Sc Finds Whether The Developers Are Liable To Pay Compensation For Failing To Handover The Possession Of Flat To Buyers

Case title:

Parsvnath Developers Ltd. Vs. Gagandeep Brar and Anr

Date of Order:

13th April 2023

Bench:

Justice M R Shah and Bopanna

Parties:

Petitioner: Parsvnath Developers Ltd.

Defendant: Gagandeep Brar and Anr

Facts:

• The developer, Parsvnath Developers Limited has filed four appeals with Civil Appeal Nos. 6380/2021, 6383/2021, 6385/2021, and 6384/2021, feeling resentful and unsatisfied with the impugned common order dated 05.02.2020 passed by the National Consumer Disputes Redressal Commission, New Delhi (for short, "National Commission"
• The development of residential, commercial, and other relevant infrastructure facilities as part of an integrated project at Rajiv Gandhi Chandigarh Technological Park in Chandigarh under the name "Pride Asia" was given to CHB by the Chandigarh Administration on December 1, 2005. The CHB accepted the appellant's - developer's - offer. In order to award development rights for 123 acres of land, CHB and the developer agreed into a Development Agreement on October 6, 2006. The aforementioned land was given to the developer, who is the appellant, by CHB for the purpose of building residences. The developer then advertised its project for the sale of flats and penthouses under the name and design of "Parsvnath Pride Asia."
• The aforementioned private responders submitted applications for the project's flat allocation. The Developer, CHB, and the private respondents/flat owners/allottees afterwards signed Tripartite Agreements. The development of the flats was expected to be finished within 36 months of the date on which the Development Agreement between CHB and the appellant, i.e., 06.10.2006, was signed, according to clause 9(a) of the aforementioned agreement. That the CHB neglected to grant the appellant custody of the unencumbered land so that it may raise the construction, which prevented the appellant from carrying out the building, according to the appellant.
• In accordance with the terms of the development agreement, a dispute emerged between the appellant developer and the CHB and was sent to the arbitrator. The dispute between the appellant and the CHB will be decided by a single arbitrator who was previously a judge of this court.
• The appellant filed a Special Leave Petition with S.L.P. (Civil) Nos. 17133–17134 of 2013 and related matters after feeling aggrieved by the common order issued by the National Commission on March 5, 2013. By order dated May 10, 2013, this Court gave notice and partially stayed the application of the National Commission's judgement and order from March 5, 2013, to the degree that compensation under clause 9(c) of the Flat Buyer Agreement was paid.
• That on January 9, 2015, the learned arbitrator finally issued a decision in the arbitration case involving the appellant and the CHB. In the ruling, the learned arbitrator further said that the appellant and the CHB would split any sum due on account of a refund of the purchase price, interest, or compensation (if and when such amounts were ultimately decided by the National Commission/Supreme Court). 
• The Special Leave Petitions filed before this Court were finally resolved by an order dated April 21, 2015 affirming the National Commission's ruling from March 5, 2013, which held that the compensation under clause 9(c) of the Flat Buyer Agreement is due.
• Following that, the individual buyers—the initial complainants—filed execution petitions with the State Commission. The State Commission ordered the appellant developer, Parsvnath Developers Ltd., to only pay compensation to the allottees in accordance with clause 9(c) of the Flat Buyer Agreement dated 28.02.2008 in an order dated 19.01.2016 in E.A. No. 100/2015.
• The State Commission issued comparable directives in response to additional execution requests submitted by the relevant buyers/allotees.
• The appellant in this case filed the current Appeal Execution before the National Commission after being upset by a decision dated 19.01.2016 issued by the State Commission. At this point, it is necessary to highlight that the National Commission dismissed the related Appeal Execution No. 41/2016, against which the appellant filed S.L.P. (Civil) No. 9961/2017, a special leave petition, with this Court.
• After that, at the request of the Developer, the National Commission dismissed each of the appeal executions that are the focus of the current appeals by the contested common order.

Issued Raised:

The question was raised before the Honorable Court of India whether the Parsvnath Developers Ltd is liable to pay compensation to the buyer of flats, in case of failure to handover the possession?

Arguments:

• The Chandigarh Housing Board was represented by Mrs. Rachna Joshi Issar and Ms. Harvinder Chowdhury, whereas the Developer was represented by Shri Sachin Datta, a knowledgeable senior counsel.
• It is argued that while both the appellant developer and the CHB were determined to be at fault for the delay in this case, section 9(c) of the Flat Buyer Agreement should not apply, especially as clause 9(a)'s prerequisites have not been met.
• Further, it is argued that even the contested judgement and order(s) are at odds with other National Commission decisions made in parallel appeal executions arising from the same order dated 08.05.2015, which was also the focus of first appeals. It is argued that even in the absence of that, the arbitration award from January 9, 2015, which was rendered final, stipulated that the obligation to pay the amount to the buyers or allottees, including the amount of compensation, shall be paid in the ratio of 70:30, and even this Court, in its decision of Civil Appeal No. 10748/2016, specifically stated that the arbitration award's 70:30 split must be implemented now that it has been rendered final. Therefore, it is unjustified for the appellant developer to be required to pay the whole sum of compensation under the impugned order issued by the National Commission and even the State Commission.
• When challenging the current appeals, knowledgeable counsel representing the CHB passionately argued that under the Tripartite Agreement/Flat Buyer Agreement and in accordance with paragraph 9(c), it is the developer's sole responsibility to pay the compensation to the purchasers/allottees. It is said that the parties are bound by the Flat Buyer Agreement/Tripartite Agreement's clause 9(c), which is a commercial agreement, in its plain form.
• It is claimed that this Court's judgement and order of April 21, 2015, upheld the developer's obligation to pay damages under clause 9(c) of the Flat Buyer Agreement.
• We spent a lot of time listening to knowledgeable counsel for the different parties.
• The State Commission awarded compensation pursuant to clause 9(c) of the Flat Buyer Agreement; however, it is necessary to note that the principal amount and interest under the order(s) of the State Commission have already been paid to the appropriate complainants and allottees. The only remaining question in these appeals is whether the developer, the appellant herein, is responsible for paying the entire amount or whether the developer and the CHB will split it.
• Considering the foregoing, it is necessary to modify the contested orders issued by the National Commission and the State Commission so that the appellant developer is held 70% accountable for paying damages under clause 9(c) of the Flat Buyer Agreement and the Chandigarh Housing Board is held 30% accountable. The current appeals filed by the appellant developer must be granted to the extent stated above, and the CHB's appeals must be resolved in accordance with the aforementioned criteria.
• No additional orders are necessary to be passed in either of the appeals filed by the Chandigarh Housing Board, Civil Appeal Nos. 6382/2021 & 6381/2021, in light of the above order made in the appeals filed by the Developer, other than ordering the disposition of the said appeals.

Analysis:

• The Chandigarh Housing Board (CHB) would be responsible for the remaining 30% of the developer's obligation to pay compensation under clause 9(c) of the Flat Buyer Agreement.
•  The Court partially upheld the appeals filed by Parsvnath Developers Limited but modified the orders of the NCDRC and SCDRC. 
• The CHB had argued that, in accordance with the Agreement's paragraph 9(c), the developer had the sole responsibility for compensating the allottees. 
• The orders of the NCDRC and SCDRC, according to the appellants, go against the earlier Supreme Court ruling in Civil Appeal No. 10748/2016, which was decided on December 17, 2019, and is titled Chandigarh Housing Board v. M/s Parasvanath Developers Pvt. Ltd.

Conclusion:

It is therefore concluded by the court that, in light of the foregoing and for the aforementioned reasons, Parsvnath Developers Limited's appeals are therefore only partially granted. The contested common judgement and order dated 05.02.2020 issued by the National Commission in Appeal Execution No. 4/2016 and other related Appeal Executions is hereby modified to hold the appellant developer liable to pay compensation to the respective allottees, buyers, and original complainants to the extent of 70%, and the liability to pay the balance 30% of the compensation in accordance with clause 9(c) of the Flat Buyer Agreement is imposed upon Chandigarh.

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