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Synopsis

The Supreme Court has ordered the Agra Development Authority (ADA) to compensate a home buyer with Rs 15 lakh and refund the full amount paid for a flat, citing the absence of completion and fire safety certificates as valid grounds for the buyer's refusal to accept possession.

A bench of Justices Vikram Nath and Prasanna Bhalachandra Varale noted that ADA, despite making an offer of possession in 2014, did not fulfill its statutory obligations by providing the requisite completion certificate and firefighting clearance certificate, both of which are essential for a valid and lawful offer of possession. 

The absence of these documents, which were also not furnished before the NCDRC, unquestionably vitiates the offer of possession made by the ADA, the bench added.

"The appellant’s key contention regarding the absence of the completion certificate and firefighting clearance certificate merits serious consideration. The appellant consistently raised this issue, asserting that a valid offer of possession cannot be made without these documents," the bench said.

Court also noted that Section 4(5) of the UP Apartment (Promotion of Construction, Ownership & Maintenance Act, 2010 and Section 19(10) of the RERA Act, 2016 mandates that a developer must obtain these certificates before offering possession. 

"Despite the appellant's repeated requests, ADA failed to produce these certificates, rendering its offer of possession incomplete and legally invalid," the bench said.

Appellant Dharmendra Sharma cited Debashis Sinha v. R.N.R. Enterprise (2023), in which the top court held that possession offered without the requisite completion certificate is illegal, and a purchaser cannot be compelled to take possession in such circumstances. 

Referring to Pioneer Urban Land and Infrastructure Limited Vs Union of India & Ors (2019) and Treaty Construction Vs Ruby Tower Cooperative Housing Society Ltd (2019), court pointed out that it had been held that the absence of these certificates was found to constitute a deficiency in service. 

"In the present case, the ADA's failure to provide the required certificates justifies the appellant’s refusal to take possession. This strengthens the appellant’s claim for additional compensation to compensate for the delay caused by ADA’s breach of its statutory obligations," the bench said.

The court, therefore, dismissed the civil appeal filed by the ADA regarding both limitation and pecuniary jurisdiction as without merit.

"In consumer disputes, the value of the claim is determined not just by the amount deposited but by the aggregate relief sought, which includes compensation and other claims. Therefore, the NCDRC rightly held that it had the requisite pecuniary jurisdiction to entertain the complaint, and this court affirms that finding," the bench said.

It also pointed out that the ongoing interactions between the parties, including ADA's acceptance of part payment in 2019 and the reminders sent, effectively extended the limitation period under established legal principles.

The home buyer had also challenged the decision of the National Consumer Disputes Redressal Commission of September 15, 2023, directing a refund of the entire amount deposited by the complainant (appellant) (except non-judicial stamp paper worth Rs 3,99,100 deposited on February 15, 2014) along with interest at the rate of 9% per annum from the date of the complaint i.e. July 11, 2020 till the date of refund within a period of two months from the date of the order.

After going through the facts of the matter, the bench said, "This court is of the considered view that both parties have exhibited lapses in their respective obligations."

Ccourt noted, on one hand, the appellant, despite having paid the tentative price of Rs 56,54,000 in 2012, failed to remit the additional amount of Rs 3,43,178, as demanded by the ADA, even after being repeatedly reminded. 

Instead, the appellant persistently sought a waiver of the penal interest on the delayed payment, eventually settling the amount only on June 04, 2019, a significant delay that cannot be overlooked and that too without the interest component which had further accrued over a period of about five years, the bench said. 

On the other hand, the ADA, despite making an offer of possession in 2014, did not fulfill its statutory obligations by providing the requisite completion certificate and firefighting clearance certificate, both of which are essential for a valid and lawful offer of possession, the bench added.

Taking into account the shortcomings on the part of both the appellant and the ADA, court deemed it appropriate to provide a compensation of Rs 15,00,000, apart from what was awarded by the NCDRC. 

"Therefore, apart from the refund of the entire amount deposited by the appellant at the rate of 9% interest per annum from July 11, 2020 till the date of refund, the ADA is directed to pay an additional amount of Rs 15,00,000 only to the appellant," the bench said.

Court directed for payment of the entire amount within three months of the court's order. It ordered the ADA to return the non-judicial stamp worth Rs 3,99,100 back to the appellant.

In its judgment on September 6, 2024, the bench said, "We refrain from imposing any exemplary costs on either party, recognising that both have contributed to the situation at hand. It is also to be noted that the ADA, being a civic body tasked with serving the public and operating on a non-profit basis, should not be unduly penalised in a manner that could impede its functioning."

Case Title: Dharmendra Sharma Vs Agra Development Authority