January    2021

Compensate flat buyers for delay in possession, rules Supreme Court

Sasi Nair

NEW DELHI: Real estate developers will now come under pressure to deliver the flats within the stipulated timeframe agreed upon with buyers of flat with Supreme Court of India ruling that flat buyers are entitled to compensation for delayed possession.

The top court declined to give in to the one-sided nature of agreements drafted to protect the interests of the developers alone.

A bench comprising Justices D.Y. Chandrachud and K.M. Joseph said a failure of the developer to comply with the contractual obligation to provide the flat within a contractually stipulated period amounts to a deficiency. "To uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate, irrespective of the nature or extent of delay would result in a miscarriage of justice," it observed.

Elaborating further the court noted that homebuyers come under severe stress due to default on part of the developers. "Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These legitimate expectations are belied when the developer, as in the present case, is guilty of a delay of years in the fulfilment of a contractual obligation," the bench noted.

National Consumer Disputes Redressal Commission had declined to entertain a consumer complaint by 339 flat buyers and accepted the defence of DLF Southern Homes Pvt. Ltd. and Annabel Builders and Developers Pvt. Ltd. that there was no deficiency of service on their part in complying with their contractual obligations and that despite a delay in handing over the possession of the residential flats, the purchasers were not entitled to compensation in excess of what was stipulated in the Apartment Buyers Agreement.

The Supreme Court, however, did not agree with this view and ruled in favour of the flat owners pointing to the gross delay of two to four years in handing over the possession of flats while ruling that the apartment buyers’ agreement were one-sided and unreasonable.

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