10th August, 2021 – Case Analysis: NBCC (India) Limited Vs. Shri Ram Trivedi by Vasu @LEXCLIQ

CASE NUMBER

Civil Appeal No 274 of 2020

BENCH

Dr. Justice D.Y. Chandrachud

Justice Mukeshkumar Rasikbhai Shah

DECIDED ON

8 March 2021

RELEVANT ACT/ SECTION

The Consumer Protection Act, 2019.

BRIEF FACTS 

It was the year 2012 when the appellant floated a housing project in Gurugram. Subsequently, an advertisement was issued and prospective buyers were invited. On 14 March 2012, the respondent applied for the allotment of a unit in the project. The project was referred to as “NBCC Heights”. The standard form laid down the terms and conditions. The entire payment was to be made in instalments. These instalments were payable under a time-restricted plan. On 30 June 2012, an allotment letter was issued to the respondent for the dwelling unit named F-402 in the project. As per the terms of allotment, the appellant would “endeavour” to hand over possession within two and a half years from the date of allotment. This was stated in Clause 20 of the agreement. As per this clause, ‘in the event of the Applicant failure to clear all the outstanding dues including interest, if any and / or takeover / occupy the Dwelling Unit within 30 days from the date of intimation in writing by NBCC, then the same shall lie at the Applicant’s risk and cost and the Applicant shall be liable to pay a compensation to NBCC (for maintaining the complex) @ Rs. 2/-per sq. ft. of the super area per month for the entire period of such delay.’ However, the respondent agreed that NBCC would be permitted to delay the delivery of the complex in case of force majeure like act of God, rebellions, sabotages, etc. In January 2017, the respondent filed a complaint before a bench in the consumer forum since possession of the unit was not provided to him.

PROCEDURAL HISTORY

The respondent filed a complaint in the National Consumer Disputes Redressal Commission. The appellant then obtained an occupation certificate in the year 2017. Possession was eventually handed over to the respondent in July 2018.  The consumer commission ordered the appellant to make the payment of compensation calculated at 10% per annum. The interest was to be on the sum deposited by the respondent from June 2015 until the actual date of possession in its impugned ruling dated September 20, 2018. In addition to this, the respondent was granted Rs 2,00,000 in damages for loss of rent and Rs 25,000 in fees. The deadline for payment was set at four weeks from the date of receipt of a copy of the order, beyond which 12 percent interest would be charged.

ISSUES BEFORE THE COURT

The appellant raised contention against the ruling by the National Consumer Disputes Redressal Commission. He raised the defence of force majeure and questioned the claim of compensation by the respondent.

RATIO OF THE CASE

The NCDRC dismissed the claim that the appellant had only committed to “encourage” the appellant to provide possession within two and a half years of the allotment date. It was determined that, even if time is not of the essence of the contract, the developer must provide serious reasons for not giving up possession on the date stated in the letter of allocation. The dismissal by NCDRC was justified. The appellant must “endeavour” completing the construction of the dwelling unit within two and a half years of receiving the letter of allotment, according to clause 20 of the letter of allotment. The term “endeavour” implied that the appellant would make a good faith endeavour to hand over possession by the deadline. Even if the expression does not include an absolute commitment to hand over the possession of the complex by a specified date, the meaning of the expression had to be read in the context of the entirety of the clause. The purchaser would be at the mercy of the builder if the expression was interpreted as leaving the date for turning over possession indefinite and at the developer’s sole choice. Clause 20 shall be interpreted as requiring the builder to exercise all reasonable endeavours to meet the obligation to provide possession by the specified date. The developer would be responsible for explaining each step towards the delay in providing the possession.

DECISION OF THE COURT

The Supreme Court upheld the decision of NCRDC and thus found delay in providing possession of the complex as an unfair trade practice. While the bench believed the NCDRC was appropriate in ordering the payment of interest, it believed that the directive should be changed in two ways: first, the date from which interest would become payable, and second, the rate of interest. The bench found no merit in the claims of the appellant that were- force majeure and delay in payment of the final instalment by the respondent. It was decided regarding the date on which interest would become payable, having respect to the one-year period that is stipulated, interest would become payable on January 1, 2016, after two and a half years from the original time under Clause 20. Second, instead of the 10% that the NCDRC had given, the interest rate should be set at 7% in light of the prevailing market conditions. Given the compensation that was given to the respondent in the circumstances mentioned, the directive to pay a sum of Rs. 2,00,000 for loss of rent was set aside. The appellant was directed to assist in the completion of all necessary processes for completing the documents (including registration formalities) for the sold housing unit.

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