Builder Liable for Poor Construction Despite Private Lab Report, Compensation Reduced: Gujarat State Consumer Commission

Gujarat Consumer Commission Reduces Compensation for Defective House Construction, Upholds Builder's Liability

Ahmedabad : The Gujarat State Consumer Disputes Redressal Commission has partially allowed an appeal by a builder, Dinsha Associates, reducing the compensation awarded to a homebuyer for defective construction from ₹1,00,000 to ₹75,000. While modifying the compensation amount, the Commission, presided over by Dr. J.G. Mekwan, upheld the builder's liability for "deficiency in service" due to poor quality construction.

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Case Background

The case originated from a complaint filed by Ramanbhai K Darji, who purchased a house from Dinsha Associates in their "Nandvan Residency" scheme in Visnagar for approximately ₹13.92 lakh. He took possession of the property on April 27, 2012.

Within a year of moving in, Mr. Darji noticed numerous significant defects, including: - Cracks in the plaster near the main door and throughout the house. - Broken marble on the stairs and loose floor tiles. - Peeling plaster and dampness on the walls. - Cracks in bathroom tiles and the verandah.

After the builder allegedly failed to address these issues, Mr. Darji and other residents commissioned a panchnama (inspection report) and sent a plaster sample to a private laboratory, "Mangalam Consultancy." The report revealed a cement-to-sand ratio of 1:9, far below the standard 1:3 ratio, indicating the use of substandard materials.

The Mehsana District Consumer Forum found in favor of the homebuyer, ordering the builder to pay ₹1,00,000 in compensation with 8% interest, along with ₹5,000 for mental agony and ₹10,000 for costs. Dinsha Associates challenged this order before the State Commission.

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Key Arguments

Dinsha Associates (Appellant-Builder):

- The builder's counsel argued that the District Forum erred by relying on a lab report and panchnama conducted in their absence.

- They contended that the private lab report was inadmissible as it was not from a government-recognized laboratory as prescribed under the Consumer Protection Act, 1986.

- The expert report by a retired engineer was merely an "observation report" and could not be considered conclusive expert evidence.

Ramanbhai K Darji (Respondent-Homebuyer):

- The homebuyer's lawyer reiterated that the builder had promised high-quality construction but delivered a house with numerous structural flaws.

- They presented the lab report and an expert affidavit from a retired executive engineer, Mr. Patel, as evidence of poor workmanship and the use of inferior materials.

- It was argued that the defects were latent and only became apparent after the family started living in the house, countering the builder's claim that the buyer had accepted the property after inspection.

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Commission's Analysis and Ruling

The State Commission critically examined the evidence presented. It agreed with the builder that the report from the private lab, "Mangalam Consultancy," could not be considered conclusive evidence under Section 13(1)(c) of the Consumer Protection Act, 1986, as the lab was not a recognized one under the act and the report was not supported by an affidavit.

However, the Commission placed significant weight on the report and affidavit submitted by Mr. Patel, a retired executive engineer. The judgment noted:

"Mr. Patel has provided his report on affidavit. And this report has not been challenged in any way by the opponent [builder]. Therefore, this Commission believes on the basis of this report that the opponent did not take proper care in the construction and the construction was done defectively."

The Commission observed that the defects, such as cracks in the plaster and poor finishing, were clearly visible in photographs submitted by the complainant. These latent defects, which are not apparent during a pre-possession inspection, constitute a clear "deficiency in service."

Citing the Supreme Court's judgment in Faqir Chand Gulati vs. Uppal Agencies Pvt. Ltd. , the Commission reaffirmed that a homebuyer is entitled to compensation when a builder fails to provide construction of reasonable quality.

While upholding the builder's liability, the Commission found that the District Forum had not provided a clear basis for arriving at the compensation figure of ₹1,00,000. Modifying this amount, the State Commission held:

"...in the opinion of this Commission, if the opponent pays ₹75,000/- to the complainant as compensation, it will be considered proper and just. Thus, the Commission feels the need to amend the order of the Ld. District Commission regarding the amount of compensation."

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Final Order

The State Commission partially allowed the appeal, modifying the District Forum's order as follows:

- The compensation amount was reduced to ₹75,000 with 8% interest per annum from the date of the original complaint until payment.

- The order to pay ₹5,000 for mental agony and ₹10,000 for litigation costs was kept intact.

- The builder was directed to pay the total amount within 60 days of the order dated November 30, 2022.