Consumer Courts Can Direct Builders To Give Refund & Compensation To Homebuyers For Failure To Deliver Apartments : Supreme Court

The Supreme Court has held that Consumer Courts can grant relief to flatbuyers who are aggrieved with the delay in delivery of the apartment as per the agreement.

Consumer Courts have the power to direct refund and compensation to a consumer for the deficiency in not delivering the apartment as per the terms of Agreement, the Court held.

"A consumer invoking the jurisdiction of the Commission can seek such reliefs as he/she considers appropriate. A consumer can pray for refund of the money with interest and compensation. The consumer could also ask for possession of the apartment with compensation.", the bench comprising Justices UU Lalit, S. Ravindra Bhat and PS Narasimha observed.

In this case, the National Consumer Disputes Redressal Commission directed a Developer to refund an amount of Rs. 2,06,41,379 with interest @ 9% p.a. to the Consumer for its failure to deliver possession of the apartment within the time stipulated as per the Apartment Buyers Agreement. The issue raised in the appeal by the builder are the following:

I. Whether the terms of the Apartment Buyers Agreement amount to an 'unfair trade practice' and whether the Commission is justified in not giving effect to the terms of Apartment Buyer's Agreement as laid down in the Pioneer case?

II. Whether the Commission has the power under the Consumer Protection Act, 1986 to direct refund of the amount deposited by the Consumer with interest?

Regarding the first issue, the bench upheld the Commission's finding that the clauses of the agreement are one-sided and that the Consumer is not bound to accept the possession of the apartment and can seek refund of the amount deposited by her with interest.

On the second issue, the bench first considered the submission of the appellant that the Consumer, having elected to proceed under the Act, the provisions of the RERA Act will have no application. Referring to Imperia Structures Ltd v. Anil Patni (2020) 10 SCC 783 and IREO Grace Realtech (P) Ltd. V. Abhishek Khanna (2021) 3 SCC 241, the bench observed that Consumer Protection Act and the RERA Act neither exclude nor contradict each other. In this regard, the court observed:

"When Statutes provisioning judicial remedies fall for construction, the choice of the interpretative outcomes should also depend on the constitutional duty to create effective judicial remedies in furtherance of access to justice. A meaningful interpretation that effectuates access to justice is a constitutional imperative and it is this duty that must inform the interpretative criterion.. When Statutes provide more than one judicial fora for effectuating a right or to enforce a duty-obligation, it is a feature of remedial choices offered by the State for an effective access to justice. Therefore, while interpreting statutes provisioning plurality of remedies, it is necessary for Courts to harmonise the  provisions in a constructive manner."

Referring to Section 14 of Consumer Protection act, the bench , while dismissing the appeal filed by the developer, observed:

15. We may hasten to clarify that the power to direct refund of the amount and to compensate a consumer for the deficiency in not delivering the apartment as per the terms of Agreement is within the jurisdiction of the Consumer Courts. Under Section 14 of the Consumer Protection Act, if the Commission is satisfied …that any of the allegations contained in the complaint about the services are proved, it shall issue an order to the opposite party directing him to, return to the complainant the price or as the case may be, the charges paid by the complainant. 'Deficiency' is defined under Section 2(g) to include any shortcoming or inadequacy in performance which has been undertaken by a person in pursuance of a contract or otherwise relating to any service. These two provisions are reproduced hereinbelow for ready reference.13 It is clear from the statutory position that the Commission is empowered to direct refund of the price or the charges paid by the consumer

A consumer invoking the jurisdiction of the Commission can seek such reliefs as he/she considers appropriate. A consumer can pray for refund of the money with interest and compensation. The consumer could also ask for possession of the apartment with compensation. The consumer can also make a prayer for both in the alternative. If a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant it, of course subject to the merits of the case. If a consumer seeks alternative reliefs, the Commission will consider the matter in the facts and circumstances of the case and will pass appropriate orders as justice demands. This position is similar to the mandate under Section 18 of the RERA Act.

Case details

Experion Developers Pvt Ltd vs Sushma Ashok Shiroor | 2022 LiveLaw (SC) 352 | CA 6044 of 2019 | 7 April 2022 

Coram: Justices UU Lalit, S. Ravindra Bhat and PS Narasimha

Counsel: Adv Gagan Gupta for appellant, Adv Jitendra Chaudhary for respondent

Headnotes

Consumer Protection Act, 1986 ; Section 2(g), 14 - The power to direct refund of the amount and to compensate a consumer for the deficiency in not delivering the apartment as per the terms of Agreement is within the jurisdiction of the Consumer Courts - A consumer can pray for refund of the money with interest and compensation. The consumer could also ask for possession of the apartment with compensation. The consumer can also make a prayer for both in the alternative. If a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant it, of course subject to the merits of the case. If a consumer seeks alternative reliefs, the Commission will consider the matter in the facts and circumstances of the case and will pass appropriate orders as justice demands. (Para 15-16)

Consumer Protection Act, 1986 -  Real Estate (Regulation and Development) Act, 2016 - Consumer Protection Act and the RERA Act neither exclude nor contradict each other - They are concurrent remedies operating independently and without primacy. [Referred to Imperia Structures Ltd v. Anil Patni (2020) 10 SCC 783 and IREO Grace Realtech (P) Ltd. V. Abhishek Khanna (2021) 3 SCC 241] (Para 14.1)

Interpretation of Statutes - When Statutes provide more than one judicial fora for effectuating a right or to enforce a duty-obligation, it is a feature of remedial choices offered by the State for an effective access to justice. Therefore, while interpreting statutes provisioning plurality of remedies, it is necessary for Courts to harmonise the provisions in a constructive manner. (Para 14.1-14.2)

Summary:  Appeal by Developer against NCDRC order directing refund and compensation to Consumer for its failure to deliver possession of the apartment within the time stipulated as per the Apartment Buyers Agreement - Dismissed - Commission is correct in its approach in holding that the clauses of the agreement are one-sided and that the Consumer is not bound to accept the possession of the apartment and can seek refund of the amount deposited by her with interest - Commission has correctly exercised its power and jurisdiction in passing the directions for refund of the amount with interest.