IN THE MATTER OF:
Wg. Cdr. Arifur Rahman Khan and Aleys Sultana and Ors. Vs. DLF Southern Homes Pvt. Ltd. (now known as BEGUR OMR Homes Pvt. Ltd.) & Ors. (Decided by Hon’ble Supreme Court of India on 24.08.2020)
Issues:
Issue 1.Whether the flat buyers are entitled to compensation in excess of what was stipulated in the Apartment Buyers Agreement?
Issue 2.Whether the execution of the Deed of Conveyance by a flat purchaser precludes a consumer claim being raised for delayed possession?
Facts:
1.The Complaint before the National Consumer Disputes Redressal Commission (NCDRC) was initially instituted by nine flat buyers. These Complainants had booked residential flats in a project called Westend Heights at New Town, DLF, BTM Extension at Begu, Bengaluru. The brochure of the first respondent advertised the nature of the project and the amenities which would be provided to buyers. Responding to the representation held out by the developer, the complainants booked flats in the residential project. The flat buyers entered into agreements with the developer. Clause 11(a) of the Apartment Buyer’s Agreement (ABA) indicated that the developer would endeavor to complete construction within a period of thirty-six months from the date of the execution of the agreement save and except for force majeure conditions. The developers issued various communications indicating the progress of the work and kept on changing the timeline of delivery of possession. Further, there was an admission of the fact that until 2015, the occupation certificate had not been received. Thus, the obligation to handover possession within a period of thirty-six months was not fulfilled.
2.The first batch of nine flat purchasers moved a consumer complaint before the NCDRC complaining of a breach by the developer of the obligation, contractually assumed, under the terms of the ABA. Since the nine complainants purported to represent the entire group of flat purchasers, a notice of the complaint under Section 12(1)(c) of the Consumer Protection Act 19863 was published in the newspapers. An I.A. was filed before the NCDRC under Section 12(1)(c) which was subsequently disposed of by NCDRC, which led to an appeal before the Apex Court. Procedural directions issued upon several impleadment applications resulted in a further order of the Apex Court reiterating that the complaint would be treated as having been filed on behalf of 339 persons. By the aforesaid order, the Apex Court had laid down a peremptory time schedule of six months for the disposal of the complaint.
3.The NCDRC divided the group of 339 flat buyers into six groups based on whether or not they had taken possession, executed deeds of conveyance, settled the dispute or sold the flats before or during the pendency of the complaint or their applications for impleadment. While recording a finding of fact that there was an admitted delay on the part of the developer, the NCDRC held that the agreements provided compensation at the rate of Rs.5/- per square foot of the super area for every month of delay. The NCDRC held that the flat purchasers who agreed to this stipulation in the agreements were not entitled to seek any amount in addition. Further, the execution of the Deed of Conveyance by a flat purchaser would preclude a consumer claim being raised for delayed possession.
4.The NCDRC dismissed the consumer complaint filed by 339 flat buyers, accepting the defense 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 ofthe residential flats, the purchasers were not entitled to compensation in excess of what was stipulated in the Apartment Buyers Agreement (ABA). Aggrieved by the order of the NCDRC, the Appellants have approached the Hon’ble Supreme Court.
Supreme Court’s Observations:
❑ The Counsel for Appellants submitted that –
i) There is a gross delay ranging between two and four years in handing over possession and the flat buyers ought not to be constrained by the terms of the agreement which are one-sided and unreasonable;
(ii) The execution of conveyances or settlement deeds would not operate to preclude the flat buyers from claiming compensation; and
(iii) The amenities which have been contracted for have not been provided by the developers. Pursuant to the aforesaid, the Counsel for Respondents submitted that – i) No evidence has been led by the complainants to discharge the onus placed upon them to establish coercion or duress while executing conveyances or settlements;
(ii) Possession of the complex, comprising of 813 apartments in nineteen towers has been handed over between four to six years ago and the developer has transferred his right, title and interest to the Residents‟ Welfare Association (“RWA”);
(iii) Out of 171 applicants, 145 have received compensation at the agreed rate while handing over possession; and (iv) Under clause 14 of the ABA, the flat buyers have been compensated at the rate of Rs 5 per square foot per month. No proof or measure of actual loss suffered has been adduced.
❑ The Court observed that the developer has accepted that there was a delay on his part which triggered of the liability to pay compensation. 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. 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.
Further, in assessing the legal position, it is necessary to record that the ABA is clearly one-sided. Evidently, the terms of the agreement have been drafted by the Developer. They do not maintain a level platform as between the developer and purchaser. The stringency of the terms which bind the purchaser are not mirrored by the obligations for meeting times lines by the developer. The agreement does not reflect an even bargain. Where, as in the present case, there has been a gross delay in the handing over of possession beyond the contractually stipulated debt, the Court is clear 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 further observed that the flat purchasers have invested their hard earned money. It is only reasonable to presume that the next logical step is for the purchaser to perfect the title to the premises which have been allotted under the terms of the ABA. But the submission of the developer is that the purchaser forsakes the remedy before the consumer forum by seeking a Deed of Conveyance. To accept such a construction would lead to an absurd consequence of requiring the purchaser either to abandon a just claim as a condition for obtaining the conveyance or to indefinitely delay the execution of the Deed of Conveyance pending protracted consumer litigation.
Thus, disapproving the view of NCDRC, the Apex Court held that flat purchasers who obtained possession or executed Deeds of Conveyance have not lost their right to make a claim for compensation for the delayed handing over of the flats. After making the aforesaid observations, the Court has directed that -
i) Except for eleven appellants who entered into specific settlements with the developer and three appellants who have sold their right, title and interest under the ABA, the respondents shall, as a measure of compensation, pay an amount calculated at the rate of 6 per cent simple interest per annum to each of the appellants. The amount shall be computed on the total amounts paid towards the purchase of the respective flats with effect from the date of expiry of thirty-six months from the execution of the respective ABAs until the date of the offer of possession after the receipt of the occupation certificate;
ii) The above amount shall be in addition to the amounts which have been paid over or credited by the developer at the rate of Rs 5 per square foot per month at the time of the drawing of final accounts; and
iii) The amounts due and payable in terms of directions (i) and (ii) above shall be paid over within a period of one month from the date of this judgment failing which they shall carry interest at the rate of 9% p.a. until payment.
