M/s Treaty Construction & Anr. v. M/s Ruby Tower Co-op. Hsg. Society Ltd.

Civil Appeal · 2019 INSC 780Decided 19 Jul 2019
Civil Appeal No. 5699 of 2019
Justice Abhay Manohar Sapre · Justice Dinesh Maheshwari

Background

A housing society formed by flat and shop buyers in a Mumbai building complained to consumer fora that the builder (the appellants) failed to complete interior works, failed to obtain the Occupancy Certificate, and failed to execute the conveyance deed despite collecting excess amounts and later agreeing to reimburse Rs. 25 lakh. The State Consumer Commission partly allowed the complaint, directing execution of the conveyance deed and refund of certain amounts; the National Consumer Disputes Redressal Commission modified this, ordering payment of Rs. 28 lakh along with daily penalties and costs. The builder appealed to the Supreme Court against these directions.

Decision Breakdown

The Supreme Court upheld the direction to pay Rs. 25 lakh, since the builder had unequivocally committed to this sum in signed meeting minutes as full and final settlement. However, it set aside the Rs. 3 lakh compensation for delay in obtaining the Occupancy Certificate, finding no evidentiary basis for that figure, and also set aside the Rs. 1,000-per-day penalty, noting unresolved disputes (including a pending High Court matter) over alleged illegal alterations by flat owners that contributed to the certificate delay. The Court also waived the Rs. 50,000 costs imposed on the builder. It directed both sides to complete their respective compliance requirements within set timeframes, with liberty to approach courts again if problems persisted. The appeal was thus partly allowed.

Lesson Learnt

A builder's own written, signed commitment at a settlement meeting can be enforced as a binding admission even years later, but punitive compensation or daily penalties require actual proof of loss or fault: courts will not impose them on bare assumption when responsibility for delay is genuinely disputed between both sides.

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