Pioneer Urban Land And Infrastructure Ltd. v. Govindan Raghavan - (Supreme Court) (02 Apr 2020)

A person cannot be made to wait indefinitely for possession of flat allotted and is entitled to seek refund of amount paid

MANU/SC/0463/2019

Property

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 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.

The Appellant – Builder however failed to apply for the Occupancy Certificate as per the stipulations in the Agreement. The Respondent – Flat Purchaser filed a Consumer Complaint before the National Commission 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 National Commission vide Final Judgment 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 Respondent – Flat Purchaser. The clauses in the Agreement were held to be wholly one – sided, unfair, and not binding on the Respondent – Flat Purchaser.

The Appellant – Builder was directed to refund Rs. 4,48,43,026 i.e. the amount deposited by the Respondent – Flat Purchaser, along with Interest @10.7% S.I. p.a. towards compensation. Aggrieved by the Order passed by the National Commission, the Appellant – Builder preferred the present statutory Appeal under Section 23 of the Consumer Protection Act, 1986.

In the present case, admittedly the Appellant – Builder obtained the Occupancy Certificate almost 2 years after the date stipulated in the Apartment Buyer’s Agreement. As a consequence, there was a failure to hand over possession of the flat to the Respondent – Flat Purchaser within a reasonable period. The Occupancy Certificate was obtained after a delay of more than 2 years on 28.08.2018 during the pendency of the proceedings before the National Commission.

In Lucknow Development Authority v. M.K. Gupta, this Court held that when a person hires the services of a builder, or a contractor, for the construction of a house or a flat, and the same is for a consideration, it is a “service” as defined by Section 2 (o) of the Act, 1986. The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service. In Fortune Infrastructure & Anr. v. Trevor D’Lima & Ors., this Court held that a person cannot be made to wait indefinitely for possession of the flat allotted to him, and is entitled to seek refund of the amount paid by him, along with compensation.

The Respondent – Flat Purchaser has made out a clear case of deficiency of service on the part of the Appellant – Builder. The terms of the Apartment Buyer’s Agreement dated 08th May, 2012 were wholly one-sided and unfair to the Respondent – Flat Purchaser. The Appellant – Builder could not seek to bind the Respondent with such one-sided contractual terms.

In Bangalore Development Authority v. Syndicate Bank, a Coordinate Bench of this Court held that when possession of the allotted plot/flat/house is not delivered within the specified time, the allottee is entitled to a refund of the amount paid, with reasonable Interest thereon from the date of payment till the date of refund. In the present case, the National Commission has passed an equitable Order.

The National Commission has rightly awarded Interest @10.7% S.I. p.a. by applying Rule 15 of the Haryana Real Estate (Regulation And Development) Rules, 2017 from the date of each installment till 05.02.2017 i.e. till the date after which the Order of stay of cancellation of the allotment was passed; and thereafter, from the date of the Commission’s final Order till the date on which the amount is refunded with Interest.

There is no illegality in the Impugned Order passed by the National Commission. The Appellant – Builder failed to fulfill his contractual obligation of obtaining the Occupancy Certificate and offering possession of the flat to the Respondent – Purchaser within the time stipulated in the Agreement, or within a reasonable time thereafter. The Respondent – Flat Purchaser could not be compelled to take possession of the flat, even though it was offered almost 2 years after the grace period under the Agreement expired. Respondent – Flat Purchaser was entitled to be granted the relief prayed for i.e. refund of the entire amount deposited by him with Interest. The Civil Appeals are accordingly dismissed.

Tags : REFUND INTEREST ENTITLEMENT