Can homebuyers seek compensation for delayed delivery of flat even after possession? Supreme Court answers

The Supreme Court recently held that a homebuyer can claim compensation for delayed delivery of a flat even after taking possession of the property [TKA Padmanabhan v. Abhiyan Cooperative Group Housing Society Ltd].

A Bench of Justices Vikram Nath and V Mohana said that mere possession does not extinguish the right of the homebuyer to seek compensation for delayed delivery. It restored a consumer complaint that had been referred to arbitration without being decided on merits.

“The subsequent receipt of possession cannot, by itself, extinguish the right of the allottee to seek adjudication of a claim for compensation for the alleged delay,” the Court held.

The Court further clarified that the existence of an arbitration clause in a housing agreement does not by itself oust the jurisdiction of consumer fora. It emphasised that once a consumer complaint has been admitted, it cannot be diverted to another forum merely because the parties had agreed to resolve disputes through arbitration.

The ruling came in an appeal filed by one TKA Padmanabhan against Abhiyan Cooperative Group Housing Society Limited. Padmanabhan had approached the district consumer forum in 2005 alleging deficiency in service on account of delay in handing over possession of a flat allotted to him by the housing society. He sought compensation for the delay.

After the complaint was admitted and notice issued, the society invoked an arbitration clause contained in the agreement between the parties and sought reference of the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996.

While the district forum initially rejected the request, it later referred the parties to arbitration after the matter was remanded by the Delhi High Court for reconsideration.

The decision was subsequently upheld by the Delhi State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission (NCDRC).

The NCDRC additionally held that Padmanabhan was not a “consumer” at the time of filing the complaint since he had already taken possession of the flat without protest.

The Supreme Court disagreed with this view of the NCDRC. It noted that Padmanabhan's complaint was not for delivery of possession but for compensation arising from the alleged delay in handing over possession.

According to the Court, whether there was any delay, whether such delay was attributable to the housing society, whether possession had been accepted unconditionally and whether compensation was payable were all questions requiring adjudication on merits.

The Court found that none of these issues had been examined by the consumer fora, which had instead relegated the parties to arbitration.

It reiterated that the existence of an arbitration agreement does not automatically bar a consumer complaint. It also relied on Section 12(4) of the Consumer Protection Act, 1986, which provides that once a complaint has been admitted, it cannot be transferred to another court, tribunal or authority.

The Bench accordingly set aside the orders passed by the district forum, State Commission and NCDRC and restored the consumer complaint for adjudication on merits. Noting that the complaint has remained pending since 2005, the Court requested the Commission to make an endeavour to decide the case within one year.

Pertinently, the case was pending before the Supreme Court since the last 10 years.

Padmanabhan represented himself in person.

The cooperative society was represented by Advocates Chandrachur Bhattacharyya, Sahil Tagotra and Shreya Kasera.

[Read Judgment]

TKA Padmanabhan v. Abhiyan Cooperative Group Housing Society Ltd.