Supreme Court quashes One-Sided clauses in Builder-Buyer Agreement as it amounts to Unfair Trade Practices [Read Judgment]

Supreme Court quashes One-Sided clauses in Builder-Buyer Agreement as it amounts to Unfair Trade Practices [Read Judgment]

Supreme Court - One-Sided clauses - Builder-Buyer Agreement - Unfair Trade Practises - Taxscan

The Supreme Court has quashed the One-Sided clauses in Builder-Buyer Agreement as it amounts to Unfair Trade Practices.

The Appellant-Developer, to challenge the judgment passed by the National Consumer Disputes Redressal Commission) National Commission) directing refund of the amounts deposited by the Apartment Buyers in the project. The Corridors developed in Sector 67-A, Gurgaon, Haryana, on account of the inordinate delay in completing the construction and obtaining the Occupation Certificate. Aggrieved by the said Judgment, the Appellant-Developer has filed the present batch of Appeals under Section 23 of the Consumer Protection Act, 1986.

The applicant has raised various issues regarding the One-Sided clauses in Builder-Buyer Agreement.

Firstly, 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 NOC as contended by the Developer; or, from the date of sanction of the Building Plans, as contended by the Apartment Buyers.

Secondly, whether the terms of the Apartment Buyer‘s Agreement were one- sided, and the Apartment Buyers would not be bound by the same.

Thirdly, whether the provisions of the Real Estate (Regulation and Development) Act, 2016 must be given primacy over the Consumer Protection Act, 1986.

It was submitted that the period of 42 months for handing over possession would commence only after the conditions mentioned in the Building Plans were fulfilled. The Apartment Buyer‘s Agreement in Clause 13.3 provides that the 42 months period would commence from the date of approval of the Buildings plans and fulfilment of the pre-conditions imposed thereunder.

The Apartment Buyers were bound by the terms of the Apartment Buyer‘s Agreement, which clearly states that the “Commitment Period” would start only after fulfilment of the pre- conditions under the Building Plan, and must be given effect to by any adjudicatory body.

The three judge bench of Justice Dr. Dhananjaya Y Chandrachud, Justice Indu Malhotra and Justice Indira Banerjee held that it is necessary to balance the competing interests of both parties, so it would be in the interests of justice and fairplay that the amounts deposited by the Apartment Buyers is refunded with  9% Interest per annum from November 27, 2018 till the date of payment of the entire amount.

The court further directed that the refund will be paid within a period of three months from the date of this judgment. If there is any further delay, the Developer will be liable to pay default 12% interest per annum.

The Apex Court further added that the Developer shall not deduct the Earnest Money of 20% from the principal amount, or any other amount as mentioned in Clause 21.3 of the Agreement, on account of the various defaults committed by the Developer, including the delay of over 7 months in obtaining the Fire NOC.

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