Monday, January 20, 2025

In preparation of the Consumer Case

 

In preparation of the Consumer Case of Indrani Som;

Here are relevant judicial precedents that may be considered in similar cases involving development agreements, inheritance of property, and rights of developers and property owners:

1. Validity and Enforceability of Development Agreements

  • Bashir Ahmed v. Mehmooda Begum (1996 SCC OnLine AP 50)
    The court upheld the enforceability of a registered development agreement when it was executed with the owner's consent and in accordance with the terms of the agreement. A valid development agreement binds both parties to their respective obligations.
  • Valliammai Achi v. Nagappa Chettiar (1967 AIR 1153)
    The court emphasized that development agreements, being contracts, are governed by the principles of contract law. Any modification or supplementary agreement must be supported by valid consent and must not violate the terms of the original agreement unless explicitly agreed upon.

2. Rights of Legal Heirs in Property Development

  • Jupudy Pardha Sarathy v. Pentapati Rama Krishna (2016) 2 SCC 56
    The Supreme Court held that upon the death of an owner, the legal heir inherits the property along with all obligations and benefits associated with it. A legal heir is entitled to enter into agreements regarding the property, including supplementary development agreements.
  • Commissioner of Wealth Tax v. Chander Sen (1986 AIR 1753)
    The Supreme Court clarified the inheritance of property under Hindu Succession Act. Legal heirs are deemed rightful owners of the inherited property and can deal with it as per the law.

3. Change in Circumstances and Supplementary Agreements

  • K. Raheja Constructions Ltd. v. Alliance Ministries (1995) 5 SCC 464
    The court held that parties to a development agreement could mutually amend or supplement the terms in a new agreement to reflect changes in circumstances, provided such changes do not violate statutory provisions.
  • Larsen & Toubro Ltd. v. State of Karnataka (2014) 1 SCC 708
    The court ruled that supplementary agreements modifying earlier agreements are valid if the terms are agreed upon by all parties and are duly executed and registered.

4. Rights and Obligations of Developers

  • Mumbai International Airport Pvt. Ltd. v. Golden Chariot Airport (2010) 10 SCC 422
    The Supreme Court held that developers are entitled to carry out construction activities without obstruction from the owners, provided they comply with the terms of the development agreement, including obtaining necessary approvals.
  • Fateh Chand v. Balkishan Dass (1964 AIR 1405)
    The court emphasized the principle of equity in contracts, including development agreements. Developers must meet their obligations within the agreed timelines to retain rights over the property.

5. Disputes Regarding Construction Standards

  • D.S. Nakara v. Union of India (1983 AIR 130)
    Although not directly related to real estate, this case emphasizes adherence to agreed specifications and standards. Applied to development agreements, developers must ensure compliance with Class-I specifications if required under the agreement.
  • Krishna K. Agarwal v. Firdous Estates (2003 SCC OnLine MP 245)
    The court held that failure to adhere to agreed construction standards is a breach of the development agreement and may lead to termination or damages.

6. Municipal Approval and Compliance

  • M.C. Mehta v. Union of India (2006) 3 SCC 399
    The court reiterated that all construction and development activities must strictly comply with municipal laws and sanctioned plans. Developers and owners are jointly responsible for ensuring compliance.
  • K. B. Saha and Sons Pvt. Ltd. v. Development Consultant Ltd. (2008) 8 SCC 564
    The court held that municipal sanctions are essential for construction projects, and any agreement that deviates from sanctioned plans may be declared void.

These precedents establish a comprehensive legal framework for dealing with issues arising out of property inheritance, development agreements, and associated rights and obligations. If specific questions or disputes arise in your case, consulting with a property lawyer for tailored advice is recommended.

 

When a developer fails to carry out construction within the agreed-upon timeframe and a substantial period (like 7 years) has elapsed, courts have addressed the rights of property owners and developers in several judicial precedents. Below are key cases and principles related to such scenarios:

1. Delay in Construction by Developer

  • K. Raheja Constructions Ltd. v. Alliance Ministries (1995) 5 SCC 464
    The court held that unreasonable delay in fulfilling obligations under a development agreement amounts to a breach of contract. The owner has the right to terminate the agreement if the developer fails to act within the stipulated timeframe.
  • Jayantilal Investments v. Madhuvihar Co-operative Housing Society (2007) 9 SCC 220
    The Supreme Court emphasized that developers are obligated to complete construction within the agreed timeline. If no reasonable explanation is provided for the delay, the owner is entitled to seek legal remedies, including termination of the agreement or damages.

2. Forfeiture or Termination of Development Agreement

  • Bharat Sanchar Nigam Limited v. BPL Mobile Cellular Ltd. (2008) 13 SCC 597
    The court highlighted that failure to meet contractual obligations, such as commencement or completion of work, can lead to the forfeiture of the agreement. If the breach is proven, the other party may terminate the agreement.
  • R.K. Jain v. DDA (1996) 1 SCC 169
    The Supreme Court ruled that prolonged inaction or failure to fulfill contractual commitments constitutes a breach, entitling the aggrieved party to terminate the agreement and seek damages.

3. Remedies for the Owner

  • Larsen & Toubro Ltd. v. State of Karnataka (2014) 1 SCC 708
    The court clarified that the owner has the right to seek damages for the developer's breach of contract and may also demand specific performance if the developer has partially performed.
  • Unitech Ltd. v. Tulsiani Constructions and Developers (2018 SCC OnLine Del 12092)
    The Delhi High Court ruled that in cases of prolonged delay, the owner has the right to reassign the project to another developer or take legal steps to recover possession of the property.

4. Breach of Development Agreement

  • Dhanrajamal Gobindram v. Shamji Kalidas & Co. (1961 AIR 1285)
    The court observed that time is of the essence in contracts, particularly in development agreements. If the developer fails to perform, it constitutes a material breach, allowing the owner to terminate the agreement.
  • M.C. Mehta v. Union of India (2006) 3 SCC 399
    Although related to environmental compliance, the court emphasized the importance of adhering to timelines in construction projects and the consequences of failing to do so.

5. Specific Cases of Inordinate Delays

  • DLF Universal Ltd. v. Appropriate Authority (2000) 3 SCC 49
    The court noted that the owner is not bound to wait indefinitely for the developer to fulfill their obligations and may terminate the agreement if a reasonable timeline is exceeded without justification.
  • Nahalchand Laloochand Pvt. Ltd. v. Panchali Co-operative Housing Society Ltd. (2010) 9 SCC 536
    The Supreme Court ruled that failure to complete construction within the agreed period, despite reasonable extensions, entitles the owner to approach the court for remedies, including damages or specific performance.

6. Consumer Protection

  • Fortune Infrastructure v. Trevor D'Lima (2018) 5 SCC 442
    The court held that developers delaying construction without valid reasons amount to a deficiency in service, making them liable under consumer protection laws. Property owners can seek compensation or refund.
  • Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan (2019) 5 SCC 725
    The court reiterated that developers must adhere to contractual timelines, failing which the affected party is entitled to relief.

Legal Remedies for the Owner

  1. Termination of Agreement: File a suit to terminate the agreement due to breach of contract.
  2. Damages/Compensation: Seek damages for the delay and loss suffered due to non-construction.
  3. Specific Performance: If desired, seek specific performance to enforce the developer's obligations.
  4. Alternative Development Agreement: Engage another developer if allowed under local laws and the terms of the existing agreement.

These precedents affirm that courts take delays in construction seriously, and owners have strong legal remedies to address such breaches.

In cases where the developer fails to construct for a prolonged period, courts have upheld the consumer's right to claim compensation based on the present market value of the property. Below are key judicial precedents that establish this principle:

1. Consumer's Right to Market Value Compensation

  • Fortune Infrastructure v. Trevor D'Lima (2018) 5 SCC 442
    The Supreme Court ruled that when a developer fails to deliver possession or commence construction within a reasonable time, the consumer is entitled to compensation based on the current market value of the property. The delay constitutes a deficiency in service under consumer protection laws.
  • Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan (2019) 5 SCC 725
    The court held that the consumer should not suffer due to the developer's inaction. Compensation should reflect the current market value to ensure that the buyer can purchase an equivalent property in the same locality.

2. Prolonged Delay Constitutes Unfair Trade Practice

  • DLF Homes Panchkula Pvt. Ltd. v. D.S. Dhanda (2019 SCC OnLine NCDRC 5)
    The National Consumer Disputes Redressal Commission (NCDRC) observed that an inordinate delay of over five years amounts to an unfair trade practice. The consumer is entitled to either a refund with interest or compensation equivalent to the current market value.
  • Emaar MGF Land Ltd. v. Aftab Singh (2019) 12 SCC 751
    The Supreme Court upheld compensation claims for delays, noting that prolonged non-performance by a developer entitles the consumer to recover losses, including the current market price of the undelivered property.

3. Consumer is Not Bound to Accept Refund of Paid Amount Alone

  • K.A. Nagamani v. Housing Commissioner, Karnataka Housing Board (2012) 5 SCC 515
    The court ruled that a consumer is not limited to claiming a refund of the amount paid to the developer. They may also seek compensation that reflects the current market value of the property as a measure of restitution.
  • Brig. (Retd.) Kamal Sood v. DLF Universal Ltd. (2007 SCC OnLine NCDRC 35)
    The NCDRC held that a consumer who has waited for years due to the developer’s inaction has the right to claim compensation based on the current market value rather than a simple refund.

4. Present Market Value to Restore Consumer's Position

  • Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65
    The Supreme Court highlighted the principle of restitutio in integrum, stating that the consumer should be restored to a position as if the breach had not occurred. For prolonged delays, compensation based on the current market value achieves this aim.
  • Kusum Lata v. M/s DLF Universal Ltd. (NCDRC, 2007)
    In cases of non-delivery or prolonged delay, the NCDRC awarded compensation equivalent to the current market price to ensure the consumer could purchase a similar property in the same locality.

5. Compensation with Interest vs. Market Value

  • NBCC (India) Ltd. v. Shri Pankaj Sinha (2018 SCC OnLine NCDRC 20)
    The NCDRC distinguished between refund with interest and compensation based on market value. It ruled that in cases where no construction has been initiated for years, the consumer is entitled to market value compensation rather than just a refund with interest.
  • Ireo Grace Realtech Pvt. Ltd. v. Abhishek Khanna (2021) 3 SCC 241
    The court held that when the delay is unjustifiable, the consumer has a right to claim the current market value or equivalent compensation to secure alternative accommodation.

6. Inordinate Delay Justifies Market-Based Relief

  • Bangalore Development Authority v. Syndicate Bank (2007) 6 SCC 711
    The court stated that inordinate delays deprive the consumer of their right to use and enjoy the property. Compensation must account for the actual loss suffered, including the market appreciation of the property.
  • Raheja Universal Ltd. v. G.R. Krishnamurthy (NCDRC, 2016)
    The NCDRC emphasized that prolonged non-performance amounts to negligence, entitling the consumer to damages aligned with the property's market value.

Legal Remedies Available to Consumers

  1. Claim for Present Market Value: File a consumer complaint under the Consumer Protection Act, 2019, demanding compensation equivalent to the current market value of the property.
  2. Termination of Agreement with Compensation: Seek termination of the agreement due to breach and claim damages reflecting the current property price.
  3. Alternative Reliefs: Include the cost of renting comparable accommodation during the delay as part of the compensation.

These precedents establish the consumer’s right to fair compensation for inordinate delays, ensuring they are not penalized for the developer’s default.

The principle of a continuous cause of action applies in cases where the wrong or breach of contract persists over time, allowing the affected party to seek legal recourse even after a significant delay. Below are key judicial precedents that discuss the application of this principle in cases involving prolonged inaction by developers:

1. Continuous Cause of Action Defined

  • Balakrishna Savalram Pujari Waghmare v. Shree Dhyaneshwar Maharaj Sansthan (1959 AIR 798, 1960 SCR (3) 355)
    The Supreme Court clarified that a continuous cause of action arises when there is a recurring or ongoing breach of obligation. In such cases, the limitation period starts anew each day the breach continues.
  • State of Bihar v. Deokaran Nenshi (1973) 1 SCC 890
    The court observed that a continuous wrong occurs when the obligation to perform persists over time, such as when a developer fails to deliver possession or commence construction within the agreed timeframe.

2. Continuous Breach of Contract by Developer

  • Raghunath Rai Bareja v. Punjab National Bank (2007) 2 SCC 230
    The Supreme Court held that failure to fulfill contractual obligations over an extended period constitutes a continuous breach, allowing the aggrieved party to file a claim even after years of inaction.
  • DLF Home Developers Ltd. v. Capital Greens Flat Buyers Association (2018 SCC OnLine SC 748)
    The court ruled that when a developer fails to initiate or complete construction within the promised timeframe, the failure constitutes a continuous cause of action. Affected buyers can seek legal remedies at any point during the developer's prolonged inaction.

3. Consumer Rights in Continuous Breach

  • Fortune Infrastructure v. Trevor D'Lima (2018) 5 SCC 442
    The Supreme Court recognized the ongoing nature of a developer's failure to fulfill promises, treating it as a continuous cause of action. It allowed the affected consumer to file a complaint even after a prolonged delay of several years.
  • Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan (2019) 5 SCC 725
    The court held that a delay in delivery or construction constitutes an ongoing wrong. The limitation period for filing a claim under consumer protection laws begins from the date the consumer becomes aware of the breach.

4. Continuous Cause of Action and Limitation Period

  • Sampuran Singh v. Niranjan Kaur (1999) 2 SCC 679
    The Supreme Court clarified that in cases of continuing breaches, each day the breach persists constitutes a fresh cause of action, and the limitation period does not bar claims for relief.
  • Ghaziabad Development Authority v. Balbir Singh (2004) 5 SCC 65
    The court ruled that in cases of ongoing non-performance, such as failure to complete construction, the limitation period is not strictly applicable. A continuous cause of action allows claims to be made at any time during the breach.

5. Judicial Remedies for Prolonged Delay

  • R.K. Jain v. DDA (1996) 1 SCC 169
    The Supreme Court held that when a developer fails to commence construction for an extended period, the affected party can invoke continuous cause of action to claim relief, including damages or specific performance.
  • Brig. (Retd.) Kamal Sood v. DLF Universal Ltd. (2007 SCC OnLine NCDRC 35)
    The NCDRC observed that the developer's prolonged inaction constituted a continuous wrong, allowing the buyer to seek remedies beyond the typical limitation period.

6. Developer's Failure to Deliver Possession

  • K.A. Nagamani v. Housing Commissioner, Karnataka Housing Board (2012) 5 SCC 515
    The court ruled that failure to hand over possession or commence construction within the stipulated timeframe creates a continuous breach. The consumer can file a complaint even after years of delay.
  • Jayantilal Investments v. Madhuvihar Co-operative Housing Society (2007) 9 SCC 220
    The court emphasized that the developer's failure to act on its contractual commitments over time gives rise to a continuous cause of action, allowing the aggrieved party to seek remedies at any point during the breach.

7. Consumer Protection and Continuous Cause of Action

  • Laxmi Engineering Works v. P.S.G. Industrial Institute (1995) 3 SCC 583
    The Supreme Court held that under consumer protection laws, the limitation period for filing a claim begins only when the consumer becomes aware of the breach or when the breach becomes evident.
  • M/s. Imperia Structures Ltd. v. Anil Patni & Ors. (2020) 10 SCC 783
    The court recognized the continuous nature of a developer's failure to complete construction and ruled that such inaction constitutes an ongoing deficiency in service.

Key Takeaways for Prolonged Developer Inaction

  1. Continuous Breach: The developer’s failure to construct for seven years constitutes a continuous breach of contract or service.
  2. No Limitation Bar: The limitation period does not apply as long as the breach persists. A claim can be filed at any point during the breach.
  3. Consumer Remedies: The aggrieved party can seek damages, refund with interest, or compensation based on the current market value of the property.
  4. Relief Under Consumer Protection: The Consumer Protection Act recognizes continuous cause of action for deficiencies in service or breaches by developers.

These precedents affirm the consumer's right to seek remedies for ongoing breaches and ensure justice is not denied due to procedural limitations.

 

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