The Supreme Court has ruled that simply giving a developer permission to enter into sale agreements, carry out construction, and hand over possession of flats does not make a landowner responsible for delays in construction. A bench of Justice PS Narasimha and Justice Alok Aradhe rejected the homebuyer’s appeal against the landowner. The Court also upheld the earlier ruling of the National Consumer Disputes Redressal Commission (NCDRC), which had cleared the landowners of any responsibility for the construction delay.

Background of the Dispute:

The dispute began after the landowners and the developer signed a Joint Development Agreement (JDA) and also executed a General Power of Attorney (GPA) in favour of the developer.

When the promised time for handing over the flats, including the grace period, had passed, the homebuyers (appellants) sent a notice to both the developer and the landowners (respondents). They then filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC), seeking relief.

Proceedings Before NCDRC:

The NCDRC directed the developer to complete the construction of the flats.However it did not hold the landowners liable for the delay. The homebuyers then took the matter to the Supreme Court, seeking to make the landowners jointly and severally liable for the delay.

The appellants argued that the General Power of Attorney executed in favour of the developer created a principal-agent relationship between the landowners and the developer. However, the landowners contended that liability for the delay lay solely with the developer. They relied on the terms of the Joint Development Agreement (JDA) and the GPA, which, according to them, protected and indemnified the landowners from any liability.

Judgement and Analysis:

After examining the JDA, the GPA and the arguments from both sides, the bench observed that the developer had the rights to carry out construction, sell the flats, and hand over possession. Therefore, the developer was liable for the delay in handing over possession, as there was no delay on the part of the landowners.

Key Observation by the Court:

Additionally, the bench also referred to the wording of the JDA, which clearly absolved the landowners from vicarious liability. It 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”.

Upholding the NCDRC’s orders, the judgement absolved the landowners of any liability and dismissed the appeal.

Case Details: Sriganesh Chandrasekaran & Ors. v. M/S Unishire Homes LLP & Ors. (Civil Appeal No.s 10527-20528 of 2024)