2024 (2) TMI 1154 - SC - Indian Laws

Right to Terminate Agreement - delay in the delivery of possession of the apartment - The jurisdiction and powers of the National Consumer Disputes Redressal Commission (NCDRC) - Scope and interpretation of the terms of the Contract - Purchase of 4BHK apartment, on the sixth floor of the proposed building - Seeking unconditional Refund of amount paid with interest - HELD THAT - The date of offer of possession , under Clause 1.14, linked with issuance of the Occupation Certificate was distinct and separate from the date of delivery of possession for fit outs and Clause 11.3 unequivocally provided the consequences in the event of delay in that regard. The right of election given thereunder to the appellants to either continue or to terminate the Agreement within ninety days from the expiry of the grace period was absolute and it was not open to the NCDRC to apply its own standards and conclude that, though there was delay in handing over possession of the apartment, such delay was not unreasonable enough to warrant cancellation of the Agreement. It was not for the NCDRC to rewrite the terms and conditions of the contract between the parties and apply its own subjective criteria to determine the course of action to be adopted by either of them. The fact that the appellants were anxious to avoid the additional tax liability, owing to the introduction of the Goods and Service Tax regime, cannot be held against them or be imputed to them as an underhand motive for backing out of the Agreement. Avoidance of tax is neither illegal nor equivalent to tax evasion and, therefore, the urgency shown by the appellants in trying to complete the process quickly so as to avoid an additional tax burden was natural. Further, it cannot be presumed that the appellants, who were willing to spend over 7.5 ₹ Crore for the apartment, would back out at the eleventh hour only because the tax component was increasing by ₹40 lakh or so. There are no hesitation in holding that the NCDRC overstepped its power and jurisdiction in ignoring the binding covenants in the Agreement and in introducing its own logic and rationale to decide as to what the future course of action of the parties and more particularly, the appellants, should be - as it is informed that the appellants did not choose to act upon the belated offer of the respondent-company, in its letter dated 29.11.2017, and are still intent on terminating the Agreement as per Clause 11.3 of the Agreement, we set aside the order dated 09.11.2022 passed by the NCDRC and allow Consumer Complaint No. 35 of 2018, directing the respondent-company to refund the deposited amount of ₹2,25,31,148/- in twelve equal monthly installments, through post-dated cheques, with simple interest thereon @ 12% p.a., from the date of receipt of the said amount or parts thereof till actual repayment. The first such installment shall be payable on the 5th of April, 2024, and the succeeding installments shall be payable on the fifth of each calendar month thereafter, till fully paid. Appeal allowed.

Summary

Issues Involved:
1. Delay in delivery of possession.
2. Right to terminate the Agreement and claim refund.
3. Interpretation of contract terms.
4. Rate of interest on refund.

Summary:

1. Delay in delivery of possession:
The appellants intended to purchase an apartment from the respondent-company and executed an Agreement to Sell on 29.11.2013. The possession for fit outs was to be delivered by 30.06.2016, extendable by a grace period of one year to 30.06.2017. The appellants alleged non-delivery of possession by this date and approached the NCDRC for a refund with interest and compensation.

2. Right to terminate the Agreement and claim refund:
The NCDRC directed the respondent-company to deliver possession within three months, rectify deficiencies, and pay delay compensation at 6% p.a. The appellants were given an option to seek a refund, subject to deduction of earnest money. Aggrieved, the appellants asserted their right to an unconditional refund with interest.

3. Interpretation of contract terms:
The Agreement stipulated separate dates for "offer of possession for fit outs" and "offer of possession" linked to the Occupation Certificate. The respondent-company claimed to have received a Part Occupancy Certificate on 08.06.2017, but the court found it insufficient as it required completion of unfinished works. The appellants were within their rights to terminate the Agreement upon non-receipt of possession by 30.06.2017.

4. Rate of interest on refund:
The court noted that the Agreement provided for a refund with interest at 12% p.a. The NCDRC's decision to impose its own standards and reduce the rate of interest was beyond its jurisdiction. The court upheld the agreed rate of 12% p.a. for the refund amount.

Conclusion:
The court set aside the NCDRC's order and directed the respondent-company to refund Rs. 2,25,31,148/- in twelve equal monthly installments with simple interest at 12% p.a. from the date of receipt till repayment. The appeal was allowed, and parties were to bear their own costs.