Kiran Raj

The Supreme Court Division Bench of Justice PS Narasimha and Justice Alok Aradhe held that a landowner's authorization to a developer to construct flats, obtain necessary sanctions, and execute sale agreements does not render the landowner liable for delays in construction attributable solely to the developer. The court dismissed an appeal filed by homebuyers seeking to hold landowners jointly and severally liable for compensation, affirming the National Consumer Disputes Redressal Commission's finding that the obligation to complete construction and deliver possession rested entirely with the developer, who alone was liable for the resulting delay.

The appeals arose from a dispute concerning delay in delivery of residential flats constructed under a Joint Development Agreement (JDA) executed between landowners and a developer. The landowners entered into the JDA on 24.02.2012 and executed a General Power of Attorney (GPA) in favour of the developer. The developer obtained a sanctioned plan and construction licence on 21.02.2013 and thereafter entered into Memoranda of Sale Agreements with flat purchasers from 29.07.2013 onwards. Under the agreements, possession was to be handed over within 36 months, with a grace period of six months.

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The stipulated period expired on 24.02.2017, but the project remained incomplete. The purchasers filed a complaint before the National Consumer Disputes Redressal Commission alleging deficiency in service and unfair trade practices. The Commission directed the developer to complete construction, obtain occupancy certificate, hand over possession, and pay interest at 6% per annum, with a higher rate upon default. The landowners were not held liable.

In review proceedings, the Commission initially held the landowners jointly and severally liable, but upon remand by the Supreme Court for want of hearing, it held that the landowners were not jointly and severally liable for delay compensation, though both parties were directed to execute sale deeds and transfer title. The purchasers challenged this finding before the Supreme Court.

The Court recorded, “These appeals, filed under Section 67 of the Consumer Protection Act, 2019 arise out of the impugned judgment and final orders dated 30.07.2024 and 19.10.2023 passed by National Consumer Disputes Redressal Commission (Commission) in the Review Petition and consumer case respectively.”

After extracting Clause 7 of the JDA, the Court noted that it “provides for mutual indemnities between the parties.” Referring to Clauses 2 and 3 of the GPA, the Court observed that these provisions authorized the developer to enter into agreements and complete registration formalities in respect of the developer’s share.

On interpreting the contractual framework, the Court stated, “On a conjoint reading of the JDA and the GPA, it is evident that, in respect of the flats falling in developer’s share, the developer has the right to enter into sale agreements, undertake construction, receive consideration, transfer possession and convey title.” It further recorded, “The construction has to be carried out by the developer. The delay in delivery of possession is in respect of flats falling to the share of the developer.”

Addressing the appellants’ contention regarding principal-agent liability, the Court observed, “It is not the case of the appellants that there was a delay in construction on account of any act or omission on the part of the landowners.” The Court added, “The liability to pay the delay compensation is sought to be fastened only on the ground that there is a relationship of principal and agent.”

The Court clarified, “The landowners are undoubtedly jointly responsible with the developer to ensure transfer of title to the appellants.” However, it stated, “The Clauses relied upon by the appellants mainly, Clauses V, VII, 12(b) and 12(c) do not indicate that landowners are under any obligation to raise construction.” It further observed, “For the lapse on the part of the developer, the landowners, who are in no way concerned with the construction, cannot be held liable for deficiency in service, particularly when the developer has indemnified them against acts of commission or omission in construction.”

Regarding prior precedents, the Court stated, “The reliance placed on orders passed by this Court on behalf of the appellants is misplaced and does not advance the case of the appellants.” It also recorded that the issue of joint and several liability must be decided on the facts of each case.

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The Court stated, “For the aforementioned reasons, we do not find any merit in these appeals. The same fail and are hereby dismissed.”

Advocates Representing the Parties

For the Petitioners: Mr. Chandrachur Bhattacharyya, Adv. Mr. Sahil Tagotra, AOR
For the Respondents: Mr. Kumar Sudeep, AOR Mr. Vidya K Sagar, Adv. Mr. Jeevan R Patil, Adv. Mr. Nandlal Kumar Mishra, Adv. Dr. Sushil Balwada, AOR

Case Title: Sriganech Chandrasekaran & Others v. M/s Unishire Homes LLP & Others
Neutral Citation: 2026 INSC 172
Case Number: Civil Appeal Nos. 10527–10528 of 2024
Bench: Justice P.S. Narasimha, Justice Alok Aradhe