Sanjay Chaudhary Vs. Pioneer Urban Land & Infrastructure Ltd

CITATION	2024 INSC 300
DATE OF JUDGMENT	10th April 2024
COURT	Supreme Court of India
APPELLANTS	Sanjay Chaudhary and others
RESPONDENT	Pioneer Urban Land & Infrastructure Ltd and others
BENCH	BR Gavai and Sandeep Mehta

INTRODUCTION

A disagreement about the delayed possession of an apartment between homeowners Sanjay Chaudhary and another appellant and the developer Pioneer Urban Land & Infrastructure Ltd. is at the center of the case Sanjay Chaudhary and others vs. Pioneer Urban Land & Infrastructure Ltd and others. The developer’s refusal to give the buyers possession of the apartment by the agreed-upon date was the initial source of contention. Following court cases, directives were made by the National Consumer Disputes Redressal Commission (NCDRC), which included paying damages and assessing interest on the unpaid balance. The appellants, however, contested the order to pay interest, which prompted a Supreme Court appeal.

FACTS OF THE CASE

1. The case centers on a disagreement between Sanjay Chaudhary and another appellant (homebuyers), as well as Pioneer Urban Land & Infrastructure Ltd. and another respondent.
2. The appellants paid the respondent-developer 90% of the total sale consideration for a flat by June 23, 2014, totaling almost Rs. 2,21,56,942.42.
3. However, the respondent-developer failed to transfer possession of the flat to the appellants by the agreed date of March 16, 2014.
4. As a result, a consumer dispute was filed, which led to judicial actions.
5. The National Consumer Disputes Redressal Commission (NCDRC) partially granted the appellants’ case, instructing the respondent to publish a new statement of account, credit delayed compensation, levy interest on the outstanding amount, and take over control of the unit.
6. The appellants questioned the requirement to pay 9% interest every year.
7. After hearing both sides, the Supreme Court ruled that the directive to levy interest at 9% per annum was incorrect and overturned it.
8. Instead, the court ordered the respondent to pay the remaining sum to the appellants within two months and hand over control of the flat within 30 days of the final payment.

ISSUES RAISED

1. Can the judgment debtor seek restitution under Section 144 CPC despite not having deposited any amount towards the modified decree after the original execution sale?
2. Whether the executing court’s failure to assess the sufficiency of a partial sale of the judgment debtor’s property to satisfy the decree constitutes an unjust and illegal action under the principles of the Civil Procedure Code (CPC)?
3. Whether the sale of the judgment debtor’s property at a significantly lower amount than its valuation, particularly when the decree holder was also the auction purchaser, indicates potential misconduct and warrants restitution under Section 144 CPC?
4. Does the court have an obligation to ensure fairness and equity in the execution of decrees involving the sale of immovable property, and how should this obligation influence the handling of partial versus full sales?

CONTENTIONS OF APPELLANTS

1. The appellants asserted that, despite paying 90% of the total sale amount, the developer failed to provide possession of the apartments within the agreed-upon deadline, therefore violating the terms of the contract.
2. They maintained that the developer’s inability to deliver possession constituted a breach of contract, resulting in financial loss and hardship.
3. The appellants claimed that the developer engaged in unfair trade practices by delaying possession and attempting to levy interest on the unpaid balance, which was not part of the original agreement.
4. They claimed that as consumers, they were entitled to timely possession of the property and should not be subjected to additional payments above what was agreed upon.
5. The appellants sought court relief in the form of an order instructing the developer to immediately give over control of the flats, as well as compensation for the delay and hardship caused.

CONTENTIONS OF REPONDENT

1. The respondents contended that the appellants failed to meet payment deadlines, causing delays in the project and eventual possession.
2. They used force majeure provisions or other unforeseen events to justify the delay in taking ownership.
3. Concerning the interest charges, theyargued that the agreement’s terms and conditions permitted them to charge interest on the outstanding balance.
4. Given the circumstances, the respondentsprovided evidence of their attempts to complete the project and turn over possession as quickly as practicable.

JUDGEMENT

The Supreme Court ordered Pioneer Urban Land & Infrastructure Ltd. (Developer) to hand over possession of the units to homeowners who had paid 90% of the total transaction cost.The Court overturned the National Consumer Disputes Redressal Commission’s (NCDRC) ruling allowing the Developer to impose interest on the purchasers’ unpaid balance.

The Court also ordered the respondent to transmit the unpaid sum to house buyers and upon full payment, the property should be handed over to the appellants within 30 days time.

ANALYSIS

In the case of Sanjay Chaudhary & Anr. v. Pioneer Urban Land & Infrastructure Ltd. & Anr. (2024 INSC 300), the Supreme Court addressed the issue of restitution under Section 144 of the Civil Procedure Code (CPC) concerning the execution of a decree and subsequent sale of a judgment debtor’s property. The court emphasized that the purpose of executing a decree by selling immovable property should not be to penalize the judgment debtor but rather to grant relief to the decree holder and confer upon them the benefits of the litigation. The court clarified that the rights of a decree holder should not lead to windfall gains simply because they obtained a decree for a specific amount.

The factual background of the case involved a decree initially executed in 1985 by the sale of the judgment debtor’s property in favor of the respondents (decree holders). Subsequently, the decree was varied by an appellate court. The appellant (judgment debtor) then sought restitution under Section 144 CPC after the modification of the decree. However, the lower courts rejected the appellant’s application for restitution primarily on the grounds that no amount was deposited by the judgment debtor after the original decree and that the auction sale of the property had already taken place.

The Supreme Court noted several critical observations:

1. The court highlighted that the power to auction any property or part thereof by the court is not merely discretionary but an obligation imposed by law.

2. It emphasized that the sale of the entire attached properties without assessing whether a partial sale would suffice to satisfy the decree was unjust and illegal.

3. The court criticized the auction process where the attached properties were sold for a significantly lower amount (Rs. 34,000) compared to their valuation (Rs. 1,05,700), suggesting potential misconduct by the decree holder who was also the auction purchaser.

The court concluded that the failure of the executing court to assess whether a partial sale would suffice to satisfy the decree resulted in great injustice to the judgment debtor. It rejected the argument that restitution could not be ordered due to the judgment debtor’s failure to challenge the auction sale or pay any amount towards the modified decree. The court clarified that it was not setting aside the execution sale directly but rather addressing the injustice caused to the judgment debtor due to improper execution proceedings.

In allowing the appeal, the Supreme Court set aside the order of the High Court, emphasizing the importance of ensuring fairness and proper assessment in the execution of decrees involving the sale of immovable properties, with the aim of providing relief to decree holders without unjustly penalizing judgment debtors. This case underscores the court’s commitment to upholding principles of equity and justice in execution proceedings under the CPC.

CONCLUSION

The Supreme Court’s ruling in Sanjay Chaudhary v. Pioneer Urban Land & Infrastructure Ltd. emphasizes the importance of preserving homebuyers’ rights and guaranteeing transparency in real estate transactions. By ordering the developer to hand over possession of the flats to homeowners who had paid 90% of the total sale consideration, the Court reiterated the notion that developers must fulfill their responsibilities under the agreement.

Further, this case establishes important guidelines for executing decrees while safeguarding the rights and interests of all parties involved. Its implications extend beyond the specific case, shaping future legal interpretations and practices concerning execution proceedings and contributing to a more equitable and just legal system.
Overall, the case demonstrates the necessity for transparency, fairness, and adherence.

It establishes a precedent for ensuring that developers meet their obligations to homeowners and emphasizes the importance of consumer protection in the real estate industry.

REFERENCES

1. https://www.advocatekhoj.com/library/judgments/announcement.php?WID=17478#:~:text=It%20is%20admitted%20that%20the,area%20and%20amenities%20being%20Rs.
2. https://www.courtkutchehry.com/Judgement/Search/t/2369760-sanjay-chaudhary-and-anr-vs

This Article is written by Poorna R student of School of Excellence in Law, Chennai India; intern at Legal Vidhiya.

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