SC: CAN’T DEFEAT A HOMEBUYER’S COMPENSATION RIGHT BY MERELY OFFERING REFUND

NEW DELHI: A real estate developer cannot defeat a homebuyer’s right to claim compensation for delays in the completion of his or her apartment by merely offering to him a refund or some other exit option, the Supreme Court has ruled.

In an order that may fortify the rights of homebuyers under the Consumer Protection Act, the court has held that the right to claim compensation was a remedy independent of various schemes that give an option to the buyers for abandoning the property.

It also held that the damages to a consumer can be over and above the amount mentioned in the developer-buyer agreement, defined as the contractual rate of compensation for delay.

In its order last week, an SC bench, headed by justice Dhananjay Y Chandrachud, highlighted that “a genuine flat buyer wants a roof over the head” and therefore, the schemes asking him a refund of what he or she had paid till date would not be sufficient.

“For a genuine flat buyer, who has booked an apartment in the project not as an investor or financier, but for the purpose of purchasing a family home, a mere offer of refund would not detract from the entitlement to claim compensation,” held the bench, which also included justi

ces Indu Malhotra and Indira Banerjee. The developer, said the bench, cannot assert that a buyer who continues to be committed to the agreement for purchase of the flat must give up his right to ask for adequate compensation.

“Mere refund of consideration together with interest would not provide a just recompense to a genuine flat buyer, who desires possession and remains committed to the project. It is for each buyer to either accept the offer of the developer an opt out, or continue with the agreement for purchase of the flat,” it said.

The order came as the bench dismissed DLF Home Developers Limited’s appeal against compensation to the flat buyers of the Capital Greens project in Delhi. The developer, through senior advocate Pinaki Misra, had challenged the order of the National Consumer Commission, arguing the delay in completion of the apartments was due to certain reasons beyond the control of the developer.

Misra added that the developer had also offered to its buyers refunds of the amount paid by them, together with interest at the rate of 9% per annum.

Representing the home buyers, senior advocate Shyam Divan defended the consumer commission’s order, directing DLF to pay compensation in the form of simple interest at the rate of 7% annually from the promised date of delivery for possession till the date on which the possession is actually offered. Affirming the order in favour of the home buyers, the bench said that “the fact that the developer offered an exit option with interest at 9% would not disentitle the flat purchasers from claiming compensation.”

The other argument by DLF, with respect to unmanageable circumstances, was also rejected with the court noting that if fatal accidents at the site stalled the work while it was found that accidents took place due to a developer’s laxity in adhering to safety norms, the flat buyers cannot be made to suffer.

“The flat buyers had to suffer on account of a substantial delay on the part of the appellants. In such a situation, they cannot be constrained to the compensation of ₹10 per square foot, provided by the agreements for flat purchase,” clarified the court about the contractual rate. However, in accordance with a previous ruling on the rate of interest, the bench ordered that the compensation on account of delay will be 6% per annum instead of 7%.