The Supreme Court on Monday(11.01.2021) comprising of a bench of Hon’ble Justice DY Chandrachud, Justice Indira Banerjee and Justice Indu Malhotra held that Developer cannot push the apartment buyers to be in one-sided and unreasonable contract/agreement and if they do so, it will be considered as an unfair practice u/s 2(1)(r) of Consumer Protection Act. (Ireo Grace Realtech Pvt. Ltd. vs. Abhishek Khanna & others)
In the above cited case, appeals were filed by the Appellant, to challenge the judgment passed by the National Consumer Disputes Redressal Commission directing refund of the amounts deposited by the Apartment Buyers in the project of the “Corridors” developed in Sector 67-A, Gurgaon, Haryana, on account of the inordinate delay in completing the construction and obtaining the Occupation Certificate. Appellant had filed the appeal u/s 23 of the Consumer Protection Act.
In the present case, the license for construction was granted to the Appellant – Developer by the Department of Town and Country Planning for developing a group housing colony on a vast tract of land admeasuring about 37.5125 acres where multiple towers comprising of 1356 apartments were to be constructed.
The license was granted with a stipulation that NOC/ Clearance from the Fire Authority shall be submitted within 90 days from the date of issuance of the sanctioned Building Plans.
The Commissioner, Municipal Corporation vide letter dated 30.12.2013 raised 16 objections with respect to the proposed Fire Fighting Scheme submitted by the Developer. On 22.01.2014 the developer had submitted that the objections raised by the Commissioner had been rectified.
The Municipal Corporation vide letter dated 28.03.2014 informed the Developer that the deficiencies in the application for Fire NOC had not been cured and the Developer was granted 15 days‘ time to cure the defects, failing which, the application would be deemed to be rejected.
Ultimately, on 27.11.2014, the Director, Haryana Fire Service granted approval to the Appellant for the same.
On 12.05.2014, the Developer executed the Apartment Buyer‘s Agreement in favor of the Apartment Buyer for a total consideration of Rs.1,45,22,006/-.
On 27.12.2017, Apartment Buyer filed a Consumer Complaint before the National Commission, wherein it was prayed that the Developer be directed to refund the amount of Rs.1,44,72,364/- paid by the Apartment Buyer along with interest @ 20% per annum compounded quarterly till realization, and compensation towards damages on account of harassment, mental agony, and litigation charges.
The following issues were raised in the appeal before the Apex Court: (i) Determination of the date from which the 42 months period for handing over possession is to be calculated under Clause 13.3, whether it would be from the date of issuance of the Fire NOC as contended by the Developer; or, from the date of sanction of the Building Plans, as contended by the Apartment Buyers; (ii) Whether the terms of the Apartment Buyer's Agreement were one-sided, and the Apartment Buyers would not be bound by the same; (iii) Whether the provisions of the Real Estate (Regulation and Development) Act, 2016 must be given primacy over the Consumer Protection Act, 1986; (iv) Whether on account of the inordinate delay in handing over possession, the Apartment Buyers were entitled to terminate the agreement, and claim a refund of the amounts deposited with interest.
The Apartment Buyer has submitted that the Developer had invited applications from the public for booking flats in the housing complex ―The Corridors, by misrepresenting that all necessary approvals/pre-clearance with respect to the and constructions had already been obtained from the office of the Director, Town and Country Planning, Haryana, and other civil authorities. The Apartment Buyers were induced to book apartments on false representations made by the Developer that the construction of the project would be completed within 42 months from the collection of the initial booking amount.
While discussing the second issue the court held that one-sided terms were an unfair trade practice under the Consumer Protection Act, 1986.
The court answered the third issue while referring to the judgment of M/s Imperia Structures Ltd. v. Anil Patni and Anr. where it was held that Section 79 of RERA Act is not a bar on the Consumer fora to entertain the complaint on behalf of an allottee.
“We are of the view that the incorporation of such one-sided and unreasonable clauses in the Apartment Buyer’s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act, the powers of the consumer fora were in no manner constrained to declare a contractual term as unfair or one-sided as an incident of the power to discontinue unfair or restrictive trade practices. An ‘unfair contract’ has been defined under the 2019 Act, and powers have been conferred on the State Consumer Fora and the National Commission to declare contractual terms that are unfair, as null and void. This is a statutory recognition of a power that was implicit under the 1986 Act. In view of the above, we hold that the Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer’s Agreement.”
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