8. Power to refer parties to arbitration where there is an arbitration agreement –(1) A judicial authority before which an action is brought in  a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration”.

The State Commission  observed as follows:

        “This kind of petition should be filed only before filing the written version.  In this case, the opposite not only filed written version, but also adduced evidence and it has come up for arguments, it thereby, undisputably, forfeited the opportunities available under the provisions of Sec.8(1). This petition is liable to be dismissed as it is filed belatedly and contrary to the provisions of Sec.8(1) of the Arbitration and Conciliation Act,1996.  The petition is dismissed.”

This order is final and the opposite party cannot raise this contention now at the this belated stage.   

 In view of the decision of Apex Court  in   FAIR AIR ENGINEERS PVT. LTD. AND ANOTHER v. N.K.MODI reported in II (1996) CPJ 13 (SC) wherein the Apex court held  that  it does not exclude the jurisdiction of this Commission even if there is an arbitration clause  in the agreement, we are of the considered view that this Commission has jurisdiction  to  entertain this complaint.  

Ex.A1 is the brochure issued by the  opposite party offering houses and flats   to the public promising world class construction  and it is pertinent to note that nowhere in the brochure  they have  stated that permission for 5^th to 12^th  floors  is still pending. Ex.A2 is the pricing structure given to the complainant  by the opposite party and the complainant adhered to all the  terms of the payment. Ex.A3 is the letter dt.18.11.2006 addressed by the opposite party  to the complainant  giving him provisional allotment of unit no.381  in Shimla Block for  Apartment no.8A  in which they have called the complainant  to pay an amount of Rs.7,69,706/- but nowhere they have stated about not having approval for construction of 8^th floor.  Having   allotted vide Ex.A3 provisional allotment of Unit  no.381  for  apartment 8A  in the 8^th floor keeping the complainant in dark of any such non approval is an act of deficiency  of service.  We also observe  from the record that the opposite party vide their letter  dt.25.2.2009  evidenced under Ex.A5  acknowledged payment of Rs.63,40,984/-  made by the  complainant to the opposite party. Ex.A7 is  the legal notice got issued by the complainant to the opposite party dt. 28.4.2009   and Ex.A8 is  the reply dt.13.5.2009 in which they contended that the complainant can terminate this agreement of sale unless the  opposite party  fails to complete the construction  as agreed in Clause 7(a) (b) (c) of the Agreement of Sale  which  reads as follows:

(a)            The Developer  and Land Owner assures to complete the construction of the Scheduled Apartment by 31^st August , 2008 or 24 months from the date of execution of this Agreement which ever is later, as corrected to any time overrum consequent upon actions arising out of recital 6  and subject  to the availability of steel or other construction material and any other causes beyond the control of the Developer.  

(b)            Provided that the Developer shall have a further grace period of three (3) months.

(c)              The Developer shall be entitled  to further periods  if the construction is delayed due to natural calamities like floods, war, earthquake, fire or stay of construction by any court or authority or any other emergencies including riots and any terrorist activities, which are beyond the normal control of the First Party

It is an admitted fact that the opposite party could not complete the  construction and  also that the complainant has paid 90% of the amounts.   Ex.A13 dt.18.9.2007  which is the offer of discount letter  addressed by the opposite party to the complainant  in which it is clearly stated as follows:

        “We are glad to inform you that this project has now all approvals,  more particularly the HUDA approval for all the 13 floors with sub cellars and the fire department approval for the same. We   have since  forwarded  these approval copies to home loan bankers.  A copy of the approvals is available  at Hill County Site just in case you wish to take a look.”    

         Opposite party in the written  arguments stated that they still have time to complete the construction and  relied on Clause 9(b)   which  is extracted below:

        “The purchaser can terminate this Agreement upon the Developer failing  construct the property within the period stipulated in this Agreement and the given grace period and the additional 8 months penalty period as provided in clause 7(a), 7(b) and 7(c) . The purchaser shall have no right, at any time whatsoever to obstruct or hinder the  progress of the construction activity.  The  purchaser further agrees that if the Developer gives prior to the expiry of the grace  period of eight months, a revised schedule of construction completion or assures  that the construction shall be completed by a new contractor of repute or a combination of both , the purchaser shall accept the same provided the Total consideration is not increased”.  

The contention of the opposite party that the complainant is not entitled   to terminate  the agreement  unless the opposite party fails to deliver  the property  as contemplated   under  Clause 7  and  is therefore not entitled for cancellation or for refund of the amount is unsustainable   since in the instant case the opposite party has admittedly not even constructed more than six floors and the complainant’s flat no.8(a)  is in the 8^th floor,  their  contention that they did not receive letter dt.25.3.2009(A6) request for cancellation and they are not aware of any such request does not hold good in the light of legal notice also got issued by the complainant and replied to  by the opposite party .  To reiterate  Ex.A6  is the letter dt.25.3.2009 addressed by the complainant to the opposite party  seeking cancellation of his allotment and to refund his money  with interest.  Thereafter  even  in Ex.A7 dt. 28.4.2009 which is the  legal  notice got issued by him and which was admittedly received by  the opposite party  and replied to,  he seeks cancellation of the agreement  and refund of the amount .   So denial of the opposite party that no such request  for cancellation was made is unsustainable.  It is pertinent to note that  Clause 9(b) (c)(d) of Ex.A4 Agreement of Sale  have  given option to the purchasers to cancel  the agreement.  Clause 9(c) states that  termination shall be by a written notice  delivered to the opposite party  as stated in the agreement.  We observe from the record that the complainant has given a written request  and also stated in his legal notice that he seeks for cancellation of Agreement of sale and for

refund of the amounts.  We are of the considered view that the act of the opposite party in not adhering  to the   terms of the agreement and taking umbrage  under Force maejure   events for non completion of construction and refusing to refund the amount of Rs.63,37,984/-  paid by 4.8.2008   i.e. 1 ½ years  ago when the opposite party has not even raised  the  building upto the  6^th floor and admittedly the complainant’s flat is in the 8^th floor, only goes to show  that   the construction of  the complainant’s flat has not even begun and this amounts to deficiency of service.   We direct the opposite party to refund the amount of Rs.63,37,984/- to the complainant with interest at 12%  p.a. from 4.8.2008   i.e. the date of payment of last instalment together with compensation of Rs.5 lakhs for the mental agony and disappointment suffered by the complainant in taking loan and paying such huge amounts  but not   fulfilling his vision  of Home World Class Construction. Today, the market values of such flats has escalated and we are of the considered view that compensation of 5 lakhs would meet the ends of justice.  We also award costs of Rs.5,000/-. 

        In the result this complaint is allowed in part directing the opposite party  to  pay Rs.63,37,984/-  with interest at 12% p.a. from  4.8.2008 i.e. the date of payment of last instalment  by the complainant  till the date of realization together with compensation  of Rs.5 lakhs and costs of Rs.5000/-

                                                                 PRESIDENT

                                                                MEMBER

                                                                  Dt. 30.4.2010

APPENDIX OF EVIDENCE

                                   Witnesses examined

For the complainant:                             For the opp.party :

Affidavit filed  in lieu of chief                    affidavit filed in lieu of

Evidence of P.W.1 on behalf             chief examination of RW.1

of the complainant                             Mr.Teja Pratap Raju, authorized

                                                     signatory of opp.party

Exhibits marked on behalf  of the complainant :

Ex.A1   : Brochure issued by opposite party

Ex.A2   : Pricing structure for apartments

Ex.A3   : Lr. Dt. 18.11.2006  of opp.party to the complt.

Ex.A4   : Agreement for sale dt.16.2.2007

Ex.A5   : Lr. Dt. 25.2.2009 of  opp.party to the complt.

Ex.A6   : Lr dt. 25.3.2009  to the Director of opp.party from complt.

Ex.A7   : Legal notice dt.28.4.2009  issued by complt to the O.P.

Ex.A8   : Reply notice dt.13.5.09 issued by the OP. counsel  to

               Complainant counsel .

Ex.A9   : Lr dt. 18.9.2007 from  O.P. to complt.

ExA10  : Lr.dt.10.1.2009 from  opposite party to the complt.

Ex.A11 : Financial Express Report paper c utting

Ex.A12 : G.P.A. issued by the complainant

Ex.A13 : Lr dt.18.9.2007  from opp.party to  complainant

Ex.A14 : News letter dt. 22.5.2009  of opp.party

Ex.A15 : News paper cutting dt.8.6.09 pertaining to the O.P.

Ex.A16 : Order in Writ Petition No.23635/05  dt. 3.11.05

Ex.A17 : Order in  Writ petition no.26365/05   dt.12.10.2007

Ex.A18 : Lr.dt.3.9.2007  of opposite party to the complainant .

Ex.A19 : Building permission report issued by  HMDA

Exhibits marked on behalf of the opposite party:

Ex.B1   : Certificate of Incorporation  dt.31.12.2007

Ex.B2  : Copy of resolution  dt.10.11.2006passed by Board of                        Directors of O.P.Company.

                                                                PRESIDENT

                                                                MEMBER

                                                                Dt.30.4.2010

Pm*