the allottees will not lose their right to claim interest for delayed possession merely on the ground that the conveyance deed had already been executed

 Amit Gupta Vs. Athena Infrastructure Ltd.Appeal No.79 of 2020 in Haryana Real Estate Appellate Tribunal,

The complaint filed by the appellant-allottee for grant of interest for delayed possession was dismissed by Ld. Haryana Real Estate Regulatory Authority, Gurugram The only ground taken in the order is that as the conveyance deed had already been executed, so the complaint was not maintainable.

It was held by the Appellate tribunal that 

"In our view the approach of the Ld. Authority is erroneous. The Hon'ble Apex Court in case Wg. Cdr. Arifur Rahman Khan and Aleya Sultana and others vs. DLF Southern Homes Pvt. Ltd. (now known as BEGUR OMR Homes Pvt. Ltd.) and others 2020(3) R.C.R.(Civil) 544 has laid down as under:-

“The developer in the present case has undertaken to provide a service in the nature of developing residential flats with certain amenities and remains amenable to the jurisdiction of the Consumer Fora. Consequently, we are unable to subscribe to the view of the NCDRC that flat purchasers who obtained possession or executed Deeds of Conveyance have lost their right to make a claim for compensation for the delayed handing over of the flats.”

In view of the aforesaid ratio of law laid down by the Hon'ble Apex Court, the allottees will not lose their right to claim interest for delayed possession merely on the ground that the conveyance deed had already been executed. The execution of the conveyance deed cannot extinguish the cause of action which had already accrued to the allottee due to delay in delivery of possession. Thus, the impugned order passed by the Ld. Authority is not sustainable. Consequently, the present appeal is hereby allowed. The impugned order dated 19.12.2019 is hereby set aside.

Punjab RERA - Long unexplained delay in pursuing the matter would obviously be hit by the bar of limitation.

 In the Matter of Indra Duggal V/s Chandigarh Overseas Pvt ltd. Case no. 1769 of 2020 decided on 07.07.2021 Before The Real Estate Regulatory Authority, Punjab

Fact of the Case 

• Unit was allotted on 26.09.2014
• Date of Builder buyer agreement was on 26.09.2014
• Entire payment has also been received by the Respondent.
• Date of Possession was 30.06.2016
• Possession has not been provided

It was held by the Authority That 

• There has been a complete inaction on the part of complainant for a period of nearly 6 years till the present complaint is filed on Aug 2020.
• Such a long unexplained delay in pursuing the matter would obviously be hit by the bar of limitation.
• The Entry at Serial no. 113 of the schedule of the limitation act,1963 provides that the limitation for any proceedings for which no separate period of limitation is provided would be 3 years from the time the right to sue accrues.
• The complaint is being dismissed as being barred by limitation.

SUPREME COURT in Consumer Protection Act: Flat buyers are entitled to just reasonable compensation on gross delay & execution of the Deed of Conveyance by a flat purchaser Does not precludes a consumer claim being raised for delayed possession

 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.

Consumer Protection Act: Entitlement of the Allottee / Homebuyer has to be reckoned in terms of the Date of the Agreement and not the RERA Registration date.

 IN THE MATTER OF: M/s. Imperia Structures Ltd. Vs. Anil Patni and Another (Decided by Hon’ble Supreme Court of India on 02.11.2020) 

Issues: 

    1. Whether the remedies available to the consumers under provisions of the Consumer Protection Act, 1986 (“CP Act”) would be additional remedies, not barred by the coming in force of the Real Estate (Regulation and Development) Act, 2016 (“RERA Act”)? 

2. Whether the provisions of the RERA Act have made any change in the legal position with regards to remedies available to the Allottees? 

3. Whether the entitlement of the Allottee has to be reckoned in terms of the date of Agreement or the RERA registration date? 

Facts: 

    1. A Housing Scheme called “The ESFERA” in Gurgaon, Haryana was launched by the Appellant in 2011. All the Complainants booked their respective apartments by paying the requisite booking amounts and thereafter executed the Builder Buyer Agreement towards their individual units. The Agreement provided for delay due to reasons beyond the control of the Developer (Appellant) and failure to deliver possession due to Govt. Rules/Notifications, etc under the Force Majeure clause and the compensation thereof. Even after four yearsthere was no sign of Project getting completed. Thereafter, in 2017, the Project was registered with Haryana Real Estate Regulatory Authority, Panchkula (“HRERA”). 

2. The Consumer Complaint was filed by the Complainants for the delay in handing over of the possession of their respective apartments. In response, the Appellant challenged the jurisdiction of the National Consumer Dispute Redressal Commission (“National Commission”) on the ground that the Complainants/Respondents would not come within the definition of consumers. After having heard the submissions, the Commission allowed the Complaint and granted relief of refund to the Complainants/Respondents. 

3. The Appellant aggrieved by the order of the National Commission, preferred an appeal under Section 23 of the CP Act before the Hon’ble Supreme Court. Court’s Observations: 

• The Counsel for Appellants submitted that once the RERA Act came into force, all questions concerning the Project including issues relating to construction and completion thereof, would be under the exclusive control and jurisdiction of the authorities under RERA Act. The National Commission, therefore, ought not to have entertained the Consumer Complaint. Further, the Registration Certificate being valid upto 31.12.2020, the Appellant could not be said to have delayed the construction and consequently, there could be no finding that there was deficiency on part of the Appellant. The Counsel for the Respondents submitted that whether the delay occurred due to force majeure was already dealt by the National Commission and no reasonable explanation was available on record to dislodge that finding. It was further submitted that the remedy afforded by the CP Act would be an additional remedy to a consumer and such legal position remained unchained even after the enactment of the RERA Act. 

• The Court noted that conclusions drawn by the National Commission that – i) all the Complainants were consumers within the meaning of the Act; and ii) there was delay on part of the Appellant in completion the construction within time, are absolutely correct and does not call for interference of this Hon’ble Court. • While discussing various precedents, the Court observed that the Hon’ble Apex Court has consistently held that the remedies available under the provisions of the CP Act are additional remedies over and above the other remedies including those made available under any special statutes;and that the availability of an alternate remedy is no bar in entertaining a complaint under the CP Act. The Hon’ble court further observed that insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. The absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a Civil Court and express saving under Section 88 of the RERA Act, make the position quite clear. Furthermore, Section 18 itself specifies that the remedy under said Section is "without prejudice to any other remedy available". Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act. 

• The Court held that in the present case the apartments were booked by the Complainants in 2011-2012 and the Builder Buyer Agreements were entered into in November, 2013. As promised, the construction should have been completed in 42 months. The period had expired well before the Project was registered under the provisions of the RERA Act. Merely because the registration under the RERA Act is valid till 31.12.2020 does not mean that the entitlement of the concerned Allottees to maintain an action stands deferred. It is relevant to note that even for the purposes of Section 18, the period has to be reckoned in terms of the agreement and not the registration. Therefore, the entitlement of the Complainants must be considered in the light of the terms of the Builder Buyer Agreements and was rightly dealt with by the Commission. 

The Hon’ble Court dismissed the appeal, affirming the view taken by the National Commission.

ONE-SIDED AND UNREASONABLE CLAUSES IN APARTMENT BUYER’S AGREEMENT CONSTITUTES “UNFAIR TRADE PRACTICE” – SUPREME COURT

 In Ireo Grace RealTech Pvt. Ltd. v. Abhishek Khanna & Ors.,CIVIL APPEAL NO. 5785 OF 2019 the Supreme Court of India examined the clauses of the buyers’ agreement and inter alia observed that 

• the allottees are given a very limited right to cancel the agreement in the event of the clear and unambiguous failure of the warranties of the developers, which leads to frustration of the agreement on that account. 

• The Court held that the terms of the apartment buyer‘s agreement, having this limited right of cancellation by the buyers are oppressive and wholly one-sided, and would constitute an unfair trade practice under the Section 2(1)(r) of the Consumer Protection Act, 2019 (CP Act).

The Court stated that term “unfair contract” is defined under the CP Act and the

conferment of powers on the State Consumer Fora and the National Commission to

declare contractual terms which are unfair, as null and void, is a statutory recognition of a power which was implicit under the CP Act. Hence, the buyers cannot be bound by such terms in the agreement. It is a welcome judgment to protect the helpless homebuyers who are left at vagaries of the developers who seek to mis-use the legal provisions.

Letter of allotment would tantamount to an agreement for sale

 In the Matter of Manjeet Singh dhaliwal versus Jvpd properties private Limited,the Maharashtra appellate Tribunal held that even a letter of allotment would tantamount to an agreement for sale under Section 2(c) of the ACT if the letter contains the description of the property, payment schedule and costs requisition of permissions, obligation to complete the project and getting Clarity to title. since nothing further was left to be agreed upon, the contract was concluded.

Escalation Cost in the Event of Delayed Possession are to be borne by the builder only

In the Matter of  Brig. (Retd.) Kamal Sood V/s DLF Universal Ltd.(FA /557 /2003)  Date of Order 02.04.2007 The NCDRC observed that

         “it was the duty of the builder to plan in advance, obtain necessary permission and thereafter, promise to deliver the possession of flat in the stipulated time. It is unfair trade practice on the part of the builder to collect money from the prospective buyers without obtaining the required permission.Secondly, in such a case, if there is any express promise that the premises would be delivered within the stipulated time, and, if not done so, escalation cost is required to be borne by the builder.”

In The Absence of Possession Clause in the Agreement, the Possession should be given in a reasonable time

 in the Matter of Fortune Infrastructure-v/s-Travor D’lima (2018) 5 SCC 442, the Honorable Supreme Court has ordered that when no date of possession is mentioned in the agreement the Promoter is expected to hand over the possession within reasonable time and the period of three years (3 yrs) is held to be reasonable time.

In the case, the Respondents were aggrieved that the appellants were not delivering the possession of flats and accordingly approached the NCDRC (National Consumer Dispute Redressal Commission) to hold that the appellants were guilty of deficiency in service and unfair trade practices as per the provisions of the Consumer Protection Act, 1986.

x

Thereafter, the NCDRC directed the appellants to refund the amount of Rs.1,87,00,000/- and pay a sum of Rs. 3,65,46,000/- as to the complainants. Aggrieved by NCDRC’s order, the appellants approached the Supreme Court, the Appellants contended that they had transferred the project to a different company thereby they should be discharged from any liability for not handing over the disputed property to the answering respondents and also to consider the downward trends shown in the real estate market which mandates a lesser compensation, compared to the one awarded by the NCDRC.

The Court remarked that a person cannot be made to wait indefinitely for the possession of flats allotted to them and they were entitled to seek the refund of the amount paid by them, along with compensation. In such cases When no delivery period is stipulated the Court noted that a reasonable time has to be taken into consideration. In the facts and circumstances of this case, a time period of 3 years was deemed as reasonable for completion of the contract.

For the quantum of compensation on account of delay in delivery of flats, the Supreme Court made reference to the case of Ghaziabad Development Authority v. Balbir Singh , wherein the Court observed that there was no fixed formula for fixing damages. The Court stated that it is settled in law that whenever the builder has refused to perform the contract without valid justification, the buyer is entitled for compensation as she has been deprived of price escalation of the flat. Every breach of contract gives rise to an action for damages. Such amount of damages must be proved with reasonable certainty. Where a party sustains loss by reason of a breach of contract, the damages are to be granted so as to place the suffering party in the same position as if the contract had been performed. In light of the above, the damages other than consequential loss have to be measured at the time of the breach. However, the aforesaid rule is flexible and needs to be assessed in facts and circumstances of individual cases.

Reference may be drawn to the decision of Pannalal Jankidas v. Mohanlal, AIR 1951 SC 144, where the Supreme Court for the first time held that the party in breach must compensate in respect of the direct consequences flowing from the breach and not in respect of loss or damage indirectly or remotely caused. This rule is based on the broad principle that the party who has suffered the loss should be placed in the same position, as far as compensation in money can do it, as if the party in breach had performed his contract or fulfilled his duty.