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NBCC (India) Limited v. Shri Ram Trivedi

Civil Appeal · 2021 INSC 162Decided 8 Mar 2021
Civil Appeal No. 274 of 2020
Dr. Justice D.Y. Chandrachud · Justice M.R. Shah

Background

NBCC floated a group housing project in Gurgaon and allotted a flat to Shri Ram Trivedi in June 2012, promising to "endeavour" to hand over possession within two and a half years. Possession was delayed and actually handed over only in July 2018. The buyer approached the National Consumer Disputes Redressal Commission (NCDRC), which awarded him interest at 10% per annum on his deposited amount plus Rs 2 lakh for loss of rent and costs. NBCC appealed to the Supreme Court, arguing the delay was due to force majeure and that its allotment letter capped compensation at a much lower contractual rate.

Decision Breakdown

The Supreme Court held that a builder's promise to merely "endeavour" to deliver possession by a date still obliges it to make genuine efforts and to justify any failure, and cannot be read as giving it unfettered discretion over timing. It found the contractual compensation clause (Rs 2 per sq ft per month) one-sided and an unfair trade practice, since buyers faced 12% interest for delayed payments while the builder's liability was far lower: consistent with the Court's earlier rulings in Pioneer Urban v. Govindan Raghavan and DLF Southern Homes v. Arifur Rahman Khan. It rejected NBCC's force majeure defence (contractor disputes and boundary disputes are ordinary business risks, not force majeure), but reduced the NCDRC's interest rate from 10% to 7% per annum and adjusted the date from which it ran to 1 January 2016, and set aside the separate Rs 2,00,000 award for loss of rent since that would now be duplicative of the interest award.

Lesson Learnt

A builder's "endeavour to complete" clause in an allotment letter is not a blank cheque for indefinite delay: courts will still hold developers to a reasonable completion timeline and strike down one-sided penalty clauses as unfair trade practices, even while moderating excessive compensation awarded below.

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

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