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SUPREME COURT OF INDIA
Uday Umesh Lalit, Indu Malhotra, JJ.
PIONEER URBAN LAND AND INFRASTRUCTURE LIMITED – Appellant
Vs.
GOVINDAN RAGHAVAN – Respondent
CIVIL APPEAL NO. 12238 OF 2018
WITH
Pioneer Urban Land & Infrastructure Ltd. - Appellant
Versus
Geetu Gidwani Verma & Anr. - Respondent
CIVIL APPEAL NO. 1677 OF 2019
Decided On : 02-04-2019
(B) Consumer Protection Act, 1986 – Section 2(1)(r) – Apartment Buyer’s Agreement – A term of a contract will not be final and binding if it is shown that flat purchasers had no option but to sign on dotted line, on a contract framed by builder – Incorporation of such one-sided clauses in an agreement constitutes unfair trade practice as per Section 2 (1)(r) of Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling flats by Builder. (Para 6.7)
Facts of Case:
Purchase of flat. Respondent–Flat Purchaser filed a Consumer Complaint before National Commission alleging deficiency of service on part of Appellant – Builder for failure to obtain the Occupancy Certificate and hand over possession of flat. National Commission passed an ex-parte Interim Order restraining Appellant – Builder from cancelling allotment made in favour of Respondent – Flat Purchaser during pendency of Consumer Case.
Findings of Court:
We see no illegality in Impugned Order passed by National Commission. Appellant – Builder failed to fulfill his contractual obligation of obtaining Occupancy Certificate and offering possession of flat to Respondent – Purchaser within time stipulated in Agreement, or within a reasonable time thereafter. Respondent – Flat Purchaser could not be compelled to take possession of flat even though it was offered almost 2 years after grace period under Agreement expired.
Result : Appeals dismissed.
Based on the provided legal document, the key points are as follows:
The court emphasized that a person cannot be made to wait indefinitely for possession of a flat allotted to them and is entitled to seek a refund of the amount paid, along with compensation, if there is undue delay (!) (!) .
Contractual terms that are one-sided, unfair, or coercive—especially those that leave flat purchasers with no real option but to accept unfavorable conditions—are considered unfair trade practices and are not binding (!) (!) (!) (!) .
The contractual clauses in the agreement were found to be wholly one-sided and unfair to the flat purchaser, and such clauses could not be relied upon to bind the purchaser (!) (!) (!) (!) .
Delay in obtaining the Occupancy Certificate and handing over possession beyond a reasonable period constitutes deficiency of service. The delay was more than two years, during which the purchaser had to service a loan and seek alternative accommodation (!) (!) (!) (!) .
The purchaser has the right to terminate the agreement and seek a refund of the entire amount paid, along with interest and compensation, especially when the builder fails to fulfill contractual obligations within stipulated or reasonable timeframes (!) (!) (!) (!) .
The applicable rate of interest for the refund was determined based on statutory rules, and the court affirmed the interest rate awarded by the authority, which was higher than the contractual rate, considering the circumstances of delay and hardship faced by the purchaser (!) (!) (!) (!) (!) .
The filing of a consumer complaint can be considered as a form of termination notice if it leads to the suspension or revocation of the builder’s registration or if it results in a delay that is unreasonable and inordinate. However, procedural compliance with contractual termination clauses is also necessary to invoke the right to refund (!) (!) .
The court rejected the builder's argument that the agreement was not properly terminated and held that the delay and deficiency of service justified the purchaser's claim for refund and compensation (!) (!) .
The court reaffirmed that unfair contractual terms, especially those that create inequality of bargaining power, are contrary to principles of justice and fairness, and such terms cannot be enforced (!) (!) .
The overall decision was to dismiss the appeals and affirm the order directing the builder to refund the amount paid by the purchaser within a specified period, along with interest and compensation, considering the delay and unfair contractual clauses (!) (!) .
Please let me know if you need further analysis or specific legal advice related to this case.
JUDGMENT :
Indu Malhotra, J.
The present statutory Appeals have been filed under Section 23 of the Consumer Protection Act, 1986 to challenge the Final Judgment and Order dated 23.10.2018 passed in Consumer Case No. 238 of 2017 and Consumer Case No. 239 of 2017 by the National Consumer Disputes Redressal Commission (hereinafter referred to as "the National Commission").
2. Since a common issue arises in both the Civil Appeals, they are being disposed of by the present common Judgment and Order.
3. For the sake of brevity, the facts in C.A. No. 12238 of 2018 are being referred to, being the lead matter.
The factual matrix of the said Civil Appeal is as under :
3.1. The Appellant - Builder launched a residential project by the name "Araya Complex" in Sector 62, Golf Course Extension Road, Gurugram.
The Respondent - Flat Purchaser entered into an Apartment Buyer's Agreement dated 08.05.2012 with the Appellant - Builder to purchase an apartment in the said project for a total sale consideration of Rs. 4,83,25,280/-.
As per Clause 11.2 of the Agreement, the Appellant -Builder was to make all efforts to apply for the Occupancy Certificate within 39 months from the date of excavation, with a grace period of 180 days.
3.2. The excavation of the project commenced on 04.06.2012. As per Clause 11.2 of the Agreement, the Builder was required to apply for the Occupancy Certificate by 04.09.2015, or within a further grace period of 6 months i.e. by 04.03.2016, and offer possession of the flat to the Respondent - Flat Purchaser.
The Appellant - Builder however failed to apply for the Occupancy Certificate as per the stipulations in the Agreement.
3.3. The Respondent - Flat Purchaser filed a Consumer Complaint before the National Commission on 27.01.2017 alleging deficiency of service on the part of the Appellant -Builder for failure to obtain the Occupancy Certificate, and hand over possession of the flat.
The Respondent prayed inter-alia for :-
Refund of the entire amount deposited being Rs. 4,48,43,026/-, along with Interest@ 18% p.a.; and
Compensation of Rs. 10,00,000/- for mental agony, harassment, discomfort and undue hardship; and
Refund of the wrongfully charged taxes including Service Tax, and other charges along with Interest @18% p.a.; and
Litigation Costs of Rs. 1,00,000/-.
3.4. On 06.02.2017, the National Commission passed an ex-parte Interim Order restraining the Appellant - Builder from cancelling the allotment made in favour of the Respondent - Flat Purchaser during the pendency of the Consumer Case.
3.5. During the pendency of the proceedings before the National Commission, the Appellant - Builder obtained the Occupancy Certificate on 23.07.2018, and issued a Possession Letter to the Respondent - Flat Purchaser on 28.08.2018.
3.6. The Appellant - Builder submitted before the National Commission that since the construction of the apartment was complete, and the Occupancy Certificate had since been obtained, the Respondent - Flat Purchaser must be directed to take possession of the apartment, instead of directing refund of the amount deposited.
3.7. The Respondent - Flat Purchaser however submitted that he was not interested in taking possession of the apartment on account of the inordinate delay of almost 3 years. The Respondent - Flat Purchaser stated that he had, in the meanwhile, taken an alternate property in Gurugram, and sought refund of the entire amount of Rs. 4,48,43,026/- deposited by him along with Interest @18% p.a.
3.8. The National Commission vide Final Judgment and Order dated 23.10.2018 allowed the Consumer Complaint filed by the Respondent - Flat Purchaser, and held that since the last date stipulated for construction had expired about 3 years before the Occupancy Certificate was obtained, the Respondent - Flat Purchaser could not be compelled to take possession at such a belated stage.
The grounds urged by the Appellant - Builder for delay in handing over possession were not justified, so as to deny awarding compensation to the Re
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