Homebuyers can claim compensation for delayed possession even after taking flats: SC

The Supreme Court has held that a homebuyer can seek adjudication of a claim for compensation for delayed delivery of a flat even after taking possession.

The apex court set aside a 2016 order of the National Consumer Disputes Redressal Commission (NCDRC), which had said the appellant was not a consumer at the time of filing his complaint alleging a deficiency in service over delayed possession because he had already taken possession of the flat without protest.

A bench of Justices Vikram Nath and V Mohana passed the order on a plea filed by a homebuyer who became a member of a cooperative group housing society in Delhi in January 2003 and was allotted a flat.

The top court observed that a claim for compensation for delayed possession arises from the period before the actual delivery of the property.

“The subsequent receipt of possession cannot, by itself, extinguish the right of the allottee to seek adjudication of a claim for compensation for the alleged delay,” the bench said in its June 4 order.

The appellant had filed a consumer complaint before the district consumer forum, alleging a deficiency in service because of the delay in handing over possession of the flat.

In July 2009, the district forum referred the parties to arbitration. The order was upheld by the Delhi State Consumer Disputes Redressal Commission in February 2013.

The appellant then moved the NCDRC, which dismissed his revision petition in January 2016.

The Supreme Court noted that the consumer complaint was admitted by the district forum and notice was issued to the housing society, which subsequently sought to have the matter referred to arbitration.

The appellant argued before the apex court that the complaint could not have been sent to arbitration solely because of an arbitration clause in the agreement between the parties.

Referring to the Consumer Protection Act, 1986, the bench said the law was intended to provide a simple, inexpensive and expeditious remedy to consumers complaining of defects in goods or deficiencies in services.

It observed that Section 3 of the Act made consumer remedies additional to, and not in derogation of, other remedies available under the law.

“The existence of another forum or another mode of adjudication, therefore, does not by itself exclude the jurisdiction of the consumer fora,” it said.

The bench added that the presence of an arbitration clause in the agreement could not, by itself, be sufficient to non-suit the appellant before the consumer forum.

It further held that the NCDRC’s order suffered from an “additional infirmity”.

“The principal issue before the National Commission was whether the district forum and the state commission were justified in referring the complaint to arbitration. The National Commission, however, dismissed the revision petition on the ground that the appellant was not a consumer at the time of filing of the complaint, since he had already taken possession of the flat without protest,” the bench noted.

It said the NCDRC had failed to address the central jurisdictional issue arising from the orders passed by the district forum and the state commission.

According to the bench, the reasoning adopted by the NCDRC could not be sustained.

It noted that the appellant’s complaint was not merely for possession of the flat but was centred on the delay in handing over possession and the compensation claimed for that delay.

The court said questions relating to whether there was a delay, whether the society was responsible and whether possession had been accepted unconditionally required adjudication on merits.

“The consumer complaint has not been adjudicated on merits at any stage. The claim of the appellant for compensation on account of alleged delay in handing over possession has neither been accepted nor rejected after evidence. Equally, the defence of the respondent society has also not been examined on merits,” it said.

The bench observed that such issues could not be decided at the threshold by holding that the appellant ceased to be a consumer merely because possession had been delivered before the complaint was filed.

Allowing the appeal, the Supreme Court set aside the orders passed by the NCDRC, the state commission and the district forum.

The court restored the consumer complaint and directed that it be placed before the District Consumer Disputes Redressal Commission, Dwarka, for a decision on merits.

It said the district commission would hear both parties and provide them with an opportunity to lead evidence.

“Since the complaint is of the year 2005, the district consumer disputes redressal commission, Dwarka, shall make an endeavour to decide the same preferably within a period of one year from the date of receipt of a copy of this order,” it said.