Supreme Court of India
WEST INTERNATIONAL CITY PVT LTD versus DEVASIS RUDRA on 25 March 2019
AKOLKATA WEST INTERNATIONAL CITY PVT LTD
v.
DEVASIS RUDRA
(Civil Appeal No. 3182 of 2019)
BMARCH 25, 2019[DR. DHANANJAYA Y CHANDRACHUD ANDHEMANT GUPTA, JJ.]
Consumer Protection Act, 1986:
Housing – Failure to deliver possession – Buyer havingCclaimed compensation from the developer, entitled to seek refundamount or estopped from doing so – On facts, in terms of the buyer’sagreement, developer was to handover possession to the buyer bythe stipulated date with a grace period of further six months –However, failure of developer to deliver the possession of houses –
DComplaint by the buyer seeking possession of houses and inalternate for refund of the amount paid to developer with 12%interest p.a. and compensation of Rs.20 lakhs – Order by the StateCommission directing the developer to refund the amount with 12%interest p.a. and compensation of Rs 5 lakhs – However,compensation amount reduced to Rs. 2 lakhs by the NationalECommission – On appeal, held: In the buyer’s agreement, for defaulton the part of the buyer, the buyer liable to pay interest at the rateof 18% p.a., however, for default on the part of the developer, thedeveloper liable to pay interest only at the savings bank rateprescribed by the SBI – Agreement being one sided, would notFpreclude the right and remedy available to the buyer to claimreasonable interest or compensation – Buyer can be expected towait for possession for a reasonable period – It would beunreasonable to construe the contract between the parties asrequiring the buyer to wait indefinitely for possession – Completioncertificate was received nearly seven years after the extended dateGfor the handing over of possession which was not at all reasonable– Thus, the orders passed by the forum below for refund justified –Rate of interest payable by the developer to the buyer modified to9% p.a. instead of 12% p.a. – Interest.
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Disposing of the appeal, the Court
HELD: 1.1 Under the Agreement clause, any delay beyond30 June 2009 would result in the developer being required topay interest at the prevailing savings bank interest of the StateBank of India. Interestingly, where the buyer is in default, theagreement stipulates that interest at the rate of 18 per cent fromthe date of default until the date of payment would be charged fora period of two months, failing which the allotment would becancelled by deducting 5% of the entire value of the property.The agreement was evidently one sided. The clause will notpreclude the right and remedy available to the buyer to claimreasonable interest or, as the case may be, compensation.[Para 10][1074-A-D]
1.2 In terms of the Buyer’s agreement, the date for handingover possession was 31 December 2008, with a grace period ofsix months. Even in 2011, when the buyer filed a consumercomplaint, he was ready and willing to accept possession. It wouldbe manifestly unreasonable to construe the contract between theparties as requiring the buyer to wait indefinitely for possession.By 2016, nearly seven years had elapsed from the date of theagreement. Even according to the developer, the completioncertificate was received on 29 March 2016. This was nearly sevenyears after the extended date for the handing over of possessionprescribed by the agreement. A buyer can be expected to waitfor possession for a reasonable period. A period of seven yearsis beyond what is reasonable. Hence, it would have beenmanifestly unfair to non-suit the buyer merely on the basis of thefirst prayer in the reliefs sought before the SCDRC. There wasin any event a prayer for refund. [Para 11][1074-E-G]
1.3 In the circumstances, the orders passed by the SCDRCand by the NCDRC for refund of moneys were justified. Havingregard to all the facts and circumstances of the case, the order ofthe NCDRC is modified by directing that the appellant would payinterest at the rate of 9% per annum to the respondentinstead and in place of 12% as directed by the NCDRC.[Para 12, 13][1075-A]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3182of 2019.
From the Judgment and Order dated 21.11.2016 of the NationalConsumer Disputes Redressal Commission, New Delhi in First AppealNo. 958 of 2016.
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ARavinder Narain, Siddharth Banthia, Rajat Gava, Rajan Narain,Advs. for the Appellant.
Supriya Bose, Sr. Adv., Debajyoti Deb, Subhasish Bhowmick,Ms. Goldy Goyel, Advs. for the Respondent.
The Judgment of the Court was delivered byBDR. DHANANJAYA Y CHANDRACHUD, J.
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1. Leave granted.
2. This appeal arises from the judgment dated 21 November 2016of the National Consumer Disputes Redressal Commission[1].
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3. A Buyer’s Agreement dated 2 July 2007 was entered intobetween the appellant and the respondent.
The respondent paid an amount of Rs 39,29,280 in 2006 in termsof a letter of allotment dated 20 September 2006. The agreement betweenthe parties envisaged that the appellant would hand over possession of aDRow House to the respondent by 31 December 2008 with a grace periodof a further six months ending on 30 June 2009.
4. The respondent filed a consumer complaint before the WestBengal State Consumer Disputes Redressal Commission[2] in 2011 prayingfor possession of the Row House and in the alternative for the refund ofEthe amount paid to the developer together with interest at 12% per annum.Compensation of Rs 20 lakhs was also claimed.
5. The SCDRC allowed the complaint by directing the appellantto refund the moneys paid by the respondent together with interest at12% per annum and compensation of Rs 5 lakhs. The NCDRC hasFmodified this order by reducing the compensation from Rs 5 lakhs to Rs2 lakhs.
6. Mr. Ravinder Narain, learned counsel appearing on behalf ofthe appellant submits that the primary relief which was sought in theconsumer complaint was for delivery of possession. According toGthe appellant, the completion certificate was received on 29 March2016, which was intimated to the respondent on 11 April 2016. Moreover,before the SCDRC, in its written submissions, the appellant had offeredpossession of the Row House to the respondent. It has also been statedthat in a complaint which was filed by an association representing 1”NCDRC”H2”SCDRC”
2”SCDRC”
the allottees of 161 Row houses, a settlement was arrived on 11 September2018 before the NCDRC specifying the date on which possessionwould be handed over together with interest at 6% per annum insteadof 4% as mentioned in the Buyers’ Agreement. It was urged that thedeveloper having made a substantial investment in terms of the agreement,a direction for refund is not warranted. It has also been urged that theSCDRC in the course of its decision erroneously observed that thedeveloper was unable to fulfill its obligation to complete the constructionwithin the agreed period and it was not certain when the Row housewould be handed over. It was urged that this observation by the SCDRCis contrary to the record since before it, a specific offer of possessionwas made.
7. It has been urged on behalf of the respondent by Mr.Supriya Bose, learned senior counsel that a consumer complaint wasfiled in the year 2011. At that stage, the respondent was bonafide readyand willing to accept possession. However, nearly seven years haveelapsed after the extended date for the delivery of possession whichexpired on 30 June 2009. In spite of this, no offer of possession wasforthcoming. Learned senior counsel submitted that the letter dated 22March 2016 of the developer was conditional and despite the subsequentletter dated 11 April 2016, no formal offer of possession was ever madeby the appellant. Moreover, it was urged that the interest awarded bythe NCDRC at the rate of 12% is just having regard to the economicloss and hardship suffered by the respondent.
8. While considering the rival submissions, we must at the outsetadvert to the following clause which was contained in the Buyer’sAgreement:
“Unless prevented by circumstances beyond the control of thecompany and subject to Force Majeure, KWIC shall ensure tocomplete the said unit in all respect within 31[st] December 2008only for the Cluster D. Further there will be a grace period of 6months (up to 30[th] June, 2009) from the date of completion. Incase the possession is not transferred after expiry of the saidgrace period, KWIC will be liable to pay prevailing saving Bankinterest of the State Bank of India for each month of delay on themoney given by the allottee as compensation but no compensationwill be paid on account of force majeure reasons.”
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1074 SUPREME COURT REPORTS [2019] 2 S.C.R.
A9. It is the above clause which is pressed in aid by the developer.Under the aforesaid clause, any delay beyond 30 June 2009 would resultin the developer being required to pay interest at the prevailing savingsbank interest of the State Bank of India. Interestingly, where the buyeris in default, the agreement stipulates that interest at the rate of 18 percent from the date of default until the date of payment would be chargedBfor a period of two months, failing which the allotment would becancelled by deducting 5% of the entire value of the property. Theagreement was evidently one sided. For a default on the part of thebuyer, interest at the rate of 18% was liable to be charged. However, adefault on the part of the developer in handing over possession wouldCmake him liable to pay interest only at the savings bank rate prescribedby the SBI. There is merit in the submission which has been urged bythe buyer that the agreement was one sided. The clause which has beenextracted in the earlier part of this order will not preclude the right andremedy available to the buyer to claim reasonable interest or, as thecase may be, compensation.D
10. The essential aspect of the case which is required to be analysedis whether the buyer was entitled to seek a refund or was estopped fromdoing so, having claimed compensation as the primary relief in theconsumer complaint. The Buyer’s Agreement is dated 2 July 2007. Interms of the agreement, the date for handing over possession was 31EDecember 2008, with a grace period of six months. Even in 2011, whenthe buyer filed a consumer complaint, he was ready and willing toaccept possession. It would be manifestly unreasonable to construe thecontract between the parties as requiring the buyer to wait indefinitelyfor possession. By 2016, nearly seven years had elapsed from the date Fof the agreement. Even according to the developer, the completioncertificate was received on 29 March 2016. This was nearly sevenyears after the extended date for the handing over of possessionprescribed by the agreement. A buyer can be expected to wait forpossession for a reasonable period. A period of seven years is beyondwhat is reasonable. Hence, it would have been manifestly unfair to non-Gsuit the buyer merely on the basis of the first prayer in the reliefs soughtbefore the SCDRC. There was in any event a prayer for refund.
11. In the circumstances, we are of the view that the orders passedby the SCDRC and by the NCDRC for refund of moneys were justified.
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12. Having regard to all the facts and circumstances of the case,we modify the order of the NCDRC by directing that the appellant shallpay interest at the rate of 9% per annum to the respondent instead andin place of 12% as directed by the NCDRC. Save and except for theabove modification, we affirm the directions of the NCDRC.
13. The amount outstanding in terms of the directions of thisCourt shall be released out of the moneys which have been deposited bythe appellant. The balance, if any, that remains shall be refunded to theappellant.
14. The appeal is, accordingly, disposed of. There shall be noorder as to costs.
15. Pending application(s), if any, shall stand disposed of.
Nidhi Jain
Appeal disposed of.
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