Full Judgment
Mrs. Usha S. Thakare, Member:
[1] Complainants, Mr. Pradeep Agarwal and Mr. Sandeep Agarwal are the real brothers. They have filed present complaint for claiming possession of Flat No.802 booked by them in the building known as ‘Gaurav Palace, Kandivali (West) in Mumbai and for claiming compensation of Rs.50,000/- for mental tension together with interest thereon @ 9% p.a. and also claimed costs of the complaint by alleging deficiency in service on the part of the Opponents.
[2] Facts giving rise to this complaint in short are as under:-
Complainants wanted to purchase a flat for their personal use. They contacted the Opponents. Opponent No.1 is a Builder. Opponent No.2 is a partner of the Opponent No.1 - M/s. Ravi Foundation. Opponent No.3 is also a Builder. Opponents Nos.1 and 3 have formed a joint-venture for construction of a building in which the Complainants have booked a flat on 19/07/2002. Opponent No.1 agreed to sell to the Complainants, a flat bearing No.802 in the proposed building known as ‘Gaurav Palace at Kandivali (West) in Mumbai. An agreement was reduced into writing. It was signed by the Opponent No.3 on behalf of the Opponent No.1, as a constituted attorney. As per Clause (4-a) read with Clause (5-c) of the said agreement, Flat No.802, admeasuring 1690 sq. ft. carpet area was agreed to be sold to the Complainants for a total consideration of Rs.25,00,000/-. Said amount was to be paid in installments. Opponent No.1 did not go by the payment schedule as set out in the agreement and demanded entire consideration prior to executing the agreement. Complainants were forced to pay entire consideration of Rs.25,00,000/- in advance prior to agreement. Date of possession was not mentioned in Clause (5-b) of the said agreement. However, as the entire consideration had been paid prior to execution of the agreement, the Opponent No.1 issued a possession letter dated 19/07/2002 without actually handing over possession of flat. Opponents failed to actually hand-over possession of the flat. On enquiry by the Complainants about the possession of the flat, evasive answers were given by the Opponents. Ultimately, the Complainants sent a letter dated 27/03/2010 to the Opponents and called upon them to complete the building, obtain the Occupancy Certificate and hand-over the possession of flat No.802 purchased by them. The Complainants were shocked by seeing reply sent by the Opponents Nos.1 and 2. Opponents Nos.1 and 2 refused to acknowledge sale of flat to the Complainants as the agreement was signed by the Opponent No.3. The Complainants sent a letter dated 13/05/2010 to the Opponents Nos.1 and 2 refuting the stand taken by the Opponents and recorded the unsuccessful attempts made by them to resolve the matter. Said letter of the Complainants is not responded by the Opponents till today.
[3] It is alleged by the Complainants that long back in the year 2002, they have paid the entire consideration of Rs.25,00,000/- for flat No.802. Till today, they did not get possession of the flat. In the agreement the date of possession is not mentioned. Complainants came to know by a reply dated 01/04/2010 that the Opponents Nos.1 and 2 are not ready to hand-over the possession of the flat. Therefore, the Complainants have filed present complaint for getting possession of the flat together with compensation and costs of litigation.
[4] Opponents Nos.1 and 2 have resisted the claim by filing their written version through constituted attorney of the Opponent No.1, namely - Mr. K. R. Gupta. It is alleged that the complaint is filed on 25/10/2010 whereas the cause of action arose on 19/07/2007 and, therefore, the complaint is time-barred. Complainants have suppressed various vital and relevant facts. Facts mentioned in the complaint do not constitute any deficiency in service and as the complaint is not maintainable the Complainants have no authority or right to claim possession of flat or compensation with interest. Opponents Nos.1 and 2 have not signed or executed any agreement. Complainants are not the ‘consumers of the Opponents Nos.1 and 2. Opponents Nos.1 and 2 have already revoked and cancelled the power-of-attorney executed in favour of the Opponent No.3 as the Opponent No.3 had not complied with the terms and conditions of the agreement between the Opponents Nos.1 and 2 and the Opponent No.3. Therefore, agreement executed by the Opponent No.3 in favour of any party, including the Complainants, is not binding upon the Opponents Nos.1 and 2. As per the conditions of power-of-attorney executed in favour of the Opponent No.3, the Opponent No.3 was to develop and/or construct the building on the said property out of his own funds. However, the Opponent No.3 failed and neglected to carry development and construction of the said property and, therefore, the Opponents Nos.1 and 2 cancelled the alleged power-of-attorney executed in favour of the Opponent No.3. Opponents Nos.1 and 2 had no option but to construct and develop the said property from their own funds. Hence, the Complainants cannot have any grievance against the Opponents Nos.1 and 2. Opponents Nos.1 and 2 have not received any consideration amount from the Complainants. If any amount is paid to the Opponent No.3 then, the Opponents Nos.1 and 2 are not responsible for the same. Said amount was received by the Opponent No.3. Letter of possession annexed to the complaint is executed by the Opponent No.3. Therefore, the complaint is liable to be dismissed as against them. Alternatively, it is submitted that the delay complained of by the Complainants in handing over the possession of the said flat is attributable to various reasons beyond the control of the Developers - M/s. Ravi Foundation. Due to serious slack in the real estate market since more than 03-04 years, Developers in the city of Mumbai were facing actual financial crunch resulting in slow progress of construction. There is no deficiency or unfair trade practice adopted by the Opponents Nos.1 and 2. Complainants are not entitled for claiming possession of the flat. Hence, it is prayed that the complaint may be dismissed.
[5] The complaint proceeded ex-parte against the Opponent No.3 as the Opponent No.3 failed to appear before the Commission inspite of receipt of notice without any sufficient cause.
[6] Both the Complainants have filed their affidavit of evidence in support of their claim. To substantiate their allegations, they have filed on record copies of relevant documents such as, agreement for sale executed in their favour by the Opponent No.3 as a power-of-attorney holder of the Opponent No.1 and copy of irrevocable power-of-attorney executed by the Opponent No.2 in favour of the Opponent No.3. Complainants have relied upon receipts of payments, possession letter, letter correspondence between the parties. To rebut the written version filed by the Opponents Nos.1 and 2, Complainants have filed on record the Deed of Confirmation executed by the Opponents Nos.1 and 2 and the Opponent No.3 on 17/07/2009 in favour of Mr. Haresh N. Sanghavi and Mrs. Veena Haresh Sanghavi. To give a counter-blow the Opponents Nos.1 and 2 have relied on evidence of their power-of-attorney, Mr. K. R. Gupta. They have also relied upon letters sent to the Opponent No.3 on 17/06/2002 for revocation of power-of-attorney executed in favour of the Opponent No.3. Opponents Nos.1 and 2 have replied to the interrogatories raised by the Complainants. Opponent No.2, Mr. Jayesh Shah has filed his own affidavit in connection with Deed of Confirmation dated 17/07/2009 executed by himself and the Opponent No.3. Opponents Nos.1 and 2 have also relied on affidavit of Mr. Haresh Sanghavi to enlive under what circumstances, the Opponent No.2 and the Opponent No.3 executed the Deed of Confirmation.
[7] We have heard authorized representative Mr. Jehangir B. Gai for the Complainants and Learned Counsel Mr. I. A. Raibakkar for the Opponents Nos.1 and 2. We have also considered brief notes of arguments submitted by both the parties.
[8] Opponent No.1 - M/s. Ravi Foundation, is a partnership firm. Opponent No.1 is a Builder. Irrevocable power-of-attorney was executed in favour of the Opponent No.3 on 10/04/2002 by the Opponent No.1. Opponent No.3 is the proprietor of Mangesh Constructions. Opponents have undertaken to construct a building known as ‘Gaurav Palace. Construction of the said building was a joint-venture of the Opponents Nos.1 to 3. These facts are not disputed.
[9] Opponents Nos.1 and 2 denied their liability to hand-over possession of flat No.802 from the building ‘Gaurav Palace to the Complainants on the ground that they never entered into an agreement with the Complainants and as such there is no privity of contract between them. They never received payment of consideration from the Complainants. Acts done by the Opponent No.3 or agreement executed by the Opponent No.3 in favour of the Complainants are not binding on them. Power-of-attorney executed by the Opponents Nos.1 and 2 in favour of the Opponent No.3 was cancelled as the Opponent No.3 failed to perform his promise and failed to construct and develop the building out of his own funds.
[10] Evidence adduced on record by the Complainants by filing affidavits prove that on 19/07/2002 an agreement was executed in their favour by the Opponent No.3 on behalf of the Opponent No.1. By the said agreement, the Opponent No.1 agreed to sell flat No.802 to the Complainants from the building ‘GauravPalace for a consideration of Rs.25,00,000/-. Version of the Complainants is fully corroborated by an agreement for sale which is a registered document. It is signed by the Opponent No.3. Contents of the agreement clearly speak that the Opponent No.1 agreed to sell flat No.802 from the proposed building to the Complainants for a consideration of Rs.25,00,000/-.
[11] Complainants have made payment of consideration to the Opponents by cheques. Cheques were issued in favour of the Opponent No.1 - M/s. Ravi Foundation. Complainant No.1, Mr. Pradeep Agarwal paid to the Opponent No.1 an amount of Rs.2,00,000/- vide a cheque bearing No.531712 dated 17/06/2002. He further paid an amount of Rs.5,00,000/- vide a cheque bearing No.531715 dated 17/07/2002. He also paid an amount of Rs.5,00,000/- vide a cheque bearing No.531716 dated 19/07/2002. Thus, Complainant No.1, Mr. Pradeep Agarwal paid a total amount of Rs.12,00,000/-. Complainant No.2, Mr. Sandeep Agarwal paid an amount of Rs.5,00,000/- vide a cheque bearing No.499579 dated 17/06/2002. He further paid an amount of Rs.3,00,000/- vide a cheque bearing No.531151 dated 19/06/2002. He paid an amount of Rs.5,00,000/- vide a cheque bearing No.531158 dated 19/07/2002. Thus, Complainant No.2, Mr. Pradeep Agarwal paid a total amount of Rs.13,00,000/-. Receipts are filed on the record by the Complainants to show full payment. Otherwise also, payment of these amounts to the Opponent No.3 is not seriously challenged by the Opponents Nos.1 and 2.
[12] It is to be noted here that the Opponent No.3 issued possession letter dated 19/07/2002 to the Complainants. Main grievance of the Opponents Nos.1 and 2 is that the agreement dated 19/07/2002, payment receipts, possession slip executed by the Opponent No.3 are not binding upon them.
[13] Admittedly, irrevocable power-of-attorney was executed by the Opponents Nos.1 and 2 in favour of the Opponent No.3. It is a registered power-of-attorney which is irrevocable. Opponents Nos.1 and 2 tried to prove that power-of-attorney executed in favour of the Opponent No.3 was revoked by them on 17/06/2002. Therefore, agreement executed by the Opponent No.3 as a power-of-attorney of the Opponent No.1 on 19/07/2002 cannot be said to be on their behalf.
[14] Mr. K. R. Gupta, constituted attorney of the Opponent No.1, in his affidavit submitted that the Opponents Nos.1 and 2 have already revoked and cancelled the power-of-attorney given to the Opponent No.3 since the Opponent No.3 had not complied with the terms and conditions of the agreement between the Opponents Nos.1 and 2 and the Opponent No.3. Alleged cancelled or revoked power-of-attorney cannot give power to the Opponent No.3 to execute any agreement in favour of the Complainants. Opponent No.3 was supposed to develop and construct the building and develop the property out of his own funds. Opponent No.3 failed and neglected to carry out construction/development and, therefore, the Opponents Nos.1 and 2 were constrained to develop the property out of their own funds. Opponents Nos.1 and 2 never received the payment of consideration. However, the receipts on the record show that the amounts were received by the Opponent No.3.
[15] Learned Counsel for the Opponents Nos.1 and 2 has drawn our attention to the letters by which the power-of-attorney of the Opponent No.3 was cancelled. Letter dated 17/06/2002 speaks that said letter was issued by the partner of the Opponent No.1. It means that the said letter was sent by the Opponent No.2. It was addressed to the Opponent No.3. By the said letter it was informed to the Opponent No.3 that the power-of-attorney dated 10/04/2002 was cancelled and all existing arrangements were terminated. Opponent No.3 was called upon not to act upon said power-of-attorney as the same shall be not binding upon the Opponents Nos.1 and 2. This letter was sent to the Opponent No.3 under certificate of posting. A copy of certificate of posting is filed on the record.
[16] It is a question before us whether irrevocable power-of-attorney can be cancelled by merely sending a letter to the Opponent No.3 particularly when it was a registered power-of-attorney. When the power-of-attorney was given to the Opponent No.3, the document was registered. Document of cancellation was not made to public. Warning was not given to public by paper publication not to deal with the Opponent No.3 pertaining to the property belonging to the Opponents Nos.1 and 2 as the power-of-attorney in favour of the Opponent No.3 was cancelled.
[17] Clause No.27 of the registered irrevocable power-of-attorney dated 10/04/2002 executed in favour of the Opponent No.3 reads as follows:-
“To execute Agreements for Sale/Conveyance/Sale Deed/Lease Deed/Deed of Assignment or any other Deed under the provisions of Transfer of Property Act and or under the provisions of Maharashtra Ownership of Flats (the promotion of construction, management sand sale) Act, 1953 and Rules there under and or under the Apartment Ownership Act 1970 and or under such act which may be applicable for the sale of the flats in the buildings constructed on the said property or any part thereof, described in the schedule hereunder written or any party thereof and/or other premises in respect of the Buildings to be constructed on the said property upon such terms and conditions and for the consideration that may be deem fit and proper by my/our Attorney with further power to receive the consideration and to acknowledge receipt thereof and to give discharge there from and to do all necessary acts, deeds, things and matter in the matter of the recovery of the sale proceeds thereof.”
[18] Above-mentioned clause shows that the Opponent No.3 was authorized to execute the agreement for sale/Conveyance/Sale Deed/Lease Deed, in short, to transfer the property of the Opponent No.1. As per Clause No.(31) of the said power-of-attorney, the Opponent No.3 was authorized to execute from time to time agreements or agreement for sale on ownership basis of such flats, shops or garages, conveyance in respect of the building or buildings that may be constructed on the said property by using the F.S.I. of the said property as well as the F.S.I. under the T.D.R. on the said property and also to execute and sign conveyance, transfer or surrender in respect of the said property and to lodge the document or documents for registration and admit the execution of any such documents before the Sub-Registrar or Registrar for assurances and complete the formalities of registration. As per Clause No.(43) of the power-of-attorney, the Opponent No.3 was authorized to open account in the name of the Opponent No.1 with any bank and to operate the same as per the convenience of the Opponent No.3 and to deposit the cheques, Demand Drafts, Pay Order received from any person, firm, company or institute drawn in favour of the Opponent No.1 in the said account and to withdraw the amount deposited therein and to sign cheques for withdrawing the amounts and to do all the acts, deeds, things which may be necessary for the account that may be opened by the Opponent No.3.
[19] Irrevocable power-of-attorney executed in favour of the Opponent No.3 by the Opponents Nos.1 and 2 shows that power and rights were assigned to the Opponent No.3 by the Opponents Nos.1 and 2 in connection with property bearing C.T.S. No.100 and S. No.96, H. No.3 of Village Malad, situated at Kandivali, Taluka - Borivali, District - Mumbai Suburban. Opponent No.3 was authorized to dispose of the flats from the building known as ‘Gaurav Palace to be constructed at property bearing C.T.S. No.100 and S. No.96, H. No.3 of Village Malad, situated at Kandivali, Taluka - Borivali, District - Mumbai Suburban; admeasuring 20,000 sq. ft. in area. Evidence adduced on behalf of the Opponents Nos.1 and 2 that irrevocable power-of-attorney in favour of the Opponent No.3 was cancelled is not satisfactory and it is not free from doubts. No intimation was given to the Sub-Registrar about cancellation of irrevocable power-of-attorney, although it was a registered document.
[20] It is very surprising to note that the present Opponents Nos.1 and 2 have confirmed the transaction agreed by the Opponent No.3 on the basis of irrevocable power-of-attorney executed on 10/04/2002, on 17/07/2009. Deed of Confirmation executed on 17/07/2009 is between Ravi Foundation i.e. the Opponent No.1 herein and Mr. Haresh N. Sanghavi and Mrs. Veena Haresh Sanghavi. Said deed is signed by the purchasers of Flat No.502 on the fifth floor in the building known as ‘Gaurav Palace situated at S. V. Road, Kandivali (West), Mumbai - 400067. It is also signed by the Opponent No.3 as a power-of-attorney holder of the Opponent No.1. Said Deed is signed on 17/07/2009 on behalf of the Opponents Nos.1 and 2. Agreement made by the Opponent No.3 with Mr. Haresh N. Sanghavi and Mrs. Veena Haresh Sanghavi on the basis of irrevocable power-of-attorney was confirmed by the Opponents Nos.1 and 2 in the year 2009 particularly when the power-of-attorney was allegedly cancelled on 17/06/2002, according to the Opponents Nos.1 and 2.[21] In this connection, the Opponent No.2 - Mr. Jayesh T. Shah has filed his affidavit and submitted that Haresh Sanghavi is known to him personally since last so may years. In the year 1990 Mr. Haresh Sanghavi was doing business as an estate broker. Later on, he became a builder and developer. He is carrying on business under the various firm names and styles in the city and suburbs of Mumbai. Mr. Haresh Sanghavi had several business transactions with the Opponent No.2. Mr. Haresh Sanghavi approached the Opponent No.2 with an agreement dated 23/06/2003 entered into between him and his wife on one hand and the Opponent No.3 on the other. At that time information about cancellation of power-of-attorney in favour of the Opponent No.3 was given. However, as Mr. Haresh Sanghavi is a close business associate and friend of the Opponent No.2, confirmed the said agreement dated 23/06/2003 executed by the Opponent No.3. This transaction is of no assistance to the Complainants. Mr. Haresh Sanghavi also deposed similar facts in his affidavit.
[22] We are of the view that much importance cannot be given to this evidence. Complainants have made payment of amount of Rs.25,00,000/- by cheques. Cheques were issued in the name of the Opponent No.1. Cheques were deposited in the account of the Opponent No.1. Cheques bearing Nos.531712, 499579 and 531151 have been credited in the bank account standing in the name of the Opponent No.1. This fact is admitted. Evidence on record falls short to prove that bearer cheques were appropriated by the Opponent No.3. Opponents Nos.1 and 2 have not secured the documents to show that the deposits made were transferred to the account of the Opponent No.3. One thing is clear that total amount of consideration was received by the Opponent No.3 as an authorized attorney of the Opponent No.1. Relevant extracts from the passbooks in respect of Bank Account No.34523 maintained by Complainant No.1 and Bank Account No.34522 maintained by Complainant No.2 with the Canara Bank, Chembur Camp Branch show that cheques were deposited in the account of the Opponent No.1. Nothing is on record to prove that the Opponent No.3 transferred said amount in his name or utilized for himself. Opponents Nos.1 and 2 never gave intimation to the Bank after alleged revocation of power-of-attorney, not to allow the Opponent No.3 from operating the bank account. No police action was taken against the Opponent No.3 for withdrawal of amount from the Bank account of the Opponent No.1.
[23] We find no hesitation to hold that the Opponent No.3 was an authorized attorney/agent of the Opponents Nos.1 and 2 on the basis of irrevocable power-of-attorney when agreement to sell flat No.802 was entered with the Complainants, said irrevocable power-of-attorney was not cancelled as per law. Alleged cancellation was not made known to the public. Opponents Nos.1 and 2 are bound by the agreement entered into by the Opponent No.3 on their behalf. Complainants have paid total consideration amount of Rs.25,00,000/- to the Opponents for purchase of a flat bearing No.802 in the building known as ‘GauravPalace. Inspite of receipt of such huge amount from the Complainants, the Opponents denied to hand-over possession of the said flat to the Complainants. They had gone to the extent of denying the sale transaction although there is a registered agreement for sale. Certainly, there is deficiency in service on the part of all the Opponents. Complainants did not get their dream house inspite of payment of an amount of Rs.25,00,000/- in the year 2002 and after a long gap of time. They are entitled to get possession of the flat purchased by them. Complainants are also entitled for compensation due to mental agony and costs of litigation. With this view of the matter, we proceed to pass the following order:-
ORDER
Complaint is partly allowed.
Opponents are jointly and severally directed to furnish a copy of Occupancy Certificate and hand-over vacant and peaceful possession of a flat bearing No.802, on the eighth floor, constructed on C.T.S. No.100, S. No.96, Hissa No.3, Malad, situated at Kandivali, Taluka - Borivali, District - Mumbai Suburban; to the Complainants.
Opponents are jointly and severally directed to pay to the Complainants, an amount of Rs.50,000/- by way of compensation towards mental tension and agony.
Opponents are jointly and severally directed to pay to the Complainants, an amount of Rs.25,000/- by way of costs and shall bear their own costs.
Opponents are directed to comply with the foregoing order within a period of forty-five days from the date of this order.