Nbcc (India) Limited vs Shri Ram Trivedi

HELD: 1. Clause 20 of the letter of allotment provides that the appellant shall “endeavour” to complete the construction of the dwelling unit within two and a half years from the date of the letter of allotment. The expression ‘endeavour’ meant that the appellant would make an earnest effort to hand over possession by that date. Even if the expression does not mean an absolute commitment to hand over possession on or before a specified date, this expression has to be read in the context of the entirety of the clause. To construe the expression as leaving the date for handing over possession indefinite and at the absolute discretion of the developer would leave the purchaser at the mercy of the builder. Clause 20 must be construed to require the builder to make all reasonable efforts to comply with the duty to hand over possession by the stipulated date. The burden would lie on the developer to explain the steps taken to comply with the contractual stipulation. Clause 20 envisages that, save and except for delay on account of force majeure, the appellant would pay compensation at the rate of Rs 2 per sq ft of the super area of the dwelling unit per month for the period of delay beyond one year from the stipulated date. It stipulates that compensation would be payable after four years (plus a valid extension due to force majeure) from the date of allotment. The above condition would indicate that beyond a period of one year, from the expiry of two and a half years, which was envisaged under Clause 20, the appellant agreed to pay compensation to the flat buyer. The latter stipulation of four years is incongruous, because previously, a period of one year beyond the stipulated period of 2.5 years is fixed, beyond which compensation becomes payable. This indicates that three and a half years was by all accounts the period for handing over possession beyond which the purchaser was entitled to compensation. [Para 7][287-A-F]

2. The NCDRC was justified in taking the view that the condition in the allotment of payment of compensation at the rate of Rs 2 per sq ft is one-sided and constitutes an unfair trade practice. The letter of allotment is in a standard form. The purchaser has no option but to sign on the dotted line. On the other hand, under Clause 16, if the buyer were to delay in the payment of any instalment, a liability to pay simple interest at the rate of 12% per annum is attracted. Clause 20, in other words, is not even-handed. While, on the one hand, it contemplates only compensation at the rate of Rs 2 per sq ft in the event that there is a delay on the part of the appellant, the buyer is required to pay a substantially higher rate of interest (12%) for any delayed payment on his part. [Para 8][290-B-D]

Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan (2019) 5 SCC 725 : [2019] 5 SCR 1169; Wg. Cdr. Arifur Rahman Khan and Aleya Sultana & Ors. v. DLF Southern Homes Pvt Ltd. 2020

(16) SCC 512 – relied on.

3. As the facts of the present case indicate, the period of two and a half years, which was stipulated under Clause 20 of the letter of allotment, came to an end at the end of December 2014. Allowing thereafter for an additional period of one year, the extended period would come to an end by the end of December 2015. The NCDRC granted interest at the rate of 10% with effect from July 2015. While the NCDRC is justified in directing the payment of interest, the direction should be modified in two respects, firstly, as regards the date from which interest would become payable and, secondly, as regards the rate of interest. As regards, the date on which interest would become payable, having regard to the one year period which is stipulated, beyond two and a half years from the original period under Clause 20, interest would become payable from 1 January 2016. Secondly, insofar as the rate of interest is concerned, the interest should be fixed at 7% per annum instead and in place of 10% which has been awarded by the NCDRC. Interest at the rate of 10% is excessive, in light of prevailing market conditions. The appellant shall pay simple interest to the respondent at the rate of 7% per annum from 1 January 2016 until 26 July 2018 which is the date on which possession was handed over to the respondent. [Paras 9 and 13(i)][290-D-G; 292-C-D]

Central Bank of India v Ravindra (2002) 1 SCC 367 : [2001] 4 Suppl. SCR 323 – relied on.

4. Once the NCDRC awarded interest for the delayed handing over of possession, there would be no justification to award an additional amount of Rs 2,00,000. The direction in regard to the payment of an amount of Rs 2,00,000 towards loss of rent shall stand set aside. [Paras 10 and 13 (ii)][290-G-H; 292-D-E]

5. The plea of the appellant that there was a delay on the part of the respondent in paying the fifth instalment does not merit acceptance. In the present case, it is evident that the appellant itself was not in a position to hand over possession of the dwelling unit by the end of December 2014. Hence, the requirement of paying the penultimate instalment in September 2014 must be looked at from that perspective. [Para 11] [291-A-C]

6. Similarly, there is absolutely no substance in the force majeure defense. The appellant has alleged that a dispute with the contractor over termination and a boundary wall dispute with neighbouring landowners constituted a force majeure condition under Clause 20 of the allotment letter. The appellant, being an experienced developer, must be conscious of routine delays caused by business exigencies. This would not frustrate the contract or absolve the appellant of the obligations assumed under the terms of the agreement. [Para 12][291-C-E] DLF Home Developers Ltd v. Capital Greens Flat Buyers Association [2021] 5 SCC 537– relied on.