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Judgment
DR. INDER JIT SINGH, PRESIDING MEMBER
This Appeal has been filed by the Appellant under Section 51 of the Consumer Protection Act, 2019, against the order dated 27.01.2026 passed by the State Consumer Disputes Redressal Commission, Delhi (hereinafter referred to as the 'State Commission'), in Consumer Complaint (CC) No. 19 of 2023, whereby the complaint filed by the Respondents/Complainants was allowed.
For the sake of convenience, the parties shall be referred to as per their status before the State Commission, i.e., the Appellant as the OP/Builder and the Respondents as the 'Complainants'.
Brief facts of the case, as presented by the complainant and as emerging from the record & the impugned order, and the pleadings of the parties, are that:
The OP Builder is registered under the Real Estate (Regulation and Development) Act, 2016 ("RERA"), holding Registration Certificate No. 326/2017 dated 17.10.2017, for its project "Arihant Southwinds." The completion date declared to the RERA Authority for the project was on or before 31.12.2020.
The Complainants were allotted a residential apartment in the project. The parties agree that more than 60% of the total sale consideration had been paid by the Complainants to the Builder before the Builder-Buyer's Agreement was executed. The Agreement was executed on 05.08.2021, approximately 20 months after the first advance payment was accepted. The Complainants contend that this is contrary to Section 13 of RERA, which requires an agreement for sale to be executed at the time an advance is accepted. Clause 7.1 of the Agreement specified 31.12.2021 as the date for handing over possession. The Complainants state that no corresponding extension of the previously declared completion date (31.12.2020) was granted by the RERA Authority, and characterize the revised date in Clause 7.1 as having been fixed by the Builder alone.
Possession was not handed over by 31.12.2021. By letter dated 06.04.2022, the Builder offered physical possession of the apartment; the Conveyance Deed had not been executed at that time. According to the Complainants, upon taking possession they observed seepage on the walls, peeling and damaged plaster, damage to wallpaper, dampness, and termite infestation, which they state were later found to be on account of blocked sewage outlets in the bathrooms of the unit. The Complainants state that they carried out interior fit-outs at a cost of approximately Rs. 20 lakhs in reliance on assurances from the Builder that the defects would be rectified and any resulting damage made good, and that the defects were not satisfactorily rectified thereafter.
The Conveyance Deed has not been executed in favour of the Complainants. The OP Builder's position is that the non-execution of the Conveyance Deed, and the associated delay, is attributable to a pending dispute between the Builder and the Municipal Corporation of Faridabad ("MCF") concerning the grant of requisite permissions/Occupancy Certificate, stated by the Builder to be sub-judice before an Arbitrator, which the Builder contends constitutes a force majeure event under Clause 9.1 of the Agreement. The Builder further attributes part of the delay to disruption of construction activity on account of the Covid-19 pandemic between 25.03.2020 and 25.05.2020.
The Complainants instituted Consumer Complaint No. 19 of 2023 before the State Commission on 06.02.2023, alleging deficiency of service and unfair trade practice on the part of the Builder, and seeking compensation for delayed possession by way of interest, rectification of defects, and compensation for mental agony, harassment, and litigation costs.
The State Commission afforded due opportunity to the Builder to file its written version. The Builder having failed to avail of the opportunity within the time granted, its right to file a reply was closed, and this closure order was not assailed by the Builder. After hearing the Complainants and perusing the material on record, the State Commission, vide the impugned order dated 27.01.2026, allowed the complaint and directed the Builder as follows:
A. To pay delayed compensation in the form of simple interest @ 6% per annum on the total amount paid by the Complainants, calculated from 31.12.2021 (the agreed date of handing over possession as per the Agreement) till the date of execution of the Conveyance Deed;
B. In the event the Builder fails to execute the Conveyance Deed within a period of three months from the date of the judgment, the delayed compensation payable under Direction (A) to be paid @ 9% per annum, calculated from 31.12.2021 till the actual date of execution of the Conveyance Deed;
C. To rectify, at its own cost, the defects in the apartment, namely seepage on the walls, peeling and damaged plaster, damage to wallpapers, visible dampness, and termite infestation affecting the interior back panel in the master bedroom;
D. To pay Rs. 1,00,000/- for mental agony and harassment to the Complainants; and
E. To pay the litigation cost to the extent of Rs. 50,000/-.
Aggrieved by the impugned order, the Builder has preferred the present Appeal, mainly on the following grounds:
The State Commission did not appreciate that the apartment had already been handed over to the Complainants on 06.06.2022, and that they are in actual, vacant, physical possession and peaceful enjoyment thereof; hence, the finding that the Complainants are not in lawful possession is erroneous.
The State Commission did not appreciate that non-execution of the Conveyance Deed is on account of force majeure circumstances under Clause 9.1 of the Agreement, namely, the failure of the MCF to furnish the Occupancy Certificate.
The State Commission did not appreciate that the dispute regarding grant of permissions is sub-judice between the Builder and the MCF before the Arbitrator, and registration of the Conveyance Deed cannot be carried out until the requisite permissions/sanctions are granted by the MCF.
The State Commission failed to appreciate that no compensation is payable when the delay is occasioned by force majeure circumstances.
The State Commission failed to grant the Builder adequate opportunity to make proper submissions.
The delay in handing over possession was on account of force majeure caused by the outbreak of Covid-19, there having been no construction activity between 25.03.2020 and 25.05.2020, resulting in a delay of only about 3.5 months.
The defects in the apartment are attributable to long-pending disputed works which the MCF, as per the allotment letter, was required to carry out; despite this, the Builder had completed the project, and the flat buyers, as also the society, are in residential/operational use.
The State Commission failed to appreciate the Written Submissions, Clarifications and Additional Written Submissions filed by the Builder, which, according to the Builder, establish that it had not delayed the project.
We have heard the learned counsel for the parties and have carefully perused the entire record, including the pleadings and evidence filed before the State Commission, the impugned order, the Agreement dated 05.08.2021, the RERA Registration Certificate No. 326/2017, and the written submissions filed on behalf of the parties.
Learned counsel for the Appellant/Builder reiterated the grounds taken in the Memorandum of Appeal, as noticed above, and contended that the finding of the State Commission that the Complainants are not in lawful possession, and the consequent direction to pay compensation and rectify defects, deserves to be set aside.
Per contra, learned counsel for the Respondents/Complainants supported the impugned order and submitted, inter alia, that:
In the absence of an Occupancy Certificate and execution of the Conveyance Deed, right, title and interest in the apartment does not vest in the Complainants, and mere physical occupation cannot be equated with lawful possession; the Builder, despite this, continued to collect maintenance charges from the Complainants.
Possession was not handed over by 31.12.2021, a date unilaterally inserted by the Builder itself, over 20 months after the date of allotment and without any extension having been obtained under RERA, where the completion date remained 31.12.2020. If, as claimed, construction was suspended for only about two months on account of Covid-19, no explanation is forthcoming as to why the unit remained unready for a year and a half thereafter, and why the Complainants were invited for fitments only in December 2021, when the apartment continued to suffer from defects and incomplete amenities. In any event, handover is complete only when the unit and the project are fit for habitation with due clearances and title has been transferred.
The delay in possession has escalated the cost of registration and stamp duty by about 40%, on account of upward revision of circle rates by the Government of Haryana, imposing an additional burden of about Rs. 4 Lakhs on the Complainants.
On taking possession, the Complainants found seepage throughout the unit. Despite assurances by the Builder that it would bear responsibility for any damage on account of inferior construction, and that the Complainants should proceed with fit-outs, the seepage was not addressed. After the Complainants completed interior works at a cost of about Rs. 20 Lakhs, it was discovered that sewage outlets in all bathrooms were blocked, causing extensive damage to walls, wallpaper and other fixtures.
The offer of physical possession vide letter dated 06.04.2022 cannot be treated as handover of complete possession, since execution and registration of the Conveyance Deed, which alone transfers title, is yet to take place. The dispute between the Builder and the MCF cannot be treated as force majeure, which must be an event of superior, unforeseeable and uncontrollable force; a regulatory dispute of the Builder's own making, and within its conception and responsibility, cannot be foisted upon the Complainants.
The State Commission had afforded ample opportunity to the Builder to file its reply, which the Builder did not avail of, nor did it challenge the order closing its right to file a reply; the Builder also made no attempt to rebut the Complainants' evidence. The contention that adequate opportunity was not granted is accordingly without substance.
The Written Submissions, Clarifications and Additional Written Submissions filed by the Builder before the State Commission did not constitute pleadings properly so called and did not furnish any viable defence on facts; they sought to allege absence of seepage as of September 2022 while ignoring the Complainants' documented complaints of seepage since December 2021, and reiterated an unsubstantiated allegation of sale at a discount that has no bearing on the Builder's admitted obligations under the Agreement dated 05.08.2021.
The Builder has also failed to allot the two individual car-parking spaces agreed to be provided to the Complainants, and instead appears to be reserving the same for allotment to new buyers at a premium; appropriate directions ought to be issued to ensure allotment of the parking spaces as agreed.
The points that arise for our consideration are: (a) whether the possession offered/handed over by the Builder is lawful and complete possession in the eye of law; (b) whether the plea of force majeure set up by the Builder is sustainable so as to absolve it of liability; (c) whether the finding of deficiency of service and the direction for rectification of defects call for any interference; and (d) whether the nature and quantum of compensation awarded by the State Commission is just and reasonable.
Lawful possession. It is not in dispute that, as on date, the Occupancy Certificate has not been obtained and the Conveyance Deed has not been executed in favour of the Complainants. Mere delivery of physical, vacant possession, without transfer of title and without the statutory Occupancy Certificate, does not amount to complete and lawful possession, and a purchaser cannot be compelled to accept such possession or be treated as having waived his claim for compensation merely because he has taken physical charge of the unit under protest and on the strength of the Builder's assurances. The Hon'ble Supreme Court, in Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, (2019) 5 SCC 725, has held that an inordinate delay in obtaining requisite approvals and in handing over possession amounts to deficiency of service, that a flat purchaser cannot be made to wait indefinitely for possession, and that clauses in a Builder Buyer's Agreement which are one-sided and favour the developer cannot be enforced to defeat the purchaser's legitimate claim for compensation. Applying this principle, we find no infirmity in the State Commission's finding that the Complainants, having received only physical possession without title and without the Occupancy Certificate, were justified in maintaining their claim for delayed-possession compensation, and Ground (i) of the Appeal is accordingly rejected.
Force majeure. The Builder's plea of force majeure rests on two limbs: first, the disruption of construction on account of Covid-19 between 25.03.2020 and 25.05.2020; and second, the pending dispute with the MCF regarding grant of the Occupancy Certificate. As regards the first limb, a disruption of about two months cannot, by itself, explain a delay in excess of twenty months in a project whose own RERA-declared completion date was 31.12.2020, and which the Builder itself unilaterally revised to 31.12.2021 in the belatedly executed Agreement. As regards the second limb, a dispute between the Builder and a statutory/municipal authority concerning grant of permissions is a regulatory and commercial risk inherent in undertaking a real estate project, and squarely within the Builder's own domain and responsibility; it cannot be characterised as a force majeure event of a superior, unforeseeable and uncontrollable nature so as to be visited upon the Complainants, who are strangers to that dispute. The Hon'ble Supreme Court, in Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna, (2021) 1 SCC 529, while examining a similar defence founded on delay in obtaining regulatory clearances, has cautioned against permitting developers to rely on one-sided contractual clauses and self-created regulatory delays to defeat the just claims of allottees, and has affirmed that the obligation to secure statutory approvals and clearances is that of the developer alone. We find that the Builder has failed to establish that the delay was occasioned by any force majeure event within the meaning of Clause 9.1 of the Agreement, and Grounds (ii), (iii), (iv) and (vi) of the Appeal accordingly fail.
Deficiency of service and defects. The presence of seepage, damaged plaster, damaged wallpaper, dampness and termite infestation in the apartment on account of blocked sewage outlets stands substantiated on record and has not been seriously controverted by the Builder before us, except by attributing the defects, in a general manner, to disputed works pending with the MCF. Clause 12(i) of the Agreement casts an unqualified obligation on the Builder to rectify, without charge, any structural or workmanship defect brought to its notice within five years of issuance of the Occupancy Certificate. The pendency of the Builder's own dispute with the MCF furnishes no justification for leaving genuine construction defects, brought to its notice as far back as December 2021 and repeated thereafter, unrectified. We also note that the Builder, having been given due opportunity to file its written version and having failed to avail of it, and having not challenged the closure of that opportunity, cannot now be permitted to contend that it was denied a fair hearing; Ground (v) is accordingly rejected. Similarly, Grounds (vii) and (viii), founded on the Written Submissions, Clarifications and Additional Written Submissions filed before the State Commission, do not, on a reading thereof, furnish any material to displace the documented complaints and evidence of the Complainants, and are accordingly rejected.
Quantum of compensation. The compensation directed by the State Commission is compensatory and restitutionary in nature, calculated by way of simple interest @ 6% per annum (enhanced to 9% per annum only in the event of continued default beyond three months) on the amount paid by the Complainants, from the very date, i.e., 31.12.2021, which the Builder itself had fixed as the date for handing over possession. It is well settled that a Builder Buyer's Agreement which, as is generally the case, entitles the developer to charge a higher rate of interest for delay in payment by the allottee than it offers to the allottee for delay in handing over possession, is a one-sided agreement, and consumer fora are not thereby precluded from awarding just and reasonable compensation dehors any such contractual stipulation. The Hon'ble Supreme Court, in Wg. Cdr. Arifur Rahman Khan v. DLF Southern Homes (P) Ltd., (2020) 16 SCC 512, has held that gross delay in handing over possession constitutes deficiency of service, that consumer fora are competent to award compensation exceeding any nominal rate stipulated in a one-sided agreement, and that execution of a Conveyance Deed, or acceptance of possession under protest, does not extinguish the purchaser's right to claim compensation for the period of delay. Tested on this touchstone, we find the compensation of 6%/9% per annum awarded by the State Commission, together with Rs. 1,00,000/- for mental agony and Rs. 50,000/- as litigation costs, to be modest, just and reasonable, and calling for no interference.
We may also note the grievance of the Complainants regarding non-allotment of the two individual car-parking spaces stated to have been agreed to at the time of allotment. While this was not a specific relief granted by the State Commission and no independent finding thereon is called for in this Appeal, we expect the Builder, consistent with its obligations under the Agreement dated 05.08.2021, to ensure that the parking spaces agreed to be provided to the Complainants are allotted to them, and are not diverted to other buyers.
For the reasons aforesaid, we find that the impugned order dated 27.01.2026 passed by the State Commission in Consumer Complaint No. 19 of 2023 is well reasoned, based on a proper appreciation of the material on record, and does not suffer from any illegality, material irregularity or jurisdictional error warranting interference by this Commission in its appellate jurisdiction. The Appeal is devoid of merit.
Accordingly, First Appeal No. 158 of 2026 is dismissed. The impugned order dated 27.01.2026 passed by the State Consumer Disputes Redressal Commission, Delhi, in Consumer Complaint No. 19 of 2023, is upheld in its entirety.
The pending IAs, if any, in the present Appeal stand disposed of.