Status as on- 26/10/2021
Overview
The Supreme Court has recently answered the question ‘Whether the Apartment Buyer’s Agreement contains wholly one-sided clauses, and the buyers would not be bound by its terms?’
While deciding various Civil Appeals, arising out of Final order and judgment of National Consumer Disputes Redressal Commission, and the leading Civil Appeal titled as ‘Ireo Grace Realtech Pvt. Ltd. Versus Abhishek Khanna & Others’, following submissions were made by the allottees among other submissions:
- The Developer had not offered possession to the Home Buyers till the date of filing the complaint, even though the Commitment Period for handing over possession had expired and also the Grace Period had lapsed.
- The Building Plans were revised in 2017, when the entire layout was changed which led to the scrapping of some of the residential towers, so that the same could be converted to commercial towers in the project.
- Since the Developer had failed to fulfill the obligation under Section 11(4)(a) of this Act, the Developer was liable under the proviso to Section 18 to pay interest at the prescribed rate of 10.75% p.a. on the amount deposited by the complainant, upto the date when the possession was offered.
The Hon’ble Supreme Court made the following observations:
- The clauses reflect the wholly one-sided terms of the Apartment Buyer‘s Agreement, which are entirely loaded in favor of the Developer, and against the allottee at every step.
- The terms of the Apartment Buyer‘s Agreement are oppressive and wholly one-sided, and would constitute an unfair trade practice under the Consumer Protection Act, 1986.
- The Hon’ble Court also referred to the decisions of ‘Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan’ wherein it was held that:
- The inordinate delay in handing over possession of the flat clearly amounts to deficiency of service.
- The clauses relied upon by the builder were wholly one-sided, unfair and unreasonable, and could not be relied upon.
- 199th report of Law commission of India stated –
“…a contract or a term thereof is substantively unfair if such contract or the term thereof is in itself harsh, oppressive or unconscionable to one of the parties.”
- A term of a contract will not be final and binding if it is shown that the flat purchasers had no option but to sign on the dotted line, on a contract framed by the builder.
- Given the one-sided nature of the Apartment Buyer‘s Agreement, the consumer forum had the jurisdiction to award just and reasonable compensation as an incident of the power to direct removal of deficiency in service.
- We are of the view that the incorporation of such one-sided and unreasonable clauses in the Apartment Buyer‘s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act.
- Finally deciding the issue, the Hon’ble Court held that the Developer cannot compel the home buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement.
Conclusion-
The Supreme Court has finally settled the law and has provided relief to all the allottees which were being regularly harassed by the builders under the shed of one sided clauses in the Apartment Buyer’s Agreements. The Court and the RERA Authority now have the power to declare any provisions of the Apartment Buyer’s Agreement which are unfairly in the favor of the Builders.
Disclaimer- The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinion before relying upon the article. For more information, please contact us at rera@centrik.in
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