Flat Possession Delay: Supreme Court Modifies Compensation in Consumer Dispute

The Supreme Court of India recently ruled on a dispute between M/s. Supertech Ltd. and a homebuyer, Rajni Goyal, concerning the delayed possession of a flat in the ‘Capetown’ project in Noida. The case involved a legal battle over whether the builder was liable for delay-related compensation and the extent of interest payable to the homebuyer. The judgment partially modified the ruling of the National Consumer Disputes Redressal Commission (NCDRC), reducing the period of compensation but upholding the buyer’s right to relief.

Background of the Case

The dispute arose when the homebuyer, Rajni Goyal, booked a flat in Supertech Ltd.’s ‘Capetown’ project in Sector 74, Noida. As per the allotment letter dated May 22, 2012, the builder had promised possession by October 2013, with a grace period of six months. However, possession was delayed significantly beyond this timeline.

On October 12, 2015, Supertech issued a ‘Pre-Possession Letter’ demanding that the homebuyer pay Rs. 12,35,656 towards various charges before possession could be handed over. The buyer refused to make the payment, arguing that the builder had failed to obtain the Occupancy Certificate at that time.

After waiting for over 15 months, the homebuyer filed a consumer complaint before the NCDRC, challenging the delay in possession and the additional charges imposed.

Key Issues Raised

Was the builder justified in demanding additional charges before delivering possession?
Was the buyer entitled to compensation for the delay in possession?
What should be the appropriate period for awarding compensation?

Arguments of the Petitioner (Supertech Ltd.)

The builder contended that possession was offered in December 2015 after obtaining the Completion Certificate for the building.
Delays occurred due to legal impediments, including orders passed by the National Green Tribunal, which prevented the timely completion of the project.
The agreement included a six-month grace period beyond October 2013, which should be considered while calculating any compensation.
The buyer delayed taking possession even after the Completion Certificate was obtained in April 2016, and she should not be allowed to claim benefits for her own inaction.

Arguments of the Respondent (Rajni Goyal, Homebuyer)

The homebuyer argued that the builder failed to deliver possession on time and did not have an Occupancy Certificate at the time of the Pre-Possession Letter in 2015.
Additional charges such as maintenance, water connection fees, labor welfare fees, and escalation costs were arbitrarily imposed.
She was entitled to interest for the period of delay as compensation for the hardship caused due to the late possession.
The interest on delay should be computed from November 1, 2013, as per the original possession timeline, until the actual offer of possession.

Supreme Court’s Analysis

The Supreme Court examined the arguments and made the following observations:

The delay in handing over possession was primarily due to legal restrictions imposed by the National Green Tribunal, which affected construction timelines.
The possession should have been handed over by October 2013, with an additional grace period of six months, making the reasonable due date May 2014.
Since the builder obtained the Completion Certificate in April 2016, the buyer was entitled to compensation for the period between May 2014 and April 2016.
The buyer could not claim interest beyond April 2016 because possession was ready, and any further delay in taking possession was attributable to the buyer’s inaction.

Final Judgment

The Supreme Court modified the NCDRC’s ruling and held:

The homebuyer was entitled to compensation in the form of simple interest at 8% per annum.
The compensation period was restricted to May 1, 2014, to April 30, 2016, instead of the longer period claimed by the buyer.
The builder was entitled to charge escalation costs, interest on delayed payments, and water connection fees, subject to proper documentation.
The order of the NCDRC was modified only to the extent of recalculating the compensation period.

The judgment concluded:

“In light of the aforesaid discussion, the period of compensation of interest must be computed from 01.05.2014 till 30.04.2016 at the rate awarded by the Commission.”

Implications of the Judgment

This ruling has significant implications for homebuyers and real estate developers:

Consumer Rights: Homebuyers are entitled to compensation for possession delays, reinforcing the accountability of builders.
Limited Compensation Period: Courts may limit compensation to a reasonable timeframe, especially if delays were beyond the builder’s control.
Documentation of Charges: Builders must provide transparent records to justify any additional charges imposed on buyers.
Legal Precedent: The ruling establishes a framework for determining compensation in cases where possession is delayed due to external factors.

This judgment strikes a balance between protecting consumer interests and ensuring that builders are not penalized for delays caused by regulatory hurdles.

Petitioner Name: M/s. Supertech Ltd..
Respondent Name: Rajni Goyal.
Judgment By: Justice Abhay Manohar Sapre, Justice Indu Malhotra.
Place Of Incident: Noida.
Judgment Date: 23-10-2018.

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Download Judgment: Ms. Supertech Ltd. vs Rajni Goyal Supreme Court of India Judgment Dated 23-10-2018.pdf

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