Date of filing: 18.12.2020

                                                               Date of Disposal:20.12.2022

 BEFORE THE III ADDITIONAL BANGALORE URBAN

DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION,

                               BENGALURU – 560 027.

DATED THIS THE 20^th DAY OF DECEMBER, 2022

CONSUMER COMPLAINT NO.1127/2020

PRESENT:

SRI.RAJU K.S,

SMT.REKHA SAYANNAVAR,:MEMBER

Ms.Preetha R.K,

D/o Mr.R.K.Mohandas,

Aged about 46 years,

No.115, Aishwarya Eastwoods Apartment,

HSR Layout Sector-2,

Bangalore-560 102. ……COMPLAINANT

Rep by Sri.M.A.Sebastian, Advocate

M/s Mantri Developers Private Limited,

A company incorporated under the companies Act, 1956,

Having its registered office At:“Mantri House,

No.41, Vittal Mallya Road,

Bangalore-560 001,

Rep by its Director

Ms.Snehal Mantri.……     OPPOSITE PARTY-1

Rep by Sri.S.Sushant Venkatesh Pai, Advocate

M/s Axis Bank,

Retail lending and payments,

Sona Tower,

32 E Cross, 4^th Block,

Bengaluru, Karnatka-560 041,

Rep by its head. ……     OPPOSITE PARTY-2

Rep by Sri.Mohan Malge, advocate

//JUDGEMENT//

BY SRI.SHIVARAMA K, PRESIDENT

The complainant has filed this complaint under Section-35 of Consumer Protection Act, 2019 seeking for a direction to the opposite parties to pay the assured return to the complainant as per MOU dt.24.06.2015 amounting to Rs.23,34,804/- with interest at the rate of 18% p.a. from July 2018 until the date of payment and a sum of Rs.11,93,105/- towards the 19 EMI’s already paid by the complainant to the 2^nd opposite party and a direction to the 1^st opposite party to complete the process of buy back and close the home loan account of the complainant with the 2^nd opposite party by paying the outstanding loan amount and direct the 2^nd opposite party to refrain from initiating recovery proceedings against the complainant and to pay a sum of Rs.10,00,000/- towards the compensation for the deficiency in service and inconvenience caused to the complainant and such other reliefs as this commission deems fit in the circumstances of the case.

2. It is not in dispute that the memorandum of understanding in between the complainant and opposite party no.1 came to be executed on 24.06.2015 vide EX.P1 and it is not in dispute that the agreement for sale of undivided interest has also came to be executed by the opposite party no.1 and the owner of the land in favour of the complainant and the agreement for construction also came to be executed by the opposite party no.1 in favour of the complainant on 14.07.2015 as per EX.P2 & P3.  Further, it is not in dispute that the opposite party no.2 had sanctioned the loan amount of Rs.87,28,500/- to the complainant on 23.07.2015.  Further, it is not in dispute that the flat No.P 1401 in Tower No.P has been allotted in favour of the complainant by the 1^st opposite party under purchase sale agreement.  Further, it is not in dispute that the 1^st opposite party offered the complainant to return the assured under Pre-EMI scheme.  The 1^st opposite party has an option to buy back the apartment.  Further, it is not in dispute that as per the scheme, the complainant had to invest a sum of Rs.1,16,74,016/- in the project for a period of 36 months and had paid an initial deposit of Rs.11,67,402/ to opposite party no.1 towards the own contribution.  Further, it is not in dispute that the 1^st opposite party had agreed to deliver to the complainant, the constructed flat on or before 30.11.2017.  Further, it is not in dispute that the construction was not completed as assured. 

3. It is the further case of the complainant that out of the home loan sanctioned, a sum of Rs.70,044,09/- has been disbursed to opposite party no.1.  Further, a sum of Rs.62,795/- was debited from the bank account of the complainant towards Pre-EMI amount on every month and it was agreed to be reimbursed to the complainant by 1^st opposite party as per the terms and conditions of the MOU dt.24.06.2015.  The EMIs deducted are never been reimbursed regularly in favour of the complainant.  Further, since there was slow progress in the project completion and irregular reimbursement of the EMIs paid by complainant to 1^st opposite party through the 2^nd opposite party, as per the terms of the Memorandum of understanding for the assured return and pre-EMI, the complainant informed her intention to opposite party no.1 ‘not to retain’ the flat and opted for the buy-back of the unit by 1^st opposite party through a letter addressed in the month of January-February 2018 by mail.  Further, even though the opposite party no.1 assured for return of                       Pre-amount and EMI reimbursement, ever since the due date failed to repay the same in spite of repeated requests.  Hence, the complainant got issued legal notice dt.26.05.2020 demanding for return of the assured amount.  Hence, the complaint came to be filed.

4. It is the further case of opposite party no.1 that the opposite party no.1 is not a product seller/service provider so far as the complainant is concerned, thereby, the complaint is not maintainable. Further, the relief sought by the complainant is in the nature of specific performance of the contract, thereby this commission has no jurisdiction to grant the relief sought.   Further, the reliefs sought by the complainant are beyond the purview of a ‘Consumer Dispute’.  Hence, on that ground also the complaint is not maintainable.  Further, the complainant is not a “consumer”, but an “investor” for gain, thereby she is disentitle from approaching this Commission.  Further, as per MOU pre-EMI scheme is applicable only to the loans approved/sanctioned by India bulls Housing Finance Limited or Punjab National Bank Housing Finance Limited.  In the instant case, the complainant has obtained the loan from the 2^nd opposite party i.e, M/s Axis Bank.  The complainant had violated the terms and conditions of MOU. Further, as per the terms of the MOU, the complainant was to communicate her willingness to opt out of purchasing the apartment and to opt in for the buy-back scheme before January 2018, but the complainant opted for buy-back scheme only in January/February 2018 i.e., after the expiry of the stipulated period stated in MOU.  Further, because of factors which was not in his control the opposite party no.1 was not able to complete the project within the time.  Hence, it is sought to dismiss the complaint.

5. It is the further case of opposite party no.2 that the complainant had availed the financial facilities from the 2^nd opposite party, thereby the complainant is liable to discharge her liabilities.  Further, 2^nd opposite party is not responsible for the non-performance by the 1^st opposite party.  Further, if the                   1^st opposite party has retracted from its commitments to the complainant, the 2^nd opposite party cannot be made liable for the same.  Further, if the 1^st opposite party had failed to perform its obligations, the complainant has remedy before the Civil Court by filing case seeking for appropriate reliefs.   Further, the Apex Court has set law that the borrowers have to repay the loan amount strictly in accordance with the terms of agreement.  Further, the bank cannot compromise the public interest, for benefiting private individuals.  Further, on the request of the complainant the opposite party bank had disbursed loan amount of Rs.73,81,179/- which the complainant had to utilize towards the purchase of the flat.  Further, since the complainant was buying the flat from the                  1^st opposite party, he had authorized the opposite party bank to disburse the loan amount directly to the builder.  Further,               1^st opposite party had issued no objection letter to the complainant to mortgage the flat as a security towards the loan.  Further, the complainant is liable to pay the opposite party bank a sum of Rs.75,63,594/- as on 23.02.2021 towards the closure of the loan.  Hence, there is no deficiency of service on the part of the opposite party no.2. 

6. To prove the case, the complainant (PW1) has filed affidavit in the form of her evidence in chief and got marked EX.P1 to P10 documents.  The authorized signatory of 1^st opposite party (RW1) has filed affidavit in the form of his evidence in chief and got marked EX.R1 document.  The Manager legal of opposite party no.2-Bank (RW2) has filed affidavit in the form of his evidence in chief and got marked EX.R2 to R6 documents. 

7. Counsels for the complainant and opposite party No.1 & 2 have filed their respective written arguments. 

       8. The points that would arise for consideration are as under:

i) Whether the complainant proves the deficiency of service on the part of the opposite party No.1 & 2 ?

    ii) Whether the complainant is entitled for the 

         compensation as sought ?

     iii) What order ?

9.   Our findings on the aforesaid points are as follows:

Point No.1 :  In affirmative

Point No.2 :  Partly in affirmative

Point No.3 :  As per the final order for the following;

REASONS

10.POINT NO.1:- The complainant (PW1) and authorized signatory of opposite party no.1 (RW1) and Manager Legal of opposite party-2 bank (RW2) have reiterated the fact stated in their respective pleadings, in the affidavits filed in the form of their evidence in chief.  It is the contention of the learned counsel for the opposite party no.1 that since the opposite party no.1 is not a “product seller” or a “service provider” in so far as the complainant is concerned and they are all independent parties to a contract, the complaint is liable to be rejected  on the ground of cause of action to approach this commission.   Section-2(42) contemplates with regard to the “service”.  The service in the form of housing construction is also comes within the meaning of service.  Admittedly, the opposite party no.1 is a developer.  Hence, it cannot be said that opposite party no1 is not a service provider as asserted by the counsel for the opposite party no.1.  Hence, there is no merit in the said contention. 

11. It is the further contended by the learned counsel for the opposite party no.1 that the dispute between the complainant and opposite party no.1 does not come within the ambit of consumer disputes.  Section-2(8) contemplates that a dispute where the person against whom a complaint has been made, denies or disputes the allegations contained in the complaint. 

12. It is the further contention of the learned counsel for the opposite party no.1 that the complainant is not a “consumer”, but an “investor” for gain, thereby she is disentitled from approaching this Commission. Opposite party no.1 comes under Section-2(42) within the meaning of “service provider” since, the opposite party No.1 is a developer.  Further, Section-2(7)(ii) provides that the consumer who avails of any service for a consideration can also be a consumer.   In the case on hand, the complainant has paid consideration as stated above.  Further, as per memorandum of understanding produced by the complainant vide EX.P1, the opposite party No.1 offered the complainant and assured the return and Pre-EMI scheme.  Further, the complainant can retain the unit stated in the agreement of sale and agreement of construction vide EX.P2 & P3 or offer to buy back of the unit by opposite party no.1.  Hence, the consideration paid by the complainant of Rs.11,67,402/- cannot be purely an investment since choice been given to the complainant.  The opposite party did not produce any materials to say that the investment by the complainant was in the nature for commercial purpose.  Hence, there is no merit in the contention of the learned counsel for the opposite party in that aspect.

13. There is no dispute with regard to the memorandum of understanding and the construction agreement.  Further as per memorandum of understanding, opposite party no.1 has assured the return of 100% after the construction was made by the opposite party No.1 to the unit purchaser at the end of June-2018 i.e., 36 months from the date of booking.  The agreement for construction is dt.14^th July, 2015.  Admittedly, the construction has not been completed within June-2018.  Since, the construction has not been completed, the complainant had addressed an email in the month of Februar-2018 stating that she surrenders the unit to opposite party no.1 to avail the benefits assured in the return scheme.  Further, on 05.02.2018 the opposite party no.1 had sent reply to the complainant stating that it would release unit on resale and close the scheme at the earliest.  Further, on 19.02.2020 the complainant got issued legal notice to opposite party vide EX.P6 stating that the complainant was not intended to retain the flat and sought for return of the amount as assured with interest.  Further, RW1 the authorized signatory of opposite party no.1 has stated in his evidence that the proposed date of handover as per Annexure B-1 of the agreement of construction was 30.11.2017.  Further, there was delay on the part of the authorities, labour strikes, non-availability of steel, sand, cement and such other vital building materials, rules, notification of the government and other public or competent authority or any dispute or matter relating to the property pending final determination by the commission.  Hence, the opposite party no.1 shall not be held responsible for the delay in completing the project and the delay was due to the factors which were beyond the control of the 1^st opposite party.  Further, the demonetization declared in November, 2016 by the Central Government hindered the progress of the project.  Further, heavy rainfall and flooding was experienced in Bengaluru.  Further, at the time of construction process, the opposite party no.1 encountered the hard rock while excavating the land.  Further, due to Covid-19 pandemic also progress of the work has been hindered.  Hence, admittedly, the work has not been completed as assured by the opposite party no.1.  Therefore, there is deficiency of service on the part of the opposite party no.1. 

14. It is the contention of the learned counsel for the opposite party no.1 that there is no deficiency of service on the part of the opposite party no.1.  In support of the contention, counsel relies the judgment rendered by Hon’ble Apex Court reported in AIR 2010 SC 1604 in between the Chairman cum Managing Director, Rajasthan Financial Corporation and others V/s S.C.Jain and others.  The fact in the said case is with regard to the setting up a manufacturing unit of plastic doors and windows on borrowing of loan.  Hence, the fact of the cited judgment is different from the facts of the case on hand.  Therefore, the same is not applicable to the case on hand.  Further, counsel has also relied the judgment reported in AIR 2020 SC 673, in between the Branch Manager, Indigo Airlines, Kolkata and others V/s Kalpana Rani Debbarma and others.   The fact in the said case is that the complainant had booked Air ticket to travel from Kolkata to Agartala operated by the opposite parties.  Further, on the travelling day the complainant was not able to board the flight and the concerned flight departure was without any information about its departure.  The fact of the case is entirely different from the facts of the case on hand and the same is not applicable to the case on hand.  Accordingly, I answer this point in affirmative.

15.POINT No.2  The complainant claimed the return of Rs.23,34,804/- with interest at the rate of 18% p.a., from July 2018.  Undisputedly, the complainant has paid a sum of Rs.11,67,402/- i.e., a sum of Rs.5,00,000/- through cheque dt.24.06.2015 and a sum of Rs.6,67,402/- through cheque dt.02.07.2015.  The opposite party no.1 assured 100% return on the consideration paid by the unit purchaser at the end of June-2018. The 100% return of the amount paid by the complainant of Rs.11,67,402/- comes to Rs.23,34,804/-.  The complainant claimed interest at the rate of 18% p.a. from July 2018.  I feel the said rate of interest is an exorbitant one.  Hence, the complainant is entitled for interest at the rate of 9% p.a. from July 2018 until the date of payment.   Further, the complainant claimed a sum of Rs.11,93,105/- towards the 19 EMI’s already paid by the complainant to the 2^nd opposite party bank.  According to RW2, upon the request of the complainant, the opposite party no.2 bank had sanctioned housing loan towards purchase of residential apartment by the complainant to be constructed by the 1^st opposite party and it has disbursed the loan amount of Rs.73,81,179/- which the complainant had to utilize towards the purchase of the flat and the complainant had authorized opposite party bank to disburse the loan amount directly to the builder.  Accordingly, the home loan account came to be entered on 21.07.2015.  Further, opposite party no.1 had issued no objection letter to the complainant to mortgage the flat as a security towards the loan.  Further, the complainant is liable to pay the opposite party bank a sum of Rs.73,63,594/- as on 23.02.2021 towards the closure of the loan. 

16. According to PW1, the opposite party no.2 bank had sanctioned home loan for Rs.87,28,500/ and had disbursed Rs.70,004,409/- in favour of the 1^st opposite party in one shot.  Further, a sum of Rs.62,795/- is being debited from the bank account of the complainant towards the pre-EMI amount on every month and the same is agreed to be reimbursed to the complainant by the 1^st opposite party as per the terms and conditions mentioned in MOU dt.24.06.2015.  But the EMIs been deducted from the complainant’s salary accounts are never been reimbursed regularly by opposite party no.1.  Further, out of the total of 65 EMIs due till December 2020, 54 EMIs are paid by the complainant to the 2^nd opposite party out of which reimbursement of 19 EMIs amounts are still remain unpaid by the 1^st opposite party to the complainant.  One of the condition in MOU as per EX.P1 is that the pre EMI will be reimbursed/paid to the client on monthly basis on or before 20^th day of the following month of the last month.  The opposite party no.1 undertakes to reimburse Pre EMI at actual on an agreed time every month but not later than 30 days from the relevant date Pre EMI of client.  Therefore, the opposite party no.1 should have directly reimbursed the pre EMI.  That has not been done.  As per MOU, the opposite party no.1 shall pay the complainant, the EMIs paid by the complainant it comes to Rs.11,93,105/-.  Therefore, the opposite party no.1 is liable to pay the said amount to the complainant.

17. It is further contended by the learned counsel for the opposite party no.1 that the opposite party no.1 had agreed to reimburse Pre-EMI every month in terms of MOU is not applicable to the complainant as she choose to get the loan from 2^nd opposite party and MOU pre-EMI scheme was applicable only to the loans approved/sanctioned by India bulls Housing Finance Limited or Punjab National Bank Housing Finance Limited. Admittedly, the complainant has borrowed the loan from Axis Bank.  I feel since the opposite party no.1 without any objection has got disbursed the loan from Axis Bank and encashed and used it for development project and now I feel for mere because the complainant had changed the bank in borrowing the loan, there is no merit in the contention that the opposite party No1 is not liable to reimburse pre-EMI on every month. 

18. Further, the complainant claimed a direction to 1^st opposite party to complete the process of buy back and close the home loan account of the complainant with the 2^nd opposite party by paying the outstanding loan amount.  It is the contention of opposite party no.2 that since the complainant had signed the mortgage deed, the complainant is liable to pay the loan.  I feel EX.P1 memorandum of understanding is an vital documents in this case.  No doubt, RW2 has produced true copy of Loan application dt.08.01.2015 vide EX.R2.  The loan sanction letter dt.09.07.2015 vide EX.R3.  The loan disbursement advice dt.21.07.2015 vide EX.R4.  Copy of home loan agreement dt.21.07.2015 vide EX.R5 and copy of the Axis Bank Statement of complainant vide EX.R6.  The home loan agreement in EX.R5 stands in the name of the complainant. The memorandum of understanding vide EX.P1 speaks that opposite party no.1 will settle the bank loan outstanding with the bank on or before June 2018 and give the final clearance certificate to the investor.  Therefore, the opposite party no.1 is liable to clear the loan outstanding as per EX.P1.  Therefore, the opposite party no.1 is directed to complete the process of buy back and close the home loan account of the complainant.

  19. The complainant further seeks a direction to the opposite party no.2 to refrain from initiating recovery proceedings against the complainant.  On perusal of EX.R5 home loan agreement, it indicates that the complainant was the applicant and in the repayment clause it is stated the borrower shall repay to the bank the amount equated in terms of monthly instalments.   In EX.P1 MOU it is stated that the opposite party no.1 shall clear the outstanding loan.  Hence, there is a conflict of interest of the parties involved in the documents.  Therefore, this commission while dealing the matter in summary procedure and as the same has not been provided under Section-39 of Consumer Protection Act, 2019, this commission cannot direct the opposite party no.2 to refrain from initiating recovery proceedings against the complainant.  Further, the complainant sought for a sum of Rs.10,00,000/- for the deficiency of service.  On perusal of the records, it appears that there is failure on the part of the opposite party no.1 in performing the construction as agreed in EX.P1 MOU and EX.P3 agreement of construction as assured.  Hence, the complainant is entitled for Rs.20,000/- towards mental agony and a sum of Rs.10,000/- towards litigation cost. Accordingly, I answer this point partly in affirmative.

20.POINT NO.3:- In view of the discussion made above, I  proceed to pass the following;

The complaint is allowed in part.

The opposite party No.1 is directed to pay a sum of Rs.23,34,804/- to the complainant with interest at the rate of 9% p.a. from July-2018 till the date of payment.

Further, the opposite party no.1 is directed to pay to the complainant a sum of Rs.11,93,105/- towards the 19 EMIs paid by the complainant and the opposite party no.1 shall complete the process of buy back and process the home loan account with 2^nd opposite party by paying the outstanding loan amount.

Further, the opposite party no.1 shall pay a sum of Rs.20,000/- towards mental agony and a sum of Rs.10,000/- towards litigation cost.  

The opposite party no.1 shall comply the order within 30 days. In case, the opposite party no.1 fails to comply the order within the said period, the above said amount of Rs.12,23,105/- (Rs.11,93,105/- + Rs.20,000/- and  Rs.10,000/-) carries interest at the rate of 9% p.a. from the date of order till realization.

Supply free copy of this order to both the parties and return extra copies of the pleading and evidence to the parties.

Applications pending, if any, stand disposed of in terms of the aforesaid judgment.

  (Dictated to the Stenographer, typed by her, the transcript corrected, revised and then pronounced in the open Commission on 20^th day of December, 2022)                                            

• REKHA SAYANNAVAR)    (RAJU K.S)         (SHIVARAMA. K)    
•  

Witness examined for the complainants side:

Smt.Preetha R.K, the complainant has filed her affidavit.

Documents marked for the complainant side:

1. Copy of the MOU dt.24.06.2015.
2. Copy of the agreement for sale of undivided interest dt.14.07.2015.
3. Copy of the agreement of the construction dt.14.07.2015.
4. Copy of the welcome letter dt.27.03.2015.
5. Original statement of account of Citi Bank.
6. Copy of the legal notice dt.19.02.2020.
7. Copy of the postal receipts.
8. Copy of the postal acknowledgment.
9. Certificate u/s 65B of Indian Evidence Act.
10. Email communication between complainant and opposite parties.

Witness examined for the opposite party side: 

Sri.Ravishankar B.S, Authorized Signatory of opposite party No.1 has filed his affidavit.

Sri.Keerthi Kashyap K, Manager Legal of opposite party No.2 Bank has filed his affidavit.

Documents marked for the Opposite Party side:

1. True copy of MOU dt.24.06.2015.

2. True copy of the loan application dt.08.01.2015.

3. True copy of the loan sanctions letter dt.09.07.2015.

4. True copy of the disbursement invoice dt.21.07.2015.

5. True copy of the home loan agreement dt.21.07.2015.

6. True copy of the Axis Bank statement of complainant.

• REKHA SAYANNAVAR)    (RAJU K.S)         (SHIVARAMA. K)    
•