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Important judgements passed by the Consumer Courts

Interesting distinction made between a joint-venture agreement, and an agreement for construction of residential building and to deliver agreed area to the land owners

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI

FIRST APPEAL NO. 531 OF 2003
(Against the Order dated null in Complaint No. of the State Commission Andhra Pradesh)

M. VITTAL RAO (DIED) REP. BY LRS. ...........Appellant(s)
Versus
M/S. BRINDAVAN BUILDERS PVT. LTD. ...........Respondent(s)

BEFORE:
    HON'BLE MR. DR. B.C. GUPTA,PRESIDING MEMBER
    HON'BLE MR. DR. S.M. KANTIKAR,MEMBER

Dated : 01 Sep 2017

ORDER

PER DR. B.C. GUPTA, MEMBER

          This appeal has been filed under section 19 read with section 21(a)(ii) of the Consumer Protection Act, 1986 against the impugned order dated 22.10.2002 passed by the Andhra Pradesh State Consumer Disputes Redressal Commission (hereinafter referred to as ‘the State Commission’) in Original Petition No. OP/10/97, vide which the said petition filed by the present appellants against the respondent/opposite party (OP)/builder was ordered to be dismissed.

2.       Briefly stated, the facts of the case are that the three complainants M. Vittal Rao, M. Dasarath and M. Badrinath, who are real brothers, stated in their consumer complaint OP/10/1997 that they were owners of an open land measuring 640 sq. yards at Raja Dharam Karan Estate, Ameerpet, Hyderabad, upon which, a building bearing old municipal No. 239 and new No. MCH-7-1-60 had been constructed. The said property was their ancestral property, divided in equal shares among them.   The complainant entered into a ‘Development Agreement’ with the respondent/OP/builder M/s. Brindivan Builders on 03.02.1991, as per which, the said builder agreed to construct a multi-storeyed building on the said premises and to provide 1200 sq. ft. built-up area to each of the complainants in the shape of three flats and retain the balance area of 6400 sq. ft. The said flats were to be provided within 8 months of the date of sanction of the municipal plan. It is alleged in the consumer complaint that the respondent/OP did not follow the terms and conditions stated in the agreement. The respondent/OP provided them flats on 17.03.1996, i.e., after a delay of 2 years and that also for much reduced area from 1200 sq. ft.   In addition, the respondent/OP used building material of inferior quality and did not leave required spaces for vehicles as per the agreement. The complainants sent legal notice to the respondent/OP on 10.07.1995, demanding compensation and also for rectification for insufficient services rendered by them. Since there was no response from the OP, the complainants filed the consumer complaint in question, seeking compensation on various items including shortfall in the area of flats provided to them. In total, the complainants demanded a sum of ₹19,41,000/- from the respondent/OP builder as compensation.

3.       The complaint was resisted by the OP builder by filing a written statement before the State Commission in which they stated that the complainants were not consumers as defined in the Act, as they had entered into a development agreement with the OP Builder. The complaint was, therefore, not maintainable before the State Commission. The OP Builder further stated that the delay in handing over the possession occurred due to proceedings pending in the courts. The development agreement was signed with them by 5 persons which included two wives of late Miryala Danaiah and 3 sons of the said person who are the present complainants. They claimed that they were the only legal heirs and absolute owners of the scheduled property. However, there were other legal heirs to the property of late Miryala Danaiah to whom the Builder had to pay various sums from time to time. The complainants had, therefore, concealed facts about the legal heirs from the OP Builder and hence, caused loss of time and loss of money to the Developer. The OP Builder further stated that the possession of the property in question was to be handed over by the complainants to the OP builder on the date of agreement itself, i.e., 03.02.1991, but the said possession was handed over after a delay of 7 months. The OP further stated that as per the schedule, the area of the property was to be 640 sq. yds. However, the complainants themselves mentioned in their counter reply submitted to the First Additional Judge Citi Civil Court and also in the legal notice issued to the developer dated 24.01.1994 that the area of the land was only 560 sq. yd. In fact, the complainants had encroached upon some land from the neighbours and also from the front road margin, due to which the M.C.H. plan was sanctioned with the effect of road-widening of 5 ft. to 6 ft. which resulted in the reduction of the area and the ultimate area provided to them was 560 sq. yd. The OP Builder had, therefore, handed over 3200 sq. ft. of area to them instead of 3600 sq. ft. The car parking space was also allotted to all the three owners which was more than 190 sq. ft. The OP Builder also stated that when they started construction of the apartments, some of the owners and legal heirs of late Miryana Balaiah, who is the brother of late Miryala Danaiah filed a suit petition against the owners claiming their shares. The court issued orders for status-quo and restrained the Builder from doing the work, due to defect in the title. Ultimately, the Developer settled the matter and compromised with the claimants by paying them heavy amounts, out of pressure and mental tension. The owners extended the time of one year as mentioned in the deed of ratification. In this way, the Builder started the construction work after a gap of 18 months, being a victim of defective title. The OP Builder also stated that they had followed the standard specifications and used quality material for the construction work. Further, it was the duty of the flat owners to maintain the building in good shape after taking possession.

4.       The State Commission vide impugned order, after taking into account the averments of the parties, dismissed the complaint on 22.10.2002 and found no deficiency in service on the part of the OP Builder. Being aggrieved against the order of the State Commission, the complainants filed the present appeal before this Commission which was decided vide order dated 14.12.2007. It was concluded that the complainants did not come under the category of ‘Consumer’, as they had not hired the services of the OP Builder for construction of a building in the ordinary sense. The appeal was ordered to be dismissed and liberty was granted to the complainants to seek relief under law from appropriate fora.

5.       Being aggrieved against the order of this Commission, the complainants challenged the same before the Hon’ble Supreme Court by way of Special Leave Petition/appeal. The Hon’ble Supreme Court vide their order dated 02.07.2013 in Civil Appeal No. 6985/2009 ordered as follows:-
“Heard the learned counsel for the parties.
In view of the judgment of this Court in Sujit Kumar Banerjee v. M/s. Rameshwaran & Ors., 2008(10) SCALE 52, the judgment and order of National Consumer Disputes Redressal Commission is set aside. The case is remanded to the learned Commission to be decided on merits.
The appeal stands disposed of accordingly.”

6.       Accordingly, the case is now being heard by this Commission. It may be stated that during pendency of the proceedings between the parties, all three complainants died from time to time and their legal heirs have been brought on record, as per the details given in the amended memo of parties.

7.       During hearing before this Commission, the learned counsel for the appellants stated that in view of the order passed by the Hon’ble Supreme Court in “Sujit Kumar Banerjee vs. M/s. Rameshwaran & Ors., (supra)” and an earlier order passed by the Hon’ble Apex Court in “Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ld. and Anr., [2008(10) SCC 345]”, the issue as to whether the appellants/complainants were consumers or not, was no more ‘res integra’. It had been amply made clear in these two judgments that the agreement between the parties was not a joint-venture agreement, but an agreement for construction of a residential building and to deliver agreed percentage of the constructed area to the land owners. The builder in these cases was, therefore, the service provider and the complainants were the consumers. The present appeal should therefore, be accepted and the developer should be asked to compensate them appropriately, as requested in the consumer complaint.

8.       The learned counsel for the respondent Builder, however, has drawn attention to the copies of the agreement entered between the parties on 3.2.1991 and then on 18.7.1991, followed by a Deed of Ratification dated 25.9.1993. The learned counsel submitted that it was stated in the Deed of Ratification between the members of the families of the complainants and the OPs, that the construction of proposed residential   apartments at the said site could not be undertaken due to dispute arising out of their title, and hence, the period stipulated for completion in the Development Agreement dated 3.2.1991, shall be extended by one year i.e. upto 25.9.1994. The OPs had submitted these facts in their reply filed before the State Commission as well.

9.       Both the parties filed their written submissions also. It has been stated in the written submissions filed by the complainants that the Municipal Corporation had sanctioned the building plan on 15.7.1991 for a commercial area of 640 sq. ft. The learned counsel for the appellants stated that as per the Deed of Ratification, the time for completion of work and handing over possession was extended upto 25.9.1994. However, for the failure of the builder to construct the plot as per schedule and for using sub-standard material, a legal notice was sent to them on 10.7.1995, calling upon the builder to pay a sum of Rs.1,49,000/- for various deficiencies on their part. The builder handed over the possession of the flat on 17.3.1996 of an area, much less than that stated in the agreement. They also used sub-standard material in the construction. The amount, as asked for in the complaint, therefore, be paid to the complainants to compensate them against the loss suffered on account of being provided less area and for the use of sub-standard material.

10.     In their written submissions filed on 15.7.2016,   the learned counsel for the respondent Developer stated that the appeal was bad for non-joinder of necessary parties. One of the appellants had sold the apartment in question, and the buyer of the said apartment had not been brought on record. The respondent further stated that actual measurement of the area of plot was 560 sq. yard and not 640 sq. yard. The order passed by the State Commission was therefore, in accordance with law and should be upheld.

11.     We have examined the entire material on record and given a thoughtful consideration to the arguments advanced before us.

12.     In so far as the issue regarding the status of the complainants as ‘consumer’ is concerned, it has been made clear in the order passed by the Hon’ble Supreme Court in “Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ld. (supra) and Sujit Kumar Banerjee v. M/s. Rameshwaran & Ors., (supra) that the agreement between the parties in such cases was not a joint venture and the complainants were to be treated to be consumers of the opposite party, which was the service provider. This view has been reiterated by the Hon’ble Apex Court in their recent judgment passed in “Bunga Danial Babu versus M/s Sri Vasudeva Constructions & Ors.” “[Civil Appeal No. 944/2016 decided on 22.07.2016]. It is held, therefore, that the complainants have the status of consumer under Section 2(1)(d)(ii) of the Consumer Protection Act, 1986 and the complaint filed before the consumer fora is maintainable.

13.     In so far as the deficiency in service pointed out in the consumer complaint is concerned, the Deed of Ratification executed between the parties on 25.9.1993 is a material document to be considered in the present case. In addition to three brothers who are complainants, the wives of late Miryala Danaiah and five more persons are parties of the Deed of Ratification. The agreements dated 3.2.1991 and 18.7.1991 have been referred to in the said Deed of Ratification. It has been stated that the ratifying parties had received the balance amount from the developer as per the agreement dated 3.2.1991 and acknowledged the receipt of the same. It has also been mentioned in the said Deed of Ratification as follows:
“The ratifying parties further agreed that, the construction of proposed residential apartments at said site could not be undertaken due to dispute arising out of their title, the period stipulated to completion of the development agreement dated, 3.2.1991 shall be extended one year from this date of ratification i.e. upto 25.9.94.”

14.     It is clear from the above, that both parties acknowledged that the construction of the proposed residential apartments at the said site could not be undertaken due to dispute arising out of their title and hence, the period stipulated in the agreement dated 3.2.1991, was being extended upto 25.9.1994. The State Commission have, therefore, rightly observed in the impugned order that there was stay/injunction in force for nearly 18 months and hence, the Builder had not intentionally or voluntarily refrained from proceeding with the construction and hence, there was no deficiency on their part on this count. We have no reasons to be in disagreement with the said view expressed by the State Commission.

15.     In so far as the issue of providing less area to the complainants by the builder is concerned, the case of the opposite parties/builder is that the complainants had title only for 560 sq. yd. as evidenced by their affidavit and counter filed before the Civil Court. In fact, they had done encroachment on the land of the neighbours as well as on the road margin. Due to reduction of land space after accounting for the widening of road, the land with the complainant came to 560 sq. yd. only. In the grounds of appeal before this Commission, the complainants have simply stated that if the landed area was less, the OPs should have issued notice to them and insisted upon reducing the area of the flats offered to the complainants proportionately. However, the complainants have not been able to establish by any evidence that the area handed over to the builder was 640 sq. yd. The position has not been clarified by the appellants in their written arguments as well, submitted before the oral arguments were led before this Commission. On the other hand, the OP builder stated in their written submissions that the complainants had mentioned in the legal notice dated 24.01.94 issued by them that the land offered for construction was 560 sq. yd. only. Even according to the revenue record, the land was 560 sq. yd. The original title deed vide document No. 54 of 1937 showed that the land area was only 594 sq. yd. The OP Builder also stated that the shortfall in the built-up area was uniform on all the flats. Keeping in view the assertions of the OP Builder on this issue, it is reasonably clear that the demand of the complainants for the grant of 3600 sq. ft. of built-up area to them is not justified and there is no deficiency in service on the part of the OP Builder on this ground as well.

16.     In their detailed order, the State Commission have dealt with the issues regarding use of substandard material etc. during construction of the property in question. There is no material on record to differ with the views taken by the State Commission in the absence of any concrete evidence to the contrary. The State Commission stated that the complainants failed to establish before them that there was an agreement between the parties that only ‘shahbad stone’ shall be laid in the apartments and not ‘Mosaic tiles’. The complainants also failed to show before the State Commission that there was an agreement to use ‘teak wood’ doors and windows.

17.       Based on the discussion above, we do not find any illegality, irregularity or jurisdictional error in the order passed by the State Commission. The first appeal is held to be without any merit and the same is ordered to be dismissed. There shall be no order as to costs.

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