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M/S. Fortune Infrastructure (now known as M/S Hicon Infrastructure) v. Trevor D'Lima

Civil Appeal · 2018 INSC 233Decided 12 Mar 2018
Civil Appeal Nos. 3533-3534 of 2017
Justice N.V. Ramana · Justice S. Abdul Nazeer

Background

The appellant builder launched a residential project ("Hicons Onyx," later renamed "Fortune Residency") in Mumbai in 2011 and sold a flat to the respondents for about Rs. 1.93 crore, of which Rs. 1.87 crore was paid. The builder later transferred the project to another company without delivering the flat, prompting the buyers to approach the National Consumer Disputes Redressal Commission (NCDRC), which found deficiency of service and ordered a refund plus roughly Rs. 3.65 crore in compensation calculated at a high market rate.

Decision Breakdown

The Supreme Court agreed that the builder was guilty of deficiency of service: it had no valid justification for transferring the project and failing to deliver the flat within a reasonable time (taken here as about three years), and a buyer cannot be made to wait indefinitely. However, the Court found the NCDRC's compensation calculation excessive because it relied too heavily on a few high-value sale deeds for a re-developed property, where market rates tend to run lower than fresh "green-field" projects. The Court fixed a more moderate reference rate (Rs. 50,000 per sq. ft. instead of Rs. 65,000), reducing the compensation while upholding the refund, a separate payment for the parking space, and litigation costs, with interest if not paid within six weeks. The appeals were allowed only in part.

Lesson Learnt

A builder who fails to deliver a flat without good reason is liable to refund the money and pay compensation for the delay, but compensation in such cases must be grounded in a fair, representative assessment of market value, not simply the highest comparable sale price available, so damages remain compensatory rather than a windfall.

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

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