LAWA LAID DOWN ON HOUSING

 

 LUCKNOW DEVELOPMENT AUTHORITY VS.M.K. GUPTA JUDGMENT 05/11/1993

“The question of law that arises for consideration in these appeals, directed against orders passed by the National Consumer Disputes Redressal Commission (referred hereinafter as National Commission), New Delhi is if the statutory authorities such as Lucknow Development Authority or Delhi Development Authority or Bangalore Development Authority constituted under State Acts to carry on planned development of the cities in the State are amenable to Consumer Protection Act, 1986 (hereinafter referred to as 'the Act') for any act or omission relating to housing activity such as delay in delivery of possession of the houses to the allottees, non-completion of the flat within the stipulated time, or defective and faulty construction etc. Another aspect of this issue is if the housing activity carried on by the statutory authority or private builder or contractor came within the purview of the Act only after its amendment by the Ordinance No. 24 in 1993 or the Commission could entertain a complaint for such violations even before”

“When the court directs payment of damages or compensation against the State the ultimate sufferer is the common man. It is the tax payers' money which is paid for inaction of those who are entrusted under the Act to discharge their duties in accordance with law. It is, therefore, necessary that the Commission when it is satisfied that a complainant is entitled to compensation for harassment or mental agony or oppression, which finding of course should be recorded carefully on material and convincing circumstances and not lightly, then it should further direct the department concerned to pay the amount to the complainant from the public fund immediately but to recover the same from those who are found responsible for such unpardonable behaviour by dividing it proportionately where there are more than one functionaries.”

“In a modem society no authority can arrogate to itself the power to act in a manner which is arbitrary. It is unfortunate that matters which require immediate attention linger on and the man in the street is made to run from one end to other with no result.”

“The legislative intention is thus clear to protect a consumer against services rendered even by statutory bodies. The test, therefore, is not if a person against whom complaint is made is a statutory body but whether the nature of the duty and function performed by it is service or even facility.”

  “ Any attempt, therefore, to exclude services offered by statutory or official bodies to the common man would be against the provisions of the Act and the spirit behind it. “

“Use of the word 'protection' furnishes key to the minds of makers of the Act. Various definitions and provisions which elaborately attempt to achieve this objective have to be construed in this light without departing from the settled view that a preamble cannot control otherwise plain meaning of a provision. In fact the law meets long felt necessity of protecting the common man from such wrongs for which the remedy under ordinary law for various reasons has become illusory”

“A scrutiny of various definitions such as 'consumer', 'service', 'trader', 'unfair trade practice' indicates that legislature has attempted to widen the reach of the Act. Each of these definitions are in two parts, one, explanatory and the other expandatory. The explanatory or the main part itself uses expressions of wide amplitude indicating clearly its wide sweep, then its ambit is widened to such things which otherwise would have been beyond its natural import”

“ 'include' is very generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute, and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural, import, but also those things which the definition clause declares that they shall include" 'include' is very generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute, and when it is so used these words or phrases must be construed as comprehending, not only such things as they signify according to their natural, import, but also those things which the definition clause declares that they shall include”

“Any defect in construction activity would be denial of comfort and service to a consumer. When possession of property is not delivered within stipulated period the delay so caused is denial of service. Such disputes or claims are not in respect of immoveable property as argued but deficiency in rendering of service of particular standard, quality or grade. Such deficiencies or omissions are defined in sub-clause (ii) of clause (r) of Section 2 as unfair trade practice. If a builder of a house uses substandard material in construction of a building or makes false or misleading representation about the condition of the house then it is denial of the facility or benefit of which a consumer is entitled to claim value under the Act”

 

GHAZIABAD DEVELOPMENT AUTHORITY V. BALBIR SINGH (2004) 5 SCC 65

 

“where there is absolutely no justifiable reason why the party has not been delivered possession of the flat which had been allotted to him nor has any offer been made to return his money with interest. Instead the body has asked the party to apply for an alternate flat at a higher rate. In our view, on these facts the award of interest at the rate of 18% is justified. It is not just interest on the amount invested but is also compensation for the harassment and agony caused to the allottee. ”

"However, the power and duty to award compensation does not mean that irrespective of facts of the case compensation can be awarded in all matters at a uniform rate of 18% per annum. As seen above, what is being awarded is compensation i.e. a recompense for the loss or injury. It therefore necessarily has to be based on a finding of loss or injury and has to correlate with the amount of loss or injury. Thus the Forum or the Commission must determine that there has been deficiency in service and/or misfeasance in public office which has resulted in loss or injury. No hard-and-fast rule can be laid down”

 

 

BANGALORE DEVELOPMENT AUTHORITY VS SYNDICATE BANK JUDGEMENT ON 17 MAY, 2007

 

“Where no time is stipulated for performance of the contract (that is for delivery), or where time is not the essence of the contract and the buyer does not issue a notice making time the essence by fixing a reasonable time for performance, if the buyer, instead of rescinding the However contract on the ground of non-performance, accepts the belated performance in terms of the contract, there is no question of any breach or payment of damages under the general law governing contracts”

“Where an alternative site is offered or delivered (at the agreed price) in view of its inability to deliver the earlier allotted plot/flat/house, or where the delay in delivering possession of the allotted plot/flat/house is for justifiable reasons, ordinarily the allottee will not be entitled to any interest or compensation. This is because the buyer has the benefit of appreciation in value”

“Where an alternative plot/flat/house is allotted and delivered, not at the original agreed price, but by charging current market rate which is much higher, the allottee will be entitled to interest at a reasonable rate on the amount paid towards the earlier allotment, from the date of deposit to date of delivery of the alternative plot/flat/house. In addition, he may be entitled to compensation also, determined with reference to the facts of the case, if there are no justifiable reasons for non-delivery of the first allotted plot/flat/house.”

 

 

 

U.T. CHANDIGARH ADMINISTRATION & ... VS AMARJEET SINGH AND ORS. 17 .3. 2009

The appellants have urged the following common contentions in  these appeals  before the SC in the matter of

(i) When the auction of sites (for grant of a lease for 99 years) was in exercise of the power of the government (UT Chandigarh Administration) under the provisions of the Development Act in accordance with the Leasehold Rules, it involves neither sale of goods nor rendering of any service. The act of leasing plots by auction by the appellants therefore did not result in the successful bidder becoming a `consumer' or the appellants becoming `service providers'. In the absence of hiring or availing of any service, the question of deficiency in service or unfair or restrictive trade practice with reference to a service, did not arise and the complaint under the Act was not maintainable.

(ii) There was no obligation on the part of the appellants, either statutory or contractual, to provide the `basic amenities' demanded by the respondents with reference to the lease of sites by public auction. The payment of the premium (which was permitted to be paid in instalments on the request of the successful bidder) and the annual rent was not conditional upon the UT Chandigarh providing any basic amenities. Payment of the amounts due could not be postponed on the ground of absence of amenities. Nor could payment of default interest be avoided, once there was default. Therefore, even assuming that the complaint was maintainable, the National Commission was not justified in interfering with the terms of the contract of lease and giving relief in regard to interest, which was legally due. Re : first contention

Held:

“Where there is a public auction without assuring any specific or particular amenities, and the prospective purchaser/lessee participates in the auction after having an opportunity of examining the site, the bid in the auction is made keeping in view the existing situation, position and condition of the site. If all amenities are available, he would offer a higher amount. If there are no amenities, or if the site suffers from any disadvantages, he would offer a lesser amount, or may not participate in the auction. Once with open eyes, a person participates in an auction, he cannot thereafter be heard to say that he would not pay the balance of the price/premium or the stipulated interest on the delayed payment, or the ground rent, on the ground that the site suffers from certain disadvantages or on the ground that amenities are not provided. With reference to a public auction of existing sites (as contrasted from sites to be `formed'), the purchaser/lessee is not a consumer, the owner is not a `trader' or `service provider' and the grievance does not relate to any matter in regard which a complaint can be filed. Therefore, any grievance by the purchaser/lessee will not give rise to a complaint or consumer dispute and the fora under the Act will not have jurisdiction to entertain or decide any complaint by the auction purchaser/lessee against the owner holding the auction of sites.”

Re : Second Contention

 

“Where there is a public auction without assuring any specific or particular amenities, and the prospective purchaser/lessee participates in the auction after having an opportunity of examining the site, the bid in the auction is made keeping in view the existing situation, position and condition of the site. If all amenities are available, he would offer a higher amount. If there are no amenities, or if the site suffers from any disadvantages, he would offer a lesser amount, or may not participate in the auction. Once with open eyes, a person participates in an auction, he cannot thereafter be heard to say that he would not pay the balance of the price/premium or the stipulated interest on the delayed payment, or the ground rent, on the ground that the site suffers from certain disadvantages or on the ground that amenities are not provided.”

 With reference to a public auction of existing sites (as contrasted from sites to be `formed'), the purchaser/lessee is not a consumer, the owner is not a `trader' or `service provider' and the grievance does not relate to any matter in regard which a complaint can be filed. Therefore, any grievance by the purchaser/lessee will not give rise to a complaint or consumer dispute and the fora under the Act will not have jurisdiction to entertain or decide any complaint by the auction purchaser/lessee against the owner holding the auction of sites.”

The term `amenity' is defined in section 2(b) of the Development Act as follows :

“2(b). `amenity' includes roads, water-supply, street lighting, drainage, sewerage, public building, horticulture, landscaping and any other public utility service provided at Chandigarh".

Therefore the assumption that there is a statutory obligation on the part of the Central Government to provide amenities, because the word `amenity' is defined in the Act is erroneous and baseless.

The National Commission has proceeded on erroneous and baseless assumptions that there is no obligation to pay the instalments until the amenities were provided and consequently the instalments could be rescheduled so as to begin after the amenities were provided and that interest would start to run only when the lessee takes possession. In view of the conflicting views of the High Court as to whether instalments are payable only after the government provides the basic amenities, the National Commission circumvented the issue.

It is the common experience that for full development of an area it takes years. It is not possible in every case that the whole area is developed first and allotment is served on a platter. Allotment of the plot was made on an as- is-where-is basis and the Administration promised that the basic amenities will be provided in due course of time. It cannot be made a condition precedent.”

 

 

FAQIR CHAND GULATI VS.UPPAL AGENCIES PVT. LTD. & ANR CIVIL APPEAL NO . 3302 OF 2005 SC :DATE OF JUDGMENT: JULY 10, 2008

When landowner is a consumer against builder for services given for construction [Joint venture agreement] HELD :

 A land owner, who enters into an agreement with a builder, for construction of an Apartment Building and for sharing of the constructed area, is a `consumer' entitled to maintain a complaint against the builder as a service-provider under the Consumer Protection Act, 1986.

The District Forum, the State Commission and the National Commission committed a serious error in wrongly assuming that agreements of this nature being in the nature of joint venture are outside the scope of consumer disputes.(Para 24)

1. A contract for construction of an apartment or house for the consumer , in accordance with the specifications and in terms of the contractis a contract for service . There is a consideration for such [service of]construction, flowing from the landowner to the builder (in the form of sale of an undivided share in the land and permission to construct and own the upper floors). To adjust the value of the extent of land to be transferred, there is also payment of cash consideration by the builder. But the important aspect is the availment of services of the builder by the land-owner for a house construction (construction of owner's share of the building) for a consideration. To that extent, the land-owner is a consumer, the builder is a service-provider and if there is deficiency in service in regard to construction, the dispute raised by the land owner will be a consumer dispute.

If the construction is part of a building which in law requires a completion certificate or C&D forms (relating to assessment), the builder is bound to provide the completion certificate or C&D forms. He is also bound to provide amenities and facilities like water, electricity and drainage in terms of the agreement.

 If the completion certificate and C&D forms are not being issued by the Corporation because the builder has made deviations/violations in construction, it is his duty to rectify those deviations or bring the deviations within permissible limits and secure a completion certificate and C&D forms from MCD. The builder can not say that he has constructed a ground floor and delivered it and therefore fulfilled his obligations. Nor can the builder contend that he is not bound to produce the completion certificate, but only bound to apply for completion certificate.If the builder fails to do so, he will be liable to compensate the complainant for all loss/damage. Therefore, the assumption of the State Commission and National Commission that the obligation of the builder was discharged when he merely applied for a completion certificate is incorrect.

 

On August 31, 2010, the Hon’ble Supreme Court of India, in the case of Nahalchand Laloochand P. Ltd. vs. Panchali Co-Op. Housing Sty. Ltd. held that “Open-to-sky” areas or “stilted” (covered) portions of their flat complexes, usable as parking spaces, cannot be sold separately by flat builders/promoters/developers as “garage”. The court reasoned that these spaces are part of the “common areas” in flat complexes and are therefore not “saleable independently as a flat or along with a flat”. This is a landmark judgment, and the first to conclusively deal with this issue. . 

 “Open-to-sky” areas or “stilted” (covered) portions of their flat complexes, usable as parking spaces, cannot be sold separately by flat builders/promoters/developers as “garage”.

 In absence of legislation to the contrary, this verdict of Supreme Court is the law of the land and any builder “selling” out the parking space is clearly in violation of the law

 

JURISDICTION OF CONSUMER FORUM IN HOUSING MATTERS

Neha Singhal

Vs

M/s. Unitech Limited

‘, that fact alone cannot suffice to oust the territorial jurisdiction of the (Delhi) State Commission to adjudicate upon the complaint, in view of the specific provisions of section 11 (2) (b) of the Consumer Protection Act, 1986 (‘the Act’). To emphasise, the clause relating to jurisdiction of “courts” in the agreement between the parties cannot by itself over-ride the statutory right of the appellant/ complainant conferred by the above-mentioned provision of the Act – that would defeat the purpose and object of the Act. This view is also in accord with the provisions of section 28 of the Indian Contract Act, 1872 (as amended with effect from 8th January 1997).’

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