Buyer not bound by one-sided contract

The National Commission held that a buyer can neither be compelled to take possession without an Occupancy Certificate nor kept waiting endlessly for the flat's completion

Minakshi Choudhary had booked an apartment in Raheja Revanta, Gururgram, constructed by Raheja Developers. The flat, measuring 2,168.9 square feet (sq ft), was priced at Rs 1,33,58,446, with additional service tax and registration charges.
 

An amount of Rs 43,34,884 was paid on May 17, 2012, as an initial deposit, and an agreement for sale was executed. Of the total amount of Rs 1,33,58,446, a sum of Rs 1,16,03,737 was paid in 16 instalments, with the last payment being made on June 26, 2016. However, possession was not handed over within 36 months, in breach of the terms of the agreement. Choudhary filed a complaint before the National Commission seeking a refund of the entire amount along with interest, compensation, and costs.
 

Raheja Developers contested the complaint. It claimed that the project was launched after obtaining all the requisite permissions from the competent authority, including a licence from the Director General, Town and Country Planning, Haryana. It also argued that the agreement provided for 36 to 48 months for possession, along with a further grace period of six months, which was subject to the provision of necessary infrastructure by the government.
 

The agreement also provided for the contingency of delay in possession, in which eventuality a monthly compensation of 

Rs 7 per sq ft would be payable. This compensation would not be applicable if the delay was due the government not providing infrastructure on time.
 

The builder explained that the delay was attributable to the Dwarka Expressway being entangled in legal issues of land acquisition, due to which the government could not provide basic infrastructure such as roads, sewerage, water, and electricity. The builder argued that the agreement provided for delays due to reasons beyond its control and contended that the complaint should be dismissed.
 

The builder also argued that the complaint was time-barred. An objection was also raised that Choudhary had taken a loan from ICICI Bank to pay the instalments, so the bank would be a necessary party when a refund was being sought.
 

The National Commission overruled the defences. It noted that since possession had not been offered, there was a continuing cause of action, and held the complaint to be within limitation. The clause protecting the builder from paying compensation was held to be oppressive, as the buyer had no option but to sign the contract, which was one-sided in the builder’s favour. It held such a clause would not be binding as it constituted an unfair trade practice. 
 

The National Commission noted that the defence about the alleged failure of the government to provide infrastructure was not applicable, as the builder had taken up this responsibility by charging a premium for amenities and infrastructure. The Commission further observed that if there was any problem with the project, it should not keep collecting instalments from the buyers. Hence, it concluded that the builder would be liable to compensate the buyer for the delay.

Accordingly, in its order of January 1, 2024, delivered by Subhash Chandra, the National Commission held that a buyer can neither be compelled to take possession of a flat in the absence of the Occupancy Certificate nor be kept waiting endlessly 

for a flat’s completion. It ordered Raheja Developers to refund the entire amount of Rs 1,16,03,737 along with compensation at 9 per cent per annum from the date of payment of each instalment. A period of eight weeks was given for compliance. In case of default, the interest rate would be increased to 12 per cent per annum. Additionally, Rs 50,000 was awarded toward litigation charges.

The writer is a consumer activist