CHANDIGARH HOUSING BOARD versus M/S. PARASVANATH DEVELOPERS PVT. LTD. & ANR.

Citation: [2019] 15 S.C.R. 157 · Decided: 17-12-2019 · Supreme Court of India · Bench: MOHAN M. SHANTANAGOUDAR, R. SUBHASH REDDY · Disposal: Dismissed

Judgment (excerpt)

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CHANDIGARH HOUSING BOARD
v.
M/S. PARASVANATH DEVELOPERS PVT. LTD. & ANR.
(Civil Appeal No. 10748 of 2016)
DECEMBER 17, 2019
[MOHAN M. SHANTANAGOUDAR AND
R. SUBHASH REDDY, JJ.]
Consumer Protection:
Failure to deliver flat to the consumer – By the Developer –
Due to the dispute between the Housing Board and the Developer
which was referred for Arbitration –  In the Award Arbitrator fixed
the liability on the Developer and the Housing Board in respect of
refund to the residential unit buyers in the ratio of 70:30 – National
Consumer Commission directed refund of principal sum to the
complainant @ 10% interest –  It also directed payment of Rs. 1
lakh towards mental harassment and further Rs. 1 lakh towards
litigation charges –  In view of the award, ascertained the liability
of Developer and Housing Board in the ratio of 70:30 –  Appeal to
Supreme Court by Housing Board questioning the liability fixed
upon it in respect of litigation cost and for mental harassment and
also enhancement of interest rate to 10%  – Held: In view of Clause
9(c) of the Tripartite Agreement, liability to pay the cost towards
litigation and mental harassment cannot be fixed on Developer alone
as the cost does not qualify as compensation u/clause 9(c) –  The
apportionment of the liability is well founded – The increase in the
interest rate was in exercise of discretionary power of the National
Commission and is not liable to be interfered with.
Dismissing the appeal, the Court
HELD: 1.1 A close reading of Clause 9(c) of the Tripartite
Agreement indicates two salient features– first, the liability to
pay compensation under this Clause can only be affixed on the
Developer if it fails to fulfill the condition under Clause 9(a) and
perform its obligations under the Development Agreement, i.e.
if it does not hand over the possession of the flat to the buyer
within a period of 36 months from the date of signing of the
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SUPREME COURT REPORTS
[2019] 15 S.C.R.
Development Agreement. The second feature of Clause 9(c) is
that it envisages a fixed compensation of Rs. 107.60 per sq metre
per month to be paid to the flat buyer. [Para 10][165-F]
1.2 Clause 9(c) is not attracted in the present case at all.
First, there has been no fulfilment of the condition under Clause
9(a) for Clause 9(c) to come into operation. This is because the
Developer never even began construction at the project site due
to the dispute with the Housing Board about the encumbrances
on the allotted land. Thus, the question of finishing such
construction within the period mentioned under Clause 9(a) does
not even arise. Consequently, Clause 9(c), which is concerned
with the non-fulfilment of this obligation, is also not attracted.
[Para 10.1][165-G-H; 166-A]
1.3 Thus, given that the breach of the Development
Agreement is attributable to both, Housing Board and the
Developer, the failure to hand over possession of the flat to the
buyer cannot be said to be on account of the non-performance of
the obligation of the Developer alone. Consequently, Clause 9(c)
is not applicable to the present case. [Para 10.1][166-E]
1.4 The amount awarded by the National Commission in
the impugned order, i.e. Rs. 1 lakh each towards mental
harassment and litigation costs, cannot be read as compensation
contemplated under Clause 9(c) of the Tripartite Agreement.
Evidently, the litigation costs cannot be construed as
compensation. Even with respect to the award of Rs. 1 lakh for
mental harassment, such amount is in the nature of a general,
lump sum compensation, which falls short of qualifying as
compensation under Clause 9(c). This is especially because there
is no mention of the stipulated fixed rate of Rs.107.60 per sq
metre of the super area of the unit, per month in the impugned
order. Thus, the liability of paying a total of Rs. 2 lakhs under
those heads cannot be foisted on the Developer alone in terms
of Clause 9(c). [Para 10.2][166-F-H]
1.5 The Appellant’s reliance on the revocation deed is
misplaced, as para 4 of this deed clearly states that “the parties
have accepted the award” and chosen to act in accordance with
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the same. Thus, it cannot be argued that this revocation deed
displaces the arbitration award dated 09.01.2015 and the direction
therein for the Developer and  the Housing Board to pay
compensation (if and when determined) in the ratio of 70:30. In
any case, this revocation deed may, at best, arguably set

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