2026 INSC 170 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5289 OF 2022

PARSVNATH DEVELOPERS LTD. ... APPELLANT

VERSUS

MOHIT KHIRBAT ... RESPONDENT

WITH

CIVIL APPEAL NO. 5290 OF 2022

PARSVNATH DEVELOPERS LTD. ... APPELLANT

VERSUS

GP. CAPT. SUMAN CHOPRA (DEAD)

THROUGH LRS. ... RESPONDENT

WITH

CIVIL APPEAL NO. 11047 OF 2025

PARSVNATH HESSA DEVELOPERS PVT. LTD. ... APPELLANT

VERSUS

AMAN CHAWLA AND ANOTHER ... RESPONDENT(S)

2

J U D G M E N T

R. MAHADEVAN, J.

1. These three appeals arise out of separate orders dated 30.07.2018,

30.07.2018, and 21.11.2019 respectively passed by the National Consumer

Disputes Redressal Commission, New Delhi

1

in Consumer Complaint Nos. 827

of 2017, 828 of 2017 and 2355 of 2017.

2. By the impugned orders, the NCDRC directed the appellant to complete

construction of the flats and hand over possession to the respondents in these

appeals on or before 31.03.2019, 31.03.2019 and 31.03.2020 respectively, after

obtaining the requisite Occupancy Certificate from the competent authorities. The

appellant was further directed to pay compensation by way of simple interest at

the rate of 8% per annum with effect from 13.11.2014, 14.12.2013 and

20.08.2015 respectively till the actual delivery of possession.

2.1. The NCDRC also directed the appellant to pay/credit rebate for the period

from 01.09.2013 to 12.11.2014 at the same rate at which such rebate had earlier

been credited to the account of the respondent Dr. Mohit Khirbat, and to pay

litigation costs of Rs.25,000/- to the respondents in each case. Insofar as the

respondents in C.A. No. 11047/2025 are concerned, the NCDRC restrained the

1

For short, “NCDRC”

3

appellant from withdrawing any rebate already credited to the account of the

respondents. It was further directed that any increase in stamp duty occurring

after 12.11.2014, 13.12.2013 and 20.08.2015 respectively shall be borne by the

appellant.

2.2. Additionally, the NCDRC permitted inspection of the flats by the appellant

prior to offering possession, with liberty to take measurements along with its

architect. In the event of any excess area being found, the respondents were held

liable to pay for such excess area at the original allotment price, with the value

thereof to be adjusted against the compensation payable. The appellant was,

however, held entitled to demand payment of any balance amount remaining after

such adjustment.

3. At the outset, a brief narration of the facts giving rise to the present appeals

is necessary. The consumer complaints state that the respondents had booked

residential apartments with the appellant in a project developed by it at Sector-

53, Gurgaon known as Parsvnath Exotica. The transaction was subsequently

endorsed by the appellant by transferring the allotments in favour of the

respondents. The material particulars of the respective cases are as follows:

4

Case No. Owner(s) of the Flat Flat No. &

Area

Agreement date

and Basic sale price

C.A. No. 5289

of 2022

(Consumer

Complaint

No. 827 of

2017)

Original owners:

Meera Mehra & Raj

Kumar Mehra;

Subsequent owner: the

present respondent

B-5-501

3390 sq. ft.

23.02.2007 and

Rs. 2,03,40,000/-

Endorsed by the

appellant on

20.05.2011

C.A. No. 5290

of 2022

(Consumer

Complaint

No. 828 of

2017)

Respondent: Gp. Capt.

Suman Chopra

B-6-903

3390 sq. ft.

12.03.2007 and

Rs. 1,82,72,100/-

C.A. No.

11047 of 2025

(Consumer

Case No. 2355

of 2017)

Original owner: Gunja

Infrastructure Private

Limited;

Subsequent owners:

Noor Bhatia and

Rakesh Bhatia; and

thereafter, GPA

Holder: Arjun Chawla

B-6-202

3390 sq. ft.

14.02.2011;

after 4% rebate of

Rs. 2,54,25,000/-,

basic price

Rs.2,44,08,000/-

Transfers dated

07.03.2011 and

02.02.2012

3.1. Under the terms of the Flat Buyer Agreements, possession of the flats was

required to be delivered within 36 months from the commencement of

construction of the respective blocks, with a grace period of six months. Despite

payment of almost the entire sale consideration by the respondents, possession

was not delivered within the stipulated or even the extended contractual period.

5

The respondents were therefore constrained to file consumer complaints before

the NCDRC seeking inter alia delivery of possession, compensation, damages

and costs.

3.2. Before the NCDRC, the appellant contended that the delay was attributable

to factors such as lack of adequate financial resources, shortage of labour,

escalation in manpower and material costs, and statutory approvals and

procedural compliances. However, the NCDRC, by the impugned orders,

disposed of the consumer complaints in favour of the respondents holding that

the appellant could not be permitted an indefinite period to obtain the Occupancy

Certificate, and was required to do so in a time-bound manner at its own cost and

responsibility. Aggrieved thereby, the appellant has preferred the present appeals.

4. The learned senior counsel appearing for the appellant contended that the

NCDRC exceeded its jurisdiction by travelling beyond the scope of Section 14

of the Consumer Protection Act, 1986

2

while granting the reliefs under the

impugned orders, and failed to give due effect to the contractual terms governing

the relationship between the parties.

4.1. It was submitted that Clause 10(a) of the Flat Buyer Agreement specifically

provides that no claim for damages or compensation shall lie against the

developer for any delay in handing over possession caused due to the reasons

2

For short, “the Act”

6

enumerated therein. In view of such stipulation, the respondents were not entitled

to claim compensation by way of interest over and above what is exactly provided

under Clause 10(c) of the Agreement, which, according to the appellant, has

already been paid.

4.2. The learned senior counsel further submitted that Clause 11 (a) of the Flat

Buyer Agreement squarely casts the liability to bear stamp duty, registration

charges and other incidental expenses upon the buyer. The direction issued by the

NCDRC requiring the appellant to bear the increased stamp duty was, therefore,

contended to be contrary to the express contractual terms.

4.3. It was also urged that the NCDRC awarded interest and litigation costs

without examining the contractual entitlements or the factual matrix, and in

disregard of the law settled by this Court. According to the learned counsel, once

the Agreement contains a specific stipulation governing compensation for delay,

grant of interest beyond such stipulation was impermissible.

4.4. The learned senior counsel contended that the respondents sought reliefs

far in excess of their legitimate entitlement, and that the amounts claimed were

inflated and unsupported by material on record, yet were allowed without proper

scrutiny.

4.5. It was further submitted that the complaints were motivated by unjust

enrichment, while genuine industry-wide difficulties faced by the real estate

sector such as shortage of finance and labour, escalation in material costs, and

7

delays in approvals, were completely overlooked by the NCDRC, despite such

factors being beyond the appellant’s control.

4.6. The learned senior counsel emphasised that the impugned orders do not

disclose any discernible methodology or rationale for determination of

compensation by way of interest or costs. It was contended that compensation

must have a rational nexus with actual loss or damage suffered, which is entirely

absent in the present cases.

4.7. With specific reference to C.A. No. 5289 of 2022, it was submitted that the

original allottee was a chronic defaulter in payment of instalments, necessitating

repeated reminders. The appellant offered possession for fit-out purposes after

reconciliation of accounts, granted a special rebate of Rs. 17,00,000/- towards

unfinished items, and credited Rs. 17,62,800/- towards compensation for delay

from September 2013 to December 2017. Pursuant to the interim order of this

Court dated 12.02.2021, further compensation was paid, aggregating to Rs.

43,73,100/- upto October 2024.

4.8. In C.A. No. 5290 of 2022, it was submitted that upon completion of works,

a letter offering possession for fit-out was issued on 13.01.2022, but the

respondent was not willing to take possession. As directed by this Court,

compensation amounting to Rs.43,05,300/- was paid upto October 2024.

4.9. Insofar as C.A. No. 11047 of 2025 is concerned, it was submitted that

possession was taken by the respondents on an “as is where is” basis on

14.08.2022, and a sum of Rs. 33,22,200/- was credited or adjusted towards special

8

rebate for the period from April 2013 to May 2021. Despite the same, the

respondents continue to raise claims for further delay compensation.

4.10. The learned senior counsel submitted that after completion of Towers B5

and B6, applications for grant of Occupancy Certificate were duly made before

the Directorate of Town and Country Planning, but the same were delayed due to

changes in government policy. It was contended that the delay in issuance of the

Occupancy Certificate is not attributable to the appellant, which has also

complied with this Court’s directions, including handing over three flats to the

State of Haryana as solvent security pending completion of EWS flats.

4.11. Ultimately, the learned senior counsel submitted that the appellant has

acted bona fide, settled several similarly situated disputes, and sought liberty to

effect settlement either by refund or by directing acceptance of possession on an

“as is where is” basis along with contractual compensation.

5. Per contra, the learned senior counsel for the respondents supported the

impugned orders and contended that the appellant failed to complete the project

or obtain the requisite approvals, including the Occupancy Certificate within the

contractual period, thereby compelling the respondents to approach the NCDRC.

It was submitted that instead of complying with the NCDRC orders, the appellant

prolonged the matter by filing the present appeals.

9

5.1. It was submitted that in C.A. No. 5289 of 2022, the respondent paid the

entire sale consideration by October 2013, despite which the appellant failed to

complete the project and hand over possession. In C.A. No. 5290 of 2022, the

respondent had paid almost the entire sale consideration of Rs.1,82,72,100/- prior

to the committed possession date of 14.12.2013, yet possession was not delivered

within time.

5.2. With respect to C.A. No. 11047 of 2025, it was submitted that despite

payment of about 95% of the sale consideration by 2013, possession was not

delivered even after expiry of the extended contractual period. Execution

proceedings were initiated due to non-compliance of the NCDRC order, resulting

in issuance of non-bailable warrants against the directors of the appellant. In the

execution proceedings, the appellant admitted its liability to the extent of Rs. 1.20

crores as against the claimed Rs. 1.33 crores. Possession was ultimately offered

on 14.08.2022 without obtaining the Occupancy Certificate, which was accepted

by the respondents due to urgent need, without prejudice to their rights.

5.3. The learned senior counsel fairly submitted that the respondents in CA.

No.11047 of 2025 preferred C.A. No. 951 of 2020 seeking enhancement of

interest, which was dismissed by this Court on 11.03.2024, thereby rendering the

NCDRC order final and binding.

5.4. It was further submitted that the appellant intentionally delayed

compliance by relying on the pendency of C.A. No. 473 of 2024 (Parsvnath

10

Developers Ltd v. Mallika Raghavan) which was ultimately dismissed on

22.04.2024 in view of an out-of-court settlement.

5.5. On the aforesaid grounds, the learned senior counsel submitted that the

respondents have suffered for more than a decade despite having paid nearly the

entire sale consideration and, accordingly, prayed for dismissal of the appeals.

6. We have carefully considered the rival submissions and perused the

materials placed on record.

7. It is not in dispute that the respondents had booked residential apartments

in the project developed by the appellant and had paid nearly the entire sale

consideration. It is equally undisputed that the appellant failed to complete the

project within the stipulated period and was unable to hand over possession of

the flats to the respondents within the contractual time frame. Consequently, the

respondents were constrained to approach the NCDRC by filing consumer

complaints. Upon consideration of the pleadings and submissions advanced by

both sides, the NCDRC disposed of the complaints in favour of the respondents.

8. As indicated above, by the impugned orders, the NCDRC directed the

appellant to complete construction of the flats and to hand over possession to the

respondents within the time specified therein, after obtaining the requisite

Occupancy Certificate from the competent authority. The appellant was further

directed to pay compensation by way of interest at the rate of 8% per annum from

11

the respective cut off dates till actual delivery of possession, to extend rebate for

the specified period at the contractual rate, to pay litigation costs of Rs. 25,000/-

and to bear any increase in stamp duty occurring after the stipulated dates.

Aggrieved by the said directions, the appellant has approached this Court with

the present appeals.

9. The principal submission urged on behalf of the appellant is that the

NCDRC exceeded its jurisdiction by travelling beyond the scope of Section 14

of the Act and the contractual terms governing the parties, particularly Clause 10

of the Flat Buyer Agreement. It is contended that in view of Clause 10(c), which

prescribes a fixed rate of compensation for delay, the respondents were not

entitled to any further amount by way of interest or compensation, and that the

grant of a higher rate by the NCDRC amounts to unjust enrichment.

10. The submissions so made cannot be accepted. The jurisdiction of the

consumer fora is traceable not merely to the contractual terms agreed between the

parties but to the statute itself. Sections 12 and 22 of the Act empower the

consumer fora, including the NCDRC to adjudicate complaints relating to

deficiency in service and to grant appropriate reliefs. Section 22 expressly

incorporates the powers under Sections 12, 13 and 14, thereby enabling the

NCDRC to issue directions and award compensation for loss or injury caused to

a consumer. The source of power, therefore, is statutory, and not contractual. For

better appreciation, the relevant provisions of the Act are extracted below:

12

“12. Manner in which complaint shall be made — (1) A complaint in relation to

any goods sold or delivered or agreed to be sold or delivered or any service

provided or agreed to be provided may be filed with a District Forum by–

(a) the consumer to whom such goods are sold or delivered or agreed to be sold

or delivered or such service provided or agreed to be provided;

(b) any recognized consumer association whether the consumer to whom the

goods sold or delivered or agreed to be sold or delivered or service provided or

agreed to be provided is a member of such association or not;

(c) one or more consumers, where there are numerous consumers having the same

interest, with the permission of the District Forum, on behalf of, or for the benefit

of, all consumers so interested; or

(d) the Central or the State Government, as the case may be, either in its individual

capacity or as a representative of interests of the consumers in general.

(2) Every complaint filed under sub-section (1) shall be accompanied with such

amount of fee and payable in such manner as may be prescribed.

(3) On receipt of a complaint made under sub-section (1), the District Forum may,

by order, allow the complaint to be proceeded with or rejected;

Provided that a complaint shall not be rejected under this sub-section unless an

opportunity of being heard has been given to the complainant.

Provided further that the admissibility of the complaint shall ordinarily be

decided within twenty-one days from the date on which the complaint was

received.

(4) Where a complaint is allowed to be proceeded with under sub-section (3), the

District Forum may proceed with the complaint in the manner provided under this

Act;

Provided that where a complaint has been admitted by the District Forum, it shall

not be transferred to any other court or tribunal or any authority set up by or

under any other law for the time being in force.

Explanation — For the purposes of this section, “recognized consumer

association” means any voluntary consumer association registered under the

Companies Act, 1956 (1 of 1956) or any other law for the time being in force.”

“22. Power and procedure applicable to the National Commission.— (1) The

provisions of sections 12, 13 and 14 and the rules made thereunder for the

disposal of complaints by the District Forum shall, with such modifications as

may be considered necessary by the Commission, be applicable to the disposal of

disputes by the National Commission.

(2) Without prejudice to the provisions contained in sub-section (1), the National

Commission shall have the power to review any order made by it, when there is

an error apparent on the face of record.”

13

11. It is well settled that housing construction falls within the ambit of

“service” under Section 2(1)(o) of the Act, and failure to deliver possession

within the stipulated period constitutes “deficiency” under Section 2(1)(g). In

Lucknow Development Authority v. M.K. Gupta

3

, this Court held that the

provisions of the Act must receive a liberal construction in favour of the

consumer, the legislation being beneficial in character. The expression

“compensation” was held to be of wide amplitude, extending not only to

pecuniary loss but also to mental agony and harassment occasioned by deficiency

in service. The following passage is pertinent:

“The word 'compensation' is again of very wide connotation. It has not been

defined in the Act. According to dictionary it means, 'compensating or being

compensated; thing given as recompense;'. In legal sense it may constitute actual

loss or expected loss and may extend to physical, mental or even emotional

suffering, insult or injury or loss. Therefore, when the Commission has been

vested with the jurisdiction to award value of goods or services and compensation

it has to be construed widely enabling the Commission to determine compensation

for any loss or damage suffered by a consumer which in law is otherwise included

in wide meaning of compensation. The provision in our opinion enables a

consumer to claim and empowers the Commission to redress any injustice done

to him Any other construction would defeat the very purpose of the Act. The

Commission or the forum in the Act is thus entitled to award not only value of the

goods or services but also to compensate a consumer for injustice suffered by

him.”

12. In M/s. Imperia Structures Ltd. v. Anil Patni and another

4

, and IREO

Grace Realtech Private Limited v. Abhishek Khanna and others

5

, this Court

reiterated that flat purchasers are “consumers” under the Act, and delay in

3

(1994) 1 SCC 243

4

Civil Appeal No. 3581-3590 of 2020 dated 02.11.2020

5

(2021) 3 SCC 241

14

handing over possession amounts to deficiency in service. The consumer fora, in

exercise of powers under Section 14, are competent to redress such deficiency

and award just and reasonable compensation commensurate with the injury

suffered. The following paragraphs from IREO are apposite:

“29. Section 2(1)(c) of the Consumer Protection Act, 1986 defines a “complaint”

as:

“2. (1)(c) “complaint” means any allegation in writing made by a

complainant that –

(i) any unfair trade practice or a restrictive trade practice has been adopted

by any trader or service provider;

(ii) the goods bought by him or agreed to be bought by him suffer from one

or more defects.

(emphasis supplied)

Section 2(1)(g) of the Act defines the expression “deficiency” to include any fault,

shortcoming or inadequacy in the quality, nature and manner of performance

which is required to be maintained under law, or in pursuance of a contract, or

in relation to a “service”. The term “service” has been defined by Section

2(1)(o) to include a service of any description which is made available to potential

users. Section 2(1)(o) was amended by Act 50 of 1993 w.e.f. from 18.06.1993 to

include “housing construction” within the purview of “service”. The

amended Section 2(1)(o) reads as follows:

“2(1)(o) "service" means service of any description which is made available

to potential users and includes, but not limited to, the provision of facilities

in connection with banking, financing insurance, transport, processing,

supply of electrical or other energy, board or lodging or both, housing

construction, entertainment, amusement or the purveying of news or other

information, but does not include the rendering of any service free of charge

or under a contract of personal service;”

(emphasis supplied)

30. In LDA v. M.K. Gupta, this Court discussed the legislative intent of including

“housing construction” within the ambit of “service‘ as: (SCC pp. 252 & 256-57,

paras 2 & 6)

“2. …. A scrutiny of various definitions such as ‘consumer’, ‘service’,

‘trader’, ‘unfair trade practice’ indicates that legislature has attempted to

widen the reach of the Act. Each of these definitions are in two parts, one,

explanatory and the other explanatory. The explanatory or the main part itself

uses expressions of wide amplitude indicating clearly its wide sweep, then its

ambit is widened to such things which otherwise would have been beyond its

15

natural import. Manner of construing an inclusive clause and its widening

effect has been explained in Dilworth v. Commissioner of Stamps as under:

“…’include’ is very generally used in interpretation clauses in order to

enlarge the meaning of the words or phrases occurring in the body of the

statute, and when it is so used these words or phrases must be construed

as comprehending, not only such things as they signify according to their

natural, import, but also those things which the definition clause declares

that they shall include.”

It has been approved by this Court in ESI Corpn. v. High Land Coffee Works

6

,

CIT v. Taj Mahal Hotel

7

and State of Bombay v. Hospital Mazdoor Sabha

8

.

The provisions of the Act thus have to be construed in favour of the consumer

to achieve the purpose of enactment as it is a social benefit oriented

legislation. The primary duty of the court while construing the provisions of

such an Act is to adopt a constructive approach subject to that it should not

do violence to the language of the provisions and is not contrary to the

attempted objective of the enactment.

….

6. ….. As pointed out earlier the entire purpose of widening the definition is

to include in it not only day to day buying and selling activity undertaken by

a common man but even such activities which are otherwise not commercial

in nature yet they partake of a character in which some benefit is conferred

on the consumer. Construction of a house or flat is for the benefit of person

for whom it is constructed. He may do it himself or hire services of a builder

or contractor. The latter being for consideration is service as defined in the

Act. Similarly when a statutory authority develops land or allots a site or

constructs a house for the benefit of common man it is as much service as by

a builder or contractor. The one is contractual service and other statutory

service. If the service is defective or it is not what was represented then it

would be unfair trade practice as defined in the Act. Any defect in

construction activity would be denial of comfort and service to a consumer.

When possession of property is not delivered within stipulated period the

delay so caused is denial of service. Such disputes or claims are not in respect

of immoveable property as argued but deficiency in rendering of service of

particular standard, quality or grade. Such deficiencies or omissions are

defined in sub-clause (ii) of clause (r) of Section 2 as unfair trade practice.…

A person who applies for allotment of a building site or for a flat constructed

by the development authority or enters into an agreement with a builder or a

contractor is a potential user and nature of transaction is covered in the

expression 'service of any description'. It further indicates that the definition

6

(1991) 3 SCC 617

7

(1971) 3 SCC 550

8

AIR 1960 SC 610 : (1960) 2 SCR 866

16

is not exhaustive. The inclusive clause succeeded in widening its scope but not

exhausting the services which could be covered in earlier part. So any service

except when it is free of charge or under a constraint of personal service is

included in it. Since housing activity is a service it was covered in the clause

as it stood before 1993.”

31. Section 2(1)(r) of the Consumer Protection Act, 1986 defines “unfair trade

practice” as follows:

“2. (1)(r) “unfair trade practice” means a trade practice which, for the

purpose of promoting the sale, use or supply of any goods or for the provision

of any service, adopts any unfair method or unfair or deceptive practice

including any of the following practices, namely…”

(emphasis supplied)

The said definition is an inclusive one, as held by this Court in Pioneer Urban

Land & Infrastructure Ltd v. Govindan Raghavan

9

, wherein this Court speaking

through one of us (Indu Malhotra, J.) held: (SCC pp. 732-33 & 734, paras 6.1 –

6.3 & 6.8)

“6.1 …. The inordinate delay in handing over possession of the flat clearly

amounts to deficiency of service. In Fortune Infrastructure v. Trevor D’Lima,

this Court held that a person cannot be made to wait indefinitely for

possession of the flat allotted to him, and is entitled to seek refund of the

amount paid by him, along with compensation.

6.2. The respondent flat purchaser has made out a clear case of deficiency of

service on the part of the appellant builder. The respondent flat purchaser

was justified in terminating the apartment buyer's agreement by filing the

consumer complaint, and cannot be compelled to accept the possession

whenever it is offered by the builder. The respondent purchaser was legally

entitled to seek refund of the money deposited by him along with appropriate

compensation.

6.3 The National Commission in the impugned order dated 23-10-2018

[Geetu Gidwani Verma v. Pioneer Urban land and Infrastructure Ltd., 2018

SCC OnLine NCDRC 1164] held that the clauses relied upon by the builder

were wholly one-sided, unfair and unreasonable, and could not be relied

upon. The Law Commission of India in its 199th Report, addressed the issue

of “Unfair (Procedural & Substantive) Terms in Contract”. The Law

Commission inter alia recommended that a legislation be enacted to counter

such unfair terms in contracts. In the draft legislation provided in the Report,

it was stated that:

“… a contract or a term thereof is substantively unfair if such contract or

the term thereof is in itself harsh, oppressive or unconscionable to one of

the parties.”

9

(2019) 5 SCC 725 : (2019) 3 SCC (Civ) 37

17

…

6.8. A term of a contract will not be final and binding if it is shown that the

flat purchasers had no option but to sign on the dotted line, on a contract

framed by the builder. The contractual terms of the agreement dated 8-5-2012

are ex facie one-sided, unfair and unreasonable. The incorporation of such

one-sided clauses in an agreement constitutes an unfair trade practice as

per Section 2(1)(r) of the Consumer Protection Act, 1986 since it adopts

unfair methods or practices for the purpose of selling the flats by the builder.”

32. In a similar case, this Court in Arifur Rahman Khan v. DLF Southern Homes

(P) Ltd.

10

affirmed the view taken in Pioneer, and held that the terms of the

agreement authored by the developer does not maintain a level platform between

the developer and the flat purchaser. The stringent terms imposed on the flat

purchaser are not in consonance with the obligation of the developer to meet the

timelines for construction and handling over possession, and do not reflect an

even bargain. The failure of the developer to comply with the contractual

obligation to provide the flat within the contractually stipulated period, would

amount to a deficiency of service. Given the one-sided nature of the apartment

buyer’s Agreement, the consumer fora had the jurisdiction to award just and

reasonable compensation as an incident of the power to direct removal of

deficiency in service.

33. Section 14 of the 1986 Act empowers the Consumer Fora to redress the

deficiency of service by issuing directions to the Builder, and compensate the

consumer for the loss or injury caused by the opposite party, or discontinue the

unfair or restrictive trade practices.

34. 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. Even under the 1986 Act,

the powers of the consumer fora were in no manner constrained to declare a

contractual term as unfair or one-sided as an incident of the power to discontinue

unfair or restrictive trade practices. An “unfair contract” has been defined under

the 2019 Act, and powers have been conferred on the State Consumer Fora and

the National Commission to declare contractual terms which are unfair, as null

and void. This is a statutory recognition of a power which was implicit under the

1986 Act.

35. In view of the above, 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.”

10

(2020) 16 SCC 512

18

13. It is equally well settled that contractual stipulations cannot curtail the

statutory jurisdiction of the consumer fora. In Pioneer Urban Land &

Infrastructure Ltd v. Govindan Raghavan

11

, this Court held that one-sided and

unreasonable clauses in builder-buyer agreements constitute an unfair trade

practice under Section 2(1)(r) of the Act. It was further observed that the

incorporation of such oppressive terms in a standard form contract, where

purchasers have little or no bargaining power, cannot bind the consumer so as to

defeat statutory remedies under the Act.

14. In the present case, Clause 10 of the Flat buyer agreement stipulates the

period for completion of construction and provides for payment of delay

compensation, and reads thus:

“10. (a) Construction of the Flat is likely to be completed within a period of thirty

six (36) months of commencement of construction of the particular Block in which

the Flat is located, with a grace period of six (6) months, on receipt of sanction of

building plans/revised building plans and approvals of all concerned authorities

including the Fire Service Dept., Civil Aviation Dept., Traffic Dept., Pollution

Control Dept., as may be required for commencing and carrying on construction

subject to force majeure, restraints or restrictions from any courts/authorities,

non-availability of building materials, disputes with contractors/work force etc.

and circumstances beyond the control of the Developers and subject to timely

payments by the Flat Buyers in the Scheme. No claim by way of

damages/compensation shall lie against the Developers in case of delay in

handing over possession on account of the said reasons. The date of submitting

application to the concerned authorities for issue of completion/ part

completion/occupancy/part occupancy certificate of the Complex shall be treated

as the date of completion of the Flat for the purpose of this clause/agreement.

11

(2019) 5 SCC 725 : (2019) 3 SCC (Civ) 37

19

(b) The Developers on completion of construction shall issue a final call notice to

the Buyer, who shall remit all dues within 30 days thereof and take possession of

the Flat. The Buyer shall be liable for payment of all taxes, levies, outflows,

maintenance charges from the dates these are levied/made applicable irrespective

of the fact that the Buyer has not taken possession of the Flat or has not been

enjoying benefit of the same.

(c) In case of delay in construction of the Flat beyond the period as stipulated

subject to force majeure and other circumstances as aforesaid under sub-clause

(a) above with a grace period of 6 months, the Developers shall pay to the Buyer

compensation @ Rs. 107.60 (Rupees One hundred seven and paise sixty only) per

sq. meter or @ Rs. 10/- per sq. ft. of the super area of the Flat per month for the

period of delay. Likewise, if the Buyer fails to settle the final account and to take

possession of the Flat within 30 days from the date of issue of the final call

notice/offer to hand over possession by the Developers, the Buyer shall be liable

to pay to the Developers holding charges@ Rs. 107 .60 per sq, meter or @ Rs.10/-

per sq. ft. of the super area of the Flat per month on expiry of 30 days’ notice.

(d) Upon taking possession of the Flat the Buyer shall not be entitled to put

forward any claim against the Developers in respect of any item of work in the

Flat which may be alleged not to have been carried out or completed or for any

other reason whatsoever.”

15. A reading of Clause 10(c) reveals that compensation for delay is stipulated

at the rate of Rs. 10 per sq. ft. per month. Whereas, Clause 5(b) of the Agreement

empowers the developer to charge interest at 24% per annum for delayed

payments by the allottee and to forfeit a substantial portion of the earnest money.

Thus, the terms are evidently one-sided and have been drafted unilaterally by the

developer. The stipulated compensation is nominal and disproportionate,

particularly in cases of prolonged delay causing financial strain and mental

hardship to homebuyers.

20

16. The statute does not impose any embargo on the grant of higher or

reasonable compensation merely because the parties have agreed to a particular

clause, especially where such clause is found to be unfair or oppressive. While

consumer fora must act judicially and not arbitrarily enhance compensation, they

are not bound to mechanically enforce a contractual term that results in manifest

injustice. Departure from such a clause, where justified by the nature and duration

of the delay and the hardship caused, lies within the statutory competence of the

forum.

17. In the instant case, the delay in completion and handing over of possession

is not disputed. Such failure constitutes deficiency in service. The NCDRC has

examined the facts, assessed the extent of delay and its impact on the

complainants, and determined compensation in the exercise of its powers

conferred under the Act.

18. Accordingly, it must be held that the NCDRC acted well within the ambit

of its statutory authority in awarding compensation, notwithstanding the

restrictive stipulation contained in Clause 10(c) of the Agreement. The power of

the consumer fora to grant just and reasonable compensation for deficiency in

service is traceable to the statute and cannot be curtailed by contractual terms

which operate to the detriment of the consumer. The award therefore represents

a legitimate and permissible exercise of statutory jurisdiction.

21

18.1. Further, as held in Laureate Buildwell Private Limited v. Charanjeet

Singh

12

, a subsequent purchaser is entitled to seek the same relief as the original

allottee and cannot be denied compensation merely on the ground that he or she

stepped into the shoes of the original allottee at a later stage. The right to claim

compensation for deficiency in service travels with the allotment, unless

expressly barred.

19. As regards the determination of compensation in cases of delayed or failed

delivery of possession, reference may be made to the decision in Bangalore

Development Authority v. Syndicate Bank

13

, wherein, this Court after surveying

a catena of decisions, crystallised the governing principles relating to grant or

refusal of relief to an allottee aggrieved by delayed or non-delivery of possession.

It was held that where possession is not delivered within the stipulated or

reasonable time without justifiable cause, the allottee is entitled to refund with

reasonable interest and in appropriate cases, additional compensation depending

upon the facts. Compensation is not uniform and must be moulded in light of the

nature of delay, conduct of the authority, and extent of harassment suffered. The

governing principles laid down in the said judgment are as follows:

“(a) Where the development authority having received the full price, does not

deliver possession of the allotted plot/flat/house within the time stipulated or

within a reasonable time, or where the allotment is cancelled or possession is

refused without any justifiable cause, the allottee is entitled for refund of the

amount paid, with reasonable interest thereon from the date of payment to date of

12

(2021) 20 SCC 401

13

(2007) 6 SCC 711

22

refund. In addition, the allottee may also be entitled to compensation, as may be

decided with reference to the facts of each case.

(b) Where no time is stipulated for performance of the contract (that is for

delivery), or where time is not the essence of the contract and the buyer does not

issue a notice making time the essence by fixing a reasonable time for

performance, if the buyer, instead of rescinding the contract on the ground of non-

performance, accepts the belated performance in terms of the contract, there is

no question of any breach or payment of damages under the general law

governing contracts. However, if some statute steps in and creates any statutory

obligations on the part of the development authority in the contractual field, the

matter will be governed by the provisions of that statute.

(c) Where an alternative site is offered or delivered (at the agreed price) in view

of its inability to deliver the earlier allotted plot/flat/house, or where the delay in

delivering possession of the allotted plot/flat/house is for justifiable reasons,

ordinarily the allottee will not be entitled to any interest or compensation. This is

because the buyer has the benefit of appreciation in value.

(d) Though the relationship between Development Authority and an applicant for

allotment is that of a seller and buyer, and therefore governed by law of contracts,

(which does not recognise mental agony and suffering as a head of damages for

breach), compensation can be awarded to the consumer under the head of mental

agony and suffering, by applying the principle of Administrative Law, where the

seller being a statutory authority acts negligently, arbitrarily or capriciously.

(e) Where an alternative plot/flat/house is allotted and delivered, not at the

original agreed price, but by charging current market rate which is much higher,

the allottee will be entitled to interest at a reasonable rate on the amount paid

towards the earlier allotment, from the date of deposit to date of delivery of the

alternative plot/flat/house. In addition, he may be entitled to compensation also,

determined with reference to the facts of the case, if there are no justifiable

reasons for non-delivery of the first allotted plot/flat/house.

(f) Where the plot/flat/house has been allotted at a tentative or provisional price,

subject to final determination of price on completion of the project (that is

acquisition proceedings and development activities), the Development Authority

will be entitled to revise or increase the price. But where the allotment is at a fixed

price, and a higher price or extra payments are illegally or unjustifiably

demanded and collected, the allottee will be entitled to refund of such excess with

such interest, as may be determined with reference to the facts of the case.

(g) Where full payment is made and possession is delivered, but title deed is not

executed without any justifiable cause, the allottee may be awarded

23

compensation, for harassment and mental agony, in addition to appropriate

direction for execution and delivery of title deed.

(h) Where the allotment relates to a flat/house and construction is incomplete or

not in accordance with the agreed specifications, when it is delivered, the allottee

will be entitled to compensation equivalent to the cost of completing the building

or rectifying the defects.

(i) The quantum of compensation to be awarded, if it is to be awarded, will depend

on the facts of each case, nature of harassment, the period of harassment and the

nature of arbitrary or capricious or negligent action of the authority which led to

such harassment.

(j) While deciding whether the allottee is entitled to any relief and in moulding the

relief, the following among other relevant factors should be considered : (i)

whether the layout is developed on 'no profit no loss' basis, or with commercial

or profit motive; (ii) whether there is any assurance or commitment in regard to

date of delivery of possession; (iii) whether there were any justifiable reasons for

the delay or failure to deliver possession; (iv) whether the complainant has

alleged and proved that there has been any negligence, shortcoming or

inadequacy on the part of the developing authority or its officials in the

performance of the functions or obligations in regard to delivery; and (v) whether

the allottee has been subjected to avoidable harassment and mental agony.

19.1. In Ghaziabad Development Authority v. Balbir Singh

14

this Court

clarified that compensation cannot follow a rigid or formulaic pattern. The

quantum must depend upon the nature and extent of the loss suffered. Where

possession is eventually delivered, compensation may ordinarily be lower since

the allottee receives the benefit of appreciation; however, where refund alone is

directed, compensation may be higher as the allottee is deprived of both

possession and escalation in value. Compensation may include pecuniary loss as

14

(2004) 5 SCC 65

24

well as mental agony resulting from deficiency in service. The relevant

paragraphs are extracted as under:

“8…Thus the Forum or the Commission must determine that there has been

deficiency in service and/or misfeasance in public office which has resulted in loss

or injury. No hard and fast rule can be laid down, however a few examples would

be where an allotment is made, price is received/paid but possession is not given

within the period set out in the brochure. The Commission/Forum would then need

to determine the loss. Loss could be determined on basis of loss of rent which

could have been earned if possession was given and the premises let out or if the

consumer has had to stay in rented premises then on basis of rent actually paid

by him. Along with recompensing the loss the Commission/Forum may also

compensate for harassment/injury both mental and physical. Similarly,

compensation can be given if after allotment is made there has been cancellation

of scheme without any justifiable cause.

9. That compensation cannot be uniform and can best of illustrated by considering

cases where possession is being directed to be delivered and cases where only

monies are directed to be returned. In cases where possession is being directed to

be delivered the compensation for harassment will necessarily have to be less

because in a way that party is being compensated by increase in the value of the

property he is getting. But in cases where monies are being simply returned then

the party is suffering a loss inasmuch as he had deposited the money in the hope

of getting a flat/plot. He is being deprived of that flat/plot. He has been deprived

of the benefit of escalation of the price of that flat/plot. Therefore the

compensation in such cases would necessarily have to be higher. Further if the

construction is not of good quality or not complete, the compensation would be

the cost of putting it in good shape or completing it along with some compensation

for harassment. Similarly, if at the time of giving possession a higher price or

other amounts is collected unjustifiably and without there being any provision for

the same the direction would be to refund it with a reasonable rate of interest. If

possession is refused or not given because the consumer has refused to pay the

amount, then on the finding that the demand was unjustified the consumer can be

compensated for harassment and a direction to deliver possession can be given.

If a party who has paid the amount is told by the authority that they are not in a

position to ascertain whether he has paid the amount and that party is made to

run from pillar to post in order to show that he has paid the amount, there would

be deficiency of service for which compensation for harassment must be awarded

depending on the extent of harassment. Similarly, if after delivery of possession,

the sale deeds or title deeds are not executed without any justifiable reasons, the

compensation would depend on the amount of harassment suffered. We clarify

that the above are mere examples. They are not exhaustive. The above shows that

25

compensation cannot be the same in all cases irrespective of the type of loss or

injury suffered by the consumer.”

20. The expansive understanding of “compensation” under the Act was

authoritatively explained in Lucknow Development Authority (supra).

Subsequent decisions, including Chief Administrator, H.U.D.A. and another v.

Shakuntla Devi

15

and DLF Homes Panchkula Pvt. Ltd. v. D.S. Dhanda Etc.

Etc.

16

reiterate that compensation must be fair, reasonable, and commensurate

with the loss or injury suffered. The consumer fora must analyse the factual

matrix and cannot mechanically restrict compensation to strict financial

calculations alone.

21. The jurisprudence that emerges is clear: compensation under the Act is

remedial and protective in character. Detailed mathematical ascertainment of

market decline is not a sine qua non; what is required is that the award be just,

reasonable and proportionate to the delay, deprivation and hardship established

on record.

22. When the aforesaid principles are applied to the present case, the conduct

of the appellant assumes significance. Over a prolonged period, this Court passed

a series of orders to safeguard the interests of the homebuyers and ensure

completion of the project. By order dated 12.02.2021, the appellant was directed

15

(2017) 2 SCC 301

16

AIR 2019 SUPREME COUR 3218

26

to complete construction and hand over possession and as an interim measure, to

pay contractual delayed compensation. The appellant was made aware that even

if the appeals were to succeed, it could not evade its contractual obligation to

compensate the homebuyers.

23. Subsequent orders dated 08.07.2021, 28.02.2022, and 08.04.2022 record

repeated assurances by the appellant, directions for completion of EWS units,

inspection by the Director of Town and Country Planning, and furnishing of

security for unfinished works. Despite such indulgences and extensions of time,

the appellant failed to secure the requisite Occupancy Certificate.

24. The proceedings dated 13.11.2024 further reveal that the appellant

continued to propose handing over possession on an “as is where is” basis without

obtaining statutory approvals. Thus, the record unequivocally demonstrates

persistent non-compliance despite repeated undertakings before this Court.

25. The issue of offering possession without an Occupancy Certificate is no

longer res integra. In Samruddhi Cooperative Housing Society Ltd v. Mumbai

Mahalaxmi Construction (P) Ltd

17

, this Court held that failure to obtain the

requisite Occupancy Certificate constitutes deficiency in service, entitling

consumers to seek compensation. The relevant paragraphs read thus:

17

(2022) 4 SCC 103

27

“24. Section 2(1)(d) of the Consumer Protection Act defines a “consumer” as a

person that avails of any service for a consideration. A “deficiency” is defined

under Section 2(1)(g) as the shortcoming or inadequacy in the quality of service

that is required to be maintained by law. In its decisions in Arifur Rahman

Khan v. DLF Southern Homes (P) Ltd. [(2020) SCC 512] and Pioneer Urban

Land and Infrastructure Ltd. v. Govindan Raghavan [(2019) 5 SCC 725 : (2019)

3 SCC (Civ) 37], this Court has held that the failure to obtain an occupancy

certificate or abide by contractual obligations amounts to a deficiency in service.

In Treaty Construction v. Ruby Tower Coop. Housing Society Ltd. [(2019) 8 SCC

157 : (2019) 4 SCC (Civ) 141], the Court also considered the question of

awarding compensation for not obtaining the certificate. In that case, the Court

declined to award damages as there was no cogent basis for holding the appellant

liable for compensation, and assessing the quantum of compensation or assessing

the loss to the members of the respondent society.

25. In the present case, the respondent was responsible for transferring the title

to the flats to the society along with the occupancy certificate. The failure of the

respondent to obtain the occupancy certificate is a deficiency in service for which

the respondent is liable. Thus, the members of the appellant Society are well

within their rights as “consumers” to pray for compensation as a recompense for

the consequent liability (such as payment of higher taxes and water charges by

the owners) arising from the lack of an occupancy certificate.”

25.1. Similarly, in Dharmendra Sharma v. Agra Development Authority

18

, it

was categorically held that a purchaser cannot be compelled to accept possession

without completion and statutory certificates, and such an offer is legally

untenable. The following paragraphs are apposite:

“29. The appellant’s key contention regarding the absence of the completion

certificate and firefighting clearance certificate merits serious consideration. The

appellant consistently raised this issue, asserting that a valid offer of possession

cannot be made without these documents. Section 4(5) of the U.P. Apartment

(Promotion of Construction, Ownership and Maintenance) Act, 2010 and Section

19(10) of the RERA Act, 2016 mandate that a developer must obtain these

certificates before offering possession. Despite the appellant’s repeated requests,

ADA failed to produce these certificates, rendering its offer of possession

incomplete and legally invalid.

18

2024 INSC 667

28

30. The appellant has rightly cited relevant precedents to bolster this argument.

In Debashis Sinha v. R.N.R. Enterprise [(2023) 3 SCC 195 : (2023) 1 SCC (Civ)

356], this Court held that possession offered without the requisite completion

certificate is illegal, and a purchaser cannot be compelled to take possession in

such circumstances…”

26. In view of these authoritative pronouncements, possession without an

Occupancy Certificate cannot be forced upon the respondents. Obtaining such

certificate is a statutory pre-condition integral to lawful delivery of possession.

27. It is also relevant to note that the respondents in C.A. No. 11047 of 2025

had sought enhancement of interest, but the award of interest at 8% per annum

has attained finality upon dismissal of their appeal (C.A. No. 951 of 2020) on

11.03.2024. Further, the order dated 21.11.2019 passed by the NCDRC in

Consumer Complaint No. 2355 of 2017, impugned in C.A. No. 11047 of 2025,

was subject to the outcome of Civil Appeal No. 473 of 2020 (Parsvnath

Developers Ltd v. Mallika Raghavan) which was disposed of on 22.04.2024, in

terms of an out-of-court settlement, directing refund with interest at 8% per

annum.

28. Having regard to the totality of circumstances, namely the prolonged delay,

failure to obtain mandatory statutory approvals, repeated non-compliance with

the directions of this Court and the long deprivation suffered by the respondents

despite payment of substantial consideration, we are of the considered view that

29

award of interest at the rate of 8% per annum represents fair and reasonable

compensation consistent with the principles laid down by this Court.

28.1. It is further evident from the record that the NCDRC has awarded rebate,

litigation expenses and additional stamp duty charges to be borne by the appellant

on account of the delay in handing over the possession. These directions have

been issued upon consideration of the factual matrix and material available on

record. Such directions are incidental and ancillary to the main relief of

compensation and fall squarely within the ambit of Section 14 of the Act. Hence,

the same do not suffer from any perversity or jurisdictional error so as to warrant

interference by this Court.

29. Accordingly, we find no merit in these appeals. The orders of the NCDRC

are hereby affirmed. The appellant is directed to obtain the requisite Occupancy

Certificate and hand over possession to the respondents in C.A. Nos. 5289 of

2022 and 5290 of 2022 within a period of six months from the date of this

judgment. Till such time, the appellant shall continue to pay compensation as

determined by the NCDRC without any default. In the event the appellant is

unable to obtain the Occupancy Certificate within the said period on account of

bona fide causes not attributable to it, liberty is granted to approach the NCDRC

for appropriate consideration, limited to the issue of interest for the period

subsequent to the time stipulated in this judgment.

30

29.1. Insofar as the respondents in C.A. No. 11047 of 2025 are concerned, they

shall be entitled to compensation by way of interest at 8% per annum from the

agreed date of possession till 14.08.2022, after adjusting the amount already paid.

The appellant shall obtain the Occupancy Certificate, if not already obtained, and

furnish the same to the respondents forthwith.

30. With the aforesaid observations and directions, all the appeals stand

dismissed. There shall be no order as to costs.

31. Pending application(s), if any, shall stand disposed of.

….....................................J.

[B.V. NAGARATHNA]

….....................................J.

[R. MAHADEVAN]

NEW DELHI;

FEBRUARY 20, 2026.