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FIRST APPEAL NO.70 of 2012

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FIRST APPEAL NO.70 of 2012

(From the order dated 05.12.2008 in Consumer Dispute No. 32/06 of the State  Consumer Disputes Redressal Commission, Andhra Pradesh at Hyderabad)
1.      Smt. V. Kamala, W/o V. Venkateswara Rao, R/o Q.No.265/A, BHEL township, Ramachandrapuram, Hyderabad-500032, Andhra Pradesh. 

2.      Smt. B. Manjula, W/o B. Bhaskar Reddy, R/o H.No. 4-61,  Ramachandrapuram, Hyderabad-500032, Andhra Pradesh. 

3.      L. Veerabhadra Rao S/o L. Venkateswara Rao, R/o Plot No. 5, Jyothinagar, Ramachandrapuram, Hyderabad-500032, Andhra Pradesh. 

4.      Smt. V. Vijaya, W/o V. Krishna Rao, R/o H.No.23-47/1, Jyotinagar, Ramachandrapuram,

          Hyderabad-500032, Andhra Pradesh.


1.      K. Rajiv, S/o K. Anand, Rep. by his GPA Holder, K.V. Babji, Plot No.48, Sri Ayyappa Society
Madhapur, Hyderabad-500081  Andhra Pradesh.         
2.      M/s Kamala Builders, Rep. by its Proprietor, Mr. C.V. Subramanyam, S/o C.V. Venkatesan,
          6-3-88/9, Panjagutta, Hyderabad – 500082, Andhra Pradesh. 
3.      P. Narsing Rao, S/o P. Narayana Rao, 23-25/2, Jyothinagar, Ramachandrapuram, Hyderabad – 500032, Andhra Pradesh. 
4.      Mr. Zahed Ali, S/o Mahabub Ali, 2-54/1, Guttala Begumpet, Madhapur Post, Jubilee Hills,
          Hyderabad – 500033, Andhra Pradesh.




For the Appellants   :   Mr. G.V.R. Choudary and Mr. A.Chandra Sekhar, Advocates 

For Respondent No1: Mr. Moshtaq Ahmad, Advocate along with Mr. K.V. Babji, GPA Holder

For Respondent No 2:          N E M O

For Respondent Nos. 3 & 4: Proceeded ex-party vide order dated 10.12.2013



(Pronounced on 3rd day of July, 2014) 


            For the reasons stated in the application seeking condonation of delay, the delay of 1131 days in filing the present Appeal is condoned.

2.      Challenge in this appeal under Section 19 of the Consumer Protection Act, 1986 (for short, “the Act”) is to the order dated 5.12.2008, made by the State Consumer Disputes Redressal Commission, Andhra Pradesh at Hyderabad (for short “the State Commission”) in Consumer Dispute No. 32/2006, whereby a direction has been issued to the Appellants, and to  Respondents No. 2 to 4, to execute the Sale Deed in favour of Respondent No. 1, and also  pay to him a compensation of`1,00,000/-.

3.      Briefly stated, the background facts leading to the present appeal are as follows:

 Appellants along with Respondents No. 3 and 4 are the owners of a piece of land admeasuring 790 sq. yards, situated in Balanagar Mandal, Ranga Reddy District, Andhra Pradesh.  On 05.07.1997, they entered into an agreement with Respondent No.2 for development of the said land. The relevant covenants in the  Development Agreement, (the owners and the Developer, referred to as the First and Second party respectively in the Development Agreement) are as under:-

“8.    In consideration of the first party having entrusted irrevocable rights to second party, the second party agrees to construct in the following manner:-

(i)     The second party has today paid a sum of Rs.4,00,000/-(Rs four lakhs only) as earnest money deposit  to  the first party the receipt of which the first party hereby admit and acknowledge. The said amount shall be returned by the first party to the second party at the time of handing over the built up area i.e. 40% of built up area entitled by the first party. The said amount shall bear no interest.

(ii)     Further the second party has (sic) agreed to construct with its own funds and deliver 40% super built up area inclusive of all common areas, balance areas circulation areas to the  first party in lieu of the development rights granted by the first party. The second party shall be entitled for the remaining built up area i.e. 60% of super built up area and has right to alienate, the same to the prospective purchasers.

10.   The first party hereby authorizes the second party to procure the customers for flats/shops and garages and other spaces and to enter into agreement of sale with such customer, collect advances and to issue valid receipts to such purchasers of flats.

11.   After completion of the said residential/ commercial complex, the second party shall deliver the possession to the first party the entire area which the first party is entitled under this agreement after obtaining acknowledgment in writing from them and shall retain their share of constructed area as per this agreement. But however the second party either during the course of construction or after the completion of the construction, shall be entitled to enter into the agreement of sale and obtain advances from the customers  on the purchase of flats and other spaces falling to the share of the second party.

15.   The first party shall execute a GPA and get it registered in favour of second party or its nominee to enable the second party to make application and obtain permissions and sanction from MCH Electricity Department, Drainage, Water Supply Departments and any other department and also to enable him to commence the construction expeditiously and authorizing the second party to enter into agreement of sale or execute registered sale deed in respect of undivided share of land and flats proposed to be constructed on the schedule property excluding portion reserves to the owners together with the corresponding land.” (Emphasis supplied)

4.      In exercise of their right to sell and collect advances from the customers in respect of their share of 60% in the super built up area in the building, on 13.02.2004, Respondent No.2 entered into an Agreement of Sale for their entire share in favour of the Complainant, Respondent No. 1 in this Appeal, for a total consideration of`45,00,000/-. A sum of `15,00,000/- was paid at the time of signing of the agreement and the balance amount was payable in installments. It is not in dispute that the entire consideration was paid by Respondent No. 1 to  Respondent No.2.  On 12.10.2005, possession of the subject property was delivered by  Respondent No.2 to Respondent No. 1.  However, despite repeated requests, Sale Deed in his favour was not executed.  On 10.04.2006, the Complainant issued a legal notice to Respondent No.2 asking him to execute the Sale Deed. Vide their letter dated 28.04.2006, the said Respondent expressed their inability to do the needful because of non-cooperation by the land owners.  Having failed to get any positive response to his request, on 26.06.2006, Respondent No. 1 filed the complaint, seeking a direction to the owners of the land and the Developer to jointly or severally, execute Sale Deed, in respect of the subject flat in his favour and to pay damages @ 18% p.a. on`45,00,000/- along with compensation of `25,000/- for mental agony.    

5.      The complaint was contested by all the Opposite Parties.  In their counter affidavit, Respondent No.2, while admitting the execution of the aforesaid agreement and receipt of the total consideration from the Complainant and delivery of physical possession, it was stated that though they had no objection to execute the Sale Deed but the land owners were not cooperating with them. In their affidavits, the land owners (Appellants and Respondents No. 3 & 4) raised a preliminary objection regarding maintainability of the complaint on the ground that the Complainant was not a ‘consumer’ within the meaning of Section (2) (1) (d) of the Act; relief sought in the complaint was in the nature of a Civil Suit for specific performance of an agreement, the complaint was barred by limitation as it was filed after a lapse of more than 2 ½ years from the date of alleged Agreement of Sale. They also denied having authorized Respondent No.2 to sell 60% of the super built up area or they having undertaken to execute a General Power of Attorney in favour of Respondent No. 2.   It was also pleaded that the Development Agreement was not properly stamped and registered.

6.      Affidavits by way of evidence were filed by the parties with certain documents including Development Agreement dated 05.07.1997 and Agreement of Sale dated 13.02.2004. In his separate Affidavit, Appellant No.3, one of the co-owners of the land, pleaded that he had been cheated by Respondent No.2 and the other co-owners of the land by fabricating documents.

7.      On appraisal of pleadings and documentary evidence, Exhibits A-1 to A-7, the State Commission has come to the conclusion that undoubtedly there was delay in execution of the Sale Deed in favour of the Complainant, which tantamounts to deficiency in service. Relying upon the decision of the Supreme Court in Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ltd. & Anr. – III (2008) CPJ 48 (SC), the State Commission held that the Complainant was a ‘consumer’ and, therefore, the complaint was maintainable.  The plea of limitation was also rejected as, according to the State Commission,  the cause of action had accrued only on 20.04.2006, when Respondent No.2 expressed his inability to execute the Sale Deed.  Being aggrieved, the co-owners of the land are before us in this appeal.

8.      We have heard Mr. G.V.R Choudary, Ld. Counsel for the Appellants. Mr. Mushtaq Ahmad, argued the case on behalf of Respondent No.1, with assistance of the GPA of the Complainant. Respondent Nos. 3 & 4 were proceeded ex-parte, vide order dated 10.12.2013.

9.      Although in the Memo of Appeal, the order is sought to be challenged on several grounds but before us the main thrust of the argument of  Ld. Counsel for the Appellants was that in the absence of any privity of contract, between the Appellants as the owners of the land and the Complainant, the Complainant was not a ‘Consumer’ qua them and, therefore, there was no question of deficiency in service on their part in not executing the sale deed in favour of the Complainant. Collusion between the Complainant and the Developer (Respondent No.2) was also alleged.  Ld. Counsel for Respondent No. 1, on the other hand, while supporting the decision of the State Commission, referred to an order dated 15.01.2013 passed by this Commission, whereby the Revision Petitions preferred by the land owners against the direction by the State Commission to them to execute Sale Deeds in favour of the flat buyers under identical circumstances were dismissed. It is pointed out that the Special Leave Petitions filed against the said orders were dismissed by the Hon’ble Supreme Court on 10.05.2013 by a speaking order, and therefore, in the light of the said order, the Revision Petition deserves to be dismissed.    

10.    Having considered the matter in the light of the documents forming part of the record and bearing in mind  the order of the Hon’ble Supreme Court in BhupinderSingh Gill & Anr. Vs. Swaroopa Rani @ Susan Charles & Anr. (SLP (C) No. 17330 of 2013)  we are of the opinion that the appeal must fail. 

11.    In Bhupinder Singh Gill (supra), the land owners had entered into a Development Agreement dated 04.03.2004 with a builder for construction of multi-storied residential-cum-commercial apartment complex.  As per the Agreement, the builder was to carry out construction at his own cost and share the built-up area with the owners.  The built up area was to be divided between the owners and the builder in the ratio of 40:60.  The Agreement stipulated that the owners would execute a General Power of Attorney in favour of the builder, authorizing him to enter into Agreement of Sale of his share of the built up area. It seems that Power of Attorney was not executed by the Owners.  Despite receiving substantial amounts from the purchasers of flats falling to his share, the builder failed to execute Sale Deeds in respect of such flats.  Complaints were filed by the purchasers, seeking direction to the builder to complete construction and to the owners to execute Sale Deeds in respect of these flats.  The District Forum allowed the complaints, inter alia, directing the builder to refund the amounts received from the Complainants/purchasers.  However, on appeal, the State Commission directed the builder to complete the construction and the owners to execute sale deeds in favour of the Complainants.  Revision Petitions (Nos. 3903/2011 and 1328/2012) were dismissed by this Commission vide order dated 15.01.2013.  It was held as under:-

“Admittedly, the flat Nos. 103 and 104 were sold to the Respondents/Complainants by the Respondent No. 2 out of its 60% share in the building. As per Clause 9 of the Development Agreement, Respondent No. 2 builder was permitted to receive the advances from the prospective purchasers and issue valid receipts with the consent of land owners.  Ld. Counsel appearing for the Petitioners submits that the Petitioners were not bound with the agreements executed by the Respondent No. 2 as no consent had been taken from them.  We do not find any substance in this submission as this fact was not in the knowledge of the Respondents/ Complainants. Respondents/Complainants had entered into the Agreement of Sale of flats and paid the consideration. They cannot be denied the execution of sale deeds only because the builder had not taken the consent of the Petitioners to receive the advance.

          Whatever dispute is there between the Petitioners and the Respondent No. 2, they can settle the same in independent proceedings. As per Development Agreement entered into between the Petitioners and the Respondent No. 2, Respondent No. 2 had the authority to sell the flats falling in its share.  As per Clause 9, the Petitioner have given implied consent to the Respondents No. 2 to transfer the property falling to its share.  The rights of the bonafide purchasers cannot be defeated only on the ground that the Petitioners were not the party to the Agreements of Sale executed between the builder and the Respondents/ Complainants.  In these circumstances, the State Commission is absolutely right in saying that the Petitioners and the Respondent No. 2 are jointly liable to execute the sale deeds in favour of the Respondents/Complainants subject to their paying the balance amount of consideration.”

12.    Being aggrieved, as noted above, the Owners carried the matter to the Supreme Court.  The Special Leave Petitions, were dismissed by a speaking order, which reads thus:

“We do not find any infirmity in the order of the courts below in regard to the merit of the complaint so as to entertain the plea of its maintainability. Therefore, the question of law on this point is left open to be considered in an appropriate proceeding.

          Insofar as, the merit of the matter is concerned, we find that the stand of the petitioners is clearly unreasonable in view of the fact that although, they had agreed to offer the plot to respondent No. 2-builder to raise construction on it and sell 60% of the flats coming to his share, the petitioners thereafter have taken a U-turn on their stand to the effect that the builder could not have sold the flat to any other buyer.

          Since the transaction of sale between the buyer and the builder is within 60% and not beyond 60% which has already been left to the petitioners by mutual agreement, the petitioners have no reason to object to the said sale.

          Since the petition has no substance on merit, the question of maintainability is not fit to be gone into at this belated stage before the apex court.

          The special leave petitions, are, therefore dismissed."

13.    In our opinion, the afore-extracted order of the Hon’ble Supreme Court is on all fours on facts at hand.  Highlighted portions of the afore-extracted covenants in the Development Agreement clearly show that on development of the land, Respondent No.2 was to hold 60% of the super built up area in the building. In terms of Clause 11 of the said agreement they could enter into sale agreements and collect advance money in respect of their share during the course of construction or after the completion of the construction. Further, in terms of clause 15 of the said agreement, the Appellants were required to execute a General Power of Attorney and get it registered in favour of Respondent No.2 or their nominee to enable them to take all necessary actions for development of the property in terms of the Development Agreement, which they failed to do.  It is pertinent to note that in reply to paragraph III (I) of the Complaint, wherein the factum of execution of Development Agreement, dated 05.07.1997, between the Appellants and Respondent No. 2 and its various clauses were specifically referred to, except for general denial of all the stipulations in the Agreement, its execution, as such, was not disputed. An inter-se dispute between the owners and the builder, if any, cannot be permitted to be used as a ploy to wriggle out of obligations under the Agreements and leave the buyer in the lurch. Admittedly, the built up area sold by Respondent No. 2 did not exceed his share under the Development Agreement dated 05.07.1997 and, therefore, the judicial discipline demands that we follow the aforenoted order dated 10.05.2013 passed by the Hon’ble Supreme Court. Since the Agreement of Sale for the subject property was entered into way back  in the year 2004, following the order of the Supreme Court, we are not inclined to examine the question whether Respondent No. 1 was a “Consumer” vis-a-vis the Owners, falling within the purview of the Act.    

14.    For the aforegoing reasons, the Appeal is dismissed but with no order as to costs.

15.    In view of order in the main Appeal, the application, bearing IA No. 705/2014, seeking cancellation of Bailable Warrants is rendered infructuous and is disposed of accordingly.






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