Whether Intending Purchaser of Flat can file Consumer Complaint against Developer / Builder [Case Law]

Consumer Protection Act, 1986 - S. 17 - Dispute of housing construction - Intending purchaser against the developer / builder - allegation of deficiency in service.

The complainant is entitled to refund of Rs. 6,40,000/- paid by him as part consideration towards total consideration amount. Besides claim of refund of amount the complainant has claimed compensation to the tune of Rs. 2,00,000/- on account of harassment and mental agony. In order to avoid further litigation, inspite of awarding an interest @ 18% p.a. a compensation in the form of simple interest @ 12% p.a. i.e. the amount of interest borrowing from bank/financial institutions, will subserve the object of justice.

STATE CONSUMER DISPUTES REDRESSAL COMMISSION WEST BENGAL

BEFORE: HON'BLE MR. SAMARESH PRASAD CHOWDHURY PRESIDING MEMBER 

11A, Mirza Ghalib Street, Kolkata - 700087 Complaint Case No. CC/127/2016

Dated : 04 Jun 2018 

1. Soumen Maity S/o Lt. Dulal Chandra Maiti, 111 D, New Jenyna Road, P.S. Belur, P.O. Liluah, Dist. Howrah, Pin no. 711 204. ...........Complainant(s) 

Versus 

1. Sri Subhas Das S/o Lt. Ajit Das, Prop., M/s Diddeshwari Construction, 14/1, B.L.- A, Mukherjee Lane, P.O. Belurmath, P.S. Belur, Dist. Howrah, Pin no. 711 202.

2. The Commissioner of Howrah Municipal Corporation 4,Mahatma Gandhi Road, P.O., P.S. & Dist. - Howrah, Pin no. 711 101. ............Opp.Party(s) 

For the Complainant: Mr. Dipak Kumar Sarkar, Advocate For the Opp.

Party: Mr. Arijit Bhattacharya, Advocate Mr. Noor Emam Khan, Advocate 

Final Order / Judgement 

The instant complaint under Section 17 of the Consumer Protection Act, 1986 (hereinafter referred to as ‘the Act’) is at the instance of an intending purchaser against the developer/builder (opposite party no. 1) and the Howrah Municipal Corporation (in short, ‘H.M.C.’/opposite party no. 2) on the allegation of deficiency in service on the part of them in a dispute of housing construction.

Succinctly put, complainant’s case is that on 27.01.2015 the complainant had entered into an agreement with the opposite party no. 1 to purchase of a self-contained flat measuring about 645 sq. ft. including 25% super built-up area with undivided proportionate impartiable share being Flat No. B – 402 on the 3rd Floor of Municipal holding No. 14/1, BL – A (previously 14/1, BL – 1 and 14/1, BL – B) Mukherjee Lane, P.S.- Belur, Dist.- Howrah within the local limits of erstwhile Bally Municipality (now Howrah Municipal Corporation) at a total consideration of Rs. 20,15,625/- @ Rs. 3125 per sq. ft. The complainant has stated that he has already paid a sum ofRs. 6,40,000/- out of the said total consideration amount of Rs. 20,15,625/-. As per terms of the agreement the O.P. No. 1 was under obligation to deliver the subject flat within 12 to 18 months from the date of obtaining sanctioned building plan. The complainant has alleged that the O.P. No. 1 has deviated the sanctioned building plan and constructed the 4 and 5 floor th th of the proposed building which was sanctioned up to 3 rd floor by H.M.C. The complainant has alleged that for such unauthorised construction the structural stability of the building has been damaged to a great extent for which the O.P. No. 1 had to stop the work of unauthorised construction for about two months. Hence, the complainant approached this Commission with prayer for following reliefs, viz.- (a) an order against opposite party no. 1 to assure the stability of the proposed flat which will purchase by the complainant; (b) an order for refund of amount of Rs. 6,40,000/- only with up to date interest; (c) an order for payment of compensation of Rs. 2,00,000/- only for causing physical and mental harassment by O.P. No. 1; (d) direction upon the opposite party no. 2 to submit the report what action was taken against the opposite party no. 1, after dismantling the unauthorised construction etc.

Opposite party no. 1/developer by filing a written version has stated that they constructed the building as per sanction of G+3 storied building plan sanctioned by Bally Municipality and they constructed 4 th and 5 th floor of the said building though the plan was not sanctioned by Bally Municipality. Subsequently, they regularised the said building plan for the 4 th and 5 th floor from the Howrah Municipal Corporation by depositing regularisation/retention fees of Rs. 15,00,660/- on 10.12.2015. The O.P. No. 1 has further stated that the Howrah Municipal Corporation demolished the unsanctioned 4 th and 5 th floor of the said building but no damage has allegedly been occurred in respect of 3 rd floor being Flat No. B – 402 of the complainant and the H.M.C. has demolished the slab of the unsanctioned portion on 06.08.2015 by using gas cutter without damaging the columns/beams and structure/foundation of the existing G+3 storied building. The O.P. No. 1 states and submits that the H.M.C. will issue the Stability/Completion Certificate in respect of the said building very shortly, after regularisation of the 4 th and 5 th floor.

The opposite party craves leave to file Completion Certificate and sanctioned plan (regularised) as soon as the same will be delivered by H.M.C. during the course of hearing.

Opposite party no. 2 i.e. H.M.C. by filing a separate written version has stated that as there was no agreement in between them and the complainant, the complaint should be dismissed against them.

During hearing of the case, complainant, O.P. No. 1 as well as the O.P. No. 2 have tendered evidence through their affidavits. They have also filed reply against the questionnaires set forth by their adversaries. Besides the same, the parties have relied upon some documents. At the time of final hearing, brief notes of argument has been filed on behalf of opposite party no. 1 On perusal of pleadings and the evidence led by the parties, it emerges that one Smt Mira Mitra and three Others were the owners in respect of a piece of land measuring about 3 cottahs 7 chittaks 21 sq. ft. together with a standing structure thereon lying and situated at Holding No. 14/1, BL – A (Previously 14/1, 14/1, BL – A and 14/1, BL – B), Mukherjee Lane, P.S.- Belur (Previously Bally) Dist.- Howrah within the local limits of Ward No. 11 of erstwhile Bally Municipality (now Howrah Municipal Corporation). Admittedly, the landowners after amalgamation of several plots had entered into an agreement with O.P. No. 1 construction firm represented by Shri Subhash Das for the purpose of raising a multi-storied building over the said property. The landowners have also executed one registered General Power of Attorney in favourof the developer on 25.03.2013. In pursuance to the agreement dated 22.01.2013, the O.P. No. 1 prepared building plans and has got the plan sanctioned from the Bally Municipality on 12.12.2014.

By dint of the development agreement and the authority conferred upon him by the landowners, the O.P. No. 1 had entered into an agreement for sale with the complainant on 27.01.2015 to sell a self-contained flat measuring about 645 sq. ft. including 25% super built-up area with undivided proportionate impartiable share being Flat No. B – 402 on the 3 rd Floor of Municipal holding No. 14/1, BL – A (previously 14/1, BL – 1 and 14/1, BL – B) Mukherjee Lane, P.S.- Belur, Dist.- Howrah within the local limits of erstwhile Bally Municipality (now Howrah Municipal Corporation) at a total consideration of Rs. 20,15,625/- @ Rs. 3125 per sq. ft. It also remained undisputed that the complainant has already paid a sum of Rs. 6,40,000/- as part consideration towards the said total consideration amount as per terms of the agreement. It was stipulated that the O.P. No. 1 will deliver the subject flat within 12 to 18 months from the date of sanctioned building plan.

Now, the whole dispute cropped up relating to unauthorised construction of another two floors. As per sanctioned building plan, the O.P. No. 1 was authorised to construct a G+3 storied building by erstwhile Bally Municipality. Admittedly, there was no sanction for construction for 4 th and 5 th floors in the said building. Due to unauthorised construction of 4 th and 5 th floors, the Howrah Municipal Corporation demolished the unsanctioned 4 th and 5 th floors of the building. It is stated by the O.P. No. 1 that due to such demolition no damage has been occurred in respect of 3 rd floor Flat for which the complainant had agreed to purchase.

Mr. Alok Mukhopadhyay, Ld. Advocate for complainant has submitted that the complainant was intended to purchase of the 3 rd floor of the building but when O.P. No. 1 by violating the sanctioned building plan constructed another two floors, certainly the opposite party no. 1 has violated the terms and conditions of the agreement and in such a situation the complainant being an intending purchaser in accordance with Section 12(1)(a) of the Act has every right to ask for refund of amount. Referring a decision of the Hon’ble National Commission reported in 2016 (3) CPR 279 [Sipra Thomas Through Ms. Sriya Coomer – vs. – Bengal Unitech Universal Infrastructure Pvt. Ltd.] Ld. Advocate for the complainant has submitted that the complainant booked the residential flat for the purpose of having a roof over his head and not for the purpose of claiming refund with compensation. However, the greediness of the developer compelled the complainant to claim refund of money because in the sanctioned building plan the H.M.C. has raised doubt as to structural stability of the building itself and as such the complainant is entitled to refund with compensation. He has also drawn my attention to another decision of Hon’ble National Commission reported in 2016 (3) CPR 191 [Dr. Narayan Ganpatrao Gawande – vs. – Milind K. Mhatre & Ors] where it was held that upon default of builder, complainants are entitled to claim refund of amount paid by them along with appropriate compensation. Ld. Advocate for the complainant has finally submitted that in view of another decision of Hon’ble National Commission reported in 2016 (3) CPR 236 (Poonam Rani – vs. – M/s. Unitech Ltd., Through Its Directors, Real Estate Division (Marketing) & Ors.] his client is entitled to 18% interest over the amount from the date of each payments till its realisation.

Per contra, Ld. Advocate for the opposite party no. 1 has contended that the opposite party no. 1 builder has constructed the building as per G+3 sanctioned building plans. Subsequently, he made construction of 4 th and 5 th floor of the said building though not sanctioned but later on heregularised the building plan for the G+5 floor from the H.M.C. He has further submitted that though H.M.C. has demolished the then unsanctioned 4 and 5 floors th th but no damage has allegedly occurred in respect of 3 rd floor flat of the complainant. He has also submitted that after regularisation of 4 th and 5 th floors, the Structural Engineer has issued Structural Stability Certificate in respect of existing G + 5 storied building. However, Ld. Advocate for the O.P. No. 1 has submitted that the O.P. No. 1 is ready to refund the deposited amount after deduction of 15% as mentioned in the brochure upon cancellation of agreement for sale.

Ld. Advocate for the O.P. No. 1 referred a decision of this Commission reported in (2017) 3 WBLR (CPSC) 230 [Shri Swapan Kumar Mukherjee & Anr. – vs. – Shri Kashinath Jaiswal] and submitted that the complaint is bad for non-joinder of necessary party for not impleading the landowners and also bad for not obtaining permission in accordance with Section 12(1)(c) of the Act. Ld. Advocate for O.P. No. 1 further proceeded to argue that in order to ascertain the structural liability, the complainant did not appoint any technical person in accordance with Section 13(4) of the Act and therefore, when the O.P. No. 1 is ready to deliver the flat to the complainant, the complainant is not entitled to any relief.

It is trite law that the parties are bound by the terms of agreement. When either of the parties did not pick up any quarrel with the terms and conditions of the agreement, they are certainly bound to follow the terms and conditions contained in the agreement. In a case reported in AIR 1996 SC 2508 (Bharti Knitting Co. – 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 signed 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 facts necessarily the Tribunal has to refer the parties to original Civil Court established under the CPC or appropriate State law to have the claims decided between the parties. But when there is a specific term in the contract, the parties are bound by the terms in the contract”.

Admittedly, the complainant had entered into an agreement with the opposite party to purchase the subject flat in accordance with the building plan sanctioned by Bally Municipality for raising construction of G + 3 storied building. Admittedly, the O.P. No. 1 by violating the said sanctioned building plan has unauthorisedly constructed 4 th and 5 th floors over the said building for which the H.M.C. demolished such unauthorised construction. The developer did so just to earn profit at the cost of intending buyer or consumer.

We must not be obsessed with the object behind the legislation of the Act. In a land mark decision reported in (1994) 1 SCC 243 [Lucknow Development Authority – vs. – M.K. Gupta] the Hon’ble Supreme Court has observed as under:

“To begin with the preamble of the Act, which can afford useful assistance to ascertain the legislative intent, it was enacted, to provide for better protection of interests of consumers. Use of the word ‘protection’ furnishes key to the minds of the makers of the Act” 

In a land mark decision reported in (2012) 10 Scale 29 [Deepak Kumar Mukherjee – vs. – Kolkata Municipal Corporation & Ors.] while setting aside the order of the Division Bench of the Calcutta High Court, the Hon’ble Supreme Court referred to the provisions of Kolkata Municipal Corporation Act, 1980 in the context of construction of additional floors in a residential building in violation of the sanctioned plan has observed thus: 

“What needs to be emphasised is that illegal and unauthorised constructions of buildings and other structure not only violate the municipal laws and the concept of planned development of the particular area but also affect various fundamental and constitutional rights of other persons.

The common man feels cheated when he finds that those making illegal and unauthorised constructions are supported by the people entrusted with the duty of preparing and executing master plan/development plan/zonal plan. The reports of demolition of hutments and jhuggi jhopris belonging to poor and disadvantaged section of the society frequently appear in the print media but one seldom gets to read about demolition of illegally/unauthorisedly constructed multi-storied structure raised by economically affluent people. The failure of the State apparatus to take prompt action to demolish such illegal constructions has convinced the citizens that planning laws are enforced only against poor and all compromises are made by the State machinery when it is required to deal with those who have money power or unholy nexus with the power corridors”.

In the written version, O.P. No. 1 undertook to file Completion Certificate and new sanctioned building plan at the time of hearing. However, the O.P. No. 1 has failed to keep their promise to produce the Completion Certificate even at the time of final hearing of the case. The revised sanctioned plan issued by H.M.C. has been filed but the said sanctioned plan bears a remark or warning– “ H.M.C. is not responsible for structural stability of the building ”. In such a situation, the complainant is not obliged to appoint an Engineer Commissioner in order to prove that the O.P. No. 1 is deficient to assure the stability of the proposed flat as per prayer (a) to the prayer clause of the petition of complaint and in that perspective, the complainant cannot be asked to purchase the said flat. In all fairness, at the time of raising construction of 4th and 5th floor, the O.P. No. 1 should have offered the complainant whether after obtaining of revised plan complainant is agreeable to purchase the subject flat or will take refund of money but the O.P. No. 1 suppressing the fact took a hidden agenda and raised illegal construction for unlawful gain. This kind of unscrupulous activities of a developer should be dealt with an iron hand by the local authority like Howrah Municipal Corporation. Therefore, there is hardly any doubt that the complainant is entitled to refund of amount together with compensation thereon.

The question as to defect of parties does not arise at all because the O.P. No. 1 has made flagrant violation of building sanctioned plan and raised construction on his own whim and fancy to make illegal profit and as such when there was no liability on the part of the landowners to that effect, the complainant has rightly did not implead the landowners as parties to this case.

The question of ‘commonness’ or ‘class action’ is not at all material in our case and the decision referred in the case of Swapan Kumar Mukherjee & Anr. (supra) is totally distinguishable with our case because in the said decision out of 8 flat owners only 2 flat owners had lodged the complaint claiming several common reliefs and benefits without obtaining any permission as required under Section 12(1)(c) of the Act. In the case before hand, the complainant has individually lodged the complaint and basically for refund of money and compensation and as such the referred decision has no manner of application in our case.

Therefore, having heard the Ld. Advocate for the respective parties and on perusal of the materials on record, I have no hesitation to hold that the complainant is entitled to refund of Rs. 6,40,000/- paid by him as part consideration towards total consideration amount. Besides claim of refund of amount the complainant has claimed compensation to the tune of Rs. 2,00,000/- on account of harassment and mental agony. Keeping in view the observation of the Hon’ble Supreme Court in the case reported in (2004) 5 SCC 65 [Ghaziabad Development Authority – vs.– Balbir Singh] and in order to avoid further litigation by O.P. No. 1, I think inspite of awarding an interest @ 18% p.a. a compensation in the form of simple interest @ 12% p.a. i.e. the amount of interest borrowing from bank/financial institutions, will subserve the object of justice.

In view of the above, the complaint is allowed on contest against O.P. No. 1 and dismissed against O.P. No. 2 with the following directions: The Opposite Party No. 1 shall refund the entire amount received from the Complainant along with compensation in the form of simple interest @ 12% p.a. from the date of each payment till the date on which the entire amount along with compensation in terms of the order is paid; The Opposite Party No. 1 shall pay Rs. 10,000/- to the complainant as costs of litigation; Payment in terms of this order shall be made within 60 days from date positively.