Supreme Court quashes one-sided clause in Builder-Buyer Agreement stating it Unfair Trade Practices

SC quashes one-sided clause in Builder-Buyer Agreement stating it Unfair Trade Practices

The Supreme Court of India (SC) directed for a refund by specifically stating that a one-sided clause in an agreement amounts to unfair trade practice

The SC stated that it is necessary to balance the competing interests of both parties, so it would be in the interests of justice and fair play that the amounts deposited by the Apartment Buyers are to be refunded with 9% Interest per annum from 27 November 2018 till the date of payment of the entire amount.

An appeal was filed by M/s Ireo Grace Realtech Pvt. Ltd. (Appellant), against Abhishek Khanna & Ors. (Respondent) before the Supreme Court of India (SC). An appeal was filed to challenge the judgment passed by the National Consumer Disputes Redressal Commission (NCDRC) to direct refund of the amounts deposited by the Apartment Buyers in the project.

The project was developed in Sector 67-A, Gurgaon, Haryana, regarding an inordinate delay in completing the construction and obtaining the Occupation Certificate. Aggrieved by the said Judgment, the Appellant has filed the present batch of Appeals under Section 23 of the Consumer Protection Act, 1986.

The appellant has raised various issues regarding the One-Sided clauses in Builder-Buyer Agreement (Agreement). Following are the issues raised by the appellant-

- Determination of the date from which the 42 months period for handing over possession is to be calculated under Clause 13.3, whether it would be from the date of issuance of the Fire Non-objection Certificate (NOC) as contended by the Developer; or, from the date of sanction of the Building Plans, as contended by the Apartment Buyers.

- Whether the terms of the Agreement were one-sided, and the Apartment Buyers would not be bound by the same?

- Whether the provisions of the Real Estate (Regulation and Development) Act, 2016, be given priority over the Consumer Protection Act, 1986?

It was observed that under the agreement the Apartment Buyers were bound by the terms and conditions of the agreement. In the said agreement it was clearly stated that the "Commitment Period" would start only after fulfillment of the pre-conditions under the Building Plan, and must be given effect to by any adjudicatory body.

The matter was taken up by the SC and listed before the three judge bench of Justices Dr. Dhananjaya Y Chandrachud, Indu Malhotra, and Indira Banerjee. The SC referred to the case of Subodh Pawar v. IREO Grace, wherein the SC recorded the statement of the counsel for the Developer that the amount would be refunded with Interest @ 10% per annum. A similar order was passed in the case of IREO v. Surendra Arora.

The SC in the instant matter directed that the refund will be paid within a period of three months from the date of this judgment. It was further stated that in case of any delay, the developer will be liable to pay a default 12% interest per annum.

The SC stated, "The Developer to refund the entire amount deposited by this respondent alongwith Interest @ 9% S.I. p.a. within a period of 4 weeks from the date of this judgment. The failure to refund the amount within 4 weeks will make the Developer liable for payment of default interest @ 12% S.I. p.a. till the payment is made."