Date of Filing: 11/08/2011

        Date of Order:12/10/2011

BEFORE THE I ADDITIONAL DISTRICT CONSUMER DISPUTES REDRESSAL FORUM SESHADRIPURAM BANGALORE -  20

Dated:  12^th DAY OF OCTOBER 2011

PRESENT

SRI.H.V.RAMACHANDRA RAO,B.SC.,B.L., PRESIDENT

SRI.KESHAV RAO PATIL, B.COM., M.A., LL.B., PGDPR, MEMBER

SMT.NIVEDITHA .J, B.SC.,LLB., MEMBER

COMPLAINT NO.1495 OF 2011

1) S. Krishnan,

No.3087, 6^th Main, HAL II Stage,

Bangalore-560 008.

2) D.S. Geetha,

No.3087, 6^th A Main, HAL II Stage,

Bangalore-560 008.

3) Aruna Subramanian,

No.3087, 6^th A Main, HAL II Stage,

Bangalore-560 008.

(Rep. by In.person)                                                            ….  Complainants.

V/s

The State Bank Of India,

Stressed Assets Resolution Centre (SARC),

J.C. Road, Bangalore-560 002,

Rep. by the Assistant General Manager.  

(Rep. by Advocate Sri. K.Prakash)                                       …. Opposite Party.

BY SRI. H.V.RAMACHANDRA RAO, PRESIDENT

-: ORDER:-

The brief antecedents that lead to the filing of the complainant U/s 12 of the Consumer Protection Act seeking direction to the Opposite Party to pay Rs.6,71,233/-, are necessary:-

          To complainant No.1, complainant No.2 is the wife and complainant No.3 is the daughter-in-law.  The complainant Nos. 2 and 3 have authorized the complainant No.1 to file this complaint on their behalf.  On 01.08.2009 the opposite party has advertised the proposed auction sale of a flat bearing address No.701, ‘B’ Block, 7^th Floor, Aishwarya Lakeview Residency, Kaggadasapura, Bangalore-560 093.  Accordingly the complainant bided at the auction and the opposite party issued the sale certificate on 03.10.2009 for Rs.35,01,003/-.  According to the said certificate it was made free from all encumbrances “known to the opposite party”.  Subsequently it was learnt that one Aishwarya Lakeview Owners Association is responsible regarding the flat in question and towards maintenance charges Rs.4,72,233/- was due and the said association has issued notice demanding the said amount on 07.11.2009.  It was a shock to the complainant as it was not intimated to the complainant by the opposite party.  The said association denied all services and maintenance to the property purchased by the complainant unless the amounts are paid.  Hence the complainant paid the amount on 30.05.2011 and 25.08.2011 along with subsequent to sale maintenance also.  According to Section 19 of the Karnataka Apartment Ownership Act 1972 the amount due to the association is also a charge on the property i.e., the flat.  This is also known to the opposite party and this is revealed in the correspondence dated: 31.12.2008, 30.01.2009, 18.03.2009.  Even Under Section 20 of the said act the opposite party is liable to repay the money paid by the complainant to association.  Even under the SARFAESI Act the opposite party is liable to pay this amount to the complainant.  Hence the complainant had filed a complaint in C.C. No.1266/2011 and the Forum on 21.07.2011 has directed the complainant to issue notice to the opposite party before filing the complaint, in case the opposite party fails to comply with the same then to institute a fresh complaint.  Accordingly the complainant has issued notice to the opposite party on 27.07.2011 to which the opposite party has replied untenably on 28.07.2011.  Hence the complaint.

2.       In brief the version of the opposite parties are:-

          The complaint is not maintainable since the authorization given to the complainant No.1 is untenable one.  The filing of the C.C. No.1266/2011, its order, notice by the complainant and reply by the opposite parties are all admitted.  The opposite parties sold the premises in question “as is where is basis” and even according to the terms of auction it is the responsibility of the intending bidder to satisfy before participating in the auction.  As the complainants were successful bidders, certificate was issued in their favour on 03.10.2009.  Any amount due to the association even if it is paid by the complainant the opposite party is not liable to reimburse.  It is a known principal that the purchasers to be aware of the amount due to the association and if not debt.  All the allegations to the contrary are denied.

3.       To substantiate their respective cases the parties have filed their respective affidavits and documents.  The arguments were heard.

4.       The points that arise for our consideration are:-

:- POINTS:-

1. Whether the amount due towards the maintenance of the flat in question is an encumbrance on the property put to auction by the opposite party?

2. Whether non-disclosure of the said due by the opposite party before auction is deficiency in service/unfair trade practice?

3. What Order?

5.       Our findings are:-

Point (A) to (C)        :           As per the final Order

                                       for the following:- 

-:REASONS:-

Point A to C:-

6.       Reading the pleadings in conjunction with the affidavits and documents on record, it is an admitted fact that the complainant No.1 is the husband of complainant No.2, complainant No.3 is the daughter-in-law.  It is also an undisputed fact that the opposite party has proposed to conduct an auction of flat No.701, ‘B’ Block, 7^th Floor, Aishwarya Lakeview Residency, Kaggadasapura, Bangalore-560 093, and issued an auction notice in the news paper.  The auction notice reads thus:-

That is to say the opposite party has issued notice that the building will be sold, “as is where is” basis and regarding the specification the bidders can verify themselves before bidding.  It means regarding the specifications of the property the bidders has to approach the building, verify the specifications whether it is in accordance with the specifications given in the auction notice that’s all.  It has not disclosed whether there is any other dues apart from the due to the opposite party is there with respect to this property.  Anyway it is an undisputed fact that the complainants have bided at the auction they were the successful bidders for Rs.35,01,003/- and the opposite party has issued the sale certificate in favour of the complainants and it was registered in the name of the complainants.  The relevant portion of the sale certificate reads thus:-

“The undersigned acknowledge the receipt of the sale price of Rs.35,01,003/- in full and handed over the delivery and possession of the scheduled property.  The sale of the scheduled property was made free from all encumbrances known to the secured creditor on deposit of the money demanded by the undersigned.”

That means the property has been sold to the complainants stating that it is free from all encumbrances and for the value received by the opposite party.  The sale is made on 03.10.2009 that means as on the date of sale the opposite party had declared that there was no encumbrances on the scheduled property sold to the complainant.

7.       It is also an undisputed fact that on 07.11.2009 the Aishwarya Lakeview Owners Association has issued a notice to the complainant and stated that Rs.4,75,640/- is due towards the said flat towards maintenance charges from April-2002 to October-2009, the BWSSB charges, AVLR Registration fees.  That means these amounts were due from April-2002 till the date of sale to the complainants and it should have been paid by the person of the flat and this has not been paid by the opposite party.  It is also an undisputed fact that the association on the threat of not allowing the complainant the service of water, electricity, maintenance has collected these amounts from the complainant on 30.05.2011 and subsequently.  It is further seen from the correspondences made between the association and the opposite party on 31.12.2009, 30.01.2009, 18.03.2009 the opposite party knew about this amount due and the association demanded the amount due, from the opposite party, even then the opposite party has not paid this amount to the association nor notified this in the auction as due to the flat and sold it subject to that.

8.       The flat that has been sold comes within the purview of Karnataka Apartments Owners Act 1972 Section 19 and 20 of the Act reads thus:-

19. Charge on property for common expenses:- All sums assessed by the Association of Apartment owners but unpaid for the share of common expenses chargeable to any apartment shall constitute a charge on such apartment prior to all other charges, except only (i) charge if any on the apartment for payment of Government and Municipal taxes and (ii) all sums unpaid on a first mortgage of the apartment.

20. Joint and several liability of Vendor, etc, for unpaid common expenses:- (1) Upon the sale of an apartment, the purchaser of the apartment shall be jointly and severally liable with the vendor for all unpaid assessments against the latter for his share of the common expenses upto the time of the sale without prejudice to the purchaser’s or grantee’s right to recover from the vendor the amount paid by the purchaser or grantee therefor.

(2) A purchaser referred to in sub-section (1) shall be entitled to a statement from the Secretary or Board of Managers, setting forth the amount of the unpaid assessment against the vendor and such purchaser or grantee shall not be liable for, nor shall the apartment sold be subject to a charge for any unpaid share of common expenses against such apartment accrued prior to such sale or bequest in excess of the amount therein set forth.

That is to say if any amount is due to the association towards maintenance that is a charge on this apartment and it is a primary charge and this has to be recovered as arrears of land revenue and these charges are to be paid by the vendor of the flat and it is a liability on the vendor and encumbrance on the flat.  In this case the opposite party as a vendor of the flat has sold the property to the complainant suppressing this amount due to the association which is a charge on the property.  Hence it is encumbrance on the property.  Hence the putting the property to auction without notifying the encumbrance is nothing but an unfair trade practice and deficiency in service.

9.       It was contended that the principals of Caveat applies to the facts and circumstances of this case that is buyers beware.  This principals of Caveat Emptor summarizes the rule that a purchaser must judge and test for himself about the title of the property and this applies to the judicial sales.  It does not say that the amount due to the association has to be enquired by the purchasers before taking part in the auction.  If any amount is due to the corporation to the authorities that could be enquired, because that will be made known in the encumbrance certificate.  But this due to the association which is a charge on the property as per the Act of 1972 which was not envisaged when this principal came in to existence or at the time of Transfer Of Property Act came in to existence.  Hence this principal is not applicable to the facts and circumstances of this case.

10.     The parties have cited the decisions in Civil Appeal No.868, 869 and 870/2003 decided on 29.08.2011 by the Apex Court of India reported in MANU/SC/0994/2011 and Civil Appeal No. 1118/2009 dated: 19.02.2009 by the Apex Court reported in MANU/SC/0258/2009.  There is no dispute above the proposition of law stated therein.  The facts and circumstances of those cases are not applicable to the facts and circumstances of this case.  Quoting in extenso the judgments of the Higher Courts are prohibited under Consumer Protection Regulation Rule 18(5) of the Consumer Protection Regulation (2005).

11.     The other contention of the opposite party is that the authorization given by the complainant Nos. 2 and 3 is invalid.  It is an untenable one.  Here the complainants had bided of the auction and the sale certificate was issued in the name of the complainants by the opposite party, that means the complainants are the co-owners hence any one of the co-owners can file a complaint or file a suit against the vendor for any deficiency in service/unfair trade practice.  Even otherwise the other two complainants have authorized the complainant No.1 to file the complaint.  That letter of authorization is not disputed and it cannot be disbelieved.  Hence the said contention is taken only for the sake of contention that’s all.

12.     If the opposite parties had disclosed particular encumbrance the complainants would not have bided the auction for Rs.35,01,003/- they could have reduced the Bid amount and they would not have purchased the property, this concealment of the encumbrance is unfair trade practice committed by the opposite parties.  Hence this amount has to be paid to the complainants back.  Hence under these circumstances we hold the above points accordingly and proceed to pass the following:-

-: ORDER:-

1. The Complaint is Allowed-in-part.
2. The opposite party is directed to pay to the complainants the sum of Rs.4,71,233/- together with interest thereon at the rate of 12% per annum from 30.05.2011 until payment within 30 days from the date of this order.
3. The opposite party is also directed to pay Rs.2,000/- as costs of this litigation to the complainants.
4. The opposite party is directed to comply with the order as ordered above at serial Nos. 2 & 3 by sending the amounts to the complainants by DD through Registered Post Acknowledgement Due and submit the compliance report to this Forum with necessary documents within 45 days.
5. Return the extra sets filed by the parties to the concerned as under Regulation 20(3) of the Consumer’s Protection Regulation 2005.
6. Send a copy of this order to both parties free of costs, immediately.

(Dictated to the Stenographer, transcribed and typed by him, corrected and then pronounced by us in the Open Forum on this the 12^th Day of October 2011)

MEMBER                                       MEMBER                            PRESIDENT