The instant complaint under Section 17 of the Consumer Protection Act, 1986 (for brevity, ‘the Act’) is at the instance of a couple/intending purchaser against a partnership construction firm and its partners (Opposite Party Nos. 1 to 3) and the landowner (Opposite Party No. 4) on the allegation of deficiency of services, primarily on the part of developer in a dispute of housing construction.
Succinctly put, complainants case is that on 11.05.2011 they entered into an agreement for sale with the OPs to purchase of a self-contained flat measuring about 1640 sq. ft. super built up area being flat No. 02 on the 2nd floor and one open car parking space measuring about 135 sq. ft. on the ground floor underneath the proposed building together with undivided proportionate share of land with users rights of all common areas of the said building lying and situated at premises No. 457, Madurdaha, P.S.- Tiljala, Kolkata- 700107, Dist- South 24 Parganas within the local limits of ward No. 108 of Kolkata Municipal Corporation at a total consideration of Rs. 53,75,000/-. The complainants have stated that they have already paid Rs. 50,37,500/- as part consideration amount and also Rs. 36,800/- as costs of tiles to the developer and they are liable to pay the balance amount of Rs. 3,37,500/- at the time of delivery of possession of the flat or at the time of execution of deed of conveyance. The complainants have stated that in order to meet the expenses to purchase the flat they obtained loan from Bank amounting to Rs. 32,25,000/- which has been directly disbursed in favour of the developer. The complainants have stated that as per terms of the agreement the developer was under obligation to handover the subject lat in complete condition within December, 2011 and it was agreed that if they failed to deliver the possession within committed date, they will pay damages of @ Rs. 5000/- per month till the date of delivery of possession of the flat. The complainants have alleged that after expiry of the stipulated period, they have requested the OPs to handover the flat but the OPs on the ground of poor financial condition undertook to complete construction positively by 30.04.2015 but unfortunately they failed to complete the construction and deliver the possession. In this regard, all the requests and persuasions including legal notice dated 08.12.2016 was not heeded to. Hence, the complainants have lodged the complaint with prayer for following reliefs, viz.- (a) to direct the OPs to deliver peaceful and vacant possession of the flat in question in a habitable condition within the period of one month and to execute the deed of conveyance immediately thereafter; (b) to provide completion certificate; (c) to pay damages of Rs. 5,000/- per month from January, 2012 till delivery of possession; (d) to award compensation to the tune of Rs. 10,00,000/- due to harassment and mental agony; (c) to award litigation costs of Rs. 50,000/- etc.
The Opposite Party Nos. 1 to 3 i.e. the partnership construction firm and its partners by fling a written version have stated that due to shortage of fund they have failed to handover the possession of the flat to the complainants within the stipulated period. It has further been stated that they will pay the delay charges @ Rs. 5000/- per month and seeks some more time to complete the construction works pertaining to the said building.
The Opposite Party No. 4/landowner by filing a separate written version has stated that the OP Nos. 1 to 3/developer in lieu of the land given by them has paid Rs. 53,00,000/- in favour of them and as such there is no embargo upon OP Nos. 1 to 3 to execute and register the deed of conveyance in favour of the complainants on the basis of registered Power of Attorney so granted by them provided contractual consideration amount is paid to the developer.
The parties have tendered evidence through affidavit. They have also given reply against the questionnaire set forth by their adversaries. Though the parties represented through their Ld Advocates yet they did not file any brief notes of argument in accordance with Regulation 13(2) of Consumer Protection Regulations, 2005.
The pleadings of the parties and the evidence on record make it quite clear that OP No. 3 is the owner of a plot of land measuring about 3 cottahs and 42.5 sq. ft. more or less lying and situated at premises No. 457, Madurdaha, P.S.- Tiljala, Kolkata- 700107, Dist- South 24 Parganas within the local limits of ward No. 108 of Kolkata Municipal Corporation. In order to construct a G+3 storied building over the said land, the OP No. 4 (landowner) has obtained sanctioned building plan from the Kolkata Municipal Corporation on 29.09.2010. Subsequently, on 24.11.2010 the OP No. 4 had entered into a development agreement with the OP No. 1 represented by OP Nos. 2 and3 for raising a G+3 storied building. On the self-same date, OP No. 4 has also executed one Power of Attorney authorising OP No. 1 to enter into agreement for sale with the intending buyers from the developer’s allocation.
The evidence on record goes to show that on 11.05.2011 the OP No. 1 represented by OP Nos. 2 and 3 had entered into registered agreement for sale with the complainants to sell one self-contained flat measuring about 1640 sq. ft. super built up area being flat No. 02 on the 2nd floor and one open car parking space measuring about 135 sq. ft. on the ground floor underneath the proposed building at a total consideration of Rs. 53,75,000/- including the costs of car parking space. The evidence on record further goes to show that the complainants have already paid Rs. 50,37,500/- and Rs. 36,800/- (adjustable with consideration amount) as costs of tiles to the OP Nos. 1 to 3 and as such they are liable to pay the balance amount of Rs. 3,37,500/-. As per terms of the agreement the complainants were liable to pay 10% of balance amount either at the time of delivery of possession or execution of sale deed. Therefore, it is evident that the complainants have fulfilled their promise in terms of the agreement for sale in making payment of consideration amount.
It is trite law that the parties are bound by the agreement. A person who signs a document contains certain contractual terms is normally bound by them even though he is ignorant of their precise legal effect, in a decision reported in AIR 1996 SC 2508 ( Bharati Knitting Company –vs- DHL World Wide Express Courier Division of Airfreight Ltd) the Hon’ble Supreme Court has observed thus:
“It is seen that when a person signs a document which contains certain contractual terms, as rightly pointed out by Mr. R.F Nariman, Ld. Senior Counsel, that normally parties are bound by such contract; it is for the party to establish exception in a suit. When a party to the contract disputes the binding nature of the singed document, it is for him to prove the terms in the contract or circumstances in which he came to sign the documents need to be established. The question we need to consider is whether the District Forum or the State Commission or the National Commission could go behind the terms of the contract? It is true, as contended by Mr. M. N. Krishanmani, that in an appropriate case, the Tribunal without trenching upon acute disputed question of facts may decide the validity of the terms of the contract based upon the fact situation and may grant remedy. But each case depends upon it own facts. In an appropriate case where there is an acute dispute of fcts necessarily the Tribunal has to refer the parties to original Civil Court established under the CPC or appropriate State law to have the clams decided between the parties. But when there is a specific term in the contract, the parties are bound by the terms in the contract.”
Now, in order to determine the alleged deficiency, let us have a look to the relevant clauses being clause Nos. 10 and 15 of agreement for sale which are set out below:
“10. The developer shall complete the construction of the building in all respects and make ready for possession of the said apartment to the purchasers on or before December 2011 subject to the compliance of terms and conditions mentioned in this agreement.”
“15. The developer shall not be liable for any loss caused by the acts of Gog or other unforeseen circumstances making it impossible for the developer to construct the said building and to deliver possession of the said flat/apartment to the purchasers on or before the stipulated date. Save and except the aforesaid reason the developer shall be liable to deliver possession of the said flat in the said building to the purchasers on or before the said stipulated date otherwise the developer shall be liable to pay damages at the rate of Rs. 5,000/- per month to the purchasers till the deliver of the flat in the building.”
Evidently, the OPs/developer has failed to fulfil their promise in handing over the subject flat within the committed date i.e. within December, 2011 and though they subsequently promised to deliver the same latest by 30th April, 2015 but failed to do so.
Mr. Ved Sharma, Ld. Advocate for the OP Nos. 1 to 3/developer has submitted that when the complainants have not made any prayer in the prayer clause of petition of complaint that they are agreeable to pay the balance amount, it cannot be said that the developer was deficient in rendering services. He has further submitted that as the complainants have not come with clean hands the complaint should be dismissed. In support of his contention, the Ld. Advocate for the OP Nos. 1 to 3 has placed reliance to a decision of the Hon’ble Supreme Court in a Civil Appeal No. 7539 of 1999 (Canara Bank and Others –vs- Sri Debasis Das and Ors).
Mr. Barun Prasad, Ld. Advocate for the complainants, on the other hand, has invited our attention to the payment schedule and submitted that when the complainants have already paid more than 90% of the total consideration amount and the balance amount of 10% is only liable to pay at the time of delivery of possession or execution of sale deed and further the developer did not issue any letter upon the complainants asking them to make payment of balance amount and to take delivery of possession, the OPs must be held deficient in rendering services.
Mr. Prabir Basu, Ld. Advocate for OP no. 4 submits that the OP Nos. 1 to 3/developer should handover the flat after obtaining completion certificate from the competent authority after receipt of balance consideration amount and being landowner the OP No. 4 cannot raise any dispute as to the claim of the complainants.
The eagerness of the complainants to purchase the flat is quite apparent. They have obtained loan from a financial institution and the said financial institution disbursed the amount of Rs. 32,25,000/- directly in favour of the developer against proper receipt. Moreover, the complainants time and again requested the OPs to handover the subject flat. In this regard, the complainants had also issued a legal notice through their Advocate upon the developer on 08.12.2016 but the developer did not feel necessity to give any reply to the same. In this regard, question No. 15 to 18 put on behalf of the complainants to OP Nos. 1 to 3 and the reply given by OP Nos. 1 to 3 to that effect appears to be noteworthy which are recorded below:
“15. You have stated that due to shortage of fund you could not complete the construction of the building - now say whether the complainants paid the consideration amount as per agreement for sale dated 11.05.2011 or not?
Ans. Yes, due to shortage of fund I could not complete in time and I requested the complainants and other flat holders to make payments of their respective parts/portions to help me out of the crisis.
16. Is it not a fact that as per agreement the complainants are liable to pay 10% of last instalment of the total consideration amount as balance consideration amount to you at the time of delivery of possession of the flat?
Ans. Matter of fact and record.
17. Is it not a fact that to purchase the flat the complainants obtained bank loan from HDFC bank for Rs. 32,25,000/- which has been directly disbursed in favour of the Opposite Party no. 1?
Ans. Matter of fact and record.
18. Is it not a fact that in case of delay in delivery the opposite party no. 1 to 3 is liable to pay damages @ Rs. 5,000/- p.m. to the complainants till the date of delivery of flat?
Ans. Matter of fact and record.”
n the landmark decision reported in (1994) 1 SCC 243 (Lucknow Development Authority –vs- M.K. Gupta) the Hon’ble Supreme Court has held that when a person hires the services of a builder, or contractor, for the construction of a house or a flat, and the same is for consideration, it is a “ service” as defined in Section 2(1)(o) of the Act and the inordinate delay in handing over the possession of the flat clearly amounts to deficiency of service. The plea taken by the developer that due to financial stringency they could not complete the construction is not acceptable because when the parties have entered into an agreement with open eyes after evaluating its pros and cons, they must fulfil their promise to keep respect to the terms of agreement. The decision referred by the Ld. Advocate for OP Nos. 1 to 3 in the case of Canara Bank and Ors (supra) does not appear to be relevant for the purpose of adjudication of this case because in the said case the question came up for consideration the scope and ambit of Regulation 6 (18) and 6 (21) of the Canara Bank Officer Employees’ (Conduct) Regulations, 1976. Moreover, I have failed to understand how it can be said that the complainants being intending purchaser have lodged the complaint with unclean hands after expiry of committed date of delivery of possession. Apparently, when the developer has failed to keep their promise in terms of the agreement for sale, certainly they are deficient in rendering services within the meaning of Section 2(1)(g) read with Section 2(1)(o) of the Act.
Therefore, the complainants are entitled to some reliefs. In my view, a direction upon the OP Nos. 1 to 3 to deliver possession in habitable condition after obtaining Completion Certificate from the Kolkata Municipal Corporation on receipt of balance consideration amount of Rs. 3,37,5
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00/- will meet the ends of justice. As per terms of the agreement, on account of failure on the part of the developer to deliver possession within December, 2011, they are liable to pay compensation of Rs. 5,000/- per month from January, 2012 till the date of actual delivery of possession. Under compelling circumstances, the complainants have to lodge the complaint for which they are entitled to litigation costs which we quantify at Rs. 20,000/-. In view of above discussion, the complaint is allowed on contest with the following directions: (i) The Opposite Party Nos. 1 to 3 are jointly and/or severally directed to handover the possession of the flat as mentioned in the Second Schedule to the agreement for sale dated 11.05.2011in favour of complainants within 90 days from the date after receipt of balance consideration amount of Rs. 3,37,500/-; (ii) The Opposite Party Nos. 1 to 3 are jointly and/or severally directed to obtain Completion Certificate from the Kolkata Municipal Corporation and to handover an authenticate copy of the same to the complainants within 90 days from date; (iii) The Opposite Party Nos. 1 to 3 are jointly and/or severally directed to pay compensation of Rs. 5,000/- per month from January, 2012 till the date of delivery of possession in favour of complainants in terms of agreement; (iv) The Opposite Party Nos. 1 to 3 are jointly and/or severally directed to pay Rs. 20,000/- to the complainants as costs of litigation; (v) The above payments in terms of the above order shall be made within 90 days from date.