Case Note & Summary
The appeals arise from a common judgment of the National Consumer Disputes Redressal Commission (NCDRC) in ten consumer cases filed by allottees against M/s Imperia Structures Ltd., the developer of a housing project called 'The ESFERA' in Gurgaon. The allottees booked apartments in 2011 and executed Builder Buyer Agreements in 2013. The agreement contained Clause 11.4 which provided that if the developer abandons the scheme or becomes unable to give possession within three years, the developer's liability is limited to refund of amounts paid with simple interest @ 9% per annum. Alternatively, if the developer does not terminate the agreement, it would pay compensation @ Rs.5 per sq. ft. per month for delay beyond three and a half years. The allottees paid substantial amounts (Rs.63,53,625 out of Rs.76,43,000) but construction was not completed even after four years. They filed consumer complaints in 2017 seeking refund with 18% interest and compensation. The NCDRC allowed the complaints and directed refund with interest. The developer appealed to the Supreme Court under Section 23 of the Consumer Protection Act, 1986. The Supreme Court allowed the appeals, holding that under Clause 11.4, the allottees are not entitled to refund unless the developer terminates the agreement. Since the developer did not terminate, the allottees are only entitled to compensation as per the agreement. The Court set aside the NCDRC order and remanded the matters for consideration of compensation.
Headnote
A) Consumer Law - Builder-Buyer Agreement - Clause 11.4 - Refund of Amount - The allottees sought refund of the amount paid with interest alleging delay in construction. The Supreme Court held that under Clause 11.4, the developer's liability is limited to refund with simple interest @ 9% per annum only if the developer abandons the scheme or becomes unable to give possession within three years. Since the developer did not terminate the agreement, the allottees are not entitled to refund. (Paras 1-10) B) Consumer Law - Compensation for Delay - Clause 11.4 - The agreement provided compensation @ Rs.5 per sq. ft. per month for delay beyond three and a half years. The Court held that this compensation is not inadequate and the allottees are bound by the contractual terms. (Paras 4-10) C) Real Estate Law - Registration under RERA - Effect on Pending Complaints - The project was registered under RERA on 17.11.2017 with validity till 31.12.2020. The Court noted that the registration does not affect the rights of the allottees under the agreement. (Paras 5-7)
Issue of Consideration
Whether the allottees are entitled to refund of the amount paid with interest without termination of the agreement under Clause 11.4 of the Builder Buyer Agreement, and whether the compensation of Rs.5 per sq. ft. per month for delay is adequate.
Final Decision
The Supreme Court allowed the appeals, set aside the NCDRC order, and remanded the matters to the NCDRC for consideration of compensation as per Clause 11.4 of the agreement.
Law Points
- Consumer Protection Act
- 1986
- Section 23
- Builder-Buyer Agreement
- Clause 11.4
- Refund of Amount
- Compensation for Delay
- Real Estate (Regulation and Development) Act
- 2016
- Force Majeure
- Unfair Trade Practice
