Flat buyers entitled to compensation for delayed possession: SC

The top court noted that it cannot be oblivious to the one-sided nature of agreements drafted to protect the interest of the developer.

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.

The bench noted that the 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," it said.

The judgement of the top court came in a matter where the National Consumer Disputes Redressal Commission, 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 top court did not agree with this approach in the case, saying that 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.

The counsel for flat owners contended before the top court that there was 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.