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Sudha & Ors. vs. Jaiprakash Associates Limited

Civil Appeal · 2022 INSC 968Decided 16 Sept 2022
Civil Appeal No. 6439 of 2021
Surya Kant · Abhay S. Oka · Sanjay Kishan Kaul

Background

The appellants had booked a flat in the respondent-builder's "Garden Isles" project in 2013, but due to construction delay, agreed in 2015 to switch the booking to an apartment in "Jaypee Greens," NOIDA, with the earlier payment adjusted toward the new unit. After paying the full consideration by mid-2017 (with part financed through a bank loan under a Quadripartite Agreement), the appellants complained that the apartment was not properly finished and, on 21 September 2017, filed a consumer complaint before the National Consumer Disputes Redressal Commission seeking a full refund with interest instead of taking possession. The National Commission dismissed their complaint, holding they had no valid reason to refuse possession, and the appellants appealed to the Supreme Court under Section 23 of the Consumer Protection Act, 1986.

Decision Breakdown

The Supreme Court examined the allotment letter and the builder's standard terms and conditions, which gave the builder 24 months to hand over possession plus a further 3-month grace period (i.e., until 10 October 2017) before a right to refund would arise. Since the appellants filed their complaint on 21 September 2017, before that 27-month window had even expired, and had also failed to comply with the National Commission's interim order directing them to produce an architect's report substantiating the alleged defects, the Court held the complaint was premature and that no deficiency in service by the builder had been established as of the complaint date. The appeal was accordingly dismissed on merits, but the Court used its equitable powers to give the appellants two months to find a buyer for the apartment (with the builder agreeing to waive about Rs. 30 lakhs still due and complete the transfer), failing which the appellants were directed to take possession themselves within three months.

Lesson Learnt

Under a builder-buyer agreement, a buyer cannot treat the contract as breached and demand a refund before the agreed possession deadline (including any grace period) has actually expired, and failing to comply with a tribunal's direction to substantiate alleged construction defects (e.g., via an independent architect's report) can be held against the complainant.

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

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