While partly allowing the appeals preferred by Parsvnath Developers Limited (developer), the Supreme Court has modified the orders of NCDRC and SCDRC in lieu of the developer’s liability to pay compensation under clause 9(c) of the Flat Buyer Agreement to the extent of 70% while the remaining 30% liability would be upon the Chandigarh Housing Board (CHB).

The bench of Justice M.R. Shah and Justice A.S. Bopanna was of the opinion that, “the State Commission as well as the National Commission have seriously erred in fastening the entire liability to pay compensation solely upon the appellant – developer. The compensation in terms of clause 9(c) of the Flat Buyer Agreement is to be shared between the developer and the CHB in the ratio of 70:30 as apportioned/determined by the learned sole arbitrator in the award dated 09.01.2015 and thereafter as observed by this Court while disposing of/dismissing Civil Appeal No. 10748/2016”.

Senior Advocate Sachin Dutta appeared on behalf of the builder while Advocate Rachna Joshi Issar appeared on behalf of the Chandigarh Housing Board.

The CHB vehemently submitted that under the Agreement and as per clause 9(c), it was the exclusive liability of the developer to pay the compensation to the allottees. However, the appellants relied on the earlier Supreme Court’s judgment in Civil Appeal No. 10748/2016, titled Chandigarh Housing Board v. M/s Parasvanath Developers Pvt. Ltd., decided on December, 17, 2019, and stated that the orders of NCDRC and SCDRC goes against it.

In the pertinent matter, the developer was given a 123-acre land by CHB for constructing residential units, with the name “Parsvnath Pride Asia”. To that effect, a tripartite agreement was signed between the developer, CHB and the private respondents/allottees. Subsequently, the appellant did not carry out the construction due to land encumbrances because of which CHB failed to handover the possession (as alleged by the appellants).

Since the dispute arose, it was referred to an arbitrator, but during the arbitration proceedings were pending, the allottees filed individual complaints before the District Consumer Disputes Redressal Commission (District Forum), the State Consumer Disputes Redressal Commission (SCDRC) and before the National Consumer Disputes Redressal Commission (NCDRC).

The NCDRC modified the orders of District forum as well as SCDRC in terms of payment, however, subjected it to the final outcome of the arbitral proceedings.

Both the National and State Commissions directed the appellant-developer to pay the entire amount of compensation.

The arbitrator had held that any amount payable on account of refund of price, interest or compensation (if and when finally determined by the National Commission/Supreme Court) would be borne by the appellant and the CHB in the ratio of 70:30.

Now the question before the Court was, whether such amount falls within the purview of compensation under Clause 9(c) of the Tripartite Agreement so as to be paid solely by the Developer or not.

The Court, after considering all the submissions made, the arbitration award, and the previous judgment in an SLP, was of the opinion that both the appellant and the CHB were responsible for the delay and, therefore, clause 9(c) of the flat buyer agreement will not be attracted, more particularly when there has been no fulfilment of conditions in clause 9(a).

Cause Title: Parsvnath Developers Ltd. v. Gagandeep Brar and Anr.

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