“Composite-Equity Adjustment” under Article 142 for Builder–Buyer Disputes – Comment on Jawala Real Estate Pvt. Ltd. v. Haresh, 2025 INSC 669

1. Introduction

The Supreme Court’s decision in Jawala Real Estate Pvt. Ltd. (now amalgamated with Macrotech Developers Ltd.) v. Haresh arises out of a decade-long tussle between a home-buyer and a developer over a premium apartment in Mumbai’s Lodha Codename Blue Moon project. Although the litigation originated in a consumer complaint before the National Consumer Disputes Redressal Commission (NCDRC) in 2013, it ballooned into appeals, miscellaneous applications, mediation attempts and even contempt allegations.

The pivotal issues were:

• Whether the builder, having sold away the originally allotted flat in violation of a subsisting stay order, could substitute a different flat.
• What monetary liabilities—price, interest, taxes, maintenance and allied charges—survived between the parties after years of non-compliance, delay and partial payments.
• Whether, and how, the Supreme Court could bring the dispute to a close by exercising its extraordinary powers under Article 142 of the Constitution.

The judgment finally fashions a Composite-Equity Adjustment: instead of wading through every contested head of claim, the Court directs the purchaser to pay a lump-sum of ₹1,40,71,000 on top of certain admitted amounts, treating it as full and final settlement of all pre-possession dues up to 05-02-2025. Possession stands confirmed, and post-possession liabilities are placed squarely on the buyer.

2. Summary of the Judgment

1. The Court recounts the chequered factual history: allotment (2013), builder’s unilateral cancellation, NCDRC’s protective orders, the builder’s violation by selling away the flat, substitution ordered by the Supreme Court in 2018 and the subsequent stalemate on outstanding payments.
2. A registry-held demand draft of ₹3.72 crore (balance sale consideration) has already been released to the builder; possession of Flat 6503 stands handed over.
3. The only question left is “what more” is payable. The builder pegs its claim at ~₹4.97 crore; the buyer admits roughly ₹2.16 lakh and conditionally another ₹15.37 lakh.
4. Noting the builder’s suppression of documents, contemptuous alienation of the original flat, and failure to disclose carpet area figures, the Court holds that strict contractual enforcement would be inequitable. At the same time, the buyer cannot escape all liability because the apartment had to be maintained and statutory outgoings met.
5. Invoking its power to “do complete justice” (Art. 142), the Court crystallises dues into four heads totalling ₹1,40,71,000, payable within eight weeks. All claims up to the possession date are thereby extinguished.
6. The parties must execute the sale deed within two months post-payment; stamp duty and registration charges to be borne by the buyer. Earlier restrictions on structural changes are lifted. The Misc. Application stands disposed.

3. Analysis

3.1 Precedents Cited / Relied Upon

Interestingly, the judgment itself cites no earlier decision by name. However, its approach implicitly leans on well-settled Supreme Court jurisprudence, notably:

• Article 142 line of cases: Supreme Court Bar Association v. Union of India (1998) 4 SCC 409 and its progeny recognise that when statutory remedies run dry or rigid application of law causes injustice, the Court may craft bespoke reliefs. The present judgment uses this tool to impose a composite monetary settlement.
• Consumer protection precedents such as DLF Homes v. Capital Greens (2021) and Pioneer Urban v. Govindan Raghavan (2019) emphasise fair play by builders and disallow unfair terms. Though not quoted, their spirit guides the Court’s skepticism towards the builder’s inflated claims and lack of transparency.
• MOFA jurisprudence: Earlier rulings like Jayantilal Investments v. Madhuvihar Co-op Housing (2007) explain developers’ statutory duties to furnish plans, carpet area and obtain NOCs. The Court invokes these MOFA duties (ss. 4 & 6) to reject charges unsupported by disclosure.

3.2 Legal Reasoning

1. Violation-based discounting: The builder’s contemptuous sale of Flat 6403 in 2014 became the cornerstone. Equity disfavors a party that defies court orders; hence interest and penalty claims were drastically pared down.
2. Lack of disclosure under MOFA: Sections 4 and 6 oblige the promoter to execute a registered agreement only after disclosing carpet area, sanctioned plans and approvals. The builder’s failure to do so vitiated its demand for assorted charges.
3. Balancing of Equities: While the buyer lost enjoyment for years, he also withheld the bulk of the price. Equitable adjustment demanded that each side absorb part of the loss.
4. Article 142 as a closure device: Calculation of every rupee of interest, tax or CAM would perpetuate litigation. The Court therefore exercised Article 142 to invent a lump-sum settlement—labelled here as Composite-Equity Adjustment.
5. Prospective liability demarcation: Post-possession outgoings (maintenance, taxes) rightly rest on the occupant; the order expressly preserves these for the housing society to recover.

3.3 Potential Impact of the Judgment

• Template for future builder–buyer impasses: Where innumerable heads of claim are hotly disputed, courts may prefer a composite settlement instead of granular computation, provided reasons are recorded.
• Deterrence against contempt by promoters: Builders who alienate property despite stay orders may find their monetary claims heavily diluted.
• Strengthening MOFA compliance: The decision underscores that failure to produce sanctioned plans, carpet area statements or NOCs can fatally undermine a developer’s monetary demands.
• Reinforcing consumer-friendly stance: By placing the burden of ambiguity on the stronger contracting party (developer), the Court aligns with global consumer-protection trends.
• Operationalising Article 142 in civil/consumer sphere: Traditionally used for criminal or constitutional issues, the judgment illustrates how Article 142 can resolve protracted civil disputes, saving judicial time.

4. Complex Concepts Simplified

MOFA (Maharashtra Ownership of Flats Act, 1963)

A state statute that regulates agreements between flat purchasers and promoters in Maharashtra. It mandates disclosures, timelines for completion and bars recovery of undisclosed charges.

NCDRC

The apex consumer forum under the Consumer Protection Act. It adjudicates high-value complaints and can issue interim measures, such as restraining sale of disputed flats.

Article 142 of the Constitution

Empowers the Supreme Court to pass any decree or order necessary for doing “complete justice” in a pending cause. Orders under Art. 142 override conflicting statutes for that specific case.

Ad-interim Stay / Injunction

A temporary prohibition granted during litigation to preserve the status quo (e.g., restraining a builder from creating third-party rights).

CAM (Common Area Maintenance)

Periodic charges levied by the builder/housing society to maintain common areas such as lobbies, lifts, gardens, etc.

5. Conclusion

Jawala Real Estate Pvt. Ltd. v. Haresh cements the Supreme Court’s readiness to depart from arithmetical exactitude and instead adopt a broad-brush equity-based settlement when faced with chronic non-compliance and documentary opacity in real-estate disputes. The judgment:

• Confers legitimacy on substituting property when original allotments are wrongfully alienated.
• Demonstrates that a developer’s claims for interest, penalties and miscellaneous charges can be slashed if statutory disclosures (under MOFA) are absent or if the promoter has acted in contempt.
• Delivers a pragmatic closure via Article 142, coining what can be called a “Composite-Equity Adjustment”.
• Sends a cautionary message to both builders and buyers: transparency, timely compliance and mutual cooperation remain the safest route; otherwise, the Court will impose its own settlement blueprint.

In the broader legal landscape, the decision augments consumer-centric jurisprudence, enriches Article 142’s repertoire in civil matters and may encourage lower fora to experiment with holistic reliefs that transcend rigid contractual formulations.