2010(1) CPR 201 (NC)
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI
R.K. Batta, Presiding Member and Dr. P.D. Shenoy, Member
Smt. RukmaniYamma and
Ors. —Complainants
versus
M/s. Kirloskar Investment and Finance
Ltd. —Opp. Party
Original Petition No. 29 of 1998
Decided on 6.1.2010

IMPORTANT POINT
The expression ‘shall not admit a complaint’ occurring in Section 24A of the Consumer Protection Act is sort of a legislative command to the consumer forum to examine on its own whether the complaint has been filed within limitation period prescribed thereunder. It is the duty of the consumer forum to take notice of Section 24A of the Act and give effect to it.

Headnote:Consumer Protection Act, 1986—Sections 2 and 14, 24A—Housing—Limitation period for filing complaint for deficiencies —Builder contract for construction of apartment complex—Defaults under the agreement—Award of compensation of Rs. 50,64,014 —Complainant, joint owners of property entered into an agreement whereby respondents, property developers undertook construction of a residential apartment complex—Respondent developer was to build the complex at its cost and allot 50% of built area in favour of respondent or its nominees—Respondent was to deliver possession of owners share of the completed building within 25 months from the date of sanction of the building plan—Time was agreed upon as being essence of contract—Construction was completed with delay of one year of date of completion of construction, as agreed—Deviations from the sanctioned plan—Deficiency in the work handed over as complete—Continuing cause of action—Whether there was delay in filing of complaint—(No) —Whether complainants were entitled to award of compensation for alleged deficiencies—(Yes)

       Held: In the case before us, the agreement was between owners and the developers/ builder. The builder, namely OP was to construct for the owners residential apartments in consideration of owners selling and transferring only 50% of the schedule property to the Builder or its nominee and agreement to permit the builder to have access to the entire property including the other 50% of their interest for development. The builder was to develop the property; the builder was to get the plans approved at its cost and charges; in the finalization of the plans the builder shall take the owners advice into account; the builder shall retain the powers to change in respect of their shares of apartments, modify, alter the plan in the event of any necessity; the builder was to secure sanction of plan, commence construction work after obtaining permission from the authorities; in consideration for development of the property by builder, the builder was permitted to retain 50% of interest in the property as also 50% of the superstructure built thereon and property as well sale proceeds, if any in respect of the same. Usual terms of building construction agreement between the complainant and the builder were incorporated. The cost of construction of the entire building was to be borne by the builder in terms of clause 5 of the said agreement dated 1.1.1990. The owners were not required to contribute any amount for the cost of the apartments except for any additional facilities and or requirements the owners may require which shall be borne by the owners. The builder was required to pay penalty in case of delay in hading over of possession within 25 months from the date of approval of the plans by the statutory authorities. The responsibility of getting all necessary sanctions, approvals, permissions, Licences, etc. were that of the builder and at the cost of the builder. Thus, it is clear that agreement in question is not a joint venture or partnership, as alleged by the OP but it is a case of agreement for consideration for building construction. The complainant is, therefore, ‘consumer’ and the OP ‘service provider’. The agreement in question is covered by the provisions of the Consumer Protection Act and the objection raised by the learned counsel for the OP that the complaint is not maintainable is without any merit. (Para 20)

       It is the duty of the consumer forum to take notice of Section 24A of the said Act and give effect to it. The contention of the learned counsel for the complainant in the written submissions is that the cause of action, if any, had arisen on 25.4.1995 when the building was complete and in any event in July-August, 1995 when the possession of the apartments in the share of the complainant was handed over. The complaint was filed on 9.2.1998, but it has been incorrectly stated in the written submissions that the same was filed on or about 31.6.1998. However, during the course of oral arguments, learned counsel for the OP stated that since possession of 4 apartments was given on 10.2.1996, the complaint with reference to the said 4 apartments would only be within the period limitation, but, in respect of the said 4 flats, no defects have been pointed out. (Para 21)

       As per agreement dated 1.1.1990, construction was to be completed within 2 years from the date of taking possession and the apartments were to be delivered within 25 months from the date of approval of plans by Bangalore Development Council. In the event of failure, there was a penalty clause for delay in delivery of possession and penalty of one lakh per month was contemplated. The Corporation approved the building plan on 2.7.1991 and OP by their letter dated 31.12.1991 informed the complainant that period of 25 months stipulated in the agreement for handing over possession of the apartments will be reckoned from 1.1.1992. Therefore, according to the complainant, the OP was required to complete the construction and handover the apartments on or before 31.1.1994. The construction was completed only in April, 1995 with delay of one year of date of completion of the construction, as agreed. The complainants had sent letter dated nil which was received by the OP on 10.5.1994, which was replied by the OP on 7.6.1994. In the said letter dated nil it was stated that OP was required to deliver the apartments to the complainants within 25 months from the date of approval of plans and since the plans were sanctioned during March, 1991, the OP was required to pay penalty of Rs. 1,00,000 per month from May, 1993 to April 1994. (Para 23)

       Thus, there has been admittedly delay in execution of the contract as per agreement and the delay has not been satisfactorily explained by the OP. Except for making averments in letter dated 7.6.1994, which are not supported by any material, there is nothing to substantiate the reasons cited for delay by the OP. The occupation certificate was obtained on 25.4.1995. It is in these circumstances that the complainants had signed letter dated 25.7.1995. The said letter seeks to absolve the OP of all the liabilities under agreement and. contemplates that there shall be no further claim of whatsoever nature on the OP either under the joint development agreement dated 1.1.1990 or under letter dated nil sent by the complainant and received by the OP on 10.5.1994. By this letter, the complainant had also agreed to refund interest free security deposit of Rs. 25,00,000 out of which, 9,00,000 was refunded on 1.8.1995. In this letter, the complainant also agreed to reimburse the OP a sum of Rs.3,34,179 being their share paid by the complainant as deposit to KEB and BWSSB before taking possession. On the face of it, the said letter dated 25.7.1995 shows that even without receiving possession of any flat, the complainants had signed the said letter absolving the OP from any liability of whatsoever nature. In the said letter dated 25.7.1995, it was stated that flats had been received by the complainant C.K. Jayaram, C.K. Nanjundegowda, Smt. Rukmaniyamma and C.K. Arun. However, possession and keys of the apartment were handed over to C.K. Jayaram on 27.7.1995 and on 2.8.1995. The possession and keys of the apartments were handed over to C.K. Arun, Smt. Rukmaniyamma and C.K. Najundegowda only on 2.8.1995. The said complainants in fact pointed out the list of pending works in letter dated 2.8.1995 which are on record. Thus, in the said 4 flats of which possession was given between 26th July, 1995 and 27th July, 1995 there were deficiencies and the said deficiencies had not been rectified. The cause of action in respect of the said 4 apartments would be continuing case of action since the deficiency in service therein were rectified. The possession of the remaining apartments was given later on and in fact, the remaining apartments were handed over only on 10.2.1996. The complainants pointed out the deficiencies in the flats by letter dated 6.5.1996. Thus, the cause of action continued even after handing over of the possession and since the deficiencies were not rectified, legal notice dated 8.6.1996 was sent to the OP listing in complete works and claiming Rs.59, 00,000 towards rectification of the deficiencies. (Para 24)

       The said complainants in fact pointed out the list of pending works in letter dated 2.8.1995 which are on record. Thus, in the said 4 flats of which possession was given between 26th July, 1995 and 27th July, 1995 there were deficiencies and the said deficiencies had not been rectified. The cause of action in respect of the said 4 apartments would be continuing case of action since the deficiency in service therein were rectified. The possession of the remaining apartments was given later on and in fact, the remaining apartments were handed over only on 10.2.1996. The complainants pointed out the deficiencies in the flats by letter dated 6.5.1996. Thus, the cause of action continued even after handing over of the possession and since the deficiencies were not rectified, legal notice dated 8.6.1996 was sent to the OP listing in complete works and claiming Rs.59, 00,000 towards rectification of the deficiencies.

       In the light of the above mentioned facts, we are of the opinion that the complaint is not barred by limitation as contended by counsel for the OP. The complaint is accordingly held to have been filed within the period of limitation. (Paras 24 & 25)

       Clause 6 stipulates that the time for delivery of the apartments is and shall be the essence of the contract. As per Clause 2(vii), the opposite party was to complete the construction of apartments in all respect and hand over possession of the same to the complainants within a period of two years from the date of builders taking possession of the schedule property under this agreement. By letter dated 31.12.1991 the Respondent sought delivery of the site in order to commence construction from 1.1.1992. By this letter, the opposite party had informed the complainants that 25 months period for the purposes of delivery of possession of complainants share shall be reckoned from 1.1.1992 which was agreed by complainants vide letter dated 6.1.1992. As per Clause 2(vii) the construction was to be completed within two years of taking possession of the schedule property. The plans were approved in the month of March, 1991 and in terms of Clause 6, the possession of owners’ share of apartments was required to be given within 25 months from the date of approval of the said plans. Therefore, the possession was required to be delivered in May, 1993. However, it appears that construction was not completed by that time and Occupancy Certificate was obtained by the opposite party in April, 1995. (Para 33)

       Taking an overall view of the matter, default clause cannot be read to operate only after the occupancy Certificate is obtained and notice is given” to the builder. In fact as per Clause 6 the builder was required to deliver possession to owners after obtaining Occupancy, Certificate though as per Clause 18 the builder was to hand over possession and apply and obtain Occupancy Certificate. There appears to be some ambiguity on this aspect and the benefit of the ambiguity, if any, has to be : construed in favour of the consumer. Clause 6 is crystal clear that if the builder commits default in delivery of whole or any of the part of the owners share of the apartments within the above stipulated time of 25 months from the date of approval of plans, the builder shall” be liable to pay penalty @ Rs.1,00,000 during the period of default. The possession of the flats was delivered from 26.7.1995 to 10.2.1996. Therefore, the opposite party shall be liable to pay penalty @ Rs.1,00,000 per month from May, 1993 till 10.2.1996. Even part delivery would also carry penalty of Rs.1,00,000 per month. Accordingly, the opposite party would pay penalty of Rs.34,00,000 (Rupees thirty four lakhs) to the complainants for not delivering the flats within 25 months of the date of approval of the plans. We have already not accepted the reasons given by the opposite party in letter dated 7.6.1994 for delay in the construction of the flats. (Para 33)

       Admittedly, initially, it was agreed that 4 apartments were to be provided, but ultimately the Complainants for income-tax purposes and for other reasons asked the Respondent to build 10 units as a result of which there were deviations from the sanctioned plan and for deviations, additional cost burden for constructing 10 flats in place of 4 flats, worked out to be Rs.2,38,465, as per report of M.G. Prasad, Architect. It appears that respondent had to pay penalty of Rs.3,21,923 for such deviations. In view of this, the complainants would not be entitled for re-appropriation of the said Rs.1,00,000 towards penalty. However, the complainants would be entitled to a sum of Rs,3,84, 179 appropriated by the respondent towards deposits paid by the respondent to KEB and BWSSB, since there is no agreement that such expenses shall be borne by the complainants. These appropriations were made against shortfall of the built up area for 280 sq. ft. @ Rs.1,425 per sq. ft. Therefore, the Complainants shall be entitled to receive a sum of Rs.3,84,179 from the Respondent on this count. As against this amount, a sum of Rs.2,38,465 which is the cost incurred for constructing 10 flats in place of 4 flats shall be adjusted. Therefore, the net amount to which the Complainants shall be entitled would be Rs.3,84,179 (-) Rs.2,38,465 = Rs.1,45,714. (Para 34)

       Result: Complaint allowed accordingly.