Summary
The Supreme Court affirmed a developer’s deficiency in failing to deliver a flat within a reasonable time, but reduced the compensation to reflect the redevelopment property’s value. Buyers could not be required to wait indefinitely, and transfer of the project did not excuse the original obligation on these facts. The Court ordered refund of Rs 1.87 crore, compensation of Rs 2.272 crore plus Rs 20 lakh for parking and Rs 10,000 litigation costs. Payment was due within six weeks, with nine per cent interest from the order date on default.
Issues
- Whether delay and transfer of the project excused failure to deliver the booked flat.
- What compensatory measure and valuation date were appropriate.
- Whether the Commission’s market-value assessment required reduction.
Provisions considered
- Section 2(1)(g), Consumer Protection Act, 1986Failure to discharge the undertaking to provide the flat within a reasonable time constituted deficiency. In this case, three years was considered reasonable where no delivery period was stipulated. (¶¶ 13, 14, 15)
Held
- The developer supplied no valid explanation for transferring the project despite its obligation to the buyers. They could not be made to await possession indefinitely and were entitled to refund with compensation. Three years was a reasonable completion period on these particular facts, rather than a universal statutory deadline for every development. (¶¶ 12, 13, 14, 15)
- Contractual compensation ordinarily places the injured party in the position performance would have produced and requires reasonable proof of loss. Breach-date valuation is the normal rule, but it is flexible where continued efforts to obtain performance, inadequate alternative offers or inability to purchase a substitute make that measure unreasonable. The Court declined to insist on breach-date valuation here. (¶¶ 11, 12, 16, 18, 19, 20, 21, 22, 25)
- The comparable sale deeds relied on by the Commission did not sufficiently reflect the distinction between a redevelopment property and green-field projects. A balanced assessment fixed Rs 50,000 per square foot, reducing the flat compensation while retaining Rs 20 lakh for parking. This was a fact-specific valuation, not a general prescribed market rate. (¶¶ 23, 24, 25, 26, 27)
- The amounts ordered were Rs 1.87 crore refund, Rs 2.272 crore compensation, Rs 20 lakh parking compensation and Rs 10,000 litigation costs. They were payable within six weeks; on default they carried nine per cent annual interest from the date of the order. The buyers could withdraw the Rs 2.5 crore deposit with accrued interest, adjusted against the developer’s liability. (¶¶ 27, 28, 29)
Result
Appeals partly allowed by reducing compensation. Specified refund, compensation and costs payable within six weeks, with 9% annual interest from the order date on default; deposited amount and accrued interest withdrawable and adjustable.