Army welfare housing organisation to pay damages for defective flats

PUNE: Even housing schemes developed by Army welfare organization are not free of defects and deficiencies which are commonly attributed to exploitative private builders.

The Pune district consumer court, while disposing of six complaints, has directed the New Delhi-based Army Welfare Housing Organization (AWHO) to pay Rs 85,000 in damages to each of the 52 army personnel residing in the Jai Jawan Aawas Yojana (JJAY) scheme developed by the welfare organisation in Hadapsar.

The damages are for delivery of flats with construction defects, delayed possession, non-execution of conveyance deed and failure to form a cooperative housing society. The total compensation works out to Rs 44.20 lakh, which, according to the court, is payable within six weeks from the date of receipt of the order passed on May 7.

The court had appointed an architect as a court commissioner, who had filed a site inspection report mentioning several construction defects in the project. Citing this report, a two-member bench of president V P Utpat and member Kshitija Kulkarni ruled, “The opponent (AWHO) shall pay compensation of Rs 50,000 to each unit holder for defects in the project, Rs 25,000 each towards delay in delivery of possession and Rs 10,000 each towards physical and mental agony caused to the complainants.”

The court has also directed AWHO to execute a conveyance deed in favour of a registered cooperative housing society for the project. Since 2010, the maintenance of the project is being handled by an unregistered ‘Users welfare committee’.

Lawyer Sanjay Gaikwad, who appeared for AWHO, told TOI, “We have to go through the consumer court’s order before we can make any comment on the issue. Any decision relating to available remedy, such as moving an appeal, will have to be taken by the AWHO head office in New Delhi.”

The AWHO had sought dismissal of the complaints, arguing that since it is a welfare organisation and the project was implemented on a no-profit-no-loss basis, there was no “consumer transaction” involved. That, clause 89 in the master brochure relating to JJAY provided for adjudication of all disputes by an arbitrator and no court or tribunal can take cognisance of the same, it contended.

The bench dismissed these arguments while relying on two Supreme Court judgments and observed: “Even though the project was run on a no-profit-no-loss basis, the opponents (AWHO & its project manager) were providing services to complainants, as they are involved in construction services.”

It further held that the Consumer Protection Act provides for parallel remedy and the apex court has held that the consumer forum has the right to settle a dispute even though there is arbitration clause.

The bench observed: “AWHO did not give proper explanation for delay in delivery of possession of flats. Moreover, the organisation levied interest at 10% p.a. for delayed payments by  buyers. As such, it was under obligation to pay compensation for delayed possession.” The bench cited another apex court ruling to hold that the builder has no right to sell the parking space.

On formation of cooperative housing society, the bench ruled that the Maharashtra Ownership of Flat Act puts the onus on the builder to ensure that such a society is formed. and conveyance deed executed in favour of the society.

Credits ET Realty

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