One-sided unreasonable clauses in Apartment Buyer's Agreement amount to unfair trade practice: SC

Satya Prakash

Tribune News Service

New Delhi, January 14

Holding that one-sided unreasonable clauses in Apartment Buyer’s Agreement constitute an unfair trade practice under the Consumer Protection Act, the Supreme Court has said the builder cannot compel buyers to abide by such clauses of an agreement.

“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… we hold that the developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement,” said a three-judge Bench of Justice DY Chandrachud, Justice Indu Malhotra and Justice Indira Banerjee.

The ruling came on an appeal filed by Ireo Grace Realtech Pvt Ltd challenging a National Consumer Disputes Redressal Commission verdict directing the developer to refund the amounts deposited by Apartment Buyers for inordinate delay in completing construction and obtaining Occupation Certificate for ‘The Corridors’ in Sector 67-A of Gurugram in Haryana.

While broadly categorising the buyer into two categories, the court said the buyers in Phase 1, the allottees (barring a few) were obligated to take possession of the apartments as the construction was complete and possession offered on June 28, 2019 after the issuance of Occupation Certificate on May 31 in the same year.

However, it said the builder was obliged to pay compensation for the delay from November 27, 2018 till the date of the offer of possession was made.

With regard to Phase 2 wherein Occupation Certificate was awaited, the top court held that buyers were entitled to refund of the entire amount deposited by them along with compensation and interest. It asked the builder to refund the money in four weeks.

“The Occupation Certificate is not available even as on date, which clearly amounts to deficiency of service. The allottees cannot be made to wait indefinitely for possession of the apartments allotted to them, nor can they be bound to take the apartments in Phase 1 of the project. The allottees have submitted that they have taken loans, and are paying high rates of interest to the tune of 7.9% etc. to the banks,” the top court noted.