Flat Buyers Entitled To Just & Reasonable Compensation For Gross Delay By Builders In Handing Over Possession: SC [Read Judgment]

The Supreme court has observed that failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within a contractually stipulated period amounts to a 'deficiency'. In cases where there is a gross delay in the handing over of possession beyond the contractually stipulated period, the jurisdiction of the consumer forum to award just and reasonable compensation is not constrained by the terms of a rate in builders agreement, the bench comprising Justices DY Chandrachud and KM Joseph said. The Court also said it cannot be oblivious to the one-sided nature of Apartment Buyers Agreements which are drafted by and to protect the interest of the developers. It also observed that execution of the Deed of Conveyance by a flat purchaser does not preclude a consumer claim being raised for delayed possession In this case, the National Consumer Disputes Redressal Commission, dismissed a consumer complaint filed by 339 flat buyers, accepting the defence of DLF Southern Homes Pvt. Ltd. and Annabel Builders and Developers Pvt. Ltd. that there was no deficiency of service on their part in complying with their contractual obligations and that despite a delay in handing over the possession of the residential flats, the purchasers were not entitled to compensation in excess of what was stipulated in the Apartment Buyers Agreement.Disagreeing with this approach, the Apex Court bench observed that, in the instant case, there has been a gross delay on the part of the developer in completing construction ranging between two and four years. The court observed: A failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within a contractually stipulated period amounts to a deficiency. There is a fault, shortcoming or inadequacy in the nature and manner of performance which has been undertaken to be performed in pursuance of the contract in relation to the service. The expression "service‟ in Section 2 (1) (o) means a service of any description which is made available to potential users including the provision of facilities in connection with (among other things) housing construction. Under Section 14(1)(e), the jurisdiction of the consumer forum extends to directing the opposite party inter alia to remove the deficiency in the service in question. Intrinsic to the jurisdiction which has been conferred to direct the removal of a deficiency in service is the provision of compensation as a measure of restitution to a flat buyer for the delay which has been occasioned by the developer beyond the period within which possession was to be handed over to the purchaser." Courts cannot be oblivious to the one-sided nature of ABAsThe bench also observed that it cannot be oblivious to the one-sided nature of ABAs which are drafted by and to protect the interest of the developer. Perusing the instant ABA, the court said that the same was manifestly one-sided: the rights provided to the developer for a default on the part of the home buyer are not placed on an equal platform with the contractual right provided to the home buyer in the case of a default by the developer. The bench observed: "Flat purchasers suffer agony and harassment, as a result of the default of the developer. Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These legitimate expectations are belied when the developer as in the present case is guilty of a delay of years in the fulfilment of a contractual obligation. To uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate irrespective of the nature or extent of delay would result in a miscarriage of justice. Undoubtedly, as this court held in Dhanda, courts ordinarily would hold parties down to a contractual bargain. Equally the court cannot be oblivious to the one-sided nature of ABAs which are drafted by and to protect the interest of the developer. Parliament consciously designed remedies in the CP Act 1986 to protect consumers. Where, as in the present case, there has been a gross delay in the handing over of possession beyond the contractually stipulated debt, we are clearly of the view that the jurisdiction of the consumer forum to award just and reasonable compensation as an incident of its power to direct the removal of a deficiency in service is not constrained by the terms of a rate which is prescribed in an unfair bargain. " The Court also observed that the decision in DLF Homes Panchkula Pvt. Ltd. v. D S Dhanda, does not prescribe an absolute embargo on the award of compensation beyond the rate stipulated in the flat buyers‟ agreement where handing over of the possession of a flat has been delayed. The decision, does not lay down that there is an absence of jurisdiction in the adjudicatory fora constituted under the CP Act 1986 to award...

Flat Buyers Entitled To Just & Reasonable Compensation For Gross Delay By Builders In Handing Over Possession: SC [Read Judgment]

Ashok Kini

"To uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate irrespective of the nature or extent of delay would result in a miscarriage of justice."

Tags