w w w . L a w y e r S e r v i c e s . i n


Skipper Bhawan (22 Barakhamba Road) Flats Buyers Association (Regd.) v/s Skipper Sales (Pvt.) Ltd. & Another

    Original Petition No. 16 of 1991
    Decided On, 13 January 1995
    At, National Consumer Disputes Redressal Commission NCDRC
    By, THE HONOURABLE MR. JUSTICE V. BALAKRISHNA ERADI
    By, PRESIDENT
    By, THE HONOURABLE MR. Y. KRISHAN
    By, MEMBER & THE HONOURABLE MR. B.S. YADAV
    By, MEMBER
    For the Complainant: Maj. Gen. Joginder Singh, Col. Jaswant Singh, Authorised Representatives. For the Opposite Parties: Nemo.


Judgment Text
B.S. Yadav, Member:

1. This complaint has been filed by an Association whose full name has been given in the cause title of this petition, on behalf of its Members as well as of the flat buyers in the complex. According to the Complainant Association, in 1977 Opposite Party No. 1 M/s Skipper Sales (Pvt.) Ltd. (for short the Company) advertised that they would construct multistoreyed building on a plot of land at 22, Barakhamba Road, New Delhi and invited applications from the public for allotment of flats in that building to be constructed. The said Company has since sold flats to a large number of persons under specific individual agreements. Based on these agreements various flat buyers were required to pay advances in instalments towards the construction of the building as it progressed upto a specific stage. Barring exceptions the total amount paid by each one of the flat buyers is equal to 95 per cent of the amount purported to be total cost of the said flats and represents in full the amount the Opposite Party Company has called upon the Members to pay so far. The last 5% instalment to make up the advance amount to 95% of the total payment was asked for from the flat buyers in 1986 and therefore, it was presumed that the building was fully completed to the extent of 90% by the end of 1986. In fact the Opposite Party No. 2 vide one of their letters in November, 1986 to all the flat buyers, committed that the building was likely to be ready for occupation by 30th April, 1987 at the latest. Upto June, 1986 the various flat buyers in this complex had paid more than Rs. 8.00 crores to the Opposite Party No. 1 Company for purchased of commercial office spaces, show rooms, parking spaces etc. booked by them. In June, 1986 there was dispute between the Directors of the Company namely Shri Tejwant Singh and Harpreet Singh resulting in transfer of all assets and liabilities, pertaining to 22 Barakhamba Road, later known as Skipper Bhavan from Opposite Party No. 1-Company to Opposite Party No. 2-M/s. Skippers Towers Pvt. Ltd. under the stewardship of Shri Tejwant Singh.

2. To formally obtain the concurrence of all the flat buyers to this change and also to concur to the transfer of all the assets and liablities to the other Company two letters were written by Opposite Party No. 1 to all the flat buyers. As advertised and promised verbally by the Opposite Party Company the reasonable period of completion was to be of 2 to 3 years at the maximum from the time of booking. In 1981 Opposite Party No. 1 addressed a letter to all the flat buyers asking them to pay amount of Rs. 74/- per sq. ft. within 7 days of issue of their letter towards the amount to be paid by the Company to Land & Development Office as conversion charges of the area from domestic to commercial. It was a condition in the allotment agreement that 'in case the Land & Development Office charges beyond Rs. 1,000/- per sq. yard then the entire difference, including so called penalities and interest, shall be borne by flat buyers in proportion to the ratio that their area of flat bears to the total area of other flats in the building'. The promoter has fraudulently not calculated the area for himself and the owners of plot No. 22, Barakhamba Road, who own 7% of the covered area, while working out the charge of Rs. 74/- per sq. ft., thus cheating hapless public. By mid 1986 at the time of partition of Opposite Party No. 1 the said party had collected a sum of Rs. 75,74,601/- from most of the flat buyers on this account but had paid only a sum of Rs. 10.00 lakhs to the Land & Development Office. The total amount collected so far under this head will be well over Rs. 1.00 crore. By not paying the further amount to the Land & Development Office the builders have duped the flat buyers by threats and coercion. The builders are liable to pay interest at the rate of 18% per annum on the amounts so collected from the various flat buyers since 1981 or its exact date of collection till it is deposited with the Government. If the amount is not deposited, the Opposite Party No. 2 be directed to refund the entire amount less the proportionate share of Rs. 10.00 lakhs paid so far, to various flat buyers with all the interest thereon upto the date of payment. Opposite Party No. 2 started asking for additional amount for different frills to be provided in the building and thus asked for an additional amount of Rs. 77.60 per sq. ft. of the flat area to be paid for fixing marble on the elevation of the building on all sides, marble flooring in the lobbies and granite/Dholpur stone in various other places and promised that the building will be fully ready by 30th April, 1987 for occupation. These additional architectural facets were neither part of the original agreement nor needed, but the Opposite Party No. 2 forcibly thrust these upon the flat buyers and extracted money from almost all of them on the threat of cancellation of their flats. Delhi High Court in Suit No. 2217/1987 titled Jaswinder Singh v. Skipper Towers Pvt. Ltd. vide Order dated 9th December, 1988 ordered that it was the builder’s responsibility to complete the elevation without liability of the flat buyers. Therefore, the flat buyers are entitled to the refund of Rs. 77.60 per sq.ft. realised by the builder. In December, 1986 Opposite Party No. 2 asked for additional amount of Rs. 91.60 per sq. ft. of the area of the flat on the ground that aluminium doors with glazing of thick imported smoked glass and tinted glass in the windows all round the building on the ground floor were to be provided and in the case of flats on the upper floors Rs. 15/- per sq. ft. area of the flats were asked to provide black glasses in all the windows. These charges are highly exorbitant and were not part of the agreement. Thus almost Rs. 20.00 lakhs of extra money has been collected by Opposite Party No. 2 illegally and the flat buyers are entitled to the refund of this amount. On January, 19870pposite Party No. 2 confirmed that the building was making steady progress and that earnest efforts were being made to complete it by mid 1987. The Opposite Party No. 2 also asked for a further sum of Rs. 52.40 per sq. ft. on the ground that fire fighting equipment and arrangement were to be provided. For this purpose the builders have collected amount at exorbitantly high rates. In the adjacent building located in the same area at 18, Barakhamba Road charges paid by all the flat owners worked out to approximately Rs. 17.25 per sq. ft. Thus there has been overcharging to the extent of Rs. 35/per sq. ft. amounting to approximately Rs. 52 lakhs for the entire building and the Opposite Party No. 2 is liable to refund this excess amount to the Complainants. In June, 1987 Opposite Party No. 2 demanded a sum of Rs. 9.00 per sq. ft. of the area of each flat towards the payment of initial deposit to be remitted to New Delhi Municipal Corporation for providing electricity connection to the building. Till now no amount has been deposited with the said Corporation though Rs. 14.00 lakhs have been collected on this ground.

3. It is further the case of Complainant that per the original agreement for sale all areas were initially sold to the flat buyers as ‘covered area’ which has been defined in the agreement as ‘area under internal walls and the periphery walls and the columns comprising the flat, half of the area will be taken in case of common walls between the two flats’. In the meantime against a total area of almost 1.00 lakh sq. ft., excluding the basement and mezanine floor, the builder has over sold more than 50% of the area totalling the sale of more than 1.5 lakhs ft. to various flat buyers. This total sale is without counting the 7-% of the total area which the Opposite Party No. 2 has separately earmarked and provided to the colloborator as part of the original colloboration agreement. To cover the over selling of the total space to the tune of 50% or above the Opposite Party No. 1-Company very cleverly manipulated the above definition of the ‘covered area’ by introducing the words 'plus proportionate share of the common area'. Thus the 'internal area' vary from floor to floor depending upon the quantum of area covered by those common spaces on that particular floor. Thus by enlarging the scope of the 'common area' to gain maximum advantage for themselves and thereby transfer on the shoulders of the flat buyers, the additional burden of the space occupied by various centralised utilities, essential services and other functional facilities which the Opposite Parties as builders are obliged to provide as an integral part of the building. Some of the examples of such areas are those utilised for locating the electrical sub-station, pump room, fire fighting room, underground water sumps, overhead water reservoirs, service and spare rooms, stoors, areas occupied by lifts, stair hall and the stairs etc. The price of these spaces must have been included in the initial pricing of the flats. The total area covered by the various common spaces on each floor should be approximately 15% to 18% of the covered area on that floor whereas the Opposite Party No. 2 have very mischievously and with fraudulent intent, to extract more money from the hapless flat buyers by reducing their covered areas, have unscrupulously increased this additional coverage to almost 40% or more. Thus a flat buyer who had originally contracted for 500 sq. ft. of the covered area will not even hope to get 300 sq.ft. of area within the periphery walls. As per the sanctioned plan of the NDMC the total area allowed for coverage on the ground floor is 9061.53 sq. ft. only and it is surprising how by 1988 the area of the same space increased to 13599 sq. ft. Thus the Opposite Party No. 2 Company has fraudulently sold more space by reducing the 'covered area' within the periphery walls which would ultimately be handed over to the flat buyers. To compensate for the loss of space utilised for fire fighting purposes and other statutory benefits the Opposite Parties have constructed additional floor but at the same time they have included these statutory areas as common spaces and have planned to pass on the extra burden to all the flat buyers thereby reducing the effective space within the periphery walls. The Opposite Parties be directed to refrain from charging for the common functional facilities from the various buyers. Besides, in violation of the sanctioned plan the Opposite Parties have encroached upon some of the open spaces and fraudulently sold the same to the flat buyers for office/commercial space. The Opposite Parties have inordinately delayed the completion of the building, its handing over and subsequent usage by the various flat buyers. They themselves have been making a regular use of this building not only for their fully air-conditioned offices but also for commercial purposes from where they are running a full fledged Travel Agency called 'Gulliver Travels' and also offices of all the Skipper Group of Companies. This utilization of the building has been going on since April, 1986 and the entire upper basement totalling an area of 18264.6 sq.ft. has been in continuous use of the Opposite Parties. Taking a nominal rent of Rs. 15 per sq. ft. the total benefit derived by the Opposite Parties is to the tune of Rs. 2,73,969/per month of rental value. Thus from 1st April, 1986 till 31st March, 1991 the Opposite Parties have already made a financial gain to the tune of Rs. 1.644 crores which otherwise they would have had to pay as rent. This amount is exclusive of the profits accrued to the various firms of the Opposite Parties including the Travel Agency. According to the agreement arrived at between Shri Vijinder Singh (Colloborator), Shri Tejwant Singh and Shri Harpreet Singh at the time of transfer of all assets and liabilities of Opposite Party No. 1 to Opposite Party No. 2 no area on the 4th floor is to be sold to any of the buyers as it is reserved for the colloborator. Opposite Party No. 2 has fraudulently and in violation of the agreement sold a number of flats to various flat buyers on the 4th floor thereby very bluntly and cleverly cheating the hapless buyers. The Opposite Parties be directed that space is allotted to all the flat buyers as per their agreements. Due to the overselling of the space, in case any of the flat buyers cannot be accommodated, the space out of almost one complete floor which is being exclusively held by the Opposite Party No. 2 their personal use, be taken over from them and allotted to the remaining flat buyers who are left out. The plans were sanctioned by the NDMC sometime in 1980 but upto this time building has not been completed. Vide letter dated 13th November, 1990 Opposite Party No. 2 held out that possession of the flats will be delivered to the flat buyers in the month of December, 1990. The Opposite Parties have been deliberately and intentionally conveying incorrect progress of the building to all the flat buyers with the sole aim of extracting more and more money. No amount has been remitted to NDMC for electric connection charges though the amount for the same has been collected by the Opposite Parties from all the flat buyers. On query by the Complainants, the Chief Fire Officer, New Delhi informed them that no objection certificate has not been issued so far. For the last 5 years the building is almost 90 to 95% complete but the final completion is wilfully dragged by the Opposite Parties. Though on the application filed by the colloborators the High Court of Delhi has issued a Stay Order against the handing over of possession to any of the flat buyers, but the Opposite Parties have physically handed over the flats to some of the flat buyers in flagrant contravention of the said Order after they had met the unreasonable demands of the Opposite Parties and cleared all their alleged dues. The members of the Complainant Association who had booked flats/office spaces/ show rooms for either renting out to derive some income from the investment or for their own use and occupation to open new office/ show room etc. or to shift their existing one from less known or disadvantageous places have suffered because of lack of any income for the past 9 to 10 years. Their investments have got blocked and they have undergone mental torture.

4. The Complainants-Association praytd for the following reliefs:

(1) Land and Development Office Charges : Payment of interest at the rate of 18% per annum on the entire amount paid towards the L & DO charges, less Rs. 10.00 lakhs which were deposited by the Opposite Parties, from the date of deposit either up to the date when the amounts paid to L & DO by the Opposite Parties and in case it is not to be paid, refund all the amount to all the flat buyers along with interest thereon.

(2) Cosmentic Improvements : Refund of the amount collected, with an interest of 18% per annum thereon towards the charges collected for alleged cosmetic improvements to include fixing of marble/granite/ Dholpur Stone and aluminium doors/windows with smoked or black glass glazing from the date of collection upto the date, possession of the flat/space is handed over.

(3) Fire Fighting : Refund of the excess charges for fire fighting equipment and its installation at the rate of Rs. 35/ per sq. ft. with interest at the rate of 18% per annum from the date of collection upto the date of handing over the possession of the flats/ spaces.

(4) Electric Connection Deposit: Payment of interest at the rate of 18% per annum on the amount remitted towards initial deposit for electric connection from the date of payment by the flat buyers upto the date of its remittance to NDMC.

(5)Share of Common Spaces : Direct the Opposite Parties to strictly follow the definition of the covered area as contained in the various agreements and restrain the Opposite Parties from passing on the burden of essential utilities or facilities and other functional areas on to the share of common spaces, to be borne by the individual flat buyers.

(6) Rental Value of Basement used by the Opposite Parties : To compensate the various flat buyers by adjusting the rental value of the utilization of basement by the Opposite Parties towards the last 5% of the instalment due from the flat buyers at the time of taking over the possession of their flats/spaces.

(7) Cancellation of Allotment/Duplicate Sales : The Opposite Parties be restrained from cancelling the allotment and from reducing the area of the flat/space and from recovering any amounts from the members of the Association in excess of the agreed sale consideration and from selling any area in excess of the sanctioned area of the building.

(8) Escalation Charges : The Opposite Parties by restrained from charging any escalation charges caused due to the delay in the construction of the building which is solely due to the builder/Opposite Parties themselves.

(9) Compensation for delay in completion : The Opposite Parties be directed to compensate the flat buyers for inordinate and intentional delay in completion of the building at the rate of 24% per annum on the instalment paid towards the agreed sale consideration w.e.f. 1st January, 1984 or thereafter whenever the payments have been made upto the date of handing over the possession of the flats/ spaces.

(10) Compensation for the Torture Caused: The Opposite Parties be directed to compensate all the flat buyers for the mental torture suffered by them at the rate of Rs. 1,000/- per lakh of the basic sale consideration as per the agreement of sale with effect from 1st January, 1984 or thereafter whenever the amounts have been paid upto the date of handing over possession of the flat/space.

The total compensation claimed under the bove heads is Rs. 27.545 crores.

5. The Opposite Party No. 2 contested the complaint. It denied that it has collected money more than the space booked and averred that the entire building is ready for occupation since November, 1990. The Company has approached the NDMC for obtaining a C and D form for the occupation of the entire building. The said form has not been received till date. Without the grant of said requisite certificate possession cannot be handed over to the flat/space buyers. In multi-storeyed projects the spaces are sold in advance and amount towards the sale price is realised in stages. The stage for the payment of last instalment of 5% has now come. It is denied that the payment of 5% of the sale price was to be paid at the time of handing over the possession. The Company had made every effort to complete the project as soon as possible but due to certain hurdles created by the NDMC and the various Departents of Government of India the project could not be completed as was expected by the Company. Certain new requirements under various enactments had to be completed and it was for this reason that some delay occurred. The Opposite Parties have not been making any false promise nor giving any assurance contrary to the facts or to the existing position. Since the Property at 22, Barakhamba Road, New Delhi as per the master plan was residenial area, the buyers have to pay the conversion charges for converting the use of residential to commercial. No person has been cheated. Further payment was not paid to L & DO since master plan of the area was changed and the Barakhamba Road was declared commercial and the High Court in a case had directed that no conversion charges shall be payable. However, this view has been rejected by the Supreme Court. Therefore, the conversion charges have to be paid to the L & DO. The charging of Rs. 77.60 per sq. ft. for providing marble stone/granite stone on the floor and the front elevation of the building was very much within the purview of the agreement. The money collected from the flat buyers has been spent by the answering Opposite Party in the said project for providing marble flooring and marble on front elevation. The flat buyers were duly informed about providing aluminium glazing and thick imported black smoke glass and nobody raised any objection at that time. All the amounts recovered for providing electric connection have been deposited with NDMC and no amount in excess have been charged from the flat/space buyers. Facilities provided are within the purview of the contract. The answering Opposite Party was justified in demanding interest due to defaults of the flat buyers in payment of the amounts due and also could cancel the allotment due to the said deaults. The ‘covered area’ would include the space required for common use like passage, stair case, lift area and the area covered by the beams and the outer structures, periphery walls ramps etc. The area sold to the various persons is as per sanctioned building plans. As per the practice in high rise buildings the area of the flat include common area to be used by the flat buyers other wise also the definition of the ‘area’ in multi-storeyed complexed will include everything which is in common use and is required for the structure. The answering Opposite Party is entitled to charge escalation charges at the rate of Rs. 150/- per sq.ft. as per the terms of the agreement. All other allegations of the Complainants’ Association were denied by the answering Opposite Party.

6. A preliminary objection has been taken by the Opposite Party No. 2 to the effect that the commercial flat or space does not fall within the purview of Consumer Protection Act. We need not discuss this point in detail because it has been sale of decided by the majority view by this Commission in Jaina Properties Pvt. Ltd. v. Mrs. Kavita Kataria, II (1994) CPJ (CP) (NCDRC). It was remarked:

'We are not impressed with the contention advanced by the learned Advocate Mr. Sachdev appearing for the revision petitioner that the expression housing construction’ occurring in the inclusive part of the definition of service’ contained in Section 2(1)(o) of the Act will not take in non-residential buildings. We are clearly of the view that the expression is wide enough to cover buildings of any type which provide shelter or a roof. Hence it will include both residential as well as non-residential structures and the activity of construction of residential as well as non-residential structures fall within the purview of the Act.'

Hence the preliminary objection is rejected.

The facts as averred by the Complainant have been given in detail above. We are of the opinion that except for the delay in the completion of the building, the members of the Complainant Association are not entitled to any other relief prayed for in the complaint under the Consumer Protection Act. The first prayer is about the refund of the amount collected by Opposite Party No. 2 for payment to the Land Development Office on the ground that out of that amount only Rs. 10.00 lakhs have been paid to that office and the remaining amount should be refunded to the members of the Complainant Association. The Opposite Party No. 2 has admitted that only Rs. 10.00 lakhs have been paid so far but the remaining amount is still to be paid. However we are of opinion that the excess amount cannot be ordered to be refunded to the members of the Complainant Association.

7. The next claim is about the refund of the amount under the head Cosmetic Improvements. The Opposite Party No. 2 has charged certain amount from the buyers of flats/ spaces for fixing marble/granite/Dholpur stone and aluminium doors/windows with smoked or black glass glazing. If such charges have been charged by the Opposite Party No. 2 it will not fall within the definition of deficiency in service. ‘Service’ has been defined under clause (o) Section 2(1) of the Consumer Protection Act. A person who renders service and levies excess charges as consideration cannot be said to have committed deficiency in service. Moreover, it is not the case of the Complainant that the Opposite Party No. 2 has not utilized the amount for the purpose for which it was realised from the flat/space buyers.

8. The next claim is for refund of excess charges under item Fire Fighting equipment and its installation on the ground that in a nearby building in the same locality less charges were realised from the flat buyers. If the flat buyers were of the opinion that more charges were being realised from them, they should not have paid that amount and should have taken the matter to a Court of Law. After paying that amount they cannot claim refund. It is not a case of the Complainant that the fire fighting equipment is not being installed in the building.

9. The next claim of the Complainant is about interest on the amount collected for electric connection on the ground that it was remitted late to N.D.M.C. We fail to understand how the complainant can claim interest on the amount so paid by them to the Opposite Party No. 2. The flat buyers were liable to pay the charges for electric connection and they have paid it. It is a matter between the Opposite Party No. 2 and NDMC as to when the former remitted the amount.

10. The next contention of the Complainant is that the Opposite Parties be directed to strictly follow the definition of the ‘covered area’ as contained in the various agreements and to restrain the Opposite Parties from passing on the burden of essential utilities or facilities and other functional areas to the share of common space, to be borne by the individual flat buyers. The complaint appears to be premature. Possession has not been delivered to the flat buyers and it is not known whether they are getting less ‘covered area’ than agreed upon. If any shortage occurs in the area of the flats the buyers can seek their proper remedy against the builders for the shortage in the area.

11. The next contention of the Complainant is about claim from the Opposite Party No. 2 for the rental value of basement used by the Opposite Parties and adjusting the rental value towards the last 5% of the instalment due from the flat buyers at the time of delivery of the possession to them proportionate to the areas of the their flats/spaces. We have not been able to understand how such a claim can fall within the Consumer Protection Act. If the Opposite Party No. 2 is in occupation of any portion of the building it cannot be said that it is a deficiency in the rendering of service towards the flats/ space buyers.

12. It is next prayed by the Complainant that the Opposite Party be restrained from cancelling the allotment and from reducing the area of flat/space and from recovering any amount from the members of the Association in excess of the agreed sale consideration, and from selling any area in excess of the sanctioned area of the building. Under the Consumer Protection Act no such injunction can be issued. If any excess price is being charged from the flat/ space buyers, then also it does not fall within the definition of ‘deficiency’ as given under the said Act. It has been consistent view of this Commission that pricing of a flat/plot does not fall within the four corners of the Consumer Protection Act. In this respect reference can be made to Gujarat Housing Board v. Datania Amritlal Fulchand & Others, First Appeal No. 241 of 1991 decided on 7.10.1993 and Gurinder Bedi v. Delhi Development Authority, III (1993) CPJ 404 (NC).

The next prayer of the Complainant is that the Opposite Parties be restrained from

Please Login To View The Full Judgment!
charging any escalation charges caused due to the delay in the construction of the building which is solely due to the builder/Opposite Parties. For the reasons stated in the preceding para no such relief can be granted to the Complainant. 13. The last relief prayed for by the Complainant is for grant of compensation for the delay in completion of the building. We are of the opinion that under this head the members of the Complainant Association are entitled to relief. They entered into agreements with the Opposite Parties somewhere in 1977 or near about. However, the construction of the building was not taken up immediately even after the NDMC had sanctioned the plan sometime in 1980. Vide letter (page 59 of the paper book) Opposite Party No. 2 had written to the flat buyers that concerted efforts to complete the building speedily were being made and it was likely to be ready for occupation by 30th April, 1987 at the latest. However, up to this day, the building has not been made ready for occupation by the flat/space buyers. The members of the Complainant Association who had booked flats/office spaces/showrooms for either renting out to derive some income from the investment or for their own use and occupation to open new office/show room etc. or to shift their existing one from less known or disadvantageous places have suffered because of lack of any income for the past 9 to 10 years. We are of the opinion that the members of the Complainant Association can be compensated for the loss suffered by them on account of the blocking of their investment for the last so many years which otherwise they could have profitable utilised in some other manner. We direct that on this account the members of the Complainant Association whose names are included in the list that has been filed shall be entitled to be paid interest at the rate of 18% per annum on the amounts paid by them from the date of deposits of various instalments till the date of delivery of possession. 14. We are of the view that the compensation awarded to the members of the Complainant Association by way of interest in the preceding para will sufficiently compensate them for the mental torture suffered by them. 15. We made it clear that for the other claims/reliefs which have not been allowed by us, the Complainants can have recourse to a Court of Law 16. In view of the above discussions, we direct the Opposite Party No. 2 to pay interest to the members of the Complainant Association at the rate of 18% per annum on the instalments paid by them from the respective dates of deposits till possession is delivered to the members of the Complainant Association. The other reliefs prayed for in the complaint are disallowed. The Complainant will be entitled to the cost of the present proceedings from the Opposite Party No. 2 which we assess at Rs. 5,000/-. Y. Krishan, Member-I agree including in regard to buyers of commercial spaces in the light of the majority order in Jaina Properties v. M/s. Kavita Kataria. Complaint allowed.
O R