The Supreme Court’s Ruling on Real Estate Contracts
The Supreme Court has made a significant ruling regarding real estate contracts, stating that if a contract heavily favors the developer, the buyer can reclaim the property allocation. The court clarified that in such cases, the builder cannot hold more than 10% of the original selling price.
Unfair Business Practices
A bench comprising Justice BR Gawai and Justice SVN Bhatti highlighted that contracts with clearly one-sided terms reflect inappropriate business behavior. The court will not enforce unfair contract terms that disadvantage one party due to unequal bargaining power.
Upholding Consumer Rights
The apex court upheld a decision from the National Consumer Disputes Redressal Commission (NCDRC) made on October 25, 2022. This ruling required Godrej Projects Development Limited to refund the remaining amount to Anil Carlekar and others, after deducting the 10% retention fee from the original selling price. The court found no reason to alter the NCDRC’s approach.
Debate Over Contract Terms
The developer had argued that the contract allowed them to withhold the entire earnest money, which was 20% of the original selling price. However, the bench found the terms to be heavily biased towards the developer.
Compensation Issues
The court criticized the minimal compensation offered to flat buyers in case of delays from the developer. It stated that such one-sided agreements are unfair trade practices. However, the court disagreed with the NCDRC’s decision to provide only 6% simple interest per year from the recovery date, deeming it inappropriate.
Refund Ordered
The Supreme Court has ordered the developer to return ₹12,02,955 to the complainants within six weeks. Previously, the developer had refunded ₹22,01,215 out of a total deposit of ₹51,12,310, as instructed by the court. The court noted that the buyers wanted to cancel their allocation due to a significant drop in property prices.
Background of the Case
The dispute began when buyers booked a flat in a Godrej project in Gurgaon back in 2014, paying ₹51,12,310 for a property initially priced at ₹1,70,81,400. After receiving a possession letter in 2017, they chose to cancel the allocation and requested their money back, challenging the developer’s claim to retain 20% of the original price.
