M J Antony: Premium for deficient service

OUT OF COURT

The Supreme Court has taken away what consumer commissions have given.

Housing boards and property developers promise residential colonies of your dreams and make you sign complicated contracts. But when you prepare to take possession of your plot or house, you find that there is hardly any infrastructure worth the name. Your dream turns into a nightmare. You want to stop payment of instalments until the developer provides you with water, electricity, roads and other basic amenities. On the other hand, the land developer threatens you with heavy interest and penalty. The high courts have taken views at variance with each other. The Supreme Court has now taken a narrow view that might disappoint the buyers. In Municipal Corporation of Chandigarh vs Shantikunj Investment Ltd, it has stated that the provision of basic amenities is not a condition precedent for complying with the terms of the contract.

Earlier, two benches of the Punjab and Haryana High Courts had taken contrary views. In one class of cases, the court ruled that the housing board cannot order resumption and forfeiture if buyers suspend payment of instalments. The board was directed to provide amenities in accordance with law, within three months. However, another bench of the same high court insisted that the allottees were bound to pay the premium and other charges according to the conditions of allotment. Otherwise, it would lead to "extremely anomalous consequences". The allottees might refuse to pay arguing that the landscaping has not been done or the pavement has not been tiled properly. In view of the opposing views, appeals were moved in the Supreme Court by both sides. However, it has ruled in favour of the latter view.

Amenity, according to a typical definition as in the Chandigarh Act, includes roads, water supply, street lighting, drainage, sewerage, horticulture and landscaping. Provision of such facilities, according to the Supreme Court, is a statutory obligation but not a condition precedent. The allottees have a right to use the property that has been leased out to them for a premium. This is only the price to enjoy the property. Without such permission, walking over the property would mean trespass. The property can be enjoyed even without basic amenities, according to the Supreme Court.

"It is the common experience that for full development of an area, it takes years," the judgement explained. "It is not possible in every case that a whole area is developed first and allotment is served on a platter. The administration has promised that the basic amenities will be provided in due course of time." However, there was one word of caution to the administration and the developers in general: Though the provision of basic amenities is not a condition precedent, there is an obligation to provide the necessary facilities for the full enjoyment of the same by the allottees.

Such aggrieved people appear to have better luck before the consumer forums. In several cases, the consumer commissions have ordered compensation to the buyers for not providing basic amenities. They have described such negligence as "deficiency in service" under the Consumer Protection Act which calls for rectification and award of damages.

In Atul Vihar Kalyan Samiti vs Dubey Construction Co, the National Consumer Commission dealt with a developer in Madhya Pradesh. The residents complained that there was insufficient water supply, roads were muddy and unusable, electrification was faulty, street lighting was absent and there was not enough open space and parking area. The National Commission set up an expert committee to examine the litany of complaints. Acting on its report, the National Commission asked the developer to rectify each complaint according to a schedule of defects showing funds against each.

The Maharashtra State Consumer Commission heard a somewhat strange argument from the developer in Ankush Naik vs Subhash Agarwal. He maintained that according to the agreement, he was not obliged to provide water supply to the colony he built. The commission ruled that such a contention was not acceptable. It asked the developer to pay Rs 100 for each day he had not provided water supply.

In Rajendra Kumar vs Development Authority, the latter did not provide drinking water, electricity, sewerage, shops, school, hospital and gardens. One of the buyers of the plots wanted his money back with interest. The development authority, on the other hand, demanded the full lease money and threatened deductions for not taking possession of the plot. The Rajasthan State Consumer Commission ruled that the authority was guilty of deficiency in service and arbitrariness. These and several other judgements of the consumer commissions give hope to the buyers who have suffered a setback in law from the Supreme Court. The apex court interpreted the term "amenities" narrowly, giving leeway to the developers to flout the entitlements of their customers. They are clever enough to ditch their clients even without the help of law. The Supreme Court judgement will only harden their attitude.