NBCC (INDIA) LTD. v. SHRI RAM TRIVEDI

CITATION	Civil Appeal No 274 of 2020
DATE OF JUDGMENT	8th March 2021
COURT	The Supreme Court of India
APPELLANT	NBCC (India) Limited
RESPONDENT	Shri Ram Trivedi
BENCH	Justice D.Y. Chandrachud, Justice M.R. Shah

INTRODUCTION

A complaint was filed in the Nation Consumer Disputes Redressal Commission by the respondent. The appellant’s argument that it had only committed to endeavor to provide possession within 2.5 years of the date of allotment was rejected by the NCDRC. It was decided that, even in cases where time is not of the essence in a contract, the developer must provide a valid justification for any delay in transferring ownership by the date specified in the letter of allocation. After calculating the two and a half years from the letter of allotment’s issuance in June 2012, the NCDRC concluded that possession should have been delivered by December 2014. In July 2015, it ordered the appellant to pay interest at the rate of 10% annually, with an additional six months of grace. The respondent feeling aggrieved by the impugned order of NCDRC filed an appeal to the Supreme Court.

FACTS OF THE CASE

1. The appellant proposed a group housing development project in Sector 89, Gurgaon, in 2012. An invitation to prospective flat buyers was published in an advertisement. To obtain a residence unit in the “NBCC Heights” project, the respondent applied on March 14, 2012. The allotment terms and conditions were outlined in a standard form. The purchase price was to be paid in installments through a time-linked plan. On June 30, 2012, the respondent received an allotment letter for project dwelling unit F-402. 

2. NBCC will complete the construction of the Dwelling Unit within 2 ½ from the date of allotment, subject to the terms of the Application and Agreement, including timely payment of the Total Price, stamp duty, and other charges due. 

3. The applicant will be responsible for all costs and liabilities associated with the failure to take possession of the dwelling unit and pay any outstanding fees, including interest, within 30 days of receiving written notice from NBCC. The applicant will also be responsible for paying NBCC’s maintenance costs, which will amount to Rs. 2/-per square foot for the duration of the delay. 

4. The applicant acknowledges that NBCC will be entitled to an extension of time for the delivery of possession of the dwelling unit if work on the said complex is delayed due to a force majeure event. If the applicant complies with all requirements of this application and agreement, NBCC agrees to pay the allottee compensation at Rs. 2/- per sq. ft of the dwelling unit per month for any delay exceeding one year from the complex’s completion date. Due to force majeure, the compensation will only become payable after four years from the date of allocation, plus a legitimate extension. The compensation shall be adjusted only at the time of the execution of the Dwelling Unit’s transfer deed.

5. The respondent filed a consumer complaint with the National Consumer Dispute Redressal Commission in January 2017 because the unit’s possession was transferred. On July 19, 2017, the appellant received an occupation certificate from the Haryana Town and Country Planning Department. On the same day that the appellant received the occupation certificate, he sent a notice to allottees informing them of the certificate’s receipt and requesting that they pay all outstanding balances before taking possession. 

6. On February 9, 2018, the respondent was issued a letter of possession. On February 28, 2018, the respondent paid a portion of the fifth and sixth installments; the remaining amount was paid on March 6. Ultimately, on July 26, 2018, the respondent received possession in exchange for an indemnity, as instructed by the NCDRC in its June 6, 2018, order. 

7. In its contested order dated September 20, 2018, the NCDRC ordered the appellant to provide compensation calculated at a rate of 10% annually on the money deposited by the respondent between June 2015 and the actual date of possession. Furthermore, the respondent was granted a sum of Rs 2,00,000 to compensate for rent loss and Rs 25,000 in costs. Four weeks were allotted for payment after receiving a copy of the order; if not paid then, interest at the rate of 12% would be due.

ISSUES RAISED

1. Whether the contract was breached by NBCC as it had contractual obligation to deliver possession of housing unit within the prescribed time limit as per the terms of the agreement.

2. Whether the NBCC’s defence of force majeure , claiming that the unforeseeable prevented the delivery of possession of housing unit was valid under the law.

3. Whether the terms of the contract were unfair under and biased towards one party, constituting an unfair trade practice under Consumer Protection Act 1986.

4. Whether the award given by NCDRC was justifiable and in accordance to prevailing market conditions.

CONTENTIONS OF THE APPELLANT

1. A residential unit had been assigned to the respondent under a time-linked plan that required payments to be made according to a set schedule. despite the first four installments, the fifth installment, which was due on September 30, 2014, was not paid on time. The final installment was payable on the issuance of the letter of possession. Given that the respondent was late in paying the fifth installment, there was no basis for awarding interest.

2. Without making an absolute promise to deliver by a certain date, the appellant only promised to “endeavor” to finish the project within 2.5 years of the date of allotment.

3. Clause 20 provided that the appellant will be entitled to compensation if the delay is caused due to force majeure.

JUDGMENT

The Supreme Court held that delaying the approval of a construction project is normal. When a delay occurs beyond the contractually stipulated time for turning over possession, a developer in the appellant’s situation would be aware of these delays and cannot use this as a defence to a claim for compensation. The Supreme Court upheld the NCDRC’s decision regarding the respondent’s right to compensation for the delayed transfer of possession. The NCDRC ruled correctly to reject the appellant’s force majeure defence. Due to the appellant’s delay, the respondent was entitled to compensation; therefore, a suitable direction for interest was required. the court held that the NCDRC’s order about the interest rate and the date it becomes payable needs to be changed. Subject to market conditions, the respondent will receive simple interest from the appellant at a rate of 7% annually starting on January 1, 2016, and continuing until July 26, 2018. The Supreme Court set aside the payment of Rs. 2,00,000 for rent loss. The court directed that within a month of receiving a certified copy of this order, the appellant will assist in completing all of the requirements for finishing the documentation related to the dwelling unit that has been sold to the respondent if they haven’t already been finished. 

ANALYSIS 

Precedent referred to by the Supreme Court

 In Pioneer Urban Land and Infrastructure Limited v. Govindan Raghavan case, The Court upheld the NCDRC’s award of 10% annually in compensation. A problem occurs when the developer neglects to fulfill their contractual duty to deliver the flat to the buyer within the agreed-upon timeframe.

In the DLF Home Developers Ltd v. Capital Greens Flat Buyers Association6 case, the court held that as an expert developer, one should be aware of regular setbacks brought on by business needs and cannot use force majeure as a defense.

CONCLUSION

Supreme Court of India addressed the issue of delayed possession of a housing unit in the ‘‘NBCC Heights’’ Project. The National consumer Dispute Redressal Commission (NCDRC) had previously held that NBCC was liable to pay compensation due to the delay and rejecting NBCC’s defence of force majeure , The Supreme Court of India upheld this decision by emphasising that delays in obtaining necessary approval do not absolve a developer from compensating purchasers for delayed possession, The Supreme Court of India modified the terms of concerning the interest rate, setting it at 7 percent per annum from January 1, 2016 until the actual date of possession, July 26, 2018. However, the award of rental loss was set aside, as court found it unjustified under circumstances. This case serves as an significant judgement in Indian consumer law , underscoring that developers must strictly adhere to delivering possession within time limit and cannot use general industry challenges as an excuse for non performance. The judgement reinforces the legal framework for protecting consumers from unfair trade practices.

REFERENCE

https://jlrjs.com/wp-content/uploads/2023/04/51.-Monika-Gurjar.pdf

https://indiankanoon.org/doc/188835545

https://lexpeeps.in/nbcc-india-limited-vs-shri-ram-trivedi/

Written by Janvi Shukla an Intern Under Legal Vidhiya.

Disclaimer: The materials provided herein are intended solely for informational purposes. Accessing or using the site or the materials does not establish an attorney-client relationship. The information presented on this site is not to be construed as legal or professional advice, and it should not be relied upon for such purposes or used as a substitute for advice from a licensed attorney in your state. Additionally, the viewpoint presented by the author is of a personal nature.