Explore the significant legal analysis provided by the court in a recent real estate dispute case. The court’s ruling sheds light on the crucial aspects of contractual interpretation, highlighting the significance of honoring the terms outlined in a written agreement. This case serves as a valuable lesson in understanding the importance of contractual agreements in legal proceedings.
Facts
- The National Consumer Disputes Redressal Commission (NCDRC) issued an order on 09.11.2022 in response to Consumer Complaint No 35 of 2018.
- The NCDRC directed the respondent company to deliver physical possession of the apartment within 3 months and conduct a joint inspection with the complainants within 15 days.
- If any deficiencies are found during the inspection, the respondent company must rectify them within 30 days.
- The complainants had the option to seek a refund if they did not wish to take possession of the unit.
- Once all defects are rectified, the respondent company must inform the complainants in writing and provide 15 days for completion of formalities and payment of dues.
- The sale consideration for the apartment was fixed at ₹7,55,50,956, with payment schedule and charges as per the Agreement to Sell dated 29.11.2013.
- The appellants had paid ₹2,25,31,148 to the respondent company by the date of filing the consumer complaint.
- No maintenance charges were payable until actual physical possession, and service taxes were to be paid as per prevailing rates.
- The respondent company was to pay delay compensation at 6% interest on the total amount paid from the committed date of possession till the offer of possession.
- The appellants sought a refund with compound interest at 18% p.a. and compensation for harassment and litigation costs.
Also Read: Non-compliance with requirements of Section 81(3) of the Representation of the People Act, 1951
Analysis
- The Purchaser was entitled to possession of the apartment for fit outs by 30.06.2016, with a grace period extending the deadline to 30.06.2017.
- The Agreement required the unit to be complete with water, electricity, and lift access by the specified dates.
- The Purchaser had the right to terminate the Agreement if possession was not provided within the agreed-upon time frame.
- The Agreement outlined the consequences of delays in possession and provided for interest on refund amounts.
- The Occupation Certificate was a crucial milestone in the possession process.
- The appellants were within their rights to terminate the Agreement and seek a refund due to the delays in possession.
- The Part Occupancy Certificate obtained by the respondent was not equivalent to the full Occupation Certificate.
- The NCDRC’s decision to allow a refund with interest was upheld as the delays in possession were deemed significant.
- The terms of the written contract between the parties were binding and could not be altered unilaterally.
- The appellants’ actions to terminate the Agreement were justified based on the contractual terms and the delays in possession.
- The court ruled in favor of the appellants, emphasizing the importance of adhering to the terms of the written Agreement.
- The Purchaser has the right to terminate the Agreement within 90 days from the expiry of the grace period.
- If termination is done within the specified time frame, the Company shall refund the Total Consideration amount or part thereof in 12 equal monthly installments with 12% interest per annum.
- The Date of Offer of Possession (for fit outs) is specified in Annexure 2 of the Agreement.
- The Company is obligated to make the Unit available for fit outs on the agreed upon date.
- If there is a delay in possession for fit outs, the Company must inform the Purchaser of a revised date.
- The Purchaser has the option to terminate the Agreement if possession is delayed beyond the grace period.
- If the Purchaser does not exercise the right to terminate within 90 days, they are deemed to continue with the Agreement.
- The Company is entitled to extensions for delays beyond their control such as material shortages, labour issues, or government regulations.
- Contracts are to be interpreted based on the actual meaning of the words contained in the contract, without the Court making a new contract on their own.
- In cases of interpreting documents related to a contract of insurance, the duty of the Court is to interpret the words as expressed by the parties, and not create a new contract.
- Through the interpretative process, the Court cannot rewrite or create a new contract between parties; they must apply the terms and conditions of the agreed agreement.
- Courts cannot substitute their view of presumed understanding of commercial terms by the parties, if the terms are explicitly expressed.
- The explicit terms of a contract serve as the final word regarding the intention of the parties.
- Respondent-company cannot seek reduction of the rate of interest contrary to the agreed rate.
- NCDRC overstepped its power and jurisdiction by ignoring the binding covenants in the Agreement.
- NCDRC introduced its own logic and rationale instead of following the agreed terms.
- Appellants have the right to terminate the Agreement as per Clause 11.3 despite the respondent’s offer.
- Appellants did not act upon the belated offer of the respondent-company.
Also Read: Setting Minimum Qualifying Marks for Viva Voce: A Question of Legality
Decision
- The order dated 09.11.2022 passed by the NCDRC is set aside
- Consumer Complaint No 35 of 2018 is allowed
- The respondent-company is directed to refund the deposited amount of 2,25,31,148 ₹ in twelve equal monthly installments
- Refund to be made through post-dated cheques with simple interest @ 12% p.a.
- The first installment due on April 5, 2024, with succeeding installments payable on the fifth of each calendar month thereafter
- The appeal is allowed with the above directions
- Pending IAs, if any, shall stand closed
Also Read: Willful Disobedience and Rectification of Court Orders
Case Title: VENKATARAMAN KRISHNAMURTHY Vs. LODHA CROWN BUILDMART PVT. LTD (2024 INSC 132)
Case Number: C.A. No.-000971 / 2023
