BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM AT BANGALORE (URBAN) 08th NOVEMBER 2010 PRESENT:- SRI.B.S.REDDY PRESIDENT SMT. M. YASHODHAMMA MEMBER SRI.A.MUNIYAPPA MEMBER COMPLAINT NOs.492, 708, 1216 & 2526/2009 COMPLAINT NO.492/2009 COMPLAINANT Sri.B.Narasimha Rao, Aged about 65 years Residing at No.21/10, Temple Raod, Kilpauk Chennai-600 010. Advocate– G.Hanumantha Reddy V/s OPPOSITE PARTIES 1. M/s Omkar Estate Pvt. Ltd., No.10, 80 feet Road, Bank Colony, Srinivasanagr Main Road, B.S.K II Stage, Near BATA Show Room, Bangalore-560050. 2. Sri. K.R.Suresh Kumar, Joint Managing Director, Residing at Shreyas, No.43, New No.4/22, Old Puttanna Road, Basavanagudi, Bangalore-560004. 3. Sri. T.V. Nagaraj, Joint Managing Director, No.43/1, 1st Floor, Kanakapur Road, Basavanagudi, Bangalore-560004. Advocate for OPs 2 & 3 Sri. Somashekara Reddy 4. Sri. B.K.Subramanyam, Director, Ashwini Silks, 1st Floor, Old Post Office Building, B.V.K. Iyengar Road, Chickpet, Bangalore-560053. Advocate for OP-4 Sri. V.F.Kumbar 5. Sri. N.V.Ashwathnarayana Setty, Director, Residing at No.106, 34th ‘B’ Cross, 11th Main, 4th ‘T’ Block, Jayanagar, Bangalore-560041. 6. Sri. M.V.Vasudeva Setty, Director, Sathyanarayana Soap Nut Works, Opp: Vinod Talkies, Near Mandipet, Tumkur. Advocate for OPs 5 & 6 Sri. K.S.Raghavendra 7. Sri. S.Shivakumar, Director, Residing at No.1254, 23rd Cross, 23rd Main Road, B.S.K. II Stage, Bangalore-560 070. Exparte 8. Sri. D. Venkatarathnam, Director, Balaji Saw Mill, Chellakere Road, Pawagada. Deleted as per order dated 13.07.2009 9. Sri. K.N.Ramaiah, Director, Lakshmivenkateshwara Nilaya No.34, Chamudeshwari Road, Rajagudi Cross Road, Jaraganahalli, J.P.Nagar Post, Bangalore-560 078. Exparte 10.Smt. Prathiba Dilip, Director, No. 379, 24th B Cross, B.S.K. II Stage, Bangalore-560070 Deleted as per order dated 13.07.2009 11.Smt.Nasarathunisa, Director, No.21/1, T.C.M.Royan Road Cross, Cheluvadi Palya, Bangalore-560053. Advocate Sri. Akmal Pasha COMPLAINT NO.708/2009 COMPLAINANT COMPLAINT NO.1216/2009 COMPLAINANT Smt. Vijaya Kumari.R W/o Radha Krishna, R/a No.875, 38th Cross, 18th Main, IV ‘T’Block, Jayanagar, Bangalore-560 041 Advocate Hanumanthagowda G.L Mrs Archana Jain T.A., W/o Pradeep B.R., Aged about 28 years, “Verabadreswara Krupa” Shiva marble Road, Near Dodd mane Nursing Home, B.H. Road, Tumkur. Presently residing at Khaleej Building, Karama P.O.Box 52161 Dubai, UAE Rep. By G.P.A holder Mr. Amith Jain. Advocate Hanumanthagowda G.L COMPLAINT NO.2526/2009 COMPLAINANT Sri. M.A.Ramesh Babu, Byrenahalli, Arsapura, Kotaragere Taluk, Tumkur District. Advocate Hanumanthagowda G.L V/s OPPOSITE PARTIES 1. M/s. Omkar Estates Pvt. Ltd. Builders and developers, No.10, 80 feet Road, Bank Colony Main Road, Shrinivas Nagar, Banashankari Ist Stage, Bangalore 560 050 Rep. by its Managing Director 2. Sri. Talam V Nagarj Managing Director No.43/1m 1st floor, Kanakapura Road, Basavanagudi, Bangalore 560 004 3. Sri K.R. Suresh Kumar Joint Managing Director Residing at Shreya, No.43, New No.4/22, Old puttanna Road, Basavanagudi, Bangalore 560 004. Advocate OP 2 &3 Somashekara Reddy O R D E R SMT. M. YASHODHAMMA, MEMBER These are the complaints filed u/s. 12 of the Consumer Protection Act of 1986 by the respective complainants, seeking direction to the Opposite Parties (herein after called as O.Ps) to complete the layout work and to execute the sale deed or in alternative to refund the present market value of the site and to hand over cash certificate along with cost and pay compensation to all these complainants on the allegations of deficiency in service on the part of the OPs. As the OPs 1 to 3 in all the complaints are common, the questions involved, relief claimed being the same, in order to avoid repetition of facts and multiplicity of reasoning; these cases stand disposed of by this common order. 2. The brief averments as could be seen from the contents of these complaints are as under: Complainants being attracted to the offer made by OP thought of becoming members of OP Company which started business of procuring the land forming the residential layout and to sell the sites to its members on scheme basis collecting the amount in instalments. OP formed a layout namely ‘Omkar Nagar’ at Hosahalli, Amanikere, Hennagara Village, Jigani Hobli, Anekal Taluk, Bangalore district and issued public advertisement and pamphlets. The value of the sites measuring 30’ x 40’ is of Rs.1,00,000/- payable in various installments. Each of the complainants paid the various instalments in the year 1997 to 2002 itself. Complainants are ready to pay the balance amount to OPs. OP is trying to sell the sites to non members at a higher price. Now market value of the sites is about more than Rs.10,00,000/-. Under these circumstances complainant felts deficiency in service on the part of the OPs. For the convenience sake the Membership No. Receipt No. and date, amount paid are noted below in the chart. When the repeated requests and demands made by the complainants have gone in vain they are advised to file these complaints and sought for the relief’s accordingly. Sl. No Complaint No. Member ship No. Date & Receipt No. Site Measurement Amount paid Date of Legal Notice Date of Reply Notice 1 492/09 539 12.12.00 39720 30x40 98100/- 01.8.08 23.11.08 2 708/09 315 10.6.00 36748 30x40 82700/- 16.2.09 Nil 3 1216/09 1166 22.2.02 44068 30x40 100000/- 5.11.08 Nil 4 2526/09 1289 22.2.02 41064 30x40 100000/- 30.9.09 Nil 3. On appearance OPs No.2,3,4 and 5 filed the version. The defence set out in all the complaints is almost identical and same. The brief averments made in the version are as under: Complainants paid the amount in instalments in the year 2000-2002 to OPs. Complainants have lost their claims both under the contract and under law as such complainants cannot make any claim after a period of 8 years from the date of payment; Complaints are hopelessly barred by limitation and the very registration of the complaint is bad in eye of law; complaints are not covered by section 12 of Consumer Protection act in as much as the complainants are not the owner of the any site in Omkar Nagar Layout; The question of providing services arise only after the complainant is legally entitled to any piece of property in the township. The question of handing over of cash certificate will not arise as the OP Company has taken decision to drop the scheme and accordingly it was dropped; OPs admits that OP1 Company invited the members for its membership and company demarcated thousand of sites of different dimensions. OP admits that company offered to allot sites of 30 X 40 ft. to its members who have paid the entire sum of Rs.1 lakh along with other charges as per the decision of the OP Company; But OP denies the cash certificate of Rs.1 lakh was offered and agreed to be given. Complainants agreed to purchase sites measuring 30x40 fts. from OP on payment of Rs.1,00,000/- along with additional charges on instalments basis; Complainant entered into agreement to purchase a site and not paid additional development charges of Rs.20,000/-. The relationship between the complainant and OP No.1 is that of seller and purchaser and nothing else; Hence this forum has no jurisdiction to entertain these complaints. The additional amount was demanded due to hike in prices for development purpose; land cost and other additional expenditures and also for the reason that various members not paid amount in time including complainants. Thereby OP Company incurred heavy loss, the land owners already filed cases against the OP Company. In OS No.742/2006, and RP 78/2006 and OS 869/2006. These cases are still pending before the Anekal court and other courts. The entire land is in dispute; OP denies that no order for conversion has been obtained by the competent authorities; On the contrary, the conversion order was obtained long back. Fixed deposit certificates are concerned the same are cancelled as per the opinion of the Company in view of the reasons placed before the company by its directors and which fact was communicated to the complainants and all others who are similarly placed. The letter addressed by the complainant might have returned as nobody in the address, in fact the company was closed long back; The allotment of the site is only after payment of full sale consideration as well as additional development charges; Complainants who neglected to make the payment with in the stipulated period of 22.02.2002 have lost their claim both under the contract and under the law; As such the complainants cannot make any claim after a period of 7 years from the date of default. Complaints are hopelessly barred by limitation. It is complainants who failed in their obligation thereby shows deficiency in service and not OPs; OPs admits that complainant entitled for site or refund of money in the year 2002 if at all they were regular and had paid full consideration additional development charges but the complainants have not paid the full amount and who had not come forward to get register the site by paying balance amount and cannot complain for damages or loss for a period of 7 years; Compensation claim is imaginary, unfounded and not maintainable; There is no sufferance or loss caused to the complainants; There is no question of payment of compensation amount or sufferance and loss as sought for. The question of payment or return of amount does not arise. The defaulting party cannot make complaint against OPs and must approach with clean hands; Among these grounds OP 2 and 3 prayed for dismissal of the complaints. 4. OP 4 and 5 filed separate version mainly contending that the object of the OP-1 is to provide sites. In order to avoid other process the lands acquired in the name of the directors and thereafter such land would be converted from agricultural to non agricultural purposes in the name of the director and thereafter layout will be formed; After formation of the layout the said director shall surrender the land to the Company or to execute the sale deed in the name of the person to whom such site was allotted; OP-4 has already surrendered the land which was acquired in his name out of the Company’s fund to the company and there are no sites are left; OP-4 has executed the sale deeds in favour of the persons to whom the sites are allotted or purchased; Complainant not introduced by OP-2. OP 2,3,5,6 and 8 have acquired the lands in their names out of the company’s funds and have not come forwarded to form the layout. None of the directors have invested their personal money to acquire the said lands; There was an understanding between the OP 2 and 3 who being the managing director and the other directors who are co-opted to the Company that the sites shall be allotted in the lands purchased in the name of the Co-opted directors and in such as event the priority shall be given to the members who have introduced by the Co-opted directors. The lands are still available with OP 2,3,5,6 and 8 which was acquired in their names out of the Company’s fund and for compensation also aforesaid five persons are alone liable; OP-4 is not liable for any of the claim. Complaint is barred by limitation. On receipt of legal notice OP-4 has given suitable reply. Among other grounds OP 4 and 5 prayed for dismissal of the complaint. 5. In order to substantiate the complaint averments, each one of these complainants have filed their affidavit evidence. In Complaint No.1216/09. Complainant through her power of Attorney Mr. Amith Jain filed her affidavit evidence and produced receipts issued by OPs and Legal notice, Postal receipts, Returned RPAD Cover, correspondences made by OP. OP-1 being Pvt. Ltd. Company inspite of service of notice remained absent without any sufficient reason or cause. Hence OP-1 is placed exparte. OP-2 Mr. T.V.Nagaraj Managing director of OP-1, filed his affidavit evidence and OP-3 Mr.K. Suresh Kumar, Joint Managing directo of OP-1 Company filed his affidavit evidence. In Complaint No.492/09 along with OP-1 to 3 others eight directors are also made as parties to the complaint. OP-1, 7 and 9 are placed exparte. OP-8 and 10 deleted as per order dated. 13.07.2009. OP-2 to 5 filed separate version. OP-5 and 6 filed affidavit evidence but OP-6 not filed the version. OP-11 though entered appearance failed to file version. Hence taken as version not filed. In Complaint No.492/09 OP-2 and 3 produced copy of the plaint in O.S.No.1294/06 OS No.742/06 and OS No. 809/06 and R.P.No.78/06. Complainants filed written arguments. OP-2 and 3 submitted written arguments. Heard oral arguments from both the sides. 6. In view of the above said facts, the points now that arise for our consideration in these complaints are as under: Point No.1:- Whether the complainants have proved the deficiency in service on the part of the OPs? Point No.2:- If so, whether the complainants are entitled for the relief now claimed? Point No.3:- To what Order? 7. We have gone through the pleadings of the parties both oral and documentary evidence and the arguments advanced. In view of the reasons given by us in the following paragraphs our findings on: Point No.1:- In Affirmative. Point No.2:- Affirmative in part. Point No.3:- As per final Order. R E A S O N S 8. At the outset it is not in dispute that the complainants became the members of the OP’s scheme as noted in the chart. The OPs accepted their membership fees issued the cash receipts and allotted certain membership number as shown in the chart to each of the complainants. Now the main grievances of these complainants are that though OP promised to complete the project before the stipulated period, but the OPs have not completed the project as promised even after collecting the full value of the site from each of the complainants. OP have not provided the amenities like roads, electricity, underground drainage, Water supply. OPs have not at all formed the layout even after long lapse of the time by which the project was to be completed. Each one of the complainants informed OP’s that they have not developed the project as promised and made a request to refund the amount along with interest and compensation. But the OP’s failed to refund the amount inspite of service of legal notice. Hence complainants approached this forum on the allegations of deficiency in service. 9. As against the case of the complainants defence of the OP 2,3,4,5 is that Ops have dropped the scheme offered by them. OPs admits that OP-1 company invited the members for its membership and company demarcated thousands of sites of different dimensions to its members who have paid entire sum of Rs.1 lakh along with other charges as per the decision of the Op Company; Complainant entered into an agreement to purchase a sites measuring 30 x 40 fts. but not paid the additional development charges of Rs.20,000/-. This contention of the OPs cannot be accepted because OP has not produced document demanding additional charges from the complainants. 10. Further the defence of the OPs regarding the jurisdiction of this forum to decide the dispute involved in all the complaints. According to OP’s the dispute is not a Consumer dispute and as such jurisdiction of this forum is ousted. We find no merit in the said defence taken by the OPs for the reason the OPs promised to render service namely allotting of sites after collecting huge amounts from each one of the complainants. It is ultimately found that OPs failed to keep up their promise namely not developed the layout and not provided the required amenities to the township as promised in their brochure. In that event the conduct of OPs certainly amounts to deficiency in service. Therefore we hold that dispute is a consumer dispute and this Forum has got jurisdiction to entertain these complaints. 11. Further the defence of OPs that these complaints are barred by limitation. In the present complaints there is passing of consideration by the complainants to the OP Company and admittedly a site was agreed to be sold to these complainants in that regard. Admittedly neither the site is sold and registered in favour of the complainants nor the amount so received is refunded. Under law when there is neither sale of site nor refund of consideration received, unless there is a specific refusal the cause of action remains continuous. Therefore in a situation like this the observation made by the Hon’ble National Commission, Delhi, gains relevance in 2005 CTJ NC 499. The Hon’ble National Commission observed that cause of action remains continuous till compliance or till the compliance is refused. If there is a refusal of compliance precisely, then the cause of action commences and the limitation of 2 years begins to run from that date of refusal. In the present complaints there is neither compliance nor refusal. Therefore these complaints are not hit by law of limitation. Hence the defence of the OP that complaints are barred by limitation is not sustainable. 12. We have perused the affidavit evidence and the documents produced by each of the complainants. In the 1st document issued by the OP-2; who is the Joint Managing director of OP-1 Company thanked the complainants for enrolling in their ‘Omkar Nagar’ residential site scheme and endorsed the receipt for Rs.5000/-. In the 2nd document which is a circular reflects the date of inaugural function of ‘Omkar Nagar’ as 02.02.1997 at Chowdaiah Memorial hall and collection of 1st instalment commence from 02.02.1997. As per the terms and conditions produced those who become the members shall pay initially Rs.5000/- as membership fees and Rs.1700 p.m as instalments for 50 months without default, development charges of Rs.2000/-each has to be paid on 10th, 20th, 30th, 40th and 50th months. The members who wish to pay entire amount will be entitled to 15% discount on sital values. The area of the site under the scheme will be 30’ x 40’ monthly instalments shall be paid on or before 12th of every month. Defaulting member not entitled to participate in the monthly draw. Members who default for 3 consecutive months are disqualified in the scheme; the amounts paid by then will be refunded without interest after forfeiting the membership fees of Rs.5,000/- after completion of the scheme. Members desire to discontinue from the scheme can do so by giving 15 days notice. The lucky draw will be held at 6.00 p.m on 12th of every month. The winner in draw will be allotted a site who need not pay further instalments and amount paid till such time will be taken as cost of the site etc., “In these complaints the each of the complainants have paid the amount to OPs as shown in the table. The receipts issued by the OPs for sum of Rs.98,100/-, 82,700/-, 1,00,000/- and Rs.1,00,000/- are produced. Now the main grievances of these complainants are that the OPs have failed to materialize the project and failed to refund the amount inspite of repeated requests and demands. There is no response to the legal notice. OPs cannot enhance the consideration illegally without any specific agreement. Hence the defence of the OPs that complainants are defaulters and have not paid the additional amount cannot be accepted. 13. From the version of OP-4 we can infer that OP-1 company chosen to acquire the lands in the name of their directors and with an understanding for subsequent transfers probably to get over the legal hurdles such an adjustment must have been made. OP 2 and 3 have not chosen to enlighten that aspect of the matter. From contention of OP 4 and 5 it is probable to hold that from out of the fund of OP-1 Company the directors have chosen to acquire lands in their own names. Not only the Managing Director even other directors also responsible and answerable as directors of the Company. 14. Further the defence of OPs is that land owners have filed cases against the OP-1 and cases are still pending before the Anekal and other Courts. The entire land is in dispute. The project remained incomplete. When OP is aware that it cannot execute the sale deed; could have fairly refunded the amount to the complainants. Retention of amount by OPs in order to make wrongful gain, inspite of service of legal notice amounts to deficiency in service on its part. We have perused the legal notice. The dream of the complainants to have their own site remained unfulfilled. We are satisfied that complainants are able to prove deficiency in service on the part of the OPs. Under these circumstances we cannot direct OPs to execute and register the sale deed as prayed by the complainants. It appears from the evidence on record by way of guarantee and assurance the OP Company must have promised its members that in case the project is not materialize they would issue cash certificates for the consideration received along with interest. However from the evidence on record it is evident that the said very scheme was closed long back. Under these circumstances we are of the considered view that the complainants are entitled for alternative relief of refund of the consideration paid with reasonable interest and for compensations along with litigation cost of Rs.2,000/-. Accordingly we proceed to pass the following: O R D E R The complaints are allowed in part. 1. In complaint No.492/2009 OPs are directed to refund Rs.98,100/- along with interest at the rate of 9% p.a. from the respective date of payments till realization and pay compensation of Rs.1,00,000/- to the complainant. 2. In complaint No.708/2009 OPs are directed to refund Rs.82,700/- along with interest at the rate of 9% p.a. from the respective date of payments till realization and pay compensation of Rs.1,00,000/- to the complainant. 3. In complaint No.1216/2009 OPs are directed to refund Rs.1,00,000/- along with interest at the rate of 9% p.a. from the respective date of payments till realization and pay compensation of Rs.1,00,000/- to the complainant. 4. In complaint No.2526/2009 OPs are directed to refund Rs.1,00,000/- along with interest at the rate of 9% p.a. from the respective date of payments till realization and pay compensation of Rs.1,00,000/- to the complainant. The respective complainants are entitled for litigation cost of Rs.2,000/- from the OP’s. This order is to be complied within four weeks from the date of its communication. This original order shall be kept in the file of the complaint No.492/2009 and a copy of it shall be placed in other respective file. (Dictated to the Stenographer and typed in the computer and transcribed by him, verified and corrected, and then pronounced in the Open Court by us on this the 08th day of November 2010.) PRESIDENT MEMBER MEMBER gm.