D.K. Jain, J. President
This First Appeal under Section 19 of the Consumer Protection Act, 1986 (for short œthe Act?), has been preferred by the Colonizer, a Company incorporated under the Companies Act, 1956 and their Manager, questioning the correctness and legality of order, dated 24.02.2009, passed by the State Consumer Disputes Redressal Commission, West Bengal (for short œthe State Commission?) in SC Case No. 07/0/2007. By the impugned order the State Commission has directed the Appellants, who were arrayed in the Complaint as Opposite Parties No. 1 and 2 respectively, to execute and register the Deed of Conveyance in respect of the subject flat in favour of the Complainants upon payment of the costs of registration as agreed to between the parties. The State Commission has also awarded a compensation of Rs.50,000/- to the Complainants as also Rs.5000/- towards costs.
2. Briefly stated, the material facts giving rise to the present Appeal are that on being approached by the Respondents/Complainants, the Appellants allotted to them Row House No. B-15, Merlin Gardens, South 24 Parganas, Kolkata by way of an Agreement of Allotment on 01.05.2003. The total sale consideration for the said house was settled at Rs.14,25,000/-. The Respondents paid a sum of Rs.50,000/- as earnest money by cheque dated 01.05.2003. A supplementary agreement was executed on the same day incorporating certain new clauses, not relevant for the present case. The Respondents applied for housing loan of Rs.15,00,000/- from Union Bank of India and on sanction thereof, on 21.01.2004, a Tripartite Agreement was executed between the Appellant Company, the Bank and the Respondents. The Complainants paid a further sum of Rs.1,93,750/- towards the balance earnest money to the Appellant Company. The receipt of Rs.2,43,750/-, by the Appellant Company from the Respondents, was acknowledged in the said Tripartite Agreement. Out of the sanctioned loan of Rs.15,00,000/-, the Bank released to the Appellant Company a sum of Rs.13,81,250/-, by pay order dated 25.02.2004 leaving a balance of Rs.1,18,750/- for the purpose of registration of Deed of Conveyance in favour of the Respondents. Thus, the Appellant Company received a total sum of Rs.16,25,000/- towards full consideration of Rs.14,25,000/- for the said property and an additional sum of Rs.2,00,000/- as contribution to the Corpus Fund for facilities as defined in Article I of Agreement dated 01.05.2003.
3. The Respondents were put in possession of the suit property on 20.04.2004 and were provided with water, electricity and other allied facilities. It seems that on certain issues, relations between the Respondents and Appellant No.1 turned sour and exchange of unpleasant letters ensued. Ultimately, vide letter dated 23.10.2006, Appellant No. 2 informed the Respondents that since they had failed to fulfil their financial obligation, in as much as the cheque in the sum of Rs.1,93,750/- issued by them on 22.09.2003 had been dishonoured twice and they had also defaulted in payment of instalments to the Bank, Agreement dated 01.05.2003 had been cancelled and they were being treated as trespassers. They were informed that the security and management staff had been instructed to desist from rendering any of the common services and/or facilities including disconnection of generator service. The Respondents were asked to immediately vacate the said premises and handover the same to them.
4. The Respondents responded to the said letter on the same day, inter-alia stating that the amount of Rs.1,93,750 had already been paid and accounted for and having accepted payment for Life Time Maintenance Charges “ Corpus Fund (in terms of the Supplementary Agreement), they were contractually obliged to provide all essential services. The Appellants were requested to leave the issue of payments to the Bank, to be dealt by them directly with the Bank. It was alleged that the Appellant Company was avoiding execution of Conveyance Deed with a view to sell the same at a higher price.
5. However, all the basic facilities having been withdrawn, the Respondents shifted from the house on 23.10.2006. Having failed to get the Conveyance Deed executed in their favour, on 01.03.2007, they filed Complaint under Section 17 of the Act in the State Commission, inter-alia, praying for directions to the Appellants to deliver possession of the suit property; restore essential services and execute and register Conveyance Deed, etc. A compensation of Rs.14,00,000/- was also demanded from the Appellants. It appears that during the pendency of the Complaint, the Bank initiated proceedings against the Respondents under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short œthe SARFAESI Act?). The Respondents amended the Complaint praying for, in the alternative, a compensation of a sum of Rs.19,44,000/- as computed therein.
6. The Complaint was resisted by the Appellants on several grounds. It was pleaded that the Complaint was bad for non-joinder of necessary party in as much as the Bank, which was one of the parties to the Tripartite agreement dated 21.01.2004, had not been impleaded. Justifying their action in cancelling the said agreement it was stated that the Respondents were also under obligation to pay Rs.10,00,000/- and Rs.3,00,000/- plus Rs.2,00,000/- by 20.05.2003 and 30.05.2003 respectively, besides they were liable to pay a further sum of Rs.75,000/- at the time of taking possession of the suit property, which amounts were not paid despite demand. It was also alleged that cheque in the sum of Rs.1,93,750/- issued by the Respondents as earnest money was dishonoured twice and the said amount was never paid. The receipt of a sum of Rs.13,81,250/- directly from the Bank was however, not denied. It was asserted that since the Respondents were not willing to pay the amount against the dishonoured cheque for Rs.1,93,750/-, Agreement dated 01.05.2003 was cancelled.
7. On consideration of the pleadings and evidence adduced by the parties by way of Affidavits, the State Commission has held that since the Tripartite Agreement, dated 21.01.2004 itself records payment of Rs.2,43,750/- by the Respondents and payment of a sum of Rs.13,84,250/- by the Bank to them was not disputed, no portion of the total consideration of Rs.14,25,000/- for the flat remained unpaid. Rejecting the stand of the Appellants that the amounts mentioned in para 6 supra, were due from the Respondents, the State Commission has come to the conclusion that the Schedule of payment, in para 2.1 of Agreement of Allotment dated 01.05.2003, stood modified on payment of Rs.13,81,250/- by the Bank and the Respondents were entitled to the relief of possession, execution and registration of Conveyance Deed, as also compensation for illegal withholding of the flat. Accordingly, the State Commission has directed the Appellants to execute and register the Deed of Conveyance in the respect of the aforesaid flat in favour of the Respondents within 60 days from the date of the order, upon payment of cost of registration, as agreed to by the parties, along with compensation of Rs.50,000/- and Rs.5,000/- as costs. In the event of default, the Respondents have been allowed to get the Deed registered through the State Commission and recover the said amounts along with interest @ 9% p.a. for the period of default. Hence, the present appeal.
8. Mr. Nakul Dewan, Ld. Counsel appearing for the Appellants, in his oral submissions, questioned the legality of the impugned order mainly on three grounds, viz. (i) the bank being party to the Tripartite agreement dated 21.01.2004, having a charge on the said property, it was a necessary party and, therefore, the complaint should have been dismissed on the ground of non-joinder of necessary parties; (ii) Being defaulters themselves for not paying a sum of Rs.1,93,750/- against the dishonoured cheque, the Respondents were estopped from accusing the Appellants of deficiency in service for not executing Conveyance Deed in their favour and (iii) Since the possession of the flat had already been delivered to the bank in proceedings under SARFAESI Act, the same had been auctioned, the auction purchaser was put in possession after execution of Conveyance Deed in their favour, the impugned directions are incapable of being implemented.
9. Per contra, Mr. Prasanta Banerjee, Ld. Counsel for the Respondents and Respondent No. 2, who appeared in person, submitted that the Appellants having received full amount of consideration for the flat, in terms of Tripartite agreement dated 21.01.2004, they could not demand any amount over and above the consideration mentioned in the said agreement. It was argued that it was only on confirmation of receipt of earnest money of Rs.2,43,750/- from the Respondents, as noted in the Tripartite agreement dated 21.01.2004, that the Appellant company had collected from the Bank the balance sale consideration of Rs.13,81,250/-, otherwise the Bank would not have released the balance amount. It was strenuously urged that had the Appellants executed the Conveyance Deed in respect of the subject property on time, having already paid 18 EMIs (Rs.2,32,654 in addition to Rs.2,43,750/- as earnest money), the Respondents would not have stopped paying further EMIs, inviting unwarranted harassment, besides being deprived of the property. It was argued that the Appellants were not concerned with the issue of recovery of balance of loan amount by the Bank from the Respondents, yet they delivered the possession of the flat to the Bank unilaterally and even executed Conveyance Deed in favour of a third party (the Auction Purchaser), during the pendency of the complaint before the State Commission. It was contended that although entire proceedings under the SARFAESI Act were illegal, as admittedly no equitable mortgage by deposit of title deeds of the flat was created in favour of the Bank, still the Respondents have settled their account with the Bank.
10. Having bestowed our anxious consideration to the material on record, we are of the opinion that there is no substance in the contentions urged on behalf of the Appellants and the Appeal is devoid of any merit.
11. There is no dispute that the total agreed consideration for the subject flat was Rs.14,25,000/-, which was payable in instalments as mentioned in Article II of the Agreement of Allotment dated 01.05.2003. Stamp duty and registration charges were also to be borne by the Respondents. By a supplementary agreement of even date, the Respondents had agreed to pay an additional sum of Rs.2,00,000/- to the Appellants for providing infra-structural maintenance, etc. facilities. The Appellants were to receive from the Respondents a total sum of Rs.16,25,000/-. Thus, the short controversy is whether the Appellants were justified in refusing to execute Conveyance Deed in favour of the Respondents and forcing them to shift from the flat, on the allegation that the Respondents had failed to pay the agreed consideration for the flat and had defaulted in discharging their debt towards the Bank.
12. In order to adjudicate upon the issue, it would be necessary to refer to a few documents on record. As noted above, after the booking of the flat and the Bank agreeing to finance the same on 21.01.2004, a Tripartite Agreement was entered into between the Respondents, the Appellant Company and the Bank. The material recitals in the agreement read as under:
œWhereas the Builder agreed to sell a Row House to the Borrowers under an Agreement of Sale dated May 01, 2003, entered into between the builder and the Borrowers, which contains the terms and conditions for sale of the Row house in favour of the Borrowers and in furtherance thereof has already paid the Builder a sum of Rs.2,43,750/- as and by way of earnest money. The balance of sale consideration is payable by the borrower based on stages of construction, which are detailed in the said agreements.
Whereas the Bank on the written application and request of the Borrowers has already sanctioned a loan of Rs.15,00,000/- to the Borrower (vide Sanction dated 22.01.2004) and has agreed to disburse/release the loan soon after the Borrowers creates an equitable mortgage by deposit of title deeds relating the Row House to be purchased by them from the Builder.
Whereas the Borrowers requested the Bank for release/ disbursement of installments directly to the Builder and the Bank has agreed to release the loan amount provided the Builder agrees to stand as guarantor for the payment effected to them.?
13. Clause (3) of the terms of covenants stipulated that the Appellant Company shall deliver possession of the flat to the Respondents only after obtaining No Objection Certificate to that effect from the Bank and further, the Appellant shall create equitable mortgage in favour of the Bank by deposit of title deeds of the flat, agreed to be sold vide Agreement of Allotment dated 01.05.2003.
14. In furtherance of the Tripartite agreement, the Bank sent to the Appellant Company a pay order in the sum of Rs.13,81,250/- with a covering letter dated 25.02.2004, which reads as follows:-
œRe: P.O. no. 003142 for Rs.13,81,250/- dated 25.02.2004 fvg. yourself in respect of Housing loan of S/Shri Pandav Roy and Partha Roy.
Enclosed please find the captioned pay order issued towards your payment in respect of purchase of Row House No.315 in the complex The Terrace Marlin Green, Kriparampur 24 Parganas (s) pertaining to S/Sri Pandav Roy and Partha Roy.
Kindly acknowledge receipt and formally hand over the property to the purchaser. We take this opportunity to thank you for entering into a Tripartite Agreement with our Bank alongwith the Borrower. It has really marked the beginning of new relationship which (illegible) will grow more and more in near future.?
15. It is manifest from the afore-extracted recitals of the Agreement that the Tripartite Agreement dated 21.01.2004, did not contemplate possession first and payment later. While noting sanction of bank loan of Rs.15,00,000/-, it records that a sum of Rs.2,43,750/- has already been paid to the Appellants/Builder. Later, the Bank released a sum of Rs.13,81,250/- on 25.02.2004 and possession of the flat was handed over to the Respondents on 20.04.2004. The afore-extracted covering letter dated 25.02.2004 also lends support to the stand of the Respondents that possession of the flat was delivered to them on the asking of the Bank. This clearly shows that possession was given after receipt of the agreed consideration in full. The explanation of Mr. Shiv Kishan Mohata, deposing on behalf of the Appellants, that at the time of signing the Tripartite Agreement, the matter of non-payment of Rs.1,93,750/- œwas taken lightly, on the basis of assurances and the gentlemanly behavior of the Complainants as a result of which the documents were not preserved and same is presently not available with Merlin Projects Ltd.? carries no conviction at all. It does not sound well even as a prudent business proposition. No colonizer such as the Appellant Company, would quietly wait for two and a half years for payment of a hitherto unpaid sale consideration. We are convinced that the claim of Rs.1,93,750 raised by the Appellants in 2006, in lieu of a cheque dishonoured in the year 2003 was a ruse to avoid execution of Conveyance Deed in favour of the Respondents and sell the subject flat at a higher price. Furthermore, no evidence is brought on record to show that any demand was raised on the Respondents, or a request was sent to the Bank, in this behalf between the period when Tripartite Agreement dated 21.01.2004 was entered into and the delivery of possession of the flat three months later, on 20.04.2004 for directing the Respondents to pay any outstanding amount. In fact, the question of outstanding balance of a sum of Rs.1,93,750/- was raised for the first time on 15.09.2006, i.e. two and a half years after delivery of possession. This completely destroys the credibility of the claim that failure to register the Conveyance Deed stems from incomplete payment of consideration.
16. In view of the above, we are in complete agreement with the State Commission that there was no evidence to show that any part of the consideration had remained unpaid and therefore, Appellants failure to execute the Conveyance Deed in favour of the Respondents was a clear deficiency in service on their part.
17. As regards the objection of the Appellants that the Complaint was bad for non-joinder of necessary party i.e. the Bank, in our opinion, this plea also deserves to be rejected. Apart from the fact that clause (3) of the covenant (Tripartite Agreement) lends support to the stand of the Respondents that on 20.04.2004 they were put in possession of the flat on the direction of the Bank and as such there was no occasion for them to allege deficiency in service on the part of the Bank, it is not even the case of the Appellants that the Bank had initiated any proceedings against them as guarantor of the loan. It is also not their case that any obligation was cast upon them to recover the loan on behalf of the Bank. Therefore, the alleged default in repayment of the loan by the Respondents to the Bank, relied upon as one of the grounds for cancellation of the Agreement on 07.11.2006, was wholly unjustified. In their letter dated 23.10.2006 to the Appellants, the Respondents had requested them to let them sort out the issue of default in EMI payments directly with the Bank. In the absence of any evidence that the Bank had sought the intervention of the Appellants for recovery of their dues, or that there was any threat of adverse action against them by the Bank, in our view, the Appellants not only deprived the Respondents of the pleasure of owning a flat for residence, they made an unholy attempt to justify their illegal action of cancelling the allotment on the ground that the Respondents were defaulters to the Bank on a technical ground, which cannot be accepted. Instead of remedying the wrong done to the Respondents, the Appellants are still trying to brazen out the illegal act by putting forth technical contentions.
18. At this juncture, it is also pertinent to note that during the pendency of this Appeal, an application (MA No.1090 of 2011) was filed by the Appellants, seeking leave to urge additional grounds, including the ground that the State Commission had failed to consider the question of impleadment of the Bank, though it was so urged. The said application was dismissed vide order dated 29.05.2012. The Special Leave Petition filed by the Appellants against the said order was dismissed as withdrawn.
19. Accordingly, we affirm the finding recorded by the State Commission that no balance amount was due to be paid by the Respondents when they were put in possession of the subject flat and therefore, the Appellants were not justified in refusing to execute Conveyance Deed in favour of the Respondents in terms of Agreement to Allotment dated 01.05.2003.
20. Having come to the above conclusion, the next question requiring consideration is as to what relief can be granted to the Respondents as during the pendency of the Complaint, the flat in question has been auctioned by the Bank in proceedings under the SARFAESI Act; possession has been delivered to the auction purchaser and even Conveyance Deed in their favour has been executed by the Appellants. In this behalf, it is pertinent to note that on receipt of re-possession notice, dated 28.07.2007, from the Bank under the provisions of the SARFAESI Act, the Respondents had filed an application in the State Commission for amendment of the Complaint, inter-alia stating thus:
œComplainants now pray that in view of all that is stated above and taking into consideration the changed situation the complainants may be granted alternative relief of Rs.19,44,000/- (Rupees Nineteen Lakhs Forty Four Thousand only).?
Under the stated circumstances, the Respondents prayed for the following alternative relief:
œAlternative a sum of Rs.19,44,000/- (Rupees Nineteen Lakhs Forty Four Thousand only) as mentioned in paragraph No. 1 hereinabove may be awarded as Compensation to the complainants.?
21. The application was opposed by the Appellants, inter-alia, on the plea that it was a ploy to mislead the State Commission by incorporating subsequent events and that enhancement of compensation was not permissible under the Act. However, the specific plea regarding the booking price of similar projects in Merlin Gardens at Rs.31,68,000/- in the year 2007, when the said application was filed, as against the booking price of Rs.16,25,000/- in the year 2003, was not specifically denied by the Appellants. In the absence of any other material in regard to the market value of the subject flat on the date (24.02.2009) when the impugned order, directing registration of Conveyance Deed and delivery of possession of the flat, was made, we feel that instead of remitting the matter back to the State Commission at this stage, for determination of compensation in lieu of the flat, the ends of justice would be sub-served if keeping in view the comparative Housing Price Index issued by the National Housing Board for the year 2007 and 2009 (100 : 162), the value of the flat, as in February 2009, is taken at Rs.50,00,000/-.
22. Resultantly, the appeal is allowed in part to the extent that in lieu of the flat in question, the Appellants shall pay to the Respondents a sum of Rs.50,00,000/- with interest @ 9% p.a. from the expiry of sixty days (the time granted for compliance) of the date of the impugned order till the date of actual realization. Other directions regarding compensation etc. are maintained. We are convinced that the Appellants have engaged the Respondents in unwarranted litigation and, therefore, it is a fit case for imposition of exemplary costs on them. Accordingly, we direct that the Appellants shall pay to the Respondents a sum of Rs.50,000/- as costs. All the said amounts shall be paid to the Respondents within 30 days of the receipt of a copy of this order. The appeal stands disposed of accordingly.
23. It will be open to the Appellants to withdraw the statutory amount of Rs.35,000/- deposited by them with this Commission at the time of filing of appeal along with interest accrued thereon.
I.A. No. 8034 of 2013
24. In view of order in the main appeal, no orders in this application seeking permission to bring on record documents/orders pertaining to Writ Petition No. 18936/07 (Sri Pandav Roy and Anr. Vs. Reserve Bank of India and Ors.) and CS (OS) No. 271/10 (Merlin Projects Ltd. and Anr. Vs. Nilmani Dutta and Anr.) are called for. The application is disposed of accordingly.