Consumer Protection Act, 1986: Interest – Award of – Justification – On facts, breach of flat purchase agreement – Outer date for handing over possession was 31.01.2014, however the buyers received occupation certificate on 10.02.2016 – Consumer complaint – Award of compensation by the National Consumer Disputes Redressal Commission for delayed handing over of possession from 01.02.2014 till 31.07.2016 as per the agreement, at the rate of INR 3 per sq. ft. per month – National Commission also awarded interest at the rate of 6 per cent per annum – Justification of – Held: Compensation at the rate of 3 per sq. ft. per month does not provide just or reasonable recompense to the flat purchaser who has invested money and that too in a city like Bangalore – Jurisdiction of the NCDRC to award just compensation cannot be constrained by the terms of the agreement – There was a delay of at least two years in handing over the possession – Thus, the award of interest at the rate of 6 per cent is reasonable and justified – Liability of the developer to pay interest would continue to operate until the date the respective flat purchasers is offered possession – Furthermore, the flat purchasers who had moved NCDRC in a representative capacity for redressal of their grievances not disentitled to receive possession of the flat. Allowing C.A. No. 1232 of 2019 and dismissing C.A.Nos. 1443-1444 of 2019, the Court
HELD: 1.1 The view of the National Consumer Disputes Redressal Commission-NCDRC that the rate which has been stipulated by the developer, of compensation at the rate of 3 per sq. ft. per month does not provide just or reasonable recompense to a flat buyer who has invested money and has not been handed over possession as on the stipulated date of 31 January 2014, is accepted. This in a city such as Bangalore does not provide just or adequate compensation. The jurisdiction of the NCDRC to award just compensation under the provisions of the Consumer Protection Act, 1986 cannot in the circumstances be constrained by the terms of the agreement. The agreement in its view is one sided and does not provide sufficient recompense to the flat purchasers. [Para 9][825-D-F]
1.2 The outer date for handing over possession was 31 January 2014. The admitted facts indicate that the occupation certificate was received on 10 February 2016. Consequently, there was a delay of at least two years since possession could not have been handed over prior to obtaining the occupation certificate. In the circumstances, the award of interest at the rate of 6 per cent is reasonable and justified. The NCDRC however, came to the conclusion that interest should be awarded only for the period from 1 February 2014 to 31 July 2016. There is merit in the submission of the flat buyers that the liability to pay interest has been inappropriately confined only upto 31 July 2016. The developer, in the affidavit by way of evidence of its representative before the NCDRC, admitted that as many as 43 complainants, who had asked for possession were not given possession for the simple reason that they had moved the NCDRC in a consumer complaint. The fact that the flat purchasers had moved the NCDRC in a representative capacity for the redressal of their grievances is no justification to deny them possession in accordance with the terms of the agreement. [Para 10-13][825-G-H; 826-A-C; F]
1.3 It emerges that even according to the developer, out of
55 flat purchasers, possession had been handed over to 16 and it was stated that possession to 9 more buyers would be offered within a period of one week. As amongst the 55 purchasers, 25 persons have been now offered possession and an additional 2 would be offered possession shortly hereafter. [Paras 15, 16] [827-D-F]
1.4 The NCDRC was not justified in proceeding on the basis that the liability to pay interest would cease to operate as on 31 July 2016. Since possession has not been handed over, the developer cannot avoid the liability to pay interest at the rate awarded by the NCDRC until the date when possession is actually handed over. The liability of the developer to pay interest at the rate of 6 per cent per annum would continue to operate until the date on which each of the respective flat purchasers is offered possession; The order passed by the NCDRC confining the award of interest for the period from 1 February 2014 to 31 July 2016 is modified in terms of the directions issued. [Para 17, 18] [827-F-H; 828-A-B]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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