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Developer Liable To Provide Amenities As Well

In Wg. Cdr. Arifur Rahman Khan vs DLF Southern Homes Pvt Ltd., appeal was filed against the order of dismissal by the National Consumer Disputes Redressal Commission on a consumer complaint filed by 339 flat buyers, 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 and, 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 primary grounds on which compensation have been sought before the NCDRC were:

(i) Delay in handing over possession of the flats;

(ii) Reimbursement of taxes and interest charged to the flat purchasers under clause 1.10 of the ABA;

(iii) Deficiency in providing amenities;

(iv) Levy of electricity charges by the developer; and

(v) Failure to construct the club house

The NCDRC divided the group of 339 flat buyers into six groups based on whether or not they had taken possession, executed deeds of conveyance, settled the dispute or sold the flats before or during the pendency of the complaint or their applications for impleadment.

The NCDRC, in the course of its judgment, observed that delay in the handing over of flats to the flat purchasers was admitted and that the agreements provided compensation at the rate of Rs 5 per square foot of the super area for every month of delay.  Referring to the decision of the Supreme Court in DLF Homes Panchkula Pvt. Ltd. v. D S Dhanda and Ghaziabad Development Authority v. Balbir Singh, the NCDRC observed that the developer had while computing the final demand made an adjustment on account of delayed compensation at the rate stipulated in the ABA. The flat purchasers having been provided credit at the rate agreed by the developers, it was held that no further entitlement existed under the law. In the view of the NCDRC, the flat purchasers had failed to prove that the stipulation contained in the agreement for the payment of compensation at Rs 5 per square foot was unreasonable.

Against this order, the appeal was filed.

Disagreeing with this approach, the Apex Court bench observed that, in the instant case, there has been a gross delay on the part of the developer in completing construction ranging between two and four years. 

As for the failure of the developer in developing and providing amenities promised in the brochure but falling outside the areas directly occupied by the flat owners or the common areas, like school, health centre etc. assured/promised by the developer in the sale brochure, the court held that developer must be held accountable to its representation. Refusing to acceed to the developers arguments that some of the amenities are there in the surrounding areas and that building the said amenities directly inside the complex being built by the developer would not be viable, the court held that a flat purchaser who invests in a flat does so on an assessment of its potential. The amenities which the builder has committed to provide impinge on the quality of life for the families of purchasers and the potential for appreciation in the value of the flat. The representation held out by the developer cannot be dismissed as chaff. True, in a situation such as the present it may be difficult for the court to quantify the exact nature of the compensation that should be provided to the flat buyers. The general appreciation in land values results in an increase in the value of the investment made by the buyers. Difficulties in determining the measure of compensation cannot however dilute the liability to pay. A developer who has breached a clear representation which has been 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. Hence, in factoring in the compensation which should be provided to the flat buyers who are concerned in the present batch of appeals, we would necessarily have to bear this issue in mind. 


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