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Consumer Forum orders KST Infrastructure to pay compensation to allottees

Postby webmaster » Mon Nov 10, 2014 10:09 pm

As per a judgement available on Indiakanoon, National Consumer Disputes Redressal forum has passed a judgment to pay compensation to group of 25 allottees who had filed a consumer case against KST Infrastructure.

Please go through the order available online.

Shri Gurdeep Singh Khurana & 24 ... vs M/S. Kst Infrastructure Ltd. on 1 April, 2014


243 OF 2012

1. Shri Gurdeep Singh Khurana R/o 3015, Setor-23, Gurgaon-122017 Acting for himself and as the duly authorized Representative of 24 others namely,

2. Mr. D. Naagaraju R/o 502 F Wingh, Vasant Sagar Saraswati Building Co-operative Housing Society, Opp. Thakur Cinema, Thakur Village, Kandivili (East) Mumbai-400101

3. Mr. Shatrunjaya S. Panwar & Mr. Surendra Singh Panwar R/o A53, DGS Apartments, Plot No.6, Sector 22, Dwarka, New Delhi-110075

4. Mr. Pankaj Gupta & Mr. B.R.Gupta R/o 186F, Pocket-I, Mayur Vihar Phase I, Delhi-110091

5. Mr. R.K. Kapil R/o B302 Aditya Mega City, Vaibhav Khand, Indirapuram, Ghaziabad-201010

6. Mr. Dheeraj Sharma R/o R160 Vani Vihar, Uttam Nagar, New Delhi.

7. Mr. Sachin Kumar Saraswat & Mr. Sumit Saraswat R/o B-370, Sarita Vihar, New Delhi-110076

8. Mrs. Neelam Uchani & Mr. Sunil Kr. Uchani R/o 12, Popular Apartment, Sector 13, Rohini, New Delhi

9. Mr. B.K. Jauhari R/o 25 A,Pocket C, Siddharth Extension, New Delhi-110014

10. Mrs. Neelam Jain & Mr. Neeraj Jain R/o 2981, Kucha Neelkanth, DaryaGanj, New Delhi-110002

11. Ms. Deepshikha Maheshwari R/o JG-39 Second floor near Krishna Mandir Malviya Nagar, New Delhi-110017

12. Mrs. Parminder Johar R/o House No. 94, Sector 16, Faridabad (Haryana)

13. Mr. Vikram Kundra R/o 223, Plot No. 2, Rama Apartment, Sector-18 Dwarka, New Delhi-110075

14. Mr. Sachin Thussu & Mrs. Shivani Thussu R/o AD 21, Mansarovar, Plot No. 3, Sector No. 5, Dwarka, Delhi

15. Sudarshan Kumar R/o E-24, Vardaman Apartments, Mayur Vihar, Extn.-I, Delhi

16. Mr. K.S. Swaminathan R/o B-132, Panchvati Apartments Vikas Puri, New Delhi-18

17. Mr. Tapan Kumar R/o 73, Dena Apartments, Sector 13, Rohini, Delhi-85

18. Mr. Astutosh Padru & Neerja Padru R/o B-4/79, (First Floor) Paschim Vihar, New Delhi-63

19. Mr. Narender Kumar Sharma & Gayatri Sharma R/o 4-P-20, Talwandi, Kota (Rajasthan)

20. Mr. Pritam Singh Rana R/o Bunglow No.1, Jildalgarh, Rajgarh, Chhattisgarh-492001

21. Ms. Deepali Gupta R/o A 2/64, Safdarjung Enclave, New Delhi

22. Mr. Nishkam & Mrs. Roopali Gupta R/o A 2/64, Safdarjung Enclave, New Delhi

23. Ms. R. Uma Rani R/o J-188, Sector 41, Noida

24. Mrs. Ranjna Grover C/o J-188, Sector 41, Noida, Uttar Pradesh

25. Sudeep Saxena & Vandana Saxena R/o 1206, Udaygiri Apartments, Kaushambi, Distt. Ghaziabad-201010 Complainants Versus M/s KST Infrastructure Ltd.

Through its Director- Mr. Kuldeep Singh Tanwar D-13, First Floor, JMD Regent Square, M.G.Road, Gurgaon (Haryana)-122009 Opposite Party BEFORE:

HONBLE MR. JUSTICE J. M. MALIK, PRESIDING MEMBER HONBLE DR. S. M. KANTIKAR, MEMBER For all the Complainants : Mr. Shivram, Advocate For the Opp. Parties :

Mr. Sanyam Saxena, Advocate PRONOUNCED ON 1ST APRIL, 2014 O R D E R JUSTICE J.M. MALIK

1. The Opposite Party has made a vain attempt to feather its own nest, i.e., it has attempted to make profit for itself at the expenses of others. It is unfortunate that the consumers have to repent to bark up the wrong tree, i.e., the Builder/Promoter. Its attention is to lead the consumers up the Garden path, when it has no free and clear title to the land in dispute.

2. These complaints are filed by 25 complainants , detailed above. The present complaints have been filed through Mr.Gurdeep Singh Khurana. The individual authorizations by each of the complainant in favour of Mr.Gurdeep Singh Khurana, have been annexed along with separate application. The complainants who are the ex-employees of State Bank of India, formed the State bank Employees Housing Welfare Organisation (SBEHWO), which is registered body under the Societies Registration Act, and all the 25 complainants are the Members of the said Society. Mr.T.N.Goel and Mr.A.K.Kapur are the President and Secretary of the above said Society. SBEHWO was under the impression that Siddhi Vinayak Apartments, located in Sector-88, Faridabad, Haryana, would be constructed by M/s. KST Infrastructure Ltd., OP. It is alleged that the President and Secretary of the Association are working hand in glove with the opposite party, therefore, the complaints were filed by the Members of the Society, in their individual names.

3. This is a piece of land measuring 8 acres out of 49 acres approximately. The complainants have paid a substantial amount to the OP. The above said 49 acres of land was purchased by one, RPS Associates from some private land owners. It appears that RPS Associates entered into some arrangements with its sister concern Group entity, RPS Infrastructure Ltd., which, in turn, has entered into alleged Agreement to Sell with M/s. KST Infrastructure Ltd., and has also executed a Special Power of Attorney dated 22.03.2007, in favour of the OP. All these facts came to the knowledge of the complainants few days back because the banks refused to grant loans to the disputed title of the land in question. The Special Power of Attorney dated 22.03.2007 is expressly revocable and some payment disputes are going on between the OP-M/s. KST Infrastructure Ltd., and RPS Infrastructure. The OP does not have any valid title, such as Sale Deed, to assert the ownership over the said 8 acres of land.

4. All the complainants under a genuine belief issued a cheque in favour of SBEHWO and handed over the same to the President and Secretary, till the period of early 2007, who, in turn, handed over the same to the OPs. The complainants have paid 30-40% of the total sale price of their respective individual flats. In some cases, it was even beyond 50%. It is alleged that the office bearers, President and Secretary, kept the complainants in dark and entered into a Memorandum of Understanding (MOU), dated 09.10.2008. Mr.Goel and Mr.Kapur, in October, 2008, revealed that the flats were being constructed by the OP. The complainants reposed faith in the office bearers and paid the amount. Thereafter, the complainants approached the State Bank of India for obtaining loans but they refused to advance the loans as the OP did not have clear title to the property in dispute. They found that the title of the OP was defective. The President and Secretary obtained the consent of the complainants, while signing the MOU. It is alleged that Mr.Goel and Mr.Kapur, while working in cahoots, with an intention to cheat and defraud the complainants, entered into the said agreement. It is also averred that some of the Members, including its office bearers, have been selectively allowed to withdraw from the said project after knowing that there is a defect in the title. When serious concerns were raised by the complainants, Mr.Goel sent a letter dated 21.01.2012 to the OP highlighting all these issues. The said letter was annexed with this complaint as Annexure C-4. The OP responded to this letter vide reply dated 13.02.2012. They admitted that they have yet to take No Objection Certificate (NOC) which was to be taken by the OP from RPS Infrastructure Ltd. Mr.Goel sent a Circular dated 09.03.2012, which, instead of dealing with these issues, rather exhorted the Members to make the payments of the dues, immediately. The said letter was placed on record as Annexure C-6. Some of the complainants issued legal notice dated 02.05.2012, which was placed on record as Annexure C-7.

Mr.Goel and Mr.Kapur, sent a reply, jointly, on 18.07.2012,which was annexed as Annexure C-8 with the complaint. The rejoinder notice was sent vide Annexure C-9.

5. In the meantime, the complainants sought a legal opinion from Mr.S.L.Gupta, Advocate on 27.01.2011, which was placed on record as Annexure C-10 and report from Axis Bank as Annexure C-11, wherein it was stated that if the OP had the clear, valid, free and marketable title, the Banks would sanction the loan. Legal opinion of Mr.Subodh Kumar Singh, Advocate, was also placed on record as Annexure C-12. Consequently, this complaint was filed before this Commission on 11.09.2012, with the following prayers :-

a) allow this complaint by directing the Opposite Party to refund to each of the complainant, the principal amount of money paid by such complainant, along with interest @ 18% p.a., calculated from the date of each installment;

b) Award compensation of Rs.10 lakhs for mental agony and harassment caused to each complainant.

c) Award costs of litigation quantified at Rs.50,000/- to each complainant;

d) Pass such other and further orders as may deem fit and proper in the facts and circumstances of the case.

6. The right of OP to file the written statement was forfeited vide order dated 06.08.2013, wherein, it was observed :-

The opposite party has refused to accept the notice on 05.11.2012. Consequently, it is deemed that the opposite party has been served on 05.11.2012. Vide order dated 28.09.2012, it was ordered that written statement be filed within four weeks but the needful was not done. On 14.02.2013, Sh.R.S.Badhran, appeared on behalf of the opposite party and stated that he has not received the paper book. He was directed to take the paper book from the Registry and file the written version, within 8 weeks.

This is an admitted fact that paper book was furnished to him on 14.02.2013.

Thereafter, four months have elapsed. Written version has not been filed. No application for extension of time to file the written version was moved. The opposite party has not availed the benefit of Section 13 of the Consumer Protection Act, 1986. We hereby forfeit the right to file the written statement under Section 13 of the Consumer Protection Act, 1986. This view is supported by as Supreme Court authority reported in Dr. J.J. Merchant Vs. Srinath Chaturvedi, III (2002) CPJ 8 (SC). This is noteworthy that no reason has been given as to why the written statement has not been filed. Even today, no application has been moved for further adjournment of this case. The right to file the written version is hereby forfeited.

The case is now fixed for 26.11.2013, for complainants evidence. The interim order to continue.

7. The order passed on 26.11.2013, on review petition, has attained finality, which reads as under :-

Notice served by the complainants was refused by the OP, in view of the arguments as per order dated 06.08.2013. Counsel for the OP stated that due to negligence of the previous Counsel Mr. R.S. Badhran, the written statement could not be filed in time. He informed the OP after the expiry of time. This is no ground at all. There is no provision for granting time in view of the three Judges Bench authority reported in the case of Dr. J. J. Merchant & Ors. Vs. Shrinath Chaturvedi III(2002 CPJ 8 (SC), wherein it was held :

.. From the aforesaid section, it is apparent that on receipt of the complaint, the opposite party is required to be given notice directing him to give his version of the case within a period of 30 days or such extended period not exceeding 15 days as may be granted by the District Forum or the Commission. For having speedy trial, this legislative mandate of not giving more than 45 days in submitting the written statement or the version of the case is required to be adhered to. If this is not adhered, the legislative mandate of disposing of the cases within three or five months would be defeated.

Therefore, the I.A.

7393/2013 is dismissed.

Second application has been moved under Section 26 for dismissal of the complaint. It is made clear that the OP has no right to lead the evidence but he is given liberty to argue on the legal issues, which will be heard at the time of final arguments.

8. It is thus clear that in view of Dr.J.J.Merchant Vs.Srinath Chaturvedi (Supra) , the OP cannot file the written version, after a long time. While following the law in the case of Kailash Vs. Nanhku & Ors., Civil Appeal No.7000 of 2004, decided on 06.04.2005, we had given it time to file the written version within 8 weeks, beyond the period of time, prescribed under the CP Act, 1986. However, the needful was not done. Consequently, the ruling mentioned in Kailash Vs. Nanhku (supra), is also of no help to the OP wherein it was specifically held :

(v) Though Order VIII, Rule 1 of the CPC is a part of Procedural Law and hence directory, keeping in view the need for expeditious trial of civil causes, which persuaded the Parliament to enact the provision in its present form, it is held that ordinarily, the time schedule contained in the provision is to be followed as a rule and departure therefrom would be by way of exception. A prayer for extension of time made by the defendant shall not be granted just as a matter of routine and merely for asking, more so, when the period of 90 days has expired. Extension of time may be allowed by way of an exception, for reasons to be assigned by the defendant and also be placed on record in writing, howsoever, briefly, by the court, on its being satisfied. Extension of time may be allowed if it was needed to be given for the circumstances which are exceptional, occasioned by reasons beyond the control of the defendant and grave injustice would be occasioned if the time was not extended. Costs may be imposed and affidavit or documents in support of the grounds pleaded by the defendant for extension of time may be demanded, depending on the facts and circumstances of a given case.

9. The principal argument submitted by the counsel for the OP is that the complainants are not consumers. There is no privity of contract between the complainants and OP. Again, there is no relationship of consumer and service provider, between the complainants and the OP. The Society is the consumer, the complainants have nothing to do with the above said MOU or contract. The case should have been filed by the President and/or Secretary of the Society. In their absence, the case goes in a tizzy. The Society SBEHWO is not making timely payment to the OP as per the agreed schedule and because the OP is informed, the complainants are not paying the installments to the Society.

OP has attached a true copy of the agreement to sell, dated 02.08.2006, which is annexed as P-1. On 10.03.2007, vide MOU, the Society agreed to purchase FSI of around 1,52,460 sq.ft.

from the OP at a cost of Rs.11,20,58,100/- + EDC/IDC and other charges in the sum of Rs.2,14,96,860/-, as may be payable to the Government and construction/maintenance charges in the sum of Rs.15,000/- per Member/flat. According to the MOU, the entire payment was to be made by 20.07.2007. The OP was to construct from Basement, Ground + 19 Floors. Copy of MOU has been placed on record as P-2. LIC was ready to advance housing loans.

OP, with the help of M/s.RPS Associates got the lien released over the 8 acres of land from Oriental Bank of Commerce making the entire site of 8 acres with the OP encumbrance free, vide letter dated 06.07.2007, annexed as Annexure P-4. There was global recession during the year 2007-08. The Society has deposited a sum of Rs.4,45,58,100/-. There was threat of forfeiture of the said amount. The Society entered into a MOU, dated 09.10.2008, requiring the OP to treat the amount of Rs.9,60,58,100/- as an amount towards providing 111 dwelling units for the purpose of its Members. The Society never made any complaint against the OP. The construction of the site continued at slow pace till May, 2010 because the complainants did not make the payment of installments. On 13.10.2010, till 18.10.2010, the OP received various complaints from the Society to refund the amount. However, there was no privity of contract between the complainants and the OP. The Developers Project was getting arrangements from LIC-HFL, Axis Bank, Dena Bank, etc., which applications are placed on record as Annexure P-6.

10. All these arguments are bereft of merit. The President and/or Secretary of the Society are working cheek with jowl with the Promoters/Builders, otherwise, they would have joined as complainants. Each of the complainant becomes a consumer, against the OP. It is also interested to note that neither the President nor the Secretary have got any interest in these apartments. They never applied for apartments with the OP.

11. The complainants have placed on record Demand Letters sent by the OP to various complainants. They also placed on record various receipts issued in their favour by KST Infrastructure Ltd, OP. The Demand Letter dated 04.06.2010, Ex.C-14, was sent to Mr.Gurdeep Singh Khurana. The receipt issued by KST Infrastructure Ltd. in favour of SBEHWO, is also placed on record. Same is the position with Mr.D.Nagaraju, who was allotted flat No.A-161 vide letter dated 07.10.2010, Ex.C-15, Mr.Shatrunjay S. Panwar/Mr.Surendra Singh Panwar, vide Ex.C-16, Mr.Pankaj Gupta/Mr.B.R.Gupta, Ex.C-17, Mr.R.K.Kapil, Ex.C-18, Mr.Dheeraj Sharma, Ex.C-19, Mr.Sachin Kumar Sarawat, Ex.C-20, so on and so forth, till Ex.C-34. These notices were sent in the individual names of the complainants. Though the Receipts were issued in the name of SBEHWO, it was also clearly, specifically and unequivocally mentioned that the money was received from the complainants, by name. Even if the office bearers of the Society turn hostile, it does not mean that the Members cannot sue the Promoters/Builders. Each Member of the Society has got the privity of contract. The OP cannot wriggle out of the liability by placing namby pamby pleas.

12. The learned Counsel for the OP vehemently argued that the OP is the owner of the premises, in dispute. He has invited our attention towards the Special Power of Attorney dated 22.03.2007. Its relevant para, runs as follows :-

WHEREAS the Executants are the Developers and have entered into Collaboration Agreement with M/s. RPS Associates, a partnership firm having its office A-193, First Floor, Okhla Industrial Area, Phase-I, New Delhi 20, for development and sale of area on land admeasuring about 28 acres (220 Kanal 06 Marla) situated in the Village Kheri Kalan & Baselwa, forming a part of Sector 88, Tehsil & District, Faridabad (Haryana), for its development.


AND the EXECUTANTS do hereby agree that all acts, deeds or things lawfully done by the said Attorney or its authorized employees under this Power of Attorney shall be construed as acts, deeds, matters and things done by the Executants and the Executants hereby undertake to confirm and ratify all and whatsoever the said Attorney or its authorized employees shall lawfully do or cause to be done by virtue of THIS SPECIAL POWER OF ATTORNEY.

This S.P.A. is Revocable.


13. The learned counsel for the OP has also pointed out that they have made arrangements for the complainants to get the loan from LIC-HFL and other Financial Institutions.

14. We find it extremely difficult to countenance this contention. It is crystal clear that OP does not own this land, free and clear. The Special Power of Attorney is revocable. Our attention was invited towards Ex.C-5, dated 13.02.2012, wherein the authorized signatory for M/s. KST Infrastructure Ltd., unambiguously mentions :-

To sort out the problem of granting loan from SBI, as desired by you, we have shown the original sale deeds in the office RPS Infrastructure Pvt. Ltd., to your panel Advocate Ms.Kavita Yadav, on 10th January, 2012 and hence, we hope your doubts regarding title and problem of SBI loan is taken care of. However, you will appreciate that granting or not granting loan is the discretion of financial institution and we cannot be blamed for the same. Your bank has taken opinion from a number of advocates but none has pointed out any defect in the title. We understand that the latest advocate has suggested that the bank may grant loan after taking a NOC from M/s. RPS Infrastructure Pvt. Ltd., we can get the same from M/s. RPS if that can facilitate sanction of loans. At your request, we had also arranged a loan camp by 2 financial institutions, namely, LIC Housing Finance and Axis Bank in the last meeting held at YMCA, New Delhi, who were willing to grant loans.

15. Our attention was also drawn towards Annexure C-11, which bears the stamp of Axis Bank Ltd. The project name is shown as Whispering Heights, Sector-88, Faridabad. The second page of Annexure C-11 clearly shows that the status of this project was on hold and the Builders name is mentioned as KST Infrastructure Pvt. Ltd. It clearly means that no work is being done at the site Project.

16. Our attention was also invited towards the MOU dated 09.10.2008 where it was mentioned :-

A. The FIRST PARTY is the Special Power of Attorney holder (vide Special Power of Attorney (SPA) dated 22nd March, 2007, regd. At Sl.No.221 in Book No.IV, Vol. No.89 on pages 293 to 304 with the Sub-Registrar Sikandarabad, Uttar Pradesh) of land measuring eight acres out of 49.4 acres situated at Sector 88, Village Kheri Kalan & Baselwa Tehsil, District Faridabad, Haryana, given by M/s. RPS Infrastructure Limited (RPS), the General Power of Attorney Holder vide General Power of Attorney (GPA) dated 18th August 2006 regd. At Sl.No.175 . in Book No.4 . Vol. No.3 .. on pages 28 .. to 30 . W With the Sub-Registrar Faridabad, Haryana and Joint Developer of the aforesaid 49.4 acres of land with M/s. RPS Associates, the title holders of the said land of 49.4 acres (hereinafter Owner).

E. The FIRST PARTY agreed to sell the said FSI to the SECOND PARTY and the SECOND PARTY agreed to purchase the said FSI vide Memorandum of Understanding dated 10.03.2007 (hereinafter Original MOU) for a consideration as specified in the Original MOU.

H. Based on the above, it is agreed between the Parties by means of this MOU that the FIRST PARTY shall build 111 dwelling units/flats on the said FSI situated within Vasundhra Complex (Whispering Heights) exclusively for the members of the SECOND PARTY in a separate block/tower named Sidhi Vinayak Apartments and allot the said dwelling units/flats on the recommendation of the SECOND PARTY to the members of the SECOND PARTY on the terms and conditions set forth herein.

17. It is, thus, clear that OP does not have any free, clear and marketable title. The naked truth is always better than best dressed lie. The OP wants to make bricks without straw. Its statement that it is the owner of the property, is all wet. The Power of Attorney is revocable. It does not go to scotch our doubts. The claim of the complainants is genuine. They entertained a genuine apprehension that even assuming that the OP constructs the flats in question, complete in all respects, even then, there are difficulties, problems, complications and even confusions at the time of registration of flats in their respective names, by which time, they would have paid up the entire sale consideration as per their respective payment schedule. The RPS Infrastructure Ltd can revoke the Power of Attorney, at any time. The skimble scamble explanation given by the OP does not go to help the legal problem. These are the harsh realities of life which cannot be glossed over. It is also difficult to fathom, why should anyone, take advantage of injustice from someone because he is wee bit more powerful.

18. The case of the complainants stands proved.

They are asking for return of the amount. The rates of the flats have already been increased by leaps and bounds.

See the law laid down in K.A. Nagamani Vs. Karnataka Housing Board, Civil Appeal Nos.6730-6731 of 2012, dated 19.09.2012 arising out of SLP (C ) No. 35226-35227 of 2011, the Honble Supreme Court was pleased to hold :-

9. ..

But in cases where monies are being simply returned then, the party is suffering a loss inasmuch as he had deposited the money in the hope of getting a flat/plot. He is being deprived of that flat/plot. He has been deprived of the benefit of escalation of the price of that flat/plot. Therefore, the compensation in such cases would necessarily have to be higher ...

It was further held that :-

26. For the reasons aforesaid, we allow the appeals and pass the following order:-

i) The respondent is directed to pay the appellant complainant, interest at the rate of 18% per annum on Rs.2,67,750/- from the date of its respective deposit till the date of realization with further direction to refund the amount of Rs.3,937/-, to her, as directed by the Consumer Forum.

ii) The respondent is directed to pay the appellant complainant further sum of Rs.50,000/- as compensation for deficiency in service on their part.

iii) The respondent is also directed to pay the appellant complainant, a sum of Rs.20,000/- towards cost of the litigation incurred by her.

19. The whole gamut of the facts and circumstances of the case leans towards the side of the complainants. We, therefore, allow these complaints and direct M/s. KST infrastructure Limited, OP, to refund to each of the complainant, the principal amount of money deposited by each of the complainants, along with interest @ 18% p.a., calculated from the date of receipt of each installment.

20. In this case, as many as 25 complainants are concerned. Each one had suffered mental agony and harassment, for the last so many years. They have incurred huge amount on litigation. Keeping in view of these facts and circumstances, we hereby direct OP to pay to all the 25 complainants, a total compensation of Rs.10,00,000/- (to be shared in equal proportion by all the complainants) towards litigation charges, harassment, mental agony, despair, anguish, frustration, sadness, etc. The above said order be complied with, within 90 days, from the date of receipt of this order. If the compensation amount is not paid within 90 days, it will carry interest @ 18% p.a., till realization.





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