In a landmark judgment emphasizing accountability in the real estate sector, the Supreme Court of India declared that builders and landowners cannot escape their responsibilities towards consumers. A Bench comprising Justice Bela M. Trivedi and Justice Satish Chandra Sharma dismissed a series of appeals filed by Akshay and another party, confirming the decisions of the National Consumer Disputes Redressal Commission (NCDRC) and the Maharashtra State Consumer Disputes Redressal Commission (State Commission).
Background of the Case
The appeals stem from a series of complaints lodged by homebuyers against Akshay and another appellant, who were the owners of the land, and Respondent No. 2, Glandstone Mahaveer Infrastructure Pvt. Ltd., the developer. The dispute arose when the appellants entered into a Joint Venture Agreement (JVA) with Glandstone Mahaveer Infrastructure Pvt. Ltd. to develop a piece of land and construct flats. An Irrevocable Power of Attorney dated July 6, 2013, was executed by the appellants in favor of the developer, authorizing them to sell the constructed units.
Subsequently, the developer entered into agreements with several homebuyers (the complainants). However, delays in construction and allegations of unfair trade practices led the complainants to approach the Maharashtra State Consumer Disputes Redressal Commission under Section 17 of the Consumer Protection Act, 1986. They sought a declaration holding both the landowners and the developer jointly and severally liable for the delay and deficiency in service.
Legal Issues Involved
The key legal issues before the court were:
1. Joint Liability of Landowners and Developers: Whether the landowners (the appellants) could be held jointly liable with the developer for the deficiencies in the service under the Consumer Protection Act, given that they had executed an Irrevocable Power of Attorney and a Joint Venture Agreement with the developer.
2. Validity of Revocation of Power of Attorney: Whether the revocation of the Power of Attorney by the appellants in August 2014 could absolve them of liability for agreements entered into by the developer with the homebuyers before the revocation date.
3. Applicability of Previous Supreme Court Judgments: The appellants cited earlier judgments, including Faqir Chand Gulati vs. Uppal Agencies Pvt. Ltd. and Sunga Daniel Babu vs. Sri Vasudeva Constructions & Ors., arguing that these precedents should absolve them of liability.
Supreme Court’s Decision
The Supreme Court upheld the orders of the State Commission and the NCDRC, dismissing the appeals filed by the appellants. In a detailed judgment, the Court noted several key observations:
1. Joint Responsibility Affirmed: The Court agreed with the findings of the NCDRC that the appellants could not “wash their hands off” from their responsibilities, as the Joint Venture Agreement and Irrevocable Power of Attorney were operative at the time the agreements were made between the developer and the homebuyers. The Supreme Court highlighted that “the interests of the complainants/consumers shall be heavily jeopardized if the plea of the appellants is accepted.”
2. Revocation Not Applicable Retrospectively: The Court observed that the revocation of the Power of Attorney on August 12, 2014, could not retrospectively absolve the appellants of liability for acts performed by the developer before that date. It stated that the appellants were bound by the actions of the developer under the Irrevocable Power of Attorney “till it was terminated, in accordance with law.”
3. Non-Applicability of Cited Judgments: The Court rejected the appellants’ reliance on previous Supreme Court judgments, stating that the circumstances in those cases were not analogous to the present case, where the complaints were filed against both the builder and the landowners.
Key Observations by the Court
Justice Bela M. Trivedi, writing for the Bench, remarked: “It does not lie in the mouth of the appellants to say that they are not liable for the acts of Respondent No.2.” The judgment stressed that allowing the appellants to evade their liability would result in “grave injustice to the complainants consumers.”
The Bench further noted, “The impugned order does not suffer from any illegality, irregularity, or jurisdictional error of any kind, and the same is upheld.”
Parties and Representation
– Appellants: Akshay and Another
– Represented by Senior Advocate Mr. Kailash Vasdev, along with Advocates Mr. R. Mohan, Mr. V. Balaji, and others.
– Respondents: Aditya and Others, including Glandstone Mahaveer Infrastructure Pvt. Ltd.
– Represented by Senior Advocate Mr. Siddhartha Dave, along with Advocates Ms. Alekhya Shastry and Ms. Arundati Mukherjee, and others.
