BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL

FORUM AT BANGALORE (URBAN)

28^TH DECEMBER 2010

       PRESENT:- SRI.B.S.REDDY                      PRESIDENT           

                         SMT. M. YASHODHAMMA     MEMBER

                         SRI.A.MUNIYAPPA                MEMBER

O R D E R

SMT. M. YASHODHAMMA, MEMBER

             The complainants filed these complaints U/s. 12 of the C.P. Act of 1986 seeking direction against Opposite Party (herein after called as OP) to refund whatever amount paid by them along with interest at 24% p.a. and compensation of Rs.8.5 lakhs and litigation costs on the allegations of deficiency in service.

          Since O.P in all the complaints are common, the question involved, relief claimed being the same, in order to avoid the repetition of facts and multiplicity of reasonings, these cases are stand disposed by this common order.

2.      The brief averments as could be seen from the contents of these complaints are as under:

          These complainants became the members of the OP Society since from 1981 to 1986. OP formed a residential sites at their Chanakyapuri layout, (Nagawara, Cholanayakanahalli and Viswanathanagenahalli of Gangenahalli side) Bangalore.  OP accepted their membership and collected the amount from the year 1981 to 1994 gave the receipts and also issued provisional allotment letters as shown below in the chart. Thereafter OP failed to register the sites in favour of the complainants. For no fault of them complainants were made to suffer both mental agony and financial loss. For the convenience sake details of membership account No. measurement of site, amount paid by each complainants, date of payments are noted below in the chart.

3.      Though each one of these complainants have paid the huge amount towards sital value during the period 1981 to 1994, they were unable to reap the fruits of their investments because of the hostile attitude of the O.P.  The repeated requests and demands made by the complainants to allot sites and register in their favour went in futile.  Thus these complainants felt deficiency in service on the part of the OP. As such they are advised to file these complaints seeking the reliefs stated above.

4.      On appearance OP filed version. The defence set out by OP in all the complaints are identical and same. 

The brief averments made in the version are as under:  The complaints filed alleging deficiency in service against the OP is not maintainable and liable to be dismissed; Complainants unnecessarily sought to make allegations against OP society without understanding or appreciating the true facts. The society cannot allot site or refund the site deposit or pay any interest or it can be saddled with any such liability towards the complainants; The society has done its best and diligently prosecuted all legal avenues available for the purpose of acquiring the lands for formation of layout and for distribution among its members.  Even though the acquisition was notified the same could not be completed in view of the acquisition proceedings quashed by the Hon’ble High Court of Karnataka and the same was confirmed by the Hon’ble Supreme Court of India.  The society has spent huge amounts of money towards land acquition, development, deposit of compensation to landlords with the Government etc., Even the layout in respect of land in possession of the society was approved by the BDA. The Hon’ble Supreme Court in its judgement has ultimately decided as follows;

“We direct that as a result of quashing of the land acquisition proceedings, including the notification as aforesaid, the possession of the  land shall be restored to the respective land owners irrespective of the fact whether they have challenged the acquisition of their lands or not.  On restoration of the possession to the land owners, they shall refund the amounts received by them as compensation or otherwise in respect of their lands.  The appellant, the respondents and the State Government including all concerned authorities / persons shall implement the aforesaid directions at an early date”.   

The amount paid by the society lying with Government of Karnataka in the form of compensation; The society has spent huge amounts for the acquisition proceedings; The state Governments is a proper and necessary party to the above proceedings as the society will be able to have some funds only when the society gets back money from the government which was deposited as compensation;

5.      The lands were acquired in favour of the society under the provision of land acquisition Act.  The procedural delays coupled with litigation pending in various courts are the reasons for delay in completion of the layout.  The society cannot directly purchase agricultural lands in view of the express bar under Karnataka land Reforms Act. The society has approached the government with various representations to have the same land acquired again or other alternate lands.  The said representations are pending active consideration with the government.  The acquisition was struck down by Hon’ble Supreme Court. The society is in no way responsible for such lapse on the part of the government of Karnataka. OP is not making any profit from the deposits received; same was spent by the OP for the purpose of acquiring lands and allotting sites to its members. In fact OP has spent more than what is received by the members. The case of complainants is that they do not want sites from the society. If by virtue of a subsequent development a member becomes legally disentitled for an allotment of site from the society, owners cannot blame the society or try to find fault with the society. The society is non profit oriented and OP cannot be saddle with interest. There is no concept of any service being rendered for any consideration, as the society is not making any profit for itself. The question of refunding the amount with interest does not arise.  The society is a co-operative institution. Complainants are admittedly a members of the society.  All disputes relating to a Co-Operative society and its member have to be adjudicated as per the provisions of Sec. 71 of the Karnataka Co-operative Societies Act. The registrar of the co-operative societies or his subordinates is the competent authority to adjudicate the dispute between a co-operative society and its member.  These complaints are barred by limitation. As per the Sec. 24A of Consumer Protection Act Complaints are to be filed within a period of two years from the date of cause of action.  The Hon’ble National Commission is held in various decisions that a complaint filed beyond the limitation period of 2 years cannot be admitted before the District Forum. Inspite of the difficulties faced OP has made its best efforts and satisfied the claim of most of the members. Who had approached the various Courts of law; OP has exhausted all its funds and now became penniless. Among these grounds O.P prayed for dismissal of these complaints.

6.      In order to substantiate the complaints averments the complainants filed their affidavit evidence and produced provisional allotment letters, cash receipts, counter foils, terms and conditions, pass book issued by OP. On behalf of OP H. Srinivas, the secretary of OP society filed his affidavit evidence and OP has not produced any documents. Then heard the arguments of both the sides.

7.      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 OP?

  Point No. 2 :-  If so, whether these complainants are

                        entitled for the reliefs now claimed?

         Point No. 3 :-  To what Order?

8.      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

9.      At the outset it is not in dispute that these complainants being lured away with the propaganda made by the OP who claims to be the House Building Co-Operative Society thought of becoming Members of the OP Society with a hope of getting a site.  OP assured them with an allotment of a residential site in the layout to be floated by them. The complainants with a fond hope of acquiring a site measuring 30 x 40 fts and 60 x 40 fts and 50 x 80 fts each one of them became the members of the OP society.  OP has also received the amounts for the period from the year 1981 to 1994, issued cash receipts. Further OP issued provisional allotment letter to these complainants in the years 1984 to 1987 itself by allotting a site at their Chanakyapuri layout at Nagavara, Cholanayakanahalli and Vishwanathanagenahalli of Gangenahalli side except in complaint No.2252/2010 complainant was assured to allot a site at Bannerghatta Housing Project consisting of Devarachikkanahalli, Kodichikkanahalli, Hongasandra, and Arakere Village, Bangalore.  The details of membership No, measurement of sites, date of provisional allotment letter, total amount paid by these complainants, towards the sital value, date of payments are mentioned in the above said chart. OP has not disputed the fact of receipt of the said amount. The documents to that effect are produced by the complainants.  Now the grievances of these complainants is that though OP collected the entire membership fees and collected substantial amounts towards allotment of sites failed to execute and register the Sale deed as promised or to refund the amounts.

10.    The defence set out by OP is that due to legal hurdles it is unable to complete the project and what ever the amount they have received from these complainants is paid to the developers and deposited towards compensation payable to landlords with the government etc., but OP failed to substantiate the said defence by producing any documents.    The land acquired for the purpose of formation of layout is repossessed by the land owners in view of quashing of the land acquisition proceedings.  So the sum and substance of the defence set out by OP is that it is unable to complete the project because of the quashing of the land acquisition proceedings. It is unable to refund the sital value to the members because the said amounts are used for paying compensation to the land owners by depositing the same with the government and for paying the development expenses.

         There is no force in the contention of the OP that the State government is necessary party to the proceedings, as there is no privity of contract between complainant and state government.  Further we do not find any force in the contention of the OP that these complaints are hit by Section 71 of Co-Operative Society Act.

11.    On the close security of the defence set out by OP it can be made out that OP collected the amount towards sital value from the complainants, with a promise that it would complete the project and register the site but project could not be completed on account of the acquisition being quashed. When OP was aware of the fact that it is unable to complete the project, it would have been fair on its part to refund the sital value collected, to its members, no such steps are taken. Hence we find deficiency of service on the part of the OP in not refunding the sital value to its Members/Complainants.  The approach of the OP does not appears to be fair and honest.  Having retained huge amount for all these years, OP accrued the wrongful gain itself thereby caused wrongful loss to these complainants that too for no fault of them. The hostile attitude of the OP must have naturally caused both mental agony and financial loss to these complainants.  OP cannot wash of its hands by taking defence of legal hurdles of quashing of acquisition proceedings.

12.     We are unable accept the defence that these complaints are barred by limitations, when once OP accepted the deposit towards sital value, with a promise to allot sites to these complainants, till OP allot and execute the sale deed, recurring cause of action will accrue to these complainants.

13.    OP has made these complainants to wait for more than 16 years.  Though complainants invested their hard earned money to acquire a site of their own but their dreams remained unfulfilled.  OP has not formed the layout and there are no sites available at the disposal of the OP to allot the same to the complainants. Relief claimed by the complaints is for refund of amount with interest at 24 % p.a. and to award damages.

14.    In our view the complainants are entitled for refund of amount deposited towards allotment of sites. Interest claimed at the rate of 24% p.a. on the deposited amount is on higher side. Reliance was placed on the principles laid down 2001 (SC) 325 Ghaziabad Development Authority Vs. Pradeep Kumar wherein it was held that:

“When the development authority is charging interest at the rate of 18% p.a. if any delay is made in the payment of installments, then the same applies to it also. When the development authority has made provision for charging for penal interest at the rate of 18% p.a. on delayed payments, then on principles of equity and law, it is bound to pay interest at the same rate.”

          The principles of the said case cannot be applied to the facts of the case for the reason that OP could not complete the project of forming the layout and allot the sites for the reason the acquisition proceedings acquiring the lands for formation of layout was quashed.

15.    Taking into consideration of all the facts and circumstances; it is fair and reasonable to award interest at the rate of 12% p.a. on the amounts to be refunded. Hindu News Paper cutting of 23.11.2010 is produced, wherein it was reported that site No.10 formed by this OP at Nagawar was purchased for Rs.8 crores from one B.G. Channappa and other two persons who had bought it from OP society in 2008. The complainants based on this news report claims that the cost of sites formed is too high; interest at 18% p.a. can be awarded. In our view the said news report is not at all relevant, as the same pertains to some other layout formed by this OP society.

16.    The learned counsel for OP produced copy of the judgement in Appeal No.551 to 559/2006 between the Amarjyothi House Building Co-operative society and Venkataramana Krishna Murthy and others on the file of Karnataka Appellate Tribunal at Bangalore wherein interest awarded at the rate of 18% p.a. on the amounts deposited was set aside. The said proceedings were arisen challenging the orders passed by the Joint Registrar of Co-operative Societies directing the society to refund the deposit with interest at 18% p.a. The said orders cannot be taken into consideration, as in the earlier proceedings of similar nature against the OP interest has been awarded at 12% p.a. Under these circumstances we are of the view that the ends of justice would be met by directing OP to refund whatever amounts it has received from these complainants with interest at 12% p.a. and pay compensation of Rs.50,000/- towards mental agony and monitory loss suffered by each one of these complainants. With these observations we answer point No.1 and 2 accordingly and proceed to pass the following: 

ORDER

          The complaints are allowed in part.

1. In complaint No.2244/10 OP is directed to refund Rs.1,10,000/- together with interest at the rate of 12% p.a. from 27.11.1993 till realization and pay a compensation of Rs.50,000 and litigation cost of Rs.1,000/- to the complainant.

2. In Complaint No.2245/10 OP is directed to refund Rs.63,000/- together with interest at the rate of 12% p.a. from 13.12.1994 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

3. In complaint No.2246/10 OP is directed to refund Rs.74,000/- together with interest at the rate of 12% p.a. from 13.12.1994 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

4. In complaint No.2247/10 OP is directed to refund Rs.69,000/- together with interest at the rate of 12% p.a. from 27.11.1993 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

5. In complaint No.2248/10 OP is directed to refund Rs.74,420/- together with interest at the rate of 12% p.a. from 13.12.1994 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

6. In complaint No.2249/10 OP is directed to refund Rs.69,000/- together with interest at the rate of 12% p.a. from 27.11.1993 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

7. In complaint No.2250/10 OP is directed to refund Rs.69,000/- together with interest at the rate of 12% p.a. from 27.11.1993 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

8. In complaint No.2251/10 OP is directed to refund Rs.56,472/- together with interest at the rate of 12% p.a. from 21.03.1990 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

9. In complaint No.2252/10 OP is directed to refund Rs.21,360/- together with interest at the rate of 12% p.a. from 25.01.1994 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

10. In complaint No. 2253/10 OP is directed to refund Rs.53,000/- together with interest at the rate of 12% p.a. from 31.12.1993 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

11. In complaint No. 2254/10 OP is directed to refund Rs.69,000/- together with interest at the rate of 12% p.a. from 27.11.1993 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

12. In complaint No. 2255/10 OP is directed to refund Rs.1,10,000/- together with interest at the rate of 12% p.a. from 27.11.1993 till realization and pay a compensation of Rs.50,000 and litigation cost Rs.1,000/- to the complainant.

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.2244/10 and copy of it shall be placed in other respective files.

(Dictated to the Stenographer and typed in the computer and transcribed by her verified and corrected, and then pronounced in the Open Court by us on this the 28^th day of December 2010.)

                                                PRESIDENT

MEMBER                                          MEMBER                   

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