Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2019 Supreme(SC) 1483

SUPREME COURT OF INDIA
Dhananjaya Y. Chandrachud, Hemant Gupta, JJ.
Kolkata West International City Pvt Ltd. - Appellant
Versus
Devasis Rudra - Respondent
Civil Appeal No. 3182 of 2019 (@SLP(C) Nos. 1795 of 2017)
Decided On : 25-03-2019

Advocates Appeared:
Ravinder Narain, Siddharth Banthia, Rajat Gava, Rajan Narain, Advocates, for the Appellants; Supriya Bose, Sr. Adv., Debajyoti Deb, Subhasish Bhowmick, Ms. Goldy Goyel, Advocates, for the Respondents

Unreasonable delay in possession can justify a refund of money with interest, even if the primary relief sought was possession.

Headnote:
Consumer Complaint - Buyer's Agreement - Clause 11 of Buyer's Agreement - Refund, Interest, and Compensation - [Clause 11 of Buyer's Agreement]
Fact of the Case:

The respondent filed a consumer complaint seeking possession of a Row House or refund of the amount paid with interest and compensation. The appellant argued that possession was offered, but the respondent claimed that no formal offer was made. The Buyer's Agreement contained a clause regarding possession and interest in case of delay.
Finding of the Court:

The court found that the delay in possession was unreasonable, and the orders for refund of money with interest were justified. The court modified the interest rate to 9% per annum instead of 12% as directed by the NCDRC.
Issues: The main issue was whether the buyer was entitled to seek a refund or was estopped from doing so, having claimed compensation as the primary relief in the consumer complaint.
Ratio Decidendi: The court held that a period of seven years for possession was unreasonable, and it would have been unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. The court also analyzed Clause 11 of the Buyer's Agreement and found it to be one-sided.
Final Decision: The court affirmed the directions of the NCDRC for refund of money with a modified interest rate of 9% per annum. The appeal was disposed of with no order as to costs.

Judgement Key Points

Key Points: - The court held that unreasonable delay in possession can justify refund of money with interest. (!) (!) - The Court modified the NCDRC order to award interest at 9% per annum, instead of 12%. (!) - The Buyer''s Agreement clause regarding possession and interest was found to be one-sided and indicative of unfairness. (!) (!) - Despite seeking possession as primary relief, refund of money with interest was justified given seven-year delay. (!) - The SCDRC/NCDRC awards for refund and compensation were upheld with modification to interest rate. (!) (!) - The possession completion certificate was received much later (2016), far beyond the extended possession date. (!) (!) - The appeal disposed of with no order as to costs. (!) - The respondent had filed a consumer complaint in 2011 seeking possession or refund with interest and compensation. (!) - The court noted that a reasonable period for awaiting possession cannot be indefinite. (!) - The amount deposit and distribution per court directions were to be adjusted from appellant's deposited funds. (!)

What is the remedy if there is unreasonable delay in possession in a Buyer''s Agreement?

What is the appropriate rate of interest on refunds awarded in a consumer dispute for delayed possession?

What are the consequences of a one-sided clause in a Buyer''s Agreement regarding possession and interest?

JUDGMENT

Dhananjaya Y. Chandrachud, J. - Leave granted.

2. This appeal arises from the judgment dated 21 November 2016 of the National Consumer Disputes Redressal Commission ("NCDRC").

3. A Buyer's Agreement dated 2 July 2007 was entered into between the appellant and the respondent.

4. The respondent paid an amount of Rs. 39,29,280 in 2006 in terms of a letter of allotment dated 20 September 2006. The agreement between the parties envisaged that the appellant would hand over possession of a Row House to the respondent by 31 December 2008 with a grace period of a further six months ending on 30 June 2009.

5. The respondent filed a consumer complaint before the West Bengal State Consumer Disputes Redressal Commission ("SCDRC") in 2011 praying for possession of the Row House and in the alternative for the refund of the amount paid to the developer together with interest at 12% per annum. Compensation of Rs. 20 lakhs was also claimed.

6. The SCDRC allowed the complaint by directing the appellant to refund the moneys paid by the respondent together with interest at 12% per annum and compensation of Rs. 5 lakhs. The NCDRC has modified this order by reducing the compensation from Rs. 5 lakhs to Rs. 2 lakhs.

7. Mr. Ravinder Narain, learned counsel appearing on behalf of the appellant submits that the primary relief which was sought in the consumer complaint was for delivery of possession. According to the appellant, the completion certificate was received on 29 March 2016, which was intimated to the respondent on 11 April 2016. Moreover, before the SCDRC, in its written submissions, the appellant had offered possession of the Row House to the respondent. It has also been stated that in a complaint which was filed by an association representing the allottees of 161 Row houses, a settlement was arrived on 11 September 2018 before the NCDRC specifying the date on which possession would be handed over together with interest at 6% per annum instead of 4% as mentioned in the Buyers' Agreement. It was urged that the developer having made a substantial investment in terms of the agreement, a direction for refund is not warranted. It has also been urged that the SCDRC in the course of its decision erroneously observed that the developer was unable to fulfill its obligation to complete the construction within the agreed period and it was not certain when the Row house would be handed over. It was urged that this observation by the SCDRC is contrary to the record since before it, a specific offer of possession was made.

8. It has been urged on behalf of the respondent by Mr. Supriya Bose, learned senior counsel that a consumer complaint was filed in the year 2011. At that stage, the appellant was bonafide ready and willing to accept possession. However, nearly seven years have elapsed after the extended date for the delivery of possession which expired on 30 June 2009. In spite of this, no offer of possession was forthcoming. Learned senior counsel submitted that the letter dated 22 March 2016 of the developer was conditional and despite the subsequent letter dated 11 April 2016, no formal offer of possession was ever made by the appellant. Moreover, it was urged that the interest awarded by the NCDRC at the rate of 12% is just having regard to the economic loss and hardship suffered by the respondent.

9. While considering the rival submissions, we must at the outset advert to the following clause which was contained in the Buyer's Agreement:

"Unless prevented by circumstances beyond the control of the company and subject to Force Majeure, KWIC shall ensure to complete the said unit in all respect within 31st December 2008 only for the Cluster D. Further there will be a grace period of 6 months (up to 30th June, 2009) from the date of completion. In case the possession is not transferred after expiry of the said grace period, KWIC will be liable to pay prevailing saving Bank interest of the State Bank of India for each month of delay on the mon

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