Chandigarh

StateCommission

CC/292/2015

Chand Berry - Complainant(s)

Versus

BCL Homes Ltd, - Opp.Party(s)

Vandanaa Malhotra & Rajneesh Malhotra

19 Feb 2016

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

Complaint No.	:	292 of 2015
Date of Institution	:	02.12.2015
Date of Decision	:	19.02.2016

 

1. Chand Berry son of Sh.Lalit Kumar Berry.
2. Mrs. Deepti Berry wife of Sh.Chand Berry.

       Both residents of House No.214-B, GH-99, Sector 20, Panchkula.

…Complainants

V e r s u s

 

1. BCL Homes Ltd., Regd. Office: Shop No.140, Railway Road, Village Dariya, U.T., Chandigarh, through its Authorized Signatory.
2. BCL Homes Ltd., Village Kishanpura, NAC Zirakpur, District Mohali, Punjab, through its Project Incharge.
3. BCL Homes Ltd., through its Managing Director, Sh.Baldev Chand Bansal, 253, Sector 7, Panchkula, Haryana-134109.
4. Axis Bank, RAC, SCO 134-135, 2^nd Floor, Sector 34-A, Chandigarh-160022.
5. Canara Bank, Branch Office at Sector 8, Madhya Marg, Chandigarh, through its Branch Manager.

....Opposite Parties

 

Complaint under Section 17 of the Consumer Protection Act, 1986.

BEFORE:         JUSTICE JASBIR SINGH (RETD.), PRESIDENT.

                        MR. DEV RAJ, MEMBER.

                        MRS. PADMA PANDEY, MEMBER

 

Argued by:-  Sh.Rajneesh Malhotra, Advocate for the complainants.

                   Ms.Radhika Subhash, Advocate for opposite party no.5.

                   Opposite parties no.1 to 3 and 4 exparte.   

 

PER JUSTICE JASBIR SINGH (RETD.), PRESIDENT

            Allured by false promises made by representatives of opposite parties no.1 to 3, the complainants purchased one built-up flat (in short the unit),  in a project floated by opposite parties no.1 to 3, under the name and style of “Chinar Homes”, Kishanpura, Zirakpur. The said unit was purchased for an amount of Rs.37.50 lacs. An amount of Rs.7,50,000/-  (Rs.3,75,000/-  on 04.10.2010 and Rs.3,75,000/- on 08.06.2011), was paid by the complainants, to opposite parties no.1 to 3. Apartment no.905A, 3 BHK, measuring 2170 square feet, was allotted, in favour of the complainants, vide allotment letter dated 07.07.2011, in the said project. Thereafter, further amount was paid and when this complaint was filed, the complainants had already paid an amount of Rs.33,75,000/- against total price of unit i.e. Rs.37.50 lacs.  As per clause 9 of the allotment letter, possession of the unit, in question, was to be delivered to the complainants, by the opposite parties no.1 to 3, within a period of 18 to 24 months, with a grace period of three months (total 27 months), from the date of issuance of allotment letter i.e. on or before 07.10.2013, after providing all the basic amenities. It was further stipulated in clause 9 that, in case, opposite parties no.1 to 3, failed to deliver possession of the unit, by the said date, they were liable to make payment of Rs.10,000/- per month, to the complainants, towards rent, for the period of delay. To make payment towards price of the unit, the complainants had raised loan of Rs.30,42,075/- @10.25% interest per annum, from opposite party no.4, which was to be repaid in 180 equated monthly installments @Rs.33,157/- per  month.   

2.       When possession was not offered by the stipulated date, the complainants visited the project and they were shocked to see that there was no development at all. The site was again visited in the years 2013-2014 and it was noticed that construction was not complete, in any of the Towers. Despite requests made, neither possession of the unit was delivered, nor compensation for the period of delay was paid, by opposite parties no.1 to 3, to the complainants.
3.       It is case of the complainants that they are living in a rented accommodation and were desirous in shifting to their own flat. However, on account of non-delivery of possession of the unit, in question, they were made to suffer heavily. Thereafter, again, communications were sent to opposite parties no.1 to 3, through emails etc., to handover possession of the unit but nothing was done. Even internal services like roads, water lines, sewerage lines etc., were not provided at the site. 
4.       It is further case of the complainants that there was no compliance to the mandatory provisions of law, qua construction to be raised in the proposed project. The complainants were shocked to receive legal notice dated 12.05.2015 Annexure C-15, from opposite party no.5, stating that opposite parties no.1 to 3 had obtained loan of Rs.32 crores from it. It was also intimated that land underneath the project and construction raised thereupon stood mortgaged with opposite party no.5 and opposite parties no.1 to 3 could effect sale thereof, only after getting “No Objection Certificate” from it (opposite party no.5). 
5.       By alleging that there was deficiency in providing service on the part of opposite parties no.1 to 3, this complaint was filed by the complainants, under Section 17 of the Consumer Protection Act, 1986 (in short the Act), claiming delivery of possession of the unit, or in the alternative, to refund the amount deposited, alongwith interest, compensation and litigation costs.
6.       At the time of arguments, claim qua refund of the deposited amount was only pressed by Counsel for the complainants.
7.       Upon notice, reply was filed by opposite parties no.1 to 3. Many technical objections were raised stating that in the face of arbitration clause contained in the allotment letter, this Commission cannot entertain the instant complaint. It is further stated that dispute between the parties being of civil nature, could only be adjudicated upon by a Competent Civil Court. Territorial jurisdiction of this Commission was also disputed. It was pleaded that the present complaint is barred by limitation. However, sale of unit to the complainants was not denied.
8.       On merits, it was stated that delay in construction of the unit(s) was caused due to force majeure circumstances i.e. economic recession; non availability of sand and other building material, on account of stay order passed by the Apex Court etc. etc. Raising of loan by opposite parties no.1 to 3, from opposite party no.5 and mortgage of the project land and construction to be raised thereupon, was admitted. The remaining averments were denied, being wrong.  
9.       In the reply filed by opposite party no.4, it was admitted that the complainants raised loan from it, to make payment of installments, towards price of the said unit. It was stated that, in case, deal is cancelled, and this Commission came to the conclusion that the complainants are entitled to refund of the amount deposited by them, in that event, opposite party no.4 will have first charge, to the extent of unpaid loan amount, by them (complainants). It was also stated that loan was obtained by submitting many documents, with an intent to create equitable mortgage.
10.       Similar reply was filed by opposite party no.5,  stating that the project floated by opposite parties no.1 to 3, was financed by it, and the unit allotted to the complainants was under equitable mortgage. It was averred that, in case, the deal is cancelled, and this Commission came to the conclusion that the complainants are entitled to refund of the amount deposited by them, in that event, opposite party no.5 will have first charge on that amount.
11.       In the rejoinder filed by the complainants, they reiterated all the averments, contained in the complaint, and repudiated those, contained in the written version of opposite parties no.1 to 3 and 5.
12.       The parties led evidence, in support of their case.
13.       On 17.02.2016, when the case was fixed for arguments, none put in appearance, on behalf of opposite parties no.1 to 3 and 4, and, as such, after waiting for sufficient time, they were proceeded against exparte.
14.        After giving our thoughtful consideration, to the contentions, advanced by Counsel for the complainants, opposite party no.5, and the evidence, on record, we are of the considered opinion, that the complaint is liable to be partly accepted, for the reasons to be recorded hereinafter. It is an admitted fact that in a housing project of opposite parties no.1 to 3, the complainants had purchased a built-up unit bearing No.905-A, measuring 2170 square feet, for an amount of Rs.37.50 lacs. As per clause 9 of the allotment letter dated 07.07.2011, possession of the unit, complete in all respects, was to be delivered to the complainants, within a period of 18 to 24 months, with a grace period of three months, from the date of issuance of allotment letter i.e. on or before 07.10.2013. As per payment schedule, against total price of Rs.37.50 lacs, the complainants had paid an amount of Rs.33.75 lacs, towards price of the said unit. Rest of the amount was to be paid, at the time, when possession of the unit was to be delivered. It is coming out on reading written statement, filed by opposite parties no.1 to 3, that completion of project is not in sight, even today. It is also not in dispute that the entire land falling underneath the project and the construction raised thereon, including the unit, in question, was mortgaged by opposite parties no.1 to 3 with opposite party no.5. It is also an admitted fact that to make payment towards price of the unit, the complainants had raised loan of Rs.30,42,075/- from opposite party no.4, against equitable mortgage of certain documents. Interest @10.25% per annum was to be paid by the complainants, to opposite party no.4.

            It is a case of failed promise and virtually deceit has been committed by opposite parties no.1 to 3, with the complainants. It was never disclosed to the complainants, by opposite parties no.1 to 3,  that the entire project land and construction to be raised thereon, stood mortgaged with opposite party no.5. Virtually after making more than 95% of the price of unit, delivery of possession thereof is not expected even in near future. Above fact clearly amounted to deficiency in providing service on the part of opposite parties no.1 to 3, which entitles the complainants to get refund of amount paid by them, towards the unit.

15.       To defeat claim of the complainants, an objection was raised by opposite parties no.1 to 3, in their written version, regarding non-maintainability of the consumer complaint, in view of existence of Arbitration Clause, in the allotment letter.

            With a view to appreciate the controversy, in its proper perspective, reference to Section 3 of the Act is made, which reads as under;

“3. Act not in derogation of any other law.—

The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.”

16.       Section 3 of the Act, is worded in widest terms, and leaves no manner of doubt, that the provisions of the Act, shall be, in addition to, and not in derogation of any other law, for the time being, in force. The mere existence of an Arbitration Clause, in the allotment letter, would not oust the jurisdiction of the Consumer Fora, in view of the provisions of Section 3 of the Act. Similar principle of law, was laid down, in Fair Air Engg. Pvt. Ltd. & another Vs. N. K. Modi (1996) 6  SCC 385  and  C.C.I Chambers Coop. Housing Society Ltd. Vs Development Credit Bank Ltd. (2003) 7 SCC 233. Not only this, recently also, a similar view was taken by the National Commission, in a case titled as DLF Limited Vs Mridul Estate (Pvt.) Ltd., Revision Petition No.412 of 2011 (alongwith other 11 connected cases), decided on 13.05.2013. Vide that judgment many Revision-Petitions were decided. Feeling aggrieved against the order dated 13.05.2013, passed by the National Commission, Rosedale Developers Private Limited/ Opposite Party challenged that order in the Hon'ble Supreme Court. In the case of Rosedale Developers Private Limited Vs. Aghore Bhattacharya and others, (Civil Appeal No.20923 of 2013), the Hon'ble Supreme Court of India, while dealing with various judgments, observed that the same (judgments) have no bearing on the issue, as to whether in the face of an Arbitration Clause, Jurisdiction  can be exercised by a Consumer Fora or not. It was further observed that the observation made in that judgment that Section 8 of the 1996 Act, is mandatory, cannot lead to an inference that the Consumer Fora is bound to refer disputes to the Arbitral Tribunal. In this view of the matter, the objection of opposite parties no.1 to 3, in this regard, being devoid of merit, is rejected.
17.       An objection was also raised by opposite parties no.1 to 3, in their written version, that since the unit, in question, was situated at Zirakpur, and also all the payments were made at that place, as such, this Commission has got no territorial jurisdiction to entertain and decide the complaint.

            According to Section 17 of the Act, a consumer complaint can be filed, by the complainants, before the State Consumer Disputes Redressal Commission, within the territorial Jurisdiction whereof, a part of cause of action arose to them. In the instant case, it is evident from the record, that payment in the sum of Rs.3,75,000/- vide receipt dated 04.10.2010 (at page 21) and Rs.3,75,000/-, vide receipt dated 08.06.2011 (at page 34) was received by the Registered Office of opposite parties no.1 to 3 at Chandigarh i.e. Shop No.140, Railway Road, Village Dariya, U.T., Chandigarh. Since, as per the documents, referred to above, a part of cause of action, arose to the complainants, at Chandigarh, this Commission has got territorial Jurisdiction to entertain and decide the complaint.  The objection taken by opposite parties no.1 to 3, in their written version, in this regard, therefore, being devoid of merit, must fail, and the same stands rejected. 

18.        Another objection was taken by opposite parties no.1 to 3, in their written version, that since the complainants sought enforcement of the allotment letter, in respect of the unit, in question, i.e. immoveable property, only a suit, in the Civil Court was maintainable.

            The complainants hired the services of opposite parties no.1 to 3, for purchasing the unit, in question, and they were allotted the same for consideration. According to clause 9 of the allotment letter, opposite parties no.1 to 3 were required to hand over possession of the unit, in question, to the complainants, within a period of 18 to 24 months, with a grace period of three months (total 27 months), from the date of issuance of the same (allotment letter), after completing all the basic amenities.  It was not that the complainants purchased the unit, in an open auction, on “as is where is basis”.  Section 2 (1) (o) of the Act, defines service as under:-

“service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service”

19.       From the afore-extracted Section 2 (1) (o) of the Act, it is evident that housing construction, also comes within the definition of a service. In Narne Construction P. Ltd., etc. etc. Vs.  Union Of India and  Ors. Etc., II (2012) CPJ 4 (SC),  it was held that when a person applies for the allotment of a building or site or for a flat constructed by the Development Authority and enters into an agreement with the Developer, or the Contractor, the nature of transaction is covered by the expression ‘service’ of any description. Housing construction or building activity carried on by a private or statutory body constitutes ‘service’ within the ambit of Section 2 (1) (o) of the Act. Similar principle of law, was laid down, in Haryana Agricultural Marketing Board Vs. Bishambar Dayal Goyal & Ors. (AIR 2014 S.C.1766). Under these circumstances, the complaint involves the consumer dispute, and the same is maintainable. Not only this, Section 3 of the Act, provides an alternative remedy. Even if, it is assumed that the complainants had a remedy to file a suit, in the Civil Court, the alternative remedy provided under Section 3 of the Act, could be availed of by them, as they fall within the definition of a consumer. In this view of the matter, the objection  taken by opposite parties no.1 to 3, in their written version, being devoid of merit, must fail, and the same stands rejected.
20.       Further objection was taken by opposite parties no.1 to 3, in their written version, that the complaint filed by the complainants, was barred by time.

            As stated above, according to the clause 9 of the allotment letter, possession of the unit, in question, was to be delivered, to the complainants, within a period of 18 to 24 months, with a grace period of three months, from the date of issuance of the same (allotment letter) i.e. on or before 07.10.2013. Neither possession of the unit, was handed over to the complainants, by the stipulated date for want of construction and basic amenities, at the site, as has been frankly admitted by opposite parties no.1 to 3, in their written version nor the penalty amount, as provided in allotment letter, was paid to them nor the amount deposited by the complainants was refunded to them. There was, thus, a continuing cause of action, in favour of the complainants, to file the complaint. In Lata Construction & Ors. Vs. Dr. Rameshchandra Ramniklal  Shah And Anr., II 2000 (1) CPC 269=AIR 1999 SC 380, wherein, the facts and circumstances were similar to the one, involved, in the instant case, it was held that there was a continuing cause of action, and the complaint was not barred by time. In Meerut Development Authority Vs. Mukesh Kumar Gupta, IV (2012) CPJ 12 (SC),  the complainant applied for a plot, in the year 1992, on the basis of inducement made in the advertisements of the petitioner, knowing fully well that the land, in question, was under litigation. Consumer Complaint was filed, in the year 2009, claiming relief of execution of the sale deed, which was granted to him. An objection was taken that the complaint was barred by time. The Hon'ble Supreme Court held that there was a continuing cause of action, and, as such, the complaint was not barred by time. The principle of law, laid down, in the aforesaid cases, is fully applicable to the facts of the instant case. Under these circumstances, it is held that the complaint was not at all barred by time. The objection taken by opposite parties no.1 to 3, in this regard, being devoid of merit, must fail, and the same stands rejected.  

21.       No other point, was urged, by Counsel for the complainants and opposite party no.5.    
22.       For the reasons recorded above, this complaint is partly accepted, with costs, against opposite parties no.1 to 3 only. Opposite parties no.1 to 3, jointly and severally, are directed as under:-

1. To refund the amount of   Rs.33,75,000/-, to  the complainants,  alongwith simple interest @12% per annum, from the respective dates of deposits onwards.
2. To pay compensation, in the sum of Rs.2 lacs, for causing mental agony and physical harassment, to the complainants, as also escalation in prices.
3. To pay cost of litigation, to the tune of Rs.20,000/-, to the complainants.
4.  Axis Bank/opposite party no.4, from which the loan was taken by the complainants, for payment of installments towards the said unit, shall have first charge on the amount, referred to, in Clause (i) above, to the extent of unpaid loan amount, by them (complainants).
5. The aforesaid awarded amounts, in the manner mentioned in clauses (i) to (iii), shall be paid by opposite parties no.1 to 3, to the complainants,  within a period of 2 months, from the date of receipt of a certified copy of this order, failing which, the amount mentioned in clause (i) shall carry penal interest @15% per annum instead of 12% per annum, from the respective dates of deposits till realization and the amounts mentioned in clauses (ii) and (iii) shall carry interest @15% per annum, from the date of filing of this complaint, till realization.
6. Complaint against opposite parties no.4 and 5, is dismissed, with no order as to costs, as no deficiency in providing service or unfair trade practice has been proved on their part.
7. However, it is made clear that opposite party no.5 shall have no right to claim any amount, which has been awarded in favour of the complainants, in the manner, referred to above.

23.       Certified Copies of this order be sent to the parties, free of charge.
24.       The files be consigned to Record Room, after completion.

Pronounced.

19.02.2016

Sd/-

 [JUSTICE JASBIR SINGH  (RETD.)]

PRESIDENT

 

 

Sd/-

[DEV RAJ]

MEMBER

 

 

Sd/-

(PADMA PANDEY)

        MEMBER

Rg.