Execution of the Deed of Conveyance by a flat purchaser does not preclude a consumer claim being raised for delayed possession

 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.

The court noted that the flat buyers were given an option by the developers to either retaining their right to pursue their claims (in which event they would not get possession or title in the meantime) or to forsake the claims in order to perfect their title to the flats for which they had paid valuable consideration. The court held that it is manifestly unreasonable to expect that in order to pursue a claim for compensation for delayed handing over of possession, the purchaser must indefinitely defer obtaining a conveyance of the premises purchased or, if they seek to obtain a Deed of Conveyance to forsake the right to claim compensation. This basically is a position which the NCDRC has espoused. We cannot countenance that view. The flat purchasers invested hard earned money. It is only reasonable to presume that the next logical step is for the purchaser to perfect the title to the premises which have been allotted under the terms of the ABA. But the submission of the developer is that the purchaser forsakes the remedy before the consumer forum by seeking a Deed of Conveyance. To accept such a construction would lead to an absurd consequence of requiring the purchaser either to abandon a just claim as a condition for obtaining the conveyance or to indefinitely delay the execution of the Deed of Conveyance pending protracted consumer litigation.

Thus the court disapproved the view of NCDRC 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 flats. The court rejected the contention that the execution of the Deed of Conveyance by a flat purchaser precludes a consumer claim being raised for delayed possession.