SC Asks Builder to Refund Buyer, 10 Years After Possession Date

A buyer cannot be required to wait indefinitely for possession, said the Supreme Court, while hearing the case.

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(Photo: Reuters)

A buyer cannot be required to wait indefinitely for possession, said the Supreme Court while affirming Consumer Commission order directing the developer to refund the amount to the buyer.

In this case (Kolkata West International City Pvt Ltd vs Devasis Rudra), the buyer paid an amount of Rs 39, 29, 280 in 2006 to the builder and the agreement between them envisaged that possession of the Row House would be handed over to the buyer by 31 December 2008 with a grace period of a further six months.

In 2011, the buyer approached the consumer commission and prayed for possession of the Row House and in the alternative for the refund of the amount paid to the developer together with interest at 12 percent per annum.

Compensation of Rs 20 lakhs was also claimed. The State Commission allowed the complaint by directing the developer to refund the moneys paid together with interest at 12 percent per annum and compensation of Rs 5 lakhs. The National Commission modified this order by reducing the compensation from Rs 5 lakhs to Rs 2 lakhs.

The issue before the Apex court bench comprising Justice DY Chandrachud and Justice Hemant Gupta in the appeal filed by the developer against order of refund was whether the buyer was entitled to seek a refund or was stopped from doing so, having claimed compensation as the primary relief in the consumer complaint. While refusing to interfere with the order of refund, the bench said:

““In terms of the agreement, the date for handing over possession was 31 December 2008, with a grace period of six months. Even in 2011, when the buyer filed a consumer complaint, he was ready and willing to accept possession. It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund.”

(This was first published on LiveLaw.in and has been republished with permission)