Builder Cannot Force Buyer To Accept Possession After Significant Delays: NCDRC Holds Sushma Buildtech Liable For Deficiency In Service

Brief Facts of the Case

The complainant booked a flat with Sushma Buildtech/builder, and a Flat Buyers Agreement was executed between the complainants and the builder. According to the Buyer's Agreement, possession was to be offered within 30 months (24 months plus 6 months grace period). Despite receiving 97% of the sale price, the builder failed to deliver possession of the flat within the stipulated period. Aggrieved by this delay, the complainant filed a consumer complaint before the State Commission of Punjab seeking redressal. The State Commission allowed the complaint and directed the builder to pay compensation for the delay in delivering possession at ₹5 per sq. ft. per month of the flat's super area from the stipulated delivery date until possession is handed over. Additionally, the builder was directed to pay simple interest at 6% per annum on the deposited amount of Rs.54,30,226 from the stipulated date until delivery. The builder was also required to pay Rs. 65,000 as litigation costs and other expenses. Aggrieved by the State Commission's order, the complainant appealed to the National Commission

Contentions of the Builder

The builder contended that the complaint should be dismissed due to pecuniary jurisdiction issues, arguing that the complainants were not 'consumers' under the Act as they purchased the flat for speculative purposes and already owned a house. They denied any deficiency in service, stating they were actively developing the project and committed to delivering possession as per the agreement terms. The builder claimed the funds received were used for project construction and development, citing force majeure circumstances like labor issues, sand shortages, and demonetization as reasons for delays. On the merits, the builder asserted the project had all necessary approvals and licenses, which the complainants had seen before signing the Apartment Buyer's Agreement.

Observations by the National Commission

The commission observed that the complainants paid Rs.64,27,245 towards the flat, with receipts confirming the payment. The agreement stipulated that possession was to be delivered within a specified timeline plus a grace period. Despite these terms and the complainant's payments, the builder failed to hand over the flat within the agreed timeframe. The complainants, who had also taken a home loan from HDFC Ltd and were paying EMIs, invested a substantial amount in seeking possession of the flat. The commission underscored that homebuyers are entitled to compensation for possession or project completion delays. Citing the case of Emmar MGF Land Ltd. & Ors. Vs. Amit Puri, the commission, noted that buyers have the right to either accept the delayed possession or seek a refund with compensation. In the Supreme Court case of Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghvan, it was established that builders cannot force buyers to accept possession after significant delays, and buyers are entitled to refunds with interest. The commission emphasized that contracts with one-sided clauses favoring builders are considered unfair trade practices under the Consumer Protection Act. Referencing its decision in Sivarama Sarma Jonnalagadda & Anr vs. M/s Maruthi Corporation Limited & Anr., the commission stated that complainants should not wait indefinitely for possession, and invoking force majeure clauses while retaining deposits is a deficiency in service and an unfair trade practice. The main issue was determining appropriate compensation for the deficiency. The commission cited the Supreme Court's judgments DLF Homes Panchkula Pvt. Ltd. Vs. D.S. Dhanda, which respectively set guidelines for compensation rates and rejected multiple compensations for a single deficiency.

The National Commission modified the State Commission's order and directed the builder to pay simple interest at 6% on the deposited amount of Rs.64,27,245 from the date the flat was due to be handed over until the possession date. Additionally, the builder was directed to pay Rs. 1,00,000 to the complainants as litigation expenses.

Case Title: Mahesh Gugnani Vs. M/S. Sushma Buildtech Limited

Case Number: F.A. No. 347/2021