Per :- Mr. Deshpande, President Place : BANDRA JUDGMENT The Complainant herein is a co-operative housing society, registered under the Maharashtra Co-operative Societies Act, 1960; and the Opposite Party No.1 is a partnership firm, which acted as the Developer/Builder. The Opposite Parties Nos.2 & 3 are the partners of the Opposite Party No.1 – Firm. The Opposite Parties Nos.4 & 5 are the owners of the land on which, the Opposite Party No.1 – Developer; constructed a building from which, members of the Complainant Society purchased their respective flats and from those members, the Complainant Society came to be formed. The members of the Complainant Society got possession of their respective flats in or about the year 2002. [2] It is the case of the Complainant Society that the Opposite Parties did not take effective steps for formation of a co-operative housing society and ultimately, the proposed society consisting of group of members took required steps and spent an amount in sum of Rs.89,000/- for consultancy and registration of the Complainant Society and became successful in getting the society registered, vide registration certificate dtd.23/2/2006. It is further case of the Complainant Society that despite statutory obligation under Section-11 of the Maharashtra Ownership Flats Act, 1960; to execute the Deed of Conveyance in favour of the society, within a period of four months from the date of formation of the society, the Opposite Parties failed to execute the Deed of Conveyance of the property in favour of the Complainant Society. The Opposite Parties also failed to obtain Occupation Certificate and Building Completion Certificate from the competent municipal authorities on account of which, the Complainant Society was required to pay penalty and extra expenses in sum of Rs.2,60,916/-. Not only that but the Opposite Parties also failed to pay the arrears of the property tax to the Municipal Corporation of Greater Mumbai (MCGM) from the year 2000 onwards and the arrears of the property tax were cleared by the Complainant Society, by raising contribution from its members and the Complainant Society incurred expenses in sum of Rs.7,79,298/- to avoid auction of the property. [3] It is further case of the Complainant Society that the Opposite Parties failed to install a lift to the building and the Complainant Society had to incur additional expenditure in sum of Rs.96,750/- for getting the lift installed. The Opposite Parties have also failed to construct an approach road for which, the Complainant Society spent an amount in sum of Rs.1,20,000/-. The Complainant Society served a notice dtd.4/8/2006, through its advocate, calling upon the Opposite Parties to discharge their statutory obligations as well as contractual obligations, but there was no response from the Opposite Parties. Ultimately, the Complainant Society filed present consumer complaint before this Forum, seeking direction, as against the Opposite Parties to discharge their statutory obligations and to pay certain sums under different heads, total amounting to Rs.16,75,964/- towards reimbursement of expenses incurred by the Complainant Society, including compensation. [4] Inspite of due service of notices of appearance issued by this Forum, the Opposite Parties Nos.1 to 3, the Developer firm and its partners, chose to remain absent and did not file their written versions on the record, as called for by this Forum. Consequently, these Opposite Parties came to be set ex-parte. [5] The Opposite Parties Nos.4 & 5, the land-owners, filed their joint written version of defence and took stand that there was no privity of contract between the members of the Complainant Society, on one hand and the Opposite Parties Nos.4 & 5, on the other. According to them, they were not guilty of deficiency in service. The Opposite Parties Nos.4 & 5 took stand that they had transferred the development rights to the Opposite Party No.1 – Firm; of which the Opposite Parties Nos.2 & 3 are the partners and as such, the Opposite Parties Nos.1, 2 & 3 are responsible for the compliances, as sought by the Complainant Society. [6] The Complainant Society filed its rejoinder to the written version of defence, as filed by the Opposite Parties Nos.4 & 5. [7] The Complainant Society filed its affidavit of evidence as well as copies of relevant documents. [8] The Complainant Society as well as the Opposite Parties Nos.4 & 5, filed their respective written notes of arguments. [9] We have gone through the pleadings, affidavit and documents as well as written notes of arguments filed by the parties. [10] We take the points that arise for our consideration and record our findings there-against as below:- Sr. No. | Points for consideration | Findings | 1. | Whether the Complainant Society has proved that the Opposite Parties are guilty of deficiency in service on account of failure on their part to discharge statutory obligations as well as contractual obligations? | YES | 2. | Whether the Opposite Parties Nos.4 & 5, the land-owners, are also liable alongwith the Opposite Parties Nos.1 to 3, to the Complainant Society? | YES | 3. | Whether the Complainant Society is entitled to the directions, as sought in the complaint and reimbursement of expenses? | YES | 4. | What order? | The complaint is partly allowed. |
REASONS FOR FINDINGS [11] This is no dispute between the parties to the complaint proceeding as regards the fact that the Opposite Parties Nos.4 & 5 are the owners of the land upon which, the building of the Complainant Society came to be constructed by the Opposite Parties Nos.1 to 3, consisting of flats, which came to be sold by the Opposite Party No.1 – Developer; under different agreements to the flat-purchasers, who subsequently formed the Complainant Society. The Opposite Parties Nos.4 & 5, in their brief written version of defence, have taken stand that under the development agreement dtd.5/10/2001, executed by & between the Opposite Parties Nos.1 to 3, on the one hand and the Opposite Parties Nos.4 & 5, on the other, they had conferred development rights to the Opposite Parties Nos.1 to 3 and the Opposite Parties Nos.1 to 3 were responsible for the obligations, which were to be discharged by the Developer. We have gone through the copy of the development agreement, which is at Exhibit-C/1, from pages (53) to (61) of the compilation of the complaint. It is seen from the provisions in the development agreement that the Opposite Parties Nos.4 & 5, were entitled to retain two flats jointly, being the entire first floor; two flats jointly, being the entire second floor; two flats jointly, being the entire seventh floor; and flat No.5 at the third floor. This is mentioned in Clause No.(02) of the development agreement. As per provisions under Clause No.(03) of the development agreement, the Developer was entitled to retain flats bearing Nos.7 & 8, on the fourth floor; flat No.6 on the third floor; flats Nos.9 & 10, on the fifth floor. Under Clause No.(13) of the development agreement, the owner has to pay outgoings from 31/3/2001. [12] Section-2(c) of the Maharashtra Ownership Flats Act, 1963; defines the term – ‘Promoter’, as follows:- “ ‘promoter’ means a person and includes a partnership firm or a body or association of persons, whether registered or not who constructs or causes to be constructed a block or building of flat or apartments for the purpose of selling some or all of them to other persons, or to a company, co-operative society or other association of persons, and includes his assignees; and where the person who builds and the person who sells are different persons, the term includes both;” [13] Close reading of Section-2(c) of the Maharashtra Ownership Flats Act, 1963; reveals that ‘promoter’ includes a person, who constructs or causes to be constructed a block or building of flat or apartments for the purpose of selling some or all of them to other persons. Definition of ‘promoter’, further reveals that where a person who builds and the person who sells are different persons, the term includes both. Thus, the definition of ‘promoter’, as given in Section-2(c) of the Maharashtra Ownership Flats Act, 1963; is inclusive and it encompasses or takes into its fold, a living person or a juristic person, who constructs or causes to be constructed a block or building of flats or apartments. It be noted that definition of ‘promoter’ not only refers to a person who builds or constructs a building, but it also refers to a person who causes said block or building to be constructed. In our view, definition of ‘promoter’, as given in Section-2(c) of the Maharashtra Ownership Flats Act, 1963; does not exclude the owner of land upon which the building consisting of flats came to be constructed. [14] Now, from the tenor & text of the written version of defence, as filed by the Opposite Parties Nos.4 & 5, it is seen that on the strength development agreement, they had conferred certain rights upon the Opposite Parties Nos.1 to 3, which were duly exercised by the Opposite Parties Nos.1 to 3 and the building came to be constructed and flats also came to be sold to the flat-purchasers. Be it noted that this activity was undertaken by the Opposite Parties Nos.1 to 3, on the strength of the development agreement dtd.5/10/2001, to which none of the members of the Complainant Society was a party. Naturally, therefore, provisions under that development agreement would not be binding upon any of the members of the Complainant Society. [15] Added to this, agreement which came to be entered into by & between flat-purchasers, on the one hand and the Opposite Party No.1 – Developer; on the other, was signed by the Opposite Parties Nos.4 & 5. The Complainant Society has produced on the record a copy of one of such agreements for sale at Exhibit-C/1, from pages (14) to (32) of the compilation of the complaint. No doubt, in the agreement for sale dtd.16/4/2002, entered into between one of the flat-purchasers and the Opposite Party No.1 – Developer; the Opposite Parties Nos.1 to 3 have been referred to as ‘the promoters’, but as pointed out above, the definition of ‘promoter’, as given in Section-2(c) of the Maharashtra Ownership Flats Act, 1963; is inclusive of land-owners. Under Clause No.(03) of the agreement to sale, the promoters had bound themselves to certain conditions and they had agreed to deliver possession by certain date. They had also undertaken to transfer ownership rights in favour of the flat-purchasers on execution of the conveyance in favour of the society. However, these provisions in the agreement for sale would not absolve or relieve the Opposite Parties Nos.4 & 5, as the land owners, from their liability as ‘the promoters’, as contemplated by Section-2(c) of the Maharashtra Ownership Flats Act, 1963. As per provisions contained in Section-16 of the Maharashtra Ownership Flats Act, 1963; provisions contained in the said Act shall take effect notwithstanding anything to the contrary contained in any contract. Thus, provisions under the Maharashtra Ownership Flats Act, 1963; shall supercede contrary provisions in any of the contract. This would be squarely applicable to the present agreement also. Therefore, by virtue of the development agreement, to which members of the Complainant Society were not a party, as also, by virtue of provisions contained in the agreement for sale of a flat, some of which are contrary to the provisions contained under the Maharashtra Ownership Flats Act, 1963; the Opposite Parties Nos.4 & 5, as the land-owners, would not be absolved or excluded from the liability and the statutory obligations arising out of provisions contained under the Maharashtra Ownership Flats Act, 1963. [16] During the course of arguments, the Learned Advocate for the Opposite Parties Nos.4 & 5, referred to decision of the Hon’ble Supreme Court in the case of Faqir Chand Gulati Vs. M/s. Uppal Agencies Pvt. Ltd. & Anr. ~ 1986-2008-CONSUMER-13388-(NS). We have gone through the said decision and it is seen that the Apex Court, in this judgment, discussed various types of agreements, which are usually entered into by & between land-holders and a builder. They are referred to as – ‘joint venture agreements’, ‘development agreements’ or ‘collaboration agreements’. Apex Court also referred to another set of agreement, which has been referred to ‘hybrid agreements’. However, this decision would not be applicable to the present case because in Faqir Chand Gulati’s case, a consumer complaint was filed by a land-owner against a builder and the question was raised as to whether a land-owner was a ‘consumer’ of the builder. In the present case, the question is as to whether the land-owners are the ‘service providers’ qua the society, having acquired the status of a ‘consumer’. Position being radically different, the decision of the Apex Court is not applicable to the present case. More-so, it does not lays down that a land-owner would not fall within the definition of the term – ‘promoter’, and would not be answerable to the flat-purchasers/consumers. Ultimately, the question has to be decided as to who agreed to provide services for consideration to a ‘consumer’. In the present case, though the Opposite Parties Nos.1 to 3, acted as developer and represented themselves as the promoters, in essence and in reality, they acted as the agents of the land-owners – the Opposite Parties Nos.4 & 5; and thus, the Opposite Parties Nos.4 & 5, as the land-owners, retained the character of principal qua the agent. It would be erroneous to hold that an agent alone is liable to the ‘service seekers’, excluding the principal, who had appointed the agent. From this stand point also, we find that the Opposite Parties Nos.4 & 5, would also be liable alongwith the Opposite Parties Nos.1 to 3 to the extent of statutory obligations as well as contractual obligations. [17] Turning to the facts of the case qua allegations of deficiency in service, the members of the Complainant Society got possession of their respective flats in or about the year 2002. As per provisions contained in Section-10 of the Maharashtra Ownership Flats Act, 1963; read with Rule-8 of the Maharashtra Ownership Flats Rules, 1964; a builder/promoter has to submit an application before the competent authorities within a period of four months from the date on which, minimum number of members required to form such organization have taken flats. Minimum number of persons, who have taken flats, should be 60% of the total number of flats for the purpose of registration of the society. Here, it is not the case of the Opposite Parties that for a long period, total number of flat-purchasers were not complete to form a co-operative housing society. Ultimately, the erstwhile members of the Complainant Society started taking steps to form a co-operative housing society. In this regard, the members of the Complainant Society had to engage an agency to take steps for formation of the society. According to the Complainant Society, its members were required to spend and incur expenses in sum of Rs.89,000/- for formation of the society. At pages (75) to (78) of the compilation of the complaint, there are copies of the receipts issued by M/s. Parab Society Service, which show that the members of the Complainant Society had paid an amount in sum of Rs.69,000/- to the said agency for taking steps for formation of the society. At page (73) of the compilation, there is a copy of certificate for registration of the Complainant Society, which shows that Complainant Society came to be registered on 23/2/2006. Since, the Opposite Parties failed to discharge their statutory obligation arising out of Section-10 of the Maharashtra Ownership Flats Act, 1963; read with Rule-8 of the Maharashtra Ownership Flats Rules, 1964; to form a society within a period of four months and since the flat-purchasers were required to spend an amount in sum of Rs.69,000/- to get the Complainant Society registered, we find that the Opposite Parties are liable to pay/reimburse this amount to the Complainant Society. [18] It is also the case of the Complainant Society that the Opposite Parties had failed to provide drinking water connection from the MCGM and it had to incur additional expenditure for getting drinking water connection and it had to spend for water charges with penalty. At page (80) of the compilation of the complaint, there is a receipt issued by plumbers – M/s. Pankaj Sanitations; for fitting of pipeline and installation of water meter. Said agency was also paid for obtaining approval from concerned municipal authorities for grant of water connection on humanitarian grounds. The Complainant Society had paid an amount in sum of Rs.77,930/- to the said contractors for fitting of pipeline and installation of water meter. This was a contractual obligation, which the Opposite Parties failed to discharge. Hence, the Opposite Parties are liable to reimburse this amount to the Complainant Society. [19] It is further case of the Complainant Society that the Opposite Parties failed to install a lift and it was required to spend an amount in sum of Rs.96,750/- for installation of a lift. The Complainant Society has produced on the record copies of the bills from pages (107) to (115) of the compilation of the complaint. It is seen from the entries in the letter dtd.30/12/2003, a copy of which is produced on the record at page (107) of the compilation, that M/s. Reliance Elevators had taken maintenance contract for maintenance of the lift installed in the building of the flat-purchasers and the Complainant Society had paid a total amount in sum of Rs.96,750/-, under receipts, copies of which are produced on the record at pages (107), (109), (112) and (115) of the compilation. This was prior to formation of the Complainant Society. Obviously, before formation of the society, a builder/ developer, is responsible for maintenance of the property and he is liable to incur the expenses for the same. Naturally, the Opposite Parties were supposed to incur the expenses for maintenance of the lift. However, it is seen from the record that the concerned agency – M/s. Reliance Elevators; received payments from the Secretary of the Complainant Society, before its formation. The Opposite Parties being the ‘promoters’, would be liable to reimburse this amount to the Complainant Society. [20] In addition to the above, the Complainant Society was required to spend for construction of an approach road to the building of the Complainant Society and it is alleged in paragraph (04)(f) of the complaint, that under the Development Control Rules, it is mandatory for a builder/promoter to construct/provide an approach road to the building, which the Opposite Parties failed to construct and the Complainant Society was required to give a contract for construction of an approach road and was required to spend an amount in sum of Rs.1,20,000/-. The Complainant Society has produced on the record copies of receipts from pages (116) to (124) of the compilation, regarding payments made by the Complainant Society to the said agency. This was prior to formation of the society, which came to be formed in the year 2006. Dates mentioned in the receipts show that payments were made in the year 2005. Naturally, the Opposite Parties shall have to reimburse the expenses in sum of Rs.1,20,000/-, incurred by the Complainant Society for construction of an approach road. [21] As per the provisions contained in the agreement for sale of flat, the promoter was under an obligation to obtain the Occupation Certificate and Building Completion Certificate from the competent municipal authorities. In the present case, till the filing of the present consumer complaint, the Opposite Parties failed to obtain the Occupation Certificate and Building Completion Certificate from the Municipal Corporation of Greater Mumbai (MCGM). Naturally, the Complainant Society was required to pay additional sums towards the property tax and water charges. Had there been Occupation Certificate from the municipal authorities, the property tax as well as the water charges would have been levied at regular rates, but in absence of Occupation Certificate, those were levied at double the normal rates. Naturally, the Complainant Society was required to incur additional expenses for these payments. Record of the case shows that these payments pertained to the period before formation of the Complainant Society. In accordance with the provisions contained in Section-6 of the Maharashtra Ownership Flats Act, 1963; it was the responsibility of the Opposite Parties, as the promoters, to pay cess and charges to the concerned department till the society was formed and conveyance was executed. It appears from the record that the Opposite Parties failed to make the payment and in order to avoid loss of basic amenity and in order to avoid auction of the property, the Complainant Society was required to make payment of water charges and property taxes, as per the demand bills received from the MCGM from time to time. At Exhibit-C/5 ‘colly’, there are copies of the demand bills and corresponding receipts regarding payments. We have verified the various bills and the receipts. The payment details towards water charges can be summarized as follows:- Compilation Page No. | Receipt dated | Amount in Rs.ps. | 79 | 2/4/2004 | 79,765/- | 81 | 16/11/2004 | 9,800/- | 83 | 19/3/2005 | 5,692/- | 85 | 24/5/2005 | 17,931/- | 87 | 9/10/2005 | 9,901/- | 90 | 31/12/2006 | 25,142/- | | Total | Rs.1,48,231/- |
[22] In view of the fact that the members of the Complainant Society had occupied their respective flats and in the normal course had there been Occupation Certificate being obtained from the competent municipal authorities by the Opposite Parties, members of the Complainant Society would have been required to pay the water charges at the normal rates. Therefore, the additional burden was payable than the normal rates. In view of this, we reduce the liability of the Opposite Parties to the extent of 50% of the total bill i.e. only to the extent of Rs.74,115/-. [23] The payment details towards property tax can be summarized as follows:- Compilation Page No. | Receipt dated | Amount in Rs.ps. | 92 | 3/3/2004 | 1,54,200/- | 96 | 19/3/2005 | 13,856/- | 97 | 19/3/2005 | 13,856/- | 100 | Not legible | 92,947/- | 102 | 19/3/2005 | 93,063/- | 104 | 24/8/2005 | 93,113/- | 106 | 2/6/2006 | 93,113/- | | Total | Rs.5,54,148/- |
[24] As per provisions contained in Section-6 of the Maharashtra Ownership Flats Act, 1963; the Opposite Parties were liable to pay property taxes till the conveyance was executed. Since, the Opposite Parties failed to execute the conveyance, the demand bills in their names were received by the Complainant Society and in order to avoid auction of the property at the hands of the MCGM, the Complainant Society discharged that liability by making payments from time to time. The Opposite Parties will have to make reimbursement of the property tax paid by the Complainant Society and the amount arrived at, as above, is in sum of Rs.5,54,148/-. Rests of the claims, as submitted in the complaint, are not supported by receipts & vouchers. Total of all these amounts comes to an amount in sum of Rs.9,91,943/-. [25] The Complainant Society has claimed compensation in sum of Rs.3,00,000/- besides interest on the amount recoverable. Since, we are inclined to award interest @ 9% p.a. on the amount found due, we are not inclined to award separate compensation to the Complainant Society. [26] As noted above, the Opposite Parties Nos.1 to 3 have not filed their written version of defence on the record, as called for by this Forum and came to be set ex-parte. No doubt, the Opposite Parties Nos.4 & 5, filed their written version of defence, but it is not in the form of an affidavit and in fact, there is no affidavit to support the contentions raised in the written version. Thus, the affidavit filed by the Secretary, on behalf of the Complainant Society, has remained un-rebutted. Still then, we have ventured to arrive at the figure of the liability, which is supported by receipts and vouchers. [27] In addition to the payment of the above sum, the Opposite Parties are also liable to obtain Occupation Certificate and Building Completion Certificate from the competent municipal authorities, as also, to execute the Deed of Conveyance in favour of the Complainant Society. In order to avoid further delay in obtaining Occupation Certificate and Building Completion Certificate and execution of Deed of Conveyance, we propose to direct the Opposite Parties to obtain Occupation Certificate & Building Completion Certificate and to execute the Deed of Conveyance within the stipulated period and in the event of failure on their part to take required steps for obtaining Occupation Certificate & Building Completion Certificate and execution of conveyance, they shall be liable to pay to the Complainant Society, penalty at a particular rate, which we quantify at an amount in sum of Rs.1,000/- per day as from the date of expiry of stipulated period. With this, we proceed to pass the order as below:- ORDER The complaint is partly allowed. The Opposite Parties are jointly & severally held guilty of deficiency in service. The Opposite Parties shall jointly & severally reimburse to the Complainant Society, an amount in sum of Rs.9,91,943/- together with interest thereon @ 9% p.a., as from the date of filing of complaint i.e. 02/Jan/2007 till realization of entire amount by the Complainant Society. The Opposite Parties are jointly & severally directed to arrange for obtaining Occupation Certificate and Building Completion Certificate from the competent municipal authorities within a period of three months from the date of receipt of copy of this order. The Opposite Parties are jointly & severally directed to execute the Deed of Conveyance in respect of the property in favour of the Complainant Society within a period of four months from the date of receipt of copy of this order. The Opposite Parties shall jointly & severally pay to the Complainant Society, an amount in sum of Rs.5,000/- towards costs. The Opposite Parties shall also furnish statement of accounts to the Complainant Society till the date of formation of the society. It is hereby made clear that in the event of failure on the part of the Opposite Parties to comply with the foregoing order within the stipulated period, they shall also be jointly & severally liable to pay to the Complainant Society, an amount in sum of Rs.1,000/- per day towards penalty, as from the date of expiry of respective stipulated period till the foregoing order is fully complied with. Rest of the claims of the Complainant Society, stands rejected. Parties shall be informed accordingly, by sending certified copies of this order.
| | [HONABLE MRS. Mrs.DEEPA BIDNURKAR] Member[HONABLE MR. Mr. J. L. Deshpande] PRESIDENT[HONABLE MR. MR.V.G.JOSHI] Member | |
