Force majeure plea must be backed by evidence

The National Commission relied on past Supreme Court judgments to conclude that failure to hand over timely possession entitled the allottee to a refund along with interest

Patel Realty, a limited company, claimed to be the exclusive owner of a plot in Bengaluru on which it was developing a project called Townsville. On March 15, 2012, Adyaraj applied for a residential apartment. The builder issued an allotment letter on March 24, 2012, for a 3,477 sq. ft. unit with two parking spaces. After Adyaraj paid Rs 5 lakh, a sale agreement was signed on February 26, 2012. The agreement stated that the total cost would be Rs 1,76,33,762, and possession would be granted by December 2013, subject to a grace period extending till June 2014.

Adyaraj took a bank loan and paid Rs 1,21,47,705 according to the payment schedule. In December 2013, he learned that Patel Realty had undergone corporate insolvency proceedings and merged with Patel Engineering. Construction was incomplete, and the project had been transferred to Infinite Dwelling Pvt. Ltd. via a development agreement.

With possession still pending, Adyaraj had a legal notice issued in 2019 but did not receive a satisfactory response. After waiting for 11 years, he filed a complaint with the National Commission, alleging deficiency in service by Patel Engineering and Infinite Dwelling.

The complaint stated that the agreement imposed 24 per cent interest for delayed payments by the purchaser but only offered 10 per cent interest as compensation for possession delays. The builders argued the delay was due to force majeure, meaning due to circumstances beyond the builder’s control. Infinite Dwelling argued it could not be held liable as the development agreement stated that Patel Engineering would be solely responsible for delays.

The National Commission ruled that possession should have been given by June 2014. It rejected the force majeure defence, observing that no evidence was put forward to substantiate the plea that the delay was caused by unforeseen events.

The National Commission relied on the judgement of the Supreme Court in Fortune Infrastructure versus Trevor D’Lima where the apex court had observed that a flat purchaser can not be made to wait indefinitely for possession. It also relied on the Supreme Court’s decision in Bangalore Development Authority versus Syndicate Bank, where it was held that in case of failure to hand over possession of the allotted plot, flat, or house within the time specified in the agreement, the allottee would be entitled to a refund along with reasonable interest from the date of payment till the date of refund.

The Commission concluded that only Patel Engineering was liable for the delay, absolving Infinite Dwelling of responsibility.

The builder tried to argue that Adyaraj and his wife had booked one flat each, so they could not be consumers as booking of two flats should be construed as a purchase for commercial purpose. The National Commission rejected this argument as being devoid of merit.

Accordingly, by its order of June 27, 2024, the National Commission Bench of Sudip Ahluwalia ordered Patel Engineering to refund Rs 1,21,47,705 to Adyaraj, with 10 per cent interest from the date of each instalment payment until the refund date. It directed that the order should be complied with within two months. If payment was not made within this period, the interest rate would stand hiked to 12 per cent for the period of delay in compliance.

The writer is a consumer activist