Consumer Have Absolute Right to Terminate Agreement on Delayed Possession: Supreme Court Overrules NCDRC

The Supreme Court, in its recent judgement, has set aside the order of the National Consumer Disputes Redressal Commission (NCDRC), reaffirming the appellants' absolute right to terminate the agreement due to delayed possession by Lodha Crown Buildmart Pvt. Ltd. The apex court emphasized the binding nature of contractual terms and the parties' inability to unilaterally alter these terms.

The appellants, Venkataraman Krishnamurthy and another, had entered into an agreement with Lodha Crown Buildmart Pvt. Ltd. for the purchase of an apartment in Mumbai. As per the agreement, the possession of the apartment was to be delivered by 30th June 2017, including a grace period of one year. The appellants approached the NCDRC, alleging non-delivery of possession and seeking a refund of the amount paid, along with interest and compensation. The NCDRC, in its order, allowed the respondent to deliver possession with certain conditions and offered the appellants a refund with deductions. Dissatisfied with the NCDRC's decision, the appellants appealed to the Supreme Court.

The Supreme Court critically analyzed the clauses of the agreement, particularly focusing on the agreed terms for possession and the consequences of delay. The Court noted that the respondent failed to deliver possession within the agreed period, including the grace period. The Court observed that the respondent could not unilaterally change the agreed terms of the contract and that the appellants' right to terminate the agreement under Clause 11.3 was absolute. The apex court criticized the NCDRC's decision, stating that it effectively rewrote the agreement's terms, which was not within its power or jurisdiction.

The Court also addressed the issue of the refund amount and the interest rate, upholding the agreement's stipulation of a 12% per annum interest rate on the refund.

The Supreme Court ordered Lodha Crown Buildmart Pvt. Ltd. to refund the deposited amount of ₹2,25,31,148 in twelve equal monthly installments with 12% p.a. interest. The first installment is to be payable on 5th April 2024. The Court's decision reasserts the sanctity of contractual terms and the parties' rights therein.

Date of Decision: 22nd February 2024

Venkataraman Krishnamurthy And Another vs Lodha Crown Buildmart Pvt. Ltd.