Case Title: Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan
Incorporating one-sided stipulations into a builder-buyer agreement is considered as an unfair commercial conduct under Section 2(r) of the Consumer Protection Act of 1986, according to the Supreme Court.
The Apex Court further noted that a builder should not attempt to bind a buyer with unfair contractual provisions. While pondering over an appeal against the decision by the National Consumer Commission that found the clauses used by the builder to be completely biased, unfair, and unjustified and could not be relied upon, the bench noted that there are significant discrepancies between the remedies accessible to both the parties. For instance, the Agreement gives the Builder the right to impose Interest @18% p.a. for any delay on part of Respondent’s (Flat Purchaser) delay in payment of instalments. However, if there is delay in delivery of the apartments, the builder is responsible for paying interest at 9% per year only.
The bench cited Section 2(r) of the Consumer Protection Act, 1986, which defines "unfair trade practices," and stated that this definition is not exhaustive. The bench also noted, among other things, that a contract will not be final and binding if the flat buyer had no choice but to sign on the dotted line of the contract. The Agreement dated May 8, 2012 consisted of conditions which were inherently unjust, irrational, and one-sided. According to Section 2(r) of the Consumer Protection Act of 1986, the inclusion of such one-sided conditions in an agreement is considered as an unfair trade practise since it adopts unfair means or practices for the Builder's business.
The bench placed heavy reliance on the case of Fortune Infrastructure & Anr. V. Trevor D’Lima & Ors. wherein this Court ruled that a person cannot be forced to wait indefinitely to take possession of the apartment that was assigned to him and is entitled to compensation as well as return of the money he paid. The bench also made reference to the 199th Report of the Law Commission of India, which suggested that legislation be passed to prevent such unjust clauses from being included in contracts. According to the said report, "A contract or a provision therein is substantively unfair if such contract or provision therein is in itself harsh, oppressive, or unconscionable to one of the parties."
The Apex Court held that, in the present matter the builder had breached the terms of the Agreement by failing to obtain the Occupancy Certificate and by not providing the Purchaser with possession of the apartment within the allotted time or within a reasonable time later. Despite the fact that the flat was provided nearly two years after the grace period stipulated in the Agreement ended, the court therefore stated that the Purchaser could not be forced to take possession of the property at such a later stage. In view of the above, the bench instructed the builder to reimburse the buyer’s money within a period of three months.