Non-compliance of statutory provisions by builder is no excuse for delay in possession

(One cannot take advantage of one’s own wrong)

National commission while dealing with a case titled Naresh Garg and Sons VS CHD Developers Ltd. Consumer Case No. 1753 of 2018 Decided on 23 March 2023, Commission rejected the Developers’ contention of non-compliance of the National Green Tribunal’s guidelines as a reason for the delay. The bench remarked that the Opposite Party cannot be allowed to reap benefits of his own wrongdoing of non-compliance and refused to consider his reason as force majeure.

Case Title Naresh Garg and Sons VS CHD Developers Ltd.

CC No. 1753 of 2018, Decided on 23^rd March 2023

Dr Prem Lata  

Brief Facts:

The complainant, Mr. Naresh Garg, applied to the Opposite Party, CHD Developers, for re-allotment of a unit near the Golf Course Avenue in Gurgaon by way of an application. The flat was earlier allotted to one Sh. Sarvesh Kumar Tiwari. The Opposite Party permitted the re-allotment, after all the necessary formalities and payment of charges, to the complainant. An apartment’s buyer agreement was also entered into between the parties and as per that, the possession of the unit was to be delivered by the opposite party within 42 months from the date of agreement. However, the Opposite Party failed to deliver the possession within the stipulated time. Hence, the Complainant filed this consumer complaint praying for a refund of the amount Rs. 79, 37,091/- with an interest and damages to the extent of Rs. 5 Lakhs.

Arguments extended by Opposite Party:

·         That the complainant would not fall under the definition of ‘consumer’ as Section 2(1)(d)(i) of the Consumer Protection Act of 1986.for the reason the property was purchased for investment and re-sale and falls under Commercial purpose  

·         That the Complainant’s claim is  inflated to bring the complaint within the pecuniary jurisdiction of NCDRC.

·         That the delay was caused due to a notification by the National Green Tribunal, Delhi resulting into stopping all construction activities by OP for a few months.

Observations of the National Commission:

·         The Opposite Party failed to place on-record the updated status of construction &likely date of its completion. Reliance was placed on the Supreme Court’s decision in Wg. Cdr. Arifur Rahman Kgan and Aleya Sultana and Ors. vs DLF Southern Homes Pvt. Ltd. & ors. (2020) 16 SCC 512, wherein it was held that failure of the developer to comply with the contractual obligation to provide the flat to a flat purchaser within the contractually stipulated period, amounts to deficiency. As per  order in case of Kolkata West international City Pvt. Ltd. vs Devasis (2020) 18 SCC 613, a buyer can be expected to wait for possession for a reasonable period but not an indefinite period.

·         The contention of the Opposite Party that Mr. Naresh is not a consumer was rejected as no evidence was produced to corroborate the same.

·         Perusal of the evidence showed that there was no blanket order of the NGT to stop construction activities. The direction to stop construction activities was only where the construction was being carried out in violation of the MOEF Guidelines 2010. No material was presented by the Opposite Party to know the exact nature of ban on construction activity under the NGT’s order and the period for which such ban was in force.

·         The bench remarked that the Opposite Party cannot be allowed to reap benefits of his own wrongdoing of non-compliance.

In light of the aforementioned discussion, the Opposite Party was ordered to refund the amount given by the Complainant along with compensation in the form of simple interest at 9% per annum from the date of each payment till the date of refund.

Similar cases decided by Hon’ble SC in similar matters

DLF Universal Ltd and Another Versus Capital Greens Flat Buyers Association (SC) Civil Appeal No’s 3864-3889 of 2020

December 14, 2020

Facts: That there was a substantial delay on the part of the Developer in handing over possession of the apartments OP took plea of force majeure conditions.

1.      Delay in the approval of building plans

2.        Issuance of stop work orders in Covid situation

3.        Exit offers were given to the flat buyers on two occasions. When the developer became aware of the fact that there was a delay beyond the contractual period of thirty-six months and the purchasers were offered

4.      Refunds of the consideration together with interest at the rate of 9% per

Annum;

5.       45% of the flat buyers in the project have sold away their

6.      The flat buyers have the benefit of an appreciation in the Capital value of the apartments purchased;

7.       The developer has extended the benefit of timely payment and goodwill rebates to the flat purchasers.

 

Supreme Court held

 

·         Force majeure clause not acceptable on both counts-non approval and direction to stop work. Non approval should have been foreseen by builder when taking up such project. Direction to stop construction by the state was done because of accidents taking place on the site for safety negligence ,this was due to insufficient safety measures and due to builders default 

·         Mere offer to exit option with interest at 9% would not disentitle the flat purchasers from claiming compensation

In view of the above discussions it is clear that Apex Court reiterates its stand that Builders are to bear for the consequences for the delays caused due to their own mismanagements and if any order by any courts are passed subsequently, that cannot be treated as force majeure conditions.

 

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