Landowners Not Liable For Builder’s Delay in Flats: Supreme Court

The Supreme Court has held that landowners cannot be held liable for deficiency in service caused by delay in construction when the responsibility for construction lies entirely with the developer, especially when the developer has indemnified the landowners against any acts or omissions related to construction.

A Bench of Justice P S Narasimha and Justice Alok Aradhe observed that under the joint development agreement (JDA), the construction work was to be carried out by the developer and the delay in handing over possession related to flats that fell within the developer’s share.

Court noted that under the JDA and the general power of attorney (GPA), the developer had the authority to enter into sale agreements, undertake construction, receive payment from buyers, hand over possession and transfer title in respect of the flats allotted to its share.

The Bench dismissed appeals filed under Section 67 of the Consumer Protection Act, 2019 against the National Consumer Disputes Redressal Commission’s orders dated July 30, 2024 and October 19, 2023.

The commission had held that in view of the JDA and the sale agreement, the landowners could not be held jointly and severally liable for deficiency in service. At the same time, it directed both the landowners and the developer to transfer title and execute sale deeds in favour of the flat buyers.

The dispute arose from delay in handing over possession of flats to the buyers.

Counsel for the appellants argued that since the landowners had executed a GPA in favour of the developer, a principal-agent relationship existed between them. It was contended that the landowners, being principals, were equally liable for the deficient acts of the developer. Relying on various clauses of the sale agreement, the appellants claimed that both the landowners and the developer were jointly and severally responsible for the delay.

On the other hand, counsel for the landowners argued that under the JDA, the entire responsibility for construction and delivery of flats rested with the developer. It was also pointed out that the developer had indemnified the landowners against any liability arising out of construction-related acts or omissions.

The landowners further submitted that the delay in handing over possession was not caused by any act or omission on their part. They also argued that the Commission’s direction requiring them to transfer title and execute sale deeds was difficult to implement.

After hearing both sides, the Supreme Court noted that the appellants had not alleged that the delay in construction was caused by any action or inaction of the landowners.

“The liability to pay delay compensation is sought to be fastened only on the ground that there is a relationship of principal and agent,” the Bench observed.

Court said the landowners and the developer were jointly responsible for ensuring transfer of title to the buyers and therefore the commission was right in directing both parties to execute sale deeds in favour of the appellants.

However, the Bench clarified that the clauses relied upon by the appellants did not show that the landowners had any obligation to undertake construction.

“For the lapse on the part of the developer, the landowners, who are in no way concerned with the construction, cannot be held liable for deficiency in service, particularly when the developer has indemnified them against acts of commission or omission in construction,” Court said.

The Bench held that the Commission had correctly fastened liability for delay compensation on the developer, as it was responsible for the delay in construction. It also noted that the interests of the flat buyers had been protected because both the landowners and the developer had been directed to transfer title and execute sale deeds.

Finding no merit in the appeals, Court dismissed them and clarified that the question of joint and several liability of landowners and developers would depend on the facts of each case.

Case Title: Sriganesh Chandrasekaran & Others Vs M/s Unishire Homes LLP & Others 

Bench: Justices P S Narasimha and Alok Aradhe

Date of Judgment: February 20, 2026