R V Prasannakumaar vs Mantri Castles Pvt. Ltd

REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 1232 OF 2019

R V PRASANNAKUMAAR & ORS. Appellant(s)

VERSUS

MANTRI CASTLES PVT. LTD & ANR. Respondent(s)

WITH

CIVIL APPEAL NOS. 1443-1444 OF 2019

JUDGMENT

Dr. Dhananjaya Y. Chandrachud, J.

The National Consumer Disputes Redressal Commission

(“NCDRC”) by its impugned order dated 8 June 2018 disposed of

the consumer complaint filed in a representative capacity under

Section 12(1)(c) of the Consumer Protection Act, 1986. The

NCDRC has come to the conclusion that though under the terms of

the flat purchase agreement, possession was liable to be handed

over to the buyers on 31 January 2014, there was a breach on

the part of the developer in complying with its contractual Signature Not Verified Digitally signed by MANISH SETHI Date: 2019.02.19 obligations. The NCDRC has noticed that the occupation 16:56:26 IST Reason:

certificate was received only on 10 February 2016 and it was

thereafter that from May 2016, certain letters offering 2

possession were issued by the developer. Based on this, the

NCDRC awarded compensation upto 31 July 2016 in the form of

interest at the rate of 6 per cent per annum.

There is a finding in the impugned order that though the

flat purchase agreement contained a stipulation for the payment

of compensation at the rate of INR 3 per sq. ft. per month for

delayed handing over of possession, the amount as stipulated is

too meager to fulfil the requirement of just compensation to

the purchasers. Accordingly, the following directions have

been issued in the impugned order;

“i) The OPs are directed to handover the possession to the complainants (if not already handed over) within a period of 60 days from the date of this order and the complainants are also directed to complete all the formalities for taking the possession.

ii) The complainants are entitled to get compensation for delayed possession from 01.02.2014 till 31.07.2016 as per the agreement i.e. @ Rs. 3/- per sq. ft. per month. Over and above this amount, the opposite parties shall be liable to pay interest @ 6% p.a. from 01.02.2014 till 31.07.2016 on complainants deposited amounts with the CPs before the due date of possession i.e. 31.01.2014.

iii) OPs are directed to complete the common facilities and amenities as per the agreement within a period of six months from the date of this order, failing which the OPs shall pay compensation @ Rs. 1,000/- per month to each of the complainants under the present complaint.

iv) The OPs are also directed to pay Rs. 2,000/- (Rupees two thousand only) to each of the complainants towards cost of litigation in the present case.

v) All these amounts except compensation for common facilities and amenities shall be adjusted against the amount due on the complainants, if any, at the time of handing over of the possession and if no amount is due on the complainants, then the 3

amount shall be paid by the OPs to the complainants on the date of possession.”

Two sets of appeals have been filed against the order of

the NCDRC. Civil Appeal No. 1232 of 2019 has been instituted by

the flat purchasers while Civil Appeal Nos. 1443-1444 of 2019

is filed by the developer.

The flat purchasers are aggrieved by the order of the

NCDRC since it grants interest only upto 31 July 2016 and not

thereafter.

Mr. Bishwajit Bhattacharya, learned senior counsel

appearing on behalf of the flat buyers has submitted that the

NCDRC was in error in assuming that all flat buyers had been

given letters of offer for possession prior to 31 July 2016

which it has been submitted, is factually incorrect.

Learned senior counsel submitted that as a matter of

fact, possession has not been offered to all the purchasers

even as on date and hence there was no justification on the

part of the NCDRC to fasten the liability to pay interest only

upto 31 July 2016 and not thereafter.

On the other hand, Mr. P.S. Narasimha, learned senior

counsel appearing on behalf of the developer has submitted that

in view of the conditions contained in the flat purchase

agreement allowing compensation at the rate of Rs. 3 per sq.

ft. per month, the award of interest of 6 per cent per annum

was not justified.

We will at the outset deal with the submission of the

developer that the NCDRC was not justified in awarding interest 4

at the rate of 6 per cent per annum and that the terms of the

flat purchase agreements must prevail.

We are in agreement with the view of the NCDRC that the

rate which has been stipulated by the developer, of

compensation at the rate of 3 per sq. ft. per month does not

provide just or reasonable recompense to a flat buyer who has

invested money and has not been handed over possession as on

the stipulated date of 31 January 2014. To take a simple

illustration, a flat buyer with an agreement of a flat

admeasuring a 1000 sq. ft. would receive, under the agreement,

not more than Rs 3000 per month. This in a city such as

Bangalore does not provide just or adequate compensation. The

jurisdiction of the NCDRC to award just compensation under the

provisions of the Consumer Protection Act, 1986 cannot in the

circumstances be constrained by the terms of the agreement. The

agreement in its view is one sided and does not provide

sufficient recompense to the flat purchasers.

The outer date for handing over possession was 31 January

2014. The admitted facts indicate that the occupation

certificate was received on 10 February 2016. Consequently,

there was a delay of at least two years since possession could

not have been handed over prior to obtaining the occupation

certificate.

In the circumstances, the award of interest at the rate

of 6 per cent is reasonable and justified. The NCDRC however,

came to the conclusion that interest should be awarded only for

the period from 1 February 2014 to 31 July 2016. 5

We find merit in the submission of the flat buyers that

the liability to pay interest has been inappropriately confined

only upto 31 July 2016. We find from the record that the

developer, in the affidavit by way of evidence of its

representative before the NCDRC, admitted that as many as 43

complainants, who had asked for possession were not given

possession for the simple reason that they had moved the NCDRC

in a consumer complaint. The relevant part of the affidavit is

extracted below:-

“I state that rest of the 43 complaints who have asked for possession have not been given possession for the reason that as on 29.06.2016, the Opposite parties had received notice of this Hon’ble Commission in respect of filing of the present case. In the present dispute, the complainants have sought prayer at para A to G under different heads.

While they sought the relief of handing over possession of their respective flats in para A, at paras B, C, D, E and F, they have also sought certain reliefs of compensation by making certain allegations of deficiency in service, compensation for delay in possession etc., against the opposite parties.

Therefore, during the pendency of present dispute, the complainants were not given possession in view of the reliefs sought in paras B to F and the statement of allegations made in the present complaint.”

The fact that the flat purchasers had moved the NCDRC in

a representative capacity for the redressal of their grievances

is in our view, no justification to deny them possession. The

fact that the flat purchasers had moved the NCDRC would not

disentitle them to receive possession in accordance with the

terms of the agreement.

When the appeal filed by the developer came up before 6

this Court on 1 February 2019, the following order was passed;

“Delay condoned.

Mr. P.S. Narasimha, learned senior counsel, has stated before the Court that 55 flat purchasers are involved in the building project in question. Learned senior counsel states on instructions that possession has been handed over to sixteen flat buyers and possession to nine flat buyers will be offered and handed over within a period of one week from today. These 25 persons, it has been submitted, have paid the entirety of their dues under the flat purchase agreement.

In respect of remaining 30 flat buyers, Mr. Narasimha states that there are outstanding payments.

Learned senior counsel appearing on behalf of the respondents disputes this position. Learned senior counsel for the respondents has submitted that 95 per cent of the payment has been made while the balance 5 per cent is payable at the time of possession.

In view of this controversy, we direct the petitioners to place on record an affidavit indicating the amounts which have been received from the remaining 30 flat buyers and the amount which is due and payable in terms of the agreements with them.

List on 11 February 2019.

In the meantime, no coercive steps shall be taken against the petitioners in pursuance of the impugned order of the NCDRC.”

From the above order it emerges that even according to

the developer, out of 55 flat purchasers, possession had been

handed over to 16 and it was stated that possession to 9 more

buyers would be offered within a period of one week.

Mr. P.S. Narasimha, learned senior counsel has stated

that in addition to the above 9 flat buyers, the developer will

be handing over possession to 2 more flat buyers immediately. 7

This indicates that as amongst the 55 purchasers, 25 persons

have been now offered possession and an additional 2 would be

offered possession shortly hereafter.

In view of the above position, the NCDRC was not

justified in proceeding on the basis that the liability to pay

interest would cease to operate as on 31 July 2016. Since

possession has not been handed over, the developer cannot avoid

the liability to pay interest at the rate awarded by the NCDRC

until the date when possession is actually handed over.

Hence, while allowing the appeal, we issue the following

directions:

(i) The liability of the developer to pay interest at the

rate of 6 per cent per annum shall continue to operate

until the date on which each of the respective flat

purchasers is offered possession;

(ii) The order passed by the NCDRC confining the award of

interest for the period from 1 February 2014 to 31 July

2016 is modified in terms of the directions issued in

clause (i) above;

(iii) The NCDRC in execution of the impugned order as

modified by the present order, shall verify with

reference to each flat purchaser the date on which an

offer of possession has been made. The liability to pay

interest at the rate of 6 per cent per annum shall

cease on the date when an offer of possession has been

made to each of the flat purchasers. 8

Accordingly, the appeal filed by the flat purchasers

(Civil Appeal No. 1232 of 2019) is allowed and the appeals

filed by the developer (Civil Appeal Nos. 1443-1444 of 2019)

are dismissed.

Pending application(s), if any, shall stand disposed of.

…………………………………………………………………...….J (DR. DHANANJAYA Y. CHANDRACHUD)

..……………………………………………………………….....J (HEMANT GUPTA) NEW DELHI, February 11, 2019 9

ITEM NO.2 + 12 COURT NO.9 SECTION XVII

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Civil Appeal No(s). 1232/2019

R V PRASANNAKUMAAR & ORS. Appellant(s)

VERSUS

MANTRI CASTLES PVT. LTD & ANR. Respondent(s)

(FOR ADMISSION and IA No.183525/2018-ADDITION/DELETION/ MODIFICATION PARTIES and IA No.183524/2018-CONDONATION OF DELAY IN REFILING)

CA NO. 1443-1444/2019 (XVII)

Date : 11-02-2019 This appeal was called on for hearing today.

CORAM : HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MR. JUSTICE HEMANT GUPTA

Counsel for the parties:-

Mr. Bishwajit Bhattacharya, Sr. Adv. Mr. Chandrachud Bhattacharya, Adv. Mr. Abhinav Mukerji, AOR

Mr. P.S. Narasimha, Sr. Adv.

Mr. Shekhar G. Devasa, Adv.

Mr. Manish Tiwari, Adv.

Mr. Luv Kumar, Adv.

UPON hearing the counsel the Court made the following O R D E R

The appeal filed by the flat purchasers (Civil Appeal No. 1232

of 2019) is allowed and the appeals filed by the developer (Civil

Appeal Nos. 1443-1444 of 2019) are dismissed in terms of the signed

reportable judgment.

Pending application(s), if any, shall stand disposed of.

(MANISH SETHI) (SAROJ KUMARI GAUR) COURT MASTER (SH) BRANCH OFFICER

(Signed reportable judgment is placed on the file)