Flat Possession Offered Without Completion & Firefighting Certificates : Supreme Court Asks Developer To Compensate Buyer

In a recent case, the Supreme Court directed the Agra Development Authority(ADA) to grant compensation to the tune of Rs. 15 Lakhs to a flat buyer over a deficiency in service caused by the developer in offering the possession of the flat without requisite completion certificate and firefighting clearance certificate.

The absence of these documents unquestionably vitiates the offer of possession made by the ADA, the Court observed.

The Court said that the flat purchaser had made out the case for the grant of additional compensation on account of deficiency of service caused by to developer's breach of statutory obligations.

The Court said that Rs. 15 Lakhs that ought to be paid to the consumer by the developer would be in addition to the total amount to be returned to the consumer. Since there was a considerable delay on the part of the consumer to pay the remaining amount to the developer, the Court deemed it appropriate to direct the developer to refund the entire amount along with 9% interest per annum from the date of complaint instead from the date of deposit of amount.

The bench comprising Justice Vikram Nath and Justice Prasanna B Varale heard a matter where the Appellant/flat purchaser challenged the decision of the National Consumer Dispute Redressal Commission (“NCDRC”) which had neither granted compensation to the Appellant nor directed the refund of the non-judicial stamp worth Rs. 3,99,100/- to the appellant (paid by him for the execution of deed) but only directed the respondent/developer to return the already deposited amount along with the interest that to from the date of complaint i.e., from 2020 which the appellant sought from the date of deposit i.e., from 2011.

The Supreme Court modified the NCDRC order by directing the developer to refund the deposit amount and the amount paid towards the non-judicial stamp carrying a 9% interest rate from the date of complaint. The amount of Rs. 15,00,000/- as compensation to be granted to the appellant would be in addition to the amount already directed to be refunded.

"In light of the aforementioned observations and taking into account the shortcomings on the part of both the appellant and the ADA, this Court deems it appropriate to provide a compensation of Rs. 15,00,000/- (Fifteen Lakhs only) apart from what was awarded by the NCDRC. Therefore, apart from the refund of the entire amount deposited by the appellant @ 9% interest per annum from 11.07.2020 till the date of refund, the ADA is directed to pay an additional amount of Rs. 15,00,000/- (Fifteen Lakhs only) to the appellant. The entire amount should be rendered to the appellant within three months of this order. We also order the ADA to return the non-judicial stamp worth Rs. 3,99,100/- back to the appellant.", the court ordered.

In the same case, the Court also dealt with the appeal filed by the developer against the decision of the NCDRC. The developer had assailed the NCDRC decision on two counts i.e., firstly the delay caused in preferring a complaint before the NCDRC and secondly, the NCDRC's jurisdiction to entertain a claim of the flat purchaser as according to the developer the dispute was less than Rs. 1 Crore when calculated in terms of deposit value.

It was contended by the developer that since the demand of the additional sum of Rs.3,43,178/- to be paid to the developer was raised in the year 2014 but was paid in the year 2019, therefore the complaint filed by the purchaser in the year would be barred by limitation as the complaint ought to be preferred within two years of arising of the cause of action. Rejecting the developer's argument, the Court observed that since there were repeated reminders sent by the developer to the purchaser and in fact the developer's act of accepting the said amount in 2019 would itself show that the period of limitation was running concurrently in terms of Section 18 of the Limitation Act.

Another ground urged by the developer is regarding the pecuniary jurisdiction of the NCDRC to entertain the claim below Rs. 1 crore amount. The developer argued that since the deposit amount is less than Rs. 1 crore therefore the NCDRC lacked the jurisdiction to decide the complaint rather the appropriate forum to decide the consumer complaint would be the State Consumer Dispute Redressal Commission (SDCRC).

Unable to agree to the developer's contention, the Court said that “NCDRC, in its impugned order, correctly observed that the claim made by the appellant was not limited to the deposit amount alone but also included compensation for mental agony, harassment, and loss of income, which brought the total claim well above Rs. 1 crore.”

“In consumer disputes, the value of the claim is determined not just by the amount deposited but by the aggregate relief sought, which includes compensation and other claims. Therefore, the NCDRC rightly held that it had the requisite pecuniary jurisdiction to entertain the complaint, and this Court affirms that finding.”, the judgment authored by Justice Vikram Nath said.

"This Court is of the considered view that both parties have exhibited lapses in their respective obligations. On the one hand, the appellant, despite having paid the tentative price of Rs. 56,54,000/- in 2012, failed to remit the additional amount of Rs. 3,43,178/-, as demanded by the ADA, even after being repeatedly reminded. Instead, the appellant persistently sought a waiver of the penal interest on the delayed payment, eventually settling the amount only on 04.06.2019, a significant delay that cannot be overlooked and that too without the interest component which had further accrued over a period of about five years. On the other hand, the ADA, despite making an offer of possession in 2014, did not fulfil its statutory obligations by providing the requisite completion certificate and firefighting clearance certificate, both of which are essential for a valid and lawful offer of possession. The absence of these documents, which were also not furnished before the NCDRC, unquestionably vitiates the offer of possession made by the ADA.", the Court observed.

Accordingly, the appeal filed by the flat purchaser was disposed of with the modification made in the NCDRCs order, whereas the appeal filed by the developer was dismissed as its primary arguments regarding both limitation and pecuniary jurisdiction were found to be without merit.

Appearance:

For Appellant(s) Mr. Vipin Sanghi, Sr. Adv. Mr. Om Prakash, Adv. Mr. Vikas Singh Jangra, AOR Mr. Sudhir Kulshreshtha, AOR

For Respondent(s) Mr. Sudhir Kulshreshtha, AOR Mr. Vipin Sanghi, Sr. Adv. Mr. Om Prakash, Adv. Mr. Vikas Singh Jangra, AOR

Case Title: DHARMENDRA SHARMA VERSUS AGRA DEVELOPMENT AUTHORITY, CIVIL APPEAL NOS.2809-2810 OF 2024 (and connected matter)

Citation : 2024 LiveLaw (SC) 703

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