Case Note & Summary
The case involves a dispute between Kolkata West International City Pvt Ltd (the developer/appellant) and Devasis Rudra (the buyer/respondent) arising from a Buyer's Agreement dated 2 July 2007 for a Row House. The respondent paid Rs 39,29,280 in 2006 pursuant to a letter of allotment. The agreement required the appellant to hand over possession by 31 December 2008, with a six-month grace period ending 30 June 2009. The developer failed to deliver possession within the stipulated time. In 2011, the respondent filed a consumer complaint before the West Bengal State Consumer Disputes Redressal Commission (SCDRC) seeking possession or, alternatively, a refund with interest at 12% per annum and compensation of Rs 20 lakhs. The SCDRC allowed the complaint, directing refund with 12% interest and Rs 5 lakhs compensation. The National Consumer Disputes Redressal Commission (NCDRC) reduced compensation to Rs 2 lakhs. The appellant appealed to the Supreme Court, arguing that the primary relief was possession, and that a completion certificate was obtained on 29 March 2016, with possession offered to the respondent. The respondent contended that no formal possession was offered and that the delay of over seven years was unreasonable. The Supreme Court examined the agreement's clause that limited the developer's liability for delay to savings bank interest, while charging 18% interest on buyer's default, finding it one-sided. The Court held that a buyer cannot be expected to wait indefinitely, and seven years beyond the extended date is unreasonable. The refund was justified despite the developer's offer. However, considering the facts, the Court reduced the interest rate from 12% to 9% per annum, affirming the rest of the NCDRC order. The appeal was disposed of with directions to release the deposited amount to the respondent and refund any balance to the appellant.
Headnote
A) Consumer Law - Delay in Possession - Refund with Interest - Buyer's Agreement dated 2 July 2007 stipulated possession by 31 December 2008 with grace period till 30 June 2009 - Developer failed to deliver possession even by 2016 - Buyer filed complaint in 2011 seeking possession or refund - State Commission ordered refund with 12% interest and compensation; National Commission reduced compensation - Supreme Court held that a buyer cannot be expected to wait indefinitely for possession, and a period of seven years beyond the extended date is unreasonable - Refund was justified despite developer's offer of possession after completion certificate in 2016 - Interest rate reduced from 12% to 9% per annum considering all circumstances (Paras 4-5). B) Contract Law - Unfair Contract Terms - One-sided Agreement - Agreement provided for 18% interest on buyer's default but only savings bank interest on developer's delay in handing over possession - Supreme Court held that such a clause does not preclude the buyer from claiming reasonable interest or compensation - The clause was one-sided and cannot bind the buyer to accept nominal interest for developer's default (Para 4).
Issue of Consideration
Whether a buyer is entitled to refund of the amount paid for a property when possession is delayed beyond a reasonable period, despite the developer's subsequent offer of possession, and whether the interest rate stipulated in a one-sided agreement is binding.
Final Decision
The Supreme Court modified the NCDRC order by reducing the interest rate from 12% per annum to 9% per annum. The rest of the NCDRC directions were affirmed. The amount outstanding was directed to be released from moneys deposited by the appellant, with any balance refunded to the appellant. The appeal was disposed of with no order as to costs.
Law Points
- Consumer Protection Act
- 1986
- Unfair Contract Terms
- Delay in Possession
- Refund with Interest
- Reasonable Time for Possession
