2014 - MSCDRC DIRECTS BUILDER TO PAY RS 32 LACS UNDER DEFECT LIABILITY - MOFA 1963

BEFORE THE HON'BLE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, MAHARASHTRA, MUMBAI

Consumer Complaint No. CC/07/70

ARUNODAYA CO-OPERATIVE HOUSING SOCIETY LTD.,

Office at Arunodaya Apartments Survey No.312,

Behind K.E.S. School, Manipada, Santacruz East,

Mumbai – 400 098............Complainant (s)

Versus

PATTATHU BROTHERS,

Pattathu House, 45-C, Kalina-Kurla Road,

Santacruz East, Mumbai–400 029............Opponent (s)

BEFORE :

HON'BLE MR. P.B. Joshi, PRESIDING MEMBER
HON'ABLE MR. Narendra Kawde MEMBER

PRESENT :

Advocate Mr.Vinod Sampat for the Complainant.
Advocate Mr.Uday Wavikar for the Opponent.

ORDER

Per Hon’ble Mr.Narendra Kawde - Member :

(1) Complainant is a Co - operative Housing society who has filed this consumer complaint against the Opponent builder developer alleging deficiency in service for not attending construction defects, non - compliance of statutory obligations under the provisions o f Maharashtra Ownership of Flats Act, 1963 (hereinafter referred to as “MOFA’ in short) to transfer right, title and interest by conveying the property.

(2) Complaint was admitted and at later stage Complainant moved an amendment application to implead the original Landlord as Opponent. Though amendment application was allowed by order dated 21 st December, 2011, the Complainant failed to carry out the amendment on the ground that some of the previous co - owners were not alive. Therefore, the c omplaint was processed and adjudicated in its original format.

(3) Members of the Complainant Society had entered into individual registered agreement to purchase the flats with the Opponent builder developers. They themselves formed the co - operative Society in the year 2004 since the Opponents have failed to form the Society of the flat buyers though requisite charges were collected. The possession of the last flats was delivered in the month of October, 2002 to some of the flat purchasers . Several defects were noticed after taking over the possession of the flats and also essential common services like defect in drainage system, leakage in terrace, fire fighting system, defective installation of lift, lift room on the terrace, non - supply of garden/play area, slanting compound wall, electrical cables/wires installation, paving and tiling, drainage covers, construction of gymnasium, rain water covers, etc. Having made persistent efforts with the Opponent builder developers, the builder dev elopers did not heed any response, therefore, the Complainant Society was compelled to undertake repair of defective works from various agencies and spent sumptuous amount on different items of repairs and installations of lifts etc. Since the Opponents a llegedly failed to redress the grievance of the Complainant Society, this consumer complaint has been filed alleging deficiency in service against the Opponent builder developers, claiming an amount of Rs.39,43,256.18 on account of reimbursement and compen sation in addition to the main prayer of seeking directions for execution of conveyance deed.

(4) We have heard Mr.Vinod Sampat, Ld.Counsel of the Complainant and Mr.U.B. Wavikar, Ld.Counsel for the Opponent at length. We have perused the re cord, documents relied upon by parties and pleadings.

(5) Admittedly the members of the Complainant Society have executed the registered sale deed for purchase of flat individually with Mr.Anthony Joseph Pattathu, the sole proprietor of the O pponent builder developer. Copy of registered agreement available on record pertains to the date 23 rd July, 2002. Standard terms and conditions as listed in the model agreement under the MOFA though not fully incorporated in the stipulations to the agreement, however, fact of forming of co - operative housing society by the Opponent builder developer, obtaining Completi on Certificate and Occupation certificate and execution of conveyance deed have been appropriately incorporated in the registered agreement to sale. However, the Ld.Counsel for the Complainant brought to our attention I.O.D. (Intention of Disapproval) iss ued by Brihanmumbai Municipal Corporation which relates to the date 24 th December, 1994. On the basis of said I.O.D. the Opponent proceeded to execute the agreement to sale. The last possession of the flat was delivered in the year 2000. After taking o ver the possession of the flats several construction defects were noticed by the members of the Complainant Society and more particularly, top floor of the ‘A’ wing, 7 th Floor, Flat No.2, 4, 13, 24, 25, 26, 29, 46, 50 and 54 reported internal leakages. Th e complaint letter was promptly sent to the Opponent builder developers but the Opponent builder developers failed to take any corrective steps. Defect in common utilities like drainage pipe, leakage in the terrace, exterior wall of the entire building, d efective fire fighting system, non - laying of the additional water pipeline, defective installation of the elevators and defective construction of lift room, slanting compound wall and other several defects in the electric cable/wires and meter box were not iced, Complainant diligently and continuously taken up the matter with the Opponent to redressal. However, the Opponent builder developers failed to attend the grievances of the Complainant. Among other communications a letter dated 27 th August, 2005 ext ensively brought to the notice of the Opponent builder developers.

(6) The various defects listed in the consumer complaint were discussed with the Opponent builder developers and the Opponent builder developers undertook by giving consent t o remove the those defects and the complainant rely on this communication which demonstrates consent of the Opponent to rectify all these defects pointed out in the said letter. Even though there was consent of the Opponent builder developers, no action w hatsoever was taken to redress the grievances of the Complainant. The Complainant approached the different agencies to carry out the various corrective works and in the process incurred huge expenditure on various items for rectification. Complainant pla ced on record several communications addressed to the Opponent builder developers. Opponent builder developers were directly liable for not attending several defects and deficiencies and vital works carried out under the provisions of note 7. Though the said stipulations are not incorporated in the model agreement but the stipulations in the model agreement come under MOFA Rules 1964 are binding which are in force. The period of defective liability is provided for three years from the date of possession of the flat. The members of the Complainants have started complaining, invited attention of the Opponent builder developers towards several defective works listed in the consumer complaint. Therefore, since the Complainants have discharged their obligati ons to bring to the notice of the Opponent builder developers immediately after possession the point of limitation in respect of grievances made on account of defective liabilities would not be applicable in this case.

(7) The Ld.Counsel of t he Opponent builder developers Mr.Uday Wavikar did not dispute the issue of executing conveyance deed. It was fairly maintained that the Opponent builder developers are willing and desiring to execute the conveyance deed. Draft of the conveyance deed was already supplied to the Complainants but there is no response whatsoever received from the Opponents. “ It is also admitted that the process of delivering the flat was completed in the year 2002” . Since the original Landlord has not been impleaded as a party to the complaint, for effective and proper adjudication the Opponent Builder Developers are in difficulty to execute the deed of conveyance on the basis of General Irrevocable Power of Attorney as the registering authorities are insisting on certain documents and consent of the original Landlord/owner as confirming party. It is admitted that completion certificate and occupation certificate obtained from the competent authorities have been deliv ered to the Complainants way back in December, 2002. While executing the agreement to sale the Opponent builder developers fairly disclosed all the details pertaining to the ownership of the land. One of the original Landlords is no more and complainants are aware of the status. Therefore, for proper and effective adjudication of the complaint, the original Landlord was a necessary party to the complaint. The status of the title of the land was elaborately discussed as mentioned in the agreement to sale with the Complainant and therefore, the Opponent builder developers have requested to implead the original Landlord as one of the Opponents to facilitate smooth execution of conveyance deed. With this point in mind the Complainants have moved amendment ap plication. Accordingly which was allowed by the state Commission. However, the Complainants have failed to carry out the amendment to implead original Landlord as party for the reasons best known to them. Failure of Complainant to obey the orders of the Commission created a deadlock to execute deed of conveyance.

(8) In so far as defects liabilities are concerned it was pointed out by the Ld.Counsel for the Opponent Builder Developers that the complaint to the extent of defect liabilities w ill hit by the provisions of limitations as the last possession was delivered in 2002 and the complaint has been filed in the year 2007 that too without application for condonation of delay. Further it was brought to our notice that the consumer complaint has been filed without adopting a proper resolution. Therefore, the consumer complaint suffers from infirmity.

(9) On going through various documents available in the compilation, we find that, though the agreement to sale elaborately stipu lates about title of the land wherein the Opponent has developed and constructed the building. Impleading the original Landlord as a party cannot be a pre - condition for adjudication of this complaint in as much as there is no privity of contract between t he flat buyers and the original landlord. Opponents have executed registered agreement to sale on the basis of Irrevocable Power of Attorney in their favour by the original Landlords. Therefore, we are not in conformity with the arguments advance by the Ld.Counsel of the Opponent Builder Developers in this behalf. Mere disclosure of title of the land does not absolve the Opponent builder developers from taking effective steps to execute deed of conveyance in favour of the Complainant Society as Section 2 (c) of MOFA covers builders and even sellers in the definition as “Promoter”. Opponents are builders and sellers. Opponents are promoters as defined under the provisions of MOFA. Moreover, as a promoters, Opponents are under obligation to execute deed o f conveyance to transfer right, title and interest in the land and building as provided under Section 11 of MOFA. Mere handing over draft of the deed of conveyance is not suffice and it is the bounden duty of the Opponent to take up the issue of deed of c onveyance to the logical conclusion. As provided under the provisions of MOFA rights, title and interest in the land and building is required to be transferred by execution of conveyance immediately after formation of the co - operative society under sectio n 10 of the MOFA. We do not find the Opponents have taken adequate steps to discharge the statutory obligation. Since the privity of contract exists between the flat purchasers and the Opponent, Complainant Society need not be directed/compelled to appro ach the original landlords with whom complaints are totally unconcerned. It is the Opponent as a promoter to take such effective steps to discharge statutory obligation for conveyance of the property and building. On going through the record, the Opponen ts have not demonstrated to take effective action except by sending a draft of deed of conveyance.

(10) Complainants have discharged their obligations by paying agreed cost of the flats and also outgoings of the property even though the proper ty is not transferred by the Opponent by executing deed of conveyance. In such a situation it is the responsibility of the Opponent to pay all outgoing charges to the various authorities as provided under Section 6 of MOFA. However, though the right, tit le and interest in the land and building have not been transferred, yet the Complainant society continued to pay charges on account of outgoings just to avoid attachment of the property in default. On perusal of the record, admitted position is that delivery of flat possession was completed in 2002. Complainants have put forth their grievances for the short comings listed in the complaint in the year 2003 by letter dated 06.08.2003 itself and the Op ponents were well within knowledge and consented to take measures to remove all the short comings/lacunas pointed out by the Complainant and attested the signature on the letter dated 27 th August, 2005, which is part of the compilation. The Complainant so ciety by inviting plans and estimates for below listed various incomplete/defective works, went ahead to take corrective measures by carrying out the remedial changes:

Since there was no positive response to attend all the defective works pointed out, the Complainant proceeded further to complete these works by inviting plans and estimates from various petty contractors and incurred expenditure on these items which is supported by documentary evidence i.e. receipts of payments made to the various contractors.

(11) Execution of agreement entails obligation on the builder to deliver promised and defect free possession of the flat along with the common amenities. This cannot be a point of dispute especially when the Complainants have paid the entire amount as per the agreement. The defects were pointed out well within time i.e. within a period of two years whereas model agreement stipulates period of three years from the date of taking over possession. Therefore, the prayer for rectification of amenities will not hit by either section 24 of the Consumer Protection Act or under the provisions of model agreement to sale.

(12) In view of above observations, Complainant Society discharged burden of proving deficiency in service against the Opponent beyond reasonable doubts as Opponents failed to discharge statutory obligation and also to provide defect free possession of the flats and common amenities. Complainants are entitled for reimbursement of the actual expenditure incurred supported by receipts for removing construction defects and securing common amenities in order and obtain right, title interest in the land and building. However, following payments are not supported by receipts, therefore, Complainant Society cannot claim reimbursement thereof :

We hold accordingly and pass the following order:

ORDER

(i) Complaint is partly allowed.

(ii) The Opponents builder developers are directed to execute deed of conveyance, to transfer right, title and interest in the building and land to the Complainant Society within a period of four months from the date of this order, failing which Rs.1,000/- will be payable to the Complainant Society per day till compliance of the order.

(iii) The Opponent Builder developers are directed to reimburse amount of Rs. 19,76,174/- as listed below with interest @9% per annum from the date of filing of this consumer complaint i.e. from 04.05.2007 till realization within a period of 60 days, failing which rate of interest will be enhanced to 12% per annum till realization.

(iii) Non-compliance of the order will attract action u/section 27(2) of the Consumer Protection Act, 1986 against the Opponent builder developer and the Complainants are at liberty to bring to the notice of this Commission, non-compliance, if any.

(iv) Opponent to bear their own costs and pay an amount of Rs.25,000/- as costs to the Complainant.

(v) Rest of the claims of Complainant stand rejected which are not specifically granted.

Pronounced on 13th August, 2014

[HON'ABLE MR. P.B. Joshi]
Presiding Judicial Member

[HON'ABLE MR. Narendera Kawde]
Member

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