EMGEE INDICTED IN `10 CRORE SIRIDAO SCAM!

RAPPED: EMGEE Developers was ordered by the consumer court to return the advance to Ms Joan Rita Bridget Mayne or failing that, to deliver the 10 crore villa supposedly being developed in Naira in Siridao on which she had paid an advance of1 crore

In a landmark judgment on March 7, 2019, Prem Narayan, presiding member of the National Consumer Disputes Re-dressal Commission, New Delhi (Consumer Case No. 1053 of 2015) indicted EMGEE properties of defrauding a Goan NRI, Joan Rita Bridget Mayne, who lives in Dona Paula of 1 crore under the pretense of selling a super luxury villa in ‘Naira’ in Siridao for10 crore. Ms Joan Mayne who paid an advance of 1 crore as the booking amount discovered that EMGEE had not got approval for villa no 12 when they took the advance of1 crore on May 19, 2014 as the booking amount. She sought the cancellation of the booking on reading that the villas was being constructed by cutting the hill for which no permission had been taken by the builder. EMGEE in turn demanded an additional 2 crore and on non-payment informed Ms Mayne that the1 crore already paid stood forfeited. In his order Prem Narayan allowed the request of the complainant and directed EMGEE Developers to refund `1 crore to Ms Joan Mayne along with 8% interest per annum from the date of deposit to the actual payment. Ms Joan Mayne was represented by senior Goan advocate Joseph Vaz. It is suspected that the 12 villa project was part of the disputed plots developed by Alcon for the Dempos

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI

CONSUMER CASE NO. 1053 OF 2015

  1. M/S. JOAN RITA BRIDGET MAYNE, C21/356, MIRANDA HOUSE, DONA PAULA, GOA – 403004

………..Complainant(s)

Versus

  1. M/S. EMGEE PROPERTIES & ANR.
    OFFICE NO. 608, 6TH FLOOR, CITI CENTRE BUILDING, PATTO PLAZA, PANAJI, GOA.
  2. MR. MUDHIT GUPTA
    MANAGING PARTNER, OFFICE NO. 608, 6TH FLOOR, CITI BUILDING, PATTO PLAZA, PANAJI, GOA.

………..Opp.Party(s)

BEFORE:

HON’BLE MR. PREM NARAIN,
PRESIDING MEMBER

For the Complainant : Mr. Joseph Vaz , Advocate with Mr. Daleep Dhyani, Advocate

Mr. Rakesh Taneja, Advocate For the Opp. Party :

Dated : 07 Mar 2019

ORDER

  1. This consumer complaint has been filed by Mrs. Joan Rita Bridget Mayne against the opposite parties M/s. Emgee Properties & anr. It has been alleged in the complaint that Memorandum of Understanding (MOU) was signed between the complainant and the opposite parties on 18.05.2014 for purchase of a villa in Goa for Rs.10,00,00,000/-. The complainant paid Rs.1,00,00,000/- as the booking amount to the opposite parties on 19.5.2014. After booking there was some news item that these villas are being constructed by cutting the hill for which no permission was taken by the builder and therefore, the construction was stopped by the order of the Collector of the District. After getting this news item the complainant became apprehensive and sent a notice to the opposite parties to inform the correct position and to share the approval for the said building plan and particularly for the villa No.12, which was allotted to the complainant. Later on it was known to the complainant that the approval was only for 9 villas and there was no approval for villa No.12, which was allotted to the complainant. On the other hand opposite parties demanded next instalment of about Rs.2,00,00,000/- from the complainant by giving notice. However, the complainant did not pay any further amount because there was no approval for the villa Nos 10, 11 & 12 though in the brochure issued by the opposite parties for project, there were 12 villas clearly shown in the photographs. Finally on 15.7.2014 the MOU was cancelled by opposite parties and the complainant was informed that due to non-payment of further instalment, the MOU stands cancelled and the amount of Rs.1,00,00,000/- stands forfeited. Accordingly, being aggrieved by the action of the opposite parties, the complainant preferred the present complaint before this Commission.
  2. The complaint has been resisted by the opposite parties by filing the written statement. It has been stated in the written statement that the approval for villas Nos 10, 11 & 12 was obtained in the re-approval of the project on 13.3.2015. It has been further alleged that because the property prices have fallen and the complainant was taking this villa for an investment, the complainant has filed this complaint for refund of the amount paid. It has been alleged that the complainant is not a consumer as this villa was being purchased as an investment. It was stated that the villas were constructed in time and opposites parties never defaulted on any of the time lines and therefore, the complainant was not justified in withholding the instalment and as per the conditions of the MOU the opposite parties rightly terminated the MOU and forfeited the amount of Rs.1,00,00,000/- paid by the complainant. It has been requested to dismiss the complaint.
  3. Both the parties filed their respective evidence affidavits.
  4. Heard the learned counsel for both the parties and perused the record.
  5. Learned counsel for the complainant reiterated points mentioned in the complaint as stated above and also submitted that the opposite parties in their written statement have mentioned that the permission for revised plan of the project was obtained on 13.03.2015 wherein the approval for 10th, 11th & 12th villas was given. It was argued that the MOU was cancelled by the opposite parties on 15.07.2014 and by that time clearly there was no approval for 12th villa which was allotted to the complainant. Clearly, the project could not have been advertised for 12 villas as there was approval for only 9 villas when the project was advertised. The opposite parties misrepresented to the complainant by mentioning in the MOU that opposite parties have got all rights and titles for the project whereas there was no approval for 3 villas namely 10th, 11th & 12th villas. It is a clear case of unfair trade practice as the opposite parties have given wrong information in the brochure also. Learned counsel specifically referred to the following clauses of the MOU:-
    “WHEREAS the Vendor herein is in the process of developing a twelve Villa complex, known as ‘Naira’, in Siridao, Goa, AND WHEREAS the Vendor affirms that it has all legal rights and title to the property on which the villas will be built and is seized and vested with authority to effect the aforesaid developments.
    AND WHEREAS the Vendor agrees to build and sell and the purchaser agrees to buy, Villa Number 12 in the aforesaid Naira Development Project with its restricted areas and facilities, together with undivided interest and title to the land on which the Villa will be built along with the common areas and facilities attaching with the same as a composite proprietary package. The BUA of the villa is approximately 605 square meters and the area of the land is approximately 500 square meters.
    AND WHEREAS the Vendor agrees to transfer its right, title and interest in the said land and envisaged villa free from all encumbrances, charges, lines or other claim whatsoever coupled with delivery of possession of the same and the Purchaser herein has also agreed to acquire the same on the said basis and on the representation of the Vendor that it is entitled to transact the same. The final Agreement for Sale and Purchase will be mutually agreed and approved by attorneys representing both parties, to be executed and registered by end December 2014, and failing the same on account of default on the part of the intending Purchaser, providing that the Vendor has completed all milestones as per the attached Payment plan, the Vendor will have the right to terminate this MOU and forfeit 50% of the booking amount, of INR 1,00,00,000 paid by the Purchaser herewith and the balance booking amount of INR 50,00,000 along with all other payments received from the Purchaser, will be refunded to the Purchaser by the Vendor within 30 days of termination, without any interest.”
  6. The Vendor agrees that in the event that the documents of title are found faulty. It will return the advance amount of Rs.100,00,000/- (Rupees One Crore only), paid by the Purchaser to the Vendor, to the Purchaser, within 30 days, with interest at the rate of 18 percent per annum.
  7. In the event the first milestone, that is the Plinth is not completed by Aug 2014, The Purchaser will have the right to terminate this MOU. In the at event The Vendor agrees to refund all the amounts paid by the Purchaser till the date of termination to the Purchaser within 45 days of such termination, with interest at the rate of 18 percent per annum.”
  8. On the basis of the above clauses, learned counsel for the complainant emphasised that even according to the MOU opposite parties do not have any right to forfeit the entire amount as there is provision of forfeiture of only 50% of the booking amount. It was further emphasised that as there was no approval for villa allotted to the complainant, complainant had full right to ask for the refund as the opposite parties had misrepresented about the project and particularly about the villa No.12. The learned counsel for the complainant further pointed out that if the documents are found faulty the builder will refund the booking amount along with interest @18% p.a. Accordingly, it was prayed that the amount of Rs.1,00,00,000/- be refunded by the opposite parties along with interest @ 18% p.a. from the date of deposit till actual payment.
  9. On the other hand learned counsel for the opposite parties stated that opposite parties never misrepresented in MOU and it is clearly stated at the beginning of the MOU that opposite parties have legal rights and title to the land on which the villas will be built. Opposite parties have never stated in the MOU that they have obtained all the statutory approvals for the project. It was further stated that so far as 12th villa is concerned, the approval has been obtained on 13.3.2015 for which the opposite parties were very sure that approval will be granted and therefore, the whole project of villas was advertised. Moreover, disclaimer is mentioned in the brochure itself. Further, the brochure is not an agreement and when it comes to a breach of a contract, the provisions of the MOU can only be considered.
  10. Learned counsel for the opposite parties further stated that the complainant is not a consumer within the definition of ‘consumer’ as given in the Consumer Protection Act, 1986 because the complainant has in the complaint mentioned at many places that this villa has been purchased for investment purpose. A person, who is investing his money for purchase of a villa, cannot be called a ‘consumer’ as the person is purchasing only for commercial purpose because in the present case, the complainant is already residing in Dubai and she would have sold this villa to some other person for profit.
  11. It was further argued by the learned counsel for the opposite parties that the stay order by the Collector on cutting of hill was revoked on 09.07.2014 itself. There was no impediment in construction of the villas. In fact, an e-mail was sent to the complainant on 06.07.2014 stating that:
    “Firstly we have not asked for further funds till we obtain a letter from the Additional Collector that the Show cause is revoked. After which we expect the funds to be transferred within 24 hours.
    Secondly it’s best to read the MOU once again to see that there is no connection between the two as long as we meet the dates as committed in the MOU. So this is done exceptionally in your case. Hope you appreciate the same.”
  12. From the above e-mail, it was clarified that no fund was required by the opposite parties before the stay was vacated. In fact the stay was vacated on 09.07.2014 and therefore, the complainant should have paid the 2 nd instalment as per the MOU. However, when no further payment was made by the complainant, the opposite parties cancelled MOU and the allotment on 15.07.2014.
  13. I have carefully considered the arguments advanced by both the learned counsel for the parties and have examined the material on record. It is true that the complainant has used the word “investment” in her complaint at many places and it has been stated that the villa was being purchased for investment.
  14. In Aashish Oberai Vs. Emaar MGF Land Limited, Consumer Case No. 70 of 2015, decided on 14.09.2016 , this Commission held as follows:-
    “In the case of the purchase of the houses which a builder undertakes to construct for the buyer, the purchase can be said to be for a commercial purpose where it is shown, by producing evidence, that the buyer is engaged in the business of a buying and selling of houses and or plots as a trading activity, with a view to make profits by sale of such houses or plots. A person cannot be said to have purchased a house for a commercial purpose only by proving that he owns or had purchased more than one houses or plots. In a given case, separate houses may be purchased by a person for the individual use of his family members. A person owning a house in a city A may also purchase a house in city B for the purpose of staying in that house during short visits to that city. A person may buy two or three houses if the requirement of his family cannot be met in one house. Therefore, it would not be correct to say that in every case where a person owns more than one house, the acquisition of the house is for a commercial purpose ”.
    13 . In another case, Kavit Ahuja Vs. Shipra Estate Ltd. & Jai Krishna Estate Developers Pvt. Ltd., I(2016) CPJ31(NC), wherein three flats were booked by the complainant, this Commission held the complainant to be a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986 and held as follows:-
    “In the case of the purchase of houses which the service provider undertakes to construct for the purchaser, the purchase can be said to be for a commercial purpose only where it is shown that the purchaser is engaged in the business of purchasing and selling houses and / or plots on a regular basis, solely with a view to make profit by sale of such houses. If however, a house to be constructed by the service provider is purchased by him purely as an investment and he is not undertaking the trading of houses on a regular basis and in the normal course of the business profession or services in which he is engaged, it would be difficult to say that he had purchased houses for a commercial purpose. A person having surplus funds available with him would not like to keep such funds idle and would seek to invest them in such a manner that he gets maximum returns on his investment. He may invest such funds in a Bank Deposits, Shares, Mutual Funds and Bonds or Debentures etc. Likewise, he may also invest his surplus funds in purchase of one or more houses, which is/are proposed to be constructed by the service provider, in the hope that he would get better return on his investment by selling the said house(s) on a future date when the market value of such house (s) is higher than the price paid or agreed to be paid by him. That by itself would not mean that he was engaged in the commerce or business of purchasing and selling the house (s).
VIOLATED: Many of the properties of EMGEE Builders have allegedly illegally encroached on paddy fields in Taleigao
  1. Generating profit by way of trading, in my view is altogether different from earning capital gains on account of appreciation in the market value of the property unless it is shown that the person acquiring the property was engaged in such acquisition on a regular basis and it was by way of a business activity.
  2. As observed by the Hon’ble Supreme Court in Laxmi Engineering Works (supra) what is a ‘commercial purpose’ is a question of fact to be decided in the facts of each case and it is not the value of the goods that matters but the purpose for which the goods brought are put to. The same would be equally applicable to for hiring or availing services.
  3. In any case, it is not appropriate to classify such acquisition as a commercial activity merely on the basis of the number of houses purchased by a person, unless it is shown that he was engaged in the business of selling and purchasing of houses on a regular basis. If, for instance, a person has two-three children in his family and he purchased three houses one for each of them, it would be difficult to say that the said houses were purchased by him for a commercial purpose. His intention in such a case is not to make profit at a future date but is to provide residential accommodation to his children on account of the love and affection he has for his children. To take another example, if a person has a house say in Delhi but he has business in other places as well and therefore, purchases one or more houses at other places where he has to live presently in connection with the business carried by him, it would be difficult to say that such acquisition is for commercial purpose. To give one more example, a person owning a house in a Metropolitan city such as Delhi, or Mumbai, may acquire a house at a hill station or a place, which is less crowded and more peaceful than a Metropolitan city, in my view, it cannot be said that such acquisition would be for commercial purpose. In yet another case, a person may be owning a house but the accommodation may not be sufficient for him and his family, if he acquires one or more additional houses, it cannot be said that he has acquired them for commercial purpose. Many more such examples can be given. Therefore, it cannot be said that merely because of the complainant had agreed to purchase three flats in the same complex the said acquisition was for a commercial purpose ”.
    14 . This Commission, in Rajesh Malhotra & Ors. Vs. Acron Developers & 2 Ors., First Appeal No. 1287 of 2014, decided on 05.11.2015 has held as follows:-
    “12. Therefore, in order to determine whether the goods are purchased for commercial purpose, the basic pre-requisite would be whether the subject goods have been purchased or the services availed of with the prime motive of trading or business activity in them, for the purpose of making profit, which, as held in Laxmi Engineering (supra) is always a question of fact to be decided in the facts and circumstances of each case”.
  4. Based on the view expressed by this Commission in the above judgements, I will not debar the complainant from filing the complaint under Consumer Protection Act, 1986 as a ‘consumer’.
  5. Now coming to the merits of the case, it is seen that the villa No.12 was allotted to complainant by the opposite parties and the MOU dated 18.5.2014 was also signed between the parties for villa No.12. In the MOU it is clearly stated that the opposite parties are developing a project for 12 villas. It is clear that when the MOU was signed and when the project was advertised through brochure, there was approval only for 9 villas and there was no approval for villas 10 th , 11 th & 12 th . From the written statement filed by the opposite parties, it is clear that the approval for villa Nos.10 to 12 was obtained on 13.3.2015. The opposite parties have not denied that a news item appeared in the newspaper that the opposite parties are cutting the hills without any permission and the Collector had imposed a stay order upon the opposite parties for the project. Clearly, in these circumstances, the complainant was fully justified in asking for the details of the project and particularly for the approval for 12 villas. Instead of giving correct position on this aspect, the opposite parties kept on demanding the second instalment as per the MOU from the complainant. The argument of the learned counsel for the opposite parties that opposite parties never misrepresented in the MOU that the project was approved, seems to be misplaced. At the start of the MOU the following is mentioned:-
    “WHEREAS the Vendor herein is in the process of developing a twelve Villa complex, known as ‘Naira’, in Siridao, Goa, AND WHEREAS the Vendor affirms that it has all legal rights and title to the property on which the villas will be built and is seized and vested with authority to effect the aforesaid developments.”
VIOLATION: Cases are pending against EMGEE Builders for their Goa Velha properties which have allegedly been built in the banned area of the CRZ zone
  1. From the above, it is clear that the opposite parties have asserted that opposite parties have authority to effect the aforesaid developments. As there was no approval for villa Nos.10 to 12, it cannot be said that the opposite parties had the authority to effect the development of the project for construction of 12 villas. Moreover, as per the terms and conditions of agreement in the MOU, it is clearly mentioned that even if there is any default on the part of the complainant, the opposite parties can only forfeit 50% of the amount and the whole amount of Rs.1,00,00,000/-cannot be forfeited as has been done in the present case. The provision in the MOU is that:-
    “The final Agreement for Sale and Purchase will be mutually agreed and approved by attorneys representing both parties, to be executed and registered by end December 2014, and failing the same on account of default on the part of the intending Purchaser, providing that the Vendor has completed all milestones as per the attached Payment plan, the Vendor will have the right to terminate this MOU and forfeit 50% of the booking amount, of INR 1,00,00,000 paid by the Purchaser herewith and the balance booking amount of INR 50,00,000 along with all other payments received from the Purchaser, will be refunded to the Purchaser by the Vendor within 30 days of termination, without any interest.”
  2. This right is with the builder only when the agreement is not signed by the complainant beyond December, 2014 and the opposite parties have obtained all milestones for the construction of the villa. In the present case as the MOU has been terminated in July, 2014 there cannot be any question of any agreement being signed in December, 2014. Hence, there cannot be any failure on the part of the complainant for signing agreement by December, 2014. Hence, this clause of forfeiture cannot be made applicable in the present case. Moreover, as per Clause No.8, the opposite parties had agreed that if the first milestone regarding completion of plinth by August, 2014, is not met the purchaser will have the right to terminate the MOU and the opposite parties will refund the amount deposited with interest @18% p.a. Clearly, the opposite parties were not in a position to complete the plinth level for villa No.12 by August, 2014 as there was no permission to build villa No.12 before 13.3.2015. Thus, it was not possible for the opposite parties to achieve this milestone and therefore, the complainant had right to cancel the MOU and to get the refund of money along with 18% p.a. interest.
  3. Technically speaking, neither the provision regarding forfeiture of 50% of the booking amount nor the clause No.8 regarding refund of the deposited amount along with 18% p.a. interest applicable in the present case because the precondition for both these clauses are not fulfilled. The clause relating to forfeiture of 50% of the deposited amount has a precondition that the parties will enter into an agreement in December, 2014 and if complainant defaults then opposite parties will have right to forfeit 50% of the booking amount. Clearly, this condition has not been fulfilled as the MOU itself has been cancelled on 15.7.2014 itself. Similarly, the precondition given in the clause No.8 is that the first milestone will be executed by the opposite parties by August, 2014 and if they fail in that achievement, the complainant will have right to cancel the MOU and to get refund of the booking amount with 18% p.a interest. As the MOU was terminated in July, 2014 itself, there was no question for the opposite parties to get the milestone of plinth level construction by August, 2014 and moreover, the complainant did not cancel the MOU, hence, this precondition is also not applicable in the present case. Hence, both these clauses cannot be made applicable in the present case. Clearly, there is no other MOU clause for forfeiture of the booking amount and therefore, clearly opposite parties cannot forfeit the booking amount of Rs.1,00,00,000/- deposited by the complainant and the same is to be refunded by the opposite parties. Even if there had been any clause for forfeiture of the booking amount in the MOU other than described above, the opposite parties would not have been entitled to forfeit any amount in the present case, because the opposite parties misrepresented the fact of approval of project for 9 villas whereas, they had the approval only for 12 villas. Thus, clearly, the opposite parties have been deficient in their services in the present case and they are guilty of unfair trade practice in the matter. As the amount of Rs.1,00,00,000/- remained with the opposite parties from 19.05.2014, the opposite parties would be liable to pay interest on this amount as held by the Hon’ble Supreme Court in Alok Shanker Pandey Vs. Union of India &Ors., II (2007) CPJ 3 (SC) as under:-
    “9. It may be mentioned that there is misconception about interest. Interest is not a penalty or punishment at all, but it is the normal accretion on capital. For example if A had to pay B a certain amount, say 10 years ago, but he offers that amount to him today, then he has pocketed the interest on the principal amount. Had A paid that amount to B 10 years ago, B would have invested that amount somewhere and earned interest thereon, but instead of that A has kept that amount with himself and earned interest on it for this period. Hence equity demands that A should not only pay back the principal amount but also the interest thereon to B.”
  4. In the facts and circumstances of the case, I deem it appropriate to allow interest @8% p.a. at which the amount of Rs.1,00,00,000/- (rupees one crore only) shall be refunded to the complainant by the opposite parties.
  5. Based on the above discussion, the following order is passed:

ORDER
Consumer complainant No.1053 of 2015 is allowed and the opposite parties are jointly and severally directed to refund Rs.1,00,00,000/- (rupees one crore only) to the complainant along with 8% interest p.a. from the date of deposit till actual payment. Opposite parties will also pay Rs.20,000/- (rupees twenty thousand only) as cost of litigation to the complainant.
This order be complied by the opposite parties within a period of 45 days from the date of receipt/service of this order.
………………….
PREM NARAIN
PRESIDING MEMBER

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