Delayed Possession of Flats: Supreme Court Orders Compensation for Home Buyers in DLF Southern Homes Case

The case of Wg. Cdr. Arifur Rahman Khan and Aleya Sultana vs. DLF Southern Homes Pvt. Ltd. (now known as Begur OMR Homes Pvt. Ltd.) involved a long-standing dispute over the delayed possession of residential flats in Bengaluru. The Supreme Court was called upon to determine whether home buyers were entitled to compensation beyond what was stipulated in the Apartment Buyers Agreement (ABA), given the significant delays by the developer.

Background of the Case

DLF Southern Homes Pvt. Ltd. launched a project called ‘Westend Heights’ at New Town, DLF, BTM Extension, Bengaluru. The project, spread across 27.5 acres, was marketed as a premium residential complex with 1980 units across 19 towers, offering modern amenities such as a clubhouse, swimming pool, shopping centers, and healthcare facilities.

Despite assurances that possession would be handed over within 36 months of signing the ABA, construction was delayed. The flat buyers were repeatedly promised new possession dates, but these deadlines were not met. Eventually, frustrated by the delays, 339 home buyers filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC), seeking compensation for delayed possession.

Arguments by the Petitioners (Home Buyers)

• The buyers argued that they had suffered financial losses due to the delay, as many had to pay rent while also servicing home loans.
• The agreement was one-sided, as the builder imposed heavy penalties on buyers for payment delays but offered a meager compensation of Rs. 5 per square foot per month for construction delays.
• The promised amenities, such as a shopping complex, health care center, and club, were either delayed or never built.
• The developer imposed additional charges for electricity and parking, which were not part of the original agreement.
• Some buyers had to execute sale deeds under duress, fearing further delays if they protested.

Arguments by the Respondents (DLF Southern Homes Pvt. Ltd.)

• The developer admitted to the delay but argued that compensation was already specified in the ABA and should not be increased.
• Force majeure conditions, such as market slowdowns and government approvals, contributed to the delays.
• Some buyers had already taken possession and executed sale deeds, which should preclude them from making further claims.
• The amenities were planned as part of a larger township and were to be completed in phases.

Supreme Court’s Observations

The Supreme Court found that:

• The delay ranged between 2 to 4 years, which was substantial and could not be excused under force majeure conditions.
• The Rs. 5 per square foot per month compensation was inadequate given the financial burden on home buyers.
• The developer’s refusal to allow buyers to take possession under protest was an unfair practice.
• The promised amenities were a key factor in inducing buyers, and the failure to provide them constituted a deficiency in service.
• The developer’s conduct amounted to unfair trade practices, as home buyers were left in financial distress.

The Court stated:

“The consumer forums are not bound by one-sided agreements where the builder imposes severe penalties on buyers while offering negligible compensation for delays. Such agreements must be scrutinized under the lens of fairness and reasonableness.”

Final Judgment and Compensation Awarded

The Supreme Court ruled in favor of the home buyers and directed the developer to pay compensation at a rate of 6% simple interest per annum on the total amount paid by buyers from the date of possession delay until the actual handover. The compensation was to be paid in addition to the Rs. 5 per square foot per month already provided in the ABA.

The Court further ordered:

• Buyers who had executed sale deeds under coercion would still be eligible for compensation.
• The developer must complete pending amenities within a stipulated timeframe.
• Additional charges for electricity and parking should be scrutinized to ensure they comply with legal requirements.
• The compensation must be paid within one month, failing which an interest rate of 9% per annum would apply.

This landmark ruling reinforces the rights of home buyers against unfair builder agreements and ensures that consumers are not left helpless in cases of project delays.

Petitioner Name: Wg. Cdr. Arifur Rahman Khan and Aleya Sultana.
Respondent Name: DLF Southern Homes Pvt Ltd. (now known as Begur OMR Homes Pvt. Ltd.).
Judgment By: Justice Dr. Dhananjaya Y. Chandrachud, Justice K.M. Joseph.
Place Of Incident: Bengaluru.
Judgment Date: 24-08-2020.

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