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REPORTABLE  

 IN THE SUPREME COURT OF INDIA  

CIVIL APPELLATE JURISDICTION  

 CIVIL APPEAL NO. 12238 OF 2018  

 Pioneer Urban Land & Infrastructure Ltd.            …Appellant  

Versus  

Govindan Raghavan                              …Respondent  

WITH  

 CIVIL APPEAL NO. 1677 OF 2019  

 Pioneer Urban Land & Infrastructure Ltd.            …Appellant  

Versus  

Geetu Gidwani Verma & Anr.                           …Respondent  

J U D G M E N T  

 INDU MALHOTRA, J.  

1. The present statutory Appeals have been filed under Section  

23 of the Consumer Protection Act, 1986 to challenge the Final  

Judgment and Order dated 23.10.2018 passed in Consumer

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Case No. 238 of 2017 and Consumer Case No. 239 of 2017 by  

the National Consumer Disputes Redressal Commission  

(hereinafter referred to as “the National Commission”).  

2. Since a common issue arises in both the Civil Appeals, they  

are being disposed of by the present common Judgment and  

Order.  

3. For the sake of brevity, the facts in C.A. No. 12238 of 2018 are  

being referred to, being the lead matter.  

The factual matrix of the said Civil Appeal is as under :  

3.1.    The Appellant – Builder launched a residential project  

by the name “Araya Complex” in Sector 62, Golf Course  

Extension Road, Gurugram.   

  The Respondent – Flat Purchaser entered into an  

Apartment Buyer’s Agreement dated 08.05.2012 with the  

Appellant – Builder to purchase an apartment in the said  

project for a total sale consideration of Rs. 4,83,25,280/-.   

  As per Clause 11.2 of the Agreement, the Appellant –  

Builder was to make all efforts to apply for the Occupancy  

Certificate within 39 months from the date of excavation,  

with a grace period of 180 days.

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3.2.    The excavation of the project commenced on  

04.06.2012. As per Clause 11.2 of the Agreement, the  

Builder was required to apply for the Occupancy  

Certificate by 04.09.2015, or within a further grace period  

of 6 months i.e. by 04.03.2016, and offer possession of the  

flat to the Respondent – Flat Purchaser.  

  The Appellant – Builder however failed to apply for the  

Occupancy Certificate as per the stipulations in the  

Agreement.  

3.3.    The Respondent – Flat Purchaser filed a Consumer  

Complaint before the National Commission on 27.01.2017  

alleging deficiency of service on the part of the Appellant –  

Builder for failure to obtain the Occupancy Certificate,  

and hand over possession of the flat.   

The Respondent prayed inter-alia for :-  

• Refund of the entire amount deposited being                 

Rs. 4,48,43,026/-, along with Interest @18% p.a.; and  

• Compensation of Rs. 10,00,000/- for mental agony,  

harassment, discomfort and undue hardship; and

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• Refund of the wrongfully charged taxes including  

Service Tax, and other charges along with Interest  

@18% p.a.; and  

• Litigation Costs of Rs. 1,00,000/-.  

3.4.    On 06.02.2017, the National Commission passed an ex-

parte Interim Order restraining the Appellant – Builder  

from cancelling the allotment made in favour of the  

Respondent – Flat Purchaser during the pendency of the  

Consumer Case.  

3.5.    During the pendency of the proceedings before the  

National Commission, the Appellant – Builder obtained  

the Occupancy Certificate on 23.07.2018, and issued a  

Possession Letter to the Respondent – Flat Purchaser on  

28.08.2018.  

3.6.    The Appellant – Builder submitted before the National  

Commission that since the construction of the apartment  

was complete, and the Occupancy Certificate had since  

been obtained, the Respondent – Flat Purchaser must be  

directed to take possession of the apartment, instead of  

directing refund of the amount deposited.

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3.7.    The Respondent – Flat Purchaser however submitted  

that he was not interested in taking possession of the  

apartment on account of the inordinate delay of almost 3  

years. The Respondent – Flat Purchaser stated that he  

had, in the meanwhile, taken an alternate property in  

Gurugram, and sought refund of the entire amount of Rs.  

4,48,43,026/- deposited by him along with Interest @18%  

p.a.  

3.8.    The National Commission vide Final Judgment and  

Order dated 23.10.2018 allowed the Consumer Complaint  

filed by the Respondent – Flat Purchaser, and held that  

since the last date stipulated for construction had expired  

about 3 years before the Occupancy Certificate was  

obtained, the Respondent – Flat Purchaser could not be  

compelled to take possession at such a belated stage.  

  The grounds urged by the Appellant – Builder for delay  

in handing over possession were not justified, so as to  

deny awarding compensation to the Respondent – Flat  

Purchaser. The clauses in the Agreement were held to be  

wholly one – sided, unfair, and not binding on the  

Respondent – Flat Purchaser.

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  The Appellant – Builder was directed to refund Rs.  

4,48,43,026/- i.e. the amount deposited by the  

Respondent – Flat Purchaser, along with Interest @10.7%  

S.I. p.a. towards compensation. The rate of Interest  

@10.7% S.I. p.a. was fixed in accordance with Rule 15 of  

the Haryana Real Estate (Regulation and Development)  

Rules, 2017 which reads as follows :  

“15. An allottee shall be compensated by the  promoter for loss or damage sustained due to  incorrect or false statement in the notice,  advertisement, prospectus or brochure in the  terms of Section 12. In case, allottee wishes to  withdraw from the project due to discontinuance  of promoter’s business as developers on account  of suspension or revocation of the registration or  any other reason(s) in terms of clause (b) sub- section (I) of Section 18 or the promoter fails to give  possession of the apartment/ plot in accordance  with terms and conditions of agreement for sale in  terms of sub-section (4) of section 19. The  promoter shall return the entire amount with  interest as well as the compensation payable. The  rate of interest payable by the promoter to the  allottee or by the allottee to the promoter, as the  case may be, shall be the State Bank of India  highest marginal cost of lending rate plus two  percent. …”  

(emphasis supplied)    

  However, for the period when the Interim Order dated  

06.02.2017 was in operation, which restrained the  

Appellant – Builder from cancelling the Respondent’s  

allotment, no Interest was awarded. The National  

Commission ordered payment of Interest from the date of

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each installment till 05.02.2017; and from the date of the  

Order passed by the Commission till the date on which the  

amount would be refunded.  

3.9.    Aggrieved by the Order dated 23.10.2018 passed by the  

National Commission, the Appellant – Builder preferred  

the present statutory Appeal under Section 23 of the  

Consumer Protection Act, 1986.  

4. Mr. C.A. Sundaram, Senior Counsel appeared for the  

Appellant – Builder, and drew our attention to the following  

Clauses in the Apartment Buyer’s Agreement dated  

08.05.2012 viz. Clause 11.5 (ii), (iv) and (v) along with Clause  

20 which read as under :  

“11.5. (ii) In the event of further delay by the  Developer in handing over of the possession of the  Unit even after 12 months from the end of grace  period, then in such case, the intending Allottee  shall have an additional option to terminate this  Agreement by giving termination notice of 90 days  to the Developer and refund of the actual  

installment paid by him against the Unit after  adjusting the taxes paid / interest / penalty on  

delayed payments.   

…  (iv)    Developer shall, within ninety (90) days from  the date of receipt of termination notice of said  Unit, refund to the intending Allottee, all the  monies received excluding the service tax  collected on various remittances, till the date of  the refund, from the Intending Allottee under this  Agreement.  In case the Developer fails to refund

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the Sale Price, the Developer shall pay interest to  the Intending Allottee @ 9% per annum for any  period beyond the said period of ninety (90) days.   The Intending Allottee shall have no other claim  against the Developer in respect of the said Unit  along with the parking space.  The Intending  Allottee in this event shall have no right to seek  any compensation apart from the interest as  stipulated herein.  …  (v) If the Intending Allottee fails to exercise his  right of termination within the time limit as  aforesaid, by delivery to the Developer of a  written notice acknowledged by the Developer in  this regard, then he shall not be entitled to  terminate this Agreement thereafter and he shall  continue to be bound by the provisions of this  Agreement, provided that in such case, the  Developer shall continue to pay the compensation  provided herein.    20. RIGHT OF CANCELLATION BY THE  ALLOTTEE  Except to the extent specifically and expressly  stated elsewhere in this Agreement, the Intending  Allottee shall have the right to cancel this  Agreement solely in the event of the clear and  unambiguous failure of the warranties of the  Developer that leads to frustration of the contract  on that account.  In such case, the Allottee shall  be entitled to a refund of the installments actually  paid by it along with interest thereon @ 6% per  annum, within a period of 90 days from the date  of communication to the Developer in this regard  less any payments made towards taxes paid by  the Developer or interest paid due or payable, any  other amount of a non-refundable nature.  No  other claim, whatsoever, monetary or otherwise  shall lie against the Developer nor shall be raised  otherwise or in any manner whatsoever by the  Allottee.  Save and except to this limited extent,  the Allottee shall not have any right to cancel this  Agreement on any ground whatsoever.”  

(emphasis supplied)  

4.1.    It was submitted that the Respondent – Flat Purchaser  

was not entitled to refund of the amount deposited, since

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the Apartment Buyer’s Agreement was not terminated by  

the Respondent – Flat Purchaser in accordance with  

Clause 11.5 (ii) of the Agreement, which stipulates that the  

allottee has to terminate the Agreement by giving a  

Termination Notice of 90 days to the Developer.  

  Since the Respondent – Flat Purchaser had not  

terminated the Agreement by a written notice as per  

Clause 11.5, the Builder could not sell the apartment, and  

refund the money to the Respondent – Flat Purchaser. On  

the contrary, the Respondent filed a Consumer Complaint  

and obtained an ex-parte Interim Order dated 06.02.2017  

restraining the Builder from cancelling the allotment made  

in favour of the Respondent.  

4.2.    It was further submitted that if the filing of the  

Consumer Complaint is considered as an act of  

termination of the Agreement, then the same was pre-

mature. As per Clause 11.5 (ii), the Respondent – Flat  

Purchaser could have claimed refund only after the expiry  

of 12 months after the grace period came to an end i.e.  

after 04.03.2017. However, the Consumer Complaint was  

filed on 27.01.2017. In these circumstances, even if it is

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found that the Appellant – Builder is liable to refund the  

amount deposited with Interest, then the date of the  

Impugned Order i.e. 23.10.2018, must be treated as the  

date of serving the Termination Notice as per Clause 11.5  

(ii) of the Agreement, and the Appellant – Builder should  

be held liable to pay Interest only after 90 days from the  

date of termination i.e. from 23.01.2019.  

4.3.    With respect to rate of Interest awarded by the National  

Commission, it was submitted that the Commission erred  

in granting Interest @10.7% S.I. p.a. even though Clause  

20 of the Agreement provided Interest @6% p.a. in case of  

delay in handing over possession. Even under Clause 11.5  

of the Agreement, the Builder was liable to pay Interest  

@9% p.a., but not @10.7% S.I. p.a. The learned Senior  

Counsel relied upon this Court’s Judgment in Bharathi  

Knitting Company v. DHL Worldwide Express Courier  

Division of Airfreight Ltd.,1 and submitted that the National  

Commission could not have granted compensation in  

excess of the rate prescribed by the Agreement.  

                                                           1 (1996) 4 SCC 704.

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5. Mr. Sushil Kaushik, learned Counsel represented the  

Respondent – Flat Purchaser.  

5.1.    It was submitted that the filing of the Consumer  

Complaint may be treated as his Termination Notice under  

Clause 11.5 (ii) of the Agreement. Under the Agreement,  

the Builder was obligated to apply for the Occupancy  

Certificate within 39 months from the date of excavation,  

with a grace period of further 6 months. The period got  

over by 04.03.3016 after taking into account the grace  

period.  

  Admittedly, the Appellant – Builder offered possession  

after an inordinate delay of almost 3 years on 28.08.2018.  

On account of the inordinate delay, the Respondent – Flat  

Purchaser had no option but to arrange for alternate  

accommodation in Gurugram. Hence, he could not be  

compelled to take possession of the apartment after such  

a long delay.  

 It was in these circumstances that the Respondent – Flat  

Purchaser sought stay of the cancellation of the allotment  

as a collateral, till his claim for refund was adjudicated by  

the National Commission.

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5.2.    It was further submitted that the Clauses of the  

Agreement were one-sided. As per Clause 6.4 (ii) of the  

Apartment Buyer’s Agreement, the Appellant Builder  

could charge Interest @18% p.a. for delayed payments.  

  However, the Appellant – Builder was not required to pay  

equivalent Interest to the Respondent – Flat Purchaser for  

delay in handing over possession of the flat.  

  On the contrary, as per Clause 11.5 (iv) of the  

Agreement, in case of delay on the part of the Appellant –  

Builder in handing over possession of the flat, the  

Respondent – Flat Purchaser was entitled to Interest @9%  

p.a. only.  

5.3.    The Respondent further submitted that the National  

Commission had ordered payment of Interest as per the  

statutory Rules i.e. Rule 15 of the Haryana Real Estate  

(Regulation and Development) Rules, 2017 @10.7% S.I.  

p.a.  

  The Respondent – Flat Purchaser submitted that he had  

obtained a loan for Rs. 3,30,00,000/- from Standard  

Chartered Bank to purchase the flat in question, and had  

entered into a Tripartite Loan Agreement with the Bank

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and the Builder. The Respondent – Flat Purchaser had to  

pay Interest @10% p.a. for servicing the loan for the entire  

period. Hence, Interest @10.7% S.I. p.a. awarded by the  

National Commission was just and fair.  

  It was pointed out that even though the National  

Commission had not granted Interest for the period during  

which the Order of stay of cancellation of the allotment  

was in operation, the Respondent – Flat Purchaser had to  

pay Interest to the Bank even for this period.  

5.4.    The Respondent – Flat Purchaser submitted that the  

present Appeal be dismissed, and the Builder be directed  

to pay the amount awarded by the National Commission  

with Interest, within 1 week, so that the Respondent can  

discharge his loan liability.  

6. We have heard the learned Counsel for both the parties, and  

perused the pleadings, and written submissions filed.  

6.1.    In the present case, admittedly the Appellant – Builder  

obtained the Occupancy Certificate almost 2 years after  

the date stipulated in the Apartment Buyer’s Agreement.  

As a consequence, there was a failure to hand over

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possession of the flat to the Respondent – Flat Purchaser  

within a reasonable period. The Occupancy Certificate was  

obtained after a delay of more than 2 years on 28.08.2018  

during the pendency of the proceedings before the  

National Commission.   

  In Lucknow Development Authority v. M.K. Gupta,2 this  

Court held that when a person hires the services of a  

builder, or a contractor, for the construction of a house or  

a flat, and the same is for a consideration, it is a “service”  

as defined by Section 2 (o) of the Consumer Protection Act,  

1986. The inordinate delay in handing over possession of  

the flat clearly amounts to deficiency of service.  

  In Fortune Infrastructure & Anr. v. Trevor D’Lima & Ors.,3  

this Court held that a person cannot be made to wait  

indefinitely for possession of the flat allotted to him, and  

is entitled to seek refund of the amount paid by him, along  

with compensation.  

6.2.    The Respondent – Flat Purchaser has made out a clear  

case of deficiency of service on the part of the Appellant –  

Builder. The Respondent – Flat Purchaser was justified in  

                                                           2 (1994) 1 SCC 243.  3 (2018) 5 SCC 442.

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terminating the Apartment Buyer’s Agreement by filing the  

Consumer Complaint, and cannot be compelled to accept  

the possession whenever it is offered by the Builder. The  

Respondent – Purchaser was legally entitled to seek refund  

of the money deposited by him along with appropriate  

compensation.  

6.3.    The National Commission in the Impugned Order dated  

23.10.2018 held that the Clauses relied upon by the  

Builder were wholly one-sided, unfair and unreasonable,  

and could not be relied upon.  

  The Law Commission of India in its 199th Report,  

addressed the issue of ‘Unfair (Procedural & Substantive)  

Terms in Contract’. The Law Commission inter-alia  

recommended that a legislation be enacted to counter  

such unfair terms in contracts. In the draft legislation  

provided in the Report, it was stated that :  

“A contract or a term thereof is substantively  

unfair if such contract or the term thereof is in  itself harsh, oppressive or unconscionable to one  of the parties.”  

6.4.     A perusal of the Apartment Buyer’s Agreement dated  

08.05.2012 reveals stark incongruities between the  

remedies available to both the parties.

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  For instance, Clause 6.4 (ii) of the Agreement entitles the  

Appellant – Builder to charge Interest @18% p.a. on  

account of any delay in payment of installments from the  

Respondent – Flat Purchaser.  

  Clause 6.4 (iii) of the Agreement entitles the Appellant –  

Builder to cancel the allotment and terminate the  

Agreement, if any installment remains in arrears for more  

than 30 days.  

  On the other hand, as per Clause 11.5 of the Agreement,  

if the Appellant – Builder fails to deliver possession of the  

apartment within the stipulated period, the Respondent –  

Flat Purchaser has to wait for a period of 12 months after  

the end of the grace period, before serving a Termination  

Notice of 90 days on the Appellant – Builder, and even  

thereafter, the  Appellant – Builder gets 90 days to refund  

only the actual installment paid by the Respondent – Flat  

Purchaser, after adjusting the taxes paid, interest and  

penalty on delayed payments. In case of any delay  

thereafter, the Appellant – Builder is liable to pay Interest  

@9% p.a. only.

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6.5.    Another instance is Clause 23.4 of the Agreement which  

entitles the Appellant – Builder to serve a Termination  

Notice upon the Respondent – Flat Purchaser for breach  

of any contractual obligation. If the Respondent – Flat  

Purchaser fails to rectify the default within 30 days of the  

Termination Notice, then the Agreement automatically  

stands cancelled, and the Appellant – Builder has the right  

to forfeit the entire amount of Earnest Money towards  

liquidated damages.  

  On the other hand, as Clause 11.5 (v) of the Agreement,  

if the Respondent – Flat Purchaser fails to exercise his  

right of termination within the time limit provided in  

Clause 11.5, then he shall not be entitled to terminate the  

Agreement thereafter, and shall be bound by the  

provisions of the Agreement.  

6.6.    Section 2 (r) of the Consumer Protection Act, 1986  

defines ‘unfair trade practices’ in the following words :  

“‘unfair trade practice’ means a trade practice which, for  

the purpose of promoting the sale, use or supply of any  

goods or for the provision of any service, adopts any unfair  

method or unfair or deceptive practice …”, and includes any

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of the practices enumerated therein. The provision is  

illustrative, and not exhaustive.  

  In Central Inland Water Transport Corporation Limited  

and Ors. v. Brojo Nath Ganguly and Ors.,4 this Court held  

that :  

“89. … Our judges are bound by their oath to  ‘uphold the Constitution and the laws’. The  Constitution was enacted to secure to all the  citizens of this country social and economic  justice. Article 14 of the Constitution guarantees  to all persons equality before the law and equal  protection of the laws. This principle is that the  courts will not enforce and will, when called upon  to do so, strike down an unfair and unreasonable  contract, or an unfair and unreasonable clause in  a contract, entered into between parties who are  not equal in bargaining power. It is difficult to give  an exhaustive list of all bargains of this type. No  court can visualize the different situations which  can arise in the affairs of men. One can only  attempt to give some illustrations. For instance,  the above principle will apply where the  inequality of bargaining power is the result of the  great disparity in the economic strength of the  contracting parties. It will apply where the  inequality is the result of circumstances, whether  of the creation of the parties or not. It will apply to  situations in which the weaker party is in a  position in which he can obtain goods or services  or means of livelihood only upon the terms  imposed by the stronger party or go without them.  

It will also apply where a man has no choice, or  rather no meaningful choice, but to give his assent  to a contract or to sign on the dotted line in a  prescribed or standard form or to accept a set of  rules as part of the contract, however unfair,  unreasonable and unconscionable a clause in  that contract or form or rules may be. This  principle, however, will not apply where the  bargaining power of the contracting parties is  equal or almost equal. This principle may not  

                                                           4 (1986) 3 SCC 156.

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apply where both parties are businessmen and  the contract is a commercial transaction. …  … These cases can neither be enumerated nor  fully illustrated. The court must judge each case  on its own facts and circumstances.”  

(emphasis supplied)    

6.7.    A term of a contract will not be final and binding if it is  

shown that the flat purchasers had no option but to sign  

on the dotted line, on a contract framed by the builder.  

  The contractual terms of the Agreement dated  

08.05.2012 are ex-facie one-sided, unfair, and  

unreasonable. The incorporation of such one-sided  

clauses in an agreement constitutes an unfair trade  

practice as per Section 2 (r) of the Consumer Protection  

Act, 1986 since it adopts unfair methods or practices for  

the purpose of selling the flats by the Builder.  

7. In view of the above discussion, we have no hesitation in  

holding that the terms of the Apartment Buyer’s Agreement  

dated 08.05.2012 were wholly one-sided and unfair to the  

Respondent – Flat Purchaser. The Appellant – Builder could  

not seek to bind the Respondent with such one-sided  

contractual terms.  

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8. We also reject the submission made by the Appellant – Builder  

that the National Commission was not justified in awarding  

Interest @10.7% S.I. p.a. for the period commencing from the  

date of payment of each installment, till the date on which the  

amount was paid, excluding only the period during which the  

stay of cancellation of the allotment was in operation.  

  In Bangalore Development Authority v. Syndicate Bank,5 a  

Coordinate Bench of this Court held that when possession of  

the allotted plot/flat/house is not delivered within the  

specified time, the allottee is entitled to a refund of the amount  

paid, with reasonable Interest thereon from the date of  

payment till the date of refund.  

8.1.    In the present case, the National Commission has  

passed an equitable Order. The Commission has not  

awarded any Interest for the period during which the  

Order of stay of cancellation of the allotment was in  

operation on the request of the Respondent – Flat  

Purchaser.   

  The National Commission has rightly awarded Interest  

@10.7% S.I. p.a. by applying Rule 15 of the Haryana Real  

                                                           5 (2007) 6 SCC 711.

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Estate (Regulation And Development) Rules, 2017 from  

the date of each installment till 05.02.2017 i.e. till the date  

after which the Order of stay of cancellation of the  

allotment was passed; and thereafter, from the date of the  

Commission’s final Order till the date on which the  

amount is refunded with Interest.  

9. We see no illegality in the Impugned Order dated 23.10.2018  

passed by the National Commission. The Appellant – Builder  

failed to fulfill his contractual obligation of obtaining the  

Occupancy Certificate and offering possession of the flat to the  

Respondent – Purchaser within the time stipulated in the  

Agreement, or within a reasonable time thereafter. The  

Respondent – Flat Purchaser could not be compelled to take  

possession of the flat, even though it was offered almost 2  

years after the grace period under the Agreement expired.  

During this period, the Respondent – Flat Purchaser had to  

service a loan that he had obtained for purchasing the flat, by  

paying Interest @10% to the Bank. In the meanwhile, the  

Respondent – Flat Purchaser also located an alternate  

property in Gurugram. In these circumstances, the

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Respondent – Flat Purchaser was entitled to be granted the  

relief prayed for i.e. refund of the entire amount deposited by  

him with Interest.  

10. The Civil Appeals are accordingly dismissed, and the Final  

Judgment and Order dated 23.10.2018 passed by the National  

Consumer Disputes Redressal Commission is affirmed. The  

appellant is granted a period of three months from today to  

refund the amount to the respondent. All pending  

Applications, if any, are accordingly disposed of.  

.....................................J.  (UDAY UMESH LALIT)  

.…...............………………J.  (INDU MALHOTRA)  

New Delhi,  April 2, 2019.