The Supreme Court recently held that incorporation of unreasonable and one-sided clauses in the Apartment Buyers’ Agreement constitutes unfair trade practice u/s 2(1)r of Consumer Protection Act.
The Bench observed that a Developer could not bound apartment buyers with one-sided contractual terms.
Observations described above were made while the Court was disposing of an appeal filed by a developer against an NCDRC order directing it to refund money to apartment owners. The developer was unable to provide them with an Occupation Certificate.
Issues Raised before the Court:-
- Determination of date from which forty-two months period for handing over the possession, is it from date of issuance of Fire NOC or the date of sanction of building plans.
- Whether the terms of the Apartment Buyers Agreement were one-sided.
- Whether provisions of Real Estate (Regulation and Development) Act, 2016 will trump over the Consumer Protection Act provisions.
- If there is a delay in handing over the possession, can buyers terminate the agreement and claim a refund.
Observation of the Court
After perusing the Apartment Buyers Agreement’s terms, the Court held that all the terms were one-sided, unreasonable and favoured the developer. It was further held that incorporating one-sided terms would constitute an unfair trade practices under the Consumer Protection Act.
The Bench stated that an unfair contract had been defined u/s 2019 Act and National Commission and State Forums have powers to declare such a contract null and void.
Reliance was placed on Imperia Structures Ltd. vs Anil Patni & Anr where the Court held that Section 79 of RERA Act does not bar consumer courts to entertain complaints filed by allottees.
Title: Ireo Grace Realtech vs Abhishek Khanna
Case No.:CIVIL APPEAL NO. 5785 OF 2019
Date of Order:11.01.2021
Coram: Hon’ble Justice DY Chandrachud, Hon’ble Justice Indu Malhotra and Hon’ble Justice Indira Banerjee