HM Journal

Wg. Cdr. Arifur Rahman Khan And … vs Dlf Southern Homes Pvt. Ltd. (Now … on 24 August, 2020

In the case of Wg. Cdr. Arifur Rahman Khan And Others vs Dlf Southern Homes Pvt. Ltd., the Supreme Court of India held on August 25, 2020 that when a developer fails to fulfil contractual obligations to provide possession of a flat to a homebuyer within the time specified in the agreement, it is a deficiency, and this type of failure on the part of the developer to fulfil contractual obligations is a deficiency.

Flat purchasers are distressed and harassed as a result of the flat developers’ shortcomings. Apartment purchasers make legitimate evaluations based on the future path of their life as it relates to the flat they have acquired. They fantasise about joyfully inhabiting the flat and living happily for the rest of their lives. However, these hopes are dashed when the flat developer fails to fulfil his contractual responsibility to provide the flat within the stipulated time frame. This example illustrates what occurs when a developer fails to meet contractual responsibilities.

2.Facts of the case-

In a construction project called ‘Western Heights’ in New Town, nine persons had reserved residential apartments. Begu, Bengaluru, DLF, BTM Extension The designs for the development project included nineteen towers. The nine people signed a contract with the building’s developer, which promised that the flats would be delivered in 36 months. The developer’s duty to deliver the building on schedule, however, was not met. The nine people filed a complaint with the National Consumer Disputes Redressal Commission under the relevant parts of the Consumer Protection Act (NCDRC). The NCDRC granted the nine complainants the right to bring the case on behalf of all the victims.

The DLF Southern Homes Pvt. Ltd. and Annabel Builders and developers Pvt. Ltd rejected the consumer pleas submitted by the 339 flat purchasers because of the grounds given. They alleged that their services were insufficient to fulfil contractual obligations and also that, although they were late in their delivery of the property, the flat buyers could not be qualified to be entitled to a reimbursement for what was set down in the agreement between the apartment buyers (ABA).

3.Issues Raised

  • The developers had delayed in handing over the possession of the residential properties to the purchasers.
  • The flat buyers should be reimbursed for all the taxes and interests that were charged from them under ABA.
  • The developers were insufficient in proving the amenities to the flat purchasers.
  • Reimbursement for levying of electric charges from the flat purchasers by the developers
  • The developers were unable to construct the clubhouse.
  • Whether the flat-buyers are constrained by the stipulation in ABA of providing compensation at the rate of Rs. 5 per sq. ft per month.
  • Whether the flat-buyers who seek to take a claim against the developer for delayed possession can as a consequence of doing so be compelled to suspend their right to obtain a conveyance deed.

4.Arguments

  1. By the Petitioner

1.The fact that there was a total delay ranging from 2 to 4 years in turning over possession of the residential premises, and the flat purchasers should not be limited by the conditions of the ABA, which are one-sided and unfriendly.

2.The completion of transfer or settlement deeds will not prohibit flat purchasers from claiming compensation from the developers.

3.The developers’ communications, sensibly, explain that the apartment purchasers were permitted to complete conveyance documents in order to gain ownership under protest.

4.The developer has not provided the facilities for which the flat purchasers paid for their residential flats.

5. The purchasers of flats are not obligated to pay the developers for the tax authorities’ demand for interest and penalty for failure to pay the tax on time.

  • By the Respondent

1. The complainants have provided no proof to discharge the obligation placed on them to establish any sort of force or pressure when completing conveyance or settlement documents.

2.Between 4 and 6 years ago, the developers turned up control of the complex, which contained 813 apartments in nineteen towers, and the developer also signed over his right, title, and interest to the Residents’ Welfare Association (RWA).

3.The rise in the value of their properties has benefited all of the flat purchasers.

4.The majority of the applicants got compensation at the rate agreed upon prior to giving up control of the residential units. These allotments were not subject to escalation, and the developers bore the expense.

5.According to ABA clause 14, all flat purchasers have been compensated at the rate of Rs. 5 per square foot per month, which works out to Rs. 7,500 per month for a residential apartment of 1500 square feet.

6. In terms of amenities, a clubhouse with a swimming pool, gymnasium, tennis court, indoor badminton courts, and squash courts has been built, and the occupation certificate has been obtained. The RWA is aware that issues developed throughout the allotting process as a result of the Bangalore Development Authority’s action, for which both the developer and the RWA filed writ petitions in the High Court of Karnataka.

7. Amenities such as a school and health care facilities were to be built in the entire township of 80 acres, of which the complex of 27 acres was also a part, and the flat purchases were acknowledged with the fact that, according to ABA, amenities that were outside the flat purchasers’ residential complex or were a part of the larger complex of 80 acres would not entitle the flat purchasers.

8.Clauses 1.3, 1.10, 2, and 3 compel flat purchasers to pay tax responsibilities, which include labour contracts tax. There was little clarity on the subject of works contract tax before the project began in 2009, however the case law of Larsen & Toubro Limited v.State of Karnataka resolved this ambiguity.

9.According to Clause 23(b), the developers have the right to levy a proportional demand on the flat purchasers for the power expenses.

10.Parking payments for the exclusive use of allocated parking spots were included in the purchase of the residential units, and the parking rates were clearly displayed upfront in the brochure.

5.Principle-

1.Section 12(1)(c) of the Consumer Protection Act, 1986 states that in a case where more than one consumer is having the same interest, a common consumer complaint can be filed on behalf of all the consumers with the district forum.

2.Section 2(1)(o) of the Consumer Protection Act, 1986 defines the term ‘service’ as something which is made available to potential consumers including the provision of facilities concerning the housing construction among other things.

3.Section 14(1)(e) of the Consumer Protection Act, 1986 states to remove the defects or deficiencies in the services in the notice.

6.Judgement-(Only on the delay of possession)

1. Except for eleven appellants who engaged into particular agreements with the developer and three appellants who surrendered their right, title, and interest under the ABA, the respondents must pay each appellant a sum determined at a rate of 6% simple interest per annum as compensation. The sum shall be determined based on the total amounts paid towards the purchase of the respective flats with effect from the date of the expiry of thirty-six months from the execution of the respective ABAs to the date of the offer of possession after receipt of the occupation certificate;

2.The above amount shall be in addition to the amounts paid over or credited by the developer at the rate of Rs 5 per square foot per month at the time of the drawing of final accounts; and

3.The amounts due and payable in terms of directions I and (ii) above shall be paid over within one month of the date of this judgement, failing which they shall bear interest at the rate of Rs 5 per square foot per month.

7.Writer Opinion-

This is not the first time that folks with a goal of owning a home have been duped by developers and their false promises. They are still waiting to take possession of their apartments, and their loan payments are piling up. The developer’s carelessness has a psychological and financial impact on the flat allottees. This sort of inefficiency should be reined in by the appropriate authorities, and instances that are similar should be given a priority to be recorded and procedures initiated as soon as possible.

The developers should have the impression that no one can get away with a miscarriage of justice. In this case, the Supreme Court determined that failure on the part of the developer to take over possession of residential properties and non-fulfillment of services and facilities represented by the developers to flat purchasers will result in the situation of paying the flat allottees.

Court Name – Supreme Court Of Indian

Judgment Name – Wg. Cdr. Arifur Rahman Khan And … vs Dlf Southern Homes Pvt. Ltd. (Now … on 24 August, 2020

Bench – Hon’Ble Dr. Chandrachud, K.M. Joseph

Judgment Date – 25th August 2020

Subject Area – RERA ACT, Taxation laws

Edited by: Athul Vergis Cherian

College Name: Christ (Deemed to be University), Bangalore (3rd Semester)

Reference

  1. https://www.scconline.com/blog/post/2020/08/24/delayed-handing-over-of-possession-amounts-to-deficiency-flat-buyers-entitled-to-compensation-sc/
  2. https://www.advocateretainer.com/blogs/consumer-cases/delay-in-possession-of-the-flat-amounts-to-a-deficiency-dlf-to-pay-interest-of-6-per-cent-per-annum-sc
  3. https://main.sci.gov.in/supremecourt/2019/27240/27240_2019_33_1501_23551_Judgement_24-Aug-2020.pdf
  4. https://indiankanoon.org/doc/161155740/?__cf_chl_jschl_tk__=pmd_743cc44e60b467619b8d70f786ea0b274833f73e-1628414502-0-gqNtZGzNAiKjcnBszQrO
  5. https://www.latestlaws.com/latest-news/sc-directed-the-dlf-southern-homes-pvt-ltd-to-pay-6-percent-simple-interest-per-annum-to-325-flat-buyers-read-judgment/
  6. https://www.corpcommlegal.in/for-how-will-the-flay-buyers-have-to-suffer/
  7. https://www.outlookindia.com/newsscroll/flat-buyers-entitled-to-compensation-for-delayed-possession-lack-of-assured-amenities-sc/1922064
  8. https://www.indianemployees.com/judgments/details/wg-cdr-arifur-rahman-khan-and-aleya-sultana-and-ors-versus-dlf-southern-homes-pvt-ltd
  9. https://arialawchambersblog.wordpress.com/2020/09/04/case-comment-wg-cdr-arifur-rahman-khan-ors-vs-dlf-southern-homes-pvt-ltd-civil-appeal-no-6239-2019/
  10. https://lexforti.com/legal-news/delay-in-handing-over-possession-is-deficiency-under-the-consumer-protection-act/

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