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M/s. Charan Homes Pvt. Ltd. & Ors vs. Sri Jai Prakash Rai, M.G. dated 2012-11-22

 

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI
 
FIRST APPEAL NO.522 of 2007
(From the Order dated 24.08.2007 in Complaint No.576/2006 of the State
Consumer Disputes Redressal Commission, Karnataka)
 
1.       M/s. Charan Homes Pvt. Ltd.
Builders & Developers,
No.11, 80 Ft. Road,
HMT Layout, R.T. Nagar,
Bangalore-560 032
 
2.       Sri K.V.V. Sathyanarayana Reddy,
Managing Director,
M/s. Charan Homes Pvt. Ltd.
Builders & Developers, No.11,
80, Ft. Road, HMT Layout,
R.T. Nagar,
Bangalore-560 032                                 ..  Appellants
 
Vs.
 
Sri Jai Prakash Rai, M.G.
S/o Late B. Guddappa Rai,
Flat No.TF-2, 3rd Floor,
Alpine View Apartments,
No.15/1, 3rd Cross,
2nd Main, Bellary Road,
Ganganagar,
Bangalore-560 032                                   …..Respondent
 
BEFORE: -
         HON’BLE MR. JUSTICE ASHOK BHAN, PRESIDENT
 HON’BLE MRS. VINEETA RAI, MEMBER
 
For the Appellants             :  Mr. S.R. Sudarram, Advocate                                                 
For the Respondent          :  Mr. Sampat Anand Shetty,
                                                      Advocate
 
                                     
PRONOUNCED ON:       22.11.2012
 
                                         O R D E R
 
ASHOK BHAN, J., PRESIDENT
 
 
Appellants which were Opposite Parties before the State Commission have filed this Appeal against the judgment and order dated 24.08.07 passed by the State Consumer Disputes Redressal Commission, Karnataka (in short, ‘the State Commission’) in Complaint No. 576/2006 wherein the State Commission allowing the complaint filed by the Respondent has directed the Appellants to allot a two bed room flat in the First Floor of the Multi Storeyed Building constructed by them in the land bearing Corporation No.21 corresponding to new No.19, Melvelle House Grounds, Palace Cross Road, Bangalore-560 020 bounded on the “East by K.T. Apartments, West by Plot No.2 of Sri N. Govind, North by Palace Cross Road, South by Madras Bangalore Railway Line’ as described in the Agreement dated 24.01.04 within a period of 60 days from the date of the Complainant paying the balance amount, if any. Rs.5,000/- were awarded as costs.
FACTS:-
 
Complainant/Respondent was in possession of non- agricultural land in Property Nos.18, 19, 20 & 29 at Melvelle House Grounds, Palace Road, Bangalore and was managing same on behalf of the original owner Narayana Reddy. In 1983, a partnership firm, namely, M.M. Foundation was constituted to develop the property bearing No.19 at the request of original owner. Respondent was one of the Partners of the Firm. Since there was no progress in the development of the said property, a tripartite agreement was entered into among the Appellants builder (Opposite Party Nos. 1 & 2), original owner of the Property and the M.M. Foundation for constructing a multi-storeyed building consisting of residential flats for sale to the intending buyers.
Thereafter, on Respondent’s agreeing to give up his right as a partner of M.M. Foundation, Appellants entered into an agreement on 24.01.04 with the Respondent for sale of a residential flat measuring 1200 Sq. Ft. in the Ist Floor of the said multi-storeyed building for consideration @ Rs.2,000/- per Sq. Ft.  Respondent paid a sum of Rs.15 lakh towards sale consideration to the Appellant which was also mentioned in the Agreement. In terms of the agreement, Respondent was liable to pay an additional sum of Rs.50,000/- in case the actual built up area in the flat sold to him exceeded 1200 Sq. Ft.  Appellants did not deliver and register the sale deed in respect of the said flat in favour of the Respondent.  Complainant, being aggrieved, filed the complaint before the State Commission.
Appellants, on being served, entered appearance and filed their written statement resisting the complaint, inter-alia, on the grounds; that the agreement relied upon by the Respondent was a sham and colourable document entered into just to wriggle out of the hurdles created by the Respondent to stall execution of the project and to cause hardship to the Appellants; that the Respondent should be relegated to the Civil Court for seeking the relief of specific performance of the agreement for sale.
State Commission, after scanning the material available on record and going through the evidence led by the parties allowed the complaint and directed the Appellants to allot a two bed room flat in the First Floor of the Multi Storeyed Building constructed by them in the land bearing Corporation No.21 corresponding to new No.19, Melvelle House Grounds, Palace Cross Road, Bangalore-560 020 bounded on the “East by K.T. Apartments, West by Plot No.2 of Sri N. Govind, North by Palace Cross Road, South by Madras Bangalore Railway Line’ as described in the Agreement dated 24.01.04 within a period of 60 days from the date of the Complainant paying the balance amount, if any. Rs.5,000/- were awarded as costs.
State Commission observed thus:-
“        In so far as the maintainability of the complaint under the Consumer Protection Act, we are of the view that under the Agreement the OPs have undertaken to built a flat for the complainant and to hand over possession executing the sale deed.  Therefore, it is a contract for rendering service and the complaint under the Consumer Protection Act is maintainable.
The next contention of the OPs is that the agreement is sham colourable and not intended to be put into effect and was executed only to wriggle out of the situation created by the complainant to stall the execution of the project. If that is so, it is for the OPs to get a declaration from the competent Civil Court to that effect. In the present case, OPs have admitted the execution of the agreement with the complainant. As already stated above, the agreement envisages construction of the complex, out of which, the Ops have agreed to sell one flat to the complainant for which consideration is said to have been paid. Under such circumstances, we are of the view that so long as the agreement remains and so long as the agreement is not superceded by an Order of the competent court, the OPs are bound by that agreement and the OPs are, therefore, liable to deliver possession of one flat by executing a registered sale deed in favour of the complainant.”
 
Appellants, being aggrieved, has filed the present appeal.
 
At the time of admission of Appeal on 23.10.07, Shri Uday U. Lalit, Senior Advocate for the Appellants after taking instructions from the Appellants made a statement that no two bed room flat is available for sale in the multi-storeyed building in question. In view of the statement made by the Ld. Counsel for the Appellants, the Appeal was admitted. Operation of the order passed by the State Commission was stayed subject to deposit of Rs.50 lakh by the Appellants with this Commission within a period of four weeks of passing of the order.   The amount on deposit was ordered to be invested in short term deposits.  Appellants preferred a SLP against the said conditional order before the Hon’ble Supreme Court which was dismissed and time was extended for deposit of the amount.
Subsequently, by letter dated 08.02.08, Appellants offered a sum of Rs.1,26,00,000/- to the Respondent to settle the claim in full and final.  The contents of the letter read:-
“Dear Rai,
Please excuse me for having dragged you to the Court of Law on the ill-advice of Mr. P.M. Bhat.  In lieu of our mutual dialogue and discussion as well as on the advice of our well-wishers, I finally decided to put an end to our long drawn legal battle and settle our disputes amicably, so as to honour the order passed by the Karnataka State Consumer Disputes Redressal Commission, Bangalore.  In this regard, I herewith send a cheque bearing No.755386 for Rs.1,26,00,000/- dated 8.2.08 drawn on Karnataka Bank Ltd., R.T. Nagar Branch, Bangalore, towards the full and final settlement of your claims.
 
Hence, I request you to permit me to withdraw the amount of Rs.50,00,000/- deposited in National Commission as per the Order passed in Appeal No.522/2007 at New Delhi and I will not press my above Appeal pending before the National Commission. Please acknowledge the receipt of the cheque.
 
The cheque issued by the Appellants to the Respondent towards full and final settlement was dishonourned on presentation by the Bank on the ground of “Payment stopped by Drawer”. Appellants lodged an FIR with the RT Nagar Police Station against the Respondent alleging that he had obtained the cheque by playing fraud.
We have heard the Ld. Counsel for the parties at length.
Ld. Counsel appearing for the Appellant has made only two fold submissions which were raised before the State Commission that the Agreement was a sham and colourable document not intended to be implemented and the complaint was not maintainable under the Consumer Protection Act, 1986.  No other argument was advanced.
As against this, Ld. Counsel appearing for the Respondent supports the order passed by the State Commission.
We agree with the view taken by the State Commission that the agreement entered into between the parties was not a sham and colourable document not intended to be put into effect.  Appellants had agreed to sell the flat to the Respondent and received a sum of Rs.15 lakh from him towards the sale consideration. Appellants could wriggle out of the written contract only on showing that the agreement had been got executed by the Respondent either by playing a fraud or coercion or on mis-representation.  Neither any such plea nor any evidence was put on record to show that the Respondent had got the agreement executed from the Appellants either by playing a fraud or coercion or on mis-representation. In the absence of any such plea or proof, the agreement cannot be termed as a sham and colourable document not intended to be put into effect on a bald submission made by the Appellants. Finding recorded by the State Commission that the agreement between the parties was valid and not a sham and colourable document is affirmed.
Learned Counsel appearing for the Appellants strenuously argued that the complaint was not maintainable under the Consumer Protection Act, 1986.  We do not find any substance in this submission as well.  Under the agreement, Appellants had undertaken to build a flat for the Respondent and to hand over the possession and execute the sale deed.  The complaint was maintainable in view of the law laid down by the Hon’ble Supreme Court in Lucknow Development Authority Vs. M.K. Gupta – (1994) 1 SCC 243, in which it has been held that the housing is a service and if the housing firm/Authority failed to comply with its obligation under the agreement, it is liable to compensate the consumer for the same.
The relevant para of the aforesaid judgment reads as under:-
“6.   What remains to be examined is if housing construction or  building activity carried on by a private  or  statutory body was service within the meaning of clause (o) of Section 2  of  the  Act as  it stood  prior to inclusion  of the expression  'housing construction'  in        the  definition  of "service"  by  Ordinance  No. 24 of 1993.   As pointed  out earlier the entire purpose of widening the definition is  to include in  it not only day to  day        buying and selling activity under-taken by a common man but even such activities which  are  otherwise  not commercial  in  nature  yet they partake of a character in which some benefit is conferred on the  consumer. Construction of a house or flat is for the benefit of person for whom it is constructed.  He may do it himself or hire services of a builder or contractor. The latter being for consideration is service as defined in the Act. Similarly when a statutory authority develops land or allots a  site or constructs a house for the benefit  of common man it is  as much service  as  by  a builder or contractor. The one is contractual service  and  other statutory service.  If the service is defective or it is not what was represented then it would be unfair trade practice as defined 257 in the Act.  Any defect in construction activity would be denial of comfort and service to a  consumer.
 
         When possession of property is not delivered  within  stipulated period the delay  so caused is denial of  service. Such disputes or claims are not in respect of immoveable property as argued but deficiency  in rendering  of service of particular standard, quality or grade.   Such deficiencies or omissions are defined in sub-clause (ii) of clause (r) of Section 2 as unfair trade practice.  If a builder of a house uses substandard material in construction of a building or makes false or misleading representation about the condition of the house then it is denial of the facility or benefit of which a consumer is entitled to claim value under the Act. When  the contractor or builder undertakes to erect a  house or flat then it is inherent in it that he shall perform his obligation as agreed to.  A flat with a leaking roof, or cracking wall or substandard floor is denial of service.”
 
          Finding recorded by the State Commission regarding the maintainability of the complaint is also affirmed.
          In the present case, it is not disputed that the Appellants had failed to deliver and register the sale deed in respect of the flat in favour of the Respondent. Ld. Counsel appearing for the Appellants during the course of arguments reiterated that no two bed room flat is available in the multi-storeyed building.  In these circumstances, we mold the relief granted by the State Commission in the following manner:-
(i)           Appeal is dismissed.
 
(ii)          Appellants are directed to either give a flat measuring 1200 sq. ft. to the Respondent as per the Agreement entered into between the parties or to pay a sum of Rs.1,26,00,000/- offered vide letter dated 08.02.08 towards full and final settlement of the claim, within a period of three months from today failing which the amount shall carry interest @ 9% p.a. from the date of offer of amount of Rs.1,26,00,000/-, i.e. 8.02.08 till payment.
 
(iii)        The sum of Rs.50,00,000/- deposited by the Appellants with this Commission be released in favour of the Respondent along with accrued interest towards the part payment  of the decretal amount.
 
(iv)        In case Appellants deliver the possession and execute the sale deed of the flat, Respondent would be liable to refund the sum of Rs.50,00,000/- and the amount of accrued interest received to the Appellants with interest @ 9% p.a. from the date of receipt of payment till the date of execution of the sale deed.
 
 
…………….. . . . . .
                                                                   (ASHOK BHAN J.)
   PRESIDENT
 
                                                       . . . . . . . . . . . . . . . .
        (VINEETA RAI)
   MEMBER
Yd
 
 
 
 
 
 
 
 

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