NBCC (INDIA) LIMITED versus SHRI RAM TRIVEDI

Citation: [2021] 2 S.C.R. 280 · Decided: 08-03-2021 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Case Partly allowed

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Judgment (excerpt)

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   [2021] 2 S.C.R. 280
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NBCC (INDIA) LIMITED
v.
SHRI RAM TRIVEDI
(Civil Appeal No 274 of 2020)
MARCH 08, 2021
[DR. DHANANJAYA Y CHANDRACHUD AND
M. R. SHAH, JJ.]
Consumer Protection:
Allotment of residential unit by builder – Clause 20 of the
allotment letter stipulated for handing-over of the unit in two and
half years and for compensation at the rate of Rs. 2 per sq. feet of
the unit per month for the period of delay beyond one year form the
stipulated date – Failure to hand-over the possession within the
time agreed upon – Consumer complaint – Consumer Commission
directed the builder to pay compensation with 10% interest pa. on
the amount deposited by the complainant from June 2015 till actual
date of possession i.e. on July 26, 2018 – Consumer Court also
awarded an amount of Rs. 2 lakhs towards loss of rent and
Rs.25,000/- as costs – Appeal to Supreme Court – Held: The
compensation @ Rs. 2/- per sq.ft. was one sided and constitutes an
unfair trade practice – As per clause 20 of allotment letter, the builder
was required to hand-over the possession within three and half years
(including extention due to force majeure) which came to an end by
the end of December 2015 – Therefore, the interest would become
payable from January 1, 2016 – In the light of prevailing market
conditions, rate of interest @ 10% pa. is excessive and therefore,
the rate is fixed at 7% pa. – Also, there was no justification to
award an amount of Rs. 2 lakhs, once interest for delayed handing-
over of possession was granted – Order of Consumer Commission
modified.
Words and Phrases:
“endeavour” – Meaning of.
Partly allowing the appeal, the Court
HELD: 1. Clause 20 of the letter of allotment provides that
the appellant shall “endeavour” to complete the construction of
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the dwelling unit within two and a half years from the date of the
letter of allotment. The expression ‘endeavour’ meant that the
appellant would make an earnest effort to hand over possession
by that date. Even if the expression does not mean an absolute
commitment to hand over possession on or before a specified
date, this expression has to be read in the context of the entirety
of the clause. To construe the expression as leaving the date for
handing over possession indefinite and at the absolute discretion
of the developer would leave the purchaser at the mercy of the
builder. Clause 20 must be construed to require the builder to
make all reasonable efforts to comply with the duty to hand over
possession by the stipulated date. The burden would lie on the
developer to explain the steps taken to comply with the
contractual stipulation. Clause 20 envisages that, save and except
for delay on account of force majeure, the appellant would pay
compensation at the rate of Rs 2 per sq ft of the super area of the
dwelling unit per month for the period of delay beyond one year
from the stipulated date. It stipulates that compensation would
be payable after four years (plus a valid extension due to force
majeure) from the date of allotment. The above condition would
indicate that beyond a period of one year, from the expiry of two
and a half years, which was envisaged under Clause 20, the
appellant agreed to pay compensation to the flat buyer. The latter
stipulation of four years is incongruous, because previously, a
period of one year beyond the stipulated period of 2.5 years is
fixed, beyond which compensation becomes payable. This
indicates that three and a half years was by all accounts the period
for handing over possession beyond which the purchaser was
entitled to compensation. [Para 7][287-A-F]
2. The NCDRC was justified in taking the view that the
condition in the allotment of payment of compensation at the rate
of Rs 2 per sq ft is one-sided and constitutes an unfair trade
practice. The letter of allotment is in a standard form. The
purchaser has no option but to sign on the dotted line. On the
other hand, under Clause 16, if the buyer were to delay in the
payment of any instalment, a liability to pay simple interest at the
rate of 12% per annum is attracted. Clause 20, in other words, is
NBCC (INDIA) LIMITED v. SHRI RAM TRIVEDI
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not even-handed. While, on the one hand, it contemplates only
compensation at the rate of Rs 2 per sq ft in the event that there
is a delay on the part of the appellant, the buyer is required to
pay a substantially hi

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