Consumer courts can try construction service cases

The National Commission rules that transactions of flats or construction activity come under consumer affairs, writes K. Vijaya Bhaskara Reddy

What if a builder refuses to register the flat after accepting advance amount? A recent verdict by A.P. State Consumers’ Disputes Redressal Commission (APSCDRC) assured that it is possible to hold the service provider respio in this kind of cases, if the victim has enough documentary evidence. It also clearly stated that construction services come under the jurisdiction of consumer courts.

According to the case, D. Vijaya Kumar, a resident of Abids, made a payment of Rs. 4 lakh to Sai Victory Constructions in August, 1997 as advance towards purchasing a flat in their residential complex at Himayatnagar. The total amount of the deal was Rs.10 lakh. However, Mr. Vijaya Kumar couldn’t get his flat registered and he later came to know that the flat was sold to a third party without his knowledge. He filed a case in Hyderabad District Forum-I in 2003, seeking the agreement to be executed or refund of his money with as interest of 24 per cent per annum, together with compensation of Rs.20,000 and court costs of Rs.10,000.

The respondents, Sai Victory Constructions, resisted the case and said the payment of Rs.4 lakh was never done to them. They also argued that this case doesn’t fall under consumer courts, but that of civil court, and prayed the dismissal of the complaint with court costs. The district forum saw that six years gap between the commencement of agreement and filing of case as a reason for disqualification and asked the complaint to file a civil suit. It dismissed the complaint.
Bank statements

Aggrieved by the decision, Mr. Vijaya Kumar appealed in the State Commission. He argued that registering the flat to a third party after receiving an amount more than 20 per cent of the deal as advance was against the A.P. Apartments (promotion of construction) Act. This time, he took care to furnish the detailed bank statements, which said that the banks had issued checks in favour of the Sai Victory Constructions. The company filed no evidence to disprove the bank statements.

The State Commission took this point into consideration and stated that company had entered into an agreement. It made two important observations at this juncture. It said that - a decision of National Commission reported in 2005 (2) CPR 1 (NC), holds that the problem will continue if the developer failed to give possession of property or refund the money and the transactions of flats or construction activity by builders come under the consumer affairs with an amendment inserted by Act 62 of 2002.It asked the builders to refund Rs.4 lakh with interest of 12 per cent per annum from August, 1997 to till date along with compensation of Rs.20,000 with court costs of Rs.5,000. Time for compliance was four weeks.