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Experion Developers Pvt. Ltd. vs Sushma Ashok Shiroor

Civil Appeal · 2022 INSC 404Decided 7 Apr 2022
Civil Appeal No. 6044 of 2019
Uday Umesh Lalit · S. Ravindra Bhat · Pamidighantam Sri Narasimha

Background

The respondent booked a large apartment in the developer's "Windchants" project in Gurgaon for about Rs. 2.36 crore under a construction-linked payment plan, with the Apartment Buyer's Agreement promising possession within 42 months of its execution (December 2012). The developer failed to deliver possession within that period, obtaining the occupation certificate only years later and offering possession in mid-2018. The buyer approached the National Consumer Disputes Redressal Commission seeking a full refund with 24% interest rather than accepting the developer's contractual "delay compensation" clause of Rs. 7.50 per square foot per month, and the Commission ordered a refund of the amount paid with 9% interest; both the developer and the buyer separately appealed to the Supreme Court, the developer contesting the refund itself and the buyer seeking a higher interest rate.

Decision Breakdown

The Supreme Court held that a one-sided Apartment Buyer's Agreement that heavily favours the developer (such as capping the buyer's remedy to a token delay-compensation figure while leaving the buyer to bear all the risk of the developer's continuing delay) amounts to an unfair trade practice, following its earlier ruling in Pioneer Urban Land v. Govind Raghvan, and that a consumer is not bound to accept possession years late and can instead seek a refund with interest. It clarified that the Consumer Protection Act and the Real Estate (Regulation and Development) Act, 2016 (RERA) do not exclude each other but operate as parallel remedies that a consumer may choose between, and that the Consumer Commission has the power under Section 14 of the Act to direct a refund. On interest, the Court held that to be truly restitutionary, interest must run separately from the date of each individual payment made by the buyer over the years, not just from the date of the last payment as the Commission had ordered, so it partly allowed the buyer's appeal to that extent, while upholding the 9% interest rate as fair and rejecting the buyer's demand for 24%.

Lesson Learnt

A homebuyer is not bound by a builder's one-sided contract clause that caps compensation for delay to a token amount. If possession is delayed unreasonably, the buyer can seek a full refund with interest running from each payment date, and can choose to pursue this remedy under the Consumer Protection Act even where RERA also applies.

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

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