K.V. Karneeswaran Vs. M/S. Lakshmi Builders (P) Ltd., Rep. by Its Md Mr. V. Thiyagarajan, Chennai and Another - Court Judgment

SooperKanoon Citationsooperkanoon.com/1111018
CourtTamil Nadu State Consumer Disputes Redressal Commission SCDRC Chennai
Decided OnOct-13-2009
Case NumberA.P.NO.305 of 2005 (Against order in O.P.No.369 of 2000 on the file of the DCDRF, Chennai (South)
JudgeHON'BLE THIRU JUSTICE M. THANIKACHALAM PRESIDENT THIRU PON. GUNASEKARAN B.A.,B.L., MEMBER - I
AppellantK.V. Karneeswaran
RespondentM/S. Lakshmi Builders (P) Ltd., Rep. by Its Md Mr. V. Thiyagarajan, Chennai and Another
Excerpt:
m. thanikachalam j, president 1. the unsuccessful complainant in op.no.369/2000, on the file of the district forum, chennai (south), is the appellant. 2. the complainant/appellant, is the original owner of the land, comprised in survey no.50/a ts no.4/14, block no.9, velachery village, measuring an extent of 3450 sq.ft. the complainant, sold the said property to the 1st opposite party, retaining 750/9000 undivided share. 3. the opposite parties, promised to develop the land, for which a development agreement, was entered into on 25.8.1995, under which, the opposite parties agreed and promised to complete the construction of the building apartments, within 12 months, from the date of handing over the vacant possession of the property, by the complainant, which was handed over accordingly on 19.11.1995. it is for the opposite parties to employ its own technical experts and other persons to carryout the applications, including the constructions, under the agreement. the opposite parties, have failed to complete the construction as agreed, when questioned, they have agreed to complete the list of works, as catalogued in para 10 of the complaint. in addition, even after taking possession of the flat, the opposite parties failed to refund the sum of rs.25000/-, being the cost of the deficit 50 sq.ft., since they have not handed over the area as agreed. by their acts, the opposite parties have committed not only breach of contract, but also committed deficiency in service. despite repeated requests to complete the work, including the common work pending in the apartments, the opposite parties failed, and therefore the petitioner is constrained to move the consumer forum, for appropriate reliefs as claimed in the prayer column. 4. the opposite parties, in their written version, accepting the purchase of the property from the complainant, as well as passing of consideration thereunder, denying the adverse allegations, would contend that the claim is barred by limitation, as well as the complaint before the consumer forum is not maintainable. 5. the district forum, framing the following two points for consideration, took the case for hearing. 1. whether the complaint filed by the complainant is maintainable? 2. to what relief are the parties entitled? 6. the district forum, instead of deciding all the facts in issue, took point no.1 alone, regarding the maintainability of the complaint. reading ex.a1 development agreement, as joint venture agreement, and relying upon a decision reported in ii (2003) cpj 446, came to the conclusion that the complaint filed by the complainant before the forum is not maintainable and if at all the complainant has to pursue his remedy elsewhere, having jurisdiction. thus without going into the merits of the case, regarding the allegations and counter allegations, the complaint came to be dismissed on 8.2.2005, which is under challenge, before this commission. 7. heard the learned counsel appearing for either side as well as perused the written submission, lower court records, and precedents relied on by them. 8. the learned counsel mr.n.l. rajah, appearing for the appellants, urged before us that the district forum has committed an error in considering the agreement between the parties, as if it is a joint venture, whereas it should have been construed only as a development agreement, involving service provider by the developer viz. the opposite party. in support of the above submission, our attention was drawn to a decision rendered by the honble supreme court in faqir chand gulati vs. uppal agencies pvt. ltd., and another, reported in iii (2008) cpj 48 (sc). 10. on the other hand it is the submission of the learned counsel for the respondent, that ex.a1 is having all the ingredients, required for a joint venture, and therefore, it will not be taken as one, provides / rendering service, and in this view, the conclusion of the district forum that the matter cannot be adjudicated under the cp act, is well acceptable. 9. a careful reading of ex.a1, and an anxious reading of the above decision, coupled with deep consideration, bestowed by us, would indicate certainly that the submission made by the learned counsel for appellant, alone has to be accepted, in view of the fact the position was different when the case was decided by the consumer forum, and its change by the recent pronouncement and ratio laid down by the apex court, in the above case. 10. in the case involved, in the above decision, there was an agreement, wherein the owner of the land and the builder have entered into an agreement, wherein, the owner had placed his vacant land, at the disposal of the builder, authorizing him to demolish the existing structure, detaining the undivided and indivisible share in the land, proportionate to their right in the building etc. in the case on hand also, as seen from ex.a1, the vendor has retained 750/9000 undivided share, offering to sell the remaining 8250/9000 sq.ft., of undivided share, for a total sale consideration of rs.9,25,000/-. in the total property, the vendor has not retained any control. the only control as seen from clause 16 of the agreement, appears to be, he was at liberty to inspect the progress of the construction of the ‘d schedule building, without any obstruction for the whole programme of construction, probably which has to be carried out in ‘a schedule, described as ‘e schedule. the vendor, has not agreed to finance or to participate in any of the construction activities or he has not agreed to supply any materials, for the construction of the building etc. therefore, not retaining any control, allowed the purchaser to construct the building and service, the purchaser has to cooperate to the vendor, as he has to construct a flat as described in ‘d schedule, and should handover the same within the time stipulated therein. the entire reading, makes it abundantly clear that, without any shade of doubt, that this is not a joint venture, since no sharing of profit or loss, no co adventure or no partnership is also established, etc. this is purely an agreement simplicitor, a development agreement, so far as the complainant is concerned, in respect of the portion (undivided share) retained by him. having the above factual position, now we have to see the decision relied on the learned counsel for appellant. 11. as seen from the clauses of the agreement, extracted in the above judgement, more or less, it tallies with our agreement. based upon the above agreement, when there was deficiency in service, the complainant therein moved the district forum, for certain relief, which was dismissed, concluding as if the owner of the land/ appellant was not a consumer as defined under sec.2(1)(d) (ii) of the consumer protection act. the appeal before the state commission also failed, on the ground that he was not a consumer, and the builder was not a service provider. thereafter, a revision came to be filed before the honble national commission, and the national commission also dismissed the revision petition, resulting an appeal before the honble supreme court. the apex court of the land, considering the legal provisions, definition for consumer, framing questions, came to the conclusion that the appellant therein was a consumer, and the builder was a service provider, and in this view, allowed the appeal, upsetting all the orders, mentioned above. 12. in that case the question framed was “whether 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. their lordships, have considered, what the joint venture is, what is the development agreement etc., in paragraph 16 of the judgement, it is observed that there is no dispute or doubt that a complaint under the ac will be maintainable in the following circumstances a) whether the owner/holder of a land who has entrusted the construction of a house to a contractor, has a complaint of deficiency of service with reference to the construction. it is also an observation of the apex court, at the end of paragraph 19 the deciding factor is not the number of a apartments deliverable to the lane owner, but whether the agreement is in thenature of a joint-venture or whether the agreement is basically for construction of certain area for the lane owner. while distinguishing the joint venture and service provider, in paragraph 20 it is observed that “in a true joint venture agreement between the land-owner and another (whether a recognized builder or fund provider), the land owner is a true partner or co-adventurer in the venture, where the land owner has a say o control in the construction and participates in the business and management of the joint venture, and has a share in the profit/loss of the venture. in such a case, the land owner is not a consumer nor is the other co-adventurer in the joint venture, a service provider. the land owner himself is responsible for the construction as a co-adventurer in the venture.” on that basis, it is concluded that when the land owner, taking assurance, retaining a share for certain constructed area or retained cash consideration, it is held that “the builder ensures absolute control in himself, only assuring the quality of construction and compliance with the requirements of local and municipal laws, and undertaking to deliver the owners constructed area of the building with all certificates, clearances and approvals to the land owner”. 13. thus analyzing from all probable angles, it is held that if the builder fails as agreed, to construct and handover the build-up area, he will be liable for compensation, for the loss as well as damage, and this could be decided by consumer forum, holding that the builder is a service provider, thereby allowed the appeal. the observations therein and the dictum declared are squarely applicable to the case on hand, which was not available for the district forum, at the time of the disposal of the case, thereby committed error, which has to be set it right, at present, by allowing the appeal. 14. in view of the fact that the district forum has not marked documents, analysed the facts and has given any finding for the state commission, sitting as an appellate authority, it is not possible to decide the case on merit, since it requires more evidence and findings also. therefore, disposing the complaint itself by us, sitting as appellate authority is not possible and desirable, and in this view, the matter has to be remitted back to the district forum, for deciding the case on merit, having jurisdiction to decide so. 15. in the result, the appeal is allowed, order of the district forum is set aside, and the matter is remitted back to the district forum, chennai (south), with a direction to consider the matter on merits and dispose of the case in accordance with law, within three months from the date of receipt of this order. there is no order as to cost in this appeal.
Judgment:

M. THANIKACHALAM J, PRESIDENT

1. The unsuccessful complainant in OP.No.369/2000, on the file of the District Forum, Chennai (South), is the appellant.

2. The complainant/appellant, is the original owner of the land, comprised in Survey No.50/A TS No.4/14, Block No.9, Velachery Village, measuring an extent of 3450 Sq.ft. The complainant, sold the said property to the 1st opposite party, retaining 750/9000 undivided share.

3. The opposite parties, promised to develop the land, for which a Development Agreement, was entered into on 25.8.1995, under which, the opposite parties agreed and promised to complete the construction of the building apartments, within 12 months, from the date of handing over the vacant possession of the property, by the complainant, which was handed over accordingly on 19.11.1995. It is for the opposite parties to employ its own technical experts and other persons to carryout the applications, including the constructions, under the agreement. The opposite parties, have failed to complete the construction as agreed, when questioned, they have agreed to complete the list of works, as catalogued in para 10 of the complaint. In addition, even after taking possession of the flat, the opposite parties failed to refund the sum of Rs.25000/-, being the cost of the deficit 50 sq.ft., since they have not handed over the area as agreed. By their acts, the opposite parties have committed not only breach of contract, but also committed deficiency in service. Despite repeated requests to complete the work, including the common work pending in the apartments, the opposite parties failed, and therefore the petitioner is constrained to move the Consumer Forum, for appropriate reliefs as claimed in the prayer column.

4. The opposite parties, in their written version, accepting the purchase of the property from the complainant, as well as passing of consideration thereunder, denying the adverse allegations, would contend that the claim is barred by limitation, as well as the complaint before the Consumer Forum is not maintainable.

5. The District Forum, framing the following two points for consideration, took the case for hearing.

1. Whether the complaint filed by the complainant is maintainable?

2. To what relief are the parties entitled?

6. The District Forum, instead of deciding all the facts in issue, took point No.1 alone, regarding the maintainability of the complaint. Reading Ex.A1 Development Agreement, as joint venture agreement, and relying upon a decision reported in II (2003) CPJ 446, came to the conclusion that the complaint filed by the complainant before the Forum is not maintainable and if at all the complainant has to pursue his remedy elsewhere, having jurisdiction. Thus without going into the merits of the case, regarding the allegations and counter allegations, the complaint came to be dismissed on 8.2.2005, which is under challenge, before this Commission.

7. Heard the learned counsel appearing for either side as well as perused the written submission, lower court records, and precedents relied on by them.

8. The learned counsel Mr.N.L. Rajah, appearing for the appellants, urged before us that the District Forum has committed an error in considering the agreement between the parties, as if it is a joint venture, whereas it should have been construed only as a Development Agreement, involving service provider by the developer viz. the opposite party. In support of the above submission, our attention was drawn to a decision rendered by the Honble Supreme Court in Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ltd., and another, reported in III (2008) CPJ 48 (SC).

10. On the other hand it is the submission of the learned counsel for the respondent, that Ex.A1 is having all the ingredients, required for a joint venture, and therefore, it will not be taken as one, provides / rendering service, and in this view, the conclusion of the District Forum that the matter cannot be adjudicated under the CP Act, is well acceptable.

9. A careful reading of Ex.A1, and an anxious reading of the above decision, coupled with deep consideration, bestowed by us, would indicate certainly that the submission made by the learned counsel for appellant, alone has to be accepted, in view of the fact the position was different when the case was decided by the Consumer Forum, and its change by the recent pronouncement and ratio laid down by the Apex Court, in the above case.

10. In the case involved, in the above decision, there was an agreement, wherein the owner of the land and the builder have entered into an agreement, wherein, the owner had placed his vacant land, at the disposal of the builder, authorizing him to demolish the existing structure, detaining the undivided and indivisible share in the land, proportionate to their right in the building etc. In the case on hand also, as seen from Ex.A1, the vendor has retained 750/9000 undivided share, offering to sell the remaining 8250/9000 sq.ft., of undivided share, for a total sale consideration of Rs.9,25,000/-. In the total property, the vendor has not retained any control. The only control as seen from clause 16 of the agreement, appears to be, he was at liberty to inspect the progress of the construction of the ‘D schedule building, without any obstruction for the whole programme of construction, probably which has to be carried out in ‘A schedule, described as ‘E schedule. The vendor, has not agreed to finance or to participate in any of the construction activities or he has not agreed to supply any materials, for the construction of the building etc. Therefore, not retaining any control, allowed the purchaser to construct the building and service, the purchaser has to cooperate to the vendor, as he has to construct a flat as described in ‘D schedule, and should handover the same within the time stipulated therein. The entire reading, makes it abundantly clear that, without any shade of doubt, that this is not a joint venture, since no sharing of profit or loss, no co adventure or no partnership is also established, etc. This is purely an agreement simplicitor, a development agreement, so far as the complainant is concerned, in respect of the portion (undivided share) retained by him. Having the above factual position, now we have to see the decision relied on the learned counsel for appellant.

11. As seen from the clauses of the agreement, extracted in the above judgement, more or less, it tallies with our agreement. Based upon the above agreement, when there was deficiency in service, the complainant therein moved the District Forum, for certain relief, which was dismissed, concluding as if the owner of the land/ appellant was not a consumer as defined under Sec.2(1)(d) (ii) of the Consumer Protection Act. The appeal before the State Commission also failed, on the ground that he was not a consumer, and the builder was not a service provider. Thereafter, a revision came to be filed before the Honble National Commission, and the National Commission also dismissed the Revision Petition, resulting an appeal before the Honble Supreme Court. The Apex Court of the land, considering the legal provisions, definition for consumer, framing questions, came to the conclusion that the appellant therein was a consumer, and the builder was a service provider, and in this view, allowed the appeal, upsetting all the orders, mentioned above.

12. In that case the question framed was

“Whether 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.

Their Lordships, have considered, what the joint venture is, what is the development agreement etc., In paragraph 16 of the judgement, it is observed that

There is no dispute or doubt that a complaint under the Ac will be maintainable in the following circumstances

a) Whether the owner/holder of a land who has entrusted the construction of a house to a contractor, has a complaint of deficiency of service with reference to the construction.

It is also an observation of the Apex Court, at the end of paragraph 19

The deciding factor is not the number of a apartments deliverable to the lane owner, but whether the agreement is in thenature of a joint-venture or whether the agreement is basically for construction of certain area for the lane owner.

While distinguishing the joint venture and service provider, in paragraph 20 it is observed that

“In a true joint venture agreement between the land-owner and another (whether a recognized builder or fund provider), the land owner is a true partner or co-adventurer in the venture, where the land owner has a say o control in the construction and participates in the business and management of the joint venture, and has a share in the profit/loss of the venture. In such a case, the land owner is not a consumer nor is the other co-adventurer in the joint venture, a service provider. The land owner himself is responsible for the construction as a co-adventurer in the venture.”

On that basis, it is concluded that when the land owner, taking assurance, retaining a share for certain constructed area or retained cash consideration, it is held that

“the builder ensures absolute control in himself, only assuring the quality of construction and compliance with the requirements of local and municipal laws, and undertaking to deliver the owners constructed area of the building with all certificates, clearances and approvals to the land owner”.

13. Thus analyzing from all probable angles, it is held that if the builder fails as agreed, to construct and handover the build-up area, he will be liable for compensation, for the loss as well as damage, and this could be decided by consumer forum, holding that the builder is a service provider, thereby allowed the appeal. The observations therein and the dictum declared are squarely applicable to the case on hand, which was not available for the District Forum, at the time of the disposal of the case, thereby committed error, which has to be set it right, at present, by allowing the appeal.

14. In view of the fact that the District Forum has not marked documents, analysed the facts and has given any finding for the State Commission, sitting as an appellate authority, it is not possible to decide the case on merit, since it requires more evidence and findings also. Therefore, disposing the complaint itself by us, sitting as appellate authority is not possible and desirable, and in this view, the matter has to be remitted back to the District Forum, for deciding the case on merit, having jurisdiction to decide so.

15. In the result, the appeal is allowed, order of the District Forum is set aside, and the matter is remitted back to the District Forum, Chennai (South), with a direction to consider the matter on merits and dispose of the case in accordance with law, within three months from the date of receipt of this order. There is no order as to cost in this appeal.