Homebuyer Victory: Supreme Court Upholds Refund for Delayed Possession in Luxury Villa Case

The Supreme Court of India, in its judgment dated July 30, 2019, delivered a significant ruling in the case of Marvel Omega Builders Pvt. Ltd. and Anr. v. Shrihari Gokhale and Anr.. This case revolved around the delayed possession of a luxury residential villa and the subsequent claim for a refund by the homebuyers. The Court upheld the National Consumer Disputes Redressal Commission’s (NCDRC) decision, reinforcing consumer rights in cases of delayed real estate projects.

Background of the Case

The respondents, Shrihari Gokhale and another, had booked a residential villa—Emerald-07—in the project ‘Marvel Selva Ridge Estate’ being developed by Marvel Omega Builders Pvt. Ltd. The total cost of the villa, including three covered parking spaces and an open terrace, was Rs. 8,31,04,425. An agreement was executed between the parties on March 22, 2013, which contained clauses regarding the completion and possession of the property.

The key contractual clauses included:

The villa would be constructed per the sanctioned plans of the Pune Municipal Corporation.
The possession of the villa was to be handed over to the buyers by December 31, 2014, provided they had made all required payments.

Between July 2012 and November 2013, the homebuyers paid Rs. 8.14 crores to the builder. However, the possession was not handed over by the promised deadline. The builder cited reasons such as additional work requested by the buyers and stop-work notices issued by the Pune Municipal Corporation in July and November 2014.

Homebuyers’ Legal Action

When the builder failed to deliver possession, the homebuyers filed Consumer Case No. 2010 of 2016 before the NCDRC. The key reliefs sought were:

A refund of Rs. 8.14 crores paid to the builder.
Compensation of Rs. 5.1 crores in the form of 18% interest per annum on the amount paid.
Pendente lite (pending litigation) and future interest at 18% per annum.
Litigation costs.

Builder’s Defense

The builder contended that:

The buyers had requested extra work amounting to Rs. 2,67,000, which caused a delay.
Stop-work notices issued by Pune Municipal Corporation delayed construction.
They were now ready to hand over possession.

NCDRC Ruling

The NCDRC rejected the builder’s justifications and ruled in favor of the buyers. Key findings included:

The additional work requested by buyers was minor and could, at most, justify a three-month delay.
The possession of the villa had still not been offered at the time of filing the complaint.
The stop-work notices were a builder’s issue and could not be used as an excuse to delay possession.

The NCDRC ordered:

The builder must refund Rs. 8.14 crores to the buyers.
They must pay compensation in the form of 10% simple interest per annum from the date of payment until the refund.
Litigation costs of Rs. 25,000.

Supreme Court’s Observations

The builder then approached the Supreme Court, challenging the NCDRC’s ruling. However, the Supreme Court upheld the NCDRC’s findings.

The Supreme Court made the following key observations:

The buyers had made nearly the entire payment by November 2013.
Despite agreeing to deliver possession by December 31, 2014, the builder had failed to do so.
The revised construction schedule promised completion by October 2014, yet the villa was still incomplete even five years later.
The builder’s failure amounted to a clear deficiency in service.

The Court stated:

“The respondents were justified in seeking a refund of the amounts deposited, with reasonable interest, due to the builder’s failure to meet contractual obligations.”

Final Verdict

The Supreme Court dismissed the builder’s appeal and upheld the NCDRC’s ruling. Additionally, the Court:

Prohibited the builder from selling or creating third-party rights over the villa until the refund was completed.
Attached the villa to ensure enforcement of the NCDRC’s order.

Conclusion

This ruling is a landmark decision reinforcing consumer rights in real estate transactions. The Supreme Court’s judgment ensures that homebuyers are protected from unscrupulous builders and that delays in possession will not go unpunished. The case serves as a strong warning to builders that failure to meet contractual obligations will lead to significant legal and financial consequences.

Petitioner Name: Marvel Omega Builders Pvt. Ltd. and Anr..
Respondent Name: Shrihari Gokhale and Anr..
Judgment By: Justice Uday Umesh Lalit, Justice Vineet Saran.
Place Of Incident: Pune, Maharashtra.
Judgment Date: 30-07-2019.

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