Sunita Samaria Singh vs. M/S Ansal Buildwell LTD.

Facts

The plaintiff, Sunita Samaria Singh, booked a flat in a project by M/s Ansal Buildwell Ltd. The total consideration was Rs. 1,49,00,000/-. The plaintiff paid 95% of the total amount, Rs. 1,51,47,340/-, in installments between March 2016 and June 2020. The defendant was to hand over possession within 3 to 3.5 years of the allotment. However, by October 2021, the flat was still incomplete, and the construction quality was poor. The plaintiff requested a refund with interest. The defendant admitted only 95% completion and refused the refund. The Occupancy Certificate (OC) was applied for only in May 2022 and not yet received. The plaintiff filed a suit seeking recovery of the amount paid along with interest.

Held

The Court held that the plaintiff is entitled to a decree for the recovery of Rs. 1,51,47,340/- along with simple interest at 9% per annum. The Court found that the defendant failed to hand over possession of the flat within a reasonable time and that the delay in obtaining the Occupancy Certificate (OC) was a sufficient reason for the plaintiff to terminate the agreement and seek a refund. The Court rejected the defendant's plea regarding the COVID-19 pandemic as a justification for the extensive delay, noting that construction activities resumed in June 2020 and that the construction was still incomplete and OC was not received even by December 2021. The Court relied on the Supreme Court's decision in Pioneer Urban Land (supra) which held that failure to hand over possession within a reasonable time and delay in obtaining OC are grounds for a flat purchaser to seek a refund with interest. A decree was passed for Rs. 2,30,33,352/- (principal amount plus calculated interest) along with future interest at 9% per annum. The interim injunction restraining the defendant from creating third-party rights was confirmed.

Key Issues

1. Whether the plaintiff is entitled to a refund of the amount paid due to the delay in handing over possession and poor quality of construction, as per the builder-buyer agreement and relevant legal principles? 2. Whether the defendant's plea of the COVID-19 pandemic justifying the delay in construction is valid? Petitioner's arguments: The plaintiff contended that the defendant failed to deliver possession of the flat within the agreed timeframe and that the construction quality was poor, as evidenced by photographs and the defendant's admission of incomplete construction. The plaintiff relied on the builder-buyer agreement and the Supreme Court's decision in Pioneer Urban Land (supra) to claim a refund with interest. The plaintiff argued that the defendant's claim of delay due to COVID-19 was unsubstantiated and that the pandemic could only justify a minimal delay. Revenue/State's arguments: The defendant argued that the delay was caused by the COVID-19 pandemic and that only 95% of the construction was completed, with possession nearing completion. The defendant also claimed that the plaintiff's request for a refund at that stage was not feasible. The defendant's contention regarding the maintainability of the suit as a commercial suit was also raised.