Parsvnath Developers Ltd. vs. Mohit Khirbat

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REPORTABLE
2026 INSC 170

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5289 OF 2022

PARSVNATH DEVELOPERS LTD. ... APPELLANT

VERSUS
MOHIT KHIRBAT ... RESPONDENT

WITH
CIVIL APPEAL NO. 5290 OF 2022

PARSVNATH DEVELOPERS LTD. ... APPELLANT

VERSUS
GP. CAPT. SUMAN CHOPRA (DEAD)
THROUGH LRS. ... RESPONDENT

WITH
CIVIL APPEAL NO. 11047 OF 2025

PARSVNATH HESSA DEVELOPERS PVT. LTD. ... APPELLANT

VERSUS
Signature Not Verified
AMAN CHAWLA AND ANOTHER ... RESPONDENT(S)

Digitally signed by
SACHIN KUMAR
SRIVASTAVA
Date: 2026.02.20
16:01:41 IST
Reason:



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J U D G M E N T

R. MAHADEVAN, J.

1. These three appeals arise out of separate orders dated 30.07.2018,
30.07.2018, and 21.11.2019 respectively passed by the National Consumer
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Disputes Redressal Commission, New Delhi in Consumer Complaint Nos. 827
of 2017, 828 of 2017 and 2355 of 2017.

2. By the impugned orders, the NCDRC directed the appellant to complete
construction of the flats and hand over possession to the respondents in these
appeals on or before 31.03.2019, 31.03.2019 and 31.03.2020 respectively, after
obtaining the requisite Occupancy Certificate from the competent authorities. The
appellant was further directed to pay compensation by way of simple interest at
the rate of 8% per annum with effect from 13.11.2014, 14.12.2013 and
20.08.2015 respectively till the actual delivery of possession.

2.1. The NCDRC also directed the appellant to pay/credit rebate for the period
from 01.09.2013 to 12.11.2014 at the same rate at which such rebate had earlier
been credited to the account of the respondent Dr. Mohit Khirbat, and to pay
litigation costs of Rs.25,000/- to the respondents in each case. Insofar as the
respondents in C.A. No. 11047/2025 are concerned, the NCDRC restrained the

1
For short, “NCDRC”


3

appellant from withdrawing any rebate already credited to the account of the
respondents. It was further directed that any increase in stamp duty occurring
after 12.11.2014, 13.12.2013 and 20.08.2015 respectively shall be borne by the
appellant.

2.2. Additionally, the NCDRC permitted inspection of the flats by the appellant
prior to offering possession, with liberty to take measurements along with its
architect. In the event of any excess area being found, the respondents were held
liable to pay for such excess area at the original allotment price, with the value
thereof to be adjusted against the compensation payable. The appellant was,
however, held entitled to demand payment of any balance amount remaining after
such adjustment.

3. At the outset, a brief narration of the facts giving rise to the present appeals
is necessary. The consumer complaints state that the respondents had booked
residential apartments with the appellant in a project developed by it at Sector-
53, Gurgaon known as Parsvnath Exotica . The transaction was subsequently
endorsed by the appellant by transferring the allotments in favour of the
respondents. The material particulars of the respective cases are as follows:





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3.1. Under the terms of the Flat Buyer Agreements, possession of the flats was
required to be delivered within 36 months from the commencement of
construction of the respective blocks, with a grace period of six months. Despite
payment of almost the entire sale consideration by the respondents, possession
was not delivered within the stipulated or even the extended contractual period.


5

The respondents were therefore constrained to file consumer complaints before
the NCDRC seeking inter alia delivery of possession, compensation, damages
and costs.
3.2. Before the NCDRC, the appellant contended that the delay was attributable
to factors such as lack of adequate financial resources, shortage of labour,
escalation in manpower and material costs, and statutory approvals and
procedural compliances. However, the NCDRC, by the impugned orders,
disposed of the consumer complaints in favour of the respondents holding that
the appellant could not be permitted an indefinite period to obtain the Occupancy
Certificate, and was required to do so in a time-bound manner at its own cost and
responsibility. Aggrieved thereby, the appellant has preferred the present appeals.

4. The learned senior counsel appearing for the appellant contended that the
NCDRC exceeded its jurisdiction by travelling beyond the scope of Section 14
2
of the Consumer Protection Act, 1986 while granting the reliefs under the
impugned orders, and failed to give due effect to the contractual terms governing
the relationship between the parties.

4.1. It was submitted that Clause 10(a) of the Flat Buyer Agreement specifically
provides that no claim for damages or compensation shall lie against the
developer for any delay in handing over possession caused due to the reasons

2
For short, “the Act”


6

enumerated therein. In view of such stipulation, the respondents were not entitled
to claim compensation by way of interest over and above what is exactly provided
under Clause 10(c) of the Agreement, which, according to the appellant, has
already been paid.
4.2. The learned senior counsel further submitted that Clause 11 (a) of the Flat
Buyer Agreement squarely casts the liability to bear stamp duty, registration
charges and other incidental expenses upon the buyer. The direction issued by the
NCDRC requiring the appellant to bear the increased stamp duty was, therefore,
contended to be contrary to the express contractual terms.
4.3. It was also urged that the NCDRC awarded interest and litigation costs
without examining the contractual entitlements or the factual matrix, and in
disregard of the law settled by this Court. According to the learned counsel, once
the Agreement contains a specific stipulation governing compensation for delay,
grant of interest beyond such stipulation was impermissible.
4.4. The learned senior counsel contended that the respondents sought reliefs
far in excess of their legitimate entitlement, and that the amounts claimed were
inflated and unsupported by material on record, yet were allowed without proper
scrutiny.
4.5. It was further submitted that the complaints were motivated by unjust
enrichment, while genuine industry-wide difficulties faced by the real estate
sector such as shortage of finance and labour, escalation in material costs, and


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delays in approvals, were completely overlooked by the NCDRC, despite such
factors being beyond the appellant’s control.
4.6. The learned senior counsel emphasised that the impugned orders do not
disclose any discernible methodology or rationale for determination of
compensation by way of interest or costs. It was contended that compensation
must have a rational nexus with actual loss or damage suffered, which is entirely
absent in the present cases.
4.7. With specific reference to C.A. No. 5289 of 2022, it was submitted that the
original allottee was a chronic defaulter in payment of instalments, necessitating
repeated reminders. The appellant offered possession for fit-out purposes after
reconciliation of accounts, granted a special rebate of Rs. 17,00,000/- towards
unfinished items, and credited Rs. 17,62,800/- towards compensation for delay
from September 2013 to December 2017. Pursuant to the interim order of this
Court dated 12.02.2021, further compensation was paid, aggregating to Rs.
43,73,100/- upto October 2024.
4.8. In C.A. No. 5290 of 2022, it was submitted that upon completion of works,
a letter offering possession for fit-out was issued on 13.01.2022, but the
respondent was not willing to take possession. As directed by this Court,
compensation amounting to Rs.43,05,300/- was paid upto October 2024.
4.9. Insofar as C.A. No. 11047 of 2025 is concerned, it was submitted that
possession was taken by the respondents on an “as is where is” basis on
14.08.2022, and a sum of Rs. 33,22,200/- was credited or adjusted towards special


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rebate for the period from April 2013 to May 2021. Despite the same, the
respondents continue to raise claims for further delay compensation.
4.10. The learned senior counsel submitted that after completion of Towers B5
and B6, applications for grant of Occupancy Certificate were duly made before
the Directorate of Town and Country Planning, but the same were delayed due to
changes in government policy. It was contended that the delay in issuance of the
Occupancy Certificate is not attributable to the appellant, which has also
complied with this Court’s directions, including handing over three flats to the
State of Haryana as solvent security pending completion of EWS flats.
4.11. Ultimately, the learned senior counsel submitted that the appellant has
acted bona fide, settled several similarly situated disputes, and sought liberty to
effect settlement either by refund or by directing acceptance of possession on an
“as is where is” basis along with contractual compensation.

5. Per contra , the learned senior counsel for the respondents supported the
impugned orders and contended that the appellant failed to complete the project
or obtain the requisite approvals, including the Occupancy Certificate within the
contractual period, thereby compelling the respondents to approach the NCDRC.
It was submitted that instead of complying with the NCDRC orders, the appellant
prolonged the matter by filing the present appeals.



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5.1. It was submitted that in C.A. No. 5289 of 2022, the respondent paid the
entire sale consideration by October 2013, despite which the appellant failed to
complete the project and hand over possession. In C.A. No. 5290 of 2022, the
respondent had paid almost the entire sale consideration of Rs.1,82,72,100/- prior
to the committed possession date of 14.12.2013, yet possession was not delivered
within time.
5.2. With respect to C.A. No. 11047 of 2025, it was submitted that despite
payment of about 95% of the sale consideration by 2013, possession was not
delivered even after expiry of the extended contractual period. Execution
proceedings were initiated due to non-compliance of the NCDRC order, resulting
in issuance of non-bailable warrants against the directors of the appellant. In the
execution proceedings, the appellant admitted its liability to the extent of Rs. 1.20
crores as against the claimed Rs. 1.33 crores. Possession was ultimately offered
on 14.08.2022 without obtaining the Occupancy Certificate, which was accepted
by the respondents due to urgent need, without prejudice to their rights.
5.3. The learned senior counsel fairly submitted that the respondents in CA.
No.11047 of 2025 preferred C.A. No. 951 of 2020 seeking enhancement of
interest, which was dismissed by this Court on 11.03.2024, thereby rendering the
NCDRC order final and binding.
5.4. It was further submitted that the appellant intentionally delayed
compliance by relying on the pendency of C.A. No. 473 of 2024 (Parsvnath


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Developers Ltd v. Mallika Raghavan) which was ultimately dismissed on
22.04.2024 in view of an out-of-court settlement.
5.5. On the aforesaid grounds, the learned senior counsel submitted that the
respondents have suffered for more than a decade despite having paid nearly the
entire sale consideration and, accordingly, prayed for dismissal of the appeals.

6. We have carefully considered the rival submissions and perused the
materials placed on record.

7. It is not in dispute that the respondents had booked residential apartments
in the project developed by the appellant and had paid nearly the entire sale
consideration. It is equally undisputed that the appellant failed to complete the
project within the stipulated period and was unable to hand over possession of
the flats to the respondents within the contractual time frame. Consequently, the
respondents were constrained to approach the NCDRC by filing consumer
complaints. Upon consideration of the pleadings and submissions advanced by
both sides, the NCDRC disposed of the complaints in favour of the respondents.

8. As indicated above, by the impugned orders, the NCDRC directed the
appellant to complete construction of the flats and to hand over possession to the
respondents within the time specified therein, after obtaining the requisite
Occupancy Certificate from the competent authority. The appellant was further
directed to pay compensation by way of interest at the rate of 8% per annum from


11

the respective cut off dates till actual delivery of possession, to extend rebate for
the specified period at the contractual rate, to pay litigation costs of Rs. 25,000/-
and to bear any increase in stamp duty occurring after the stipulated dates.
Aggrieved by the said directions, the appellant has approached this Court with
the present appeals.

9. The principal submission urged on behalf of the appellant is that the
NCDRC exceeded its jurisdiction by travelling beyond the scope of Section 14
of the Act and the contractual terms governing the parties, particularly Clause 10
of the Flat Buyer Agreement. It is contended that in view of Clause 10(c), which
prescribes a fixed rate of compensation for delay, the respondents were not
entitled to any further amount by way of interest or compensation, and that the
grant of a higher rate by the NCDRC amounts to unjust enrichment.

10. The submissions so made cannot be accepted. The jurisdiction of the
consumer fora is traceable not merely to the contractual terms agreed between the
parties but to the statute itself. Sections 12 and 22 of the Act empower the
consumer fora, including the NCDRC to adjudicate complaints relating to
deficiency in service and to grant appropriate reliefs. Section 22 expressly
incorporates the powers under Sections 12, 13 and 14, thereby enabling the
NCDRC to issue directions and award compensation for loss or injury caused to
a consumer. The source of power, therefore, is statutory, and not contractual. For
better appreciation, the relevant provisions of the Act are extracted below:


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“ 12. Manner in which complaint shall be made — (1) A complaint in relation to
any goods sold or delivered or agreed to be sold or delivered or any service
provided or agreed to be provided may be filed with a District Forum by–
(a) the consumer to whom such goods are sold or delivered or agreed to be sold
or delivered or such service provided or agreed to be provided;
(b) any recognized consumer association whether the consumer to whom the
goods sold or delivered or agreed to be sold or delivered or service provided or
agreed to be provided is a member of such association or not;
(c) one or more consumers, where there are numerous consumers having the same
interest, with the permission of the District Forum, on behalf of, or for the benefit
of, all consumers so interested; or
(d) the Central or the State Government, as the case may be, either in its individual
capacity or as a representative of interests of the consumers in general.

(2) Every complaint filed under sub-section (1) shall be accompanied with such
amount of fee and payable in such manner as may be prescribed.

(3) On receipt of a complaint made under sub-section (1), the District Forum may,
by order, allow the complaint to be proceeded with or rejected;
Provided that a complaint shall not be rejected under this sub-section unless an
opportunity of being heard has been given to the complainant.
Provided further that the admissibility of the complaint shall ordinarily be
decided within twenty-one days from the date on which the complaint was
received.

(4) Where a complaint is allowed to be proceeded with under sub-section (3), the
District Forum may proceed with the complaint in the manner provided under this
Act;
Provided that where a complaint has been admitted by the District Forum, it shall
not be transferred to any other court or tribunal or any authority set up by or
under any other law for the time being in force.
Explanation — For the purposes of this section, “recognized consumer
association” means any voluntary consumer association registered under the
Companies Act, 1956 (1 of 1956) or any other law for the time being in force.”

“22. Power and procedure applicable to the National Commission.— (1) The
provisions of sections 12, 13 and 14 and the rules made thereunder for the
disposal of complaints by the District Forum shall, with such modifications as
may be considered necessary by the Commission, be applicable to the disposal of
disputes by the National Commission.

(2) Without prejudice to the provisions contained in sub-section (1), the National
Commission shall have the power to review any order made by it, when there is
an error apparent on the face of record.”


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11. It is well settled that housing construction falls within the ambit of
“service” under Section 2(1)(o) of the Act, and failure to deliver possession
within the stipulated period constitutes “deficiency” under Section 2(1)(g). In
3
Lucknow Development Authority v. M.K. Gupta , this Court held that the
provisions of the Act must receive a liberal construction in favour of the
consumer, the legislation being beneficial in character. The expression
“compensation” was held to be of wide amplitude, extending not only to
pecuniary loss but also to mental agony and harassment occasioned by deficiency
in service. The following passage is pertinent:
“The word 'compensation' is again of very wide connotation. It has not been
defined in the Act. According to dictionary it means, 'compensating or being
compensated; thing given as recompense;'. In legal sense it may constitute actual
loss or expected loss and may extend to physical, mental or even emotional
suffering, insult or injury or loss. Therefore, when the Commission has been
vested with the jurisdiction to award value of goods or services and compensation
it has to be construed widely enabling the Commission to determine compensation
for any loss or damage suffered by a consumer which in law is otherwise included
in wide meaning of compensation. The provision in our opinion enables a
consumer to claim and empowers the Commission to redress any injustice done
to him Any other construction would defeat the very purpose of the Act. The
Commission or the forum in the Act is thus entitled to award not only value of the
goods or services but also to compensate a consumer for injustice suffered by
him.”

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12. In M/s. Imperia Structures Ltd. v. Anil Patni and another , and IREO
5
Grace Realtech Private Limited v. Abhishek Khanna and others , this Court
reiterated that flat purchasers are “consumers” under the Act, and delay in

3
(1994) 1 SCC 243
4
Civil Appeal No. 3581-3590 of 2020 dated 02.11.2020
5
(2021) 3 SCC 241


14

handing over possession amounts to deficiency in service. The consumer fora, in
exercise of powers under Section 14, are competent to redress such deficiency
and award just and reasonable compensation commensurate with the injury
suffered. The following paragraphs from IREO are apposite:

“ 29. Section 2(1)(c) of the Consumer Protection Act, 1986 defines a “complaint”
as:
“2. (1)(c) “complaint” means any allegation in writing made by a
complainant that –
(i) any unfair trade practice or a restrictive trade practice has been adopted
by any trader or service provider;
(ii) the goods bought by him or agreed to be bought by him suffer from one
or more defects.
(emphasis supplied)
Section 2(1)(g) of the Act defines the expression “deficiency” to include any fault,
shortcoming or inadequacy in the quality, nature and manner of performance
which is required to be maintained under law, or in pursuance of a contract, or
in relation to a “service”. The term “service” has been defined by Section
2(1)(o) to include a service of any description which is made available to potential
users. Section 2(1)(o) was amended by Act 50 of 1993 w.e.f. from 18.06.1993 to
include “housing construction” within the purview of “service”. The
amended Section 2(1)(o) reads as follows:
“2(1)(o) "service" means service of any description which is made available
to potential users and includes, but not limited to, the provision of facilities
in connection with banking, financing insurance, transport, processing,
supply of electrical or other energy, board or lodging or both, housing
construction, entertainment, amusement or the purveying of news or other
information, but does not include the rendering of any service free of charge
or under a contract of personal service;”
(emphasis supplied)
30. In LDA v. M.K. Gupta, this Court discussed the legislative intent of including
“housing construction” within the ambit of “service‘ as: (SCC pp. 252 & 256-57,
paras 2 & 6)
“2. …. A scrutiny of various definitions such as ‘consumer’, ‘service’,
‘trader’, ‘unfair trade practice’ indicates that legislature has attempted to
widen the reach of the Act. Each of these definitions are in two parts, one,
explanatory and the other explanatory. The explanatory or the main part itself
uses expressions of wide amplitude indicating clearly its wide sweep, then its
ambit is widened to such things which otherwise would have been beyond its


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natural import. Manner of construing an inclusive clause and its widening
effect has been explained in Dilworth v. Commissioner of Stamps as under:
“…’include’ is very generally used in interpretation clauses in order to
enlarge the meaning of the words or phrases occurring in the body of the
statute, and when it is so used these words or phrases must be construed
as comprehending, not only such things as they signify according to their
natural, import, but also those things which the definition clause declares
that they shall include.”

6
It has been approved by this Court in ESI Corpn. v. High Land Coffee Works ,
7 8
CIT v. Taj Mahal Hotel and State of Bombay v. Hospital Mazdoor Sabha .
The provisions of the Act thus have to be construed in favour of the consumer
to achieve the purpose of enactment as it is a social benefit oriented
legislation. The primary duty of the court while construing the provisions of
such an Act is to adopt a constructive approach subject to that it should not
do violence to the language of the provisions and is not contrary to the
attempted objective of the enactment.
….
6. ….. As pointed out earlier the entire purpose of widening the definition is
to include in it not only day to day buying and selling activity undertaken by
a common man but even such activities which are otherwise not commercial
in nature yet they partake of a character in which some benefit is conferred
on the consumer. Construction of a house or flat is for the benefit of person
for whom it is constructed. He may do it himself or hire services of a builder
or contractor. The latter being for consideration is service as defined in the
Act. Similarly when a statutory authority develops land or allots a site or
constructs a house for the benefit of common man it is as much service as by
a builder or contractor. The one is contractual service and other statutory
service. If the service is defective or it is not what was represented then it
would be unfair trade practice as defined in the Act. Any defect in
construction activity would be denial of comfort and service to a consumer.
When possession of property is not delivered within stipulated period the
delay so caused is denial of service. Such disputes or claims are not in respect
of immoveable property as argued but deficiency in rendering of service of
particular standard, quality or grade. Such deficiencies or omissions are
defined in sub-clause (ii) of clause (r) of Section 2 as unfair trade practice.…
A person who applies for allotment of a building site or for a flat constructed
by the development authority or enters into an agreement with a builder or a
contractor is a potential user and nature of transaction is covered in the
expression 'service of any description'. It further indicates that the definition

6
(1991) 3 SCC 617
7
(1971) 3 SCC 550
8
AIR 1960 SC 610 : (1960) 2 SCR 866


16

is not exhaustive. The inclusive clause succeeded in widening its scope but not
exhausting the services which could be covered in earlier part. So any service
except when it is free of charge or under a constraint of personal service is
included in it. Since housing activity is a service it was covered in the clause
as it stood before 1993.”

31. Section 2(1)(r) of the Consumer Protection Act, 1986 defines “unfair trade
practice” as follows:
“2. (1)(r) “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
including any of the following practices, namely…”
(emphasis supplied)

The said definition is an inclusive one, as held by this Court in Pioneer Urban
9
Land & Infrastructure Ltd v. Govindan Raghavan , wherein this Court speaking
through one of us (Indu Malhotra, J.) held: (SCC pp. 732-33 & 734, paras 6.1 –
6.3 & 6.8)
“6.1 …. The inordinate delay in handing over possession of the flat clearly
amounts to deficiency of service. In Fortune Infrastructure v. Trevor D’Lima,
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 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
[Geetu Gidwani Verma v. Pioneer Urban land and Infrastructure Ltd., 2018
SCC OnLine NCDRC 1164] 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.”

9
(2019) 5 SCC 725 : (2019) 3 SCC (Civ) 37


17

…
6.8. 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 8-5-2012
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(1)(r) of the Consumer Protection Act, 1986 since it adopts
unfair methods or practices for the purpose of selling the flats by the builder.”

32. In a similar case, this Court in Arifur Rahman Khan v. DLF Southern Homes
10
(P) Ltd. affirmed the view taken in Pioneer, and held that the terms of the
agreement authored by the developer does not maintain a level platform between
the developer and the flat purchaser. The stringent terms imposed on the flat
purchaser are not in consonance with the obligation of the developer to meet the
timelines for construction and handling over possession, and do not reflect an
even bargain. The failure of the developer to comply with the contractual
obligation to provide the flat within the contractually stipulated period, would
amount to a deficiency of service. Given the one-sided nature of the apartment
buyer’s Agreement, the consumer fora had the jurisdiction to award just and
reasonable compensation as an incident of the power to direct removal of
deficiency in service.

33. Section 14 of the 1986 Act empowers the Consumer Fora to redress the
deficiency of service by issuing directions to the Builder, and compensate the
consumer for the loss or injury caused by the opposite party, or discontinue the
unfair or restrictive trade practices.

34. We are of the view that the incorporation of such one-sided and unreasonable
clauses in the apartment buyer‘s Agreement constitutes an unfair trade practice
under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act,
the powers of the consumer fora were in no manner constrained to declare a
contractual term as unfair or one-sided as an incident of the power to discontinue
unfair or restrictive trade practices. An “unfair contract” has been defined under
the 2019 Act, and powers have been conferred on the State Consumer Fora and
the National Commission to declare contractual terms which are unfair, as null
and void. This is a statutory recognition of a power which was implicit under the
1986 Act.

35. In view of the above, we hold that the Developer cannot compel the apartment
buyers to be bound by the one-sided contractual terms contained in the apartment
buyer‘s Agreement.”

10
(2020) 16 SCC 512


18


13. It is equally well settled that contractual stipulations cannot curtail the
statutory jurisdiction of the consumer fora. In Pioneer Urban Land &
11
Infrastructure Ltd v. Govindan Raghavan , this Court held that one-sided and
unreasonable clauses in builder-buyer agreements constitute an unfair trade
practice under Section 2(1)(r) of the Act. It was further observed that the
incorporation of such oppressive terms in a standard form contract, where
purchasers have little or no bargaining power, cannot bind the consumer so as to
defeat statutory remedies under the Act.

14. In the present case, Clause 10 of the Flat buyer agreement stipulates the
period for completion of construction and provides for payment of delay
compensation, and reads thus:
“10. (a) Construction of the Flat is likely to be completed within a period of thirty
six (36) months of commencement of construction of the particular Block in which
the Flat is located, with a grace period of six (6) months, on receipt of sanction of
building plans/revised building plans and approvals of all concerned authorities
including the Fire Service Dept., Civil Aviation Dept., Traffic Dept., Pollution
Control Dept., as may be required for commencing and carrying on construction
subject to force majeure, restraints or restrictions from any courts/authorities,
non-availability of building materials, disputes with contractors/work force etc.
and circumstances beyond the control of the Developers and subject to timely
payments by the Flat Buyers in the Scheme. No claim by way of
damages/compensation shall lie against the Developers in case of delay in
handing over possession on account of the said reasons. The date of submitting
application to the concerned authorities for issue of completion/ part
completion/occupancy/part occupancy certificate of the Complex shall be treated
as the date of completion of the Flat for the purpose of this clause/agreement.


11
(2019) 5 SCC 725 : (2019) 3 SCC (Civ) 37


19

(b) The Developers on completion of construction shall issue a final call notice to
the Buyer, who shall remit all dues within 30 days thereof and take possession of
the Flat. The Buyer shall be liable for payment of all taxes, levies, outflows,
maintenance charges from the dates these are levied/made applicable irrespective
of the fact that the Buyer has not taken possession of the Flat or has not been
enjoying benefit of the same.

(c) In case of delay in construction of the Flat beyond the period as stipulated
subject to force majeure and other circumstances as aforesaid under sub-clause
(a) above with a grace period of 6 months, the Developers shall pay to the Buyer
compensation @ Rs. 107.60 (Rupees One hundred seven and paise sixty only) per
sq. meter or @ Rs. 10/- per sq. ft. of the super area of the Flat per month for the
period of delay. Likewise, if the Buyer fails to settle the final account and to take
possession of the Flat within 30 days from the date of issue of the final call
notice/offer to hand over possession by the Developers, the Buyer shall be liable
to pay to the Developers holding charges@ Rs. 107 .60 per sq, meter or @ Rs.10/-
per sq. ft. of the super area of the Flat per month on expiry of 30 days’ notice.

(d) Upon taking possession of the Flat the Buyer shall not be entitled to put
forward any claim against the Developers in respect of any item of work in the
Flat which may be alleged not to have been carried out or completed or for any
other reason whatsoever.”

15. A reading of Clause 10(c) reveals that compensation for delay is stipulated
at the rate of Rs. 10 per sq. ft. per month. Whereas, Clause 5(b) of the Agreement
empowers the developer to charge interest at 24% per annum for delayed
payments by the allottee and to forfeit a substantial portion of the earnest money.
Thus, the terms are evidently one-sided and have been drafted unilaterally by the
developer. The stipulated compensation is nominal and disproportionate,
particularly in cases of prolonged delay causing financial strain and mental
hardship to homebuyers.



20

16. The statute does not impose any embargo on the grant of higher or
reasonable compensation merely because the parties have agreed to a particular
clause, especially where such clause is found to be unfair or oppressive. While
consumer fora must act judicially and not arbitrarily enhance compensation, they
are not bound to mechanically enforce a contractual term that results in manifest
injustice. Departure from such a clause, where justified by the nature and duration
of the delay and the hardship caused, lies within the statutory competence of the
forum.

17. In the instant case, the delay in completion and handing over of possession
is not disputed. Such failure constitutes deficiency in service. The NCDRC has
examined the facts, assessed the extent of delay and its impact on the
complainants, and determined compensation in the exercise of its powers
conferred under the Act.

18. Accordingly, it must be held that the NCDRC acted well within the ambit
of its statutory authority in awarding compensation, notwithstanding the
restrictive stipulation contained in Clause 10(c) of the Agreement. The power of
the consumer fora to grant just and reasonable compensation for deficiency in
service is traceable to the statute and cannot be curtailed by contractual terms
which operate to the detriment of the consumer. The award therefore represents
a legitimate and permissible exercise of statutory jurisdiction.



21

18.1. Further, as held in Laureate Buildwell Private Limited v. Charanjeet
12
Singh , a subsequent purchaser is entitled to seek the same relief as the original
allottee and cannot be denied compensation merely on the ground that he or she
stepped into the shoes of the original allottee at a later stage. The right to claim
compensation for deficiency in service travels with the allotment, unless
expressly barred.

19. As regards the determination of compensation in cases of delayed or failed
delivery of possession, reference may be made to the decision in Bangalore
13
Development Authority v. Syndicate Bank , wherein, this Court after surveying
a catena of decisions, crystallised the governing principles relating to grant or
refusal of relief to an allottee aggrieved by delayed or non-delivery of possession.
It was held that where possession is not delivered within the stipulated or
reasonable time without justifiable cause, the allottee is entitled to refund with
reasonable interest and in appropriate cases, additional compensation depending
upon the facts. Compensation is not uniform and must be moulded in light of the
nature of delay, conduct of the authority, and extent of harassment suffered. The
governing principles laid down in the said judgment are as follows:
“(a) Where the development authority having received the full price, does not
deliver possession of the allotted plot/flat/house within the time stipulated or
within a reasonable time, or where the allotment is cancelled or possession is
refused without any justifiable cause, the allottee is entitled for refund of the
amount paid, with reasonable interest thereon from the date of payment to date of

12
(2021) 20 SCC 401
13
(2007) 6 SCC 711


22

refund. In addition, the allottee may also be entitled to compensation, as may be
decided with reference to the facts of each case.

(b) Where no time is stipulated for performance of the contract (that is for
delivery), or where time is not the essence of the contract and the buyer does not
issue a notice making time the essence by fixing a reasonable time for
performance, if the buyer, instead of rescinding the contract on the ground of non-
performance, accepts the belated performance in terms of the contract, there is
no question of any breach or payment of damages under the general law
governing contracts. However, if some statute steps in and creates any statutory
obligations on the part of the development authority in the contractual field, the
matter will be governed by the provisions of that statute.

(c) Where an alternative site is offered or delivered (at the agreed price) in view
of its inability to deliver the earlier allotted plot/flat/house, or where the delay in
delivering possession of the allotted plot/flat/house is for justifiable reasons,
ordinarily the allottee will not be entitled to any interest or compensation. This is
because the buyer has the benefit of appreciation in value.

(d) Though the relationship between Development Authority and an applicant for
allotment is that of a seller and buyer, and therefore governed by law of contracts,
(which does not recognise mental agony and suffering as a head of damages for
breach), compensation can be awarded to the consumer under the head of mental
agony and suffering, by applying the principle of Administrative Law, where the
seller being a statutory authority acts negligently, arbitrarily or capriciously.

(e) Where an alternative plot/flat/house is allotted and delivered, not at the
original agreed price, but by charging current market rate which is much higher,
the allottee will be entitled to interest at a reasonable rate on the amount paid
towards the earlier allotment, from the date of deposit to date of delivery of the
alternative plot/flat/house. In addition, he may be entitled to compensation also,
determined with reference to the facts of the case, if there are no justifiable
reasons for non-delivery of the first allotted plot/flat/house.

(f) Where the plot/flat/house has been allotted at a tentative or provisional price,
subject to final determination of price on completion of the project (that is
acquisition proceedings and development activities), the Development Authority
will be entitled to revise or increase the price. But where the allotment is at a fixed
price, and a higher price or extra payments are illegally or unjustifiably
demanded and collected, the allottee will be entitled to refund of such excess with
such interest, as may be determined with reference to the facts of the case.

(g) Where full payment is made and possession is delivered, but title deed is not
executed without any justifiable cause, the allottee may be awarded


23

compensation, for harassment and mental agony, in addition to appropriate
direction for execution and delivery of title deed.

(h) Where the allotment relates to a flat/house and construction is incomplete or
not in accordance with the agreed specifications, when it is delivered, the allottee
will be entitled to compensation equivalent to the cost of completing the building
or rectifying the defects.

(i) The quantum of compensation to be awarded, if it is to be awarded, will depend
on the facts of each case, nature of harassment, the period of harassment and the
nature of arbitrary or capricious or negligent action of the authority which led to
such harassment.

(j) While deciding whether the allottee is entitled to any relief and in moulding the
relief, the following among other relevant factors should be considered : (i)
whether the layout is developed on 'no profit no loss' basis, or with commercial
or profit motive; (ii) whether there is any assurance or commitment in regard to
date of delivery of possession; (iii) whether there were any justifiable reasons for
the delay or failure to deliver possession; (iv) whether the complainant has
alleged and proved that there has been any negligence, shortcoming or
inadequacy on the part of the developing authority or its officials in the
performance of the functions or obligations in regard to delivery; and (v) whether
the allottee has been subjected to avoidable harassment and mental agony.

14
19.1. In Ghaziabad Development Authority v. Balbir Singh this Court
clarified that compensation cannot follow a rigid or formulaic pattern. The
quantum must depend upon the nature and extent of the loss suffered. Where
possession is eventually delivered, compensation may ordinarily be lower since
the allottee receives the benefit of appreciation; however, where refund alone is
directed, compensation may be higher as the allottee is deprived of both
possession and escalation in value. Compensation may include pecuniary loss as

14
(2004) 5 SCC 65


24

well as mental agony resulting from deficiency in service. The relevant
paragraphs are extracted as under:
“8…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 of 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 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. Further if the
construction is not of good quality or not complete, the compensation would be
the cost of putting it in good shape or completing it along with some compensation
for harassment. Similarly, if at the time of giving possession a higher price or
other amounts is collected unjustifiably and without there being any provision for
the same the direction would be to refund it with a reasonable rate of interest. If
possession is refused or not given because the consumer has refused to pay the
amount, then on the finding that the demand was unjustified the consumer can be
compensated for harassment and a direction to deliver possession can be given.
If a party who has paid the amount is told by the authority that they are not in a
position to ascertain whether he has paid the amount and that party is made to
run from pillar to post in order to show that he has paid the amount, there would
be deficiency of service for which compensation for harassment must be awarded
depending on the extent of harassment. Similarly, if after delivery of possession,
the sale deeds or title deeds are not executed without any justifiable reasons, the
compensation would depend on the amount of harassment suffered. We clarify
that the above are mere examples. They are not exhaustive. The above shows that


25

compensation cannot be the same in all cases irrespective of the type of loss or
injury suffered by the consumer.”

20. The expansive understanding of “compensation” under the Act was
authoritatively explained in Lucknow Development Authority (supra).
Subsequent decisions, including Chief Administrator, H.U.D.A. and another v.
15
Shakuntla Devi and DLF Homes Panchkula Pvt. Ltd. v. D.S. Dhanda Etc.
16
Etc. reiterate that compensation must be fair, reasonable, and commensurate
with the loss or injury suffered. The consumer fora must analyse the factual
matrix and cannot mechanically restrict compensation to strict financial
calculations alone.

21. The jurisprudence that emerges is clear: compensation under the Act is
remedial and protective in character. Detailed mathematical ascertainment of
market decline is not a sine qua non ; what is required is that the award be just,
reasonable and proportionate to the delay, deprivation and hardship established
on record.

22. When the aforesaid principles are applied to the present case, the conduct
of the appellant assumes significance. Over a prolonged period, this Court passed
a series of orders to safeguard the interests of the homebuyers and ensure
completion of the project. By order dated 12.02.2021, the appellant was directed

15
(2017) 2 SCC 301
16
AIR 2019 SUPREME COUR 3218


26

to complete construction and hand over possession and as an interim measure, to
pay contractual delayed compensation. The appellant was made aware that even
if the appeals were to succeed, it could not evade its contractual obligation to
compensate the homebuyers.

23. Subsequent orders dated 08.07.2021, 28.02.2022, and 08.04.2022 record
repeated assurances by the appellant, directions for completion of EWS units,
inspection by the Director of Town and Country Planning, and furnishing of
security for unfinished works. Despite such indulgences and extensions of time,
the appellant failed to secure the requisite Occupancy Certificate.

24. The proceedings dated 13.11.2024 further reveal that the appellant
continued to propose handing over possession on an “as is where is” basis without
obtaining statutory approvals. Thus, the record unequivocally demonstrates
persistent non-compliance despite repeated undertakings before this Court.

25. The issue of offering possession without an Occupancy Certificate is no
longer res integra . In Samruddhi Cooperative Housing Society Ltd v. Mumbai
17
Mahalaxmi Construction (P) Ltd , this Court held that failure to obtain the
requisite Occupancy Certificate constitutes deficiency in service, entitling
consumers to seek compensation. The relevant paragraphs read thus:

17
(2022) 4 SCC 103


27

“24. Section 2(1)(d) of the Consumer Protection Act defines a “consumer” as a
person that avails of any service for a consideration. A “deficiency” is defined
under Section 2(1)(g) as the shortcoming or inadequacy in the quality of service
that is required to be maintained by law. In its decisions in Arifur Rahman
Khan v. DLF Southern Homes (P) Ltd. [(2020) SCC 512] and Pioneer Urban
Land and Infrastructure Ltd. v. Govindan Raghavan [(2019) 5 SCC 725 : (2019)
3 SCC (Civ) 37], this Court has held that the failure to obtain an occupancy
certificate or abide by contractual obligations amounts to a deficiency in service.
In Treaty Construction v. Ruby Tower Coop. Housing Society Ltd. [(2019) 8 SCC
157 : (2019) 4 SCC (Civ) 141], the Court also considered the question of
awarding compensation for not obtaining the certificate. In that case, the Court
declined to award damages as there was no cogent basis for holding the appellant
liable for compensation, and assessing the quantum of compensation or assessing
the loss to the members of the respondent society.

25. In the present case, the respondent was responsible for transferring the title
to the flats to the society along with the occupancy certificate. The failure of the
respondent to obtain the occupancy certificate is a deficiency in service for which
the respondent is liable. Thus, the members of the appellant Society are well
within their rights as “consumers” to pray for compensation as a recompense for
the consequent liability (such as payment of higher taxes and water charges by
the owners) arising from the lack of an occupancy certificate.”



18
25.1. Similarly, in Dharmendra Sharma v. Agra Development Authority , it
was categorically held that a purchaser cannot be compelled to accept possession
without completion and statutory certificates, and such an offer is legally
untenable. The following paragraphs are apposite:
“29. The appellant’s key contention regarding the absence of the completion
certificate and firefighting clearance certificate merits serious consideration. The
appellant consistently raised this issue, asserting that a valid offer of possession
cannot be made without these documents. Section 4(5) of the U.P. Apartment
(Promotion of Construction, Ownership and Maintenance) Act, 2010 and Section
19(10) of the RERA Act, 2016 mandate that a developer must obtain these
certificates before offering possession. Despite the appellant’s repeated requests,
ADA failed to produce these certificates, rendering its offer of possession
incomplete and legally invalid.

18
2024 INSC 667


28


30. The appellant has rightly cited relevant precedents to bolster this argument.
In Debashis Sinha v. R.N.R. Enterprise [(2023) 3 SCC 195 : (2023) 1 SCC (Civ)
356], this Court held that possession offered without the requisite completion
certificate is illegal, and a purchaser cannot be compelled to take possession in
such circumstances…”

26. In view of these authoritative pronouncements, possession without an
Occupancy Certificate cannot be forced upon the respondents. Obtaining such
certificate is a statutory pre-condition integral to lawful delivery of possession.

27. It is also relevant to note that the respondents in C.A. No. 11047 of 2025
had sought enhancement of interest, but the award of interest at 8% per annum
has attained finality upon dismissal of their appeal (C.A. No. 951 of 2020) on
11.03.2024. Further, the order dated 21.11.2019 passed by the NCDRC in
Consumer Complaint No. 2355 of 2017, impugned in C.A. No. 11047 of 2025,
was subject to the outcome of Civil Appeal No. 473 of 2020 (Parsvnath
Developers Ltd v. Mallika Raghavan) which was disposed of on 22.04.2024, in
terms of an out-of-court settlement, directing refund with interest at 8% per
annum.

28. Having regard to the totality of circumstances, namely the prolonged delay,
failure to obtain mandatory statutory approvals, repeated non-compliance with
the directions of this Court and the long deprivation suffered by the respondents
despite payment of substantial consideration, we are of the considered view that


29

award of interest at the rate of 8% per annum represents fair and reasonable
compensation consistent with the principles laid down by this Court.

28.1. It is further evident from the record that the NCDRC has awarded rebate,
litigation expenses and additional stamp duty charges to be borne by the appellant
on account of the delay in handing over the possession. These directions have
been issued upon consideration of the factual matrix and material available on
record. Such directions are incidental and ancillary to the main relief of
compensation and fall squarely within the ambit of Section 14 of the Act. Hence,
the same do not suffer from any perversity or jurisdictional error so as to warrant
interference by this Court.

29. Accordingly, we find no merit in these appeals. The orders of the NCDRC
are hereby affirmed. The appellant is directed to obtain the requisite Occupancy
Certificate and hand over possession to the respondents in C.A. Nos. 5289 of
2022 and 5290 of 2022 within a period of six months from the date of this
judgment. Till such time, the appellant shall continue to pay compensation as
determined by the NCDRC without any default. In the event the appellant is
unable to obtain the Occupancy Certificate within the said period on account of
bona fide causes not attributable to it, liberty is granted to approach the NCDRC
for appropriate consideration, limited to the issue of interest for the period
subsequent to the time stipulated in this judgment.



30

29.1. Insofar as the respondents in C.A. No. 11047 of 2025 are concerned, they
shall be entitled to compensation by way of interest at 8% per annum from the
agreed date of possession till 14.08.2022, after adjusting the amount already paid.
The appellant shall obtain the Occupancy Certificate, if not already obtained, and
furnish the same to the respondents forthwith.

30. With the aforesaid observations and directions, all the appeals stand
dismissed. There shall be no order as to costs.

31. Pending application(s), if any, shall stand disposed of.


….....................................J.
[B.V. NAGARATHNA]



….....................................J.
[R. MAHADEVAN]
NEW DELHI;
FEBRUARY 20, 2026.