The National Consumer Disputes Redressal Commission (NCDRC) has ruled that a real estate developer cannot escape its contractual and legal obligations by merely offering possession if the unit is incomplete or lacks a valid occupancy certificate (OC). The Commission emphasized that a valid offer of possession must be supported by all requisite statutory approvals and the fulfillment of promised amenities.
The ruling came in an appeal filed by Experion Developers against a June 2024 order of the Uttar Pradesh State Consumer Disputes Redressal Commission. The dispute involved homebuyers Preeti Yadav and Pushpendra Kumar Yadav regarding their flat in the ‘Experion Capital’ project in Gomti Nagar, Lucknow.
The complainants booked flat number 703 in Tower-2 of the ‘Experion Capital’ project in December 2017. A formal agreement for sale was executed on July 10, 2018, for a total consideration of ₹1,13,68,681. According to the agreement, the developer was obligated to offer possession on or before November 30, 2022, accompanied by the completion and occupancy certificates.
The buyers alleged that they ended up paying a total of ₹1,34,98,422.11, which included an excess of ₹21,29,741.11 over the agreed price. Furthermore, they contended that although an offer of possession was made on April 5, 2022, the project lacked the promised amenities. The developer subsequently cancelled the allotment on September 16, 2022, and forfeited ₹29,49,933, a move the buyers challenged as arbitrary.
The developer argued that they had fulfilled their obligations by obtaining a completion certificate on January 7, 2022, and offering possession before the contractual deadline. They claimed the buyers had defaulted on payments, justifying the cancellation and forfeiture under the terms of the agreement. Additionally, the developer challenged the jurisdiction of the consumer forum, arguing that the case should be heard by the Real Estate Regulatory Authority (RERA) and that the complainants were “investors” rather than “consumers.”
The buyers maintained that the offer of possession was paper-only as the site was incomplete and lacked necessary amenities. They argued that the cancellation of their allotment was unjustified, especially since they had already paid a substantial portion of the consideration.
The bench, comprising presiding member AVM J Rajendra (Retd) and member Justice Anoop Kumar Mendiratta, rejected the developer’s jurisdictional objections. Regarding RERA, the Commission noted that remedies under the Consumer Protection Act are supplemental to other statutes. On the “investor” claim, the NCDRC observed that the developer failed to provide evidence that the flat was intended for speculative or commercial purposes.
Addressing the core issue of possession, the Commission stated:
“It is a settled principle that a mere issuance of an offer of possession does not absolve the builder unless the unit is complete in all respects and is supported by requisite statutory approvals, including OC (occupancy certificate).”
The Commission also found the builder’s conduct regarding the cancellation to be inconsistent. It noted that the developer continued to raise financial demands even after the purported cancellation in September 2022, indicating that the move was “neither bona fide nor final.” The forfeiture of nearly ₹29.5 lakh was deemed unjustified as the developer could not prove any corresponding losses.
While the NCDRC upheld the state commission’s findings on deficiency of service, it modified the compensation structure. Citing the Supreme Court’s judgment in DLF Homes Panchkula Private Limited v D S Dhanda, the bench set aside a separate ₹10 lakh award for mental agony to avoid “multiple compensations for singular deficiency.”
- Hand over physical possession of the flat with the occupancy and completion certificates within 30 days.
- Pay delay compensation in the form of simple interest at 6% per annum on the sale price (₹1,13,68,681) from the due date of possession until the date of a valid offer with an OC.
- Refund the excess amount of ₹21,29,741.11 with 9% interest from the date of deposit until the date of refund.
- Pay litigation costs of ₹50,000.
