In a recent appeal filed under Section 19 of the Consumer Protection Act, 1986, M/s Hede Consultancy Co. Ltd. and M/s Phoenix Township challenged the Order dated 27.08.2013 passed by the State Consumer Disputes Redressal Commission (State Commission) in Goa. The appellants sought to reverse the decision made in Complaint No. 23 of 2012, where the complaint was partly allowed. The case revolves around the failure of the developer to deliver possession of a flat to the complainant, despite multiple assurances.
Case Background:
The dispute originated in 1995, when Mr. Domingos Estevam Menezes, the original complainant, entered into an agreement with the developer to purchase a flat at the 'Angeline Apartments' in Candolim Village. The flat, identified as S-5, was to be handed over to the complainant on or before 06.04.1997. However, despite full payment of Rs. 5,35,500/- for the flat and several follow-ups, the possession of the flat was never transferred. Over time, the developer transferred the rights of the flats to M/s Phoenix Township, which further compounded the situation. The complainant alleged that the flat was unlawfully converted into an international hotel, and he had been cheated.
Legal Proceedings and Allegations:
In 2012, the complainant filed a complaint before the State Commission seeking possession of the flat, along with compensation for the undue delay. He demanded a daily penalty of Rs. 5,000 from the developer, Hede Consultancy Co. Ltd., and Phoenix Township Ltd. The complainant also sought interest on the amount paid for the flat and requested an injunction against any further use of the flat.
The defendants, on the other hand, raised several objections. They argued that the complaint was barred by limitation as the agreed-upon possession date was 06.04.1997, and the complainant had failed to file the complaint within the prescribed two-year period. They also claimed that there was no contractual relationship between the complainant and M/s Phoenix Township Ltd., as the assignment agreement dated 25.01.1999 did not mention the complainant.
State Commission's Ruling:
The State Commission partly accepted the complainant’s claim, ordering the developer and the two companies to hand over possession of the flat within 30 days. The State Commission also awarded compensation for mental stress and other hardships suffered by the complainant. This included an annual payment based on the flat’s value, with increasing compensation over a five-year period.
Appeal and Arguments:
In the appeal before the National Commission, the appellants contended that the complaint was filed far beyond the limitation period, making it time-barred. They emphasized that the cause of action arose in 1997, and the complainant should have filed the complaint within two years. They also argued that there was no privity of contract between the complainant and the appellants, and that the agreement did not extend to the complainant.
Furthermore, they claimed that the flat was no longer available as it had been converted into a hotel property. They also alleged that the complainant had no claim against them, given that the assignment agreement in 1999 did not include the complainant in the list of affected flat owners. Finally, they argued that the State Commission had wrongly granted compensation for mental distress, as no such claim was made by the complainant.
Complainant's Counter-Arguments:
On the other hand, the complainant’s legal counsel argued that the cause of action continued until the possession of the flat was handed over. They pointed out that despite the developer’s previous promises, the appellants were trying to avoid their contractual obligations. The complainant also referred to earlier litigation in which it was decided that the complainant should be compensated with interest, not a flat.
Legal Considerations:
One of the key issues in this case was whether the complaint was barred by the limitation period. The appellants relied on the fact that the original agreement stipulated a possession date of 06.04.1997, and the two-year period to file the complaint under Section 24A of the Consumer Protection Act should have been calculated from this date.
However, the complainant argued that the cause of action was ongoing due to the developer’s continued failure to deliver possession. Additionally, the complainant maintained that despite the lengthy delay, the appellants had never formally communicated with him to resolve the issue.
Supreme Court's Stance on Fraud and Limitation:
In this regard, the National Commission referred to the decision in City Union Bank Ltd. v. R. Chandramohan (2023), where the Supreme Court held that complaints involving highly disputed facts or criminal acts such as fraud could not be adjudicated under the Consumer Protection Act. Such matters require detailed investigation and cannot be resolved in summary proceedings.
Final Verdict:
Given the nature of the dispute, which involved allegations of fraud and deception, the National Commission concluded that the matter could not be adjudicated under the Consumer Protection Act due to the complexity of the facts involved. The Commission ruled that issues like fraud and cheating necessitate a civil suit for proper adjudication.
Thus, the appeal was allowed, and the order passed by the State Commission was set aside. The complainant was given the liberty to pursue the matter in a court of competent jurisdiction. This ruling emphasizes the importance of considering the nature of a complaint before determining the appropriate forum for its resolution.
Conclusion:
The case serves as a reminder of the importance of timely action in real estate disputes and highlights the limitations of the Consumer Protection Act in dealing with matters involving fraud and contractual complexities. It also underscores the need for parties involved in long-standing disputes to carefully assess the best course of action, considering the legal and factual issues at stake.
In real estate transactions, where the contractual obligations remain unmet, legal recourse may involve both consumer protection mechanisms and civil litigation to address the grievances effectively.
Consumer Protection Act, 1986
