Developer Liable To Pay Compensation, Builder’s Dispute With Contractors Does Not Constitute Force Majeure: NCDRC

Posted On - 8 May, 2023 • By - Pooja Sirnapelly

The National Consumer Dispute Redressal Commission (NCDRC) reviewed a Consumer Complaint filed by a purchase of a flat and allowed the same in favour of the complainant/purchaser. The presiding member of the National Consumer Dispute Redressal Commission (NCDRC), Dr. Inderjit Singh issued the decision as a single judge on the bench. 

Brief Facts of the Complaint: The Complainant had purchased a flat from the developer, wherein there was an inordinate delay from the end of the developer to complete the construction of the building. The developer’s claim that the project could not be finished within the deadline due to customers’ failure to make payments. The commission maintained that as a skilled developer, they should have been aware of the delays that can occur due to business needs. Therefore, the commission reiterated that disputes with contractors over termination cannot be considered force majeure. 

The complainant relied on the fact that the higher management of the opposite party i.e., developer advertised the project as extremely lavish and guaranteed that it would be completed within 39 months, as all the necessary permissions were obtained. However, during the allotment of the flat, the complainant claimed that the buyer’s agreement or terms and conditions were not shared with him. He also paid the booking amount and some instalments as requested by the opposite party i.e., developer. 

According to the complainant, he was not presented with the buyer’s agreement before finalizing the deal. Upon reviewing the agreement later, the complainant found it to be one-sided and arbitrary, with clauses that heavily favoured the opposite party. For example, in case of a delay in project completion, the complainant would have to pay more compensation than the nominal amount to be paid by the opposite party. Additionally, the agreement only assigned obligations to the allottee, and not the opposite party. The opposite party also caused a delay in the delivery of the project, which led to the complainant’s decision to file a consumer complaint. 

The National Consumer Dispute Redressal Commission (NCDRC) relied on the decision in the matter of Arifur Rahman Khan and Aleya Sultana and ors. vs DLF Southern Homes Pvt. Ltd. and ors. (2020) 16 SCC 512, which held that a developer’s failure to fulfil their contractual obligation of delivering a flat to the buyer within the stipulated time period amounts to deficiency. The bench noted that despite a lapse of 5 years from the promised delivery date, construction was still incomplete. The bench also agreed that the complainant was justified in refusing to make further payments upon discovering the delays in construction. 

Based on the observations, the National Consumer Dispute Redressal Commission (NCDRC) granted the consumer complaint and directed the opposite party to refund the entire principal amount to the complainant, along with a 9% per annum interest rate.