IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 3533-3534 OF 2017   

M/S. FORTUNE INFRASTRUCTURE (NOW KNOWN AS M/S. HICON  INFRASTRUCTURE) & ANR.

…APPELLANT(S)

VERSUS TREVOR D’LIMA & ORS.              …RESPONDENT(S)

J U D G M E N T   

N.V. RAMANA, J.   

1. These  appeals  are  filed  against  the  impugned

orders,  dated 08.09.2016 and 03.11.2016,  passed

by  the  National  Consumer  Disputes  Redressal

Commission  [hereinafter  ‘NCDRC’  for  brevity],  in

Consumer Complaint No. 636 of 2015 and Review

Application  No.  273  of  2016  in  the  Consumer

Complaint No. 636 of 2015. 2. A few facts which are necessary for the disposal of

this  matter  are  that  the  appellants,  in  the  year

2011,  launched  a  residential  housing  project  by

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Reportable

name  ‘Hicons  Onyx’,  renamed  as  Fortune

Residency,  which  was  a  re-development  of

Mohammadi House. The respondents booked a flat

bearing no. 202, 2nd Floor in ‘A’ wing, admeasuring

828.40 Sq. Ft. with one unit of parking-space. The

total  consideration  for  the  flat  was  Rs.

1,93,00,000/-. It is alleged by the appellants, that

due  to  increase  in  the  cost  beyond  what  was

expected,  they  transferred  the  project  to  another

company being M/s. Zoy Shelcon Pvt. Ltd. It is to be

noted  that  the  respondents  have  paid  a  sale

consideration of Rs. 1,87,00,000/-.  

3. In 2015, aggrieved by the fact that appellants were

not  willing  to  deliver  the  flat  to  them,  the

respondents  approached  NCDRC  through  a

consumer  complaint,  being  CC  No.  636  of  2015,

with following prayers- a.  To hold and declare the Opposite Parties to be

guilty  of  deficiency  in  service  and  unfair  trade practices as per the provisions of the Consumer Protection Act, 1986

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b. To direct the Opposite Parties 1 to 4 to comply with  their  statutory  obligations  and  to  execute and  register  the  Agreement  for  Sale  with  the complainants in respect of flat No. 202 on the 2nd floor  admeasuring  828.40  Sq.  Ft.  with  one  car parking in the building known as Hicon Onyx and since re-named as Fortune residency situated at plot  no.  F/1116-A,  Village  Bandra,  St.  Martins Road  Bandra  (West),  Mumbai  400  050 (Maharashtra).

c. To  direct  the  Opposite  Parties  no.  1  to  4  to complete the construction of the building known as  ‘Hicons  Onyx’  since  renamed  as  ‘Fortune residency’ and to hand over to the complainants vacant  and peaceful  possession of  the  Flat  No. 202 on the 2nd floor admeasuring 828.40 Sq. Ft. with one car parking in the building known as Hicons  Onyx  and  since  renamed  as  Fortune residency situated at plot no. F/1116-A, Village Bandra, St. Martins road Bandra (West), Mumbai 400 050 (Maharashtra) on receiving the balance consideration amount of Rs. 6,00,000/-from the complainants

Alternatively In the event of the Opposite Parties no. 1 to 4 having created third party interests in favour of  the  Opposite  Party  no.  5,  to  direct  the Opposite parties no. 1 to 4 to hand over to the complainants any other flat of the same size  quality  and specifications  with  one  car parking in the same building ‘Hicons Onyx’ since re-named as ‘Fortune Residency’ or any flat  of  the  same  size,  quality  and specifications  with  one  car  parking  in  the

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same locality of the present building Hicons Onyx or Fortune Residency.

x   x   x   x   x  

x   x   x   x   x  

f. To direct the Opposite Parties No. 1 to 4 jointly and  severally  pay  to  the  complainants Rs.5,00,000/-  (Rupees Five  lakhs only)  towards compensation for the inconvenience and mental agony suffered by  the  complainants  due  to  the enormous delay in construction of the building, negligence  and  deficiency  in  service  of  the Opposite Parties No. 1 to 4.

g. To direct the opposite Parties No. 1 to 4 jointly and severally to pay to the complainants the sum of Rs. 1,00,000/- (Rupees One Lakh only) being the Legal and other incidental expenses incurred by the complainants.

h. For such other and further relief as this Hon’ble Commission  may  deem  fit  and  proper  in  the nature and circumstances of the above numbered complaint.

4. The NCDRC has allowed the complaint and directed

the  appellants:  1.  To  refund  the  amount  of  Rs.

1,87,00,000/-  which  they  have  received  from the

complainants, within six weeks from the day of the

impugned judgment; 2. The appellants were further

directed  to  pay  a  sum  of  Rs.  3,65,46,000/-  as

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compensation and Rs. 10,000/- as cost of litigation

to the complainants within six weeks from the day

of the impugned judgment; 3. The aforesaid amount

was ordered to be paid at 10% per annum from the

date of the order till the actual date of payment. It

may  be  noted  that  even  the  review  against  the

aforesaid order was dismissed by the NCDRC  vide

order dated 03.11.2016.

5. Having  dissatisfied  with  the  impugned  orders

passed by  the  NCDRC,  appellants  approached

this  Court through these civil appeals.  

6. At the threshold it was brought to our notice that

on  08.09.2016,  when  the  matter  was  argued,  on

most  of  the  other  dates  the  appellants  remained

unrepresented before NCDRC. Further the counsels

representing  the  appellants  stated  that  their

counsel appointed for the forum below did not file

necessary  pleadings  except  for  a  proforma  reply.

Keeping in view of the above, they argued that this

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case should be remanded back to the NCDRC for

fresh  consideration.  However,  on  careful

consideration  of  facts  of  this  case,  we  are  of  the

opinion that a remand may not be required at this

stage.  To  put  a  quietus  to  the  litigation,  the

controversy can be adjudicated by this Court.  

7. Learned  counsel  for  the  appellants,  primarily

submitted  that  the  present  appellants  have

transferred  the  project  to  a  different  company

thereby they should be discharged from any liability

for not handing over the disputed property to the

answering respondents (Complainants). He further

argued that, the present circle rate of the disputed

property is pegged at approximately half the price

awarded by the NCDRC. Lastly, he urged before this

Court  to  consider the downward trends shown in

the  real  estate  market  which  mandates  a  lesser

compensation, compared to the one awarded by the

NCDRC.  

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8. Per Contra, the learned counsel appearing on behalf

of the answering respondents (Complainants) fully

supported the reasoning of the NCDRC in coming to

a  conclusion  that,  the  appellants  herein  provided

deficient service by delaying the handing over of the

flat  to  the  complainants.  In  all  fairness,  learned

counsel  for  answering  respondents  have  admitted

that  prices  as  contemplated  under  the  impugned

order of NCDRC are not reflective of the true market

rates for similar flats available in the near vicinity of

the disputed flats.

9. It  would  not  be  out  of  context  to  mention  that

during the hearing of this case, many attempts were

made by both parties to amicably settle the issue

concerning  the  quantum  of  compensation  which

could not fructify. Further we requested Shri. Raju

Ramachandran, learned senior advocate, to use his

good office to persuade parties to settle the matter.

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Such an endeavour also could not impress upon the

parties and therefore this court was called upon to

adjudicate the matter.

10. Having heard learned counsels on either side

and perusing the materials available on record, the

issue that fall for consideration is whether there is

deficiency of service on the part of the appellants? If

so, what is just and reasonable compensation?  

11. It is now well established that the contractual

damages  are  usually  awarded  to  compensate  an

injured party to a breach of contract for the loss of

his bargain. In the case of  Johnson and Anr. V.

Agnew, [1979] 1 All ER 883, the aforesaid case has

clearly held as under- The  general  principle  for  the assessment  of  damages  is compensatory,  i.e.  that  the  innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed.

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12. The aforesaid proposition remains to hold the

field and has been applied consistently. This rule is

more  qualified  when  it  comes  to  the  real  estate

sector. If the seller wants to limit their liability for

breach of  contract  under  the  aforesaid  rule,  they

have  to  portray  that  they  have  performed  their

obligation  in  a  prudent  manner.  It  may be  noted

that  the  onus  is  on  the  seller  to  show  his  best

efforts and bona fides in discharging the obligation.

It may be noted that even in the absence of fraud,

mere  unwillingness  to  carry  out  the  duty  could

constitute bad faith sufficient for the purchaser to

claim damages. 13. To decide whether the respondent ought to be

awarded  compensation  because  of  deficiency  of

service, it is important to consider the meaning of

deficiency as provided under Section 2(1)(g) of the

Consumer Protection Act, 1986. (g)  “deficiency”  means  any  fault, imperfection, shortcoming or inadequacy in  the  quality,  nature  and  manner  of

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performance  which  is  required  to  be maintained by or under any law for the time  being  in  force  or  has  been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;

In light of the above definition, we have to examine

whether  there  is  any  deficiency  in  service,  which

entitles the complainant to damages/compensation.

14. In the present case, the appellants did not give

any valid  reasons as to  why they transferred the

property to a third party, despite their contractual

obligation  to  the  respondents  (complainants).  The

obligation was on the  appellants to  show that  he

was  unable  to  transfer  the  property  to  the

respondent.

15. Moreover,  a  person  cannot  be  made  to  wait

indefinitely for the possession of the flats allotted to

them and they are entitled to seek the refund of the

amount  paid  by  them,  along  with  compensation.

Although we are aware of the fact that when there

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was no delivery period stipulated in the agreement,

a  reasonable  time  has  to  be  taken  into

consideration.  In  the  facts  and  circumstances  of

this case, a time period of 3 years would have been

reasonable  for  completion of  the contract i.e.,  the

possession was required to be given by last quarter

of 2014. Further there is no dispute as to the fact

that  until  now  there  is  no  redevelopment  of  the

property.  Hence,  in  view of  the  above  discussion,

which  draw  us  to  an  irresistible  conclusion  that

there  is  deficiency  of  service  on  the  part  of  the

appellants and accordingly the issue is answered.

When once this Court comes to the conclusion that,

there is deficiency of services, then the question is

what compensation the respondents/complainants

is entitled to ?

16. Before  we come to  the  aspect  of  quantum of

compensation, it would be appropriate to look at the

settled legal  position concerning the same. At the

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outset, we may note that even under the Consumer

Protection Act, 1986, the damages for commercial

contracts need to be determined as per the Indian

Contract Act.

17. It would be pertinent to note that in common

law,  claim  for  damages  is  the  rule  and  specific

performance is an exception, while in civil law front,

specific performance has traditionally been a prime

remedy for the breach of contract.1  

18. This  Court  in  Ghaziabad  Development

Authority v. Balbir Singh, (2004) 5 SCC 65, has

observed that  there  is  no  fixed formula for  fixing

damages in the following manner-

8. However, the power and duty to award compensation does not mean that irrespective of  facts  of  the  case  compensation  can  be awarded in all  matters at  a uniform rate of 18%  per  annum.  As  seen  above,  what  is being  awarded  is  compensation  i.e.  a recompense  for  the  loss  or  injury.  It therefore necessarily has to be based on a

1  Apparent from the study of French Civil Code (FCC)  and German Civil Code (BGB).

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finding  of  loss  or  injury  and  has  to correlate  with  the  amount  of  loss  or injury. 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  be  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

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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. … We clarify that  the  above are  mere  examples.  They are not exhaustive. The above shows that compensation  cannot  be  the  same in  all cases  irrespective  of  the  type  of  loss  or injury suffered by the consumer.

(emphasis supplied) 19. It must be noted that the law is well settled in

this  regard.  Whenever  the  builder  has  refused  to

perform the contract without valid justification, the

buyer is entitled for compensation as he has been

deprived of price escalation of the flat. Every breach

of contract gives rise to an action for damages. Such

amount of damages must be proved with reasonable

certainty.   

20. Before  we  assess  the  damages,  another

important issue to be delved upon is the reckoning

date for the purpose of the assessing the damages.

Whether should it  be from the date on which the

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breach took place or should it be from the date of

judgment?

21. Learned counsel for the appellants, with some

vehemence,  argued that  the  rates  of  the  property

have considerably slumped due to downfall in the

real-estate  market.  Such  submissions  are  to  be

tested as per the established principles of law. As

per the settled law, the damages become due on the

date when the breach of contract takes place, and

are normally assessed by the reference to the time

of  breach.  The  aforesaid  rule  is  based  on  the

principle that the injured party is presumed to be in

knowledge of the breach as soon as it is committed

and at that time he can take appropriate measures

of  mitigation  to  control  the  loss  flowing  from the

breach. The courts may deviate from the aforesaid

rule  and  fix  appropriate  date  in  facts  and

circumstance  of  a  case  if  aforesaid  presumptions

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could  not  be  established  or  it  would  not  be

reasonable to follow the rule. It may be noted that

where there is non-delivery of the flat/house, and

the developer has refused to provide alternative and

equivalent  accommodation,  and  the  buyer  lacks

means to purchase a substitute from the market,

then in such circumstances, damages would not be

reasonable to be assessed on the breach date.

22. We have already noted that the appellants were

to perform the contract within a reasonable period

of three years from the date of the agreement i.e., by

the last quarter of 2014. Aggrieved by the delay in

handing  over  the  possession,  the  respondents

(complainants)  approached  the  NCDRC  for

conveyance and in alternative prayed for damages.

It is now settled that where a party sustains loss by

reason of a breach of contract, the damages are to

be granted so as to place the suffering party in the

same  position  as  if  the  contract  had  been

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performed. In light of the above, the damages other

than consequential loss have to be measured at the

time of the breach. However, the aforesaid rule is

flexible  which  needs  to  be  assessed  in  facts  and

circumstances  of  individual  case.  In  this  case  at

hand  the  respondents  tried  to  execute  the

agreement  and  sought  for  conveyance  of  the

property  through  the  NCDRC.  In  these

circumstances we may note that, even in the first

appeal,  offers  were  being  made  on  behalf  of

appellants  to  convey  alternative  properties,  which

were  refused  as  being  insufficient.  Therefore,  in

facts and circumstances of  this case,  the damage

need not be determined from the date of breach of

contract.

23. Even  though  the  appellants  raised  a  factual

issue  concerning  the  non-payment  of

part-consideration, we do not think it is necessary

to go into this aspect, as the NCDRC has given a

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categorical finding that Rs. 1,87,00,000/- has been

paid by the respondents (complainants).

24. Appellants  have  produced  circle  rates  of

properties in the vicinity of the disputed flats. These

rates  vary  from  Rs.  18,655  per  Sq.  Ft.  to  Rs.

25,787/- per Sq. Ft. Whereas the respondents have

produced executed sale deeds in the nearby vicinity,

which was Rs. 65,000 per Sq. ft., Rs. 69,342/- per

Sq. ft., Rs. 75,000/- per Sq. Ft. and Rs. 88,050/-

per  Sq.  Ft.  NCDRC  has  taken  the  minimum

available  market  price  as  the  reference  point  for

awarding compensation at the rate of Rs. 65,000/-

per  Sq.  Ft.  We  are  of  the  opinion  that  excessive

reliance  on  the  aforesaid  sale  deed  may  not  be

appropriate  as  the  present  property  is  a

redevelopment of an earlier property. Our attention

has been drawn to  the  fact  that  usually  the  real

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estate rates for re-developed properties are on the

lower side instead of green-field projects.

25. In light of the above, we consider that the claim

of the respondents (complainants) as granted by the

NCDRC  seems  to  surpass  the  actual-loss  based

damages  and  enter  the  domain  of  gain-based

remedy. Although we do not recognize any a priopri

limitations on such claim, but we do not think that

it would be appropriate to grant such damages in

the case at hand. There is no dispute about the fact

that damages for the contractual breach is generally

compensatory arising out of the breach. Therefore,

the damages awarded should not be excessive and a

court/tribunal needs to take a balanced approach

so as to ensure right compensation.  

26. Taking  into  consideration  of  factual  aspects

involved in the matter and on consideration of the

submissions of the counsels on either side, we deem

it appropriate, just and reasonable that the market

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rate  be fixed at  Rs.  50,000/- per Sq.  Ft.  (Rupees

Fifty Thousand per square feet) as the reference rate

for determination of market price prevailing in the

vicinity  of  the  disputed  property.  Hence,  the

estimated market price would be Rs.4,14,20,000/-

instead  of  Rs.5,38,46,000/-  as  granted  by  the

NCDRC.  However,  we  do  not  see  any  reason  to

interfere in respect of the compensation granted for

the parking space.

27. Therefore, the appellants are directed as under- a. To refund the amount of Rs. 1,87,00,000/- which

they have received from the complainants. b. To  pay  a  sum  of  Rs.  2,27,20,000/-  as

compensation to the complainants. c. To  pay  a  sum  of  Rs.  20,00,000/-  as

compensation for one unit of parking lot. d. The appellants shall also pay Rs. 10,000/- as the

cost of litigation to the complainants. e. The  aforesaid  amount  is  required  to  be  paid

within six weeks from the day of this order. If the payment in terms of this order is not made within the time stipulated herein, it shall carry interest of 9 % per annum from the date of this order.

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28. It  is  to  be  noted  that  this  Court  vide order

dated 23.02.2017, while issuing notice, directed the

appellants  to  deposit  Rs.  2,50,00,000/-  before

NCDRC as a  condition precedent  for  hearing  this

case.  Later  it  was  represented  to  us  that  the

appellants  as  on  31.05.2017,  had  deposited  the

aforesaid  amount  before  NCDRC.  In  view  of  the

above, we allow the respondents (complainants) to

withdraw  the  aforesaid  amount  with  accrued

interest,  if  any  and the  same  be  adjusted  to  the

appellants’ liability as indicated above.

29. In light of the above discussions, we allow the

appeals in part to the extent indicated above. There

shall be no order as to the costs.

………………………J. (N. V. Ramana)

………………………J. (S. Abdul Nazeer)

New Delhi       March 12, 2018

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ITEM NO.1503               COURT NO.9               SECTION XVII                S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS Civil Appeal  No(s).  3533-3534/2017 M/S. FORTUNE INFRASTRUCTURE (NOW KNOWN AS M/S HICON  INFRSTRUCTURE) & ANR. Appellant(s)                                 VERSUS TREVOR D'LIMA & ORS.                                  Respondent(s) ([HEARD BY : HON. N.V. RAMANA AND HON. S. ABDUL NAZEER, JJ.]) Date : 12-03-2018 These appeals were called on for pronouncement of  today. For Appellant(s)                       Mr. E. C. Agrawala, AOR                     For Respondent(s)

Mr. Abhir Phukan, Adv.                       For Mr. V. Shyamohan, AOR                      

Hon'ble Mr. Justice N.V. Ramana pronounced the judgment of the Bench  comprising  His  Lordship  and  Hon'ble  Mr.  Justice  S.  Abdul Nazeer.

In light of the discussions, we allow the appeals in part to the extent indicated in the signed reportable judgment.  There shall be no order as to the costs.

(SUKHBIR PAUL KAUR)                             (RENUKA SADANA)      AR CUM PS                                   ASST.REGISTRAR

 (Signed reportable judgment is placed on the file)

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