Delayed Possession in Real Estate: Supreme Court Ruling on Buyer Rights in Villa Purchase Dispute
The Supreme Court of India recently delivered a judgment in a dispute between Sanjay Singh and another buyer against Central Himalayan Land Development Co. Ltd. The case involved a delayed villa possession in a real estate project called “Cloud-9 Hill Town” in Uttarakhand. The ruling clarified key aspects of property buyer rights, contractual obligations, and the role of courts in enforcing possession agreements.
Background of the Case
The appellants, Sanjay Singh and another, had booked a residential plot in the real estate project developed by the respondent company. According to an agreement executed on 14.04.2004, the villa was to be constructed and completed within 30 months for a total price of Rs. 15,65,000. The sale deed for the plot was registered in the buyers’ names on 14.05.2004. The appellants financed the purchase through a loan of Rs. 13,30,000 from a bank and paid the required installments as per schedule.
However, on 03.10.2007, the buyers received a demand notice from the developer, asking them to pay the balance amount of Rs. 5,13,850 along with interest at a steep rate of 24%. The buyers attempted to pay the principal amount on 12.10.2007, but the developer refused to accept the cheque. Instead, the developer presented a revised statement of accounts that included Rs. 3,61,460 as interest, bringing the total demand to Rs. 8,73,556.
Legal Proceedings
Consumer Complaint by the Buyers
Frustrated with the delay, the buyers filed a consumer complaint (CC/110/2008) against the developer, arguing that:
- The developer had failed to deliver the villa within the agreed timeline.
- Their attempt to clear the balance amount was wrongfully rejected.
- The company’s demand for 24% interest was unjustified.
They sought possession of the villa and requested that the balance payment be accepted without interest.
Developer’s Lawsuit for Recovery
Simultaneously, the developer filed a summary suit (CS No.431/14/2008) in Tis Hazari, New Delhi, seeking to recover Rs. 8,73,556 from the buyers.
District Forum and Trial Court Rulings
- On 29.04.2010, the District Consumer Forum-II, New Delhi ruled in favor of the buyers. It ordered the developer to deliver possession of the completed villa without any interest and pay Rs. 1,00,000 as compensation.
- On 30.07.2014, the Additional District Judge at Tis Hazari, New Delhi dismissed the developer’s suit, rejecting its claim for recovery.
High Court’s Decision
The developer appealed against the trial court’s order, filing Regular First Appeal No.876 of 2016 in the Delhi High Court. However, the appeal was filed with a delay of 721 days. The developer claimed that the delay was due to their advocate failing to inform them of the trial court’s decision.
The High Court condoned the delay, subject to a Rs. 20,000 cost, and ordered the buyers to deposit Rs. 5,13,850 with the court. The developer was directed to hand over possession of the villa.
Supreme Court’s Observations and Ruling
Key Judicial Findings
The Supreme Court scrutinized the proceedings and made several important observations:
- On Delay Condonation: The Court noted that the developer had failed to provide a valid explanation for the 721-day delay. It found the explanation of advocate negligence unconvincing, particularly because no effective steps were taken against the advocate.
- On Possession of the Villa: The Court observed that the High Court’s interim order had enabled a practical resolution, ensuring that the buyers received possession of their villa after depositing the balance amount.
- On Reversal of Possession: The Supreme Court criticized the High Court’s subsequent decision to reverse possession, stating, “The situation having been brought about in terms of the understanding between the parties as recorded in the earlier orders of the High Court, there was no reason for the High Court to direct reversal of the situation.”
Final Judgment
The Supreme Court ruled in favor of the buyers, setting aside the High Court’s decision to return the villa to the developer. The Court’s directions were:
- The buyers would retain possession of the villa as per their original agreement.
- The Rs. 5,13,850 deposited with the court would be released to the developer, including any accrued interest.
- The pending appeal before the State Consumer Commission would proceed on its own merits.
Conclusion
This ruling is a landmark judgment in real estate disputes, reinforcing the rights of property buyers against arbitrary delays and unfair interest demands by developers. It establishes that developers cannot unjustly withhold possession or impose excessive financial burdens on buyers. The judgment ensures that buyers receive their rightful property without undue litigation.
Petitioner Name: Sanjay Singh & Anr..Respondent Name: Central Himalayan Land Development Co. Ltd..Judgment By: Justice Uday Umesh Lalit, Justice Ashok Bhushan.Place Of Incident: Nainital, Uttarakhand.Judgment Date: 21-02-2019.
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Download Judgment: Sanjay Singh & Anr. vs Central Himalayan La Supreme Court of India Judgment Dated 21-02-2019.pdf
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