Holding

The Supreme Court held that there was no deficiency in the housing‑construction service and upheld the National Commission’s order rejecting the refund claim.

Summary

Tulip Park Co‑operative Housing Society Ltd filed a complaint before the National Consumer Disputes Redressal Commission under the Consumer Protection Act, 1986, alleging that the builder, SAi Overseas Import and Export, delivered only 29,788.34 sq ft of saleable area instead of the 34,361 sq ft stipulated in their agreement and sought a refund of Rs 28,80,776. The agreement expressly stated that there would be no dispute on the saleable area. The Commission held that the building was constructed as per the sanctioned plan, the agreement barred any dispute on area, and the architect’s certificate lacked particulars, thus finding no deficiency in service. The Society appealed to the Supreme Court, which upheld the Commission’s order, ruling that no deficiency existed in the housing‑construction service and dismissing the appeal.

Issues considered

Whether a shortfall in the measured saleable area, contrary to the contract, constitutes a 'deficiency' in service under Section 2(g) of the Consumer Protection Act, 1986.
Whether a contractual clause that precludes any dispute on saleable area is enforceable in a consumer complaint.
Whether the architect’s certificate and affidavit constitute sufficient evidence of a deficiency.
Interpretation of 'service' under Section 2(o) of the Consumer Protection Act in the context of housing construction.

Legislation cited

Consumer Protection Act, 1986s. 2(g), s. 2(o)

Subjects

Consumer protectionDeficiency in serviceHousing constructionSaleable areaContractual clauseArchitect reportRefund claimNational Consumer Disputes Redressal Commission

Judgment

..... TULIP PARK CO-OPERATIVE HOUSING SOCIETY LTD .
v.
A
MIS. SAi OVERSEAS IMPORT AND EXPORT

SEPTEMBER 14, 1999

[S. SAGHIR AHMAD AND D.P. WADHWA, JJ.] B

Consumer Protection Act, 1986-Section 2(g), 2(o)-Deficiency in
service-Housing construction-Appellant alleging short fall in saleable
area by developer-Claim for refund-Original Claim rejected by National
Commission-Building constructed as per sanctioned plan-Agreement by C
Appellant not to raise any dispute regarding saleable area-Whether any
deficiency in service-Held, No.

The Appellant filed a complaint before tJte National Consumer Disputes
Redressal Commission against the Respondent alleging deficiency in service D
rendered ip the housing construction. The Appellant contended that the
Respondent failed to provide 34361 sq.ft. of the area as per terms of contract,
there was a shortfall of 4572.66 sq.ft. in the constructed area and sought for
a refund of Rs. 28,80,776/-. As per the agreement between the Appellant and
Respondent a declaration was made by the Respondent-builder that the building
is sanctioned as per Bombay Municipal Corporation. The agreement E
specifically recorded that there will be no dispute on the saleable area by the
purchasers on any grounds and on any reasons. The building was constructed
as per the sanctioned plan and each flat had the area as given in the plan
annexed to the agreement.

The Appellant-Complainant filed a certificate and an affidavit by its F
architect mentioning that the saleable area is only 29,788.34 sq.ft. The
National Commission dismissed the complaint holding that there is no
deficiency in service.

Dismissing the Appeal, the Court
G
HELD: 1.1. The Orders of the National Commission rejecting the
prayer of the Complainant is upheld. There is no deficiency in service in
"housing construction" provided by the respondent, considering the fact that
the building was constructed as per the sanctioned plan and each flat has the
area as given in the agreement and the complainant had agreed not to raise H
377
378 SUPREME COURT REPORTS [1999] SUPP. 2 S.C.R.

A any dispute regarding saleable area, particularly when permitted area of
construction was to the extent of 34361 sq.ft. (381-D]
..
1.2. The report of the architect is bereft of particulars. The National ·
Commission is right in rejecting the report. (381-C]

B CIVIL APPELLATE JURISDICTION: Civil Appeal No. 13417 of
1996.

From the Judgment and Order dated 21.6.96 of the National Consumer
Dispute Redressal Commission, New Delhi in O.P. No. 111 of 1994.

C S.S. Javali and Rustom B. Hathikhanawala for the Appellant.

Joseph Vellapally, R. Narain, Ashok Sagar, Ms. Punita Singh and Amitabh
Marwah for the Respondent for JBD & Co.

The Judgment of the Court was delivered by
D
D.P. WADHWA, J. Appellant was complainant before the National
Consumer Disputes Redressal Commission (for short 'National Commission').
Proceedings were initiated under the Consumer Protection Act, 1986, under
which National Commission has been constituted to entertain complaints
where value of the goods or services and compensation, if any, claimed
E exceeds Rs. 20 lacs. National Commission is also an Appellate Authority. It
hears the appeals from orders of the State Commission.

The complainant, a co-operative housing society, had complained short-
fall in services rendered by the respondent, a builder and developer, which
had agreed to construct and sell 64 flats to the complainant in a building
F called Tulip Park. The complainant is not happy with the order dated June 21,
1996 of the National Commission in one aspect and it is that while under the
agreement dated May 10, 1990 respondent had agreed to construct the flats
having total saleable area measuring 34, 361 sq. ft. at the rate of Rs. 630 per
sq. ft. but the saleable area actually measured comes to 29,788. 34 sq. ft. There
G being thus short fall of 4,572.66 sq. ft. in the constructed area. Since complainant
had paid the price for the area of 34, 361 sq. ·ft. and it got only 29,788.34 sq.
ft. it claimed refund from the respondent of an amount of Rs. 28,80,776 (4,
572.66 sq. ft. x Rs. 630 per sq. ft.). The National Commission did not agree
with the complainant. In this appeal by the complainant we are called upon
to decide on, what the appellant says, if there is any deficiency in services
H provided by the respondent, the builder.
TULIP PARK CO-OP HOUSING SOCIETY LTD. v. SAi OVERSEAS IMPORT AND EXPORT [D.P. WADHW A,J. ) 379

'- .. Under clause (g) of Section 2 of the Act "deficiency" means "any fault, A
imperfection, shortcoming or inadequacy in the quality, nature and manner of
perfonnance which is required to be maintained by or under any law for the
time being in force or has been undertaken to be performed by a person in
pursuance of a contract or otherwise in relation to any service". A complaint
lies if there is deficiency in service of housing construction. "Service" under B
- clause ( o) of Section 2 means service of housing construction as well. Grievance
of the complainant is that the respondent failecr'to give 34,361 sq.ft. of area
in the building Tulip Park in accordance with the terms of the contract and
that less area was given. When this fact was brought to the notice of the
respondent it took the stand for the first time that there was a mistake and
it had forgotten to include the stilt area in the agreement and claimed that the C
complainant had to pay for the stilt area. There is no ground floor as the
building is constructed on stilts. Price of land is included in the cost of
construction calculated at the rate of Rs. 630 per sq. ft. Actual total saleable
area given was 29,788.34 sq. ft. and thus there was the shortfall of the actual
area. The respondent was liable to return the amount for the shortfalls of this
area aggregating to Rs. 28,80, 776. D
We may at this stage refer to some of the terms of the agreement alleged
breach of which led the complainant to approach the National Commission.
The agreement recites as to how the respondent, as developer, became entitled
to sell the land and the building constructed thereon. Respondent was to E
construct the building as per sanctioned plan granted by the Bombay
Municipal Corporation. As per the sanctioned plan respondent was required
to construct 64 flats in two wings 'A' and 'B'. Wing 'A' has seven floors with
four flats on each floor totalling 28 flats. Wing 'B' has six floors with six flats
on each floor totalling 36 flats. With the agreement a plan was annexed
showing the flats on each floor of both the wings giving sq. ft. area of the F
flat. The plan, however, does not show the area of the common places.
Agreement specifically records the declaration of the builder that the building
is sanctioned for development and construction as per the sanctioned plan
granted by the Bombay Municipal Corporation. Orders of the Bombay
Municipal Corporation and the sanctioned plan were part of the agreement. G
Members of the complainant are the employees of the Air India and they
fonned themselves into a cooperative society called Tulip Park Co-operative
Society Ltd. They entered into agreement with the builder on "package deal"
basis to purchase the proposed building under construction and the land
described thereunder at the rate of Rs. 630 per sq. ft. saleable area. Two
clauses of the agreement which are relevant for our purpose are as under : H
380 SUPREME COURT REPORTS [1999) SUPP. 2 S.C.R.

A "l. The Developer shall sell and the Purchaser herein as Chief
Promoter representing himself, and the enrolled members of the . --
proposed Co-operative Housing Society to be formed and
registered under the Maharashtra Co-operative Societies Act
have agreed to purchase on what is commonly termed "Package
Deal" basis, the said proposed Building to be constructed and
B comprising of 64 residential flats totally permitted for construction
to the extent of 34,361 sq. ft, of the saleable area inclusive of the
balcony, lift, landings lobby and staircase area on the portion of
land admeasuring 1820 sq. mts., hearing C.T.S. No. 263, Sr No.7-
A, Hissa 13, being, lying and situated at village Maro!, within the
c registration district of Bombay Suburban of Greater Bombay,
more particularly described hereunder in the Second Schedule
••
and prominently indicated on the Plan annexed hereto as
Annexure "l-A" together with the amenities and specification as
more particularly set out in the List of Amenities annexed hereto
as Annexure "II" at the consideration (which includes the value
D of the Land) that is Rs. 630 per sq. ft. saleable area of the
building and on the terms and conditions as hereafter set out.
It is agreed there will be no dispute on the saleable area by the
purchasers on any grounds and on any reasons.
2. That the total consideration (including the value of the Land and
E amenities to be provided by the Developer) at the agreed deal
rate of Rs.630 per sq ft. of the proposed Building being
constructed and consisting of the 64 residential flats and to the
extent of34361 sq. ft saleable area (inclusive of the balcony, lifts,
landing, lobby and the staircase areas) is agreed to be a sum of
F Rs. 2,16,47,430 (Rupees Two Crore Sixteen Lacs Forty Seven
Thousand Four hundred and Thirty Only)."
It is not disputed that the building was constructed as per the sanctioned
plan and each flat has the area as given in the plan annexed to the agreement.
It is the manner of calculation of the saleable area. Complainant was put to
G notice of the area to be constructed in the building from the plan annexed with
the agreement as well as with the sanctioned plan. Two things are apparent
from the terms of the agreement: (1) Proposed building was to have 64
residential flats totally permitted for construction to the extent of 34,361 sq.
ft. of the saleable area (emphasis supplied) and (2) there will be no dispute
on the saleable area by the purchaser on any ground and on any reason. We
H are not going into the question if the area under the stilts was to be paid
TULIP PARK CO-OP. HOUSING SOCIETY. LTD. v.SAIOVERSEASIMPORTANDEXPORT [D.P. WADHWA,J.] 381

separately as claimed by the respondent or not as that has been negatived A
by the National Commission. We repeatedly put it to the learned counsel for
the complainant as to bow and where the area of 4572.66 sq. ft. could have
been built in the build,ing, shortfall, which is alleged. There was no answer
to that and· there could not be any as the building was constructed as per
the sanctioned plan. Complainant has brought on record a certificate by its
architect giving the saleable area as 29,788,34 sq. ft. There is also an affidavit B
in support of the report of the architect but what we find is that the report
of the architect is bereft of particulars. The report did not find favour with
the National Commission and we think rightly.

Considering the fact that the building was constructed as per the C
sanctioned plan and each flat has the area as given in the agreement and that
complainant had agreed not to raise any dispute regarding saleable area,
particularly when permitted area of construction was to the extent of 34,361
sq. ft., we do not th~ there is any defi¢iency in service in "housing
construction" provided lpy the respondent. 1We uphold the orders of _the
National Commission in rejecting that praye~ of the complainant wherein it D
had claimed that respondent be directed to refund Rs. 28,80,776 towards the
shortfall of the saleable area.

The appeal is dismissed. We, however, leave the parties to bear their
own costs.
E
VM Appeal dismissed.