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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

Civil Appeal No 155  of 2015

M/s Lanco Hills Technology Park Pvt Ltd                   .... Appellant(s)

      Versus

Manisha Balkrishna Kulkarni & Anr                  ....Respondent(s)

J U D G M E N T

Dr Dhananjaya Y Chandrachud, J

1 Admit.

2 This  appeal  arises  from  a  judgment  of  the  National  Consumer

Disputes  Redressal  Commission1 dated  9  October  2014  in  Consumer

Complaint No 112 of 2014.

3 An agreement to sell was executed between the appellant and the

respondents on 21 March 2011 under which the respondents agreed to

purchase  an  apartment  in  a  complex  which  was  developed  by  the

appellant  in  Hyderabad.   The  total  consideration  was  Rs  1,55,50,826.

Subsequently, an amount of Rs 6,00,000 was paid towards an additional

parking space.  Under Clause 5.1(iii) of the agreement, possession of the

1 NCDRC

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apartment was to be handed over to the respondents by 28 March 2011,

with  a  grace  period  of  three  months.   Clause  8  of  the  agreement

contemplated that the period of possession would be extended during the

operation of a force majeure event.  The appellant received a no-objection

certificate from the State Disaster Response and Fire Services Department

on 4 July 2011.  The final occupancy certificate for the residential tower in

which  the  apartment  was  situated  was  issued  by  the  Andhra  Pradesh

Industrial Infrastructure Corporation Limited on 22 August 2011.

4 Though  the  agreement  contemplated  that  possession  would  be

handed over on 28 March 2011 with a grace period of three months, it

appears that on 28 March 2011 a restraining order was issued by the State

Waqf Tribunal as a result of a dispute in relation to a part of the land on

which the project was being developed.  The order of the Waqf Tribunal

was upheld by the High Court on 3 April 2012.  However, on 8 May 2012,

the order of injunction was vacated by this Court.  On 15 October 2012, the

appellant informed the respondents that the apartment would be ready for

occupation on 3 November 2012 and followed this up with communications

dated 5 November 2012, 20 December 2012 and 7 February 2013.  By the

communication dated 20 December 2012, the appellant recorded that all

the  deficiencies  which had been noticed by the respondents  had been

cleared.  Eventually, a sale deed was executed on 11 February 2013 and

the  sale  transaction  was  completed  and  registered.   The  total

consideration  inclusive  of  the  cost  of  the  parking  space  was  Rs

1,61,50,826.   The  respondents  had  paid  85%  of  the  total  agreed

consideration under  the agreement  to  sell  while  the balance was paid,

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together with the execution of the sale deed.   

5 The  dispute  between  the  parties  relates  to  the  claim  of  the

respondents that despite the execution of the sale deed, possession was

not handed over.  The respondents moved a consumer complaint before

the  NCDRC  seeking  a  direction  for  the  handing  over  of  physical

possession, together with interest and damages for delayed delivery.

6 During the pendency of the proceedings, possession of the apartment

was handed over to the respondents on 28 August 2014.  A document

which is styled as “the Keys Hand Over Form” records that all three sets of

keys were handed over to the representative of the respondents.   

7 The NCDRC disposed of the consumer complaint by its judgment and

order dated 8 October 2014.  The NCDRC directed the appellant to pay

compensation at the rate of Rs 5 per sq ft for the delay of six months, at

the agreed contractual rate.  There is a direction to pay compensation at

the rate of 18% per annum for the delay beyond six months for which no

specific provision was contained in the agreement between the parties.

8 Learned counsel appearing on behalf of the appellant placed reliance

on the provisions contained in the sale deed which was executed on 11

February  2013.   Clause  3  of  the  sale  deed  contains  a  stipulation  of

possession being handed over in the following terms:

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“3. Possession

Simultaneously,  upon  the  execution  of  this  Sale  Deed and the full receipt of the total consideration, the Vendor has and the Purchasers acknowledge that the Vendor has handed over the  physical,  vacant,  lawful  and  peaceful  possession  of  the Scheduled Property.”

Hence, it has been submitted that upon handing over of possession, the

appellant was not liable to pay compensation to the respondents.  

9 On  the  other  hand,  it  has  been  submitted  on  behalf  of  the

respondents that despite the above stipulation in the sale deed, the fact of

the matter is that there were numerous deficiencies in the apartment which

was  agreed  to  be  sold  even  at  the  stage  when  the  sale  deed  was

executed.  Hence, it  has been submitted that it  was only on 28 August

2014 that possession was handed over, as is evidenced by the document

which was executed between the parties.

10 The agreement to sell contained a stipulation in Clause 5.1(iii) to the

effect that the appellant would hand over the possession of the apartment

by 28 March 2011 and, in any event, within a grace period of three months

thereafter.  The grace period expired on 28 June 2011.  The agreement

contained a stipulation to the effect that:

“In  the  event  of  occurrence of  a  Force  Majeure  Event  in terms of Clause 8 of this Agreement, the period of possession will be automatically extended for such period that the Force Majeure Event subsists.  In the event of any delay beyond the time stated above the Developer shall pay the Purchaser an amount of  Rs.5 (Rupees Five Only) per square foot  of the Super built up area of the Residential Unit for every month of delay up to a maximum of 6 months”.

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11 The  record  indicates  that  between  28  March  2011,  when  the

restraining order was passed by the Waqf Tribunal, and 8 May 2012, when

the injunction was vacated by this Court, the appellant was prohibited from

handing over of possession or alienating any part of the property.  One of

the force majeure events stipulated in Clause 8 of the agreement is to the

following effect:

“(iv) any notice, order, rules, notification of the Government and/or  other  public  or  competent  authority,  including  any prohibitory  order  of  any  court  against  development  of property;”

Hence, in terms of the stipulation contained in Clause 5.1(iii), the period for

handing over of the possession stood extended during the prevalence of

the force majeure event.  After the injunction was vacated by this Court on

8  May  2012,  the  appellant  had,  in  terms  of  the  grace  period  of  three

months, time until 8 August 2012.  Thereafter, for a period of six months

ending on 8 February 2013, the appellant was subject to the requirement

of paying compensation at Rs 5 per sq ft.  The agreement stipulated that

this would be for a delay of up to a maximum of six months.  The period of

six months ended on 8 February 2013.  The agreement did not make any

specific provision for the period thereafter.

12 The respondents had paid 85% of the agreed consideration, together

with the agreement to sell, and even the balance at the time when the sale

deed was executed on 11 February 2013.  Having paid the consideration,

it  was evidently  not  in  their  interest  to delay the receipt  of  possession.

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Though the sale deed records that possession was handed over, it is clear

from the contemporaneous record that it was only on 28 August 2014 that

all the sets of keys of the apartment were handed over to the respondents.

Consequently,  the  appellant  would  be  liable  to  pay  reasonable

compensation to the respondents for the period between 9 February 2013

and 28 August 2014, in addition to the contractual payment due for the

period between 8 August 2012 and 8 February 2013.   

13 However, we are of the view that the direction to pay interest at the

rate of  18% per annum is excessive and accordingly  has to be scaled

down. Adopting a rate of 6% as a broad guideline, we have computed the

compensation at a lump sum of Rs 10 lakhs to obviate any dispute on

computation.   

14 We accordingly issue the following directions:

(i) For the period between 8 February 2012 and 8 February 2013, the

appellant  shall  pay compensation in terms of Clause 5.1(iii)  of  the

agreement to sell at the rate of Rs 5 per sq ft;

(ii) For the period between 9 February 2013 and 28 August 2014, the

compensation which is payable by the appellant to the respondents is

computed at a lump sum of Rupees Ten Lakhs.

The aforesaid amount shall be paid within a period of one month from the

receipt of a certified copy of this order.

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15 The appeal is partly allowed in the above terms.  There shall be no

order as to costs.

…………...…...….......………………........J.                                                                     [Dr Dhananjaya Y Chandrachud]

…..…..…....…........……………….…........J.                              [Hrishikesh Roy]

 New Delhi; December 17, 2019

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ITEM NO.23               COURT NO.8               SECTION XVII-A

              S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS

Civil Appeal  No(s).  155/2015

M/S LANCO HILLS TECHNOLOGY PARK PVT LTD.           Appellant(s)

                               VERSUS

MANISHA BALKRISHNA KULKARNI & ANR.                 Respondent(s)

(WITH IA No. 2/2015 - STAY APPLICATION)   Date : 17-12-2019 This appeal was called on for hearing today.

CORAM :           HON'BLE DR. JUSTICE D.Y. CHANDRACHUD          HON'BLE MR. JUSTICE HRISHIKESH ROY

For Appellant(s) Mr. Deepak Khurana, Adv. Mr. Tejasv Anand, Adv. Mr. Umesh Kumar Khaitan, AOR

                   For Respondent(s) Mrs. D. Bharathi Reddy, AOR

Ms. D. Tejaswi Reddy, Adv.                      

UPON hearing the counsel the Court made the following                               O R D E R

Admit.

The appeal is partly allowed in terms of the signed

reportable judgment.

There shall be no order as to costs.

Pending application, if any, stands disposed of.

 (SANJAY KUMAR-I)                (SAROJ KUMARI GAUR)      AR-CUM-PS                           COURT MASTER

(Signed reportable judgment is placed on the file)