Summary
A flat booked in March 2008 in a Gurgaon project was to be delivered within 36 months, which the builder's letter of 26.03.2009 made run from the date of booking with delay compensation doubled to Rs 10 per sq ft per month. The builder's offer of possession in June 2013 came with a statement of account found illegal because it denied rebates for a nine-day delay in an instalment on an unproved demand notice. The State Commission awarded delay compensation from March 2011 until a fresh offer of possession but directed the allottee to pay maintenance charges; the National Commission substituted 6% interest from July 2013 following Arifur Rahman Khan. The Supreme Court restored the State Commission's compensation: the builder's own enhanced term governed and the Arifur Rahman Khan ratio, concerning a one-sided agreement, did not apply;
Issues
- Whether consumer fora may direct a flat allottee to pay maintenance charges to the builder when the builder's own case is that the charges belong to an independent maintenance association that is not a party and has made no claim.
- Whether delay compensation should be awarded at the contractual rate as enhanced by the builder, or replaced by interest under Arifur Rahman Khan v. DLF Southern Homes.
- Whether an offer of possession conditioned on payment of a statement of account found to be illegal is a valid offer that stops the running of delay compensation.
- From which date delay compensation runs where the builder has amended the possession clause to run from the date of booking.
Provisions considered
- Sections 19 and 23 (appeals from the State and National Commissions), Consumer Protection Act, 1986Leave was limited to the maintenance-charge direction and the direction for a fresh offer of possession; a pure question of law going to the root of the dispute could be decided though not sharply raised below, the Court's role in a consumer dispute having an element of proactivity in public interest. (¶¶ 1, 13, 14, 19)
- Delay compensation and maintenance clauses, Apartment Buyers' Agreement dated 03.12.2008 (clauses 17, 19, 20 and 39; definition of 'Maintenance Agency') as modified by the builder's letter of 26.03.2009The 'or' in the definition of maintenance agency is disjunctive, so once maintenance is handed to an association the builder is not entitled to collect the charges; clause 20 creates the allottee's obligation to pay the agency, not the builder. Clause 17's Rs 5 compensation was doubled to Rs 10 per sq ft and made to run three years from booking by the builder's letter, which bound it. (¶¶ 15, 16, 17, 18, 21, 23, 27)
Held
- No principal–agent relationship between the builder and the condominium association was shown and the builder itself said maintenance charges were payable to the association, which was not impleaded and made no claim; the fora erred in directing the allottee to pay a third party, since such a direction is a declaration of liability in vacuum in the absence of the admitted claimant. (¶¶ 16, 17, 18, 29)
- The builder having itself amended the compensation clause to run three years from booking (March 2008), compensation ran from March 2011 as the State Commission held. The National Commission wrongly departed from the builder's own enhanced term to award 6% interest from July 2013; Arifur Rahman Khan was decided in the context of a lopsided agreement and does not apply where the builder had itself doubled the compensation and imposed matching holding charges. (¶¶ 23, 26, 27)
- Compensation stops running on a valid offer of possession (D.S. Dhanda, Capital Greens), but the letter of 10.06.2013 offered possession only on paying a statement of account that both fora found illegal, after rebates were wrongly withheld for a nine-day delay on an unserved demand; the builder later admitted the miscalculation. It was therefore no valid offer, and the allottee was justified in awaiting adjudication rather than taking interim possession with unspecified obligations. Mediation proposals cannot be referred to. (¶¶ 10, 24, 25, 28)
- The directions for a fresh offer of possession were sustained with eight weeks' extension, and delay compensation at Rs 10 per sq ft per month was directed for the entire period from March 2011 until the fresh offer, after adjusting compensation already paid and the early payment rebate of Rs 95,136. (¶ 29)
Result
Appeals disposed of: the directions requiring the allottee to pay maintenance charges set aside; fresh offer of possession to be issued and conveyance executed within eight weeks; delay compensation at Rs 10 per sq ft per month from March 2011 till the fresh offer, adjusting sums already paid and the early payment rebate; costs of Rs 50,000 retained; other findings of the National Commission undisturbed.