KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION

VAZHUTHACAUD, THIRUVANANTHAPURAM

C.C.No.64/2016

JUDGEMENT DATED: 19.06.2023

PRESENT:

COMPLAINANT:

(by Adv. R. Ajaykumar)

Vs.

OPPOSITE PARTIES:

(by Adv. Dougles Linsby N.R.)

JUDGEMENT

HON’BLE JUSTICE SRI. K. SURENDRA MOHAN : PRESIDENT

          This is a complaint filed under Section 17 of the Consumer Protection Act, 1986 (hereinafter referred to as the Act for short) claiming compensation for alleged deficiency in service and unfair trade practice of the opposite parties.  The 1^st opposite party is a Private Limited Company engaged in the business of land development, construction and sale of apartments, villas and other residential structures.  The 2^nd opposite party is the Managing Director of the Company while the other opposite parties are the Directors of the 1^st opposite party.

          2.       The complainant is a person working abroad.  Therefore, this complaint was filed through his Power of Attorney Holder.  But later on, he has sought permission to pursue this complaint by himself and has been conducting this case by himself.  His case is that, he was approached by the opposite parties and persuaded to purchase a “C” type three-bedroom apartment in a project by name NOVA CASTLE APARTMENT, TKD Road, Pattom, Thiruvananthapuram.  The total sale price of the apartment was Rs.95,00,000/-(Rupees Ninety Five Lakhs).  The schedule of payments was also accepted.  The payments were to be made at specific points in the progress of the construction.  The complainant paid Rs.30,00,000/-(Rupees Thirty Lakhs) on 06.11.2013, Rs.10,00,000/-(Rupees Ten Lakhs) on 17.12.2013 and Rs.20,00,000/-(Rupees Twenty Lakhs) on 19.12.2013.  The complainant thus made a total payment of Rs.60,00,000/-(Rupees Sixty Lakhs) to the opposite parties.  The date of completion and handing over of the apartment was 31.12.2014.  However, the opposite parties have failed to honour their commitment and construction of the apartment remains incomplete to this date. 

          3.       Further, the opposite parties subsequently changed the plan of the building to include their corporate office without the consent of the complainant and the other persons who had booked apartments.  The above change denied to the apartment owners extra access to the entrance.  The entrance for the apartment owners was shifted to the rear portion of the building.  The opposite parties also modified the plan for exclusive use of elevators and staircases for their corporate office.  Since the above modifications were in violation of the agreed terms, the complainant also made a complaint to the Corporation of Thiruvananthapuram on 21.07.2014. 

4.       According to the complainant, the modifications also affected the shares of the apartment owner in the immovable property.  The nature of the building itself was changed and it has become a residential cum commercial building.  The complainant had agreed to buy an apartment in a residential building.  On 08.02.2014 the opposite parties claimed that block work of the complainant’s apartment was complete and therefore, his balance payment was due.   However, the complainant found that the work was completed only over his apartment on the ninth floor while the work of all other apartments were remaining incomplete.  The complainant realised that the attempt of the opposite parties was to claim the balance amount due from him without completing the construction.  The complainant requested the opposite parties to return the amount of Rs.60,00,000/-(Rupees Sixty Lakhs) paid by him with interest thereon @18% per annum as agreed by them.  But they were not amenable to the said request.  According to him the interest was fixed at 18% taking into account the fact that the complainant was not having a house of his own at Trivandrum. 

5.       It was to satisfy the dream of the complainant to have a house of his own at Trivandrum that he had paid the amount of Rs.60,00,000/-(Rupees Sixty Lakhs) to the opposite parties.  However, the opposite parties have neither handed over possession of the completed apartment nor returned the money paid by the complainant.   Their conduct amounts to serious deficiency in service and unfair trade practice.  As a result, the complainant has been suffering deep agony and pain at the loss of his hard earned money and his inability to own a house of his own.  The complainant is frustrated, disappointed, dejected and depressed on account of the acts and omissions on the part of the opposite parties.  Therefore, he is entitled to be granted an amount of Rs.10,00,000/-(Rupees Ten Lakhs) as compensation.  In the above circumstances, the complainant has claimed return of the amount paid by him with interest thereon @18% per annum, together with an amount of Rs.10,00,000/-(Rupees Ten Lakhs) as compensation along with punitive damages and costs.    

          6.       The opposite parties had promised to hand over possession of the fully constructed apartment to the complainant on or before 31.12.2014.  But they have not made any progress in the construction, so far.  Instead, the opposite parties have changed the initial plan of the building, to accommodate their corporate office in the said building without informing or obtaining the consent of the complainant and other residents who had agreed to purchase apartments.   The opposite parties made provision for their corporate office with extra access to the entrance, denying such facility to the apartment owners.  In fact, the entrance for the apartment owners was shifted to the rear portion of the building.  The opposite parties also modified the plan for exclusive use of elevators and staircases for their corporate office.  All this was in violation of the express terms agreed upon.  Therefore, the complainant raised the issue of permit violation before the Corporation of Thiruvananthapuram by submitting a petition dated 21.07.2014.  The individual shares of the apartment owners over the property was also affected.  The nature of the building itself stands changed.  The opposite parties had a malafide intention all along to house their corporate office in the building.  But, they represented to the complainant that the building was a fully residential one, without disclosing their real intention.  The building is therefore not a fully residential one but, a residential cum commercial-corporate building.  The complainant never agreed to purchase an apartment in such a building.  Therefore, the complainant has sought for return of the amount paid by him along with compensation and costs claimed in the complaint.  According to the complainant, he is a consumer under the Act.  There is deficiency in service and unfair trade practice on the part of the opposite parties who are the service providers. 

          7.       The complainant therefore requested the opposite parties to refund the amount of Rs.60,00,000/-(Rupees Sixty Lakhs) paid by him with interest thereon @18% per annum as stipulated in the agreement, since the opposite parties were not able to hand over possession of the completed apartment on time.  The rate of interest was fixed at 18% per annum taking into account the fact that the complainant was not having a house of his own at Trivandrum, forcing him to live in a rented house whenever he visited Trivandrum.  However, the opposite parties were not amenable to the said request.  The complainant has every right to recover the amount of Rs.60,00,000/-(Rupees Sixty Lakhs) paid by him with interest thereon @18% per annum, together with an amount of Rs.10,00,000/-(Rupees Ten Lakhs) as compensation for the loss and mental agony caused to him. 

8.       The complaint was admitted and notice was issued to the opposite parties by this Commission.  On receipt of notice the opposite parties entered appearance through counsel and contested the complaint.  According to the common written version filed by the opposite parties, the complaint itself was not maintainable.  According to them, the dispute falls outside the jurisdiction and powers of the Redressal Authorities constituted under the Act.  The dispute in this case comes within the scope of the Real Estate (Regulation and Development) Act 2016, a specific enactment made for the purpose of resolving the disputes between a builder and an allottee.   The Real Estate Regulatory Authority (RERA for short) is specially constituted to look into the complaints as in the present case.  Section 79 of the said Act specifically bars the jurisdiction of all other Courts and Tribunals over matters that come within the adjudicatory powers of the Regulatory Authority or its Appellate Tribunal.  Therefore, it is submitted that this Commission has no jurisdiction to entertain this complaint. 

9.       It is further contended that the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2016 (Commercial Courts Act for short) also enacts a specific bar of jurisdiction over commercial disputes including issues relating to construction and infrastructure contracts.  Chapter II of the Act deals with Commercial Courts and Chapter V specifically require transfer of all claims pending before other Courts and Tribunals to the Special Courts.  Therefore, according to the opposite parties this complaint is not maintainable in view of the provisions of the Real Estate (Regulation & Development) Act, 2016 and the Commercial Courts Act.

10.     Apart from the above, the complaint is barred by limitation.  All the transactions took place in the year 2013.  But, this complaint has been filed only in 2016.  The averments in the complaint are also in the nature of settlement of accounts and refund of money.  In view of all the above objections, it is contended that the complaint is not maintainable.

11.     On the merits, it is contended that the 1^st opposite party is a reputed and professionally managed builder at Thiruvananthapuram.  The Company has pioneered a number of high-rise constructions and apartments built to its exacting standards with a continually improving Quality Control System to ensure uniform quality in every aspect of its construction.  It is admitted that, the complainant had entered into an agreement with the 1^st opposite party for development of the land and construction of an apartment.  As per the agreement, it was expected that the construction would be completed within the extended periods subject to force majeure conditions.  The terms of the agreement would reveal that time was never the essence of the contract.  The complainant was informed by the opposite parties that the finishing date of the work was extended up to June 2018 due to unforeseen circumstances.  There has been no wilful delay on the part of the opposite parties in completing the construction.  The work was not delayed due to any laches on the part of the opposite parties.   The delay was on account of labour issues, escalation of price of construction materials due to global recession, changes in building rules and statutes, etc.  The said intervening factors were unforeseen circumstances beyond the control of opposite parties.  The construction agreement provides for such circumstances and such periods have to be specifically excluded while calculating the time for completion. 

12.     It was further contended that there were no regular enquiries by the complainant as required.  But, the opposite parties used to keep the complainant addressed of all the happenings at the site.  The complainant was also not                    regular in making timely payments to the opposite parties and that too affected the pace of construction.  As per the agreement executed between the parties, the date of completion was subject to the complainant fulfilling his obligations as per the agreement and the other terms and conditions therein.  The complainant has wilfully hidden the above aspects and is making allegations without any bonafides.   The complainant has come to this Commission with unclean hands.  The original of the agreement is not produced.  The date of completion of the project was extended to June 2018. 

13.     The complainant has not produced the original agreement before this Commission.  He has also not produced any original documents.  The documents produced along with the complaint are not genuine and cannot be admitted in evidence without testing the veracity of the document.  Several Police cases were registered against the opposite parties at the instance of some complainants.  Almost all documents were taken away by the Police in connection with the investigation.  The opposite parties were also in judicial custody for more than 21 days.  During this period most of the office records were taken away by some interested persons.  It is apprehended that some forged documents might have been created to raise false claims against the opposite parties.  Therefore, the documents relied upon by the complainant are disputed documents and cannot be admitted in evidence. 

14.     According to the version, the delay in completing the construction of the apartment is attributable to several factors including lorry labour strike, hike in the price of sand, shortage of construction materials like sand, scarcity of stone etc.  In the year 2012, there was stone quarry strike which continued for days together.  Scarcity of cement also resulted in stopping of construction activities.  The opposite parties did not opt for purchase of low quality sand or low grade cement and did not wish to compromise on the structural strength and durability of the building.  In the year 2013, sand labourer’s strike had become violent.  Again in the year 2014, construction industry had gone into stagnancy as a result of rising cement price.  There was complete restriction for quarrying and excavations at environmentally fragile places.  These factors were beyond the control of the opposite parties.  The true state of affairs had been communicated to the complainant at all relevant times.  The complainant is trying to wriggle out of the consequences provided for such situations.  There was no unfair trade practice, deficiency in service or undue delay on the part of the opposite parties.   Therefore, the complainant is not entitled to any compensation as claimed.  The opposite parties are taking all necessary steps to complete the construction of the apartment in a time bound manner. 

15.     The 1^st opposite party is a Private Limited Company with only three Directors.  The entire dealings of the company are managed by the Managing Director, the Chairman and the Director.  But, other persons having no interest are also made opposite parties.  Therefore, the complaint is liable to be dismissed for misjoinder of parties.  The complainant has no cause of action to institute the present complaint.  None of the reliefs sought for can be allowed or granted.  The interest claimed is exorbitant.  Therefore, the complaint is liable to be dismissed with costs.

16.     On the above pleadings, both sides went to trial.  Both sides have not adduced any oral evidence.  The complainant filed affidavit in lieu of chief examination.  Exhibits A1 to A9 documents are marked by the complainant in his affidavit.  A proof affidavit has been filed on behalf of all the opposite parties producing one document marked as Exhibit B1.  After close of evidence both the parties were heard. 

17.     According to the counsel for the complainant, substantial amounts had been handed over to the opposite parties under Exhibit A1 agreement with the object of satisfying the cherished dream of the complainant to acquire a residential apartment of his own.  However, after having received the amount, the opposite parties have neither completed the construction nor handed over the apartment that was agreed to be delivered possession of in the year 2014.  It is clear that they have no intention of completing the construction.  Therefore, it is only appropriate that the complainant is permitted to recover the amounts paid by him from the opposite party.  The counsel prays that a decree may be granted as prayed for in the complaint. 

18.     According to the counsel for the opposite parties, as per orders of the National Company Law Tribunal, proceedings before all Courts and Tribunals have been stayed and for the said reason, this Commission lacks jurisdiction to pass orders against them.  It is contended that the opposite parties have been divested of their authority in respect of the company and they are no longer in management thereof.  Therefore, passing of any orders against them would serve no purpose.  On the above grounds, the counsel seeks dismissal of the complaint.

19.     The following points arise for consideration in this complaint:

1. Is the complaint maintainable?
2. Is there any deficiency in service or unfair trade practice on the part of the opposite parties as alleged in the complaint?
3. Reliefs and costs?

Point No.1

          20.     The question of maintainability was raised in a number of petitions filed by the opposite parties in the connected cases that are pending against them seeking return of the amounts paid by various consumers as per similar agreements as in the present case.  All the petitions referred to above were heard together and dismissed as per common order dated 21.02.2019 of this Commission.  The said order not having been challenged by the opposite parties before any higher Forum has become final.  The said position has been reiterated by this Commission in two subsequent orders dated 12.06.2019 and 14.06.2019 holding that similar complaints were maintainable before this Commission.  The said orders have also become final and binding on the opposite parties.  Therefore, it is not necessary for us to consider the question of maintainability here.  Therefore it is not open to them to raise the question of maintainability here again. 

Point Nos. 2 & 3

          21.     Both the above points are considered together for the sake of convenience. 

          22.     The case of the complainant is that, as per an agreement dated 31.10.2013, marked as Exhibit A1 in these proceedings, entered into between the 1^st opposite party and the complainant, the opposite parties had agreed to construct and hand over possession of an apartment in the project by name “SAMSON & SONS, NOVA Castle Apartment Projects, T.K.D. Road, Pattom”.  The apartment agreed to be purchased by the complainant was to be located on the third floor of the building complex and has been described as Apartment No.3-C (type C).  The apartment after completion of construction was to be registered and conveyed to the complainant along with 1.15 cents of undivided interest in 45cents of land, along with the apartment.   The total sale consideration agreed to be paid by the complainant was Rs.95,00,000/-(Rupees Ninety Five Lakhs).  Though the complainant has paid an amount of Rs.60,00,000/-(Rupees Sixty Lakhs) to the opposite parties towards the sale consideration they have not completed the construction or conveyed the apartment to the complainant as agreed. 

          23.     A common version has been filed by all the opposite parties in which they have admitted the execution of Exhibit A1 agreement.  Their case is that, due to unforeseen circumstances the construction could not be completed.  According to them the delay was on account of labour issues, escalation of price of construction materials due to global recession, changes in building rules and statutes, all of which according to them, constitute force majeure conditions.  They have a further case that omission on the part of the complainant to make timely payments has also contributed to the delay.  According to them, the opposite parties are taking all necessary steps to complete the construction of the apartment in a time bound manner. 

          24.     Though the opposite parties have pleaded force majeure conditions as the reason for not completing the construction as agreed in Exhibit A1, absolutely no evidence have been adduced by the opposite parties in support of the said contentions.  Though some sweeping allegations have been made disputing the genuineness of the documents produced by the complainant, the contentions have not been pursued during the trial.  The complainant has also not been cross examined on any of the disputed aspects.  Exhibits A3, A4, A5 and A6 are receipts issued by the Managing Director of the 1^st opposite party.  The opposite parties have no case that the said documents were not issued by them.  In fact, the said documents were all marked without any objection from their counsel, on consent.  The said receipts account for payment of an amount of Rs.60,00,000/-(Rupees Sixty Lakhs).  The balance amount was not paid since the construction was not proceeding properly.  Since Exhibits A3, A4, A5 & A6 receipts are not in dispute, we hold that the case of the complainant regarding payment of Rs.60,00,000/-(Rupees Sixty Lakhs) to the opposite parties stands proved. 

          25.     The opposite parties have questioned the jurisdiction of this court to try this complaint and to go ahead with these proceedings contending inter-alia that these proceedings are not maintainable in view of the provisions of the Insolvency and Bankruptcy Code, 2016 (I & B Code for short), the provisions of the Real Estate Regulation and Development Act, 2016 (RERA) and the provisions of the Commercial Division and Commercial Appellate Division of High Court Acts, 2016 (Commercial Courts Act for short).  The impact of the various provisions of the Acts referred to above have been considered by the Apex Court in Pioneer Urban Land and Infrastructure Limited Vs Union of India and others (2019)8 SCC 416.   It has been held by the Supreme Court that, the remedies referred to above are all concurrent remedies operating in different fields and therefore, such remedies are available to be taken recourse of by a litigant at his discretion.  Since the complainant before us has chosen his remedy under the Consumer Protection Act, his complaint before this Commission is perfectly maintainable and there is no embargo in proceeding with this complaint.  Therefore, the said contentions of the opposite parties are rejected.

          26.     It is not in dispute that, the apartment complex has not been constructed yet.  As per Exhibit A1 agreement possession of the apartment was to be given before 31.12.2014.  Though more than eight years have elapsed the opposite parties have not honoured their commitments.  According to their version, they are taking necessary steps to complete the construction in a time bound manner.  Therefore, it is clear that the construction of the apartment remains incomplete even as on today.  In view of the above, the contention of the complainant that he is entitled to recover the amount paid by him, with interest is fully justified.  The complainant is also entitled to interest on the said amount till the date of payment.  Since the agreed rate of interest between the parties as per Exhibit A1 agreement is @18% per annum, the claim of the complainant for being granted interest at the said rate shall also cannot be declined.

          27.     The desire of a person to own a house of his own is sacred and sacrosanct.  It was to satisfy the said desire of the complainant that he had parted with such a huge amount.  The mental agony at losing his hard earned money and at the same time being unable to acquire his dream house cannot be trivialised.  Therefore, the complainant shall be entitled to compensation for his suffering, which is fixed at Rs.7,00,000/-(Rupees Seven Lakhs).

          In the result, this complaint is allowed as follows:-

1. The opposite parties are directed to pay the complainant the amount of Rs.60,00,000/-(Rupees Sixty Lakhs) received from the complainant, with interest thereon @18% per annum from 31.12.2014, the date on which possession of the apartment was agreed to be handed over, till the date of realisation;
2. The opposite parties are directed to pay Rs.7,00,000/-(Rupees Seven Lakhs) as compensation towards the mental agony and hardships suffered by the complainant, with interest thereon @8% per annum from 07.05.2016, the date of filing this complaint, till date of payment.
3. The opposite parties shall further pay an amount of Rs.50,000/-(Rupees Fifty Thousand) as costs of this litigation. 
4. All the above amounts shall be paid within a period of one month from the date of receipt of a copy of this judgement, failing which all the amounts shall carry interest @9% per annum.

Dictated to my Confidential Assistant, transcribed by her, corrected by me and pronounced in the Open Court, on this the 19^th day of June, 2023.

SL

C.C.No.64/2016

APPENDIX

1. COMPLAINANT’S WITNESS

2. COMPLAINANT’S DOCUMENTS

3. OPPOSITE PARTY’S WITNESS

4. OPPOSITE PARTY’S DOCUMENTS

                    PRESIDENT