caselaws
Supreme Court of India
M/S Ireo Pvt. Limited vs Aloke Anand on 21 January, 2022Author: Hon’Ble Dr. Chandrachud
Bench: Hon’Ble Dr. Chandrachud, Hon’Ble Ms. Trivedi
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 180 of 2022
M/s IREO Private Limited …Appellant
Versus
Aloke Anand and Others …Respondents
WITH
Civil Appeal No. 268 of 2022
Signature Not Verified
Digitally signed by
DEEPAK SINGH
Date: 2022.01.31
15:17:43 IST
Reason:
1
JUDGMENT
Dr Justice Dhananjaya Y Chandrachud, J
1 The appeals under Section 23 of the Consumer Protection Act 19861 arise
from the decision of the National Consumer Disputes Redressal Commission2 on
complaints which were instituted against the appellant by the allotees of its
housing project called „SKYON‟, located at Golf Course Extension Road in Sector
60 of Gurgaon, Haryana3. The appellant advertised that the Project offered state
of the art facilities such as home automation devices, Wi-Fi and high-end video
door security systems in each apartment.
2 The Building Plans for the Project were approved by the Directorate of
Town and Country Planning, Haryana 4 on 27 September 2011, subject to certain
terms and conditions to be fulfilled by the appellant. Thereafter, on 31 July 2012,
the State Environment Impact Assessment Authority, Haryana granted an
Environment Clearance for the Project.
3 The appellant submitted an application to the Commissioner, Municipal
Corporation, Gurgaon5, for approval of the Fire Fighting Scheme for the Project
on 16 January 2012. The CMC Gurgaon granted the approval on 25 September
20136.
4 On 26 August 2016, the Occupation Certificate was issued by the Director
1
“COPRA”
2
“NCDRC”
3
“Project”
4
“TCP Haryana”
5
“CMC Gurgaon”
6
“Fire NOC”
2
General of TCP Haryana in respect of Tower D of the Project. Further, on 14
September 2017, the Occupation Certificate was issued in respect of Tower B of
the Project.
5 Other than these common facts in relation to the Project, the appeals arise
from separate complaints and have distinct facts. However, they raise a common
issue. Hence, we shall set out the facts of the lead appeal (Civil Appeal No 180 of
2022) in detail.
6 In Civil Appeal No 180 of 2022, the first respondent filed a booking
application for an apartment in the Project on 22 December 2010. An amount of
Rs 15,00,000 was paid as booking amount by a cheque dated 14 October 2010.
7 The appellant issued a letter offering allotment to the first respondent on 14
January 2011, by which the appellant allotted an apartment having a tentative
super area of 2809 sq ft, bearing No B3203, Floor 31 in Tower B of the Project.
The appellant and the first respondent entered into an Apartment Buyers
Agreement7 on 14 February 2012.
8 Due to the apartment not being handed over in time by the appellant, the
first respondent filed a consumer complaint8 before the NCDRC on 3 May 2017.
The reliefs claimed in the complaint were as follows:
“i. Direct the Opposite Parties to handover possession of Unit
to the Complainant, complete in all respects and in conformity
with the Allotment Letter and Apartment Buyers’ Agreement,
with all additional facilities and as per quality standards
promised and execute all necessary and required documents
7
“ABA”
8
Consumer Complaint No 1277 of 2017
3
in respect of the said apartment in favour of the Complainant
within 6 months of this petition being filed before this Hon’ble
Commission or as directed by this Commission;
ii. Direct the Opposite Parties for an immediate 100% refund
of the total principal amount of Rs. 2,23,91,480/- (Rupees
Two Crore Twenty Three Lakh Ninety One Thousand Four
Hundred and Eighty Only) paid by the Complainant, along
with a penal interest of 18% per annum from the date of the
receipt of the payments made to the Opposite Parties, in case
the Opposite Parties cannot deliver or fail to deliver the
absolute, complete and final physical possession of the flat
within a period of 6 months of this petition being filed before
this Hon’ble Commission or as directed by this Hon’ble
Commission;
iii. Direct the Opposite Parties to pay a delayed possession
compensation equal to interest @ 18% per annum on the
amount deposited by the Complainant with the opposite
Parties, with effect from March 2015 i.e. date when
possession was promised, till the date of actual possession is
handed over by the Opposite Parties along with all necessary
documents and common areas and facilities as promised
during the initial booking made by the Complainant;
[…]”
From the prayers, it is clear that the first respondent sought a direction to the
appellant to provide the apartment, compliant with all the requirements mentioned
in the ABA, within six months of the complaint, i.e., by 3 November 2017. In
relation to this prayer, the first respondent also filed an interim application9 before
the NCDRC seeking a direction to the appellant for the delivery of possession of
the apartment. Along with this, the first respondent sought compensation for
delayed possession, calculated at the rate of 18 per cent per annum on the
amount deposited with the appellant from the date on which actual possession
was to be delivered (March 2015). However, if the appellant failed to deliver the
9
IA No 17613 of 2017
4
possession of the apartment within six months, the first respondent sought the
refund of the principal amount of Rs 2,23,91,480, with interest at 18 per cent per
annum from the date the amount was paid by the first respondent to the
appellant.
9 The appellant issued a notice to claim possession to the first respondent
on 25 September 2017. On 16 February 2018, the NCDRC passed an interim
order, inter alia, in relation to the interim application:
“Arguments on IA No. 17613 of 2017 filed by the complainant
heard. By this application, complainant is seeking direction to
the opposite parties to deliver possession of the allotted
apartment being unit no. SY-B-32-03. Learned counsel for the
complainant submits that he is ready and willing to take
possession of the flat if found in fit condition and he is also
ready and willing to pay the payment raised by the opposite
party subject to the decision in this complaint. Learned
counsel for the opposite party has no objection if interim order
is passed as stated by learned counsel for the complainant.
In view of the above, application is disposed of with the
direction that opposite parties shall deliver possession of the
allotted apartment to the complainant on payment of
demanded dues by the complainant within one month of the
date of payment. It is made clear that this order is subject to
final outcome of the complaint. Counsel for the opposite
parties state that in view of the interim order passed today on
the application of complainant, he does not press his IA No.
2661 and 2662 of 2018.”
10 On 17 May 2018, the first respondent filed another interim application
bringing on record several photographs showing that the apartment was not
complete and was not in a habitable condition. In response to an email from the
first respondent, the appellant sent the following email on 25 September 2018:
“We have noted the content if your email and wish to apprise
you that due to limited workforce, the finishing work is slow at
5
the site. We expect the same to resume in full force in near
future and thereafter, we may look at completing the work at
the earliest for the handover.”
Thus, it is clear the apartment which had been offered for possession by the
appellant was not complete in all respects nor was it in a habitable condition.
11 By its judgment dated 1 November 2021, the NCDRC held that the
appellant did not contest that an amount of Rs 2,23,91,480 had been paid by the
first respondent. It then noted that the first respondent would be considered as a
consumer within the meaning of Section 2(1)(d) of COPRA since the appellant
had not brought on record anything to prove that the first respondent was
indulging in the business of buying/selling apartments. On merits, the NCDRC
relied on a decision rendered by it on 6 December 2019 in relation to the
appellant‟s Project (Siddharth Vasisht v. lREO Pvt. Ltd. and Ors10), which was
upheld by this Court on 11 December 202011. The NCDRC thus ordered a refund
of Rs 2,23,91,480 with simple interest at the rate of 10.25 per cent per annum,
which it noted was the rate of interest payable under the Real Estate (Regulation
and Development) Act 2016 in Haryana in respect of cases where refund is made
to flat buyers due to the delay of the developer in handing over possession.
12 In Siddharth Vasisht (supra), relying on its previous decision in
Shamshul Hoda Khan v. IREO Victory Valley Pvt. Ltd. and Anr.12, the NCDRC
had rejected the appellant‟s argument that the calculation of the period for the
10
Consumer Case No 1062 of 2018
11
Civil Appeal (Diary) No 21634 of 2020
12
Consumer Case No 2110 of 2016, decided on 17 January 2019
6
delivery of possession of the apartment under Clause 13.3 of the ABA would only
start from the date the Fire NOC was granted. In Shamshul Hoda Khan (supra),
the NCDRC had rejected the developer‟s submission by noting that the Haryana
Fire Service Act 200913 did not prohibit the commencement of construction on a
housing project after Building Approval was sanctioned and pending a Fire NOC
if the Building Approval did not contain such a condition and, in any case, the
appellant had commenced construction on the housing project before it received
the Fire NOC. Similarly, in Siddharth Vasisht (supra), the NCDRC also noted
that the appellant had commenced construction on the Project before it received
the Fire NOC.
13 This Court rejected the appeal against the decision in Siddharth Vasisht
(supra) by relying on its earlier order dated 3 May 2019 14 rejecting the appeal
against Shamshul Hoda Khan (supra). This Court has thereafter rejected a
review petition 15 against its order rejecting the appeal against the decision in
Shamshul Hoda Khan (supra) by an order dated 15 October 2019, where it
noted that the NCDRC had correctly pointed out that since the appellant began
construction before the Fire NOC was granted, it could not argue that the period
for delivery of possession should start only from the date the Fire NOC was
granted. This Court held:
“Delay in filing the review petition is condoned.
The principal submission raised in the review petition is on
the basis of Section 15(1) of the Haryana Fire Service Act,
13
“HFS Act”
14
Civil Appeal No 4801 of 2019
15
Review Petition (Civil) No 2339 of 2019
7
2009. It is submitted that the construction of a building could
only begin after the Fire Scheme was approved by the
concerned authority and as the Fire Safety Scheme in the
present case was approved on 28.10.2013 the period ought
to be reckoned from that date.
The submission was dealt with by the National Commission
and the relevant portion from para 10 was as under:
“It is an admitted position that the opposite party had been
raising demand based upon the stage of construction even
prior to 28.10.2013 when the first fire safety clearance came
to be issued. The payment plan agreed between the parties
envisaged payment of the 3rd instalment on commencement
of excavation, 4th on casting of basement roof slab and the 5th
on casting of ground floor roof slab. The 6th instalment was
payable on casting of 3rd floor roof slab. It is an admitted
position that even the 4th instalment which was payable on
casting of basement roof slab was demanded on 5.2.2013.
The 5th and 6th instalments were demanded on 21.3.2013 and
18.9.2013 respectively. Admittedly, the fire safety clearance
had not been received by that time.”
In view of the circumstances on record this Court refused to
interfere and dismissed the civil appeal.
We have gone through the review petition and do not find any
substance in the submissions raised therein. This review
petition is, therefore, dismissed.”
14 In the present appeal, Mr Ankur Saigal, learned Counsel appearing on
behalf of the appellant, has submitted that:
(i) Clause 13.3 of the ABA stipulates that possession would be handed over
within forty-two months after the pre-conditions were fulfilled, and there
was a grace period of 180 days. It has been submitted that the Building
Plan sanctioned on 27 September 2011 contained a requirement of a Fire
NOC, and the Fire NOC was received only on 25 September 2013. Hence,
the contractual date for handing over possession, including the 180 days‟
grace period, would be 24 September 2017. In this context, reliance has
8
been placed on the communication of the appellant dated 25 September
2017 making an offer of possession;
(ii) In view of the judgment of this Court dated 11 January 2021 in IREO
Grace Realtech Private Limited v. Abhishek Khanna and Others16, the
period for delivery of possession begins only from the date the Fire NOC is
granted; and
(iii) A direction for refund together with interest was not warranted because the
relief sought in the consumer complaint before the NCDRC was
possession of the flat and the prayer for refund was set up in the alternate,
in the event that possession could not be offered. Since the appellant
offered possession within the contractual period, there is no valid basis to
order a refund.
15 Opposing these submissions, Ms Nina R Nariman, learned Counsel
appearing on behalf of the first respondent, submitted that:
(i) The first respondent moved an interim application before the NCDRC
seeking a direction for the delivery of possession. On 16 February 2018,
the NCDRC disposed it off with a direction to the appellant to deliver
possession upon the payment of the outstanding dues, within a month of
the date of payment;
(ii) On 25 September 2018, nearly seven months after the interim order of the
NCDRC, the appellant addressed an email, inter alia, stating that “…due to
limited workforce, the finishing work is slow at the site”. The appellant‟s
16
(2021) 3 SCC 241
9
email stated that it expected “the same to resume in full force in near future
and thereafter…may look at completing the work at the earliest for the
handover”. In view of the above email, the appellant was not in a position
to hand over possession even as on 25 September 2018; and
(iii) The construction of the Project started even before the issuance of the Fire
NOC, as is apparent from the fact that letters of demand were addressed
to the first respondent commensurate with the casting of slabs on 18
February 2013, 27 May 2013 and 3 December 2013. Hence, the plea that
the period for the delivery of possession of the apartment commenced only
from the date of the Fire NOC is not tenable.
16 The primary relief which was sought by the appellant before the NCDRC
was the handing over of possession of the flat allotted under the ABA. The bona
fides of the first respondent are apparent from the fact that interim application
was moved before the NCDRC for handing over possession. In other words,
consistent with the plea in the complaint, the first respondent sought possession
in the first instance. An interim order was passed on 16 February 2018 directing
the appellant to hand over possession.
17 The core submission of the appellant is that the date for handing over
possession would be 24 September 2017, having regard to the provisions of
Clause 13.3 of the ABA. Clause 13.3 provided as follows:
“13.3 Subject to Force Majeure, as defined herein and
further subject to the Allottee having complied with all its
obligations under the terms and conditions of this Agreement
and not being in default of any provision(s) of this Agreement
including but not limited to the timely payment of all dues and
10
charges including the total Sale Consideration, registration
charges, stamp duty and other charges and also subject to
the Allottee having complied with all formalities or
documentation as prescribed by the Company, the Company
proposes to hand over the possession of the said Apartment
to the Allottee within a period of 42 (forty two) months from
the date of approval of the Building Plans and/or fulfillment of
the preconditions imposed thereunder (‘Commitment Period’).
The Allottee further agrees and understands that the
Company shall additionally be entitled to a period of 180 days
(‘Grace Period’), after the expiry of the said Commitment
Period to allow for unforeseen delays in obtaining the
Occupation Certificate etc., from the DTCP under the Act, in
respect of SKYON Project.”
18 According to the appellant, in terms of the above clause, the date by when
the offer of possession could be made would be 24 September 2017. This
submission runs contrary to the orders of this Court dismissing the appeals
against NCDRC‟s decisions in Shamshul Hoda Khan (supra) and Siddharth
Vasisht (supra), both of which are of two-judge Benches. However, in support of
this proposition, the appellant has placed reliance on the decision of this Court in
Abhishek Khanna (supra), which is a decision by a three-judge Bench.
19 In Abhishek Khanna (supra), which was in relation to another housing
project of the appellant, one of the issues before this Court was:
“22.1. (i) Determination of the date from which the 42 months
period for handing over possession is to be calculated under
Clause 13.3, whether it would be from the date of issuance of
the fire NOC as contended by the developer; or, from the date
of sanction of the building plans, as contended by the
apartment buyers.”
After analysing the provisions of the HFS Act, Clause 13.3 of the ABA (which
contained the same condition as the ABA in this case, that the period for delivery
11
of possession would commence from the “date of approval of the Building Plans
and/or fulfillment of the preconditions imposed thereunder”), and Clauses 3 and
17(iv) of the sanctioned Building Approval (which are identical to Clauses 317 and
17(v)18 of the sanctioned Building Approval in the present case), the Court held
that the period for delivery of possession would only commence from the date the
Fire NOC was granted. This Court held:
“25.7. The environmental clearance granted by the Ministry of
Environment & Forest Government of Haryana on 12-12-2013
required the developer to submit a copy of the fire safety plan
approved by the Fire Department, before commencing
construction of the project. General Condition (vi) under Part
B of the environmental clearance stipulated that the
developer shall obtain all other statutory clearances, including
the approval from the Fire Department, prior to construction of
the project. Clause (vi) provides that:
“(vi) All other statutory clearance such as the approvals for
storage of diesel from Chief Controller of Explosive, Fire
Department, Civil Aviation Department, Forest Conservation
Act, 1980 and Wild Life (Protection) Act, 1972, Forest Act,
1927, PLPA 1900, etc. shall be obtained as applicable by
project proponents from the respective authorities prior to
construction of the project.”
(emphasis supplied)
17
“3. FIRE SAFETY:
[…]
On receipt of the above request the Commissioner, Municipal Corporation, Gurgaon after satisfying himself that
the entire fire protection measures proposed for the above buildings are as per NBC and other Fire Safety Bye
Laws, and would issue a NOC from Fire safety and means of escape/access point of view. This clearance/NOC
from Fire Authority shall be submitted in this office along with a set of plans duly signed by the Commissioner,
Municipal Corporation, Gurgaon within a period of 90 days from the date of issuance of sanction of building plans.
Further, it is also made clear that no permission for occupancy of the building shall be issued by Commissioner,
Municipal Corporation, Gurgaon unless he is satisfied that adequate firefighting measures have been installed by
you and suitable external firefighting infrastructure has been created at Gurgaon, by Municipal Corporation,
Gurgaon. A clearance to this effect shall be obtained from the Commissioner, Municipal Corporation, Gurgaon
before grant of occupation certificate by the Director General.”
18
“17. GENERAL:-
[…]
(v) That the colonizer shall obtain the clearance/NOC as per the provisions of the Notification No. S.O. 1533 (E)
Dated 14.09.2006 issued by Ministry of Environment and Forest, Government of India before starting the
construction/execution of development works at site.”
12
25.8. We are of the view that it was a mandatory requirement
under the Haryana Fire Service Act, 2009 to obtain the fire
NOC before commencement of construction activity. This
requirement is stipulated in the sanctioned building plans, as
also in the environment clearance.
25.9. The 42 months’ period in Clause 13.3 of the Agreement
for handing over possession of the apartments would be
required to be computed from the date on which fire NOC
was issued, and not from the date of the building plans being
sanctioned.”
Based on this, the Court held19 that allottees who had been offered possession
and in respect of whose apartments the Occupation Certificate had been issued,
were bound to take possession (after having been paid compensation for the
delay in offering possession) and could not terminate the ABA. However, it is
important to note that the Court found that the construction in respect of their
apartments was complete.
20 In the present case, since the Fire NOC was only granted on 25
September 2013, the period for delivery of possession of the apartment (the forty-
two months period, along with the 180 days‟ grace period) would end on 24
September 2017. The appellant issued a notice of possession to the first
respondent on 25 September 2017.
21 However, even if this submission of the appellant is accepted, it is
apparent that the appellant was not in a position to comply with the interim order
of the NCDRC for the handing over of possession. Though the interim direction
was issued on 16 February 2018, the email of the appellant dated 25 September
19
Paragraph 44
13
2018 indicates that possession could not be handed over due to the absence of
an adequate work force at the site. Thus, it is evident that the appellant was not
in a position to hand over possession of the apartment even after the interim
order. In this backdrop, the order of the NCDRC for the grant of refund at the
appropriate rate of interest cannot be faulted.
22 For the above reasons, we affirm the judgment of the NCDRC, since the
position in the present case is distinguishable from the facts before this Court in
Abhishek Khanna (supra).
23 In Civil Appeal No 268 of 2022, the first respondent was allotted an
apartment in Tower D of the Project. The ABA was signed on 6 September 2013.
The appellant issued a notice of possession on 6 September 2016. The first
respondent filed a consumer complaint 20 before the NCDRC on 14 February
2017 seeking a refund of the amount paid with interest at 18 per cent per annum
or the possession of the apartment, if the appellant was willing to complete the
apartment in accordance with the specifications in the ABA in a time bound
manner and not charge any further amount over and above the sale
consideration. By its judgment dated 22 November 2021, which takes note of the
decision of this Court in Abhishek Khanna (supra), the NCDRC directed the
appellant to refund the principal amount to the first respondent with interest at the
rate of 10.25 per cent per annum.
24 We have heard Mr Ankur Saigal, learned Counsel for the appellant and Mr.
20
Consumer Case No 417 of 2017
14
Vaibhav Gaggar, learned Counsel for the respondent.
25 The finding of fact which has been recorded by the NCDRC in its
impugned judgment dated 22 November 2021 is that the amenities which were
promised by the appellant have not been provided in the Project and the
apartment. In the course of discussion, the NCDRC has, in fact, tabulated the
amenities which were to be but have not been provided. In this view of the
matter, the direction for the refund of the amount paid together with interest,
cannot be faulted. The appellant made a solemn representation to the flat buyer
of the amenities which would be provided in the flat and the Project. A breach of
this representation is actionable at law.
26 The appeals are accordingly dismissed.
27 Pending applications, if any, stand disposed of.
……..…………….……………………..J.
[Dr Dhananjaya Y Chandrachud]
……..…………….……………………..J.
[Bela M Trivedi]
New Delhi;
January 21, 2022
15
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