A Home Buyer Is Contractually Obligated To Take Possession If It Is Offered After The Issuance Of An “Occupation Letter”: NCDRC

The National Consumer Disputes Redressal Commission, presided by Justice Ram Surat Maurya (presiding member) and Bharatkumar Pandya(member), held if possession is offered after obtaining an “occupation certificate,” the home buyer is contractually obligated to take possession, failing which would result in a breach of contract. Contentions of the Complainant The complainant booked a flat with Chintels India/builder, paid the booking amount, and received an Allotment Letter from the builder. The builder executed the apartment Buyer agreement for the flat, indicating a basic sale price of Rs. 21,701,050, excluding taxes. The payment plan outlined in Annexure-IV of the agreement is a 'construction link payment plan. According to Clause-11 of the agreement, the builder had 36 months from the actual start of construction, plus a grace period of six months, to hand over possession. Clause 12 covers delay compensation and allows the allottee to seek a refund with a 90-day notice in case of possession delay. After the 42-month period expired, the builder offered possession to the complainant with a final demand of Rs. 4,595,188 (excluding stamp duty and registration charges). However, upon visiting the project, the complainant discovered that the allotted flat was incomplete and not habitable. The complainant seeks a refund of Rs. 20,013,951 with interest at 24% per annum from the respective deposit date to the refund date. Additionally, the complainant demands compensation for the deficiency in service. Contentions of the Opposite Party The builder argued that they applied to issue an “occupation certificate,” granted before offering possession to the complainant. Instead of paying the remaining amount and taking possession, the complainant filed a complaint seeking a refund. The builder argued that a slight delay in completing the construction occurred, allowing them an extension under the agreement. They denied the incomplete or uninhabitable state of the flat on the possession offer date. The builder contended that if the complainant invoked the provisions of clause 12 in the agreement, they wouldn't be entitled to any interest on the deposit. The presence of an arbitration clause in clause 30 of the agreement meant the complaint should be dismissed. The complainant had obtained a loan from India Infoline Housing Finance Limited based on a tripartite agreement, and the flat was mortgaged. However, India Infoline Housing Finance Limited was not included as a party in the complaint. The builder argued that the complaint lacked merit and should be dismissed. Observations by the Commission The commission observed The commission noted that there was no unreasonable delay in offering possession to the complainant. Until the possession offer date, the complainant did not exercise the right to claim a refund, as outlined in clause 12 of the agreement. Despite the complainant's allegation of incomplete construction on the possession offer date, no application was filed to have a local commission decide this matter. The commission relied upon the judgment in Ireo Grace Realtech Private Limited Vs. Abhishek Khanna, wherein the court held that the issuance of an “occupation certificate” is considered prima facie evidence of construction completion. The commission emphasized that if possession is offered after obtaining an “occupation certificate,” the home buyer is contractually obligated to take possession. Since the complainant declined to take possession after the offer, they would be liable for breaching the contract, leading to the forfeiture of earnest money, defined as the 'booking amount' in clause 5 of the agreement. Citing Supreme Court cases Fateh Chand Vs. Balkishan Das, Maula Bux Vs. Union of India, and Kailash Nath Associate Vs. Delhi Development Authority, the commission stressed that the forfeiture of earnest money for breach of contract must be reasonable. If it resembles a penalty, the provisions of Section 74 of the Contract Act of 1872 apply, and the party forfeiting must prove actual damage. Following the cancellation of the allotment, the flat would remain with the builder, and the commission found no significant actual damage in this scenario. The commission directed the builder to refund the entire amount deposited by the complainant with interest @9% per annum from the date of the respective deposit till the date of refund, after forfeiting 10% of the basic sale price.

A Home Buyer Is Contractually Obligated To Take Possession If It Is Offered After The Issuance Of An “Occupation Letter”: NCDRC

Ayushi Rani

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