Supreme Court Upholds Consumer Rights in Delay Compensation: Vidya & Ors vs. Parsvnath Developers Ltd

Overview

In a significant judgment, the Supreme Court of India addressed the issue of delay in delivering possession of flats by developers and the compensation due to buyers. The case, Vidya and Others vs. M/S Parsvnath Developers Ltd., highlights the importance of consumer rights in real estate transactions and the obligations of developers to adhere to promised timelines.

Case Background

The appeal stemmed from an order by the National Consumer Disputes Redressal Commission (NCDRC), which directed Parsvnath Developers Ltd. to refund the amount deposited by the complainants, Vidya and others, with interest. Here's a detailed look at the facts leading up to the appeal:

Project Launch and Initial Payments

In 2008, Parsvnath Developers launched a group housing project, 'Parsvnath Paramount', in New Delhi.
Vidya and other appellants booked a 3BHK flat, depositing initial sums on July 15 and August 14, 2008.
They entered into a Flat Buyer Agreement on October 10, 2008, and were allotted Flat No. 301 in Tower 3.

Payment Plan and Subsequent Issues

The appellants opted for a Construction Linked Payment Plan, paying a total of ₹1,30,62,971 by December 21, 2013, about 95% of the total sale price.
In April 2011, the developer unilaterally transferred their booking to a different flat.
Despite several payments and attempts to contact the developer, no significant construction progress was made, and the project faced indefinite delays.

Legal Action and Commission's Order

Aggrieved by the delays, the appellants filed a complaint with the NCDRC in 2016.
The NCDRC ordered the developer to refund the deposited amount with 9% interest per annum and awarded costs of ₹1 lakh to the appellants.

Supreme Court's Verdict

The appellants challenged the NCDRC's order, particularly the interest rate of 9% per annum, arguing it should be higher given the terms of the Flat Buyer Agreement and the significant delay.

Arguments Presented

The appellants' counsel contended that the interest rate should align with the 24% per annum charged by the developer for delayed payments by buyers, or at least 12% as mentioned in the agreement.
The developer's counsel argued that the delay was due to unforeseen technical issues and market recession, invoking the force majeure clause.

Court's Findings

The Supreme Court, citing precedents and the specifics of the case, held that:

"Insofar as the contention of the respondent-Developer that since there was a delay in sanctioning the layout plans, it was covered under force majeure clause is concerned, this Court, in the case of DLF Home Developers Limited (earlier known as DLF Universal Limited) and Another v. Capital Greens Flat Buyers Association and Others has held to the contrary."

The court found that the NCDRC rightly directed the refund but should have awarded a higher interest rate given the circumstances:

"In our view, the learned Commission, at least, ought to have awarded interest at the rate of 12% per annum in view of clause 7(b) of the Agreement."

Final Judgment

The Supreme Court partly allowed the appeal, modifying the interest rate:

"The direction made by the learned Commission for refund of the entire amount deposited by the complainants-appellants is upheld. However, the direction with regard to interest is modified to the extent that it shall be paid at the rate of 12% per annum from the date of respective deposit till the date of refund."

The judgment underscores the court's commitment to protecting consumer rights and ensuring developers fulfill their contractual obligations.

TAGS: Consumer rights Supreme Court Delay compensation Real estate Refund Interest rate NCDRC