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.
