Case Note & Summary
The Supreme Court of India heard two sets of appeals against an order of the National Consumer Disputes Redressal Commission (NCDRC) dated 8 June 2018. The NCDRC had disposed of a consumer complaint filed in a representative capacity under Section 12(1)(c) of the Consumer Protection Act, 1986, by flat purchasers against the developer, Mantri Castles Pvt. Ltd. The dispute arose from a flat purchase agreement where possession was due by 31 January 2014, but the developer obtained the occupation certificate only on 10 February 2016. The NCDRC found the developer in breach and awarded compensation for delayed possession from 1 February 2014 to 31 July 2016, comprising contractual compensation at Rs. 3 per sq. ft. per month plus interest at 6% per annum on the amounts deposited by the purchasers before the due date. The NCDRC also directed completion of common amenities and costs. The flat purchasers appealed (Civil Appeal No. 1232 of 2019) arguing that the NCDRC erred in limiting interest to 31 July 2016, as many had not received possession even after that date. The developer appealed (Civil Appeal Nos. 1443-1444 of 2019) contending that the contractual compensation rate should prevail and the award of 6% interest was unjustified. The Supreme Court considered the submissions. The court noted that the developer's affidavit before the NCDRC admitted that 43 complainants who asked for possession were not given possession because they had filed the consumer complaint. The court found this justification unacceptable. The court also observed that even during the Supreme Court hearing, out of 55 flat purchasers, only 16 had received possession, and 9 more were to be offered within a week. The court held that the NCDRC was justified in awarding 6% interest, as the contractual rate of Rs. 3 per sq. ft. per month was too meager to be just compensation, especially in Bangalore. However, the court found that the NCDRC erred in limiting interest to 31 July 2016, as possession had not been handed over to all purchasers. The Supreme Court allowed the flat purchasers' appeal and dismissed the developer's appeals. It directed that the liability to pay interest at 6% per annum shall continue until the date each flat purchaser is offered possession. The NCDRC was tasked with verifying the date of offer of possession for each purchaser in execution proceedings.
Headnote
A) Consumer Law - Representative Complaint - Section 12(1)(c) Consumer Protection Act, 1986 - Just Compensation - The NCDRC disposed of a consumer complaint filed in a representative capacity under Section 12(1)(c) of the Consumer Protection Act, 1986, concerning delayed possession of flats. The Supreme Court held that the NCDRC's award of interest at 6% per annum was justified, but the liability should continue until actual possession is offered, not limited to 31 July 2016. (Paras 1-7) B) Consumer Law - Unilateral Contractual Clause - Inadequacy of Compensation - The flat purchase agreement stipulated compensation at Rs. 3 per sq. ft. per month for delay. The Supreme Court agreed with the NCDRC that this amount was too meager to constitute just compensation, especially in a city like Bangalore. The court held that the NCDRC's jurisdiction to award just compensation under the Consumer Protection Act cannot be constrained by such one-sided terms. (Paras 4-5) C) Consumer Law - Delay in Possession - Interest Liability - The developer received the occupation certificate on 10 February 2016, but possession was not offered to all buyers. The Supreme Court found that the NCDRC erred in limiting interest to 31 July 2016, as many buyers had not been offered possession even as of the date of the Supreme Court hearing. The court directed that interest at 6% per annum shall continue until the date each flat purchaser is offered possession. (Paras 5-7)
Issue of Consideration
Whether the NCDRC was justified in confining the liability to pay interest for delayed possession only up to 31 July 2016, and whether the developer's contractual compensation rate of Rs. 3 per sq. ft. per month is adequate.
Final Decision
The Supreme Court allowed the appeal of the flat purchasers (Civil Appeal No. 1232 of 2019) and dismissed the appeals of the developer (Civil Appeal Nos. 1443-1444 of 2019). The court modified the NCDRC order to direct that the liability to pay interest at 6% per annum shall continue until the date each flat purchaser is offered possession. The NCDRC shall verify the date of offer of possession for each purchaser in execution.
Law Points
- Consumer Protection Act
- 1986
- Section 12(1)(c)
- Representative capacity
- Just compensation
- Delay in possession
- Interest rate
- Unilateral contractual clause
- Deficiency in service
