ORDER
B.K. Taimni, Member
1. Appellant was the complainant before the State Commission, where he had filed a complaint alleging deficiency in service on the part of the respondents.
2. Undisputed facts of the case are that the appellant/complainant was allotted a flat No. 3 on 1st floor of the new building which was under construction at No. 19, Harris Road, Bangalore by the respondent company for a total consideration of Rs. 24,70,000, which included the cost of the flat, as well as one car parking space in the basement. In pursuant to this an ‘Agreement to Sell’ was entered into by the parties on 9.8.1996 and there is an Agreement to Build dated 8.8.1996 between the parties. There is no dispute that since there was difficulty in raising finances by the appellant, a Tripartite Agreement was also entered into between the respondent, appellant and Vysa Bank. As per material on record there is no dispute that the appellants had paid Rs. 22,70,000 to the respondent of which Rs. 9,20,000 was paid by the appellant/complainant from his own sources and Rs. 13,50,000 was made available by Vysya Bank Housing Finance Ltd. (Para 34 of the written version filed by the respondent before the State Commission).
3. It was the case of the complainant that since completed flat was not being handed-over in time, i.e., by 31.12.1997, as agreed between the parties, hence in these circumstances they asked for refund of money in January and February 1998 through the letters, which are on record. Since money was not being returned and there was outstanding amount by the Bank, the Bank filed a suit against both the appellant and the respondent for recovery of the amount. In the meantime, for non-delivery of possession and non-refund of money on account of non-delivery of complete flat, a complaint was filed before the State Commission. The matter was contested by the parties before the State Commission, who through a cryptic order dismissed the complaint on the ground that the dispute between the parties is already before a Civil Court and in such situation the parties can seek the same relief, i.e., being sought before the Consumer Fora, from the Civil Court, in the light of which, the complaint was dismissed, hence this appeal before us.
4. We heard the learned Counsel for the parties at length. Since the basic facts are not in dispute we are not getting into the facts enumerated above except to the extent we have to satisfy whether there was any deficiency in service on the part of the respondent or not? To narrow down and to deal with the specific points at issue we reproduce below Clauses 2(e)(f](g) and 3(b) of the ‘Agreement to Build’ entered between the parties:
2(e) If the second party fails to pay the instalments as per the agreed time schedule, the first party shall be entitled to claim interest for the first three months at the rate of 18% p.a. from the date of default till the date of payment.
2(f) If the second party fails to make payments within the period of three months as aforesaid, the first party shall be entitled to terminate this agreement and shall be further entitled to deduct 10% of the total contract sum before returning the remaining amount without any reference to the second party.
2(g) In such an event, the first party shall be entitled to sell the Schedule ‘D’ property and the Schedule ‘E’ Apartment and all appurtenances thereto to any other person of the first party’s choice.
3(b) In the event the first party being unable to complete the construction under normal conditions and hand over possession of the Schedule ‘E’ Apartment by the above date, the first party agrees to refund to the second party the amount paid to the first party by the second party, along with interest thereon at 18% p.a. within 60 days from the said date on demand.
(Emphasis supplied)
5. If we see the material on record we are left in no doubt that the appellant did not pay the demanded amount of Rs. 4,26,034 communicated by the respondent vide its letter dated 31.7.1997. This amount on account of additional interest came to Rs. 4,43,293 on 30.9.1997 and Rs. 4,52,329 as on 1.10.1997. There is also a letter on record written by the father of the complainant who is also the Power of Attorney Holder, disputing the outstanding amount of Rs. 4,17,650 as communicated to him vide letter dated 31.9.1997 by the respondent, and broadly agreeing to a figure totalling Rs. 3,29,733. Admittedly this amount was never paid.
6. As per material on record we also see that it was not a question of only completion of flat but also carrying out certain additional work. Even if we see the joint inspection done by the appellant and some engineer which is on record yet we are not satisfied that this incomplete work would come in the way of the appellant taking possession as most of it related to the additions/alterations in the flat, agreed to between the parties.
7. In view of above, we are unable to sustain the plea of the appellant that he is entitled to refund of money along with interest @18% p.a. in view of Clause 3(b) of the agreement reproduced earlier.
8. However, when we see Clause 2(f) it is crystal clear that if the second party, i.e., the appellant fails to make payment within a period of three months of the demand being raised by the first party, the latter shall be entitled to terminate this agreement which has not been done. Result being neither the possession got transferred nor the money refunded leaving the appellant/complainant high and dry. We are unable to sustain the argument advanced by the learned Counsel for the respondent that appellant is not entitled for refund of this money. According to them the appellant demanded the refund of money, because the market price of the real-estate was going down. In our view, it is the prerogative of the buyer to ask for refund if they are unable to honour the commitment as per terms of the agreement, which was the case in hand. Thus, not refunding the money on demand in view of the conditions mentioned in para 2 of the agreement is a clear case of deficiency on the part of the respondent.
9. As per para 2(f), at best they could have deducted 10% of the total contracted amount before returning the money but they did nothing of this sort, which is a clear case of breach of terms of contract, which the Agreement is, thus, falling within the mischief of Section 73 of the Indian Contract Act, 1872, which is reproduced below:
73. Compensation for loss or damage caused by breach of contract-When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
10. It was vehemently argued by the learned Counsel for the respondent that the appellant would not be entitled to any compensation, as there has been no breach on their part.
It is quite clear that when an obligation resembling those created by contract has been incurred and has not been discharged, the person so injured (in this case the appellant) would be entitled to receive some compensation. Not adhering to the Term 2(f) of the Agreement is a clear case of breach of agreement on the part of the respondent. At best it could have only deducted 10% of the contracted amount, and refund the balance, which has not been done so far, which is reflection of their ugly intentions.
11. It may be also mentioned that subsequent to the orders passed by the State Commission, the Civil Court whether the Bank had filed a recovery suit against both the parties have passed the order in following terms:
The plaintiff and the defendants 1 and 2 in the above case, files this joint compromise petition as under-
1. The above case has been filed by the plaintiff against all the defendants inter alia praying for a sum of Rs. 26,51,523.57 with future interest at 20.50% p.a. compounded quarterly from the date of filing of suit, i.e., 20.10.2001 till the date of realisation.
2. That the plaintiff Bank and the defendants 1 and 2 further submit that they have mutually agreed and reached a settlement in the above case and that the plaintiff is willing to receive a sum of Rs. 21,68,500.00 by way of a one time settlement from the defendants 1 and 2 and in pursuance thereof the defendants 1 and 2 have agreed to pay to the plaintiff the total sum of Rs. 21,68,500.00 towards full and final settlement of the above suit claim amount of Rs. 26,51,523.57.
3. The plaintiff bank acknowledges the receipt of Rs. 21,68,500.00 by way of Demand Draft/P.O. bearing No. 867967 dated 16.8.2007 drawn on Centurion Bank of Punjab and hereby releases its charge in respect of the property situated at Flat No. 3, situated in 1st Floor, No. 19, Harris Road, Benson Town, Divisional Corp 84, Bangalore, morefully described in Schedules A, B and C of the plaint.
4. The plaintiff Bank submits that in view of the above payment received from the defendants 1 and 2, the entire claim made against the defendants 1 and 2 in the above suit amounting to Rs. 26,51,523.57 stands satisfied, and the defendants 1 and 2 stand absolutely discharged of their liability in respect thereof, and the plaintiff Bank shall not be entitled to seek any further claim towards the suit claim amount.
5. The defendants 1 and 2 reserve the right to proceed independently against the defendant No. 3 herein for due recovery of the amount paid by them to the plaintiff and for any other relief that they are entitled for as against the defendant No. 3.
6. The plaintiff requests that this Hon’ble Court may be pleased to direct refund of the full Court fees.
Wherefore this Hon’ble Court may be pleased to pass final decree in the above C.S. in terms of the above settlement recited in this Memo and further direct refund of the Court fees in the interest of justice.
12. In view of above, the self-imposed restrictions imposed by the State Commission stand relaxed and we are of the view that the non-refund of money after deduction of 10% of the total contracted amount is a breach of contract. It is also not in dispute that till date the respondent has enjoyed that money for its business/commercial purpose, in view of which it is directed that the respondent shall refund the deposited amount of Rs. 22,70,000 after deducting 10% of the contracted amount (i.e., Rs. 2,47,000 along with interest @10% p.a. from 1.3.1998 (relatable to various dates of January and February 1998 when they asked for refund of money) till the date of this order. This payment shall be made within 6 weeks from the date of passing of this order, failing which the interest rate shall go up to 12% p.a.
13. In the peculiar facts and circumstances of the case no order as to costs.