How a Malad man defeats a mighty builder!

By I C Naik

After relentlessly pursuing a case before Consumer Fora, a Common man in Malad [Mumbai Suburb] Mangesh Koltharkar defeated a mighty builder lobby and got himself compensated at current market price of the flat un-delivered a decade ago. Mangesh had reportedly booked a flat for an agreed price of Rs 9.26 lakh in the year 1999 and paid Rupees 3.51 lakh as advance.

The Builder did not perform his undocumented principal obligation namely delivery of the flat, besides committing several criminal offenses under MOFA. Mangesh successfully agitated before the Maharashtra State Consumer Disputes Redressal Commission and got the order for payment of Rupees 25.25 lakh passed against the delinquent developer who cheated him.

Mangesh put up a brave fight to get “a civil redress” for the criminal wrong done by the builder.  It is not as simple as that. There is a lot to think about this case about the builders going unpunished and that is what causes deficiency in service i.e. a civil wrong. If the deterrents were activated to curb the crimes it would have acted as obstacles to deficiency in service. The builder’s criminal wrong-deeds were;  (1) he took more than the maximum permissible 20% of total flat price as advance i.e Rs 3.51 lakh, he committed a (2) criminal offence also of not executing an agreement mandated under Section 4 of the Maharashtra Ownership Of Flats (Regulation Of The Promotion Of Construction, Sale, Management And Transfer) Act, 1963 (the MOFA).

The question of another obligation of the registration of the agreement did not arise as none was written down by the builder; another (3) offence under MOFA.  Till today apparently these criminal-deeds are like technical lapses as the State Administration does not seem to consider them as worth a blink of an eye, but the important fact was these criminal deeds induced the builder to commit a civil wrong and the flat was ultimately not delivered and what was delivered was excuses, excuses and excuses for years together, a torture worth imagination but only a common man can do it and not the Authorities responsible to prevent them happening. One more highly contentious legislation namely the Maharashtra Housing (Regulation and Development) Act, 2012 ( Maharashtra Housing Regulation Act) is poised to replace this alleged incompetent MOFA (as admitted by the Government after over half a century!!!).

After two years of wait in Delhi on the 24th February 2014 the President of India gave the assent to the Act which now awaits notification by the State Government to come in to force. The reins of that Government in the meanwhile got passed on to opposite parties, thus affixing a question mark on the law seeing the light of the day in its present form. There is no hurry for anybody to go in for this law, except the Consumer who has any way suffered for more than half a century under MOFA.

And the irony; the Builders have already run it down saying that “it does not cover the government agencies that accord approvals and only imposes additional responsibilities on builders. There is no time limit for any authority to accord its permission….  though they need to obtain about 52 permissions and clearances.

It is a matter of some hope of late that the Consumer Forums have become more active and consumers are also waking up to fight for their rights though still as an un-organized lot.

Something worth mentioning is Mangesh was not deterred by the fact that after filing a complaint in 2002 the documents pertaining to the proceedings were reportedly ravaged by a white ant infestation (genuinely perhaps).The commission reasoned out the compensation of Rupess 25.25 lakh by reckoning the land cost per sq ft built-up area at Rs10,191 as per the government ready reckoner for stamp duty in the same area. Since Mangesh had paid Rupees 3.51 lakh, (37% of the prevalent flat price) for 620 Sq Ft prorated value worked out to Rupees 23.37 lakh which the Commission held as payable to him by the Builders. The remaining amount Rupees 1.87 lakh was assigned towards the compensation for money spent on travel  and for suffering the mental agony, harassment and the costs of the complaint.

Now the most important un-attempted question; Should the Builders go scot-free despite committing acts attracting penal provision up to 5 years’ imprisonment under MOFA as listed below?

QUOTE: SECTION 13: OFFENCES BY PROMOTERS

(1) Any promoter who, without reasonable excuse, fails to comply with, or contravenes,

the provisions of section 3,4, 5 (save as provided in sub-section (2) of this section), 10 or 11 shall, on conviction, be punished with imprisonment for a term which may extend to three years or with fine, or with both.

(2) Any promoter who commits criminal breach of trust of any amount advanced or deposited with him for the purposes mentioned in section 5 shall, on conviction, be punished with imprisonment for a term which may extend to five years, or with fine, or with both.

(3) Any promoter who, without reasonable excuse, fails to comply with, or contravenes,any other provision of this Act or of any rule made thereunder, shall, if no other penalty is expressly provided for the offence, be punished, on conviction, with imprisonment fora term which may extend to one year, or with fine which may extend to ten thousand rupees, or with both. UNQUOTE

Under Section 3 he must give information and the documents listed in this section

Under Section 4 he must execute agreement/register it and take advance (below 20%)

Under Section 5 he must maintain a separate bank account of sums taken as advance

The moot question therefore is, why the presence of the proven evidences of criminal offences under a State Law (MOFA) on the records of the neutral forum like the Consumer Court should be allowed to go un-recognized for appropriate punitive actions by the competent court in the State?  Should the Consumer Forums not reach out to potential remedial measures which can help cut back the complaints from taking place in future which later need not come up for adjudication before that body?

Do we not see there exists a fit case of a proven offence being recognized as a threat to the potential deficiency in service to unidentified consumers and therefore needs to be put to justice in present i.e. by transferring such matters to the district magistrate’s courts to initiate appropriate trials under the State Legislation.

Facts found relevant which were responsible for a consumer to seek justice under Central enactment namely Consumer Protection Act 1986 should not be wasted as of no relevance to the State enactment once established beyond doubts. In fact there is nothing to try, an offence is proved and only punishment is to be quantified. Perhaps a writ in the High Court can direct Consumer Courts to start becoming futuristic to provide redress to an unborn complaint to an unknown consumer. Judicial thinking has undoubtedly broaden up the dimensions by an order under Gujarat Cooperative societies Act incase of Amul’s Chairman delivered on 19th of March this year, clarifying true dimension of a democratic character of cooperative society as readable post The Constitution ( 97th Amendment ) Act 2011.

It is pertinent to look at the justification for the repeal of the MOFA by the Maharashtra Housing Regulation Act. QUOTE: WHEREAS the Maharashtra Ownership Flats (Regulation of the promotion of construction, sale, management and transfer) Act 1963, though enacted to provide for relief to flat purchasers against sundry abuses, malpractices and difficulties related to the construction, sale, management and transfer of flats, it is noticed by the State Government that, the said Act did not provide for an effective implementing arm for its various statutory provisions, as the flat purchasers could only approach consumer forum or civil court for acts of omission or commission regarding provisions of the said Act; UNQUOTE

This rationale of the Maharashtra Housing Regulation Act,  irresponsibly overlooks the State’s responsibility of taking cognizance of the criminal proceeding contemplated as illustrated in the present case of civil wring to Mangesh discussed herein above for which criminal consequences are set out under SECTION 13: OFFENCES BY PROMOTERS reproduced above.

Lastly is it that India is going for a drastically different approach towards implementation of legislations by appointing judicious bodies with provisions integrated in to the concerned Statute like the one we have under cooperative societies Act namely the Cooperative Courts and Appellate Tribunals. In that event IPC 1860 will have to be completely revamped which is any way an antique piece of Indian legislative history. Or may be dispensed with as every statute will have its own set up to try offences under the Act.

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