2nd Additional Bench

 STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
              PUNJAB, CHANDIGARH


                 Consumer Complaint No. 227 of 2016

                            Date of Institution : 29.07.2016
                            Date of Decision : 16.08.2017


Vishnu Kumar son of Shri Mahender Pal, resident of House No.
3223, Sector 21-D, Chandigarh.
                                                    ....Complainant

                                Versus

1.   The Sherwood Officers Society (Regd.), Mohali/Amritsar,

through its Chairman Shri Parampal Singh Sidhu r/o H. No. 3048,

Power House Road, Bathinda.

2.   RKM Housing Ltd., SCO 1-2-3-4, Behind Chandigarh

Engineering College, Sector-112, Landran, S.A.S. Nagar (Mohali)

through its Managing Director Mr. K.S. Walia.

                                                 ....Opposite parties

                       Consumer Complaint under Section 17 of
                       the Consumer Protection Act, 1986.
Quorum:-

     Shri Gurcharan Singh Saran, Presiding Judicial Member.
     Shri Rajinder Kumar Goyal, Member

Present:-

     For the complainant    :    Sh. Shubham Kaushik, Advocate
     For opposite party No.1: Sh. Ashok Verma, Advocate
     For opposite party No.2: Sh. J.P.S. Sidhu, Advocate
 Consumer Complaint No. 227 of 2016                                  2




GURCHARAN SINGH SARAN, PRESIDING JUDICIAL MEMBER

                                ORDER

Complainant has filed this complaint against the opposite parties (hereinafter referred as Ops) under Section 17 of the Consumer Protection Act, 1986 (for short the Act) on the averments that Op No. 1 i.e. Sherwood Officers Society (Regd.) is a registered body under Section 2 of the Societies Registration Act, 1860 having its Head Office at Amritsar, which was formed for the development scheme in the vicinity of the city of Chandigarh at Sector 113, Mohali and they carried out a wide publicity and general public was invited in the project for booking of the residential plots. They were to develop the plots of various sizes i.e. 200 yards, 250 yards, 300 yards, 400 yards and 500 yards. The complainant believing the assurance extended by Op No. 1 as a genuine one applied for membership of the Society by depositing a sum of Rs. 21,000/- vide cheque No. 906677 dated 3.5.2011 for the allotment of a plot of 200 sq. yards. On the basis of his membership, he was allotted to 200 sq. yards plot vide allotment letter dated 5.6.2011 @ Rs. 13,800/- per sq. yards for a total sale consideration of Rs. 27,60,000/-. The complainant made the payment to the tune of Rs. 19,00,000/-. Op No. 1 expressly assured that the development activities at the site are to start very soon and that the plots will be made available within the stipulated period i.e. 1½ years from the date of booking. However, the assurances given by the Ops were totally false and misleading. Consumer Complaint No. 227 of 2016 3 The factum of getting various approvals from the Government was found false from the letter of Op no. 1 SOS/2294 dated 20.5.2013 wherein it was clearly stated by the Authorized Signatory that CLU for the project has been approved by STP letter No. 308-STP (S)- SS-11 GR dated 3.2.2012. In the year 2014, the complainant was apprised that MOU dated 15.7.2014 has been signed between Op No. 1 and M/s RKM Housing Limited (RKM Builder) for handing over the entire project to Op No. 2, who shall now develop and deliver the possession. That decision was taken by some founder member and was imposed upon all the ordinary members leaving no option except to ratify the said decision in the Annual General Meeting held on 31.7.2014. Op No. 2 then sent letter requesting the Members to sign the consent letter on the basis of which fresh allotment letter shall be issued. The complainant also signed the consent letter. On the basis of that Op No. 2 vide letter No. RKM/0217 dated 30.10.2014 issued revised allotment letter and Op No. 2 also assured to deliver the possession of the said plot within a period of 20 months from the date of issuance of the letter, however, both the parties played fraud with the Members as Ops were not having CLU or layout plan of the project from the GMADA, therefore, the scheme was launched in violation of the provisions of PAPRA, 1995. No development has been started at the spot. Alleging unfair trade practice and deficiency in services on the part of Ops, complaint has been filed by the complainant against the Ops for refund of Rs. 19 Lacs alongwith interest @ 24% p.a. from Consumer Complaint No. 227 of 2016 4 the date of deposit, compensation of Rs. 5 Lacs and litigation expenses of Rs. 50,000/-.

2. Upon notice, Ops filed their written reply. Op No. 1 in its written reply took the preliminary objections that complaint is not maintainable in the present form; complainant has not come to the Commission with clean hands; the complainant has failed to make the payment on due dates and that the complaint is not maintainable before this Commission as the complainant has alleged fraud for which the complaint should be referred to the Civil Court. On merits, the averments stated in the preliminary objections were reiterated. However, it is a matter of record that the complainant applied for membership, which was allowed and he was allotted plot of 200 square yards for a total cost of Rs. 27,60,000/-, out of which a sum of Rs. 6.90 lacs was to be paid on the date of booking and amount of Rs. 10.35 Lacs was to be paid on or before 24.9.2011 and another amount of Rs. 10.35 Lacs was to be paid on or before 24.1.2012. However, the complainant paid a sum of Rs. 10 Lacs on 3.5.2011, Rs. 8 Lacs on 6.9.2011. He paid a sum of Rs. 1 Lac on 20.12.2012 and 3rd installment of Rs. 10 Lacs, which was to be paid on or before 24.1.2012 was not paid. He also did not pay the EDC/IDC charges. It has been specifically denied that Op No.1 expressly assured that the activities at the site will start very soon and that the possession of the flat will be made within stipulated period of 1½ years from the date of booking i.e. 3.5.2011. It was also denied that the offer given by Op No.1 was false and mis-leading or that no development activity was carried Consumer Complaint No. 227 of 2016 5 out at the site. As per Clause 9 of the allotment letter, it was mentioned that all efforts will be made to hand over the possession of the flat within a period of 1½ years from the date of booking. This Op is just a Society and not Colonizer and the work is to be carried out on the basis of payment made by its Members. Since the Members failed to make the payment, therefore, CLU from the GMADA could not be obtained. Society went in loss. Earlier CLU amount was Rs. 1,29,00,000/- but lateron it was increased to Rs. 2,40,00,000/-. With the consent of Members vide MOU dated 15.7.2014, the project was handed over to Op No. 2 for development. Therefore, the complaint of the complainant is not maintainable against this Op. Complainant has also given a consent to transfer the project to Op No. 2, therefore, no unfair trade practice or deficiency in service on the part of this Op. Complaint is without merit, it be dismissed with special costs against this Op.

3. Op No. 2 in their written reply pleaded that Op No. 1 is a Society registered under the Societies Registration Act and that the complainant was enrolled as a Member with Op No. 1. It was further stated that the Member, who is admitted/enrolled as ordinary member was to get his membership renewed after a period of 2 years. The complainant was admitted as a Member w.e.f. 3.5.2011 and was bound to get his membership renewed on or before 3.5.2013, therefore, he is not a Member of Op No.1. The complainant was told about the MOU between Op No. 1 & Op No. 2 by sending a letter and consequently, the complainant gave his Consumer Complaint No. 227 of 2016 6 consent letter dated 30.10.2014. Op No. 2 wanted to take up the matter and to develop the project for which he was to get CLU from GMADA and other approvals from the concerned Departments for which huge amount was required. Op No. 2 wrote letter dated 15.5.2016 and 30.6.2016 to the complaint to deposit the development charges and remaining balance payment but the complainant did not deposit it. Therefore, there is no unfair trade practice or deficiency in service on the part of this Op. Complaint is without merit, it be dismissed.

4. The parties were allowed to lead their respective evidence to prove their contentions. Complainant in his evidence has tendered has tendered his affidavit Ex. C-1 and documents Exs. C-2 to C-5. On the other hand Op No. 1 had tendered affidavit of Varinder Singh, Accountant Ex. Op-1/A and documents Exs. Op- 1/2 to Op-1/4.

Miscellaneous Application No. 1749 of 2017

5. During the pendency of the complaint opposite party No.1 moved an application for dismissal of the present complaint qua opposite party No.1 because opposite party No.1 is the Society, according to Section 13 of the Societies Registration Act 1860, provided as under:-

"In the event of any dispute arising among the said governing body or the members of the society, the adjustment of its affairs shall be referred to the principal court of original civil jurisdiction of the district in which the chief building of the Consumer Complaint No. 227 of 2016 7 society is situate and the court shall make such order in the matter as it shall deem requisite."

6. Therefore, this Commission has no jurisdiction to decide the matter between the society and members. To support this proposition he has referred the judgment reported in 2009(5) BCR 201 titled as General Manager, Telecom Vs. M.Krishnan & Anr., wherein it has been held that Consumer Forum does not have the jurisdiction as there is a special remedy under Section 7B of Telegraph Act regarding disputes in respect of telephone bills. However, later on the Hon'ble National Commission had circulated the instructions that under Section 3 of the Act an additional remedy has been provided. Therefore, the Consumer Fora, have the jurisdiction as held in II (2014) CPJ 38 titled as "GMTD, BSNL, Shillong Vs. KUM.D.Phawa, Mangpoh". Moreover, the provisions under the Telegraph Act are entirely different than the provisions under the Cooperative Societies Act, therefore, this judgment will not apply to the facts of the present case. He has further referred to the judgment reported in 2013(4) C.P.J. 333 titled as Anjana Abraham Vs. Managing Director of Koothattukulam Farmers Service Co-operative Bank Ltd., in which, there was a dispute between a member and Cooperative society regarding the settlement of account. In that event, it was observed that if there is alternative remedy under Section 69 of the Act, the complaint was rightly dismissed by the Consumer Fora. He further referred to a judgment reported in 2015(2) C.P.J. 207, titled as K.D.Kothiyal Vs. Phool Kaul & Ors. In that case, there Consumer Complaint No. 227 of 2016 8 was a dispute between two members of the society. In that context, it was held that consumer complaint is not maintainable. He has also referred to a judgment reported in 2016(4) C.P.J. 711 titled as Rajendra Singh Verma Vs. Committee of Management, Indraprastha Sahakari Awas Samiti Limited & Anr. It was a dispute regarding the outstanding amount. The matter was settled by the arbitrator. In that context, it was held by the Hon'ble Bench that once the matter is settled by the Arbitrator then the complaint before the National Commission is barred by principles of res judicata. He has referred to another judgment reported in 2016(2) C.P.J. 42 titled as "Hanuman Sahakari Pani Pruvatha Sanstha Maryadit & Ors. Vs. Ramchandra Bapuso Khade & Ors.". In that case, there was a dispute between the opposite party and society regarding loss caused on account of non-supply of water for irrigation of land. In that context, it was held by the Hon'ble National Commission that Consumer Fora has no jurisdiction to entertain the complaint. Whereas, learned counsel for the complainant referred to the judgment of Hon'ble National Commission reported in 2017(1) CLT 73 titled as "Raj Kumar Goyal Vs. Malwinder Singh Battu & Ors." In this case, opposite purchased a land and assured to its members to allot flats but failed to give possession. In that context, it was held that even if the issue is to be handled by the Cooperative Department under cooperative law, jurisdiction of Consumer Fora to deal with these matters is not barred. In that case, personal liability of the office bearers of Cooperative Society will also be there. In that case, a Consumer Complaint No. 227 of 2016 9 Judgment of Hon'ble Supreme Court reported in III (1996) CPJ 1 (SC) titled as "Fair Air Engineers Pvt. Ltd. Vs. N.K.Modi" was also relied upon. In another judgment reported in IV(2015) C.P.J., Pg.16 titled as H.R. Singh & Ors. Vs. Vandana Sanjay Pandya & Ors, it was observed that Cooperative Societies Act does not oust the jurisdiction of Consumer Protection Act, 1986. A specific provision under Section 3 of the Act has been provided. The same is reproduced as under:-

"3. Act not in derogation of any other law: The provisions of the Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force."

7. This Section is in addition to and not in derogation of provisions under any other Act. Where the Cooperative Society has assured for the services after taking the amount from its members then it falls within the ambit of services and where the society is in default of services then the matter is covered under the Consumer Protection Act, 1986 and Consumer Fora have the jurisdiction to entertain the complaints. Therefore, we do not agree with the plea raised by the counsel for OP No. 1 that the complaint against Op No.1 be dismissed. The application is without merit and it is hereby dismissed.

Miscellaneous Application No. 1750 of 2017

8. OP No. 1 also moved an application to place on record the certificate issued by GMADA on 9.3.2012. However, counsel for the complainant stated that it is clear from this certificate is valid from 7.12.2010 to 6.12.2015 that period is already over and no Consumer Complaint No. 227 of 2016 10 certificate has been placed on the record that it has been got renewed. Therefore, it will not serve the purpose that the Op had the certificate of Promoter but it expired in the year 2015 and it was not further got renewed. Therefore, we do not see any merit in the application and the same is hereby dismissed. Main Complaint

9. It is an admitted fact that Op No. 1 is a Society registered under the Cooperative Societies Act, 1860. The complainant was enrolled as a Member. Op No. 1 raised the scheme under the name and style of Sherwood Estates Mohali, Sector 113, Mohali. On the basis of advertisement given by the Op, the complainant got membership on the basis of which he was given allotment letter of 200 yards plot vide letter dated 5.6.2011. Ex. C-1 is the main features of the scheme raised by the Op. Ex. C- 3 is the Membership Registration form vide which a sum of Rs. 21,000/- was received by Op No. 1. Op No. 1 further received a sum of Rs. 8 Lacs vide receipt dated 6.9.2011 and Rs. 1 Lac vide receipt dated 20.12.2012 referred in the other receipt i.e. Ex. C-3 (colly). Further, Op No. 2 issued revised allotment letter Ex. C-4 in which it was admitted receiving a sum of Rs. 19,00,000/-. Then as per MOU with Op Nos. 1 & 2, the project was transferred to Op No.

2. The copy of the MOU has been placed on the record as Ex. Op- 1/3. This MOU includes the following Clause:-

"And whereas the First Party, in the overall interest of the Society and its Members/Allottees, has decided to involve a reputed Developer/Colonizer who shall take over the entire Consumer Complaint No. 227 of 2016 11 project of the First Party in Sector 113, Mohali along with all its assets and liabilities and develop it for the Members/Allottees."

Clause No. 6 further specify the period within which after development plots will be delivered to the Members.

"6. The second party shall obtain Change of Land Use (CLU) as soon as possible from date of signing of this MOU with concerned department and shall undertake development of the area into a residential colony. The Second Party will hand over Plots after developing the same to the non- defaulting Members/Allottees within 20 months from the date of MOU."

Accordingly, the revised allotment letter was issued by Op No. 2 as Ex. Op-1/4. It also certifies the receipt of earlier amount of Rs. 19 Lacs and out of the balance amount a sum of Rs. 3 Lacs was demanded by Op No. 2. No doubt that consent was given by the complainant for transferring the project by Op No. 1 to Op No. 2 but when Op No. 1 was not developing the project under the compelled circumstances, they had to give the consent.

10. Now the question arises whether Op No. 1 was entitled to raise such a scheme without any CLU and other certificates from the concerned Departments. The CLU was accorded to Op No. 2 vide their letter dated 2.12.2016, which makes it clear that before that neither Op No. 1 or Op No. 2 had the relevant certificates, it has been so stated by Op No. 2 in their reply, even such certificates were not there when the project was transferred to Op Consumer Complaint No. 227 of 2016 12 No. 2. Here the reference to Section 4 of the PAPRA, 1995 is relevant, which reads as under:-

"4. Issuing of Advertisement or Prospectus:- (1) No promoter shall issue an advertisement or prospectus, offering for sale any apartment or plot, or inviting persons who intend to take such apartments or plots to make advances or deposits, unless,-

(a) the promoter holds a certificate of registration under sub-section (2) of section 21 and it is in force and has not been suspended or revoked, and its number is mentioned in the advertisement or prospectus; and

(b) a copy of the advertisement or prospectus is filed in the office of the competent authority before its issue or publication.

(2) The advertisement or prospectus issued under sub- section (1) shall disclose the area of the apartments or plots offered for sale, title to the land, extent and situation of land, the price payable and in the case of colonies, also layout of the colony, the plan regarding the development works to be executed in a colony and the number and the validity of the licence issued by the competent authority under sub-section (3) of section 5, and such other matters as may be prescribed.

(3) The advertisement or prospectus shall be available for inspection at the office of the promoter and at the site where the building is being constructed or on the land being developed into a colony, alongwith the documents specified in this section and in section 3.

(4) When any person makes an advance or deposits on the faith of the advertisement or prospectus, and sustains any loss or damage by reason of any untrue statement included therein, he shall be compensated by,-

   (a)      the promoter, if an individual;
 Consumer Complaint No. 227 of 2016                                      13



      (b)     every partner of the firm, if the promoter is a firm;
      (c)     every person who is a director at the time of issue of

the advertisement or prospectus, if the promoter is a company:

Provided, however, that such person shall not be liable if he proves that,-

(a) he withdrew his consent to become a director before the issue of the advertisement or prospectus; or

(b) the advertisement or prospectus was issued without his knowledge or consent, and on becoming aware of its issue, he forthwith gave reasonable public notice that it was issued without his knowledge or consent; or

(c) after the issue of the advertisement or prospectus and before any agreement was entered into with buyers of plots or apartments, he, on becoming aware of any untrue statement therein, withdrew his consent and gave reasonable public notice of the withdrawal and of the reasons therefor.

(5) When any advertisement or prospectus includes any untrue statement, every person who authorised its issue, shall be punished with imprisonment for a term which may extend upto one year or with fine which may extend upto five thousand rupees, or, with both, unless he proves that the statement was immaterial or that he had reason to believe and did upto the time of issue of the advertisement or prospectus believe that the statement was true."

11. The counsel for the Ops have failed to convince before us how they had complied with the provisions of Section 4 of the Act. Further the CLU now provided by Senior Town Planner vide letter dated 2.12.2016 Ex. Op-2/D and Clause No. 9 of the letter issued by Senior Town Planner is as under:-

"(ix) Applicant shall obtain NOC from P.P.C.B. under the Water Prevention and control of Pollution Act, 1970, Municipal Solid Waste Management and Handling Rules, 2000 or any other relevant Act before undertaking any development at site."

However, opposite party No. 2 has also not placed on the record the requisite Certificate obtained by them from the concerned departments.

12. Therefore, we have no hesitation to return the findings in favour of the complainant and against the Ops that they have indulged in unfair trade practice as well as deficiency in service even after transferring the project to Op No. 2. Op No. 2 has not been able to deliver the possession within a period of 20 months as agreed. Complainant had submitted an application/complaint in Sangat Darshan against the Ops, upon which the Estate Officer (R), GAMADA told to its official to send the complaint under Section 4 of the PAPRA Act to the competent authority for its approval and necessary action and soon it was also written to the Senior Superintendent of Police, S.A.S. Nagar for the registration of case against the afore said persons.

13. Counsel for Op No.2 contended that there is no direct agreement between the complainant and Op No. 2. The reference is given to MOU Ex. Op-1/4, which shows that Op No. 2 has come in the footsteps of Op No. 1 and had taken all the assets and liabilities and after that he also issued the fresh allotment letter Ex. Consumer Complaint No. 227 of 2016 15 C-4, therefore, it cannot say that there is no privity of contract between the complainant and Op No. 2.

14. If this is the situation when the opposite parties failed to obtain the necessary permissions from the concerned authorities and to complete the project within the stipulated time, the consumer cannot be allowed to suffer for an indefinite period and he is entitled to refund of his amount. It has been so held in 2007(2) CLT 440 titled as 'Kamal Sood Vs. DLF Universal Ltd.' and 2014(2) CLT 401 titled as 'Brigadier B.S.Taunque (Retd.) & Others Vs. M/s Sangeethashree Builders & Developers International Private Limited & Others'. Similar orders have been passed by this Commission in F.A. No.231 of 2016 decided on 12.10.2016 titled as M/s R.K.M. Housing Ltd. Vs. Smt. Geeta Bhatia & Anr. and F.A. No.230 of 2016 decided on 12.10.2016 titled as M/s R.K.M. Housing Ltd. Vs. Smt. Rakhi & Anr.

15. Another contention was raised by the counsel for the Op No.2 that rate of interest should not be given more than 8%, which is the bank interest rate. However, there is provision under Clause No. 3 of the allotment letter dated 5.6.2011, which is as under:-

"3. As the plot has been offered on no-profit-no-loss basis, late payment will attract penal interest @ 12% p.a. and sustained default will lead to cancellation of allotment."

If the Ops are charging interest @ 12% on late payment then they are liable to pay the same interest to the complainant on account of Consumer Complaint No. 227 of 2016 16 their deficiency in service. It has been so provided under Rule 17 of the PAPRA Rules, 1995.

16. No other point was raised.

17. Sequel to the above, we accept the complaint and ordered all the Ops as under:-

(i) to refund the sum of Rs.19,00,000/- alongwith interest at the rate of 12% per annum from the various dates of payment till realization;

(ii) to pay Rs.1,00,000/- as compensation on account of unfair trade practice on the part of the Ops by giving false assurances to develop the area within the stipulated period of 20 months, which causes mental tension and harassment to the complainant;

(iii) to pay Rs.21,000/- as litigation costs.

Both the Ops are jointly and severally liable to make the payment to the complainant.

18. The above directions be complied with within a period of 45 days from the date of receipt of certified copy of the order.

19. The complaint could not be decided within the statutory period due to heavy pendency of court cases.

(GURCHARAN SINGH SARAN) PRESIDING JUDICIAL MEMBER (RAJINDER KUMAR GOYAL) MEMBER August 16, 2017.

as Consumer Complaint No. 227 of 2016 17