1. Builder-buyer agreement dispute — Delay in possession — Arbitration and Conciliation Act, 1996. (Para 1 , 2 , 3 , 4 )
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2026 Supreme(Online)(Del) 16995
IN THE HIGH COURT OF DELHI AT NEW DELHI
V. Kameswar Rao, Manmeet Pritam Singh Arora, JJ
Omaxe Ltd. – Appellant
Versus
Asha Saini – Respondent
FAO (COMM) 53/2022 | FAO (COMM) 91/2022
Advocates:
For the Appellants/Petitioners: Ramesh Singh, Mukti Bodh, Mala Diwadi, Nanya Hage, Subhashish Panda
For the Respondents: Praveen Mahajan, Raj Choudhary
For the Appellants/Petitioners: Ramesh Singh, Mukti Bodh, Mala Diwadi, Nanya Hage, Subhashish Panda
For the Respondents: Praveen Mahajan, Raj Choudhary
The contractual relationship begins from the date of booking and payment of earnest money; nominal compensation clauses in BBAs signed under coercion are unenforceable, and allottees are entitled to reasonable interest for delayed possession under Section 55 of the Contract Act.
Headnote:(A) Contractual Relationship - Commencement of Contract - Booking application and payment of earnest money constitute a concluded and enforceable contract; subsequent Builder Buyer Agreements (BBA) cannot unilaterally extend the delivery period or postpone the obligation to hand over possession. (Para 9, 12)
(B) Compensation for Delay - Unfair Contractual Terms - Clauses limiting compensation to nominal amounts (e.g., per sq. ft.) are unenforceable where the agreement was signed under coercion or without bargaining power; allottees are entitled to reasonable interest for delayed possession. (Para 14, 18)
(C) Limitation - Delayed Possession - The cause of action for delayed delivery of possession crystallizes upon the actual delivery of possession, and time spent bona fide prosecuting a civil suit may be excluded. (Para 9.5)
(D) Arbitration Law - Scope of Interference - Under Section 37, the court will not interfere with a plausible and reasoned finding of fact by the arbitrator unless there is patent illegality. (Para 11, 19)
Issues: Whether the arbitral awards awarding compensation for delayed possession based on the booking date rather than the BBA date were legally sustainable and whether the limitation period was correctly computed.
Legal Category Hierarchy
- property and real estate
- arbitration and conciliation
- contract law
- practice and procedure
Table of Contents
2. Appellant argued possession period from BBA execution; Respondent argued from booking date. (Para 5 , 6 )
3. Sole Arbitrator held BBA was continuation of booking; possession period starts from booking date. (Para 9 , 10 , 12 , 13 , 14 , 17 )
4. Compensation for delayed possession can exceed contractual rate under coercive circumstances. (Para 15 , 18 , 19 , 20 )
5. Appeals dismissed with costs; arbitral awards upheld. (Para 22 , 23 , 24 )
6. When does the period for handing over possession commence in a builder-buyer agreement?
From the date of booking and acceptance of payment, not from the subsequent execution of the formal builder-buyer agreement. (Para 9 , 12 , 13 )
7. Can an arbitral tribunal award compensation for delayed possession exceeding the contractual rate?
Yes, where the builder-buyer agreement was executed under coercive circumstances, the contractual compensation clause ceases to bind the allottee. (Para 14 , 15 , 17 , 18 , 19 )
8. Is proof of actual loss mandatory for awarding compensation for delayed possession?
No, compensation is founded on Section 55 of the Contract Act, and the measure has been established by Supreme Court and consumer forum judgments. (Para 17 , 19 )
JUDGMENT
MANMEET PRITAM SINGH ARORA, J.
1. The present appeals have been preferred by the Appellant under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 [‘Act of 1996’] impugning the common order dated 11.01.2022 passed by the learned District Judge (Commercial Court)-01, South-East District, Saket Courts, New Delhi [‘District Judge’] in OMP (Comm.) No. 53/2019 and OMP (Comm.) No. 50/2019.
1.1. Dispute arose out of two separate Builder Buyer Agreements [‘BBA’] executed between the Appellant and the Respondent. The parties are common in both the appeals.
1.2. Since both appeals involve substantially identical facts, contractual stipulations, parallel arbitral proceedings and common questions of law, they are being considered together.
1.3. The Appellant has addressed common arguments and has treated FAO (COMM) No. 53/2022 as the lead appeal.
2. FAO (COMM) No. 53/2022 arises out of a Booking Application Form dated 21.03.2006 and BBA dated 09.02.2012 executed between the Appellant and the Respondent, in respect of Flat No. 706, Petronas Tower, in the Appellant’s residential project, ‘Omaxe North Avenue’, Bahadurgarh, Haryana [‘Project’]. Disputes arose between the parties regarding the delay in handing over possession of the said flat, which ultimately culminated in invocation of arbitration clause and commencement of arbitral proceedings before the learned Sole Arbitrator. By award dated 26.12.2018, as modified by subsequent order dated 11.02.2019, the learned Sole Arbitrator allowed the Respondent’s claims and awarded damages, pendente lite interest on the awarded damages, refund of overcharged interest collected by Appellant, litigation costs and future interest. Aggrieved thereby, the Appellant instituted a petition under Section 34 of the Act of 1996, being OMP (Comm.) No. 53/2019, before the District Judge. By impugned judgment dated 11.01.2022, the District Judge dismissed the said petition and upheld the arbitral award.
3. FAO (COMM) 91/2022 arises out of a separate Booking Application Form dated 23.03.2006 and BBA dated 02.02.2012 executed between the same parties in respect of Flat No. 602, Empire Tower, in the same Project. Similar disputes regarding the delay in handing over possession of the said flat were referred to arbitration before the same learned Sole Arbitrator. By award dated 26.12.2018, as modified by subsequent order dated 11.02.2019, the learned Sole Arbitrator allowed the Respondent’s claims and awarded damages, pendente lite interest on the awarded damages, refund of overcharged interest collected by Appellant, litigation costs and interest. The Appellant challenged the said award by filing a petition under Section 34 of the Act of 1996, being OMP (Comm.) No. 50/2019, before the District Judge which upheld the arbitral award and dismissed the said petition by the common judgment dated 11.01.2022.
FACTS
4. The common facts relevant for deciding the present appeals are as under: -
4.1 The Respondent had initially applied for allotment of the flats in the Project in the year 2006 and was subsequently allotted the flats [‘Flat No. 706, Petronas Tower’ and ‘Flat No. 602, Empire Tower’] on payment of the booking amount. The Appellant forwarded draft BBAs to the Respondent in September 2008. According to the Appellant, although the BBAs were received by the Respondent, they were executed only in February 2012 since the Respondent raised certain issues regarding the contractual terms. Under the BBAs, the Appellant undertook to hand over possession within thirty (30) months, with an extended period of six (6) months, from the date of execution of the respective BBAs.
4.2 However, it is a matter of record that between March 2006 and January 2009, the Respondent had paid the entire amount towards base price claimed by the Appellant as per the Construction Linked Plan [‘CLP’]. The only amount which remained pending was to be paid at the time of receiving the offer of the poss
