Supreme Court Affirms NCDRC Directions; Developer Must Obtain Occupancy Certificate and Pay 8% Interest for Delay

A bench of Justices B.V. Nagarathna and R. Mahadevan heard appeals by Parsvnath group companies challenging orders of the National Consumer Disputes Redressal Commission (NCDRC) that directed completion of construction, delivery of possession and payment of compensation to home‑buyers for prolonged delay in handing over flats in the Parsvnath Exotica project, Sector‑53, Gurgaon.

The Court affirmed the NCDRC orders and dismissed the appeals. It held that the jurisdiction of consumer fora derived from statute and not from the parties’ contractual stipulations, and that one‑sided contractual clauses could not be allowed to curtail statutory remedies. The Court observed that the failure to deliver possession and to obtain requisite statutory approvals, including the Occupancy Certificate, constituted deficiency in service under the Consumer Protection Act. It affirmed the NCDRC’s directions to complete construction, obtain the Occupancy Certificate and hand over possession within six months in two appeals, and to pay compensation by way of interest at 8% per annum from the respective cut‑off dates till delivery of possession. The Court expressly noted that “the source of power, therefore, is statutory, and not contractual.” The Court, in its reasoning, observed: “The word 'compensation' is again of very wide connotation. It has not been defined in the Act. According to dictionary it means, 'compensating or being compensated; thing given as recompense;'. In legal sense it may constitute actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult or injury or loss. Therefore, when the Commission has been vested with the jurisdiction to award value of goods or services and compensation it has to be construed widely enabling the Commission to determine compensation for any loss or damage suffered by a consumer which in law is otherwise included in wide meaning of compensation.”

Background:
The three Civil Appeals (Nos. 5289 of 2022, 5290 of 2022 and 11047 of 2025) arose from NCDRC orders in consumer complaints by allottees who had booked and paid nearly the entire sale consideration for 3390 sq. ft. flats in Towers B5 and B6 of the Parsvnath Exotica project. Under the buyer agreements possession was to be delivered within 36 months with six months’ grace; despite payments the developer failed to hand over possession within the contractual period. The NCDRC directed the developer to complete construction, obtain Occupancy Certificates and deliver possession by specified dates, to pay compensation by way of simple interest at 8% per annum from the respective cut‑off dates till actual delivery, to extend/reinstate contractual rebates, to bear any increase in stamp duty after the relevant dates and to pay litigation costs.

The developer challenged the NCDRC’s orders contending that contractual clauses (including a nominal compensation clause of Rs.10 per sq. ft. per month and an express allocation of stamp duty to buyers) governed the parties’ rights and barred enhancement of compensation; it also relied on industry difficulties and delays in statutory approvals. The respondents argued that the failure to obtain approvals and deliver possession within time constituted deficiency in service and justified the statutory relief granted by the NCDRC.

Applying settled precedents, the Court held that housing construction was a “service” under the Act and that consumer fora could award just and reasonable compensation for deficiency in service notwithstanding restrictive contractual terms, particularly where such clauses were one‑sided. The Court referred to earlier decisions including Lucknow Development Authority v. M.K. Gupta, Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan and IREO Grace Realtech v. Abhishek Khanna, and reiterated that compensation under the Act had a wide amplitude. The Court found persistent non‑compliance by the appellant, including offering possession without Occupancy Certificates in breach of law, and noted prior directions and interim orders passed by this Court. The reliefs awarded by the NCDRC were held to be within statutory power, and the appeals were dismissed with directions as to timelines and maintenance of compensation payments pending compliance; liberty was granted to approach the NCDRC for genuine inability to obtain approvals. There was no order as to costs.

Case Details:
Case No.: Civil Appeal Nos. 5289 of 2022, 5290 of 2022 and 11047 of 2025 (arising from Consumer Complaint Nos. 827 of 2017, 828 of 2017 and 2355 of 2017)
Case Title: Parsvnath Developers Ltd. v. Mohit Khirbat; Parsvnath Developers Ltd. v. Gp. Capt. Suman Chopra (dead) through LRs; Parsvnath Hessa Developers Pvt. Ltd. v. Aman Chawla & Another
Appearances:
For the Petitioner(s): (Names/designations not specified in the reported judgment)
For the Respondent(s): (Names/designations not specified in the reported judgment)