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Akshay vs. Aditya

Not available · 2024 INSC 657Decided 29 Aug 2024
Not available
Justice Bela M. Trivedi · Justice Satish Chandra Sharma

Background

The appellants owned a plot of land and entered into a Joint Venture Agreement (JVA) with a builder (Respondent No. 2) to develop it into flats, also executing an Irrevocable Power of Attorney (IPA) in the builder's favour. The builder, relying on the JVA and IPA, sold flats to various homebuyers (the complainants) but allegedly failed to deliver possession or complete construction. The buyers filed consumer complaints against both the builder and the landowners. The State Consumer Commission and later the National Consumer Disputes Redressal Commission (NCDRC) both held the landowners jointly and severally liable along with the builder to complete construction, hand over possession, and pay compensation. The landowners appealed to the Supreme Court, arguing they had revoked the Power of Attorney in August 2014 and so could not be held liable for the builder's later defaults.

Decision Breakdown

The Supreme Court dismissed the appeals, holding that the landowners could not escape liability. It found that at the time the builder entered into sale agreements with the buyers, the JVA and the Irrevocable Power of Attorney were both fully in force, and even the landowners' own revocation letter stated they would not be liable only "henceforth" (i.e., from the date of that letter onward), meaning liability for pre-revocation conduct remained intact. Crucially, the underlying Joint Venture Agreement itself had never been revoked. The Court also noted the landowners had never taken any action against the builder for its alleged breaches, undermining their claim of having distanced themselves from the transaction. The Court agreed with the NCDRC that precedents cited by the landowners (involving a landowner as a "consumer" vis-a-vis a builder) did not apply here, since this case concerned the landowners' liability toward third-party flat buyers.

Lesson Learnt

A landowner who authorizes a developer through a Power of Attorney and Joint Venture Agreement to sell flats on their land cannot walk away from liability to the buyers merely by later revoking the authorization: liability continues for transactions the developer entered into while the authorization was still valid, especially if the landowner never legally cancelled the underlying development agreement.

Official source (sci.gov.in)View Judgment (PDF)

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