BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI

                  BEFORE :       Hon’ble Thiru Justice R. SUBBIAH                   PRESIDENT

                             Tmt. Dr. S.M.LATHA MAHESWARI                   MEMBER

COMMON ORDER IN

F.A.NO.107/2016 AND FA.NO.179/2017

(Against order in CC.NO.208/2013 on the file of the DCDRC, Chennai (North)

DATED THIS THE 30^th DAY OF JULY 2021 

FA.NO.107/2016

N. Senthilvelan

S/o. D. Namasivayam                                                                      M/s. V. Balaji

No.41B/25, Alagiri Nagar Main Road                                                   Counsel for

Vadapalani, Chennai 600 026                                                             Appellant / Complainant

           Vs.

1.       M/s. Sare Jubilee Shelters Private Limited

          Regd. Office at No.1379, Goldenvilla

          6^th Street, I Block, Vallalar Kudiyeruppu                             M/s.Edwin Solomon

          18^th Main Road, Anna Nagar West                                 Counsel for 1^st Respondent                         

          Chennai – 600 040

          Rep. by its Managing Director

2.       VIP Housing & Properties

          No.17/1, Mahalinga Chetty Street

          Mahalingapuram, Nungambakkam                                       (R2 Given up)

          Chennai – 600 034

          Rep. by its Manager                                               Respondents / Opposite parties

FA.NO.179/2017

M/s. Sare Jubilee Shelters Private Limited

Rep. by its Authorised Signatory C.Saravanan                             

Formerly having office at

6^th Street, I Block, Vallalar Kudiyeruppu

18^th Main Road, Anna Nagar West

Chennai – 600 040

Presently having office at

First Floor, SKCL Icon, C42 & 43                                    M/s. Suganya Devi Duraichamy

CIPET Road, Thiru vi ka Industrial Estate                                       Counsel for

Guindy, Chennai – 600 032                                            Appellant / 1^st Opposite party

                        Vs.

1.       N. Senthilvelan

S/o. D. Namasivayam                                                              M/s. V. Balaji

No.41B/25, Alagiri Nagar Main Road                                            Counsel for

Vadapalani, Chennai 600 026                                                1^st Respondent / Complainant

2.       VIP Housing & Properties

          No.17/1, Mahalinga Chetty Street

          Mahalingapuram, Nungambakkam                                    M/s. Jeevanantham                

          Chennai – 600 034                                                                   Counsel for

          Rep. by its Manager                                              Respondent /2^nd  Opposite party

The complainant had filed a complaint before the District Commission against the opposite parties praying for certain direction. The District Forum allowed the complaint. Against the said order, these appeals have been preferred by the 1^st opposite party in FA.No.179/2017 praying to set aside the order of the District Commission dt.7.6.2016 in CC.No.208/2013, and FA.No.107/2016 filed by the complainant praying for enhancement of compensation.

          These appeals coming on before us for hearing finally today, upon hearing the arguments of  both parties, perusing the documents, lower court records, and the order passed by the District Commission, this commission made the following common order:

JUSTICE   R. SUBBIAH,  PRESIDENT    

1.       The appeal in FA.No.107/2016 has been filed by the complainant as against the 1^st opposite party alone, claiming disallowed portion of the order passed by the District Commission, Chennai (North) in CC.No.208/2013 dt.7.6.2016.

2.       As against the same order impugned, the 1^st opposite party has filed an appeal in FA.No.179/2017 praying to set aside the order impugned in toto.

3.       Since both the appeals are arise out of the same order, these appeals are disposed of by way of common order. 

4.       For the sake of convenience, the parties shall be referred as arrayed in the original complaint filed before the District Commission in CC.No.208/2013.

5.       The brief facts which are necessary to decide the issues involved in the appeal are as follows:

          The case of the complainant before the District Commission is that the 1^st opposite party is a builder.  The complainant booked a flat promoted by the 1^st opposite party in Flat No.M-4340 Type-2BHR Phase IV, with super built up area of 1012 sq.ft with UDS measuring 563.61 sq.ft of land, and paid a sum of Rs. 5 lakhs as advance i.e., Rs.1 lakh on 25.8.2011, and Rs.150000/- on 1.9.2011 thereafter on 19.9.2011 a sum of Rs.250000/- as against the total sale consideration of Rs.28,28,508/-. 

          As per the construction agreement dt.30.9.2013, the 1^st opposite party had agreed to handover the possession of the flat within 24 months from the date of agreement.  The 1^st opposite party had undertaken to handover the possession on or before 30.9.2013. 

          The complainant is working as a Development Officer at LIC.  Hence he wanted to avail housing loan from LIC Housing Finance Ltd., to make the payment to the builder.  At the time of making part sale consideration, the complainant requested the 1^st opposite party to provide photo copies of the title deeds and other related documents pertaining to the said property to avail housing loan.  But the complainant was informed by the 1^st opposite party that they will send the documents to the LIC Housing Finance directly for their scrutiny to enable them to get a legal opinion on the title of property.  However only after much persuasion, the opposite party has handed over the documents to the LIC Housing Finance Ltd. Thereafter the legal opinion dt.30.10.2012 was obtained from the LIC Housing Finance Ltd.  In the said legal opinion certain defects were pointed out with regard to certain document.  In view of the said defects pointed out in the legal opinion, again the complainant requested the opposite party to furnish the documents mentioned in the said legal opinion for processing the loan.  Inspite of several requests on various dates in between 20.10.2012 to 24.4.2013 through E-Mail, the 1^st opposite party has neither sent the documents nor sent any reply.  Finally on 5.2.3013 the complainant made specific request either to comply the legal requirement or to refund the amount with accrued interest.  There is no response for that email also.  In such circumstances, the 1^st opposite party has unilaterally cancelled the agreement and refunded a sum of Rs.1,82,189/- and have forfeited the amount of Rs.3,17,811/- as earnest money.  Therefore, the complainant issued legal notice on 19.9.2013 demanding the refund of entire advance amount with compensation. 

          Unilateral cancellation of the agreement amounts to deficiency in service.  Since there is no reply from the 1^st opposite party, left with no other alternative, the complainant filed a complaint before the District Commission alleging that the 1^st opposite party had indulged in unfair trade practice and also committed deficiency of service, claiming for refund of advance amount of Rs.5 lakhs, and a sum of Rs.2,00,000/- towards compensation for mental agony, and Rs.3,00,000/- towards deficiency in service alongwith cost of Rs.25000/-. 

6.       The case of the complainant was resisted by the 1^st opposite party by filing a detailed version stating that the dispute is not a consumer dispute, since the allegations raised are purely in commercial terms and conditions, it does not fall within the purview of the Consumer Protection Act 1986.  As per the agreed terms in clause 19.1 all disputes, controversies or differences, which may arise between the parties have to be referred to Arbitration and exclusively triable by an Arbitrator or by a Civil Court.  Therefore, the consumer fora lacks jurisdiction. 

          It is admitted that the complainant had booked the complaint mentioned flat, and agreed to pay the total consideration of Rs.28,28,508/- to the 1^st opposite party in 9 instalments. 

But the 1^st opposite party would contend that the complainant had paid only first two instalments.  As per clause 2.3 of the Agreement, the undivided share of land shall be executed and registered upon receipt of 90% of the total sale consideration as indicated in the payment schedule.  In the event of any default of any instalment as per clause 2.4.2 and 16.1 the 1^st opposite party shall be entitled to terminate the agreement. 

          The contention of the complainant is that the 1^st opposite party has agreed to send the document to LIC Housing Finance Ltd., directly for their scrutiny and legal opinion, is not correct.  The complainant is not entitled to get the refund of advance amount with interest, since he committed breach and failed to pay the instalments as agreed and thus prayed for dismissal of the complaint.

7.       Before the District Commission on the side of the complainant documents Ex.A1 to A15, and on the side of the opposite parties Ex.B1 to B50 were marked. 

8.       The District Commission upon hearing the arguments of bothside, and on evaluation of material records has framed three questions to decide as to

          1.  Whether this Forum has jurisdiction to entertain this complaint?

          2.  Whether there is deficiency in service on the part of the opposite parties?

          3.  Whether the complainant is entitled to any relief? If so to what relief?

          The District Commission having dealt with those questions in detail, rejected the defense of the 1^st opposite party and directed the  1^st and 2^nd opposite parties to refund the forfeited sum of Rs.3,17,811/- and also to pay a sum of Rs.1,00,000/- towards compensation for mental agony besides litigation expenses of Rs.5000/-. 

9.       Since the District Commission has ordered to refund only Rs.3,17,811/- out of Rs.5 lakhs, the complainant has come forward with this appeal in FA.No.107/2016, praying for enhancement of award amount.

10.     The 2^nd opposite party/ 2^nd Respondent has remained absent, and was set exparte before District commission.  The complainant has given up the 2^nd Respondent in the appeal filed by the complainant.

11.     The 1^st opposite party as appellant in FA.No.179/2017 has prayed for setting aside the order passed by the District Commission, Chennai (North), on the ground that the District Commission had failed to consider the defence of the opposite party that the dispute alleged in the complaint is not a Consumer Dispute as per Sec.2(1) of the Consumer Protection Act 1986.  The 1^st opposite party also would submit that as per clause 19.1 of the Agreement of Sale & Construction, the dispute ought to have been referred to Arbitration or to Civil Court.

12.     We have heard the submissions, perusal of materials available on record,  and have dealt with the factual matrix in detail, we have framed the following issues to be decided.    

          In view of the above, the following questions framed for consideration

1. Whether the disputes raised in the complaint will fall within the purview of Consumer Protection Act?
2. Whether the complainant is entitled for refund of advance amount in full?
3. Whether the non-furnishing of documents by the builder to get legal opinion with regard to title of property will amounts to deficiency in service?

13.     POINT NO.1:

          It is the submission of the learned counsel for opposite party that as per clause 19.1 of the agreement any dispute shall be referred to Arbitration.  Hence according to the opposite party, when there is a specific clause for arbitration, the consumer court has no jurisdiction to entertain the complaint. 

          While holding the above defence, the District Commission has held that as per the order of the Hon’ble National Commission, reported in 2013 (2) CPR 756 (NC) held in DLF Limited and others Vs. Mridul Estate (Pvt.) Ltd., and others, the Consumer Fora are not bound to refer the dispute to Arbitral Tribunal in terms of valid arbitration clause in the agreement. 

          As per the above judgement, the Hon’ble National Commission has held that  the “Complaint filed by a consumer before Consumer Fora would be maintainable despite there being an arbitration clause in agreement to refer the dispute to Arbitrator- Consumer Protection Act is a special remedy with objective of redressal or grievance of affected consumers.. If small consumers are relagated to Alternative Dispute Resolution mechanism of arbitration, remedy provided under CP Act would become illusionary”. 

          In this connection, the learned counsel also drew our attention to a judgement reported I (2019) CPJ 5 (SC), held in Emaar MGF Land Limited Vs. Aftab Singh.  Wherein the Hon’ble Apex Court has held that “ Complaint under Consumer Protection Act 1986 being special remedy, despite there being an arbitration agreement proceedings before Consumer Forum have to go on “  It is further held that “Consumer disputes to be non-arbitrable”.

          Therefore,   In view of the above citations, and as was held by the District Commission the Consumer has jurisdiction to entertain the complaint.  Point No. 1 is answered accordingly. 

14.     POINT NO.2:

           The main defence of the 1^st opposite party are that the money forfeited out of the advance amount paid by the complainant @ Rs.3,17,811/- was collected towards earnest money, and the earnest money is always forfeitable in the event of default of payment of instalment by the purchaser as per clause 2.4.2. 

          While answering the above query the District Commission has held that the money collected from the complainant as advance, cannot be construed as an earnest money and concluded that the forfeiture of the said amount would amounts to deficiency in service.  While considering the above point, the District Commission had cited two judgements of the Hon’ble National Commission.

          Learned counsel for the appellant had also drew the attention of this commission to the citations referred by the District Commission reported in I (2015) CPJ (NC) in DLF Ltd., Vs. Bhagwanti Narula, wherein the National Commission has cited a judgement of the Hon’ble Apex Court in Shree Hanuman Cotton Mills & Ors. Vs. Tata Air Craft Ltd., reported in 1969 (3) SCC  522, where the Hon’ble Apex Court has held that “An earnest must be a tangible thing.  That thing must be given at the moment at which the contract is concluded, because it is something given to bind the contract, and, therefore it must come into existence at the making or conclusion of the contract”. 

          In another judgement of the National Commission in Punjab Urban Planning and Development Authority Vs. Shakuntala Devi Saini reported in II (2009) CPJ 344 (NC), it was held that “ Authority with whom earnest money deposited, if itself guilty of lapse/ default, cannot withhold earnest money”.  Therefore, as was held by the District Commission, since the complainant cannot get loan because of the non-providing of necessary documents by the opposite parties, the complainant cannot pay the instalments.  Therefore, we concur with the findings of the District Commission that the     advance amount cannot be said to be earnest money, and therefore the complainant entitled for refund of the said amount.  Point No.2 answered accordingly.

15.     POINT NO.3:

          With regard to the 3^rd question, it is the submission of the opposite party that there is no obligation on the part of the opposite party to send the documents from their side to offer legal opinion.  Therefore there is no deficiency on their part.

          In our considered opinion unless the document is sent, the loan amount will not be released.  Only if the loan amount is released, the complainant will be in a position to make full payment towards sale consideration.  Therefore, we are of the considered opinion that whether there is a clause or not, when a request is made by the complainant to furnish the documents for legal opinion, the builder is duty bound to furnish the same, if it is in his possession.  Therefore, there is deficiency in service on his part and we do not find any merit in the case of the 1^st opposite party.  Point No.3 is answered accordingly.

          So far we hold that there is no error in the findings of the District Commission and we hereby concur the same.

16.     As far as the direction for refund of the advance amount is concerned, the District Commission has ordered to refund only the forfeited amount of Rs.3,17,811/-.  Whereas the learned counsel appearing for the complainant would submit that the amount refunded by way of cheque @ Rs.1,82,189/- has been actually not encashed by the complainant.  Therefore he claims for refund of the entire advance amount of Rs.5 lakhs.  The learned counsel for opposite party also has not produced any documents to rebut the claim of the complainant.  Accordingly, we hold that the complainant is entitled to the refund of Rs.5 lakhs.

17.     In view of the above findings, the order of the District Commission is ordered to be modified with regard to the refund amount only confirming the rest of the directions. 

18.     In the result, the appeal filed by the appellant/ complainant in FA.No.107/2016 is allowed, modifying the order of the District Commission, Chennai (North) in CC.No.208/2013 dt.7.6.2013, enhancing the amount awarded towards refund at Rs.5,00,000/- instead of Rs.3,17,811/-, confirming the rest of the award.  Time for compliance one month, from the date of receipt of the order, failing which the interest shall carry @9% from the date of default till payment. There is no order as to cost in this appeal. 

19.     Appeal filed by the appellant/1^st opposite party in FA.No.179/2017 is dismissed.  There is no order as to cost.

S.M. LATHAMAHESWARI                                                                        R. SUBBIAH

           MEMBER                                                                                            PRESIDENT