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Consumer Courts have the power to direct builders to give refund and compensation for failure to deliver apartments : SC

Written by Shaurya Mahajan

Today, the Supreme Court in the case of Experion Developers Pvt Ltd vs Sushma Ashok Shiroor held that Consumer Courts can grant relief to flatbuyers who are aggrieved with the delay in delivery of the apartment as per the agreement.

Consumer Courts have the power to direct refund and compensation to a consumer for the deficiency in not delivering the apartment as per the terms of Agreement, the Court held. In this case, the National Consumer Disputes Redressal Commission directed a Developer to refund an amount of Rs. 2,06,41,379 with interest @ 9% p.a. to the Consumer for its failure to deliver possession of the apartment within the time stipulated as per the Apartment Buyers Agreement.

The issue raised in the appeal by the builder are the following:

I. Whether the terms of the Apartment Buyers Agreement amount to an ‘unfair trade practice’ and whether the Commission is justified in not giving effect to the terms of Apartment Buyer’s Agreement as laid down in the Pioneer case?

II. Whether the Commission has the power under the Consumer Protection Act, 1986 to direct refund of the amount deposited by the Consumer with interest?

Regarding the first issue, the bench upheld the Commission’s finding that the clauses of the agreement are one-sided and that the Consumer is not bound to accept the possession of the apartment and can seek refund of the amount deposited by her with interest.

On the second issue, the bench first considered the submission of the appellant that the Consumer, having elected to proceed under the Act, the provisions of the RERA Act will have no application. Referring to Imperia Structures Ltd v. Anil Patni (2020) 10 SCC 783 and IREO Grace Realtech (P) Ltd. V. Abhishek Khanna (2021) 3 SCC 241, the bench observed that Consumer Protection Act and the RERA Act neither exclude nor contradict each other.

The court referred to Section 14 of Consumer Protection act, and dismissed the appeal filed by the developer.

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