NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI ORIGINAL PETITION No. 331 OF 2002 Talaganj Co-operative Group Housing Society Ltd. Plot No. 49, Sector-13, Rohini, Delhi – 110 085 … Complainant Versus 1. M/s. OTIS Elevators Co. (India) Ltd. (Northern Region), Himalaya House 11th Floor, 23, K.G. Marg, New Delhi 2. M/s. OTIS Elevators Company (I) Ltd. Through its Managing Director Gateway Building, Apollo Bundar, Mumbai … Opposite Parties BEFORE: HON’BLE MR.JUSTICE J. M. MALIK, PRESIDING MEMBER HON’BLE MR.VINAY KUMAR, MEMBER For the Complainant : Mr. R.S. Tomar, Advocate with Mr. Pardeep Kumar, President & Mr. S.P. Chander, Secretary, of Complainant Society For the Opposite Parties : Mr. Anurag Chowdhry, Advocate PRONOUNCED ON_31.05.2013 O R D E R JUSTICE J.M. MALIK 1. The parties have locked horns over the installation of Twenty-two Passenger Elevators. The Talaganj Co-operative Group Housing Society Ltd., the complainant Society awarded the work of supply and installation of 22 Passenger Electronic Traction Elevators in the Society in favour of M/s. OTIS Elevators, OPs, vide contract dated 29.04.1996. Clause 23 of the Agreement runs as follows:- “23. DELIVERY AND ERECTION: (a) We can complete the elevator installation in 52 weeks from the date of receipt of order, advance payment, layout approval, and settlement of all technical details, whichever is later. (b) The above completion period is subject to your handing over to us for uninterrupted use, a clear dry elevator pit, shaft and machine room complete in all respects, as per approved layout drawing along with preparatory work and power supply 24 weeks before the completion date indicated in (a) above. (c ) If during the inspection of site, we observe that there is a delay in completion of the elevator pit, shaft and machine room or availability of power supply, we may at our option, delay the final assembly of materials and shipment to site as to synchronize with the hoist way and machine room completion date. In such an event, a fresh completion date will be established depending upon the minimum installation time indicated in (b) above”. 2. The cost of 22 Elevators was agreed at Rs.1,73,80,000/-, i.e. Rs.7.90 lakhs per Elevator. The complainant Society issued a cheque, dated 28.04.1996, in the sum of Rs.2,00,000/-. The Society further paid a sum of Rs.5,00,000/- vide cheque dated 13.06.1996. Information was sent to M/s. Otis Elevators Co. (I) Ltd., OPs, on 17.09.1996, that all the 11 Blocks were ready in all respect and request was made to deliver the material, at the earliest. However, the OPs did not pay heed to the request made by the complainant. The complainant went on waiting for about 2 years. 3. Thereafter, a meeting was held between the officials of the Ops and the President and Secretary of the complainant Society on 19.03.1998. A fresh schedule for completion of the installation of lifts and payment of the dues was finalized between the parties, wherein it was agreed that from June-November, 1998, four Elevators each, would be installed, i.e. four lifts every month and six lifts in the month of November, 1998. It was also agreed that the payment would be made as and when it became due. The complainant society also agreed to release the payment of Rs.19.63 lakhs in the month of March, 1998. The OPs also confirmed the receipt of approximately 30% advance of the contract price. Vide letter dated 26.03.1998, the OP was informed that no discussion was held during the meeting held on 19.03.1998 regarding price escalation cited in point No.1(b) of the Minutes of the Meeting. The complainant Society objected to the amount of Rs.66,835/- which was claimed towards the price escalation of material portion for four lifts. However, the complainant Society sent a cheque dated 26.03.1998 in the sum of Rs.19,23,577/- to the OPs. 4. On 29.04.1998, the OPs submitted Invoice dated 19.04.1998 for a sum of Rs.20,48,692/-, for settlement of all dues against the contract as of date. In the said letter, it was also mentioned that interest is to be paid @ 21% p.a. in the event of delay in making payment. Complainant sent two cheques of even date 08.5.1998, in the sum of Rs.15,00,000/- and Rs.5,07,718/- to the OPs and thus cleared the amount demanded by the OPs, after deducting TDS @ 2% p.a. OPs were requested to complete the installation of 22 passenger Elevators by November, 1998, otherwise, the complainants would not pay any price escalation of any kind and in that event, the Ops would be liable to pay the damages towards the inconvenience and loss caused to the members of the society due to non-installation of lifts. This stand was reiterated in the meeting and also vide letter dated 06.03.1998. 5. On 29.06.1998, the OPs were informed that the draw of lot had taken place and the Society would give possession of the flats to the members, by October, 1998. Another letter dated 05.08.1998 was sent to the OPs regarding slow progress of the work, in response to their letter dated 03.08.1998. Till then, the complainants had paid a sum of Rs.1.30 crores. Not a single lift was installed, whereas, it was agreed that 8 lifts would be installed by then. On the other hand, the Ops alleged that delay was being caused by the Society, Complainant. It is alleged that this act was nothing but to cover-up their lapses and delay. The OPs were told that time was the essence of the contract and the needful should be done within the prescribed period. The complainant has placed few letters in this regard, with the OPs. A detailed letter dated 10.12.1998 was sent to the OPs. It was explained that the complainant Society had already paid 90% of the total cost of the lifts, but the work was not done even up to 25%. It was apparent that the money of the complainant Society was spent somewhere else, therefore, the Society demanded interest @ 21% p.a. on the amount which was paid in excess to the work executed at site, till November, 1998. The work was assessed and calculated at Rs.3,64,991/- and OPs were asked to pay the aforesaid amount. The complainant also demanded compensation which could be computed on the basis of monthly rental which respective flats of the members would have fetched in the market, as on date. The total amount which the complainant would have fetched comes to Rs.21,50,000/-. However, the complainant claims a nominal amount of Rs.5,00,000/- per month on an average basis towards the aforesaid rental loss caused to its Members on account of delay caused by the OPs. 6. The OPs did not do the needful, despite writing letters dated 23.11.1997, 05.01.1998 and 08.03.1999. The flats were handed over to the Members but till the filing of this complaint, not even a single lift had become functional due to which the complainant Society has faced a great amount of difficulties. The complaint was filed on 11.11.1999 and the following claims were raised :- “(i) pay to the complainant an amount of Rs.88.50 lakh by way of compensation, the details of which were already specified herein above, along with pendent lite and future interest on the said amount @ 21% p.a. till its realization, in the interest of justice and equity; (ii) direct the opposite party for completing the commissioning of all the 22 Elevators and to make it operational/ functional without any further delay; (iii) restraining the opposite party to claim/demand any price escalation/fees from the complainant; (iv) this Hon’ble Commission may further be pleased to award the cost of proceedings in favour of complainant and against the respondents, in the interest of justice and equity”. DEFENCE OF OPS: 7. OPs have contested this case. They have admitted that an Agreement between the parties, for installation of 22 Elevators, was entered into. It is explained that the said contract was a reciprocal works contract and execution of the awarded job by the OPs was dependent on the various preparatory works, which were to be done by the complainant Society on its cost. The list of the said preparatory works was placed with the reply. Those works were mainly related to providing and furnishing by the complainant Society, hoistway, pit shaft, machine rooms, complete in all respects, adequate power supply, etc. It is alleged the complainant Society failed to do the said works in time which caused hindrance in the execution of jobs by the OPs. The time-frame within which the OPs were to complete the Elevator installation was 52 weeks. The said 52 weeks were to commence from the date of receipt of the order or advance payment, lay out approval and settlement of all technical details, whichever is later. The said period was further subjected to the completion of the various preparatory works by the complainant Society before 24 weeks of the date of the completion. OPs agreed that the payment of the contract price was to be made by the complainant Society pro-rata per elevator, as was enshrined in Clause No.6 of the contract, which reads as follows:- “Payment shall be made pro rata per elevator as follows, Rs.2.00 lakh with order, balance to make 10% by 7.6.1996, further 10% advance by 07.08.1996,balance 10% advance by 07.10.1996, 60% on receipt of advice from us that materials are ready for dispatch, and the remaining 10% on completion of our installation work, with the further provision that if we are delayed by any cause beyond our control, the final 10% will be paid to us within 180 days from the date of our advice that materials are ready for dispatch. Partial supplies when made shall be payable pro rata as above. Any payment not made on the due date shall bear interest from such date at the rate of 21% per annum. We reserve the right to dispose of the equipment or to discontinue our works or to withhold the release of completed elevator(s) at any time until overdue payments, with interest, shall have been made as per the terms and conditions and we have assurance satisfactory to us that subsequent payment will be made as they fall due. We shall resume the work subject to our other manufacturing and/or erection commitments or schedules at that time. Provided that, this will in no way relieve you of your liabilities and obligations under this contract”. 8. It is alleged that the complainant Society failed to pay the contract price as per the agreed schedule. It was agreed that at least 30% of the contract price would be paid by 07.10.1996 but the complainant Society paid the same on or about 04.02.1998, i.e., after delay of almost 16 months. The complainant Society further delayed the payment of other Invoices and the OPs had to send several reminders to the complainant Society. The timely payment of the bills, like other contract, was an important term of the contract having bearing on the execution of the contract. The complainant Society waddled out of the commitments and on the contrary, alleged that the execution of the contract was delayed by the OP. The contract price was based on the cost of the raw material components and the labour cost as on the date of quotation, but it was subject to IEEMA Price Valuation Adjustment, that is to say, that the Variation in Wholesale Price Index Number for metal products and all India Average Consumer Price Index, as per formula given in the IEEMA Price Valuation clause. The complainant Society objected and disputed the claims of the OPs and delayed the payment of its Bills/Invoices. The rates quoted and agreed between the parties were valid for 78 weeks, from the date of placing the order and, in case the execution of the contract was extended beyond this period, on account of the complainant Society, to fulfill its obligation, the OPs were entitled to re-price the contract. Clause 2 of the contract clarifies this position and is reproduced as follows:- “2. The agreed contract price, which is subject to variation as per IEEMA price variation clause included in the contract, shall be valid for 78 weeks from the date of your acceptance of this proposal. Should the said period is extended beyond this stipulated time due to (i) failure on your part to effect all payment as per clause 6 below and and/or (ii) failure on your part to provide data or approve drawings required for the manufacture of the elevator as per clause 5 below and/or (iii) delay in completion of the hoist-way and machine room, we will submit for your acceptance the revised price prevailing on the date of such quotation and on its acceptance by you, we will program the supply and installation of the equipment. In the absence of your acceptance of the revised price and payment of any additional advance that may become due, we may at our option, cancel the order with a cancellation charge as may be determined by us”. 9. The time limit of 78 weeks, expired in October, 1997 and till that time, the complainant Society did not make even the payment of the advance. The outstanding towards the advance was cleared on or about 04.02.1998. In October, 1997, the right to re-price and cancel the contract, accrued in favour of the Ops. However, they did not exercise their right and agreed and continued to execute the contract on the original price and even though, full advance was not paid, yet on the request of complainant, OPs supplied material for four Elevators between December, 1996 to May, 1997. This was done by the OPs despite the amount was outstanding and the sole objective behind it was to help out the complainant Society as they wanted to show progress to its members to collect dues from them. However, the conduct of the Society was not very encouraging and it paid only 60% of the total cost of the four elevators, as late as in March, 1998. By March, 1998, the complainant had incurred huge liability on account of the interest on delayed payments of advance and material payment over aforesaid four Elevators. The OPs, however, did not charge any interest. The OPs agreed to fresh schedule of completion of job, in a meeting held on 19.03.1998. The OPs agreed in the meeting for a revised schedule. It agreed to complete the installation of four lifts each at site from June to November, 1998 and two lifts to be completed by November, 1998. The complainant Society was to pay Rs.19,62,834/- in the month of March, 1998. The complainant Society was to make payments as per the terms of the contract. The Complainant Society was to keep ready and make available to the OPs, the Elevator pit shafts, hositway, machine rooms, along with approved lay-out and power supply by April, 1998. The Complainant Society unnecessarily disputed the price escalation of Rs.66,835/- , while making payment of the outstanding dues of Rs.19,62,834/- and paid the same under protest, despite having agreed to pay the same, in the meeting held on 19.03.2003. The complainant Society also failed to do the preparatory civil and electric works which they were obliged to do, under the terms of the contract, which was a pre-requisite for installation and commissioning of the elevators. The complainant failed to provide the pit, hoistway, machine room by April, 1998. Several reminders were sent, but the needful was not done. The OPs delivered the material for balance 18 elevators, at the site of the complainant Society from June, 1998 to first week of October, 1998. The work of installation and commissioning of the elevators could not pick up the momentum and was constantly hampered due to failure of the complainant Society in handing over the pit, hoistway, machine room, along with uninterrupted 3-phase supply and due to various other works which were to be completed by the Society and were necessary for installation of the lifts. The 3-phase power supply adequate for testing one lift at a time was made available, only in January, 2000. The voltage supply at the site was also as per the requirements of the Elevators and the range thereof was much below the voltage range of the equipment. Other major difficulties and handicap in commissioning all the elevators were inter-alia in the form of non-availability of architrave and huge gaps between the landing doors and the floor walls, etc. The complainant sent letters/reminders dated 15.07.1998, 27.07.1998 and 19.12.1998, 07.06.2000 and 16.09.2000 and 18.12.2000. The OP with lot of difficulties and loss managed to complete the installation of all the twenty-two elevators during the period June, 1998 to July, 1999. It could manage 8 elevators in June, 2000 and 3 (three) elevators in October, 2000. The installation work was examined and approved by the complainant. The complainant did not make the full payment. The complainant did not fulfill its contractual obligations, all the delay is attributed on the part of the complainant. The OPs suffered huge losses, on account of failure of complainant society to fulfill its part of the obligations. The very slow progress of the works to be carried out by the complainant Society forced the man-power of the OPs to sit idle, thereby causing huge loss to the OPs. There were lot of damage caused to the wiring, conduits and fixtures, doors and car top of the elevators by the labour employed by the society for the civil and electric work. Wiring of the many elevators was also found damaged. 10. The OPs have neither supplied any defective goods nor provided any deficient services to the complainant and as such the present complaint is not maintainable. The jurisdiction of this Commission has been called into question. It is explained that the subject matter of this case is of civil nature and hence beyond the jurisdiction of this Commission. As per clause 23, the work was to be completed within 52 weeks but at the same time, the complainant society was required to fulfill the other enabling conditions within 24 weeks. OPs were to commence the work from the date of receipt of the order or from the date of payment of advance payment, or from the date of layout approval or from the date, when all technical details are settled, whichever is later. The complainant Society was under obligation to pay 10% which comes to Rs.17,38,000/- as part of advance by 07.06.1996 but the complainant society, till 13.06.1996, paid only a sum of Rs.7,00,000/-. The complainant society made a false representation that 11 blocks were ready, in all respects. The OPs were not obliged to proceed further in the matter, by delivering the material at site, without receipt of full advance payment, being 30% of the contract price. The complainant Society should have paid Rs.52, 14,000/- as advance but it had paid only Rs.25,38,000/-. The OPs were under no obligation to deliver any material at site, without receipt of full advance payment, being 30% advance of the contract price. The complainant society should have paid the said amount, till 07.10.1996, but the same was paid on 04.02.1998, i.e. after about 16 months. The OPs supplied material for 4 elevators between December, 1996 to May, 1997 though the Society had not made full advance payment. All the allegations have been denied. 11. We have heard the learned counsel for the parties and gone through their written synopsis. Counsel for the OPs submitted that the written statement filed by him should be taken as written submissions. It was submitted that, on 19.03.1998, a meeting was held between parties. It transpired that only four lifts were delivered at the site and the installation work had just started. On that, a revised schedule was drawn up and it was agreed to that all the 22 elevators would be completed, till November, 1998. The revised schedule vis-à-vis actual execution is tabulated below:- Time Revised Schedule Installation as claimed by OTIS Flat (C ) Commissioning as per M/s. OTIS flat (J) June, 1998 4 2 July, 1998 4 2 August, 1998 4 -- September, 1998 4 6 October, 1998 4 5 November, 1998 2 -- April, 1999 --- 3 May, 1999 --- --- June, 1999 --- -- July, 1999 --- 4 August, 1999 --- --- September, 1999 to May, 200 No Work No Work June, 2000 ---- --- 8 July, 2000 --- ---- August, 2000 --- --- September, 2000 --- ---- 3 October, 2000 --- --- ---- 22 22 11 12. It was argued that only 11 lifts have been commissioned and that stands confirmed by the report of the Local Commissioner. It was also argued that the OPs did not adhere to the time schedule provided under the Agreement, and disputed the fact that the payments were promptly made, as and when claimed and even payments not due were made on 06.03.1999, i.e. a sum of Rs.1,80,78,271/- was paid. The total amount agreed to be paid was Rs.1,73,80,000/- whereas, by 06.03.1999, the complainant paid a sum of Rs.1,80,78,271/-. The total agreement amount of Rs.1,76,83,271/- was paid by 01.01.1999, and further increased amount of Rs.1,80,78,271/-, was paid by 06.03.1999. The remaining lifts, though installed, but were not commissioned. For the 11 uncommissioned lifts, the complainant’s payment of nearly Rs.90.04 lakh has been blocked, for the last 12 years, which would have become more than double @ the interest rate of 12%. 13. The court had also appointed Local Commissioner vide order dated 30.08.2005. The Local Commissioner, Deputy Registrar of this Commission submitted his report, on 03.09.2005. He found that most of the lifts were not functional. On 09.10.2006, this Commission directed the OPs to make additional lifts functional, vide additional affidavit dated 01.12.2006. The OPs had explained that two additional lifts were made functional. They further submitted that in case the other lifts were to be made functional, it would entail cost of Rs. 19.00 lakh. It also came to light that said two lifts, claimed to be functional, were not actually operational. It is alleged that the demand made by the complainant is absolutely illegal, arbitrary and unsustainable in law. The complainant has already paid almost the entire amount. It is explained that there are 11 blocks and each block was to have two lifts each. The OPs have installed only 11 lifts, i.e. 1 lift, per block. The OPs were to complete the lift by November, 1998, instead, they supplied the material in July, 1999, after the delay of 9 months. The installation work was not taken up at all, till June, 2000 and from June, 2000 to September, 2000, the OPs installed the above said only 11 lifts, thereafter, the OPs abandoned the work despite the fact that full payment was made. 11 lifts are functional for the last 12 years, under the Actual Maintenance Control (AMC) with the OPs. The extra burden on single lift, in place of two, has resulted in wear and tear of moving parts, leading to frequent break-downs. For example, the lift of block 16 went out of order, for 7 to 8 times (for 3 to 4 days each instance) during past 5 months. Similar is the situation with the other blocks. 14. Lastly, it was argued that as a result of frequent break downs, the mandatory provisions of lift in multi-storeyed buildings is often not available to the residents putting them to tremendous difficulties and health hazards. Some of the residents have undergone operations like knee replacement, by-pass heart surgery, etc. The residents are suffering from health problems. 15. On the other hand, the counsel for the OPs argued that he does not want to file additional written arguments and his written statement should be considered as written synopses. Their submission is that advance payment, being 30% of the contract price, was to be paid by 07.10.1996 but the complainant paid the same on or about 04.02.1998, i.e. after a delay of about 16 months. He contended that these are the complainants who are responsible for the delay. The learned counsel also submitted that their written statement is their written arguments. 16. In the initial stage, it was a case of contributory negligence. The complainant could not pay 10% of the initial entire payment. The complainant also could not provide the proper place with the requisite requirements. However, the ball was in the court of the OPs. They could have condoned the delay or cancelled the agreement. Till then the complainant was the defaulter and the OPs were the calling the shots. Their written version itself depicts that the OPs did not exercise their right to cancel the contract and greed to enter into a fresh agreement. The OPs received the money along with escalation charges paid under protest. The receipt of entire amount was not denied. The OPs should have honoured their commitments. 17. During the arguments, a suggestion was given by the Bench that a Local Commissioner should be appointed to know the true state of affairs. The counsel for the complainant readily agreed to this suggestion. However, the counsel for the opposite parties displayed reluctance. Counsel for the complainant vehemently argued that 11, out of 22 elevators, have been installed in the premises in dispute. Counsel for the opposite parties argued that 13, out of 22 elevators, have been installed. Therefore, the deficiency on the part of the opposite parties, stands proved. Counsel for the opposite parties, however, stated at this stage, that the prices have gone up by leaps and bounds. It will be very difficult for the opposite parties to install the remaining elevators, on the spot. It must be borne in mind that the amount of entire elevators has already been paid to the opposite parties. They are enjoying the amount, for the last more than a decade. The case of the complainant stands fully established. 18. Consequently, we hereby direct the opposite parties to install the remaining elevators and make them in working condition, within 90 days, otherwise they will be liable to pay penal costs of Rs.10,000/- per day. Litigation charges, compensation for harassment and mental agony, is awarded @ Rs. 50,000/- per year, from the date of filing of this complaint before this Commission, i.e. on 12.02.2000, till the needful is done, and it will carry interest @ 9%, per year, from 12.02.2000, till the elevators are installed. ..…………………..……… (J.M. MALIK, J.) PRESIDING MEMBER ……………….…………… (VINAY KUMAR) MEMBER
Posted on: Sat, 15 Jun 2013 13:37:28 +0000
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