In CIVIL APPEAL NO. 6044 of 2019-SC- Power to direct refund of sale consideration and compensate consumer for deficiency in not delivering apartment is within Consumer Court’s jurisdiction: SC Justices Uday Umesh Lalit, S. Ravindra Bhat & Pamidighantam Sri Narasimha [07-04-2022]

Read Judgment: EXPERION DEVELOPERS PVT. LTD. Vs.  SUSHMA ASHOK SHIROOR

Tulip Kanth

New Delhi, April 8, 2022: Affirming that the Consumer Commission correctly exercised its jurisdiction in directing the Developer to refund  the sale consideration to the Consumers for its failure to deliver possession of the apartment, the Supreme Court has clarified that the power to direct refund of the amount and to compensate a consumer for the deficiency in not delivering the apartment as per the terms of Agreement is within the jurisdiction of the Consumer Courts.

The Larger Bench of Justice Uday Umesh Lalit, Justice S. Ravindra Bhat and Justice Pamidighantam Sri Narasimha held that if a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant it, of course subject to the merits of the case.

The appeals in question were filed under Section 23 of the Consumer Protection Act, 1986, challenging the judgment of the National Consumer Disputes Redressal Commission whereby the Commission directed the Appellant-Developer to refund sale consideration of almost Rs 2 crore with interest @ 9% p.a. to the Respondent-Consumer for its failure to deliver possession of the apartment within the time stipulated as per the Apartment Buyers Agreement.

The factual scenario of this case was such that the Consumer booked an apartment measuring 3525 sq. ft. for a total consideration of Rs. 2,36,15,726  in one of the Apartment units in the Windchants in Sector 112, Gurgaon, Haryana. The Developer-Experion Developers Private Ltd.,  agreed for construction linked payment plan, which led to the execution of the Apartment Buyer’s Agreement.

On failure of grant of possession, the Consumer approached the National Disputes Redressal Commission by filing an original complaint  alleging that he had paid the total sale consideration but possession was not granted even till the filing of the complaint. He, therefore, sought a refund of the total consideration along with interest @ 24% p.a.

The Developer filed its Written Statement before the Commission stating that though the 42 months period expired on June 26,2016, the purchaser would only be entitled to delay compensation under Clause 13, for a sum of Rs. 4,54,052.

Allowing the complaint, the Commission found that the agreement was one-sided, heavily loaded against the allottee and entirely in favor of the Developers and so, directed the Developer to refund the sale consideration with interest @ 9% p.a. 

It was against these findings that the Developer filed one Civil Appeal and the Consumer also filed another appeal challenging the Commission’s judgment to a limited extent for grant of an enhanced interest @ 24% p.a.

At the outset, the Top Court upheld the Commission’s order insofar as it directed the Developer to refund the amounts paid by the Consumer with interest for the unjustifiable delay in delivering the apartment. On law, the Bench considered the interplay between the judicial remedies under the Act and the Real Estate (Regulation and Development) Act, 2016 and explained the remedial choices of a consumer under these statutes. 

The Court said,”We have held that the Commission created under the Act has the power to direct refund under Section 14 of the Act. We conclude that the Act and the RERA Act neither exclude nor contradict each other and they must be read harmoniously to subserve their common purpose.”

The Bench relied on the judgment of this Court in Pioneer Urban Land and Infrastructure Ltd. v. Govind Raghvan wherein it was held that the term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder and the incorporation of one-sided clauses in an agreement constitutes an unfair trade practice as per Section 2(r) of the Consumer Protection Act, 1986 since it adopts unfair methods or practices for the purpose of selling the flats by the builder.

Considering Pioneer’s Case (Supra), the Apex Court held that the Commission was correct in its approach in holding that the clauses of the agreement were one-sided and that the Consumer was not bound to accept the possession of the apartment and could seek refund of the amount deposited by her with interest. 

Referring to the judgments of this Court Imperia Structures Ltd v. Anil Patni and IREO Grace Realtech (P) Ltd. V. Abhishek Khanna, the Bench observed that Consumer Protection Act and the RERA Act neither exclude nor contradict each other and they are concurrent remedies operating independently and without primacy. 

The Court asserted,“We may hasten to clarify that the power to direct refund of the amount and to compensate a consumer for the deficiency in not delivering the apartment as per the terms of Agreement is within the jurisdiction of the Consumer Courts, the Bench added.” Referring to sections 2(g) and 14, the Bench noted that the Commission is empowered to direct refund of the price or the charges paid by the consumer.

“A consumer invoking the jurisdiction of the Commission can seek such reliefs as he/she considers appropriate. A consumer can pray for refund of the money with interest and compensation. The consumer could also ask for possession of the apartment with compensation. The consumer can also make a prayer for both in the alternative. If a consumer prays for refund of the amount, without an alternative prayer, the Commission will recognize such a right and grant it, of course subject to the merits of the case. If a consumer seeks alternative reliefs, the Commission will consider the matter in the facts and circumstances of the case and will pass appropriate orders as justice demands”, held the Bench.

The Top Court specifically referred to the legal regime under the Consumer Protection Act, only to show that the Commission has the power and jurisdiction to direct return of money under Section 14 if a consumer so chooses. On this ground, the Bench was of the opinion that the Commission correctly exercised its power and jurisdiction in passing the above directions for refund of the amount with interest. 

On the issue of interest, the Bench opined that for the interest payable on the amount deposited to be restitutionary and also compensatory, interest has to be paid from the date of the deposit of the amounts. The Commission in the order impugned had granted interest from the date of last deposit and according to the Court, this did not amount to restitution.Finding no reason to interfere in the appeal filed by the Consumer for enhancement of interest, the Court held the interest of 9% granted by the Commission to be fair and just.

Thus, dismissing the Developer’s Appeal, the Apex Court partly allowed the appeal filed by the Consumer.