Experion Developers Private Ltd. V. Sushma Ashok Shiroor (Civil Appeal No. 6044 Of 2019 And Civil Appeal No. 7149 Of 2019)

Posted On - 27 July, 2022 • By - Namrata Shah

Recently, the bench comprising Justices U.U. Lalit, S. Ravindra Bhat and P.S. Narasimha of the Supreme Court in Experion Developers Private Ltd. v. Sushma Ashok Shiroor[1], ruled that the builders need to give a refund and compensation to the allottees in case of failure of delivery of apartments.

Facts

The National Consumer Disputes Redressal Commission (NCDRC) ordered the developer to refund the consumer an amount of INR 2.06 crores plus interest of 9% per year after it failed to provide possession of the flat by the agreed deadline.

Aggrieved by the said order, the developer approached the Hon’ble SC. Meanwhile, the buyer also approached the SC, praying for the applicability of a higher rate of interest. Both appeals were merged and heard in the present case.

Issues

  1. Whether the terms of the Apartment Buyers Agreement constitute unfair trade practices; and
  2. Whether the Commission has the authority to order a straight refund of the sum the customer deposited with interest.

Analysis

For the first issue, the SC upheld the finding of the NCDRC and observed that the terms of the Apartment Buyers Agreement are one-sided, favouring the developer and therefore, the customer is not required to take possession in exchange for a refund.

The Court dealt with the second issue in the affirmative, observing that the consumer courts have valid jurisdiction to grant relief to flat buyers in the present case. The court interpreted Section 14 of the Consumer Protection Act[2] in consonance with Section 18 of the RERA[3]. It held that ‘…a consumer invoking the jurisdiction of the Commission can seek such reliefs as he/she considers appropriate. A consumer can pray for a refund of the money with interest and compensation. The consumer could also ask for possession of the apartment with compensation. The consumer can also make a prayer for both in the alternative. If a consumer prays for a refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant it, of course, subject to the merits of the case.”  

Endnote

The SC in the present case rightly dismissed the appeal filed by the developers and allowed in part the appeal filed by the consumer for allowing the interest to be calculated from the dates of deposit instead of the date of possession. The judgment clarified the position that provisions of the Consumer Protection Act, 2019 and Real Estate (Regulation and Development) Act, 2016 must be construed in harmony. Further, the court’s application of restitution and compensatory measures while awarding the interest is an unprecedented step of the Indian judiciary towards a consumer-friendly adjudication. 

[1] Experion Developers Private Ltd. v. Sushma Ashok Shiroor, Civil Appeal No. 6044 of 2019 and Civil Appeal No. 7149 of 2019.

[2] Consumer Protection Act, § 14 (2019): Procedure of Central Authority.

[3] Real Estate (Regulation and Development) Act, § 18 (2016): Return of amount and compensation.