Summary
The Supreme Court upheld compensation for delayed flat possession but reduced it to simple interest at 7% annually from 1 January 2016 to 26 July 2018 and removed a separate Rs 2 lakh rent award. An undertaking to endeavour to complete construction required reasonable efforts and did not leave delivery entirely to the builder. The standard form’s nominal delay compensation was unfair compared with the buyer’s interest burden. Contractor and boundary disputes did not establish force majeure on these facts.
Issues
- Whether the endeavour clause and standard form compensation rate defeated a claim for delayed possession.
- Whether the developer established force majeure or could rely on delayed payment of the penultimate instalment.
- What rate, period and additional compensation were appropriate.
Held
- Endeavour required earnest and reasonable efforts to deliver within the stipulated period, with the developer bearing the burden of explaining compliance. Read as a whole, the clause allowed an additional year beyond two and a half years, rather than indefinite delay. (¶¶ 7, 9)
- The standard form’s Rs 2 per square foot delay compensation, compared with 12% interest imposed on the buyer, was one-sided and did not constrain just compensation by the consumer forum. (¶ 8)
- The delayed instalment defence was considered against the developer’s own inability to offer timely possession. Contractor termination and boundary disputes were ordinary business exigencies, not substantiated force majeure excusing performance here. (¶ 11-12)
- Compensation was modified to 7% simple annual interest from 1 January 2016 until actual possession on 26 July 2018. An additional Rs 2 lakh for lost rent was unwarranted once delay interest compensated the buyer. Payment and completion of necessary documentation were directed within one month. (¶¶ 9-10, 13)
Result
Appeal partly allowed: compensation revised to 7% simple interest for the specified period; separate rent compensation set aside, with payment and documentation directions. No costs.