SC: Homebuyers can claim delay compensation even after taking flat possession

The Supreme Court ruled that homebuyers can seek compensation for delayed possession even after taking possession of their flats. Setting aside an NCDRC order, the court restored a long-pending consumer complaint and directed its adjudication on merits by the district commission

New Delhi: The Supreme Court has said that a homebuyer can seek adjudication of his claim for compensation for the delay in delivery of the flat even after getting its possession. The apex court set aside a 2016 order of the National Consumer Disputes Redressal Commission (NCDRC), which said that the appellant was not a consumer at the time of filing his complaint alleging a deficiency in service on account of the delay in handing over the possession of the flat, since he had already taken its possession without protest.

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

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The top court observed that a claim for compensation for delayed possession necessarily arises from the period prior to the actual delivery of possession.

“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 instituted a consumer complaint before the district consumer forum, alleging a deficiency in service on account of the delay in handing over possession of the flat.

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

The appellant then approached the NCDRC, which dismissed his revision petition in January 2016. The apex court noted that the consumer complaint filed before the district forum was admitted and notice was issued to the society, which later filed an application seeking reference of the dispute to arbitration.

The appellant argued before the apex court that the consumer complaint could not have been referred to arbitration merely on the basis of an arbitration clause in the agreement between the parties.

Dealing with the appeal, the bench referred to the Consumer Protection Act, 1986 and said it is a beneficial legislation intended to provide a simple, inexpensive and expeditious remedy to a consumer who complains of a defect in goods or deficiency in service.

It said Section 3 of the Act provides that the remedy under this legislation was in addition to and not in derogation of any other remedy 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 said the fact that the agreement between the parties contained an arbitration clause could not, by itself, be treated as sufficient to non-suit the appellant before the consumer forum.

It said 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 in doing so, the NCDRC failed to address the central jurisdictional question arising from the orders passed by the district forum and state commission.

The bench said the reasoning adopted by the NCDRC cannot be sustained. It said the appellant’s complaint was not for delivery of possession simpliciter and his grievance was that there was a delay in handing over possession of the flat and he was entitled to compensation for such delay.

The bench said whether there was any delay, whether such delay was attributable to the society and whether the appellant had accepted possession unconditionally, were matters which 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 said these issues could not have been concluded at the threshold by holding that the appellant ceased to be a consumer merely because possession was delivered before the complaint was filed.

While allowing the appeal, the bench set aside the orders passed by the NCDRC, the state commission and the district forum. It restored the consumer complaint and said it be placed before the District Consumer Disputes Redressal Commission, Dwarka, for decision on merits.

The top court said the district commission would decide the complaint after affording due opportunity of hearing and of leading evidence to both parties.

“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.