The Supreme Court ruled that homebuyers can approach consumer forums for compensation over delayed possession even after taking flat possession. The Court set aside the NCDRC order and held that arbitration clauses cannot prevent buyers from seeking remedies against real estate developers for deficient services.
The Supreme Court held that taking possession of a flat does not stop homebuyers from filing complaints against real estate developers for inadequate service. Even after a buyer takes custody of the flat, they can still approach consumer forums to claim compensation for delayed possession.
The Supreme Court set aside an order of the National Consumer Disputes Redressal Commission (NCDRC), which had ruled that once the buyer takes possession, they no longer remain a “consumer” and cannot seek compensation for the delay. It also ruled that an arbitration clause in the agreement between the homebuyer and the developer would not prevent the homebuyer from raising grievances before the consumer forum.
In this case, 22 years after a homebuyer received possession of his flat in a housing project in Dwarka (NCR), a bench of Justices Vikram Nath and V. Mohana allowed the buyer’s plea to seek compensation for delayed handover. The court said the NCDRC’s reasoning “cannot be sustained”.
The bench said,
“The appellant’s complaint was not for delivery of possession simpliciter. His grievance was that there had been delay in handing over possession of the flat and that he was entitled to compensation for such delay. A claim for compensation for delayed possession necessarily arises from the period prior to the actual delivery of possession. The subsequent receipt of possession cannot, by itself, extinguish the right of the allottee to seek adjudication of a claim for compensation for the alleged delay,“
The bench restored the homebuyer’s 2005 complaint that had been filed before the district consumer forum and directed it to decide within a year. It asked the forum to determine whether there was delay, whether the delay could be attributed to the respondent, whether the buyer accepted possession without conditions, and whether compensation is payable.
The bench said,
“The claim of the appellant for compensation on account of alleged delay in handing over possession has neither been accepted nor rejected after evidence. Equally, the defence of the respondent society has also not been examined on merits. These issues could not have been concluded at the threshold by holding that the appellant ceased to be a consumer merely because possession had been delivered before the complaint was filed. In such circumstances, it would not be appropriate for this court to record any finding on the factual controversy between the parties,”
On whether the arbitration clause or the Consumer Protection Act should take precedence, the bench observed that the 1986 law provides a special and additional remedy for consumers. It said this statutory jurisdiction cannot be removed just because the parties have included an arbitration clause in their agreement.
It said,
“Once that mechanism is validly invoked and the complaint is admitted, the consumer cannot be driven out of that forum merely because the agreement between the parties contains an arbitration clause. A private contractual clause cannot be permitted to defeat the continued operation of a statutory remedy which Parliament has expressly made additional to other remedies under Section 3 of the 1986 Act,”
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