UTPAL TREHAN VERSUS DLF HOME DEVELOPERS LTD.

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4690 OF 2022

(Arising out of SLP (C) NO.19226 OF 2021)

UTPAL TREHAN .... APPELLANT(S)

VERSUS

DLF HOME DEVELOPERS LTD. .... RESPONDENT(S)

WITH

CIVIL APPEAL NOS. 46914692 OF 2022

(Arising out of SLP (C) NOS.58715872 OF 2022)

J U D G M E N T

ANIRUDDHA BOSE, J.

Leave is granted on the limited question which was

formulated by this Court at the time of issue of notices, by the

order passed on 3rd January 2022 in SLP (C) No.19226 of 2021.

So far as SLP (C) Nos.58715872 of 2022 are concerned, leave

is granted on the point on which the appellants thereof had

confined their grievances, recorded in our order passed on 19th

April, 2022. We shall refer to these points later in this

judgment. The controversy which we shall address in this

judgment revolves around the quantum of compensation that

the appellant in SLP (C) No.19226 of 2021 (now appeal) would

be entitled to receive because of delay in delivery of possession

of a flat as also the appellant’s obligation to pay maintenance

charges in respect thereof.

2. The specific disputes giving rise to these appeals relate to

an Apartment Buyers’ Agreement, executed on 3rd December,

2008 between Utpal Trehan (whom we shall henceforth refer to

as “allottee”) and DLF Home Developers Limited (we shall refer

to them as the “builder”) for purchase of a flat, within a

complex named New Town Heights in Sector91, Gurgaon (now

Gurugram), Haryana. This was booked by the allottee on

depositing a sum of Rs.5 lakhs in March 2008. The allotment

letter was issued on 16th April 2008, and allocation was made of

Apartment No. GBD153 along with its parking. As per the

Apartment Buyers’ Agreement, the area of the flat was to be

1760 square feet (super area). The consideration amount was

Rs.45,12,000/, to be paid as per instalment payment plan

forming part of the Agreement. The stipulation relating to

possession of the flat is contained in Clauses 11 and 17 of the

said Agreement. A copy of the draft Agreement has been

annexed to the allottee’s paper book. In substance, the time for

possession has been stipulated to be within 36 months from

the date of execution of the Agreement subject to certain

qualifications and exceptions incorporated in the Agreement

itself. This date of delivery of possession, along with the effects

thereof, underwent certain changes, as there was delay on the

part of the builders in getting certain regulatory clearance. Mr.

Pinaki Mishra, learned Senior Advocate has appeared for the

builder and the allottee has appeared in person before us.

3. The facts forming genesis of the grievances of the allottee

have been summarised in the decision of the National

Consumer Dispute Redressal Commission (“National

Commission”) delivered on 23rd July 2021, which is under

appeal before us. We quote below the relevant passages from

this decision:

“12. ….. The allotment letter dated 16.04.2008 and

Annexure3 to the Apartment Buyer’s Agreement

dated 03.12.2008 provided a "Time Linked Payment

Plan” under which 95% of the sale consideration

(including Rs. 5,00,000/ of booking amount) had to

be paid in 11 instalments starting from 29.05.2008

and ending on 29.06.2010. Vide Clause12 of the

Allotment Letter dated 16.04.2008 and Clause11 of

Apartment Buyer's Agreement dated 03.12.2008, the

possession had to be handed over within 36 months

from the date of agreement. Environment Clearance

Certificate was delayed as such the builder could not

start construction till May, 2009, i.e. more than one

year from booking. In such circumstances, the builder

through letter dated 26.03.2009, amended the terms

of the agreement and the payment of the instalments

were changed as “construction Linked Payment

Plan”. The builder has simultaneously provided

various benefits to the buyers, i.e. Advance Payment

Rebate in the shape of interest at the rate of 13% p.a.

on the amount in excess of 35% of sale price as on

26.03.2009, 5% discount of basic sale price, increase

of approximately 5% area and compensation for

delayed possession @ Rs.10/ per Sq. ft. per month

from the date of expected possession till actual

possession and Timely Payment Rebate, equivalent to

10% basic sale price. Letter dated 23.06.2009 and

statement of account dated 10.06.2013 prove that the

benefits of (i) Rs.9059/ as Advance Payment Rebate,

(ii) Rs. 1,98,000/ as 5% discount of basic sale price

and (iii) increase of 5% area have been given to the

complainant.

13. The complainant argued that “Timely Payment

Rebate” and “compensation for delay in possession”

had not been given in statement of the account dated

10.06.2013, for which he was entitled. The builder

has denied the Timely Payment Rebate on the ground

that in spite of service of demand letter dated

29.12.2011, the amount due was not deposited till

last date i.e. 18.01.2012, rather it was deposited on

27.01.2012 (without including the amount of interest

accrued on it in the meantime). As the time was

essence of contract and this instalment was not

deposited in time as such the complainant was not

entitled for Timely Payment Rebate.”

(quoted verbatim from paperbook)

We shall discuss separately the position of the respective

parties as regards obligation of the allottee to pay maintenance

charges.

4. The allottee had approached the Delhi State Consumer

Disputes Redressal Commission (“State Commission”), in the

month of May 2015, after the builder had raised additional

demands under different heads. As per the allottee, the total

sum, as demanded, added upto Rs.9 lakhs approximately.

Otherwise, the allottee claims to have had cleared the requisite

instalments. At that point of time, the main complaint of the

allottee was of being deprived of certain payment related

benefits on being offered possession of the flat. He was being

denied these benefits, since as per the builder, the allottee had

made default in payment within the due date on demand of the

developer of the ensuing instalment. As would be apparent from

the said passages of the decision under appeal, the builder’s

contention is that by a notice of 29th December 2011, the

allottee was to pay the next instalment by 18th January 2012,

but this was paid on 27th January 2012. The builder thus

alleged nine days’ delay. The allottee’s stand on this count, on

the other hand, was that he had not received the notice of 29th

December 2011, but on receiving a reminder on 22nd January

2012, he cleared the dues on 27th January of that year.

5. The delivery and payment stipulations were modified on

account of delay in getting environmental clearance and these

modifications, as made by the builder, has been summarised in

the passage quoted above from the National Commission

decision. So, we are avoiding a repeat of these modification

terms in this judgment.

6. Before the State Commission, the allottee prayed for the

following reliefs:

“4. ……. i. Give the possession of the said flat at the

earliest.

ii. Pay an amount of Rs. 10,00,000/ as compensation for

causing mental trauma and agony to complainant due to

delay in giving the possession.

iii. Also pay additional delayed possession rent @ Rs.

15/ sq. ft. till the possession is offered to complainant.

iv. Further waive of the undue/unjustifiable demand

already raised towards the final dues settlement.

v. To pay Rs. 50,000/ towards the expenses incurred by

the complainants towards telephonic communications and

personal visits made to OP since 2006.

vi. To pay a sum of Rs. 75,000/ towards the payment of

litigation expenses.”

(quoted verbatim from paperbook)

7. During pendency of the proceeding before the State

Commission, an application was filed by the builder to bring on

record certain subsequent events. What was sought to be

brought on record included crediting to the allottee

compensation for delayed possession of Rs.4,22,816/, Timely

Payment Rebate of Rs.4,02,076/ and interest of Rs.14,082/.

This application also highlighted that certain sum of money was

already credited to the allottee’s account under the head of

Early Payment Rebate. This application also showed the liability

of the complainant (i.e. the allottee) of Rs.3,16,899/ as

maintenance charges, Rs.96,000/ as IBM charges and

Rs.14,18,203/ as holding charges. The said application

appears to have been filed subsequent to an attempt at

mediation while the dispute was pending before the State

Commission.

8. The State Commission found that there was deficiency in

service and the complaint was allowed in following terms:

“20. …… i. OP shall issue fresh offer of possession of the

apartment in question i.e. GBD153, New Town Heights in

Sector91, Gurgaon to the complainant and shall handover

the possession of the apartment to the complainant within

a period of 06 weeks.

ii. OP shall also execute the sale deed/conveyance deed

and get it registered in the name of the complainant on

payment of stamp duty, registration charges and other

incidental charges, if any, by the complainant, within a

period of one month thereafter.

OP shall pay to the complainant the delayed compensation

@ Rs. 10/ per sq. ft. per month for the delayed period

from the agreed date of possession i.e. March, 2011 till the

date of fresh offer of possession after adjusting the

delayed compensation already paid to the complainant.”

(quoted verbatim from paperbook)

9. On the question of maintenance charges, however, the

State Commission went against the allottee, holding :

“19. As regards payment of Rs 3,16,899/ towards

maintenance charges, and Rs.14,18,204/ toward holding

charges @ Rs. 10 per square feet till 11.10.2018, as is

stated in the aforesaid handing over the cheque issued

earlier a new cheque can be issued against the same.

As on date, the complainant is liable to make the

following payment as per the agreement:

i. Maintenance charges (till 30.09.2018) – Rs.3,16,899.

ii. IBMS (Interest Bearing Maintenance Security) – Rs.

96,000/

iii. Holding Charges (@ Rs. 10/ per sq. ft. till

11.10.2018) – Rs.14,18,203/.

However, upon suggestions from this Hon’ble Commission,

the opposite party shall consider waiving the holding

charges accruing day by day and hence, nothing remains

payable to the opposite party. The maintenance security

and the maintenance charges incurred towards upkeep of

the multistorey building as mentioned above shall be

payable to the Condominium Association who are

maintaining the property inquestion since the date the

property was ready for possession and was

conveyed/offered to the complainant.”

(quoted verbatim from paperbook)

10. One of the critical issues which was examined by the

State Commission was as to whether there was any delay in

payment of instalment by the allottee upon demand being

made. This question arose as the builder had denied certain

benefits to the appellant which would have accrued to him if

timely payment of instalments was made on demand. The

builder alleged that the demand in this case was made on 29th

December 2011 requiring the allottee to make payment by 18th

January 2012. As we have already discussed, the allottee took

the plea that the letter of 29th December 2011 was never

received by him and when he received a reminder letter of 19th

January 2012 on 22nd January 2012, he made the payment on

27th January 2012, factoring in certain holidays which

intervened. The State Commission examined this issue and

gave a finding on fact that the material on record did not

establish that the demand notice of 29th December 2011 was

served on any adult family member/known person of the

allottee and that the developer had failed to prove service of

demand notice upon the allottee. The State Commission thus

held that the allottee could not be deprived of the benefits

outlined in the builder’s letter of 26th March 2009 on the

allegation of failure to pay instalment within due date.

11. The appeal of the allottee to the National Commission

was mainly against the finding given by the State Commission

on maintenance charges. The builder questioned legality of that

part of the decision of the State Commission under which they

were directed to issue fresh offer of possession and payment of

delayed compensation.

12. The National Commission partly allowed both the

appeals, interalia holding:

“In view of aforementioned discussions First Appeal No.

1530 of 2019 is partly allowed and First Appeal No. 1638

of 2019 is partly allowed. DLF Home Developers Ltd., (the

builder) is directed to (i) offer possession of the apartment

in dispute to the complainant afresh and hand over

possession to the complainant within 6 weeks and execute

the sale/conveyance deed in his name, within one month

thereafter, on payment of stamp duty, registration charges

and other incidental legal charges, (ii) pay compensation

for delay in possession, i.e interest @ Rs. 6% per annum

on the sale price deposited by him for the delayed period

from July, 2013 till the date of fresh offer of possession,

adjusting “Early Payment Rebate” of Rs.95,136/ as

mentioned in statement of account dated 10.06.2013 and

(iii) pay “Timely Payment Rebate” i.e 10% of basic sale

price. The builder is entitled to realise/adjust the

Maintenance charges, from the date of issue of Occupation

Certificate and cost of increased area (i.e. the area

increasing to 5% of the increased area). The builder shall

pay a cost of Rs.50,000/ to the complainant to meet out

his litigation and other expenses.”

(quoted verbatim from paperbook)

13. So far as the allotee’s appeal is concerned, (arising out of

SLP (C) No.19226 of 2021) at the time of issue of notice, this

Court had passed the following order:

“Heard petitioner in person.

Issue notice limited to the question of maintenance

charges as provided for by NCDRC in the concluding part

of the order impugned. Notice may be made returnable in

four weeks.

Dasti service in addition to order in process permitted.”

14. In the appeal filed by the builder, at the stage of issue of

notice on the petition for special leave to appeal, it was recorded

in our order of 19th April 2022 that the learned counsel

appearing for the petitioner, (i.e., the builder) essentially

confined his submissions to the grievance of the petitionerdeveloper in regard to the directions by the National

Commission and the State Commission for making ‘a fresh offer

of possession’. We have indicated earlier in this judgment that

we are granting leave restricted to these two questions only.

15. We shall first deal with the question of directions to pay

to the builder maintenance charges. In the definition Clause

and Clauses 19, 20 and 39 of the Apartment Buyer’s Agreement

dated 3rd December 2008, it has been specified:

“Definitions

……

Maintenance Agency" means DHDL or association of

allottees or such other agency/body to whom the

maintenance of the Said Building/Said Complex (including

common areas and facilities) is handed over by DHDL and

who shall be responsible for providing the maintenance

services within the Said Building /Said Complex and who

shall be entitled to collect the Maintenance Charges.”

“19. Maintenance of the Said Building/Said

Complex/Said Apartment

In order to provide necessary maintenance services, upon

the completion of the Said Building/ Said Complex the

maintenance of the Said Building/Said Complex may be

handed over to the association of Apartment allottees or

such other agency/ body/ company/ association of

condominium. The Allottee agrees to execute Maintenance

Agreement (draft given in Annexure VII to this Agreement)

with the Maintenance Agency or any other nominee/

agency or other body/ association of Apartment owners as

may be appointed by DHDL from time to time for the

maintenance and upkeep of the Said Land/the Said

Building/the Said Complex. This Agreement shall not be

deemed to be executed till the same is signed by all the

parties. The Allottee further undertakes to abide by the

terms and conditions of the Maintenance Agreement and

to pay promptly all the demands, bills} charges as may be

raised by the Maintenance Agency from time to time.

DHDL reserves the right to change, modify, amend, impose

additional conditions in the Maintenance Agreement at the

time of its final execution. The Maintenance Charges shall

become applicable/ payable from the date DHDL has

received the occupation certificate/the date of allotment

whichever is later. It is further clarified that DHDL may at

its sole discretion hand over the maintenance of the Said

Building/ Said Complex to anybody/association of

Apartment owners of the Said Building/Said Complex

including but not limited to any body/ association of

condominium of the Said Building/ Said Complex, as the

case may be, at any time before/ after the construction of

the Said Building/ Said Complex is complete either for

each building or for the entire Said Complex and the

Allottee specifically gives his consent to this proposal. It is

further specifically clarified that the draft Maintenance

Agreement, set out in Annexure VII to this Agreement is

merely an indicative Agreement that is proposed to be

entered into with the Allottee for maintenance and upkeep

of the Said Building/ Said Complex, however, if at any

time, after having taken over the Said Building/ Said

Complex, the said association of Apartment owners/

condominium of association decides to modify, alter, add,

delete any one or more of the terms and conditions of the

Maintenance Agreement, the Allottee shall not have any

objection to the same and shall execute the Maintenance

Agreement as may be required by the Maintenance Agency

or association of Apartment owners or association of

condominium or its nominees or assigns.

20. Fixation of total Maintenance Charges

The total Maintenance Charges shall be more

elaborately described in the Maintenance Agreement (draft

given in Annexure VII). The Maintenance Charges shall be

levied from the date of occupation certificate or the date of

allotment, whichever is later and the Allottee undertakes

to pay the same promptly. It is agreed by the Allottee that

the payment of Maintenance Charges will be applicable

whether or not the possession ofSaid Apartment is taken

by the Allottee. The Maintenance Charges shall be

recovered on such estimated basis which may also include

the overhead cost on monthly/quarterly intervals as may

be decided by the Maintenance Agency and adjusted

against the actual audited expenses as determined at

every end of the financial year and any surplus/deficit

thereof shall be carried forward and adjusted in the

maintenance bills of the subsequent financial year. The

estimates of the Maintenance Agency shall be final and

binding on the Allottee. The Allottee agrees and

undertakes to pay the maintenance bills on or before due

date as intimated by the Maintenance Agency.

……

39. Association of apartment owners

The Allottee agrees and undertakes to join association/

society of apartment owners as may be formed by

DHDL/Company on behalf of Apartment owners and to

pay any fees, subscription charges thereof and to complete

such documentation and formalities as may be deemed

necessary by DHDL/ Company for this purpose.”

(quoted verbatim from paperbook)

16. Annexure VII to that Agreement appears at Page 185 of

the paperbook in SLP (C) No. 19226 of 2021, which is in the

form of a draft. The actual copies of the Agreements, if

executed, have not been annexed to the paperbooks filed in

either of these two appeals. No material has otherwise been

produced before us to show if the Maintenance Agreement

(Annexure VII to the main Agreement) was executed or not. Be

that as it may, even if we proceed on the basis that the

maintenance Agreement is applicable, the same constitutes a

tripartite Agreement involving the builder, New Town Heights

Condominium Association, a registered society and the

purchaser. This is in the format of a standard form Agreement

with several portions thereof left blank. In the counter affidavit

of the builder, it has been stated that the maintenance charges

are not paid to them but to the statutory condominium

association of allotees who actually renders maintenance

services recovered from each allotee. That association to us

appears to be an independent body and there is nothing on

record to demonstrate that such association is an agent of

either the builder or the purchasers. In Clause 39 of the

Apartment Buyers’ Agreement, there is hint that such an

Association might be formed by the builder but no particular of

its formation, or for that matter, its existence have been shown

before us at the time of hearing.

17. The definition of Maintenance Agency means “DHDL (the

builder) or association of allottees or such other agency…….”

but the conjunction “or” as has been applied in the definition

clause ought to mean in the alternative and this definition

cannot be construed to infer that even after handing over the

maintenance work to an association, the builder shall continue

to remain as a maintenance agency entitled to collect

maintenance charges. The clause relating to fixation of total

maintenance charges only specifies the obligation of an allottee

to pay such charges and the substantive Agreement specifies

again that the maintenance charges would be payable to the

maintenance agency.

18. In so far as the subject dispute is concerned, the

builder’s case, as stated above, is that the maintenance agency

is to receive the maintenance charges but no specific case has

been made out that the builder themselves are carrying on the

maintenance work, which could have brought them within the

definition of maintenance agency under the main Agreement. In

such circumstances, we are unable to appreciate as to how, in

dealing with the allotees’ complaint against the builder, the two

statutory fora passed orders which effectively required the

allotee to make over payment as maintenance charges to a third

party, the association in this case. We have already observed

that from the materials on record, no principalagent

relationship has been established between the builder and the

association as regards the Maintenance Agreement entitling the

builder to claim and receive maintenance charges. The builder,

at best, is facilitator in organising a maintenance agency. The

overall obligation of a flat buyer to pay maintenance charges

may be derived from interpretation of clause 20 of the main

Agreement. But without any claim from the entity, who are to

render maintenance services and charge for the same, in our

opinion, the two statutory fora ought not to have directed the

allottee to make payment of maintenance charges. The National

and the State Commissions, in our opinion, have committed

error in directing the allotee to make payment of maintenance

charges, which ought to have been paid to the association when

there was no claim from the association in the first place.

Secondly, nothing has been brought to our notice from which it

could be inferred that the builder had the authority to represent

the association for collecting maintenance charges. On the

other hand, as we have already indicated, the builder’s own

case is that the maintenance charges ought to be paid to the

association. The latter (i.e., the association) has not been

impleaded as a party at any stage of these proceedings. Nor

they have prosecuted any claim.

19. We must point out here that from the two orders of the

State and the National Commissions, we do not find that the

point on right of the builder to claim maintenance charges was

specifically discussed. In the complaint before the State

Commission, point was taken that in absence of delivery of

possession, charging for maintenance by the association was

unjustified but the principle which we have discussed in the

preceding three paragraphs are purely legal issues and goes to

the root of the dispute relating to payment of maintenance

charges. Moreover, question of law formulated in paragraph 2D

of the allottee’s special leave petition (now appeal), in our

opinion, is broad enough to cover this issue. While determining

rights of parties on a question of law which emerges from the

pleadings and crystallises for adjudication, we cannot ignore

answering that question. For otherwise, an incorrect principle

of law may have to be laid down on account of failure of the

litigants in raising it in clear terms. Moreover, the nature of the

dispute having originated from a consumers’ grievance, the role

of the Court has to be beyond just being an adjudicatory forum

in an adversarial cause, and must have an element of

proactivity in public interest. Having returned a specific finding

on this point, we do not consider it necessary to deal with the

allottee’s contention that claim of maintenance charge was

unjustified in absence of possession of the subjectflat being

delivered to them.

20. Now we shall turn to the legality of the decision under

appeal issuing direction upon the builder to make payment of

delayed compensation. The provision relating to delayed

compensation is contained in Clause 17 of the main

Agreement:

“17. Failure to deliver possession : Remedy to DHDL:

The Allottee agrees that if the construction and

development of the Said Complex is abandoned or

DHDL is unable to give possession within thirty six

(36) months from the date of execution of this

Agreement or such extended periods as permitted

under this Agreement, DHDL shall be entitled to

terminate this Agreement whereupon DHDL's liability

shall be limited to the refund of the amounts paid by

the Allottee with simple interest @ 6% per annum for

the period such amounts were lying with DHDL and

DHDL shall not be liable to pay other compensation

whatsoever.

However, DHDL may, at its sole option and

discretion, decide not to terminate this Agreement in

which event DHDL agrees to pay only to the

Allottee(s) and not to anyone else and only in cases

other than those provided in Clauses 14, 15, 16 and

50 and subject to the Allottee not being in default

under any term of this Agreement, compensation @

Rs. 5/ per sq. ft. of the Super Area of the Said

Apartment per month for the period of such delay

beyond thirty six (36) months or such extended

periods as permitted under this Agreement. The

adjustment of such compensation shall be done only

at the time of conveyancing the Said Apartment to the

Allottee first named in this Agreement and not

earlier.”

(quoted verbatim from paperbook)

21. As there was delay in obtaining regulatory clearance for

the project, the builder themselves had made certain

modifications in the terms of the Agreement, providing certain

benefits to the flat buyers. This was done by the

communication dated 26th March 2009 (at page 223 of the

paper book in the allottee’s appeal). The relevant portion of this

communication reads:

“As far as "New Town Heights" is concerned, we

would like, to mention here that the necessary

Building Plan Approvals for all the sectors of “New

Town Heights” have been received. As you know, we

are a highly compliant organisation, and we would

like to start construction only after we have received

the final Environment Clearance, which is awaited.

As soon as we receive the same, we shall commence

the construction. However, to allay any fear that you

might have as far as the handing over period is

concerned, we hereby revise the Compensation

Clause No. 17 of the Agreement to Sell, to the extent

of doubling the Compensation payable to Rs. 10/

psft per month, as against Rs. 5 / psft per month,

that was applicable earlier. Similarly, if the customer

delays in taking over the possession once the

possession is offered by the Company, he/she shall

also be liable to pay Holding Charges at the same

rate, ie., Rs. 10/ psft per month, for the delay

involved in taking over the possession.

We stand behind our promised date of delivery as 3

years, as we have already communicated earlier. We

have amended this clause to "3 Years from the date

of booking" instead of '3 years from the date of

Agreement', which was the earlier commitment.”

(quoted verbatim from paperbook)

The direction of the State Commission on delayed

compensation has already been quoted in this judgment. The

National Commission, however, modified this directive, which

has also been quoted in the earlier paragraph. This

modification has been questioned by the allotee.

22. Paragraphs 15 and 16 of the National Commission’s

decision disclose the reasoning for modifying the directive of the

State Commission upon the builder to pay delayed

compensation. Such modification is as regards the quantum of

compensation and the relevant part of the National

Commission’s order is reproduced below:

“15. So far as the compensation for delayed

possession is concerned, the complainant has

accepted part of the benefits given under the letter

dated 26.03.2009 and is claiming remaining benefits.

By this letter, mode of payment of the instalments

were changed as “construction Linked Payment

Plan”. The construction was started in May, 2009.

After adjusting the amount till March, 2009 and the

benefits given by the letter dated 26.03.2009, on it,

the complainant was asked to deposit instalment

some time in 2010. Demand notice dated 16.03.2012,

shows that Terrace Floor Slab was completed at that

time and demand notice dated 18.06.2012 shows

that the builder had applied for issue of Occupation

Certificate, which has been issued on 28.02.2013.

Thereafter, final accounts of the buyers were

prepared and possession was offered through letter

dated 10.06.2013. Due to delay in starting

construction payment schedule of the instalments

was changed and to mete out suffering of the buyers,

various benefits were provided. Delay in offering

possession had occurred as construction could not be

started for more than one year of booking. lf the

buyers were required to payment instalments on later

dates than the dates fixed in the agreement, then

how it can be expected that the possession could be

given within three years of the agreement. In the

circumstances, the builder was justified in not giving

compensation for delayed possession in the

statement of account dated 10.06.2013.

16. However, as we found that the complainant was

entitled for "Timely Payment Rebate” as such

statement of the account dated 10.06.2013 and

demand on its basis was illegal. In such

circumstances we direct the builder to pay 6% p.a.

interest on the amount deposited by the complainant

toward basic sale price, as compensation for delay in

possession from July 2013 till date of offer of

possession as directed by Supreme Court in Wg. Cdr.

Arifur Rahman Khan Vs. DLF Southern Homes

Pvt. Ltd., (2020) 16 SCC 512.”

(quoted verbatim from paperbook)

23. We are, however, unable to accept this reasoning. So far

as start of the running time for quantifying delayed payment of

compensation from March 2013 is concerned, we find that the

builder themselves had modified the relevant clause by their

letter dated 26th March 2009, amending the starting date for

computing delayed payment of compensation from end of three

years from the date of Agreement to three years from the date of

booking. Thus, the date of booking in the case of the allottee

being March 2008, the State Commission had rightly directed

payment of delayed compensation from March 2011.

24. Mr. Mishra has urged that the entire responsibility for

delivery of possession of the flat should not fall on his clients as

the allottee himself could have applied before the adjudicatory

forum for possession thereof subject to outcome of the case.

But this argument in our view is fallacious. The dispute

between the parties primarily arose as the builder denied

substantial benefits to the allottee for nine days’ delay in

clearing instalment. This allegation of delay has been rejected

by the Consumer Fora and their concurrent finding is that no

proper demand was made for payment of such instalment. Mr.

Mishra has, in his submissions, emphasised on the “offer for

possession” letter dated 10th June 2013 and his submission is

that obligation to pay delayed payment compensation cannot go

beyond that date. The builder’s case is that they cannot be held

responsible if the allottee does not take possession of the flat,

when offered. A copy of this letter has been annexed at page

235 of the builder’s paperbook. On a plain reading of this letter,

we find that the builder offered physical possession only on

remitting of payments as per statement of accounts, which was

for a sum of Rs.9,00,382/ and on furnishing an undertaking.

The National Commission found that the statement of account

dated 10th June 2013 and demand on that basis was illegal. As

the offer for possession was conditional on settling of accounts

and, as the accounts reflected illegal demand, the builder

cannot argue that there was a valid offer for possession under

the letter dated 10th June 2013. In this background, in the

event the allottee wanted proper adjudication of his rights and

liabilities before asking for interim possession of the flat which

would have had carried with it unspecified obligations, no fault

can be found in such conduct of the allotee.

25. Reliance has been placed on the judgments of two

coordinate Benches of this Court in the cases of DLF Homes

Panchkula Pvt. Ltd. vs D.S. Dhanda and Ors. [(2020) 16 SCC

318] and DLF Home Developers Ltd. And Another vs Capital

Greens Flat Buyers Association & Ors. [(2020] SCC Online SC

1125] in support of the argument of the builder that “Delay

Compensation” could be awarded only upto the date of offer of

possession. But in this case, we have already held that there

was no valid offer for possession. In the case reported in

[(2020) 16 SCC 318], interest was directed to be paid by way of

compensation on deposited amount from the promised date of

possession to the actual date of handing over possession, and

the coordinate Bench directed, interalia, payment of interest at

the rate of 9% per annum for a period of two months from the

date of offer for possession. In the case of Capital Greens Flat

Buyers Association (supra), interest was awarded as

compensation for delay in delivery of possession. The latter

judgment was delivered in the special circumstances of that

case. We accept the argument advanced on behalf of the

builder that time for payment of compensation for delayed

payment shall stop running from the date of offer for

possession. But in this case, there was no valid offer for

possession. Mr. Mishra also sought to bring to our notice the

proposals made in course of mediation proceeding. But

mediation obviously failed between the parties and we cannot

refer to what transpired during the process of mediation while

adjudicating the right of the parties in an appeal.

26. The ratio of the judgment in the case of Wing

Commander Arifur Rahman Khan and Aleya Sultana and

Others vs DLF Southern Homes Pvt. Ltd. and Others [(2020)

16 SCC 512] does not apply in the facts of the present case. The

aforesaid decision was rendered in a context in which a

coordinate Bench of this Court found the Agreement involved in

that case was lopsided, giving unjustified advantage to the

builder. The relevant paragraph from the judgment is

reproduced below:

“25. The only issue which then falls for

determination is whether the flat buyers in these

circumstances are constrained by the stipulation

contained in Clause 14 of ABA providing

compensation for delay @ Rs 5 per square feet per

month. In assessing the legal position, it is necessary

to record that the ABA is clearly onesided. Where a

flat purchaser pays the instalments that are due in

terms of the agreement with a delay, Clause 39(a)

stipulates that the developer would “at its sole option

and discretion” waive a breach by the allottee of

failing to make payments in accordance with the

schedule, subject to the condition that the allottee

would be charged interest @ 15 per cent per month

for the first ninety days and thereafter at an

additional penal interest of 3% p.a. In other words, a

delay on the part of the flat buyer attracts interest @

18% p.a. beyond ninety days. On the other hand,

where a developer delays in handing over possession

the flat buyer is restricted to receiving interest at Rs 5

per square feet per month under Clause 14 (which in

the submission of Mr Prashant Bhushan works out to

11.5% interest p.a.). Would the condition which has

been prescribed in Clause 14 continue to bind the flat

purchaser indefinitely irrespective of the length of the

delay? The agreement stipulates thirtysix months as

the date for the handing over of possession.

Evidently, the terms of the agreement have been

drafted by the developer. They do not maintain a

level platform as between the developer and

purchaser. The stringency of the terms which bind the

purchaser are not mirrored by the obligations for

meeting timelines by the developer. The agreement

does not reflect an even bargain.”

27. So far as the present appeals are concerned, the

quantum of delayed compensation has been enhanced by the

builder themselves, along with provision for enhancement with

respect to the delay in payment if made by the allottee in taking

possession. In such circumstances, we do not think the

National Commission ought to have had deviated from the

modified contractual terms contained in the communication

dated 26th March 2009 and replace the said terms with 6%

interest per annum from July 2013 till the date of fresh offer of

possession was made. In our opinion, on the point of payment

of delayed compensation, the State Commission’s view was the

right view.

28. Now comes the question as to which date shall be treated

to be the date for fresh offer of possession. Both the fora have

directed the builder to issue fresh offer of possession as per the

dates specified in the order. The directions of the State and

National Commissions were not to operate with retrospective

effect, from 10th June 2013. The argument of the builder is that

a possession offer letter was issued on that date. This letter

showed certain sum of balance and also included certain

demands on account of cost of increase in apartment size area,

further EDC and IDC charges, stamp duty charges, etc. Some

rebates were also denied to the allottee on account of delay in

payment of instalment by nine days, which we have discussed

in the preceding paragraphs of this judgment. In an application

dated 15th November 2018, which was filed on 7th January 2019

before the State Commission, the builder admitted their fault in

not providing any compensation for delayed payment in the

aforesaid letter of 10th June 2013 and prayed that the

complainant (i.e., the allottee) be directed to pay excess amount

as specified in the said application and take possession of the

apartment. The State Commission found that, as per the said

application, the builders had admitted wrong calculation in

settling the credits in the account of the allottee. In fact, the

builders then had given the credit for a sum of Rs.2,40,210/

and issued a cheque for the said sum, which the allottee did

not encash. Such conduct on the part of the allottee was

justified as the dispute was still pending before the State

Commission. The State Commission found deficiency of service

on the part of the builder by sending wrong statement of

accounts along with the letter of possession and as per the

finding of the State Commission, the allottee was deprived in

taking possession of the flat, which was offered, because of

these factors. The National Commission did not take a contrary

view and in fact came to a finding that the statement of account

dated 10th June 2013 and demand on that basis was illegal.

These findings arrived by the two fora were on appreciation of

evidence and we do not find any perversity in such finding. So,

the letter of 10th June 2013 cannot be treated as a valid offer

letter.

29. (i) We, accordingly, hold the finding of the National

Commission as also the State Commission that the allottee

would be required to pay maintenance charges as

erroneous and that part of the findings of the two

Commissions are set aside.

(ii) The entity to whom such charge is due has not raised

any claim. In such circumstances, direction to the allottee

to pay maintenance charges was not warranted as the

entity entitled to receive such charges is not a party to

these proceedings. Such directions assume the character of

declaration of liability or obligation of the allottee in

absence of the admitted claimant, who had not brought any

action or staked their claim in any other manner through

these proceedings. Such declaratory relief cannot be given

in vacuum.

(iii) We sustain the order of the National Commission as

also the State Commission that fresh offer of possession

ought to be issued. We extend the time for issuing such

offer of possession by a period of eight weeks from this

date. Execution of Deed shall be effected within the

aforesaid period.

(iv) We modify the direction of National Commission relating

to payment of delayed compensation and while restoring

the directions of the State Commission, we direct that

delayed compensation be paid at the rate of Rs.10 per

square feet per month for the entire period from March

2011 till the date on which the fresh offer of possession is

issued.

(v) The delayed possession compensation shall be paid to

the allottee after adjusting the delayed compensation

already paid. The early payment rebate of Rs.95,136/ shall

also be adjusted, as has been directed by the National

Commission. The said sum was mentioned in the statement

of account dated 10th June 2013.

(vi) We retain the order as to costs to be paid to the allottee

quantified by the National Commission as Rs.50,000/.

30. Both the appeals are disposed of in the above terms. We,

however, make it clear that in this judgment, we have

addressed only the two questions on which leave is granted.

Rest of the findings or directions of the National Commission

shall remain undisturbed.

31. Connected applications, if any, shall stand disposed of,

without any order as to costs.

………………………………., J.

(DINESH MAHESHWARI)

………………………………., J.

(ANIRUDDHA BOSE)

NEW DELHI;

11th JULY 2022

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- March 04, 2020

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UTPAL TREHAN VERSUS DLF HOME DEVELOPERS LTD.

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