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Bangalore Development Authority Vs. Syndicate Bank

Posted on 01 May 2009 by jyoti

Title

Bangalore Development Authority Vs. Syndicate Bank



Coram

P. K. BALASUBRAMANYAN, R. V. RAVEENDRAN



Act

Consumer Protection Act



Subject

Consumer Protection Act, 1986-ss. 2(1)(o), 14 and 23:

General Principles regulating grant of relief to a Consumer(applicant for allotment) who complains of delay in delivery or non-delivery under the Consumer Protection Act, 1986 stated.

Interest-Grant of 18% commencing from the expiry of two years after the deposit of `last instalment'-For delay in delivery of possession of houses/flats by Development Authority-Held: There was no specified date to deliver houses by the Authority-Development Authority already delivered the house during the pendency of the complaint at the agreed price-Allottee accepted the same and also had the benefits of appreciation of price of the house-Thus, order of the Commission granting interest not sustainable.

Compensation-Entitlement of-For delay in delivery of possession of houses/flats by Development Authority-Held: No, since there was no specific date for delivery of possession of the houses-Houses were constructed under a self-financing scheme on `No-Profit No-Loss basis" by using instalments/amounts paid by allottees-Authority received instalments without interest by way of adjustment in 1989-Delay in delivery was on account of the contractor-However, houses were delivered in 1997 at a price agreed in 1986-Allottee had the benefit of appreciation of price of house-Thus, no deficiency in service on the part of the Authority.

Appellant-Bangalore Development Authority introduced a "Self Financing Housing Scheme" for construction of HIG, MIG and LIG flats/houses. Respondent-Syndicate Bank applied for allotment of 15 `HIG' Houses, 110 `MIG' units and 125 `LIG' units. Initially the tentative price of HIG house was fixed and thereafter, the price was revised. BDA called upon the respondent to pay the revised amount in instalments and also informed the respondent that the units would be ready for occupation in December, 1986. However, the respondent did not pay the instalments. Thereafter, BDA informed the respondent that 15 HIG Houses had been allotted to respondent on 16.11987. Respondent surrendered allotment of 125 LIG units. By letter dated 15.5.1989, BDA recovered due towards the cost of 15 HIG Houses by adjustment and appropriation from the amount which had became refundable to the respondent on account of surrender of allotment in regard to LIG units. BDA delivered 4 HIG houses in December, 1989 and May, 1990. The completion of construction and delivery of remaining 11 HIG houses was delayed. Respondent sought interest on the price paid on account of delay in delivery of the HIG houses. However, appellant informed the respondent that the delay was on account of the contractor raising a dispute and stopping the work but assured that possession would be delivered immediately after completion. Respondent issued notice demanding performance of contract. Respondent then filed a complaint under section 21 of Consumer Protection, Act, 1986 claiming completion and due delivery of the remaining 11 HIG houses; payment of interest; payment as reimbursement of rent paid by respondent for 11 houses; and compensation for mental agony and harassment. During the pendency BDA delivered remaining HIG house in January/March 1997. Commission allowed the complaint holding that BDA had promised to deliver the houses to the respondent by December 1986; that in spite of respondent having made full payment and making repeated demands, 11 houses were not delivered till the complaint was filed in 1995, thus there was deficiency of service on the part of BDA. It directed the appellant to pay interest at 18% per annum on approximate price of HIG houses commencing from the expiry of two years after the deposit last instalment up to date of handing of over the possession. Hence the present appeal.



Citation

2007 AIR 2198, 2007(7 )SCR47 , 2007(6 )SCC711 , 2007(8 )SCALE200 , 2007(8 )JT106



Head Notes

Allowing the appeal, the Court

HELD: 1.1. There is some vagueness in the order of the Commission, in regard to the period of which interest is awarded. The amount with regard to the approximate price of HIG houses was not paid in instalments as assumed by the Commission. BDA recovered the due towards the cost 15 HIG Houses by adjustment and appropriation from the amount which had became refundable to the respondent on account of surrender of allotment in regard to LIG units. Such adjustment was made on 15.5.1989 and for all purpose, that is the date of payment of price of the HIG Houses. As the houses were delivered in January/March, 1997, the direction issued by the Commission would mean that BDA had to pay interest at the rate of 18% p.a. from 15.5.1991 to January/March, 1997 which works out to about Rs. 55 lakhs.
[Para 11] [57-H; 58-A-C]

1.2. Commission has neither referred to the relevant facts nor drawn proper inferences. There is no basis for the finding that BDA had agreed to deliver the houses by December, 1986 or the finding that no reason was shown for the delay in delivery. The payment was only on 15.5.1989. Therefore, delivery could not obviously be by the end of if reasonable period for construction is to be reckoned as two years (as assumed by the Commission) then the question of delay would arise only after 15.5.1991. The Commission also assumed that mere delay automatically meant deficiency in service and in all the such cases, the allottee will be entitled to interest at 18% p.a. from the date of payment till date of delivery. There cannot be uniform award of interest at 18% p.a. in all cases and that in cases of complaints of deficiency in service by a development authority relating to allotment plots/flats, the principles laid down in Balbir Singh's case should be applied. Therefore, the decision of the Commission under appeal, cannot be sustained.
[Para 12] [58-D-G]

1.3. The Development Authority delivered the house during the pendency of the complaint at the agreed price, which was accepted by the allottee-complaint, the question of awarding any interest on the price by him from the date of deposit to date of delivery of possession, does not arise. The allottee who had the benefit of appreciation of price of the house, is not entitled to interest on the price paid. In this case, the 11 houses were delivered in 1997 at the agreed prices. Thus, the order of the commission awarding interest at 18% per annum on the price of the houses is unsustainable and liable to be set aside. [Para 13] [59-A-B]

2.1. The loss caused to the respondent is the rental income which the houses would have fetched if they had been delivered earlier from the agreed due date to date of actual delivery of possession. Alternatively, it is the rent paid by the Respondent for the houses taken on lease due to non-availability of the allotted houses. However, the respondent did not produce any document to show that it paid Rs. 3000/- per month per house for similar houses between 1991 and 1997. Nor did it produce any evidence to show that Rs. 3000/- was the prevailing rent for similar houses. It is not the case of the respondent that documentary evidence for payment of rent was not available. Where documentary evidence was available, but not produced, obviously a mere statement in the affidavit cannot be the basis for award of damages.
[Para 14 and 15] [59-C-D; G-H]

2.2. The brochure relating to the BDA scheme did not mention any specific date for delivery of possession of the houses. No agreement was entered into between the parties stipulating any time for performance or delivery of houses. The only document on which reliance is placed by the respondent is a letter dated 22.8.1985 wherein BDA referred to the expected date of completion of construction i.e., December 1986 while intimating the revised cost of the HIG houses on account of escalation etc. and also the instalment to be paid by the respondent. [Para 16] [60-B-D]

2.3. The instalments were not paid and respondent itself was the defaulter. Nevertheless, BDA allotted 15 houses as per intimation dated 27.5.1987. In a self financing scheme, the instalments paid by the allottees are used for construction. If an allottee does not pay the instalments, he cannot obviously expect completion of construction. In this case, the payment was received by BDA (without charging any interest) by way of adjustment on 15.5.1989. Even if the reasonable period for construction is taken as two years, BDA had to explain the `delay' only from 15.5.1991 and not from 1985 as assumed by the Commission. BDA delivered four houses in time, that is in 1989 and 1990. It did not deliver the remaining 11 houses as its contractor delayed execution of the work. When the respondent wrote letters in 1989, 1990, 1993 and 1994 and also got in touch with BDA officers, seeking possession, BDA explained that the delay was on account of its contractor stopping work and raising a dispute. BDA took necessary steps. It delivered the houses in January/March, 1997. [Para 16] [60-C-H]

2.4. Both parties-BDA as also the respondent proceeded on the basis that time was not essence of the contract. In a contract involving construction, time is not the essence of the contract unless specified Even when the respondent wrote the letters in 1989, 1990, 1993 and 1994, it did not make time for performance the essence of contract, nor fixed any reasonable time for performance. The respondent did not also choose to terminate the contract, obviously in view of the manifold increase in the value of the houses. For the first time, by notice dated 11.7.1994, it purported to make the time the essence, but demanded delivery within an unreasonable period of one month and filed the complaint on 4.2.1995. Thus, it cannot be said that the respondent made time the essence of contract, in a manner recognized in law. The development authority was constructing these houses under a self-financing scheme on `No-Profit No-Loss basis" by using the instalments/amounts paid by the allottees. The houses were delivered in 1997 at a price agreed in 1986. By 1997, the value had gone up many times (more than 10 times according to BDA). The respondent had the benefit of such rise in value. The respondent also failed to prove any negligence on the part of BDA. In this factual background, there was no `deficiency in service' on the part of BDA entitling the respondent for any compensation by way of interest or otherwise Consequently, the respondent is not entitled to any compensation.
[Para 17] [60-G-H; 61-A-C]

Lucknow Development Authority v. M.K. Gupta, [1994] 1 SCC 243; Ghaziabad Development Authority v. Balbir Singh, [2004] 5 SCC 65; Haryana Development Authority v. Darsh Kumar, [2005] 9 SCC 449 and Ghaziabad Development Authority v. Union of India, [2000] 6 SCC 113, referred to.

Altaf Ahmad, Sr. Adv., S.K. Kulkarni, M. Gireesh Kumar and Vijay Kumar for the Appellant.

A.B. Dial, Sr. Adv., Sapna Sinha and Rajiv Nanda for the Respondent.



Judgment Made On

17/05/2007

CASE NO.:
Appeal (civil) 5462 of 2002

JUDGMENT:
J U D G M E N T


R. V. RAVEENDRAN J.


This appeal by Special Leave is filed against the order dated
11.04.2002, passed by the National Consumer Dispute Redressal
Commission ('Commission' for short) in O.P.No. 21 of 1995.

The Facts

2. The Banglore Development Authority (Appellant herein, 'BDA' for
short) introduced a "Self Financing Housing Scheme" for construction of
flats/houses in Banglore in the year 1982. The said Scheme contemplated
construction of three types of flats/houses categorized as Higher Income
Group, Middle Income Group, and Low Income Group ('HIG', 'MIG', and
'LIG' for short). Under the said scheme an applicant for allotment was
required to make an initial deposit of 15% of the cost of the unit and pay the
balance in eight quarterly instalments of 10% and the last instalment of 5%.

3. Syndicate Bank ('Respondent' herein) made an application dated
17.7.1982 for allotment of 250 flats/houses under the said scheme, that is, 15
'HIG' Houses, 110 'MIG' units and 125 'LIG' units. BDA registered the
request for allotment of 15 HIG Houses, vide confirmation letter dated
20.8.1984. This appeal relates to delay in delivery of 11 HIG houses at
R.M.V. Extension, Bangalore.

4. BDA had initially fixed the tentative price of a HIG house as
Rs.2,85,000/-. The price was revised to Rs.4.75 lakhs per unit (Rs.5.5 lakhs
in respect of corner units). By letter dated 22.08.1985, BDA informed the
respondent about the revision of price of HIG Houses from Rs.2.85 lakhs to
4.75 lakhs per unit. BDA also indicated the total amount due in respect of
15 HIG Houses and required the Respondent to pay the said amount in
installments as shown in the Annexure thereto. BDA also informed the
Respondent that the units would be ready for occupation in December, 1986.
As respondent did not pay the instalments, BDA sent a letter dated
20.10.1986 demanding payment. By letter dated 27.5.1987, BDA informed
Respondent that 15 Houses (including three corner houses) had been allotted
to Respondent on 16.1.1987 and furnished the numbers of the houses
allotted.

5. A sum of Rs.98,85,210/- paid by the Respondent towards the cost of
LIG units became refundable to respondent, on account of surrender of
allotment of the 125 LIG units. The cost of 15 HIG houses was Rs.73.5
lakhs (that is, three corner units at the rate of Rs.5.5 lakhs each and 12 other
units at the rate of Rs.4.75 lakhs each). The respondent had paid a sum of
Rs.19,33,925/- in advance towards the cost of the 15 H.I.G. houses and the
balance due was Rs.54,16,075/-. By letter dated 15.5.1989, BDA adjusted
and appropriated the said sum of Rs.54,16,075/- (due in respect of 15 HIG
Houses) and a sum of Rs.21,66,250/- (due in respect of MIG Units), from
out of Rs.98,85,210/- paid towards LIG units, and refunded the balance of
Rs.23,02,885/- to the Respondent. Thus it would be seen that the cost of
H.I.G. units was received by BDA only on 15.05.1989.

6. BDA delivered 4 HIG houses in December, 1989 and May, 1990. The
completion of construction and delivery of remaining 11 H.I.G. houses (in
RMV Extension, Bangalore) was delayed. By letters dated 29.11.1989,
17.01.1990, 9.7.1993 and 11.1.1994, the Respondent pointed out the delay in
delivery of the HIG houses and requested for early delivery of possession of
the houses. Respondent also demanded interest on the price paid, at the bank
rate from 01.01.1986 till date the delivery of the houses apart from
reimbursement of the losses incurred on account of the non-delivery. When
the officers of the respondent met the officers of BDA personally to enquire
about the 11 Houses, they were informed that the delay was on account of
the contractor (M/s. Khoday Engineering) raising a dispute and stopping the
work in respect of part of the project, and assured that possession will be
delivered immediately after completion. The Respondent issued a final
notice dated 11.07.1994 through counsel demanding performance within one
month. When BDA failed, the respondent filed a complaint before the
Commission under section 21 of Consumer Protection Act, 1986 ('Act' for
short).


Claim, defence and the decision

7. The Respondent sought the following reliefs against BDA, in its
complaint :

a) Completion and due delivery of the remaining 11 HIG houses;
b) Payment of Rs.1,98,40,930/73 by way of interest on the sum of
Rs.53 lakhs being the price of the said 11 houses from
01.01.1986 to 31.12.1994 (the interest claimed at the bank rate
varying from 16.5% to 24.25% P.A. compounded quarterly);

c) Payment of Rs. 16.5 lakhs as reimbursement of the rent paid by
the Respondent for 11 houses at the rate of Rs.3,000/- per house
per month from 01.01.1987 to 31.12.1994 (Note : Though for
96 months the amount works out Rs.31,68,000/-, claim was
restricted to Rs.16.5 lakhs which is the rent for 11 houses for 50
months);

d) Payment of Rs.25,00,000/- as compensation for mental agony
and harassment;

e) Payment of future interest at 19.5% P.A. on Rs. 53,00,000/-
plus Rs.33,000/- per month by way of reimbursement of the
rent, from 01.01.1995 till delivery of possession


8. BDA resisted the claim both on the question of maintainability, as
also merits. In brief, the contentions were :

a) It was not a service provider nor a seller of goods and the
respondent was not a 'consumer' and therefore the complaint
under the Act was not maintainable.

b) The contract did not stipulate any period for completion and
delivery. Being a building contract, time was not the essence of
the contract. The project related to construction of 558 HIG
Houses. 490 houses were completed during 1989. The
contractor - M/s. Khoday Engineering, raised a dispute and
delayed the work relating to the remaining 68 houses (including
11 houses to be delivered to the respondent). After making all
possible efforts to persuade the contractor to take up and
complete the work, it rescinded the contract with the contractor
by Resolution dated 15.2.1995 and took steps to get the work
completed through an alternative agency. The delay was thus
for reasons wholly beyond its control and unintentional, and
there was no breach.

c) It would complete and deliver the 11 houses within a short time
at the agreed price, though price of the houses had risen by 10
times.

d) As it was executing the self financing housing scheme on 'no
profit no loss' basis, it should not be burdened with any
financial liability for any delay.

e) Even if it was treated as a service provider and the complaint
was held to be maintainable, as there was no negligence or
deficiency in service on its part, it was not liable to pay any
interest or compensation.


9. During the pendency of the complaint before the commission, BDA
delivered one HIG house on 21.1.1997 and remaining 10 HIG houses on
12.3.1997. The Respondent thus secured the main relief sought in the
complaint. What remained was the claim for interest and compensation.
Parties led evidence by way of affidavits. Neither party sought leave to
cross-examine the witness (deponent) of the other party. The Commission by
order dated 11.04.2002 allowed the complaint. It held :

a) BDA had promised to deliver the houses to the Respondent by
December, 1986.

b) In spite of respondent having made full payment and making
repeated demands, 11 houses were not delivered till the
complaint was filed in 1995. Thus there was deficiency of
service on the part of BDA.

c) BDA had not placed any material on record to show why the
houses could not be completed and delivered between 1985 to
1991. The complainant was in no way concerned with the
dispute between BDA and its contractor and the consequential
delay. Even though the 11 houses were delivered in 1997 after
the complaint, BDA was guilty of deficiency in rendering
service.


In view of the said findings, following its decision in HUDA Vs. Darsh
Kumar [Revision Petition No. 1197/1998 dated 31.8.2001], it directed the
appellant to pay interest at 18% per annum on Rs.53,00,000/- (the
approximate price of 11 HIG Houses) commencing from the expiry of two
years after the deposit of last instalment of Rs.53 lakhs up to date of handing
over the possession. The said order is challenged in this appeal.




The principles

10. Where a Development Authority forms layouts and allots plots/flats
(or houses) by inviting applications, the following general principles
regulate the granting of relief to a consumer (applicant for allotment) who
complains of delay in delivery or non-delivery and seeks redressal under the
Consumer Protection Act, 1986 ('Act' for short) - [vide : Lucknow
Development Authority vs. M. K. Gupta - 1994 (1) SCC 243, Ghaziabad
Development Authority vs. Balbir Singh - 2004 (5) SCC 65, and Haryana
Development Authority vs. Darsh Kumar - 2005 (9) SCC 449, as also
Ghaziabad Development Authority vs. Union of India - 2000 (6) SCC 113]:

(a) Where the development authority having received the full price, does
not deliver possession of the allotted plot/flat/house within the time
stipulated or within a reasonable time, or where the allotment is cancelled or
possession is refused without any justifiable cause, the allottee is entitled for
refund of the amount paid, with reasonable interest thereon from the date of
payment to date of refund. In addition, the allottee may also be entitled to
compensation, as may be decided with reference to the facts of each case.

(b) Where no time is stipulated for performance of the contract (that is for
delivery), or where time is not the essence of the contract and the buyer does
not issue a notice making time the essence by fixing a reasonable time for
performance, if the buyer, instead of rescinding the contract on the ground of
non-performance, accepts the belated performance in terms of the contract,
there is no question of any breach or payment of damages under the general
law governing contracts. However, if some statute steps in and creates any
statutory obligations on the part of the development authority in the
contractual field, the matter will be governed by the provisions of that
statute.

(c) Where an alternative site is offered or delivered (at the agreed price)
in view of its inability to deliver the earlier allotted plot/flat/house, or where
the delay in delivering possession of the allotted plot/flat/house is for
justifiable reasons, ordinarily the allottee will not be entitled to any interest
or compensation. This is because the buyer has the benefit of appreciation in
value.

(d) Though the relationship between Development Authority and an
applicant for allotment is that of a seller and buyer, and therefore governed
by law of contracts, (which does not recognise mental agony and suffering
as a head of damages for breach), compensation can be awarded to the
consumer under the head of mental agony and suffering, by applying the
principle of Administrative Law, where the seller being a statutory authority
acts negligently, arbitrarily or capriciously.

(e) Where an alternative plot/flat/house is allotted and delivered, not at
the original agreed price, but by charging current market rate which is much
higher, the allottee will be entitled to interest at a reasonable rate on the
amount paid towards the earlier allotment, from the date of deposit to date of
delivery of the alternative plot/flat/house. In addition, he may be entitled to
compensation also, determined with reference to the facts of the case, if
there are no justifiable reasons for non-delivery of the first allotted
plot/flat/house.

(f) Where the plot/flat/house has been allotted at a tentative or
provisional price, subject to final determination of price on completion of
the project (that is acquisition proceedings and development activities), the
Development Authority will be entitled to revise or increase the price. But
where the allotment is at a fixed price, and a higher price or extra payments
are illegally or unjustifiably demanded and collected, the allottee will be
entitled to refund of such excess with such interest, as may be determined
with reference to the facts of the case.

(g) Where full payment is made and possession is delivered, but title deed
is not executed without any justifiable cause, the allottee may be awarded
compensation, for harassment and mental agony, in addition to appropriate
direction for execution and delivery of title deed.

(h) Where the allotment relates to a flat/house and construction is
incomplete or not in accordance with the agreed specifications, when it is
delivered, the allottee will be entitled to compensation equivalent to the cost
of completing the building or rectifying the defects.

(i) The quantum of compensation to be awarded, if it is to be awarded,
will depend on the facts of each case, nature of harassment, the period of
harassment and the nature of arbitrary or capricious or negligent action of
the authority which led to such harassment.

(j) While deciding whether the allottee is entitled to any relief and in
moulding the relief, the following among other relevant factors should be
considered : (i) whether the layout is developed on 'no profit no loss' basis,
or with commercial or profit motive; (ii) whether there is any assurance or
commitment in regard to date of delivery of possession; (iii) whether there
were any justifiable reasons for the delay or failure to deliver possession;
(iv) whether the complainant has alleged and proved that there has been any
negligence, shortcoming or inadequacy on the part of the developing
authority or its officials in the performance of the functions or obligations in
regard to delivery; and (v) whether the allottee has been subjected to
avoidable harassment and mental agony.

Whether Respondent is entitled to interest?

11. At the outset, we may notice that there is some vagueness in the order
of the Commission, in regard to the period for which interest is awarded.
The Commission has awarded interest at the rate of 18% per annum
commencing from the expiry of two years after the deposit of 'last
instalment' of Rs.53 lakhs. The sum of Rs.53 lakhs was not paid in
instalments as assumed by the Commission. BDA recovered Rs.54,16,075/-
due towards the cost of 15 HIG Houses by adjustment and appropriation
from the amount which had became refundable to the Respondent on
account of surrender of allotment in regard to LIG units. Such adjustment
was made on 15.5.1989 and for all purposes, that is the date of payment of
price of the HIG Houses. As the houses were delivered in January/March,
1997, the direction issued by the Commission would mean that BDA had to
pay interest at the rate of 18% per annum from 15.5.1991 to January/March,
1997 which works out to about Rs.55 lakhs. Because of the vagueness in the
direction regarding date of commencement of interest, the Respondent
contended that interest should be calculated from the expiry of two years
from the date of payment of last instalment, which was in December, 1985
(which was in respect of LIG units). Respondent contends that if interest is
so calculated the amount due as interest would be Rs.87.89 lakhs. Be that as
it may.
12. The Commission has neither referred to the relevant facts nor drawn
proper inferences. There is no basis for the finding that BDA had agreed to
deliver the houses by December, 1986 or the finding that no reason was
shown for the delay in delivery. The allotment of 15 HIG Houses identified
by House numbers was only by resolution dated 16.1.1987 and
communicated to Respondent on 27.5.1987. The payment was only on
15.5.1989. Delivery could not, therefore, obviously be by the end of
December, 1986. If reasonable period for construction is to be reckoned as
two years (as assumed by the Commission), then the question of delay
would arise only after 15.5.1991. The Commission also assumed that mere
delay automatically meant deficiency in service and in all such cases, the
allottee will be entitled to interest at 18% per annum from the date of
payment till date of delivery by relying on its decision in HUDA vs. Darsh
Kumar. The decision of the Commission in HUDA vs. Darsh Kumar was
held to be unsustainable by this Court, on appeal in HUDA vs. Darsh Kumar
[2005 (9) SCC 449]. This Court held that there cannot be uniform award of
interest at 18% per annum in all cases and that in cases of complaints of
deficiency in service by a development authority relating to allotment of
plots/flats, the principles laid down in Balbir Singh (Supra) should be
applied. Therefore, the decision of the Commission under appeal, based on
its earlier decision in Darsh Kumar, cannot be sustained.

13. As already noticed, where the grievance is one of delay in delivery of
possession, and the Development Authority delivers the house during the
pendency of the complaint at the agreed price, and such delivery is accepted
by the allottee-complainant, the question of awarding any interest on the
price paid by him from the date of deposit to date of delivery of possession,
does not arise. The allottee who had the benefit of appreciation of price of
the house, is not entitled to interest on the price paid. In this case, the 11
houses were delivered in 1997 at the agreed prices (Rs. 5.5 lacs per corner
HIG House and Rs.4.75 lacs per other HIG Houses). In view of it, the order
of the Commission awarding interest at 18% per annum on the price of the
houses is unsustainable and liable to be set aside.

Whether respondent is entitled to any compensation?

14. This leads us to the next question as to whether the Respondent is
entitled to any compensation, to make good the loss caused to him on
account of the delay in delivery. The loss is the rental income which the
houses would have fetched if they had been delivered earlier from the agreed
due date to date of actual delivery of possession. Alternatively, it is the rent
paid by the Respondent for the houses taken on lease due to non-availability
of the allotted houses. The Respondent contends that it is entitled to
reimbursement of the rents paid by it in respect of 11 houses, on account of
the delay on the part of BDA in delivering the houses. It was submitted that
even if a reasonable time of two years is provided for construction from the
deemed date of payment (15.5.1989), BDA would be liable to compensate
the Respondent for the rent paid by it for 11 houses from 15.5.1991 till
January/March, 1997. Respondent alleged that it had to pay a rent of
Rs.3000/- per house or Rs.33000/- for 11 Houses, per month, due to the non-
delivery of 11 HIG Houses. The Respondent submitted that the
compensation payable would therefore be around Rs.23 lakhs; and that as it
had restricted its claim to Rs.16,50,000/- in the complaint under this head,
the said amount may be awarded as compensation.

15. The Respondent did not produce any document to show that it paid
Rs.3,000/- per month per house for similar houses between 1991 and 1997.
Nor did it produce any evidence to show that Rs.3000/- was the prevailing
rent for similar houses. It is not the case of the Respondent that
documentary evidence for payment of rent was not available. Where
documentary evidence was available, but not produced, obviously a mere
statement in the affidavit cannot be the basis for award of damages.

16. The more serious issue is whether the facts and circumstances warrant
a finding of negligence and deficiency in service on the part of BDA
necessitating award of compensation. The brochure relating to the BDA
scheme did not mention any specific date for delivery of possession of the
houses. No agreement was entered into between the parties stipulating any
time for performance or delivery of houses. The only document on which
reliance is placed by the respondent is a letter
dated 22.8.1985 wherein BDA makes a reference to the expected date of
completion of construction while intimating the revised cost of the HIG
houses on account of escalation etc. The said letter stated that the total cost
of 15 HIG houses would be Rs.7125000/- and after adjustment of
Rs.1068750/-, the balance of Rs.6036250/- was payable in seven bi-monthly
instalments from November, 1985 to December, 1986, (the first six
instalments being Rs.862327/- and the last instalment being Rs.862288/-). It
also incidentally stated that the houses would be ready for occupation in
December, 1986. The instalments were not paid and respondent itself was
the defaulter. Nevertheless, BDA allotted 15 houses as per intimation dated
27.5.1987. In a self financing scheme, the instalments paid by the allottees
are used for construction. If an allottee does not pay the instalments, he
cannot obviously expect completion of construction. In this case, the
payment was received by BDA (without charging any interest) by way of
adjustment on 15.5.1989. Even if the reasonable period for construction is
taken as two years, BDA had to explain the 'delay' only from 15.5.1991 and
not from 1985 as assumed by the Commission. BDA delivered four houses
in time, that is in 1989 and 1990. It did not deliver the remaining 11 houses,
as its contractor delayed execution of the work. It may be mentioned that the
project contemplated construction of 558 HIG houses and the work got stuck
only in regard to 68 houses (including the 11 houses to be delivered to the
Respondent). When the respondent wrote letters in 1989, 1990, 1993 and
1994 and also got in touch with BDA officers, seeking possession, BDA
explained that the delay was on account of its contractor (M/s Khoday
Engineering) stopping work and raising a dispute. BDA took necessary
steps, and even sought government intervention, to persuade the contractor
to proceed with the work. Having failed in its effort, it ultimately cancelled
the contract with the contractor and got the work completed through an
alternative agency and immediately after completion, delivered the houses in
January/March, 1997.

17. We find that both parties - BDA as also the Respondent proceeded on
the basis that time was not the essence of the contract. In a contract
involving construction, time is not the essence of the contract unless
specified. Even when the respondent wrote the letters dated 29.11.1989,
17.1.1990, 9.7.1993 and 11.1.1994, it did not make time for performance the
essence of contract, nor fix any reasonable time for performance. The
Respondent did not also choose to terminate the contract, obviously in view
of the manifold increase in the value of the Houses. For the first time, by
notice dated 11.7.1994, it purported to make the time the essence, but
demanded delivery within an unreasonable period of one month and filed the
complaint on 4.2.1995. Thus, it cannot be said that the Respondent made
time the essence of contract, in a manner recognized in law. We also find
that the development authority was constructing these houses under a self-
financing scheme on 'No-Profit No-Loss basis' by using the
instalments/amounts paid by the allottees. The houses were delivered in
1997 at a price agreed in 1986. By 1997, the value had gone up many times
(more than 10 times according to BDA). The Respondent had the benefit of
such rise in value. The respondent also failed to prove any negligence on the
part of BDA. In this factual background, we find it difficult to hold that there
was 'deficiency in service' on the part of BDA entitling the respondent for
any compensation by way of interest or otherwise. Consequently, the
respondent is not entitled to any compensation.

18. We may also note that the respondent had also written letters dated
27.12.2005 and 25.1.2006 during the pendency of these appeals stating that
if the sale deeds were executed in respect of these 11 houses, it will
withdraw its claim against BDA. The sale deeds were not executed and the
matter is kept pending in view of the pendency of the dispute.

Conclusion

19. Before concluding, it is necessary to refer to one more contention
urged by BDA. It contended that when a person enters into a contract for
purchasing a house (land with building), from a Development Authority, the
allottee does not 'hire or avail of a service' and is not a 'consumer' under the
Act. It is contended that where the contract is for sale of a house (land with
building) as contrasted from a contract for construction of a house by a
contractor with the site-owner, the seller is not a service provider, and the
purchaser is not a consumer; and sale of land with a building constructed by
a development authority, involves neither sale of goods, nor hiring/availing
of any services. BDA had specifically raised this contention before the
Commission as a preliminary objection regarding maintainability of the
complaint. It appears that this contention was not pressed before the
Commission nor raised as a specific ground in the special leave petition, in
view of the decision of this Court in Lucknow Development Authority vs. M.
K. Gupta (Supra). In that case, a two-Judge Bench of this Court held that
where a development authority undertakes to construct buildings or allot
houses or building sites either as amenity or as benefit, it amounts to
rendering of a service and will be covered by the expression 'service made
available to potential users' referred to in section 2(o) of the Act. But this
Court did not examine or deal with the question whether a contract for sale
of a house premises, (that is site with a constructed house), as contrasted
from a contract of construction amounted to 'providing a service of any
description to a potential user including housing construction'. Be that as it
may. Though there appears to be some logic in the contention of BDA, we
do not propose to decide the issue, as we are allowing this appeal on other
grounds, and as this contention was not specifically pressed before the
Commission. We leave this question open for decision in an appropriate
case.

20. In view of the above, we allow this appeal and set aside the order
dated 11.4.2002 of the National Consumer Disputes Redressal Commission.
As the main prayer for completion and delivery of the houses was complied
with during the pendency of the complaint, and as we have held that
respondent is not entitled to interest or compensation, the complaint is
disposed of with a direction to BDA to complete the process of execution
and registration of sale deed/s in respect of the houses without claiming any
extra cost, within three months from today. The cost of stamp duty and


registration in respect of such sale deeds will be borne by the respondent.
Parties to bear their respective costs.



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