Flat buyers entitled to compensation for delayed possession, says Supreme Court

In a significant ruling, the Supreme Court on Monday rejected a view that flat purchasers who obtained possession or executed Deeds of Conveyance have lost their right to make a claim for compensation for the delayed handing over of the dwellings.

The top court held that the flat buyers are entitled to compensation for delayed handing over of possession and for the failure of the real estate developer to provide assured amenities.

A bench of Justices D Y Chandrachud and K M Joseph said, “A developer who has breached a clear representation, made to the buyers of the amenities which will be provided to them should be held accountable to the process of law. To allow the developer to escape their obligation would put a premium on false assurances and representations made to the flat purchasers.”

The court held that a failure of the developer to comply with the contractual obligation to provide the flat to a purchaser within a stipulated period amounts to a deficiency of service under the Consumer Protection Act.

The court allowed an appeal filed by Wg Cdr Arifur Rahman Khan, Aleya Sultana and others against a judgement by the National Consumer Disputes Redressal Commission.

The NCDRC had dismissed a consumer complaint filed by 339 flat buyers in Bengaluru, accepting the defence of DLF Southern Homes Pvt Ltd and Annabel Builders and Developers Pvt Ltd that there was no deficiency of service on their part in complying with their contractual obligations.

The panel had agreed to a contention by the developers that despite a delay in handing over the possession of the residential flats, the purchasers were not entitled to compensation in excess of what was stipulated in the Apartment Buyers' Agreement.

The court held that the reasoning of the NCDRC suffered from “a clear perversity and patent errors of law”. Advocate Prashant Bhushan, appearing for the appellants, pointed out that there was a gross delay ranging between two and four years in handing over possession.

He said the flat buyers ought not to be constrained by the terms of the agreement which are one-sided and unreasonable. He added that the execution of conveyances or settlement deeds would not operate to preclude the flat buyers from claiming compensation.