Reliance On Force Majeure Clause To Justify Prolonged Delays Unacceptable : NCDRC Holds Developer Liable For Deficiency In Service

The National Consumer Disputes Redressal Commission, presided by Mr. Subhash Chandra and Dr. Sadhna Shanker, held that reliance on force majeure clauses to justify prolonged delays in possession is unacceptable and amounts to deficiency in service. Brief Facts of the Case The complainant booked a flat with the developer, paying Rs. 62,63,060, which was 97% of the total cost of Rs. 64,56,768, with the remaining amount to be paid at the time of possession. According to the agreement, possession was to be handed over by March 2013, but the developer failed to do so. As a result, the complainant filed a complaint before the State Commission of Maharashtra, seeking possession of the flat along with 20% annual interest on the paid amount from the agreed possession date until delivery. The complainant also sought Rs. 23,08,788 for the price difference, Rs. 2,37,101 for appreciation, Rs. 4 lakh for loss of earnings and travel expenses, Rs. 5 lakh for mental agony, and additional legal and incidental costs. The State Commission allowed the complaint and directed the developer to hand over the possession and to pay interest @20% p.a. on the amount of Rs.62,63,060. It also directed the insurer to pay Rs. 1,00,000 towards compensation for mental agony and Rs. 25,000 for litigation costs. Consequently, the developer appealed before the National Commission. Contentions of the Developer The developer contended that there was no negligence or deficiency in service on their part, arguing that possession had already been offered to the complainant, who refused to take it. They challenged the award of interest and compensation, stating the 20% interest was excessive and cited Central Bank of India vs. Ravindra in support. They argued that the delay was caused by external factors, including the extension of the project by CIDCO and delays in obtaining the occupancy certificate from authorities, for which they were not responsible. Additionally, they claimed the complainant failed to cooperate, including refusing to sign agreements or pay the pending balance, thus absolving the developer of liability. Observations by the National Commission The National Commission observed that there was a clear deficiency in service by the developer, as possession of the flat, despite 97% payment by the complainant, was delayed indefinitely without a valid occupancy certificate, which was the developer's responsibility. Citing Sivarama Sarma Jonnalagadda vs. Maruthi Corporation Limited, it was held that reliance on a force majeure clause to justify prolonged delays is untenable and amounts to both deficiency in service and unfair trade practices. Furthermore, the Supreme Court in DLF Homes Panchkula Pvt. Ltd. vs. D.S. Dhanda ruled that multiple compensations for a single deficiency are unjustified. The complainant was awarded simple interest at 6% per annum on the deposited amount from the promised possession date until the actual handover, referencing Wing Commander Arifur Rahman Khan vs. DLF Southern Homes Pvt. Ltd., and litigation costs of ₹20,000. However, the National Commission set aside the compensation for mental agony and additional costs imposed by the State Commission. Furthermore, it directed the developer to provide possession with a valid occupancy certificate after receiving the balance payment. Case Title: Late Mohan S. Kale Vs. Hillari Victor D'souza Case Number: F.A. No. 404/2019 Click Here To Read/Download The Order

Reliance On Force Majeure Clause To Justify Prolonged Delays Unacceptable : NCDRC Holds Developer Liable For Deficiency In Service

Ayushi Rani

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Reliance On Force Majeure Clause To Justify Prolonged Delays Unacceptable : NCDRC Holds Developer Liable For Deficiency In Service

Ayushi Rani

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INR 1099+GST

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