Homebuyers Can Claim Compensation Even After Taking Possession: Supreme Court

The Supreme Court has ruled that a homebuyer who accepts possession of a flat after a delay does not automatically lose the right to seek compensation for the period of delay. The judgment, delivered in June, sets aside orders from three consumer fora and clarifies key legal questions in builder-buyer disputes.

The case involved T K A Padmanabhan, a member of the Abhiyan Cooperative Group Housing Society in New Delhi. He was allotted a flat in January 2003 but faced delays in possession. In 2005, he filed a complaint before the District Consumer Disputes Redressal Commission, Dwarka. The society sought to refer the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, citing an arbitration clause in the buyer's agreement. The court referred the parties to arbitration in 2009, a decision upheld by the state commission.

Padmanabhan then approached the National Consumer Disputes Redressal Commission (NCDRC), which dismissed his complaint, stating that he had taken possession unconditionally and without protest a year and a half before filing the complaint. The NCDRC held that he ceased to be a 'consumer' after taking possession and that the agreement came to an end, thus no privity of contract existed.

The Supreme Court bench of Justices Vikram Nath and V Mohana disagreed. Relying on its earlier ruling in Emaar MGF Land Ltd. v. Aftab Singh, the Court held that an arbitration clause does not override the jurisdiction of consumer fora. The Consumer Protection Act, 1986, provides a 'special and additional remedy' for consumers. Once a complaint is admitted, Section 12(4) of the Act bars its transfer to any other court or tribunal. The Court stated, 'a private contractual clause cannot be permitted to defeat the continued operation of a statutory remedy.'

The Court also addressed whether a buyer who takes possession can still be treated as a 'consumer' for the period of delay. Under Section 2(1)(d) of the Consumer Protection Act, a consumer is anyone who hires or avails services for consideration. Section 2(1)(o) includes 'housing construction' as a service. The Court noted that the buyer's grievance pertains to the delay before possession, and taking possession does not extinguish the right to seek compensation for that delay. The complaint must be heard on its merits.

The judgment reinforces that homebuyers retain their rights even after accepting possession, and consumer fora remain accessible despite arbitration clauses. This provides significant relief to homebuyers facing delayed possession, ensuring they can seek compensation without losing their consumer status.