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The Supreme Court has dismissed an appeal filed by a few homebuyers wherein certain allegations were made against DLF Universal Limited for engaging in unfair/restrictive trade by demanding extra charges after the construction of the apartments had already begun.

A 3-judge bench of Justices L Nageshwar Rao, BR Gavai and BV Nagarathna held that there was no misrepresentation by the construction company and, therefore, the allegation of unfair trade practice came to be rejected.

BB Patel and a few others approached the top court in appeal against the judgment of the Monopolies and Restrictive Trade Practices Commission, New Delhi whereby a complaint filed by them under Sections 36-A, 36-B(a) and (d), 36-D and 36-E read with Sections 2(i) and 2(o) of the Monopolies and Restrictive Trade Practices Act, 1969 came to be dismissed.

In their complaint, the appellant homebuyers had alleged that though the possession of the flats was to be handed over to them in January 1996, construction commenced only in June, 1996.

Moreover, a demand letter was issued on June 2, 1997 by which they were intimated about the extra charges which worked out to Rs. 8,78,905/- for each flat on account of increase in the area by 9.236 sq. meters, escalation charges on material and labour, external electrification costs including 24 hours back-up power, sub-station DG sets, etc.

They were then asked to pay the extra amount and after they refused to do so, DLF cancelled the Apartment Buyer Agreement (ABA) as the outstanding amount was not paid. DLF also issued cheques refunding the amounts paid for the flat by the homebuyers which were not encashed by them.

The top court held that in so far as unfair trade practice with reference to the delay in handing over possession was concerned, the relevant clauses in the ABA which was entered into between the parties were clauses 16, 18 and 21(d).

According to clause 16, the Court noted that the company was entitled for reasonable extension of time for delivery of possession of the premises, in case, possession could not be delivered within 2 1/2 to 3 (two and half to three) years from the date of booking. 

"There is no doubt that there has been a delay in completion of the project beyond three years. However, the appellants did not issue any notice for termination of the agreement. On the other hand, notices issued by the appellants on 24.02.1998, 22.04.1998 and 12.08.1998 related to demand of extra costs. The appellants did not, at any point of time, make a grievance relating to delay in handing over of possession of the apartment....", the Bench noted.

It was further held that there was no intention on the part of the appellants to insist on time being the essence of contract as they did not terminate the ABA due to delay in handing over possession of the apartments which they could have, in accordance with clause 18 of the ABA.

"The allegation in the complaint is that the respondent has committed unfair trade practice by seeking to recover large sums of money from the buyers without handing over possession of the flats. In the garb of delay in handing over possession of the property, the appellants are seeking possession of a property, the cost of which is more than 10 times the price at which it was offered, without even paying the balance basic sale price", held the bench.

Relying on the ABA, the Court opined that the extra charges that were demanded by the respondent were pursuant to clauses 2(b), 4, 15 and 16 of the ABA and were thus allowed.

The Court further disagreed with the contention of the appellants that imposition of extra charges was a calculated and pre-planned design of the company.

Justice Nageshwar Rao in his judgment added that the compensation sought by the appellants could not be granted as Section 12-B of MRTP Act empowers the Commission to grant compensation only when any loss or damage is caused to a consumer as a result of a monopolistic, restrictive or unfair trade practice.

DLF informed the Court that the price of each flat was Rs.3.25/- crores today. In response to the suggestion made by the Court, DLF submitted that they were willing to handover the flats provided the appellants pay the balance amount payable i.e., Rs.31,52,933/- for each flat.

Thus, while disposing of the appeal, the bench ordered,

"Though, we have upheld the order of MRTP Commission, in the interest of justice, the respondent shall handover possession of the flats to the appellants on payment of Rs.25,00,000/- (Rupees Twenty-Five Lakhs Only) for each flat by the appellants."

Cause Title: B.B. Patel & Ors. vs DLF Universal Ltd.