NE LEGAL BUREAU
NEW DELHI, JUNE 27
In a significant ruling reinforcing consumer rights in the real estate sector, the Supreme Court has held that a homebuyer does not lose the right to seek compensation for delayed possession merely because he has accepted delivery of the flat. Setting aside a 2016 order of the National Consumer Disputes Redressal Commission (NCDRC), the apex court ruled that taking possession of a property cannot extinguish a consumer’s legal claim arising from delays in handing over the flat.
- Landmark verdict rules that accepting possession of a flat does not extinguish a homebuyer’s right to claim compensation for delayed delivery
- Supreme Court says consumer rights survive possession, restoring complaint that had remained unheard on merits for two decades
- Bench holds arbitration clauses cannot automatically oust the jurisdiction of consumer forums under the Consumer Protection Act
- NCDRC faulted for dismissing complaint on a technical ground instead of deciding the core issue of alleged deficiency in service
- Dwarka District Consumer Commission directed to adjudicate the long-pending case on merits within one year, after hearing both sides
A Bench comprising Justices Vikram Nath and V. Mohan observed that a claim for compensation is intrinsically linked to the period preceding delivery of possession.
“The subsequent receipt of possession cannot, by itself, extinguish the right of the allottee to seek adjudication of a claim for compensation for the alleged delay,” the Bench said in its June 4 judgment.
The case arose from a complaint filed by a Delhi homebuyer, who had become a member of a cooperative group housing society in 2003 and later alleged deficiency in service owing to delayed possession of his flat.
The consumer complaint, however, was referred to arbitration by the District Consumer Forum in 2009, a decision later upheld by the Delhi State Consumer Disputes Redressal Commission. When the matter reached the NCDRC, the Commission dismissed the revision petition in 2016 on the ground that the complainant had already accepted possession of the flat without protest and therefore was no longer a “consumer.”
Rejecting this reasoning, the Supreme Court said the NCDRC had failed to examine the central legal issue before it.
“The principal issue before the National Commission was whether the District Forum and the State Commission were justified in referring the complaint to arbitration. The National Commission, however, dismissed the revision petition on the ground that the appellant was not a consumer at the time of filing of the complaint, since he had already taken possession of the flat without protest,” the Bench observed.
The Court held that the reasoning adopted by the NCDRC “cannot be sustained,” noting that the complainant’s grievance related not to possession itself but to the delay in handing over the property and the consequential entitlement to compensation.
The Bench further clarified that questions such as whether the delay actually occurred, whether it was attributable to the housing society and whether possession had been accepted unconditionally are issues requiring adjudication on evidence rather than summary dismissal.
Emphasising the consumer-friendly nature of the law, the Court reiterated that the Consumer Protection Act, 1986 is a beneficial legislation designed to provide consumers with a simple, inexpensive and speedy remedy.
The judgment also reaffirmed that the existence of an arbitration clause does not automatically bar proceedings before consumer forums.
“The existence of another forum or another mode of adjudication, therefore, does not by itself exclude the jurisdiction of the consumer fora,” the Bench said.
Allowing the appeal, the Supreme Court set aside the orders of the NCDRC, the State Commission and the District Forum, restoring the original consumer complaint for adjudication on merits before the District Consumer Disputes Redressal Commission, Dwarka.
Observing that the complaint has remained pending since 2005, the Court directed the District Commission to provide both parties a full opportunity to lead evidence and endeavour to conclude the proceedings within one year from receipt of the judgment.
The verdict is expected to provide significant relief to thousands of homebuyers across the country by reaffirming that accepting possession of a delayed property does not amount to waiving the statutory right to seek compensation for deficiency in service.
