Failure To Deliver Flats Within Stipulated Deadline, NCDRC Holds SJP Infracon Liable For Deficiency In Service

Brief Facts:

SJP Infracon Ltd. (“Builder”) launched a group housing project named 'Sri Radha Skygarden' in 2010. After receiving 95% consideration from homebuyers, the Builder halted the construction and gave them standard form allotment letters (“Allotment Letters”) containing arbitrary and one-sided clauses. The Builder failed to deliver possession of the flats within the deadline mentioned in Clause 22 of the Allotment Letters. Further, this clause stipulated only a meagre compensation of Rs. 5/- per square foot for one month of delay. In March 2019, the Builder issued an Offer of Possession Letters (“Possession Letters”) and charged interest under the guise of delayed payment by the homebuyers, despite a lack of any such delay. For bookings made before 25th June 2013, the Builder also charged 'Farmers Compensation' of Rs. 75/- per square foot. Moreover, the Possession Letters were issued based on a Temporary Occupancy Certificate (“TOC”) granted by the Greater Noida Industrial Development Authority (“Authority”) on 18th March 2019. The TOC mentioned that the apartments had certain defects. A similar letter issued, before the TOC, in 2017 also pointed out the discrepancies. However, allegedly, no action was taken. Therefore, the homebuyers formed a voluntary consumer association in the name of Sri Radha Homebuyers Association (“Complainants”), to collectively protect their interests against the Builder.

The Complainants filed a consumer complaint in the National Consumer Disputes Redressal Commission, New Delhi (“NCDRC”).

Contentions of the Builder:

The Builder contended that the complaint was false and barred by a period of limitation. Under the project, 16 out of 19 towers had been built and 535 allottees were already residing there. For the remaining 3 towers, the Occupancy Certificates were pending before the Authority and Possession Letters were already issued to the homebuyers. Additionally, due to adverse circumstances (demonetization and GST implications on the Real Estate Sector), the Builder moved an application before the Authority on 19th August 2016 for an extension of time, which was successfully granted on 2nd September 2016. Further delays happened due to the advent of Covid-19.

Observations of the NCDRC:

The NCDRC observed that the Builder failed to produce the Occupancy Certificates. Therefore, it was presumed that it had not obtained the Occupancy Certificates to date. It was further held that a TOC cannot be considered an Occupancy Certificate, as it was issued to resolve the discrepancies with the apartment buildings. Therefore, possession offered based on the TOC was not construed to be valid possession.

Regarding the delays, the NCDRC reiterated the settled position of law that the possession is delivered within the stipulated time with a grace period of 6 months/period agreed upon. If no such period is provided in the agreement, then it is deemed to be 3 years. Failure to deliver possession within this time renders the builder liable for deficiency in service, requiring him to pay compensation.

It was observed that the Builder failed to hand over the possession of the flats to the Complainants within the stipulated time. Further, its contention regarding the period of limitation was also rejected, as there was a continuing cause of action since the Complainants had been waiting for possession after paying 95% of the total consideration. The events cited for delay (Demonetization, GST implications and COVID-19) were deemed to be invalid as these occurred after the stipulated deadline for project completion. The NCDRC also held that the Builder wrongfully charged the 'Farmers Compensation' from the Complainants. It was not the liability of the Complainants and hence, charging the same was invalid.

In light of the aforementioned findings, the Builder was held liable for deficiency in service and was directed to:

• handover the vacant possession of the apartments after procuring the Occupancy Certificate, in conformity with the T&C of the Allotment Letter, without any demand of excess consideration including the 'Farmers Compensation', within 6 months.
• execute a conveyance deed in favour of the Allottees for their respective apartments within 6 months.
• pay compensation for the delay, from the promised date of delivery till the actual date of possession, at 8% per annum interest on the amount deposited from the date of the deposit.
• firstly, adjust the amount of delayed compensation towards the balance amount payable by the Complainants. Further, it was directed to not levy any penalty or penal interest on the balance payment to be made by the Complainants. In case of failure to deliver the possession of the flats, the Allottees would get the option to wait for the Occupancy Certificate to take the possession or to seek refund of their money at 9% per annum from the date of deposit till the actual payment. If the refund is sought by the Allottee, then the Builder has to refund the entire amount with 9% interest within 2 months of such application. If the Builder fails to refund the amount within two months, then the rate of interest payable will be 12% per annum.
• pay Rs. 1 Lakh as litigation costs to the Complainants.

Case Title: Sri Radha Skygarden Homebuyers Association vs M/s SJP Infracon Ltd.

Case No.: C.C. No. NC/CC/884/2020

Advocates for the Complainants: Mr Sahil Sethi, Ms Arushi Mann and Mr Vikash Kumar

Advocates for the Opposite Party: Ms Anam Sahar

Date of Pronouncement: 17.03.2025