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Opinion

Exit agreements do not deny the right to compensation: SC order

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A real estate developer cannot grapple with homebuyers’ rights to claim compensation for delays in completion of their apartments simply by offering refunds or some other exit option, the Supreme Court has ruled.

In the order that could strengthen the rights of home buyers under the Consumer Protection Act, the court has held that the right to claim compensation is independent of schemes offered by developers that give buyers a choice. to rescind your purchase.

It also held that damages to a consumer can exceed the amount mentioned in the developer-buyer agreement, defined as the contractual delay compensation rate.

In their order last week, a higher court bench headed by Judge Dhananjay Y Chandrachud, noted that “a true flat buyer wants a roof over their head” and therefore schemes that offer them a refund of what they had paid to date would not be enough.

“For a genuine apartment buyer, who has reserved an apartment in the project not as an investor or financier, but for the purpose of buying a family home, a mere offer of repayment would not detract from the right to claim compensation,” said the bench, which also included judges Indu Malhotra and Indira Banerjee.

The developer, the bank said, cannot claim that buyers who remain committed to the apartment purchase agreement renounce their right to adequate compensation.

“Simply reimbursing the consideration along with interest would not provide a fair reward to a genuine home buyer, who wants possession and remains committed to the project. Each buyer must accept the offer of the developer and choose not to participate, or continue with the agreement to purchase the apartment, ”he said.

The court also addressed another argument related to the appreciation of the patrimonial value of the flats over time, noting that this factor could only be one of the considerations when determining the amount of damages, but that it cannot deprive consumers of fair and just compensation.

The order came as the bank dismissed DLF Home Developers Limited’s appeal against compensation to home buyers from the Capital Greens project in Delhi. The developer, through lead defender Pinaki Misra, challenged the order from the National Consumer Commission, arguing that the delay in completion of the apartments was due to certain reasons beyond the developer’s control.

Misra added that the developer also offered its buyers refunds of the amount paid by them, along with interest at a rate of 9% per year.

On behalf of the home buyers, lead attorney Shyam Divan defended the consumer commission order, ordering DLF to pay compensation in the form of simple interest at a rate of 7% per annum from the promised delivery date for possession. until the date the possession is actually offered.

Affirming the order in favor of home buyers, the bank said that “the fact that the developer offered an exit option with 9% interest would not deprive the home buyers of claiming compensation.”

DLF’s other argument, regarding unmanageable circumstances, was also rejected and the court noted that if fatal accidents at the site brought work to a standstill while the accidents were determined to have occurred due to the developer’s laxity in complying with the security, the flat buyers can not suffer.

“Apartment buyers had to suffer from a substantial delay on the part of the appellants. In such a situation, they cannot be limited to the 10 rupees per square foot compensation provided by the flat purchase agreements, ”the court clarified, commenting on the contractual fee.

However, based on an earlier ruling on the interest rate, the court ordered the late payment compensation to be 6% per annum instead of 7%.

“We welcome the Supreme Court order because it will empower the thousands of home buyers who have long suffered at the hands of developers, who have delayed their projects for many years and continue to deny justified compensation with repayment of the investment. But we hope that the authorities will implement this order on the ground to safeguard the rights of home buyers, ”said Abhishek Kumar, president of the Noida Extension Plan Homeowners Welfare Association.

“We will examine this request in detail and then find out how it will affect real estate in the future. But any order that empowers the consumer helps the sector by restoring the faith of the homebuyer … So we hope this order will have a positive impact on the real estate sector, ”said Subodh Goyal, Western Chapter Secretary of Uttar Pradesh. of the Confederation. from the Real Estate Developers Association of India.

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