Per Mr.Justice S.B.Mhase, Hon’ble President 1. Complaint nos. 345/2000,346/2000,347/2000,227/2001,228/2001&229/2001 are being disposed of by common order. The complainants in all these complaints are the members of a Proposed Co-operative Housing Society of Air India, while opponent no.1 is a builder and developer and opponent nos.2 & 3 are the Chief Promoters of the said proposed society. Initially opponent no.1 was a Chief Promoter and after him the opponent no.2 was appointed as Chief Promoter. All the complainants in the respective complaints are the proposed members of the said proposed society. The opponent no.1 was to construct a building at village Kole Kalyan, Taluka Andheri on a plot bearing Survey no.28, Hissa no.6, CTS No.289/1 to 5 admeasuring 1773 sq.yards equivalent to 1593 sq.meters. The complainants had agreed to purchase a flat admeasuring 550 sq.ft. at the cost to be calculated @ Rs.1450/- per sq.ft. increased from Rs.1100/- per sq.ft. Accordingly, opponent no.1 entered into a Memorandum of Understanding dated 26/10/1993 with the opponent no.2. Thereafter, opponent no.3 stepped in the shoes of opponent no.2 and entered into a supplemental Memorandum of Understanding dated 05/12/1998. 2. All the complainants have paid an amount of Rs.34.10 lakhs upto 15/12/1998. Amount of Rs.3 lakhs was paid by the complainants through opponent no.1 when Memorandum of Understanding was executed on 26/10/1993. Thereafter, amount of Rs.31.10 lakhs was paid by all the complainants through opponent no.3 being a Chief Promoter of the said proposed society and, thus, the amount of Rs.34.10 lakhs has been paid to opponent no.1. Receipt of these amounts have been acknowledged by opponent no.1 in the above referred documents. 3. Details of the amounts paid by each of the complainants is as follows:- Sr.No. Name of Complainant Case No. Amount 1. Mr.M.M.Sarang C/345/2000 Rs.1,75,000/- 2. Mrs.Rohini Mether C/346/2000 Rs.2,00,000/- 3. Mrs.Deepa R.Malandkar C/347/2000 Rs.1,60,000/- 4. Mr.P.Y.Sahastrabudhe C/227/2001 Rs.2,70,000/- 5. Mrs.M.M.Patki C/227/2001 Rs.2,15,000/- 6. Sagar Terrace Co-op.Society C/227/2001 Rs.6,08,000/- 7. Mr.S.S.Baing C/228/2001 Rs.1,10,000/- 8. Mr.T.S.Shikalgar C/228/2001 Rs.2,70,000/- 9. Mr.C.V.Shetty C/228/2001 Rs. 74,000/- 10.Mr.P.R.Phal C/228/2001 Rs.1,57,000/- 11.Mr.B.K.Darad C/228/2001 Rs.1,90,000/- 12.Mr.M.B.Rege C/228/2001 Rs.1,10,000/- 13.Mr.P.D.Modak C/229/2001 Rs.1,27,000/- 14.Mr.V.S.Sawarkar C/229/2001 Rs.2,45,000/- 15.Mr.V.S.Kamat C/229/2001 Rs.1,90,000/- 16.Mr.D.V.Shirolkar C/229/2001 Rs.1,99,000/- 17.Mr.K.K.Patankar C/229/2001 Rs.1,10,000/- ------------------ Total…. Rs.34,10,000/- =========== 4. It is a case of the complainants that as per the Agreement of 26/10/1993, opponent no.1 was to carry on construction of above referred plot and, thereafter, complainants were to be put into possession of the flats as agreed. Even though the agreements have taken place in the year 1993 as stated above, no construction was carried out by the opponent no.1. However, opponent no.3 has been subsequently elected as Chief Promoter. He negotiated with opponent no.1 and opponent no.1 assured that the construction will be carried out and, therefore, Memorandum of Understanding dated 15/12/1998 was executed and amount of Rs.31.10 lakhs was paid by all the complainants by collecting contribution from each of the complainants. Since the construction was not carried out within a period of 24 months from 15/12/1998 as per Memorandum of Understanding and since all the opponents have failed to discharge their obligations, the complainants have filed the above referred complaints separately for the recovery of the amounts. 5. All the complainants have contributed and paid through opponent nos.2&3 to the opponent no.1 and, therefore, they have also claimed the interest @ 18% p.a. on said amount. 6. It is further their case that since they could not get the flats and if they have to purchase the flat, now they will have to incur a huge amount for the purchase of the flat and, therefore, each of them have claimed the damage @ Rs.5 lakhs from the opponents and on total amount they are further claiming interest @ 18% p.a. 7. Opponent nos.1 to 3 were served in all the complaints and all the opponents have denied the claims made in the complaints. 8. Opponent no.1 has contended that the complainants are not consumers and there is no deficiency of service on the part of the opponent. However, he has admitted that these complainants had approached to opponent no.1 in order to develop the said plot and construct thereupon 40 flats. However, opponent no.1 further contended that the said plot was under reservation for recreation ground and the said fact was informed to the society and the complainants and, therefore, 18 members along with opponent no.2 entered into a Memorandum of Understanding. In short, it is his case that unless the reservation is vacated, the development cannot be carried out, was a fact known to the complainants and said reservation was never lifted by the B.M.C. and, therefore, development cannot be carried out. He has further contended that the amounts of the payments are exaggerated. Opponent no.1 also contended that the complaints being vexatious be dismissed with cost. Opponent no.1 has also contended that the complaints are time barred. 9 Opponent no.2 though served has not filed any written version. Opponent no.3 has filed written version. He has admitted that he was a Chief Promoter after the opponent no.2. The Memorandum of Understanding dated 15/12/1998 is also accepted by him and he has only tried to explain in what manner he was diligent and was acting on the instance of General Body directions. He has denied the liability for the payments. 10. Complainant has also filed rejoinder after having denied the contentions of the opponent no.1. So far as reservation part is concerned, it is stated in the para 7 of the rejoinder that it was the duty of the O.P.no.1 to get the reservation clear and construct the building under the terms of the Agreement and that the complainant is not aware and do not admit that the opposite party no.1 made several representations with the concerned authorities requesting them to clear the said land for development. Then the contentions raised by the opponent no.3 have been denied. Rest of the contentions in the rejoinder are not relevant. 11. We have heard advocates of both the parties. Perused the briefs of arguments and the affidavits of the parties. 12. After going through the material on record, we find the following facts are not in dispute. Namely that the complainants desired to form a proposed Co-operative Housing Society of Air India employees and initially opponent no.2 was a Chief Promoter and after him opponent no.3 was/is Chief Promoter. All the members of the said proposed society including the complainants had approached to opponent no.1 to develop a plot Survey no.28, sub-division no.6, CTS 289/1 to 5 admeasuring 1773 sq.yard equivalent to 1593 sq.meters situated at Village Kole Kalyan, Taluka Andheri. Each of the members was to get a flat of 550 sq.ft. and initially rate was Rs.1100/- sq.ft. which was subsequently increased to Rs.1450/- sq.ft. On 26/10/1993 there was Memorandum of Understanding between opponent no.1 & opponent no.2. However, opponent no.2 was to carry out construction of the proposed society of which the complainants were the proposed members. Said work was not carried out till 1998 and in 1998 opponent no.3 became the Chief Promoter and, thereafter, there was an another Memorandum of Understanding dated 15/12/1998. At the time of first document of 1993, amount of Rs.3 lakhs was paid, while at the time of second Memorandum of Understanding of 1998 amount of Rs.31.10 lakhs was paid and, thus, an amount of Rs.34.10 lakhs was paid to opponent no.1. The said plot upon which the development was to be carried out was admittedly a plot under reservation for recreation ground and it was an understanding of the complainants, Chief Promoter and the opponents that the construction on the said plot is to be carried out after the reservation is vacated or lifted and that the said reservation has not been lifted till today and no construction has been carried out by opponent no.1 on the said plot till today. 13. First objection which is raised by opponent no.1 is in respect of limitation. Complaints then filed on or about 10/8/2000 and according to opponent no.1 initial Memorandum of Understanding is of the year 26/10/1993 and, therefore, complaint is time barred. We do not find substance in the said contention. Opponent has failed to refer to the Memorandum of Understanding dated 15/12/1998. In fact by the said document it is agreed that within a period of 24 months construction would be carried out and amount of Rs.31.10 lakhs was paid by the complainants and other proposed members of the proposed society. Therefore, there was novation of contract between the parties in the year 1998 and on failure to construct within a period of 24 months, the cause of action will arise. 24 months will be completed by 15/12/2000 and, thereafter, within a period of two years i.e. till 15/12/2002 the complainants are eligible to file a complaint. Cause of action arises on failure to carry out construction and deliver possession and, thus, calculated the cause of action, last date for filing complaint is on or about 15/12/2002. Even if we assume that the cause of action has arisen in the year 1998, yet two years will be completed by 15/12/2000. As against that complaints have been filed on 10/8/2000 and, therefore, if viewed from any angle complaints are within time. 14. Another objection which has been raised by the opponents is that the complainants are not consumers and there is no deficiency in service. Other contention also has no merit. Opponent no.1 is a builder/developer is an admitted position. There was an agreement in respect of construction on the plot and flats to be given to each of the complainants and the proposed members of the proposed society and the said construction was not carried out and the possession was not delivered to the complainants and the proposed members of the proposed society in spite of the fact that they have paid an amount of Rs.34.10 lakhs by the two documents referred to above. Therefore, the services of the opponent no.1 were hired and part payment was made by the complainants and the Chief Promoter of the proposed society and, therefore, there was a relationship of ‘consumer’ and ‘service provider’ amongst the parties and the said contention raised by the opponents is hereby rejected. So far as payments received are not in dispute and they cannot be disputed because their payments have been made by Memorandum of Understanding and there is receipt given by opponent no.1 to that effect. Opponent no.1 has not brought on record anything which will show that the payments as detailed in the agreements were not received by opponent no.1, except the contentions of the short payments. There is nothing on record to demonstrate that the complainants and the proposed society have made any short payment than as detailed in the two Memorandum of Understandings. Therefore, each of the complainants are entitled to recover amount of actual payment. 15. Complainants have claimed an amount of Rs.5 lakhs by way of any damage. Damages are being claimed by the complainants on a ground that because of the non development made by opponent no.1, the complainants could not get the possession of the flats in question and now if they have to purchase a flat elsewhere they will have to pay higher price as the markets have gone up and, therefore, they are claiming damages. Each of the complainants is claiming damage @ Rs.5 lakhs in respect of flats to be purchased by each of the complainants. There is no doubt that the prices have gone up and, therefore, if the complainants desires to purchase a flat of the same size in the same locality, complainants will have to pay higher price. Further question which requires consideration in this complaint is as to whether the complainant is entitled for damages. It is an admitted position on record especially statement made in para 7 as stated above that the plot in question where the development was to be carried out was under reservation for recreation ground by the BMC and unless and until the said reservation is lifted and the plot is converted into a residential use, construction of the flats for residential purpose for the complainants and other members of the proposed society could not have been carried out by the opponent no.1. 16. Opponent no.1 has stated in his written version that the said fact was brought to the notice of the complainants and the opponent nos.2&3 and other members. Opponent has further stated that initially there were 45 members but ultimately only 18 members have entered into a transaction because of the reservation. Complainants have also stated that responsibility to lift up reservation was on opponent no.1. Thus, the fact of reservation for recreation ground is an admitted one and was known to the complainants and its members and opponent no.1 has not suppressed the said fact from the complainants. Therefore, the day one Memorandum of Understandings were entered into, complainants and the members of the proposed society were aware of the fact that unless the reservation is lifted, the plot in question cannot be developed by opponent no.1. No doubt there may be an agreement between them that they all will exert to lift up the reservation but the fact still remains that till today reservation has not been lifted. Therefore, non construction and non development of the said plot cannot be said to be withholding of service and/or not rendering of any service. On the contrary defect in the execution of the performance of the agreement was known to the parties. Not only that but the parties were aware of the fact that the plot in question cannot be developed in view of the reservation and in spite of that parties have entered into an agreement. Therefore, it is a case of paridelicts, that means defect in the property was known to the parties when the agreement was executed and in spite of that parties entered into an agreement with the full knowledge of the defect in the property. Under these circumstances, since both the parties are aware of the defect in the property, none of the parties are entitled to claim damages from either of the party. 17. Section 65 of the Contract Act prohibits payment of the damages under these circumstances and, therefore, even if market prices have gone high, it would not be possible for the complainants to purchase similar type of flat in the same locality at the same cost, yet the complainants are not entitled for damages since defects in the property as stated above was within the knowledge of the complainants. 18. Next question which requires consideration as to whether the complainants are entitled for an interest @ 18% p.a. as claimed. What we find that the amounts have been taken by opponent no.1 and they have been used by him in his business and profession even though the opponent no.1 could not develop the property in question and, therefore, to the extent of the principal amount which has been paid by the complainants, complainants are entitled to claim interest @ 18% p.a. 19. We are aware that the bank rates presently are lesser than this amount. However, we are equally aware that the interest rate in the private market of builder is much higher than 18% p.a. In one of the cases which we have come across wherein builder has agreed to pay interest of Rs.1,75,000/- within a period of 12 months as against advancement of amount of Rs.1,75,000/- by an investor. Therefore, that will show the rate of interest in the building profession as against bank rate of 18% p.a. is higher interest and, therefore, what we find that 18% interest though appears to be higher than bank interest, we are taking into consideration the private market of investment and interest in the building profession and we find that 18% interest is proper one in the facts of this case and, therefore, we hold that complainants are entitled to claim interest @ 18% p.a. on the amounts advanced. 20. Since opponent nos.2 & 3 were the promoters and they have advanced an amount to opponent no.1 by Memorandum of Understandings for and on behalf of complainants, they cannot be held liable for the amounts. Opponent nos.2 & 3 also stand at par with complainants. Complaints are therefore dismissed as against opponent nos.2&3. In view of this we pass the following order:- ORDER COMPLAINT NO.345/2000 1. Complaint is partially allowed. 2. Opponent no.1 shall pay Rs.1,75,000/- to the complainant from 15/12/1998 till its realization. 3. Prayer in respect of damages of Rs.5 lakhs is hereby rejected. 4. Opponent no.1 shall pay Rs.5000/- to the complainant by way of cost of complaint. 5. Complaint is dismissed as against opponent nos.2&3. 6. Copies of the order be furnished to the parties. COMPLAINT NO.346/2000 1. Complaint is partially allowed. 2. Opponent no.1 shall pay Rs.2,00,000/- to the complainant from 15/12/1998 till its realization. 3. Prayer in respect of damages of Rs.5 lakhs is hereby rejected. 4. Opponent no.1 shall pay Rs.5000/- to the complainant by way of cost of complaint. 5. Complaint is dismissed as against opponent nos.2&3. 7. Copies of the order be furnished to the parties. COMPLAINT NO.347/2000 1. Complaint is partially allowed. 2. Opponent no.1 shall pay Rs.1,60,000/- to the complainant from 15/12/1998 till its realization. 3. Prayer in respect of damages of Rs.5 lakhs is hereby rejected. 4. Opponent no.1 shall pay Rs.5000/- to the complainant by way of cost of complaint. 5. Complaint is dismissed as against opponent nos.2&3. 6. Copies of the order be furnished to the parties. COMPLAINT NO.227/2000 1. Complaint is partially allowed. 2. Opponent no.1 shall pay following amounts to the complainants from 05/12/1998 till its realization. Mr.P.Y.Sahastrabudhe …Rs.2,70,000/- Mrs.M.M.Patki ….Rs.2,15,000/- Sagar Terrace Co-op.Society …..Rs.6,08,000/- 3. Prayer in respect of damages of Rs.5 lakhs is hereby rejected. 4. Opponent no.1 shall pay Rs.5000/- to the complainant by way of cost of complaint. 5. Complaint is dismissed as against opponent nos.2&3. 6. Copies of the order be furnished to the parties. COMPLAINT NO.228/2000 1. Complaint is partially allowed. 2. Opponent no.1 shall pay following amounts to the complainants from 05/12/1998 till its realization. Mr.S.S.Baing …Rs.1,10,000/- Mr.T.S.Shikalgar …Rs.2,70,000/- Mr.C.V.Shetty …Rs. 74,000/- Mr.P.R.Phal …Rs.1,57,000/- Mr.B.K.Darad …Rs.1,90,000/- Mr.M.B.Rege …Rs.1,10,000/- 3. Prayer in respect of damages of Rs.5 lakhs is hereby rejected. 4. Opponent no.1 shall pay Rs.5000/- to the complainant by way of cost of complaint. 5. Complaint is dismissed as against opponent nos.2&3. 6. Copies of the order be furnished to the parties. COMPLAINT NO.229/2000 1. Complaint is partially allowed. 2. Opponent no.1 shall pay following amounts to the complainants from 05/12/1998 till its realization. Mr.P.D.Modak ……Rs.1,27,000/- Mr.V.S.Sawarkar ……Rs.2,45,000/- Mr.V.S.Kamat ……Rs.1,90,000/- Mr.D.V.Shirolkar ……Rs.1,99,000/- Mr.K.K.Patankar ……Rs.1,10,000/- 3. Prayer in respect of damages of Rs.5 lakhs is hereby rejected. 4. Opponent no.1 shall pay Rs.5000/- to the complainant by way of cost of complaint. 5. Complaint is dismissed as against opponent nos.2&3. 6. Copies of the order be furnished to the parties. | 
