Supreme Court Modifies Refund Order in Nagpur Real Estate Dispute

The Supreme Court of India, on August 12, 2022, delivered a crucial judgment in the case of M/S Siddhyvinayak Infrastructure vs. Kamalakar Jayant Srivastava & Anr.. The case revolved around a real estate transaction dispute in Nagpur, Maharashtra, where the complainant alleged a breach of contract by the builder. The Supreme Court modified the order passed by the National Consumer Disputes Redressal Commission (NCDRC), directing the builder to refund a specified amount to the complainant with interest.

This ruling provides clarity on consumer rights in real estate disputes and sets a precedent for how courts should handle cases where property transactions remain unresolved for extended periods.

Background of the Case

The dispute originated when the complainant, Kamalakar Jayant Srivastava, entered into an agreement with the appellant, M/S Siddhyvinayak Infrastructure, for the purchase of a Twin Bungalow in Nagpur. The complainant agreed to purchase the bungalow for a total price of Rs. 9,74,000, with the following payment structure:

Rs. 4,23,520 paid in cash.
Rs. 5,50,520 to be paid through a loan from the bank.

Although the bank sanctioned a loan of Rs. 6,40,000 in favor of the complainant, the amount was never disbursed due to incomplete property documents. Consequently, disputes arose between the parties, leading to the complainant filing a case before the District Consumer Disputes Redressal Forum, Nagpur.

District Consumer Forum’s Order

The District Consumer Forum, after hearing the arguments, ruled in favor of the complainant and directed the builder to:

Complete the construction of the Twin Bungalow and hand over possession.
Execute the sale deed in favor of the complainant.
Pay Rs. 30,000 as compensation for physical and mental harassment.
Pay Rs. 5,000 as litigation expenses.
Pay Rs. 300 per day as penalty from January 1, 2008, until possession was handed over.

Appeal Before NCDRC

The builder challenged the District Forum’s decision before the National Consumer Disputes Redressal Commission (NCDRC), arguing that:

The delay in loan disbursement was the complainant’s fault.
The builder should not be held responsible for delays in loan processing.
There were legal restrictions on registering the sale deed.

The NCDRC modified the District Forum’s order, directing the builder to:

Hand over possession of the bungalow within one month.
Execute the sale deed once the Occupation Certificate was obtained.
Receive the balance amount of Rs. 6,49,220 from the complainant within four weeks.

Appeal Before the Supreme Court

The builder approached the Supreme Court, challenging the NCDRC’s ruling. The appellant argued that:

The original agreement was signed in 2006, and 16 years had passed without resolution.
The complainant failed to make the full payment.
It was impractical to enforce a sale after such a long time.

Supreme Court’s Observations

1. Long Delay in Execution

The Supreme Court noted that nearly 16 years had passed since the agreement was signed:

“The original agreement between the parties dates back to 2006. It is unreasonable to enforce specific performance of the contract after such a prolonged period.”

2. Failure of the Complainant to Secure Loan

The Court observed that although the loan was sanctioned in 2006, the complainant did not take further steps to ensure its disbursement:

“The complainant did not take adequate steps to secure the loan and fulfill the financial obligations under the contract.”

3. Modification of NCDRC’s Order

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

“The builder shall refund Rs. 3,24,780 to the complainant with interest at 12% per annum from the date of the agreement.”

Final Judgment

The Supreme Court ruled:

The builder must refund Rs. 3,24,780 to the complainant.
Interest at 12% per annum must be paid from June 8, 2006.
The refund must be processed within four weeks.
Once the payment is made, the builder will have no further obligations regarding the property.

Impact of the Judgment

The Supreme Court’s decision has several key implications:

Protects builders from indefinite obligations: The judgment prevents developers from being forced to fulfill agreements after excessive delays.
Ensures fair compensation for homebuyers: The refund with interest safeguards the complainant’s financial interests.
Clarifies consumer protection laws: Courts will consider practical timelines while enforcing property sale agreements.

Conclusion

The Supreme Court’s ruling in M/S Siddhyvinayak Infrastructure vs. Kamalakar Jayant Srivastava sets a crucial precedent for real estate disputes. It emphasizes that both parties must fulfill their contractual obligations within a reasonable timeframe. By modifying the refund order, the Court ensured a balanced resolution, protecting the interests of both the homebuyer and the builder.

Petitioner Name: M/S Siddhyvinayak Infrastructure.
Respondent Name: Kamalakar Jayant Srivastava & Anr..
Judgment By: Justice D.Y. Chandrachud, Justice J.B. Pardiwala.
Place Of Incident: Nagpur, Maharashtra.
Judgment Date: 11-08-2022.

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