Home Buyer Cannot Be Denied Compensation Just Because Earlier, Builder Had Offered Refund for Delayed Handing Over of Possession: SC

Last week, the Supreme Court held in a case that the Home Buyer is not disentitled from claiming compensation just because the Builder has offered an Exit Option of refund of consideration alongwith interest.

The Court observed that a Home Buyer, who has booked a flat in the project for the purpose of a home for family, cannot be disentitled from his claim merely because the builder  has offered compensation.

A Bench of Hon’ble Justice DY Chandrachud, Hon’ble Justice Indu Malhotra and Hon’ble Justice Indira Banerjee, has delivered this Judgment in a case involving the challenge to the Order of NCDRC.

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Capital Greens Flat Buyers Association filed a complaint before the NCDRC alleging that the developer DLF Home Developers Ltd. has caused delay in handing over the possession of flats, therefore a compensation @7% should be awarded from the promised date of possession.

The Commission allowed the claim of flat buyers. Feeling aggrieved DLF moved to Supreme Court challenging the Order of NCDRC on two counts:

  1. Possession was delayed due to Force Majeure conditions.
  2. Exit Offer was offered to buyers with interest @9%, but they refused.

On First ground of challenge the Supreme Court held that delay in approval of building plan is normal and it cannot be set up as force majeure condition.

On Second ground the Supreme Court held that a genuine flat buyer cannot be disentitled to his claim of compensation for delayed handing over of possession, merely because the developer has offered compensation and interest. It has been observed that a Home Buyer wants roof over the head. Mere offer of refund of consideration by the builder would not be a just recompense a genuine home buyer, who is committed to the agreement and want possession.

The option is always available to the home buyer either to accept the offer of developer or continue with the agreement. Therefore the argument to this effect is unsustainable.

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The Bench upheld the Order of NCDRC, while referring to the Judgments in the case of Pioneer Urban Land and Infrastructure Ltd vs. Govindan Raghvan reported in (2019) 5 SCC 725and Wing Commander Arifur Rahman Khan and Aleya Sultana and Others vs DLF Southern Homes Pvt Ltd and Others.

However the interest has been reduced from 7% to 6%.

Case Details:

Title: DLF Home Developers Ltd. (Earlier Known as DLF Universal Ltd) vs. Capital Greens Flat Buyers Association 

Case No.: CA 3864-3889/2020

Coram: Hon’ble Justice DY Chandrachud, Hon’ble Justice Indu Malhotra and Hon’ble Justice Indira Banerjee

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