Real Estate Dispute: Supreme Court Upholds Refund for Delayed Apartment Possession

The case of Experion Developers Pvt. Ltd. vs. Sushma Ashok Shiroor revolves around the issue of delayed possession of a residential apartment and the rights of homebuyers under the Consumer Protection Act, 1986 and the Real Estate (Regulation and Development) Act, 2016 (RERA). The Supreme Court upheld the National Consumer Disputes Redressal Commission’s (NCDRC) order directing the developer to refund the amount paid by the homebuyer, along with interest, for failing to deliver possession within the stipulated time.

Background of the Case

The dispute arose from a residential project named Windchants developed by Experion Developers Pvt. Ltd. in Sector 112, Gurgaon, Haryana. The respondent, Sushma Ashok Shiroor, had booked an apartment measuring 3525 sq. ft. in the project, with a total price of Rs. 2,36,15,726/-. The parties entered into an Apartment Buyer’s Agreement on December 26, 2012.

As per Clause 10.1 of the agreement, the possession of the apartment was to be handed over within 42 months from the approval of the building plan, receipt of environmental clearance, or execution of the agreement—whichever was later. An additional grace period of 180 days was allowed. Clause 13 provided for delay compensation at Rs. 7.50 per square foot per month in case of delayed possession.

Failure to Deliver Possession

The consumer paid Rs. 2,06,41,379/- towards the apartment.
The stipulated period of 42 months plus 180 days expired on June 26, 2016.
Despite this, the developer failed to deliver possession.
The occupancy certificate was obtained only on July 23, 2018, and the possession notice was issued on July 24, 2018.
Due to the prolonged delay, the homebuyer sought a full refund instead of taking possession.

Arguments of the Petitioner (Developer)

The developer argued that the homebuyer was only entitled to delay compensation under Clause 13, amounting to Rs. 4,54,052/-.
The possession notice had already been issued, and the homebuyer should be directed to take possession instead of seeking a refund.
Since the consumer filed the complaint under the Consumer Protection Act, 1986, provisions of the Real Estate (Regulation and Development) Act, 2016 (RERA) should not apply.
The interest rate granted by the NCDRC was excessive.

Arguments of the Respondent (Homebuyer)

The homebuyer contended that the delay in possession was unreasonable and unjustified.
The terms of the agreement were one-sided and heavily favored the developer.
Since the apartment was not delivered on time, the buyer had a legal right to seek a full refund with interest.
The rate of interest awarded by the NCDRC was fair, considering the financial burden borne by the consumer.

Supreme Court’s Ruling

The Supreme Court, comprising Justices Uday Umesh Lalit, S. Ravindra Bhat, and Pamidighantam Sri Narasimha, upheld the NCDRC’s order and ruled in favor of the homebuyer.

1. One-Sided Buyer Agreement Is Unfair

The Court held that the agreement was one-sided, favoring the developer. It relied on its earlier ruling in Pioneer Urban Land and Infrastructure Ltd. vs. Govind Raghvan, stating:

“The clauses of the agreement are entirely loaded in favor of the builder. The homebuyer cannot be compelled to accept possession after an indefinite delay.”

2. Delay in Possession Amounts to Deficiency in Service

The Court ruled that the developer’s delay in obtaining the occupancy certificate and offering possession constituted a deficiency in service under the Consumer Protection Act.

3. Homebuyer Has a Right to Seek Refund

Quoting from its ruling in Fortune Infrastructure vs. Trevor D’Lima, the Court stated:

“A person cannot be made to wait indefinitely for possession of the flat allotted to them. They are entitled to seek a refund along with compensation.”

4. Refund with Interest Is Justified

The Court upheld the NCDRC’s order directing the developer to refund Rs. 2,06,41,379/- with 9% interest per annum. It rejected the developer’s claim that the interest rate was excessive.

Impact of the Judgment

Reaffirms that homebuyers have a right to a refund in cases of excessive delay.
Ensures real estate developers cannot misuse one-sided agreements to their advantage.
Clarifies that Consumer Protection Act and RERA can coexist, providing multiple remedies for aggrieved homebuyers.
Strengthens homebuyer rights by recognizing delayed possession as a serious deficiency in service.

Conclusion

The Supreme Court’s decision in Experion Developers Pvt. Ltd. vs. Sushma Ashok Shiroor sets a strong precedent for homebuyers facing unreasonable delays. By upholding the refund with interest, the Court has reinforced consumer rights in the real estate sector, ensuring that developers are held accountable for project delays.

Petitioner Name: Experion Developers Pvt. Ltd..
Respondent Name: Sushma Ashok Shiroor.
Judgment By: Justice Uday Umesh Lalit, Justice S. Ravindra Bhat, Justice Pamidighantam Sri Narasimha.
Place Of Incident: Gurgaon, Haryana.
Judgment Date: 07-04-2022.

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