Landowners Not Liable For Construction Delay By Developer : Supreme Court

Merely because the landowner authorizes the developer to construct the flats, obtain sanctions, and sell the flats, it would not make them liable for the delay caused in the construction of the flats by the developer, observed the Supreme Court.

A bench comprising Justices PS Narasimha and Alok Aradhe dismissed an appeal filed by a homebuyer, while affirming the NCDRC's decision, which had absolved the landowners of the delay caused in the construction of the flat.

The case arose from a Joint Development Agreement (JDA) executed in February 2012 between landowners and Unishire Homes, under which the developer was tasked with obtaining sanctions, constructing the project, and selling flats for which a General Power of Attorney (GPA) was also executed by the landowners in the developer's favor.

When the project was delayed by over six years, homebuyers approached the National Consumer Disputes Redressal Commission (NCDRC) seeking possession and compensation. While the NCDRC initially held the developer solely liable for the delay and directed payment of interest to buyers, it exonerated the landowners, ruling that construction was not their responsibility.

The homebuyers challenged this before the Supreme Court under Section 67 of the Consumer Protection Act, 2019, arguing that the landowners, as principals who had executed a GPA in favor of the developer, should be vicariously liable for the agent's deficiencies.

Rejecting the homebuyer's argument, the judgment authored by Justice Aradhe observed that the landowners cannot be held liable for the delay in the construction, when JDA clearly absolved them from such a liability.

“For the lapse on the part of the developer, the landowners, who are in no way concerned with the construction, cannot be held liable for deficiency in service, particularly when the developer has indemnified them against acts of commission or omission in construction.”, the court observed.

“The construction has to be carried out by the developer. The delay in delivery of possession is in respect of flats falling to the share of the developer.”, the court held.

Accordingly, the appeal was dismissed.

Headnote

Consumer Protection – Joint Development Agreement (JDA) – Liability of Landowners for Delay in Construction – Held: Landowners cannot be held jointly and severally liable with the developer for deficiency in service arising from construction delays if the obligation to construct rests solely with the developer under the JDA and the General Power of Attorney (GPA) - The developer's right to enter into sale agreements and undertake construction for their share of the property, coupled with indemnity clauses protecting landowners from the developer's breaches, shifts the liability for delay compensation exclusively to the developer.

Principal and Agent Relationship – General Power of Attorney – Held: The execution of a GPA by landowners in favor of a developer to facilitate sale agreements and title transfers does not automatically make the landowners liable for the developer's specific failures in construction, especially when no acts or omissions are attributed to the landowners regarding the delay - Held: While landowners are not liable for construction delay compensation, they remain jointly responsible with the developer to ensure the transfer of title and execution of sale deeds in favor of the flat buyers – Appeals dismissed. [Paras 12-16]

Cause Title: SRIGANESH CHANDRASEKARAN & OTHERS VERSUS M/S UNISHIRE HOMES LLP & OTHERS

Citation : 2026 LiveLaw (SC) 185

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Appearance:

For Appellant(s) : Mr. Chandrachur Bhattacharyya, Adv. Mr. Sahil Tagotra, AOR

For Respondent(s) :Mr. Kumar Sudeep, AOR Mr. Vidya K Sagar, Adv. Mr. Jeevan R Patil, Adv. Mr. Nandlal Kumar Mishra, Adv. Dr. Sushil Balwada, AOR