DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION, ERNAKULAM
Dated this the 26th day of March 2024.
Filed on: 04/08/2020
PRESENT
Shri.D.B.Binu President
Shri.V.Ramachandran Member Smt.Sreevidhia.T.N Member
C.C.No 205/2020
COMPLAINANTS
1. A. Radhakrishnan Nair aged 69 years, S/o Late A Govindan Nair, residing at Flat NO.A-05, "Uthradam", Oxoniya Infocity Vintage, Edachira, Thengode P.O., Via Kakkanad, Kochi - 682 030.
2. P. Suvarnakumari, aged 63 years, W/o. A. Radhakrishnan Nair, residing at Flat NO.A-05, "Uthradam". Oxoniya Infocity Vintage, Edachira, Thengode PO Via Kakkanad, Kochi - 682 030.
(By Adv. George Cherian Karipparambil, Karipparambil Associates, H.B. 48, Panampilly Nagar, Kochi 682 036)
Vs.
OPPOSITE PARTIES
1. M/s. Nucleus Premium Properties Pvt. Ltd. 34/239C, Near Mariya Park, Padivattom-Pipeline Road, Near NH Bypass, Palarivattom, Edapally P.O., Kochi 682 024. Represented by its Director Mr.Nashid N.P., aged 37 years, S/o.Mohammed Ali.
2. Mr.Nashid N.P., S/o.Mohammed Ali, Director, M/s Nucleus Premium Properties Pvt. Ltd., 34/239C, Near Mariya Park, Padivattom-Pipeline Road, Near NH Bypass, Palarivattom, Edapally P.O., Kochi - 682 024.
3. Mr. Nishad N.P., S/o. Mohammed Ali, Director, M/s.Nucleus Premium Properties Pvt. Ltd., 34/239C, Near Mariya Park, Padivattom-Pipeline Road, Near NH Bypass, Palarivattom, Edapally P.O., Kochi - 682 024.
(1 to 3 rep. by Adv.Philip T.Varghese, Thomas T.Varghese, Shubha Abragam, Adhil P, T.D.Road, Ernakulam)
4. Mariamma, D/o. Abraham, Uppukeril House, 33, Vidya Nagar, Cochin University P.O., Pin 682 022.
5. Subha Thomas, D/o. Thomas, residing at Uppukeril House, 33, Vidya Nagar, Cochin University P.O. Pin 682 022
6. Sumam Varghese, D/o. Thomas, residing at Uppukeril House, 33, Vidya Nagar, Cochin University P.O., Pin 682 022.
(OP 4 to 6 rep. by Adv.Santhosh Mathew, Second Floor, 42/1686, D20, Empire Building, High Court East End, Kochi-18))
F I N A L O R D E R
D.B. Binu, President.
1. A brief statement of facts of this complaint is as stated below:
The complaint filed under Sections 34 and 35 of the Consumer Protection Act, 2019, involves a dispute between a retired couple and a real estate developer, along with its directors and landowners, regarding an apartment project named "Nucleus Live Life" located in Thrikkakara North Village, Kanayannur Taluk. The complainants, both former employees of the Kerala High Court Services and currently working at the Kerala Administrative Tribunal in Thiruvananthapuram, allege that the developer and associated parties engaged in unfair trade practices, negligence, and deficiency in service, leading to financial losses and emotional distress.
The core grievances include misappropriation of funds by the developers, misleading advertisements and promises about the apartment project, significant delays in construction, unfair trade practices including manipulation of agreement dates, and the financial and emotional toll on the complainants, who are senior citizens with health issues. Despite paying substantial amounts and taking out a housing loan, the project has not progressed as promised, causing them to seek legal recourse.
The complainants demand compensation for the financial losses and emotional distress caused by the developer's actions, including compensation for the losses incurred due to the unfair trade practices, negligence, and deficiency in service, the cost of proceedings, and any other relief deemed fit and necessary by the Commission.
2) Notice
The commission sent notices to the opposite parties, but the opposite parties did not file their versions within the statutory period. Therefore, they have been set as ex-parte.
3) Evidence
The first complainant has filed a proof affidavit along with three documents, which were marked as Exhibits A-1 to A-3. Additionally, the Expert Commission report has been marked as Exhibit C-1.
- Exhibit A-1: A copy of the bank statement issued by the State Bank of India, Kalamassery branch.
- Exhibit A-2: The Sale and Construction Agreement dated December 24, 2016.
- Exhibit A-3: A copy of the bank statement issued by the State Bank of India, Kalamassery branch, covering the period from April 21, 2018, to November 19, 2021.
4) The main points to be analysed in this case are as follows:
i) Whether the complaint is maintainable or not?
ii) Whether there is any deficiency in service or unfair trade practice from the side of the opposite party to the complainant?
iii) If so, whether the complainant is entitled to get any relief from the side of the opposite party?
iv) Costs of the proceedings if any?
5) The issues mentioned above are considered together and are answered as follows:
In the present case in hand, as per Section 2(7) of the Consumer Protection Act, 2019, a consumer is a person who buys any goods or hires or avails of any services for a consideration that has been paid or promised or partly paid and partly promised, or under any system of deferred payment. Copies of the bank statements issued by the State Bank of India, Kalamassery branch. These documents prove payment to the opposite parties (Exhibits A-1 and A-3). Hence, the complainant is a consumer as defined under the Consumer Protection Act, 2019, (Point No. i) goes against the opposite parties.
The complainant filed the above case seeking compensation for the deficiency in service caused by the opposite party’s failure to refund the deposited amount. The complainant alleges that the opposite parties did not fulfil their obligation to return the money, resulting in a deficiency in the service provided to the complainant.
We have heard Sri. George Cherian Karippaparambil, the learned counsel appearing for the complainants, submitted that the complainants have lodged a consumer complaint against the developer and associated parties of the "Nucleus Live Life" apartment project for failing to complete the project as promised. The key points of the argument include:
- The first opposite party, the project's developer and builder, alongside the second to sixth opposite parties, including directors and landowners, are held responsible for the project's development and promotion.
- The construction and sale agreements indicated specific costs and a completion deadline of November 24, 2018, for apartment No. 3A, with a total payment of Rs. 42,25,099 made by the complainants.
- The project was abandoned, and the funds paid by the complainants were allegedly diverted and misappropriated, leading to a claim of joint and several liabilities against the opposite parties.
In defense, the first to third opposite parties attribute the construction delay to economic recession and the COVID-19 pandemic, claiming efforts to expedite completion. The fourth to sixth opposite party contends there is no direct consumer relationship with the complainants, requesting dismissal of the complaint.
Subsequent developments include the filing of an expert commission application by the complainants for project inspection, leading to an unchallenged report indicating the project's incomplete and abandoned status. On the evidence day, the opposite parties were absent, resulting in their ex parte status and the marking of the complainants' exhibits (Exhibits A-1 and A-3) and the expert commission report (Exhibit C-1) without objection.
The case centers on allegations of service deficiency, negligence, and unfair trade practices by the opposite parties, with the undisputed facts supporting the complainants' claims. The complaint seeks to address these issues, highlighting the opposite parties' failure to complete the project as agreed and the resulting impact on the complainants.
The evidence presented included an ex-parte proof affidavit filed by the complainants, and it was unchallenged by the opposite parties. Therefore, the complainant's claims were considered credible and supported by the evidence. Therefore, the complainants request the commission to grant the relief sought, including compensation for mental agony and unfair trade practices.
The opposite parties’ conscious failure to file their written version within the statutory period in spite of having received the Commission’s notice to that effect amounts to an admission of the allegations leveled against them. Here, the case of the complainant stands unchallenged by the opposite parties. We have no reason to disbelieve the words of the complainant as against the opposite parties. The Hon’ble National Commission held a similar stance in its order dated 2017 (4) CPR page 590 (NC).
The opposite parties raised no objections to the expert commission report, which has been marked as Exhibit C1 in the proceedings without any dispute from their side. Below, we have included the pertinent section of the expert commission report for reference.
“ 3. അന്യായ പട്ടിക വസ്തു ബഹുമാനപ്പെട്ട കോടതിയിൽ നിന്നും ഏകദേശം 11 കിലോമീറ്റർ മാറി കളമശ്ശേരി HMT റോഡിൽ വലതുവശത്തായി പൈപ്പ് ലൈൻ റോഡിൽ പണിപൂർത്തിയാക്കാതെ നാളുകളായി കാടു പിടിച്ചു കിടക്കുന്ന ഫ്ളാറ്റ് സമുഛയമാണ്. ഈ ഫ്ളാറ്റ് സമുച്ച യത്തിലെ രണ്ടാം നിലയിലുളള കോൺക്രീറ്റ് തൂണുകളും സ്ലാബും മാത്രം പണിതിട്ട് ബാക്കി പണികൾ നടത്താതെ നാളുകളായി പണിപൂർത്തിയാക്കാത്ത ഫ്ളാറ്റാണ് അന്യായപട്ടിക വസ്തുതു. ഈ ഫ്ളാറ്റ് സമുച്ചയത്തിലോ ചുറ്റും പാതിവഴിയിൽ പണിതിട്ടിരിക്കുന്നു. ഇൻഡി പെൻറഡ് വില്ലകളിലോ ആൾ താമസ്സം ഇല്ല. കമ്മീഷൻ പട്ടിക വസ്തുവിൽ ചെന്ന അവസരത്തിൽ പരാതിക്കാരി ശ്രീമതി P സുവർണ്ണകുമാരി, ടിയാളുടെ ഭർത്താവ് A രാധാകൃഷ്ണൻ എന്നിവർ ഹാജരായിരുന്നതും അവരുടെയെല്ലാം സാന്നിദ്ധ്യത്തിലും സഹകരണത്തിലും അന്യായ പട്ടിക വിവരണത്തിൻ്റെ അടിസ്ഥാനത്തിൽ വസ്തുതിരിച്ചറിഞ്ഞ് കമ്മീഷനപേക്ഷയിൽ തിട്ടപ്പെടു ത്തിയിട്ടുളളതാണ് ആവശ്യപ്പെട്ടിരിക്കുന്ന കാര്യങ്ങൾ
4. pasang Nucleus live life എന്ന പേരോടു കൂടിയ Re. survey Bode No. 5 - Survey Nos. 684, Re. Survey Division Nos. 13,14,22,23,24,26,30,31 എന്നീ സർവ്വേ നമ്പറുകളിലായി 47.98 ആർ വിസ്തീർണ്ണത്തിൽ തൃക്കാക്കര നോർത്ത് വില്ലേജിൽ കണയന്നൂർ താലൂക്കിൽ സ്ഥിതിചെയ്യുന്ന ബഹുനില ഫ്ളാറ്റ് സമുഛയത്തിലെ രണ്ടാം നിലയിലുള്ള ഫ്ളാറ്റ് ആണ്. ഈ ഫ്ളാറ്റിൻ്റെ പണികൾ 24.12.2016 ലെ Sale cum Construction Agreement പ്രകാരം ആരംഭിച്ച്, കെട്ടിട സമുഛയത്തിൻ്റെ കോൺക്രീറ്റ് Structural വർക്കുകൾ വളരെ നല്ലരീതിയിൽ പണികഴിച്ചിട്ടുണ്ട്. എന്നാൽ കെട്ടിടത്തിൻ്റെ മുറികൾ രൂപംകൊടു ക്കുന്ന തിനുള്ള സോലിഡ് ബ്ലോക്ക് മേസന്ററി, പ്ലംബിംഗ്, വയറിംഗ്, പ്ലാസ്റ്ററിംഗ്, ഫ്ളോറിംഗ്, സീലിംഗ് പ്ലാസ്റ്ററിംഗ് ആദിയായ പ്രധാന ജോലികളൊന്നും ചെയ്യാത്ത രീതിയിൽ പായലും പൂപ്പലും പിടിച്ച് പണികൾ ഉപേക്ഷിച്ച് പോയരീതിയിൽ കമ്മീഷന് കാണുവാൻ ഇടയായിട്ടുണ്ട്. 7 വർഷം കഴിഞ്ഞിട്ടും യാതൊരുപണിയും നടത്താത്തതിനാൽ ഇനിയും പണികൾ ആരംഭിച്ച് പൂർത്തീകരിക്കണമെങ്കിൽ അന്നത്തെ എസ്റ്റിമേറ്റ് തുകയുടെ ഇരട്ടിയോളം തുക ചെലവ് വരുന്നതിനാൽ അത് വൻ സാമ്പത്തിക ബാധ്യത സൃഷ്ടിച്ചേക്കാമെന്നും കമ്മീഷന് ബോധ്യപ്പെട്ടിട്ടുണ്ട്. കെട്ടിടത്തിൻ്റെ നിലവിലുള്ള അവസ്ഥ ബോധ്യമാക്കുന്നതിന് ചിത്രങ്ങൾ സഹിതമാണ് റിപ്പോർട്ട് സമർപ്പിക്കുന്നത്.”
The expert commission report, marked as Exhibit C1 and unopposed by the opposite parties, reveals significant details about the "Nucleus Live Life" apartment project. The property has been left in a state of neglect for years. The report specifies that only the concrete pillars and slabs of the second floor have been constructed, with no progress made on essential works like masonry, plumbing, wiring, plastering, flooring, and ceiling plastering. The site, abandoned, was inspected in the presence of the complainant, Mrs. P Suvarnakumari, and her husband, Mr. A Radhakrishnan. Despite the passage of seven years since the initiation of work according to the Sale cum Construction Agreement dated December 24, 2016, the property remains incomplete. The commission notes that resuming and completing the construction at this stage would incur costs significantly higher than the original estimates, potentially leading to substantial financial burdens. The current state of the property is documented in the report with accompanying photographs.
The application (I.A no 236 of 2021) was submitted by the second opposite party, stating that the first opposite party company has entered the Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016, as per an order from the National Company Law Tribunal (NCLT), Kochi Bench. This order imposed a moratorium against the continuation of any suits or proceedings against the opposite parties. Consequently, the second opposite party sought to suspend all proceedings in the consumer complaint (C.C. No.205/2020).
Upon review, the Commission referred to a precedent from the Hon'ble Kerala State Commission and the Hon'ble Supreme Court's decision in Pioneer Urban Land and Infrastructure Limited Vs. Union of India & others (2019) 8 SCC 416, alongside the ruling in M/s. Imperia Structures Ltd Vs. Anil Patni. These decisions emphasized that proceedings under the Consumer Protection Act can continue despite any moratorium ordered by the NCLT under the Insolvency and Bankruptcy Code.
The Commission concluded that the jurisdiction of the Consumer Commission remains unaffected by insolvency proceedings, supported by various higher judiciary decisions. Therefore, the application by the second opposite party, which aimed to halt the consumer complaint proceedings, was found to lack merit and was dismissed, allowing the consumer complaint to proceed.
The complainant pointed out that the construction agreement, marked as Exhibit A2 and dated December 24, 2016, explicitly committed the opposite parties to finish and deliver apartment No. 3A by November 24, 2018. However, the expert commission's report, designated as Exhibit C1, reveals that the "Nucleus Live Life" apartment project remains uncompleted and has been abandoned. This situation undeniably indicates a failure to provide the promised service and a lack of due diligence on the part of the opposite parties, who have engaged in deceptive practices. Therefore, it logically follows that the judgment should favour the complainants, granting the relief sought in their complaint.
We have carefully heard the submission made at length by the learned Counsel representing the complainant and have also considered the entire evidence on record.
In the matter before us, involving a complaint under the Consumer Protection Act, 2019, the complainants, have raised serious allegations against the developer, its directors, and landowners of the "Nucleus Live Life" apartment project for unfair trade practices, negligence, and deficiency in service.
Under the Act, 2019, a consumer is defined in Section 2(7) as any person who avails of goods or services for a consideration. The documents provided by the complainants, notably the bank statements (Exhibits A-1 and A-3) and the Sale and Construction Agreement (Exhibit A-2), incontrovertibly establish the complainants as consumers who have engaged in a transaction with the opposite parties, thus bringing the case within the ambit of the Act.
The Supreme Court's ruling in Pioneer Urban Land and Infrastructure Limited vs. Union of India & others (2019) 8 SCC 416, and further in M/s. Imperia Structures Ltd vs. Anil Patni, clarifies that the proceedings under the Consumer Protection Act can proceed independently of the Insolvency and Bankruptcy Code, 2016, proceedings. This principle underscores the autonomy of consumer protection mechanisms in addressing grievances directly related to consumer rights and interests.
The evidence presented, notably the unchallenged expert commission report (Exhibit C-1), paints a stark picture of negligence and deficiency in service. The report vividly describes the abandoned state of the "Nucleus Live Life" project, highlighting the absence of essential construction works despite the lapse of several years and the substantial payments made by the complainants. This situation unequivocally indicates a breach of the contractual obligations by the opposite parties, characterized by their failure to deliver the apartment within the agreed timeline.
A. Deficiency in Service and Negligence
The definition of deficiency in service is well established in jurisprudence, encompassing any fault, imperfection, shortcoming, or inadequacy in the quality, nature, and manner of performance required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract with a consumer. The incomplete construction and abandonment of the project, as detailed in the expert commission's findings, constitute a clear case of deficiency in service and negligence on the part of the opposite parties.
Supporting this judgment are various precedents where the National Commission and the Supreme Court have held that non-completion of projects within the stipulated time and the diversion of funds constitute deficiency in service and unfair trade practice (Refer: Lucknow Development Authority vs. M.K. Gupta (1994) 1 SCC 243).
The opposite parties' failure to contest the allegations or the expert commission report (Exhibit C-1) effectively amounts to an admission of the facts as presented by the complainants. The absence of any counter-evidence or argument from the opposite parties lends further credence to the complainants' claims.
B. Liability of the Opposite Parties
Given the evidence and the legal framework within which this dispute is situated, it is evident that the opposite parties have failed to fulfill their contractual obligations, leading to significant financial and emotional distress for the complainants. The law mandates that consumers must be protected from such malpractices and be duly compensated for their losses.
In Lucknow Development Authority v. M.K. GuptaLucknow Development Authority Vs M.K. Gupta Air 1994 Sc787 (AIR 1994 SC 787), the Honourable Supreme Court held that when a person hires the services of a builder, or a contractor, for the construction of a house or a flat, and the same is for a consideration, it is a ‘service’ as defined by Section 2 (0) of the Consumer Protection Act,1986. The inordinate delay in handing over possession of the flat amounts to a deficiency of service.
The journey to homeownership is increasingly marred by the unethical practices of some builders, leading to widespread issues of fraud, delays, and subpar construction for homebuyers. Many find their dreams of owning a perfect home shattered by misleading project approvals and broken promises. Recognizing these difficulties, the government has initiated protective measures for homebuyers, especially for those less informed about their rights. Yet, the dream of a beautiful home remains vulnerable. It falls upon the legal system and regulatory bodies to proactively defend the aspirations and trust of homebuyers, ensuring their path to acquiring a home is secure and filled with hope, rather than obstacles and disappointment. This proactive stance is crucial in rebuilding trust in the real estate sector and upholding the rights and dreams of individuals aiming to secure a safe and comforting space for their families.
In light of the foregoing analysis, legal reasoning, and the principles laid down in relevant case laws, this Commission finds in favour of the complainants. It is hereby ordered that the opposite parties jointly and severally compensate the complainants for the deficiency in service and negligence, as detailed in their complaint, including the costs of the proceedings and any other relief deemed fit and necessary to redress the grievances of the complainants.
We determine that issue numbers (I) to (IV) are resolved in the complainants favour due to the significant service deficiency and the unfair trade practices on the part of the opposite parties. Consequently, the complainant has endured considerable inconvenience, mental distress, hardships, and financial losses as a result of the negligence of the opposite parties.
In view of the above facts and circumstances of the case, we are of the opinion that the opposite parties are liable to compensate the complainants.
Hence the prayer is partly allowed as follows:
I. The Opposite Parties shall reimburse the complainants ₹42,25,099 (Rupees Forty-Two Lakh Twenty-Five Thousand Ninety-Nine Only) as the total amount paid by the complainants for the construction of the apartment, as evidenced by Exhibits A-1 and A-3.
II. The Opposite Parties shall pay ₹5,00,000 (Rupees Five Lakhs Only) to the complainant as compensation for the deficiency in service and unfair trade practices, as well as for the mental agony and physical hardships endured by the complainants.
III. The Opposite Parties shall also pay the complainants ₹25,000 (Rupees Twenty-Five Thousand Only) towards the cost of the proceedings.
The Opposite Parties are jointly and severally liable for the above directions, which shall be complied with within 45 days from the date of receipt of a copy of this order. Should there be a failure to comply within the specified period, the amounts outlined in Points I and II shall accrue interest at 9% per annum from the date of the agreement (24-12-2016) until fully realized.
Pronounced in the Open Commission on 26th day of March 2024.
Sd/-
D.B.Binu, President
Sd/-
V.Ramachandran, Member
Sd/-
Sreevidhia.T.N, Member
Forwarded by Order
Assistant Registrar
Assistant Registrar
Appendix
Complainant’s Evidence
- Exhibit A-1: A copy of the bank statement issued by the State Bank of India, Kalamassery branch.
- Exhibit A-2: The Sale and Construction Agreement dated December 24, 2016.
- Exhibit A-3: A copy of the bank statement issued by the State Bank of India, Kalamassery branch, covering the period from April 21, 2018, to November 19, 2021.
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