# ALEYA SULTANA AND ORS v. DLF SOUTHERN HOMES PVT LTD. (NOW KNOWN AS

- **Citation:** [2020] 9 S.C.R. 136
- **Court:** Supreme Court of India
- **Decided:** 2020-08-24
- **Case number:** Civil Appeal No. 6239 of 2019
- **Bench:** Dr. Dhananjaya Y Chandrachud, K. M. Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/aleya-sultana-and-ors-v-dlf-southern-homes-pvt-ltd-now-known-as-34862
- **Pages:** 49

## Headnote

Consumer Protection Act, 1986 - s.2(1)(g) - Deficiency of
service - Complaint by flat buyers seeking compensation inter alia
alleged delay in handing over possession of the flats - Dismissed
by NCDRC - On appeal, held: Failure of the developer to hand
over possession within the contractually stipulated period amounts
to a deficiency of service u/s.2(1)(g) - In the present case, under
the Apartment Buyers Agreement (ABA), the developer was obligated
to hand over possession of the flats within thirty-six months of the
date of the agreement which condition was breached - Existence
and extent of the delay constitute an admitted factual position -
There has been a gross delay on the part of the developer in
completing construction ranging between two and four years -
Further, the agreement is manifestly one-sided - Nature and quantum
of delay are such that the compensation provided in Clause 14,
ABA would not provide sufficient recompense to the purchasers -
Jurisdiction of consumer forum to award just compensation as an
incident of its power to direct removal of a deficiency in service is
not constrained by the terms of a rate prescribed in an unfair bargain
- Impugned judgment set aside - Flat buyers entitled to
compensation.
Consumer Protection Act, 1986 - s.14(1)(e) - Jurisdiction of
consumer forum - Nature and extent of - Discussed.
Consumer Protection - Flat buyers' agreements - Delayed
possession - Award of compensation in addition to agreement -
Duty of Courts - Held: Ordinarily, courts would hold parties down
to a contractual bargain - However, cannot be oblivious to the
one-sided nature of agreements drafted by and to protect interest
of the developer.
[2020] 9 S.C.R. 136
136
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Consumer Protection Act, 1986 - s.2(1)(o) - "service" -
Meaning of - Held: 'service' in s.2(1)(o) means a service of any
description made available to potential users including the provision
of facilities in connection with (among other things) housing
construction.
Consumer Protection - Claim against delayed possession of
flats - Right of flat buyer to obtain deed of conveyance - Held:
Unreasonable to expect that in order to pursue a compensation
claim for delayed handing over of possession, the purchaser must
indefinitely defer obtaining a conveyance of the premises or, if they
seek to obtain a Deed of Conveyance to forsake the right to claim
compensation.
Consumer Protection - Delay in handing over possession of
residential flats - Interest in flats transferred - Compensation for
delayed possession - Entitlement of subsequent transferees -
Discussed.
Consumer Protection Act, 1986 - s.2(1)(g) - Held: Deficiency
u/s.2(1)(g) means a fault, imperfection, shortcoming or inadequacy
in the quality, nature and manner of performance.
Partly allowing the appeals, the Court
HELD: 1.1 Compensation for delayed possession
1. The fulcrum of the case of the developer rests on clause
14 of the ABA. Clause 11(a) of the ABA indicates that subject to
"all just exceptions" the developer endeavoured to complete
construction within a period of thirty-six months from the date of
the execution of the agreement unless hindered byforce majeure
conditions. Undoubtedly, the expression 'endeavour' indicates
that the developer did not bind itself to an inflexible timeline of
thirty-six months. But then again, the timeline of thirty-six moths
was subject to just exceptions and could be excused in the event
of force majeure conditions coming into operation. By the
provisions of clause 14, the developer agreed to compensate the
flat buyers at the rate of Rs. 5 per square feet of the super area of
the apartment per month for the period of delay. The existence
and extent of the delay constitute an admitted factual position.
The failure of the developer was neither relatable to a "just
exception" or the prevalence of force majeure conditions
referable to clause 11. [Paras 18-21][157-C, E-G; 158-E; 159-A]
ARIFUR RAHMAN KHAN AND ALEYA SULTANA v. DLF SOUTHERN
HOMES

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SUPREME COURT REPORTS
[2020] 9 S.C.R.
WG. CDR. ARIFUR RAHMAN KHAN AND
ALEYA SULTANA AND ORS.
v.
DLF SOUTHERN HOMES PVT LTD. (NOW KNOWN AS
BEGUR OMR HOMES PVT. LTD.) AND ORS.
(Civil Appeal No. 6239 of 2019)
AUGUST 24, 2020
[DR. DHANANJAYA Y CHANDRACHUD AND
K. M. JOSEPH, JJ.]
Consumer Protection Act, 1986 - s.2(1)(g) - Deficiency of
service - Complaint by flat buyers seeking compensation inter alia
alleged delay in handing over possession of the flats - Dismissed
by NCDRC - On appeal, held: Failure of the developer to hand
over possession within the contractually stipulated period amounts
to a deficiency of service u/s.2(1)(g) - In the present case, under
the Apartment Buyers Agreement (ABA), the developer was obligated
to hand over possession of the flats within thirty-six months of the
date of the agreement which condition was breached - Existence
and extent of the delay constitute an admitted factual position -
There has been a gross delay on the part of the developer in
completing construction ranging between two and four years -
Further, the agreement is manifestly one-sided - Nature and quantum
of delay are such that the compensation provided in Clause 14,
ABA would not provide sufficient recompense to the purchasers -
Jurisdiction of consumer forum to award just compensation as an
incident of its power to direct removal of a deficiency in service is
not constrained by the terms of a rate prescribed in an unfair bargain
- Impugned judgment set aside - Flat buyers entitled to
compensation.
Consumer Protection Act, 1986 - s.14(1)(e) - Jurisdiction of
consumer forum - Nature and extent of - Discussed.
Consumer Protection - Flat buyers' agreements - Delayed
possession - Award of compensation in addition to agreement -
Duty of Courts - Held: Ordinarily, courts would hold parties down
to a contractual bargain - However, cannot be oblivious to the
one-sided nature of agreements drafted by and to protect interest
of the developer.
[2020] 9 S.C.R. 136
136
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Consumer Protection Act, 1986 - s.2(1)(o) - "service" -
Meaning of - Held: 'service' in s.2(1)(o) means a service of any
description made available to potential users including the provision
of facilities in connection with (among other things) housing
construction.
Consumer Protection - Claim against delayed possession of
flats - Right of flat buyer to obtain deed of conveyance - Held:
Unreasonable to expect that in order to pursue a compensation
claim for delayed handing over of possession, the purchaser must
indefinitely defer obtaining a conveyance of the premises or, if they
seek to obtain a Deed of Conveyance to forsake the right to claim
compensation.
Consumer Protection - Delay in handing over possession of
residential flats - Interest in flats transferred - Compensation for
delayed possession - Entitlement of subsequent transferees -
Discussed.
Consumer Protection Act, 1986 - s.2(1)(g) - Held: Deficiency
u/s.2(1)(g) means a fault, imperfection, shortcoming or inadequacy
in the quality, nature and manner of performance.
Partly allowing the appeals, the Court
HELD: 1.1 Compensation for delayed possession
1. The fulcrum of the case of the developer rests on clause
14 of the ABA. Clause 11(a) of the ABA indicates that subject to
"all just exceptions" the developer endeavoured to complete
construction within a period of thirty-six months from the date of
the execution of the agreement unless hindered byforce majeure
conditions. Undoubtedly, the expression 'endeavour' indicates
that the developer did not bind itself to an inflexible timeline of
thirty-six months. But then again, the timeline of thirty-six moths
was subject to just exceptions and could be excused in the event
of force majeure conditions coming into operation. By the
provisions of clause 14, the developer agreed to compensate the
flat buyers at the rate of Rs. 5 per square feet of the super area of
the apartment per month for the period of delay. The existence
and extent of the delay constitute an admitted factual position.
The failure of the developer was neither relatable to a "just
exception" or the prevalence of force majeure conditions
referable to clause 11. [Paras 18-21][157-C, E-G; 158-E; 159-A]
ARIFUR RAHMAN KHAN AND ALEYA SULTANA v. DLF SOUTHERN
HOMES PVT. LTD.
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1.2 The ABA is clearly one-sided. Where a flat purchaser
pays the instalments that are due in terms of the agreement with
a delay, clause 39(a) stipulates that the developer would "at its
sole option and discretion" waive a breach by the allottee of failing
to make payments in accordance with the schedule, subject to
the condition that the allottee would be charged interest at the
rate of 15 per cent per month for the first ninety days and
thereafter at an additional penal interest of 3 per cent per annum.
In other words, a delay on the part of the flat buyer attracts interest
at the rate of 18 per cent per annum beyond ninety days. On the
other hand, where a developer delays in handing over possession
the flat buyer is restricted to receiving interest at Rs 5 per square
foot per month under clause 14. Evidently, the terms of the
agreement have been drafted by the developer. They do not
maintain a level platform as between the developer and purchaser.
The stringency of the terms which bind the purchaser are not
mirrored by the obligations for meeting times lines by the
developer. The agreement does not reflect an even bargain. [Para
22][159-C-F]
1.3 The agreement did not stipulate that the developer
would pay any interest on the amount which had already been
received. A large chunk of the purchase price was thus available
to the developer to complete construction. The court must take
a robust and common-sense based approach by taking judicial
notice of the fact that flat purchasers obtain loans and are required
to pay EMIs to financial institutions for servicing their debt.
Delays on the part of the developer in handing over possession
postpone the date on which purchasers will obtain a home.
Besides servicing their loans, purchasers have to finance the
expenses of living elsewhere. A failure of the developer to comply
with the contractual obligation to provide the flat to a flat purchaser
within a contractually stipulated period amounts to a deficiency.
There is a fault, shortcoming or inadequacy in the nature and
manner of performance which has been undertaken to be
performed in pursuance of the contract in relation to the service.
The expression 'service' in Section 2 (1) (o) means a service of
any description which is made available to potential users
including the provision of facilities in connection with (among
other things) housing construction. Under Section 14(1)(e), the
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jurisdiction of the consumer forum extends to directing the
opposite party inter alia to remove the deficiency in the service
in question. Intrinsic to the jurisdiction which has been conferred
to direct the removal of a deficiency in service is the provision of
compensation as a measure of restitution to a flat buyer for the
delay which has been occasioned by the developer beyond the
period within which possession was to be handed over to the
purchaser. Flat purchasers suffer agony and harassment, as a result
of the default of the developer. 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. 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. Undoubtedly, as this court held
in Dhanda, courts ordinarily would hold parties down to a
contractual bargain. Equally the court cannot be oblivious to the
one-sided nature of ABAs which a red rafted by and to protect
the interest of the developer. Parliament consciously designed
remedies in the CP Act 1986 to protect consumers. Where, as in
the present case, there has been a gross delay in the handing
over of possession beyond the contractually stipulated debt, the
jurisdiction of the consumer forum to award just and reasonable
compensation as an incident of its power to direct the removal of
a deficiency in service is not constrained by the terms of a rate
which is prescribed in an unfair bargain. [Paras 23, 24][159-H;
160-A-B; E-H; 161-A-D]
1.4 The judgment in Dhanda's case does not prescribe an
absolute embargo on the award of compensation beyond the rate
stipulated in the flat buyers' agreement where handing over of
the possession of a flat has been delayed. Dhanda's case was
preceded by consent terms which were presented before this
Court in two earlier civil appeals under which interest at the rate
of 9 per cent had been granted. The decision lays down that the
award of interest cannot be arbitrary and without nexus to the
default which has been committed. Hence, the award of interest
at the maximum rate of interest charged by a nationalised bank
ARIFUR RAHMAN KHAN AND ALEYA SULTANA v. DLF SOUTHERN
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for advancing home loans was construed to be arbitrary. It was in
this context that the court observed that the parties having agreed
to a consequence for delay, exceptional and strong reasons must
exist for the consumer fora to depart from the agreed rate. The
decision does not lay down that there is an absence of jurisdiction
in the adjudicatory fora constituted under the CP Act 1986 to
award remedial compensation to a flat buyer for the delay of the
developer in handing over possession on the agreed date. In the
present case, there exist, clear and valid reasons for not holding
down the flat buying consumers merely to the entitlement to
receive compensation at the rate of 5 per square foot per month
in terms of clause 14 of theABA: (i) There has been a breach on
the part of the developer in complying with the contractual
obligation to hand over possession of the flats within a period of
thirty-six months of the date of the agreement as stipulated in
clause 11(a); (ii) The failure of the developer to hand over
possession within the contractually stipulated period amounts to
a deficiency of service within the meaning of Section 2 (1) (g),
warranting the invocation of the jurisdiction vested in the NCDRC
to issue a direction for the removal of the deficiency inservice;
(iii) The triggering of an obligation to pay compensation on the
existence of delay in handing over possession is admitted by the
developer for, even according to it, it has adjusted compensation
at the agreed rate of Rs 5 per square foot per month to 145 out of
the 171 appellants; (iv) The agreement is manifestly one-sided:
the rights provided to the developer for a default on the part of
the home buyer are not placed on an equal platform with the
contractual right provided to the home buyer in the case of a
default by thedeveloper; (v) There has been a gross delay on the
part of the developer in completing construction ranging between
two and four years. Despite successive extensions of time to
deliver possession sought by the developer, possession was not
delivered ontime; (vi) The nature and quantum of the delay on
the part of the developer are of such a nature that the measure of
compensation which is provided in clause 14 of the ABA would
not provide sufficient recompense to the purchasers;and (vii)
Judicial notice ought to be taken of the fact that a flat purchaser
who is left in the lurc has a result of the failure of the developer
to provide possession within the contractually stipulated date
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suffers consequences in terms of agony and hardship, not the
least of which is financial in nature. Having paid a substantial
amount of the purchase price to the developer and being required
to service the debt towards loan installments the purchaser is
unable to obtain timely possession of the flat which is the subject
matter of the ABA. [Paras 31, 32][167-C-H; 168-A-F]
DLF Homes Panchkula Pvt. Ltd. v. D S Dhanda, Etc.
(2020) 16 SCC 318 : [2019] 7 SCR 1061 -
distinguished.
2.1 It would be manifestly unreasonable to expect that in
order to pursue a claim for compensation for delayed handing
over of possession, the purchaser must indefinitely defer obtaining
a conveyance of the premises purchased or, if they seek to obtain
a Deed of Conveyance to forsake the right to claim compensation.
This basically is a position which the NCDRC espoused. This
Courtcannot countenance that view. The developer in the present
case undertook to provide a service in the nature of developing
residential flats with certain amenities and remains amenable to
the jurisdiction of the Consumer Fora. [Paras 34, 36][170-D; 171E]
2.2 However, the cases of the eleven purchasers who
entered into specific settlement deeds with the developers have
to be segregated. These eleven flat purchasers having entered
into specific deeds of settlement, it would be only appropriate
and proper if they are held down to the terms of the bargain.
Similarly, the three appellants who transferred their title, right
and interest in the apartments would not be entitled to the benefit
of the present order since they have sold their interest in the
apartments to third parties.Even if the three appellants who had
transferred their interest in the apartments had continued to
agitate on the issue of delay of possession, the Court is not
inclined to accept the submission that the subsequent transferees
can step into the shoes of the original buyer for the purpose of
benefiting from this order. The subsequent transferees in spite
of being aware of the delay in delivery of possession the flats,
had purchased the interest in the apartments from the original
buyers. Further, it cannot be said that the subsequent transferees
suffered any agony and harassment comparable to that of the first
ARIFUR RAHMAN KHAN AND ALEYA SULTANA v. DLF SOUTHERN
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buyers, as a result of the delay in the delivery of possession in
order to be entitled to compensation. [Paras 37, 38][171-G-H;
172-B, F-G]
HUDA v. Raje Ram (2008) 17 SCC 407 : [2008] 16
SCR 601 - relied on.
3. Amenities
Club house
There has been no breach by the developer of the obligation
to provide a constructed facility of a club for the RWA. [Para
40][174-C]
Other amenities
A deficiency under Section 2(1)(g) means a fault,
imperfection, shortcoming or inadequacy in the quality, nature
and manner of performance. This may be required to be maintained
under law or may be undertaken to be performed in pursuance of
a contract or otherwise in relation to any service. The builder
invited prospective flat purchasers to invest in the project of
Westend Heights on the basis of a clear representation that the
surrounding area of New Town situated on 80 acres was being
developed to provide a wide range of amenities including a
shopping centre, health care facilities and an early learning school.
The developer has failed to provide these amenities. This is a
case involving an experienced developer who knew the nature
of the representation which was being held out to the flat
purchasers. Developers sell dreams to home buyers. Implicit in
their representations is that the facilities which will be developed
by the developer will provide convenience of living and a certain
lifestyle based on the existence of those amenities. Having sold
the flats, the developer may find it economically unviable to provide
the amenities. The flat purchasers cannot be left in the lurch or,
as in the present case, be told that the absence of facilities which
were to be provided by the developer is compensated by other
amenities which are available in the area. The developer must
be held accountable to its representation. True, in a situation
such as the present it may be difficult for the court to quantify the
exact nature of the compensation that should be provided to the
flat buyers. The general appreciation in land values results in an
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increase in the value of the investment made by the buyers.
Difficulties in determining the measure of compensation cannot
however dilute the liability to pay. A developer who has breached
a clear representation which has been made to the buyers of the
amenities which will be provided to them should be held
accountable to the process of law. [Paras 41-43][175-E-G; 176E-H; 177-A-B]
4. Tax
There is no deficiency of service in regard to the demand
of interest payable on the tax which was required to be deposited
with the revenue. [Para 47][180-B]
Larsen and Toubro Limited v. State of Karnataka (2014)
1 SCC 708 : [2013] 17 SCR 678- - referred to.
5. Electricity
The NCDR Chas up held the collection of the charges
towards electricity based on the terms of the ABA. There is no
infirmity in the finding of the NCDRC, which is based on the
provisions contained in clause 23(b) of the ABA. The charges
recovered are not contrary to what was specified in the contract
between the parties. [Para 51][182-E]
6. Parking
The demand of parking charges is in terms of the ABA and
hence it is not possible to accede to the submission that there
was a deficiency of service under this head. [Para 54][183-C]
7. The dismissal of the complaint by the NCDRC was
erroneous. The flat buyers are entitled to compensation for
delayed handing over of possession and for the failure of the
developer to fulfil the representations made to flat buyers in
regard to the provision of amenities. The impugned judgment
and order of the NCDRC dismissing the consumer complaint is
set aside. Directions issued. [Para 55][183-D-E]
Nahalchand Laloochand Private Limited v. Panchali
Cooperative Housing Society Limited (2010) 9 SCC
536 : [2010] 10 SCR 804 - distinguished.
ARIFUR RAHMAN KHAN AND ALEYA SULTANA v. DLF SOUTHERN
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Ghaziabad Development Authority v. Balbir Singh
(2004) 5 SCC 65 : [2004] 3 SCR 68; R. V.
Prasannakumaar v. Mantri Castles Pvt Ltd. (2020) 14
SCC 769 : [2019] 5 SCR 821; Pioneer Urban Land
and Infrastructure Limited v. Govindan Raghavan
(2019) 5 SCC 725 : [2019] 5 SCR 1169 - relied on.
Larsen and Toubro Limited v. State of Karnataka (2014)
1 SCC 708 : [2013] 17 SCR 678; DLF Limited v.
Manmohan Lowe (2014) 12 SCC 231 : [2013] 16 SCR
979; Lucknow Development Authority v. M K Gupta
(1994) 1 SCC 243 : [1993]3 Suppl. SCR 615; Narne
Construction (P) Ltd. v. Union of India (2012) 5 SCC
359 : [2012] 4 SCR 574 - referred to.
Case Law Reference
[2004] 3 SCR 68
relied on
Para 15
[2019] 7 SCR 1061
distinguished
Para 15
[2013] 17 SCR 678
referred to
Para 17(viii)
[2010] 10 SCR 804
distinguished
Para 17(x)
[2013] 16 SCR 979
referred to
Para 17(x)
[1993] 3 Suppl. SCR 615
referred to
Para 25
[2019] 5 SCR 821
relied on
Para 27
[2019] 5 SCR 1169
relied on
Para 28
[2012] 4 SCR 574
referred to
Para 36
[2008] 16 SCR 601
relied on
Para 38
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6239
of 2019.
From the Judgment and Order dated 02.07.2019 of the National
Consumer Disputes Redressal Commission in Complaint Case bearing
No. CC/1055/2015.
With
Civil Appeal No. 6303 of 2019
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Bishwajit Bhattacharyya, Col. R. Balasubramaniam, Pinaki Misra,
Sr. Advs., Prashant Bhushan, Chandrachur Bhattacharyya, Sahil Tagotra,
Shankar Divate, Ms. Ruby Singh Ahuja, Ms. Seema Sundd, Pravin
Bahadur, Sanjeet Ranjan, Ms. Kritika Sachdeva, Priyash Sharma, Prabhat
Ranjan, Ritu Raj Srivastava, Aditya Singh, Alabhya Dhamija, Ms. Tanushi
Patel, M/s. Karanjawala & Co., Advs. for the appearing parties.
The Judgment of the Court was delivered by
DR. DHANANJAYA Y CHANDRACHUD, J.
1. The National Consumer Disputes Redressal Commission1
dismissed a consumer complaint filed by 339 flat buyers, accepting 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 Agreement2.
2. The complaint before the NCDRC was initially instituted by
nine flat buyers. These nine complainants had booked residential flats in
a project called Westend Heights at New Town, DLF, BTM Extension
at Begu, Bengaluru. The project was being developed in an area
admeasuring 27.5 acres and was to consist of 1980 units, spread across
nineteen towers each consisting of a stilt and eighteen floors.
3. The Brochure of the first respondent advertised the nature of
the project and the amenities which would be provided to buyers. It held
out the following representations on the basis of which buyers were
induced to invest:
"New Town - the premier choice for Bangalore living. A premium
residential enclave that celebrates life in all its resident splendor.
Featuring spacious apartments and a rich selection of amenities,
you will find in New Town, a residence specially appointed to
maximize your comfort and convenience. In New Town
premium high rise apartments are set against the backdrop of a
vibrant living environment where fun, comfort, security, and
serenity blend in perfect unison. Life at New Town satisfies all
1 "NCDRC"
2 "ABA"
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your needs and fulfils your heart's desire. Imagine a place where
leisurely pursuits are always within reach. Imagine living
where convenience is never more than around the corner.
Westend Heights at New Tower DLF, BTM Extn.
Designs, keeping in mind the modern day requirements and
meeting them with apt amenities, Westend Heights is the first
phase of New Town, with premium high-rise apartments at
affordable prices. The complex brings you comfort living embodied
in individual towers overlooking sprawling parks and vistas. This
project is being developed in a land area of 27. 5 acres. The project
consists of 1980 units spread across 19 towers that are Stilt+ 18
floors high.
Amenities
Fun, Fitness, Leisure, Right Next Door
The most exclusive Club in Bangalore at New town, DLF
BTM, EXTN,
The Club set amidst a very comfortable setting is an impressive
feature of New Town. It is specially designed to take care of all
stresses brought on by the modern world. Altogether a beautiful
composition, that blends seamlessly with your lifestyle.
Swimming Pool:
Gymnasium/Aerobics Centre
Restaurant & Bar
Billiards Room
Banquet Hall
Tennis Courts
Cards Room
Squash Courts
Spa, Massage & Beauty Parlour
Ease, Enjoyment, Convenience. Right Next Door
Convenient shopping facilities at New Town, DLF BTM
EXTN
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Shop with ease at our convenience shopping centre, well
equipped to handle your everyday needs. The shopping centre
will offer an array of outlets to make your life a trouble free
affair.
Experience convenience at your doorstep
Hope, Dreams, Future. Right Next Door
Renowned Early Learning School at New Town DLF BTM
EXTN.
Our play school airs to care for your child in a stimulating safe,
fun-filled environment. It symbolizes our conviction that nurtured
roots lay the foundation of a fully grown blossomed tree.
Health, Wellbeing. Assurance, Right Next Door
State-of-the-art healthcare facilities at New Town DLF BTM
EXTN.
In these years of fast paced lives, your family's wellbeing is
foremost in our minds. Our healthcare centre will better the
latest in screening, diagnosis, and medical care with
competent medical professionals by your side, we will make
sure that you would always remain in the best of health.
Comfort, Confidence, Peace of Mind Right Next Door.
Keeping your loves ones safe and secure at New Town, DLF
BTM EXTN.
Let New Town set your mind at rest when it comes to security.
Our advanced, state-of-the-art security system ensures comfort
& peace of mind for you and your loved ones, with monitored
gates, CCTV for parking and entrance lobby, video surveillance
system and a rigorously screened 24-hour security guard
workforce, New Town offers you a secure and a well-protected
abode." (emphasis supplied)
4. Responding to the representation held out by the developer, the
complainants booked flats in the residential project. The flat buyers
entered into agreements with the developer. Clause 11(a) of the ABA
indicated that the developer would endeavour to complete construction
within a period of thirty-six months from the date of the execution of the
agreement save and except for force majeure conditions. Clause 11(a)
provided:
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"11. (a) Schedule for Possession of the Said Apartment
The Company/LOC based on the present plans and estimates
and subject to all just exceptions, endeavors to complete
construction of the Said Building /Said Apartment within a period
of thirty six (36) months from the date of execution of this
Agreement unless there shall be delay or failure due to Force
Majeure conditions including but not limited to reasons mentioned
in Clauses 11(b) and 11(c) or due to failure of Allottee to pay in
time the Total Price and other charges taxes, securities etc. and
dues/payments or any failure on the part of the Allottee to abide
by all or any of the terms and conditions of this Agreement."
5. Force majeure stipulations were illustrated in sub-clauses (b)
and (c) of clause 11, which included delay due to the reasons beyond the
control of the developer and failure to deliver possession due to
Government rules, orders or notifications, respectively. Construction was
behind schedule. The flat purchasers were informed on 12 January 2011
that possession of the apartments was expected to be completed by the
middle of 2012. This assurance was not fulfilled. By a communication
dated 18 June 2013, the developers issued a revised timeline intimating
all flat buyers that the delivery of possession would commence from
October 2013. However, on 8 August 2013 another communication was
issued stating that the real estate industry was affected by an economic
slow-down which had hampered the pace of construction. The date for
handing over possession was extended to June 2014. A tentative schedule
for delivery was indicated under which Towers D1 and D2 would be
handed over by January 2014, and Towers A3 to A6, A7, B3 and B4
would be handed over by May 2014. On 8 August 2014, the timelines for
handing over possession were again extended by the developers : under
the revised schedule the flats in Towers D1 and D2 were to be handed
over in August 2014, those in A1 to A-7 in February 2015, B1 to B6 in
April 2015 and C1 to C4 in June 2015. On 4 May 2015, the developers
issued another communication indicating the progress of the work and
informed the purchasers that site visits had been initiated for the project
"till we receive the occupancy certificate for clusters A, B and C". This
is an admission of the fact that until then the occupation certificate had
not been received. The obligation to handover possession within a period
of thirty-six months was not fulfilled.
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6. The first batch of nine flat purchasers moved a consumer
complaint before the NCDRC complaining of a breach by the developer
of the obligation, contractually assumed, under the terms of the ABA.
Since the nine complainants purported to represent the entire group of
flat purchasers, a notice of the complaint under Section 12(1)(c) of the
Consumer Protection Act 19863 was published in the newspapers.
7. Numerous applications for impleadment were allowed by the
NCDRC and an amended complaint was ordered to be filed. On the
complainants moving an application under Section 12(1)(c), the NCDRC
by its order dated 21 November 2017 permitted them to file the complaint
on behalf or for the benefit of all the flat buyers who were interested in
the reliefs. However, flat buyers who had (i) executed deeds of
conveyance; or (ii) executed affidavits while accepting the agreed
compensation in full and final satisfaction; or (iii) received possession
within the stipulated time period; or (iv) had sold their flats after the
execution of the conveyance; or (v) who were subsequent purchasers
having purchased the flat after the execution of the conveyance deed
were to remain outside the purview of the proceedings. Further, the
buyers from whom Preferential Location Charges, charges for the
preferential location of the apartment, were not charged and were not
chargeable were to remain out of the class on whose behalf or benefit
the complaint was instituted. On a challenge to the order, this Court by
an order dated 10 April 2018 directed:
"Since the complaint filed by the appellants was only by nine persons
jointly for their benefit, the same could not be treated to be in
representative capacity. Accordingly, the impugned order is set
aside.
Aggrieved parties are at liberty to file an appropriate fresh
application under Section 12(1)(c) of the Consumer Protection
Act, 1986 before the National Consumer Disputes Redressal
Commission within two weeks from today. The same may be
disposed of by the National Commission in accordance with law
within three months from the date of filing of such an application."
8. Pursuant to the liberty which was granted by this Court, an
I.A.4 was filed before the NCDRC under Section 12(1)(c). The
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application was disposed of on 13 July 2018 which led to an appeal
before this Court.
9. On 28 September 2018, this Court set aside the order of the
NCDRC with the following directions:
"Having heard learned counsel for the appellants, we are of the
view that the impugned judgment dated 13.07.2018 needs to be
set aside. We set it aside and direct the National Consumer
Disputes Redressal Commission to treat the complaint, as amended,
that has been filed, as a complaint filed on behalf of all 339 persons
and to proceed on merits.
It will be open for the respondents to give their say on the merits
of each of the 339 complainants.
The Commission will decide the matter within a period of six
months from today.
The Civil Appeals are disposed of accordingly."
10. Procedural directions issued upon several impleadment
applications resulted in a further order of this Court of 8 May 2019
reiterating that the complaint would be treated as having been filed on
behalf of 339 persons. By its order dated 28 September 2018, which
was reiterated again on 8 May 2019, this Court had laid down a
peremptory time schedule of six months for the disposal of the complaint.
Eventually, on 2 July 2019, the complaint was dismissed by the NCDRC.
11. Civil Appeal No 6239 of 2019 comprises of 83 appellants.
Civil Appeal No 6303 of 2019 comprises of 88 appellants. Thus, there
are before this Court a total of 171 flat purchasers in the appeals. The
complaint before the NCDRC, which was confined by the order of this
Court dated 28 September 2018 to 339 complainants, now covers a more
restricted field of 171 flat purchasers. Annexure-1 to Civil Appeal No
6239 of 2019 contains a tabulation of (i) names of the flat purchasers;
(ii) dates on which the flats were booked; (iii) dates on which the ABAs
were signed; (iv) dates by which possession was to be handed over
under the ABAs; and (v) dates on which the letter for possession was
issued by the developers.
12. The NCDRC divided the group of 339 flat buyers into six
groups based on whether or not they had taken possession, executed
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deeds of conveyance, settled the dispute or sold the flats before or during
the pendency of the complaint or their applications for impleadment:
•
Group A: Complainants who took possession of their flats
before the filing of the complaint/impleadment applications.
•
Group B: Complainants who took possession and executed
deeds of conveyance during the pendency of the complaint/
impleadment applications.
•
Group C: Complainants who took possession during the
pendency of the complaint/impleadment applications but have
not executed deeds of conveyance.
•
Group D: Complainants who settled their dispute during the
pendency of the complaint/ impleadment applications.
•
Group E: Complainants who sold their flats during the
pendency of the complaint/impleadment applications.
•
Group F: Complainants who have not taken possession of the
flats and have not executed a deed of conveyance.
13. The NCDRC held that flat buyers in Groups A and B who had
taken possession before the filing of the complaint / impleadment
applications and those who took possession and executed deeds of
conveyance before or during the pendency of the proceedings would
not be entitled to pursue their claims. The execution of the deed of
conveyance, according to the NCDRC, is a transfer of a right in property
and it is not within the jurisdiction of the Commission to entertain a
grievance that the conveyances have been entered into under coercion.
Additionally, according to NCDRC, under the conveyance deed, such
flat buyers had accorded their satisfaction to the services provided by
the developer and voluntarily discharged the developer of all its liabilities
under the ABA. As regards flat purchasers in Group C, the NCDRC
noted that even those who have taken possession but have not executed
a deed of conveyance have voluntarily discharged the developer. The
NCDRC observed that flat buyers in Group C had taken possession
without protest, without its permission and without lodging any complaint
with it after taking the possession. Those in Group D who had settled
their dispute during the pendency of the complaint were held to be estopped
from pursuing their grievances. The NCDRC did not accept the contention
of the flat buyers in Group D that that they had settled the matter under
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coercion and undue influence since, according to the NCDRC, no specific
facts and circumstances were pleaded by such flat buyers which made
them surrender their free will. The buyers in Group E who have sold
their flats during the pendency of the complaint were held to have no
subsisting right. The NCDRC noted that as regards Group F
(complainants who had neither taken possession nor executed a
conveyance), as many as 337 out of 339 flat purchasers had in fact
taken possession. The NCDRC had to deal with the claims of two
remaining complainants, who had accepted the delayed compensation
but did not accept possession. Their complaints were dismissed.
14. The primary grounds on which compensation have been sought
before the NCDRC were:
(i)
Delay in handing over possession of the flats;
(ii) Reimbursement of taxes and interest charged to the flat
purchasers under clause 1.10 of the ABA;
(iii) Deficiency in providing amenities;
(iv) Levy of electricity charges by the developer; and
(v) Failure to construct the club house.
15. The NCDRC, in the course of its judgment, observed that
delay in the handing over of flats to the flat purchasers was admitted.
While recording a finding of fact that there was an admitted delay on the
part of the developer, the NCDRC held that the agreements provided
compensation at the rate of Rs 5 per square foot of the super area for
every month of delay. The NCDRC held that the flat purchasers who
agreed to this stipulation in the agreements were not entitled to seek any
amount in addition. Paragraph 470 of the judgment of the NCDRC
contains its finding:
"470. There is no dispute to the fact that the completion of the
project had been delayed. Delay had been acknowledged by the
opposite parties. They had also offered to these complainants the
delayed compensation calculated @ Rs 5/-per sq. ft. of the super
area."
The NCDRC observed that the developer had while computing
the final demand made an adjustment on account of delayed compensation
at the rate stipulated in the ABA. The flat purchasers having been
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provided credit at the rate agreed by the developers, it was held that no
further entitlement existed under the law. In the view of the NCDRC,
the flat purchasers had failed to prove that the stipulation contained in
the agreement for the payment of compensation at Rs 5 per square foot
was unreasonable. In taking this view, the Commission has lent support
to its decision by relying upon the decisions of this Court in DLF Homes
Panchkula Pvt. Ltd. v. D S Dhanda, Etc.5 ("Dhanda") and Ghaziabad
Development Authority v. Balbir Singh6 ("Balbir Singh"). On the
merits of the other grievances, the NCDRC has held that
(i)
The charges recovered towards tax and interest are in terms
of clause 1.10 of the ABA;
(ii)
Charges recovered for electricity are in terms of the ABA;
(iii)
The levy of parking charges is valid; and
(iv)
The club house has been constructed.
16. In order to facilitate the final disposal of the Civil Appeals,
counsel appearing on behalf of the appellants formulated the nature of
the grievances of the flat buyers in the written submissions tendered
during the hearing. Mr Prashant Bhushan, learned Counsel appearing
for the appellants has formulated his submissions under the following
heads:
(i)
There is a gross delay ranging between two and four years
in handing over possession and the flat buyers ought not to
be constrained by the terms of the agreement which are
one-sided and unreasonable;
(ii)
The execution of conveyances or settlement deeds would
not operate to preclude the flat buyers from claiming
compensation. The emails of the developer clearly indicate
that the flat buyers were not permitted to execute
conveyances or to receive possession under protest;
(iii)
The amenities which have been contracted for have not
been provided by the developers; and
(iv)
The flat buyers are not liable to indemnify the developer for
the demand of interest and penalty raised by the tax
5 2019 SCC OnLine SC 689
6 (2004) 5 SCC 65
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authorities as a result of the failure to deposit the tax on
time. During the oral arguments, it was clarified that only
interest has been recovered from the flat buyers.
The above submissions of Mr Prashant Bhushan have been
reiterated in the submissions urged before the Court by Mr Bishwajit
Bhattacharya, learned Senior Counsel appearing on behalf of another
group of purchasers. Mr R Balasubramanian, learned Senior Counsel
has, while adopting the submissions which were urged by Mr Prashant
Bhushan, advanced submissions on the levy of electricity charges and
charges for parking spaces.
17.