Holding

The Court held that the 42‑month period is to be computed from the date of the fire NOC, the one‑sided clauses are unfair and void, RERA remedies are without prejudice to CP Act remedies, and the buyers must be refunded the amounts paid with 9% interest per annum.

Summary

The case involved a dispute between IREO Grace Realtech Pvt. Ltd., a real‑estate developer, and a group of apartment buyers over the delayed possession of flats in the "The Corridors" project. The buyers alleged that the developer had incorporated one‑sided clauses in the Apartment Buyer’s Agreement, failed to obtain the mandatory fire NOC on time, and therefore breached the contractual commitment period of 42 months plus a 6‑month grace period. The Supreme Court examined whether the 42‑month period should be calculated from the sanction of the building plans or from the issuance of the fire NOC, whether the agreement’s clauses amounted to an unfair trade practice under the Consumer Protection Act, and whether the remedies under the Real Estate (Regulation & Development) Act, 2016 (RERA) were to be given primacy over those under the Consumer Protection Act, 1986. The Court held that the period must be counted from the fire NOC date, that the one‑sided clauses were unfair and void, and that RERA remedies are without prejudice to the consumer‑forum remedies. Consequently, the buyers were entitled to a full refund of the amounts paid with interest at 9% per annum, and the developer was barred from deducting earnest money or other charges. The appeals were disposed of, directing the developer to comply with the refund order within three months.

Issues considered

The appropriate start date for the 42‑month possession period under Clause 13.3 of the agreement.
Whether the contractual terms are one‑sided and constitute an unfair trade practice under the Consumer Protection Act.
Whether the RERA Act’s provisions have primacy over the Consumer Protection Act in providing remedies.
Whether the apartment buyers are entitled to terminate the agreement and obtain a refund with interest.

Legislation cited

Consumer Protection Act, 1986s. 14, s. 18, s. 2(1)(c), s. 2(1)(g), s. 2(1)(o), s. 2(1)(r), s. 3
Consumer Protection Act, 2019s. definition of unfair contract
Haryana Fire Safety Act, 2009s. 15
Real Estate (Regulation & Development) Act, 2016s. 11(4)(a), s. 12, s. 14, s. 18, s. 19, s. 31, s. 71, s. 79, s. 88

Subjects

consumer protectionunfair trade practicereal estate regulationRERAcontractual fairnessdelay compensationpossession dateelection of remedieshousing construction serviceconsumer forum jurisdiction

Judgment

[2021] 2 S.C.R. 1 1

IREO GRACE REALTECH PVT. LTD. A
v.
ABHISHEK KHANNA & OTHERS
(Civil Appeal No. 5785 of 2019)
JANUARY 11, 2021 B
[DR. DHANANJAYA Y CHANDRACHUD,
INDU MALHOTRA AND INDIRA BANERJEE, JJ.]
Consumer Protection – Apartment Buyer’s Agreement – Unfair
trade practice – Oppressive and one sided contractual terms – Held:
The Developer cannot compel the apartment buyers to be bound by C
the one-sided contractual terms contained in the Apartment Buyer’s
Agreement – Incorporation of one-sided and unreasonable clauses
in the Apartment Buyer’s Agreement constitutes an unfair trade
practice u/s.2(1)(r) of CP Act, 1986 – Even under the CP Act of
1986, the powers of the consumer fora were in no manner
D
constrained to declare a contractual term as unfair or one-sided as
an incident of the power to discontinue unfair or restrictive trade
practices – An “unfair contract” has been defined under the
Consumer Protection Act, 2019, and powers have been conferred
on the State Consumer Fora and the National Commission to declare
contractual terms which are unfair, as null and void – This is a E
statutory recognition of a power which was implicit under the
Consumer Protection Act, 1986.
Consumer Protection – Applicability of provisions of
Consumer Protection Act as an additional remedy, despite existence
of remedies under special statutes – Whether primacy to be given to F
RERA Act over the Consumer Protection Act – Held: Remedies under
the Consumer Protection Act are in addition to remedies available
under special statutes – Absence of a bar u/s.79 of RERA Act to
initiation of proceedings before a fora which is not a civil court,
read with s.88 of the RERA Act makes the position clear – s.18 of
the RERA Act specifies that remedies are “without prejudice to any G
other remedy available” – Real Estate (Regulation & Development)
Act, 2016 (RERA Act)
Consumer Protection – Apartment Buyer’s Agreement –
Determination of the date for handing over Possession – Discussed,
with reference to the facts and circumstances of the case. H
1
2 SUPREME COURT REPORTS [2021] 2 S.C.R.

A Consumer Protection – Apartment Buyer’s Agreement –
Entitlement of the Apartment Buyers to refund of the amount deposited
with Delay Compensation – Discussed, with reference to the facts
and circumstances of the case.
Disposing of the appeals, the Court
B HELD: 1.1 The first issue which has been raised by the
Appellant-Developer as also the Apartment Buyers, is the
relevant date from which the 42 months’ period is to be calculated
for handing over possession. Clause 13.3 of the Agreement states
that the Developer proposed to offer possession of the apartment
C to the allottee within a period of 42 months from the date of
approval of the Building Plans and/or fulfilment of the pre-
conditions imposed thereunder, referred to as the “Commitment
Period”. The Company would be entitled to a further “Grace
Period” of 180 days’ after the expiry of the Commitment Period
for unforeseen delays beyond the reasonable control of the
D Company. This would work out to 42+6 months i.e. 48 months.
[Para 18][29-C-E]
1.2 The point of controversy is whether the 42 months’
period is to be calculated from the date when the Fire NOC was
granted by the concerned authority, as contended by the
E Developer; or, the date on which the Building Plans were
approved, as contended by the Apartment Buyers. Section 15
of the Haryana Fire Safety Act, 2009 makes it mandatory for a
Builder/Developer to obtain the approval of the Fire Fighting
Scheme conforming to the National Building Code of India, and
F obtain a No Objection Certificate before the commencement of
construction. Clause 13.3 of the Apartment Buyer’s Agreement
provides that the 42 months’ period has to be calculated from
the date of approval of the Building Plans and/or fulfilment of the
pre-conditions imposed thereunder. The Building Plans
sanctioned by the Directorate of Town and Country Planning,
G Haryana contained the Terms & Conditions of Approval, which
included a provision for Fire Safety contained in Clause (3). The
Developer was directed to submit Fire Safety Plans indicating
the complete Fire Protection Arrangements, and means of escape/

H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 3
& OTHERS

access for the proposed building with suitable legend and standard A
signs. On receipt of the Fire Plans, the Commissioner, Municipal
Corporation, Gurgaon, after satisfying himself with the entire fire
protection measures as in conformity with the National Building
Code, 2005 and the Fire Safety Bye-Laws, would issue an NOC
for Fire Safety. This NOC/Clearance was required to be submitted
B
before the Municipal Corporation, within a period of 90 days’from
the issuance of the sanctioned Building Plans. Clause 17(iv) of
the sanctioned Plan stipulated that the Developer shall obtain an
NOC from the Ministry of Environment & Forests, before starting
the construction/execution of development works at site. The
Environmental Clearance granted by the Ministry of Environment C
& Forest Government of Haryana on 12.12.2013 required the
Developer to submit a copy of the Fire Safety Plan approved by
the Fire Department, before commencing construction of the
project. General Condition (vi) under Part B of the Environmental
Clearance stipulated that the Developer shall obtain all other
D
statutory clearances, including the approval from the Fire
Department, prior to construction of the project. Thus, it was a
mandatory requirement under the Haryana Fire Safety Act, 2009
to obtain the Fire NOC before commencement of construction
activity. This requirement is stipulated in the sanctioned Building
Plans, as also in the Environment Clearance. The 42 months’ E
period in Clause 13.3 of the Agreement for handing over
possession of the apartments would be required to be computed
from the date on which Fire NOC was issued, and not from the
date of the Building Plans being sanctioned. In the present case,
the Developer obtained approval of the Building Plans from the
F
Directorate, Town and Country Planning, Haryana, on 23.07.2013.
The Developer applied for issuance of Fire NOC for the Fire
Fighting Scheme of the Group Housing Colony within the 90 days
period before the Director, Fire Service, Panchkula. [Paras 18.1-
18.10][29-E-G; 30-G-H; 31-A-H; 32-A-H]
1.3 The Commissioner vide letter dated 30.12.2013 raised G
16 objections with respect to the proposed Fire Fighting Plan.
The Developer vide letter dated 22.01.2014 responded to the
objections, submitting that the objections had been cured, and

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4 SUPREME COURT REPORTS [2021] 2 S.C.R.

A requested that the approval of the Fire Fighting Scheme be
granted on a priority basis. The Fire Department informed the
Developer vide letter dated 28.03.2014 that the deficiencies in
the application for Fire NOC had not been cured. The Developer
was granted a further period of 15 days’ to cure the defects, failing
which, its application would be deemed to be rejected. The
B
Developer submitted revised drawings as per the NBC Fire
Scheme alongwith its letter dated 18.08.2014. This letter was
received in the office of the Municipal Corporation on 13.10.2014,
as per endorsement on the said letter. [Para 18.10][33-A-D]
1.4 On 27.11.2014, the Director, Haryana Fire Service
C granted approval to the Fire Fighting Scheme subject to the
conditions mentioned therein. The computation of the period for
handing over possession would be computed from this date. The
Commitment Period of 42 months plus the Grace Period of 6
months from 27.11.2014, would be 27.11.2018, as being the
D relevant date for offer of possession. The aforesaid chronology
for obtaining Fire NOC would indicate a delay of approximately 7
months in obtaining the Fire NOC by the Developer. [Para
18.11][33-D-F]
2.1 Under the construction-linked plan, Clause 6 provided
E that the apartment buyers would be required to deposit 20% of
the sale consideration within 45 days of booking of the apartment.
Clause 7.4 of the Agreement provides that if there is a delay in
payment of an instalment, the apartment buyer would be required
to pay Interest on every delayed payment of such instalment @
20% S.I. p.a. Clause 13.2 of the Agreement provides that if the
F allottee fails, ignores or neglects to take possession of the said
Apartment in accordance with the Notice of Possession, the
allottee shall be liable to pay “Holding Charges” on the super
area @ Rs.7.5 per sq. ft. per month. In contrast, Clause 13.3 of
the Agreement provides that if the Company fails to offer
G possession by the end of the Grace Period i.e. 42+6 months, it
would be liable to pay Delay Compensation@ Rs.7.5 per sq. ft. of
the super area for every month of delay. [Para 19.1][33-G-H;
34-B-D]
2.2 Delay compensation at Rs. 7.5 per sq. ft. works out to
H approximately 0.9% to 1 % Interest per annum.The price per
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 5
& OTHERS

sq. ft of an apartment under the Apartment Buyer’s Agreement A
was Rs. 10,350/- per sq. ft. Clause 13.5 provides that the allottee
may opt for termination, only after 42 months from the date of
issuance of Fire NOC + 6 months’ Grace Period, plus a further
period of 12 months. The Delay Compensation would be payable
to the allottee only if the termination was “validly opted”. The
B
compensation was limited to a fixed period of 12 months only,
and that no other claim whatsoever, whether monetary or
otherwise, was payable by the Developer. Clause 13.8 of the
Agreement provides that the allottee shall be deemed to have
waived all its claims in respect of the area, specifications, quality,
construction, any other provision in the apartment against the C
Developer upon taking possession of the apartment. Clause 21
provides for termination of the Agreement and forfeiture of
earnest money by the Developer, if the allottee neglects or fails
to make timely payments as stipulated in the Agreement, or fails
to exercise the options offered by the Developer. [Para 19.1]
D
[34-D-H; 35-A-B]
2.3 Clause 21.3 provides that upon such termination, the
Appellant Company shall be under no obligation, except to refund
the amounts already paid by the allottee, without any interest,
and after forfeiting and deducting the earnest money, interest on
delayed payments, brokerage / commission / charges, service E
tax and other amounts due and payable to it. The principal amount
after the aforesaid deductions are made, would be refunded at an
uncertain future date i.e. after the Developer had sold the
apartment allotted to the complainant. In contrast, the allottee is
given a very limited right to cancel the Agreement solely in the F
event of the clear and unambiguous failure of the warranties of
the Company, which leads to frustration of the Agreement on
that account. In such case, the allottee will be entitled to a refund
of the instalments actually paid, along with interest @ 8% p.a.
within a period of 90 days from the date of determination to this
effect. No other claim, whatsoever, monetary or otherwise shall G
lie against the Company. [Para 19.1][35-B-E]
2.4 The aforesaid clauses reflect the wholly one-sided terms
of the Apartment Buyer’s Agreement, which are entirely loaded

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6 SUPREME COURT REPORTS [2021] 2 S.C.R.

A in favour of the Developer, and against the allottee at every step.
The terms of the Apartment Buyer’s Agreement are oppressive
and wholly one-sided, and would constitute an unfair trade practice
under the Consumer Protection Act, 1986. Section 2(1)(g) of the
Act defines the expression “deficiency” to include any fault,
shortcoming or inadequacy in the quality, nature and manner of
B
performance which is required to be maintained under law, or in
pursuance of a contract, or in relation to a ‘service’. The term
“service” has been defined by S. 2(1)(o) to include a service of
any description which is made available to potential users. S.
2(1)(o) was amended by Act 50 of 1993 w.e.f. from 18.06.1993 to
C include “housing construction” within the purview of “service”.
[Paras 19.2, 19.3][35-E-H; 36-A-D]
Lucknow Development Authority v. M.K. Gupta (1994)
1 SCC 243 : [1993] 3 Suppl. SCR 615; Pioneer Urban
Land and Infrastructure Ltd v. Govindan Raghavan
D (2019) 5 SCC 725 : [2019] 5 SCR 1169; Wg. Cdr. Arifur
Rahman Khan & Others v. DLF Southern Homes Pvt.
Ltd., 2020 SCC Online SC 667 – relied on
2.5 Section 14 of the 1986 Act empowers the Consumer
Fora to redress the deficiency of service by issuing directions to
E the Builder, and compensate the consumer for the loss or injury
caused by the opposite party, or discontinue the unfair or
restrictive trade practices. The incorporation of such one-sided
and unreasonable clauses in the Apartment Buyer’s Agreement
constitutes an unfair trade practice under Section 2(1)(r) of the
Consumer Protection Act. Even under the 1986 Act, the powers
F of the consumer fora were in no manner constrained to declare a
contractual term as unfair or one-sided as an incident of the power
to discontinue unfair or restrictive trade practices. An “unfair
contract” has been defined under the 2019 Act, and powers have
been conferred on the State Consumer Fora and the National
G Commission to declare contractual terms which are unfair, as null
and void. This is a statutory recognition of a power which was
implicit under the 1986 Act. The Developer cannot compel the
apartment buyers to be bound by the one-sided contractual terms
contained in the Apartment Buyer’s Agreement. [Paras 19.6,
19.7][40-B-F]
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 7
& OTHERS

3.1 The Consumer Protection Act, 1986 was enacted to A
protect the interests of consumers, and provide a remedy for
better protection of the interests of consumers, including the
right to seek redressal against unfair trade practices or
unscrupulous exploitation. Section 3 of the Consumer Act
provides that the remedies under the Act are in addition to, and
B
not in derogation of any other law applicable. [Paras 20.1, 20.2]
[40-F-G; 41-G-H]
Secretary, Thirumurugan Cooperative Agricultural
Credit Society v. M. Lalitha (dead) through LRs and
others (2004) 1 SCC 305 : [2003] 6 Suppl. SCR 659
– referred to C

National Seeds Corporation Limited v. M.
Madhusudhan Reddy (2012) 2 SCC 506 : [2012]
2 SCR 1065; Virender Jain v. Alaknanda Cooperative
Group Housing Society Limited and others (2013) 9 SCC
383 : [2013] 2 SCR 1058; Emaar MGF Land Ltd. v. D
Aftab Singh, (2019) 12 SCC 751 : [2018] 14 SCR 791
– relied on.
3.2 Section 18 of the RERA Act, 2016 provides the remedy
of refund with interest and compensation to allottees, when a
Developer fails to complete the construction or give possession E
as per the Agreement of Sale. The remedies under Section 18
are “without prejudice to any other remedy available”. Section 71
of the RERA Act empowers the RERA Authority to determine
compensation payable under Sections 12, 14, 18 and 19 of the
Act. The proviso to Section 71 provides that a consumer has the F
right to withdraw its complaint before the consumer fora in respect
of matters covered under Sections 12, 14, 18 and 19 of the Act,
and file the same before the RERA. [Paras 20.5, 20.6][45-E-G]
3.2 Section 79 of the RERA Act bars the jurisdiction only
of civil courts in respect of matters which an authority constituted G
under the RERA Act is empowered to adjudicate on. Section 88
of the RERA Actis akin to Section 3 of the Consumer Protection
Act, and provides that the provisions of the RERA Act shall apply
in addition to and not in derogation of other applicable laws. [Paras
20.7, 20.8][46-D-F]
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8 SUPREME COURT REPORTS [2021] 2 S.C.R.

A 3.3 An allottee may elect or opt for one out of the remedies
provided by law for redressal of its injury or grievance. An election
of remedies arises when two concurrent remedies are available,
and the aggrieved party chooses to exercise one, in which event
he loses the right to simultaneously exercise the other for the
same cause of action. [Para 20.9][46-G-H]
B
A.P. State Financial Corporation v. M/s GAR Re-rolling
Corporation (1994) 2 SCC 647 : [1994] 1 SCR 857;
P.R. Deshpande v. Maruti Balaram Haibatti (1998) 6
SCC 507 : [1998] 3 SCR 1079; National Insurance Co.
Ltd. v. Mastan & Ors. (2006) 2 SCC 641 : [2005]
C 5 Suppl. SCR 704 – referred to
Transcore v. Union of India (2008) 1 SCC 125 : [2006]
9 Suppl. SCR 785; Mathew Varghese v. M. Amritha
Kumar (2014) 5 SCC 610 : [2014] 2 SCR 736; M/s
Imperia Structures Ltd. v. Anil Patni and Anr (2020) 10
D SCC 783 – relied on
3.4 The absence of a bar under Section 79 of the RERA Act
to the initiation of proceedings before a fora which is not a civil
court, read with Section 88 of the RERA Act makes the position
clear. Section 18 of the RERA Act specifies that the remedies
E are “without prejudice to any other remedy available”. [Para
20.11][51-D-E]
4.1 The Apartment Buyers in their Complaint filed before
the National Commission made a prayer for refund of the amount
deposited alongwith Interest @ 20% p.a. compounding quarterly
F till its realisation. The Apartment Buyers, in their submissions
have stated that they have obtained home loans on which Interest
@ 7.90% p.a. is being paid, even as on date. The Delay
Compensation specified in the Apartment Buyer’s Agreement of
Rs. 7.5 per sq. ft. which translates to 0.9% to 1% p.a. on the
G amount deposited by the Apartment Buyer cannot be accepted
as adequate compensation for the delay in the construction of
the project. At the same time, the claim of the Apartment Buyers
for payment of compound interest @ 20% p.a., cannot be accepted

H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 9
& OTHERS

as it has no nexus with the commercial realities of the prevailing A
market. [Para 21.2][57-E-G]
4.2 Covid–19 Pandemic has greatly impacted the
construction industry. In these circumstances, it is necessary to
balance the competing interest of both parties. In the interests
of justice and fairplay, the amounts deposited by the Apartment B
Buyers is refunded with Interest @ 9% S.I. per annum from
27.11.2018 till the date of payment of the entire amount. The
refund will be paid within a period of three months from the date
of this judgment. If there is any further delay, the Developer will
be liable to pay default interest @ 12% S.I. p.a. The Developer
shall not deduct the Earnest Money of 20% from the principal C
amount, or any other amount as mentioned in Clause 21.3 of the
Agreement, on account of the various defaults committed by the
Developer, including the delay of over 7 months in obtaining the
Fire NOC. [Para 21.2][58-A-D]
Case Law Reference D

[2019] 5 SCR 1169 relied on Para 17
[1993] 3 Suppl. SCR 615 relied on Para 19.3
[2003] 6 Suppl. SCR 659 relied on Para 20.2
E
[2012] 2 SCR 1065 relied on Para 20.2
[2013] 2 SCR 1058 relied on Para 20.2
[2018] 14 SCR 791 relied on Para 20.3
[1994] 1 SCR 857 relied on Para 20.10
F
[1998] 3 SCR 1079 referred to Para 20.10
[2005] 5 Suppl. SCR 704 referred to Para 20.10
[2006] 9 Suppl. SCR 785 relied on Para 20.10
[2014] 2 SCR 736 relied on Para 20.10
G
(2020) 10 SCC 783 relied on Para 20.11

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10 SUPREME COURT REPORTS [2021] 2 S.C.R.

A CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5785
of 2019.
From the Judgment and Order dated 28.03.2019 of the National
Consumer Disputes Redressal Commission, New Delhi in Consumer
Complaint No. 3873 of 2017.
B With
Civil Appeal NoS. 7615, 7975, 8454, 8480, 8482, 8785-94, 9139,
9216, 9638 of 2019 and Civil Appeal No. 3064 of 2020.
Anil Grover ,Sr. AAG Haryana, Chander Uday Singh, Sr. Adv.,
C Mahesh Agarwal, Rishi Agrawala, Abhimanyu Bhandari, Anshuman
Srivastava, Sameer Chaudhary, Divyang Chandiramani, Shaishir Divatia,
Aarush Bhatia for Mr. E. C. Agrawala, Piyush Singh, Aditya Parolia,
Akshay Srivastava, Nithin Chandran, Prateek Vats, Rajesh Kumar, Gaurav
Goel, A.R.Takkar, Amarjeet Kumar, Ms. Shriya Takkar, A. Venayagam
Balan, Deepak Kumar Khushalani, Santosh Kumar Pandey, Yashraj Singh
D Deora, Ms. Sonal Mashankar, Ms. Shivangi Sud, Shyam Agarwal,
Abhishek Birthray, Adeem Ahmed, Sumit R Sharma, Rajiv Raheja, Gopal
Jha, Ms. Noopur Singhal, Rahul Khurana, Satish Kumar, Subas Ray,
Sanjay Kumar Visen, Advs. for the appearing parties.
The Judgment of the Court was delivered by
E INDU MALHOTRA, J.
1. The present batch of Appeals has been filed by the Appellant-
Developer, to challenge the judgment passed by the National Consumer
Disputes Redressal Commission (“National Commission”) directing refund
of the amounts deposited by the Apartment Buyers in the project “The
F Corridors” developed in Sector 67-A, Gurgaon, Haryana, on account of
the inordinate delay in completing the construction and obtaining the
Occupation Certificate. Aggrieved by the said Judgment, the Appellant-
Developer has filed the present batch of Appeals under Section 23 of
the Consumer Protection Act, 1986 (“Consumer Protection Act”).
G Since common issues have arisen for consideration, they are being
decided by a common Judgment.
For the sake of brevity, the facts in Civil Appeal No. 5785 of 2019
are being referred to as the lead matter.

H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 11
& OTHERS [INDU MALHOTRA, J.]

2. The Department of Town and Country Planning granted a A
license to Respondent No.3 – Precision Realtors Pvt. Ltd. and
Respondent No.4 – Blue Planet Infra Developers and Madeira Conbuild
Pvt. Ltd. for developing a group housing colony on a vast tract of land
admeasuring about 37.5125 acres where multiple towers comprising of
1356 apartments were to be constructed. Subsequently, the license for
B
construction was transferred to the Appellant- Developer.
3. On 23.07.2013, the Building Plans of the project were sanctioned
by the Directorate of Town and Country Planning, Haryana. Clause 3 of
the sanctioned Plan stipulated that NOC/ Clearance from the Fire
Authority shall be submitted within 90 days from the date of issuance of
the sanctioned Building Plans. C

4.The Developeropened booking for the apartments in 2013. On
07.08.2013, the Respondent No.1- Apartment Buyer was allotted a 2
BHK apartment in Tower-C of the project. Similar allotment letters were
issued to various other Apartment Buyers in the housing project.
D
5. On 23/24.10.2013, the Developer applied for issuance of an
NOC for the Fire Fighting Scheme of the group housing colony to the
Commissioner, Municipal Corporation, Gurgaon.
The Commissioner, Municipal Corporation vide letter dated
30.12.2013 raised 16 objections with respect to the proposed Fire Fighting E
Scheme submitted by the Developer.
The Developer replied to the said objections vide letter dated
22.01.2014, stating that the objections raised by the Commissioner had
been rectified. The Developer sought approval of the Fire Fighting
Scheme on priority. F
The Municipal Corporation vide letter dated 28.03.2014 informed
the Developer that the deficiencies in the application for Fire NOC had
not been cured.The Developer was granted 15 days’ time to cure the
defects, failing which, the application would be deemed to be rejected.
Ultimately, on 27.11.2014, the Director, Haryana Fire Service G
granted approval to the Fire Fighting Scheme subject to the conditions
mentioned therein.
6. On 12.12.2013, Respondent No.3 obtained environmental
clearance for setting up the group housing project from the State
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12 SUPREME COURT REPORTS [2021] 2 S.C.R.

A Environment Impact Assessment Authority. Clause 39 of the said
clearance stipulated that the project proponent shall submit a copy of the
Fire Safety Plan duly approved by the Fire Department before the start
of construction.
Under Part-B of the General Conditions in Clause (vi), it was
B stipulated that the project proponent would obtain all other statutory
clearances, such as the approval for storage of diesel from the Chief
Controller of Explosives, Fire Department, Civil Aviation Department,
Forest Conservation Act, 1980 and Wildlife (Protection) Act, 1972, Forest
Act, 1927, PLPA 1900 etc. from the concerned authorities, prior to the
construction of the project.
C
7. The Apartment Buyers vide letter dated 25.03.2014 received a
copy of the Apartment Buyer’s Agreement with a construction linked
payment plan, which is extracted hereunder :

D

E

F

G

H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 13
& OTHERS [INDU MALHOTRA, J.]

8. On 12.05.2014, the Developer executed the Apartment Buyer’s A
Agreement in favour of Respondent No.1 – Apartment Buyer for a total
consideration of Rs.1,45,22,006/-.
The relevant terms of the Apartment Buyer’s Agreement are set-
out hereinbelow :
Clause 6 pertains to payment of Earnest Money, and reads as : B

“6. EARNEST MONEY
The Company and the Allottee hereby agree that 20% (Twenty
percent) of the Sale Consideration of the Apartment shall be
deemed to constitute the “Earnest Money”.” C
(emphasis supplied)
Clause 7 pertains to payment of instalments, and provides that :
“7. PAYMENT OF INSTALLMENTS
7.1 The Allottee has opted for the Payment Plan annexed herewith D
as Annexure-IV. The Allottee understands that it shall always
remain responsible for making timely payments in accordance
with the Payment Plan Annexure-IV. Only in the case of a
construction linked Payment Plan, the Company shall be obliged
to send demand notices for installments on or about the completion
of the respective stages of construction. The demand notices shall E
be sent by registered post/courier and shall be deemed to have
been received by the Allottee within 05 (five) days of dispatch by
the Company or receipt thereof, whichever is earlier.
7.2 It shall not be obligatory on the part of the Company to send
any reminders for any payments whatsoever. Although the F
Company shall not be obliged to send demand notices other than
for the construction linked Payment Plan, or any reminders
whatsoever for payments of the instalment, in the event that any
such notices or reminders are sent by the Company to the Allottee,
as a gesture of courtesy, these shall not, under any circumstances, G
be construed or deemed to be a waiver of the obligations and
responsibility of the Allottee to itself make timely payments in
accordance with the Payment Plan or in response to such demand
notices in the case of a construction linked Payment Plan.

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14 SUPREME COURT REPORTS [2021] 2 S.C.R.

A 7.3 If the Allottee prepays any installments(s) or part thereof to
the Company before it falls due for payment, the Allottee shall be
entitled to pre-payment rebate on such prepaid amounts at the
interest rate declared by the Company for this purpose from time
to time. The interest on such prepaid installment(s) shall be
calculated from the date of prepayment uptill the date when such
B
amount would actually have become due. The credit due to the
Allottee on account of such pre-payment rebate shall however be
adjusted/paid only at the time of final instalment for the said
Apartment.
7.4 The Allottee shall be liable to pay simple interest on every
C delayed payment, at the rate of 20% per annum from the date
that it is due for payment till the date of actual payment thereof.In
case the Allottee defaults in making payment of the due installment
(including partial default) beyond a period of 90 days from the
due date, the Company shall be entitled, though not obliged, to
D cancel the Allotment and terminate this Agreement at any time
thereafter in accordance herewith. However, the Company may
alternatively, in its sole discretion, instead decide to enforce the
payment of all its dues from the Allottee by seeking Specific
Performance of this Agreement. Further, in every such case of
delayed payment, irrespective of the type of Payment Plan, the
E subsequent credit of such delayed installments(s)/payments along
with delayed interest in the account of the Company shall not
however constitute waiver of the right of termination reserved
herein and shall always be without prejudice to the rights of the
Company to terminate this Agreement in the manner provided
F herein.
7.5 Save and except in the case of any bank, financial institution
or company with whom a tripartite agreement has been separately
executed for financing the said Apartment, or where the Company
has given its permission to mortgage to any bank, financial institution
G or company for extending a loan to the Allottee against the said
Apartment, the Company shall not be responsible towards any
other third party, who has made payments or remittances to the
Company on behalf of the Allottee and any such third party shall
not have any right against the said Apartment or under this
Agreement whatsoever. The Company shall issue the payment
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 15
& OTHERS [INDU MALHOTRA, J.]

receipts only in favour of the Allottee. Notwithstanding the above, A
the Allottee is and shall remain solely and absolutely responsible
for ensuring and making all the payments due under this Agreement
on time.
7.6 The Allottee may obtain finance/loan from any financial
institution, bank or any other source, but the Allottee’s obligation B
to purchase the said Apartment pursuant to this Agreement shall
not be contingent on the Allottee’s ability or competency to obtain
such finance. The Allottee would remain bound under this
Agreement whether or not it has been able to obtain finance for
the purchase of the said Apartment. The Allottee agrees and has
fully understood that the Company shall not be under any obligation C
whatsoever to make any arrangement for the finance/loan facilities
to the Allottee from any bank/financial institution. The Allottee
shall not omit, ignore, delay, withhold, or fail to make timely
payments due to the Company in accordance with the Payment
Plan opted by the Allottee in terms of this Agreement on the grounds D
of the non-availability of bank loan or finance from any bank/
financial institution for any reason whatsoever and if the Allottee
fails to make the due payment to the Company within the time
agreed herein, then the Company shall have right to terminate this
Agreement in accordance herewith.
E
7.7 Furthermore, in every case where the Allottee has obtained a
loan/finance from a bank, financial institution or any other source
and for which a tripartite agreement has also been executed by
the Company, it is agreed by the Allottee that any default by the
Allottee of the terms and conditions of such loan/finance, shall
also be deemed to constitute a default by the Allottee of this F
Agreement, whereupon or at the written request of such bank,
financial institution or person from whom such loan has been
obtained the Company shall be entitled to terminate this
Agreement.”
(emphasis supplied) G
Clause 13 of the Agreement provides for handing over possession
of the Apartments and reads as :
“13. POSSESSION AND HOLDING CHARGES
H
16 SUPREME COURT REPORTS [2021] 2 S.C.R.

A 13.1. Upon receipt of the Occupation Certificate under the Act
pertaining to the said Apartment, the Company shall notify the
Allotee in writing to come and take over the possession of the
said Apartment (“Notice of Possession”). In the event the Allottee
fails to accept and take the possession of the said Apartment
within the time indicated in the said Notice of Possession, the
B
Allottee shall be deemed to have become the custodian of the
said Apartment from the date indicated in the Notice of Possession
and the said Apartment shall thenceforth remain at the sole risk
and cost of the Allottee itself.
13.2. Notwithstanding any other provisions of this Agreement, the
C Allottee agrees that if it fails, ignores or neglects to take the
possession of the said Apartment in accordance with the Notice
of Possession sent by the Company, the Allottee shall be liable to
pay additional charges equivalent to Rs.7.5 (Rupees Seven &
Half only) per sq. ft. on the Super Area per month of the said
D Apartment (“Holding Charges”). The Holding Charges shall be a
distinct charge in addition to the maintenance charges and not
related to any other charges/consideration as provided in this
Agreement.
13.3 Subject to Force Majeure, as defined herein and further
E subject to the Allottee having complied with all its obligations under
the terms and conditions of this Agreement and not having
defaulted under any provision(s) of this Agreement including but
not limited to the timely payment of all dues and charges including
the total Sale Consideration, registration charges, stamp duty and
other charges and also subject to the Allottee having complied
F with all formalities or documentation as prescribed by the Company,
the Company proposes to offer the possession of the said
Apartment to the Allottee within a period of 42 (Forty Two) months
from the date of approval of the Building Plans and/or fulfilment
of the preconditions imposed thereunder (“Commitment Period”).
G The Allottee further agrees and understands that the Company
shall additionally be entitled to a period of 180 days (“Grace
Period”), after the expiry of the said Commitment Period to allow
for unforeseen delays beyond the reasonable control of the
Company.

H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 17
& OTHERS [INDU MALHOTRA, J.]

13.4. Subject to Clause 13.3, if the Company fails to offer A
possession of the said Apartment to the Allottee by the end of the
Grace Period, it shall be liable to pay to the Allottee compensation
calculated at the rate of Rs.7.5 (Rupees Seven & Half only) per
sq. ft. of the Super Area (“Delay Compensation”) for every month
of delay until the actual date fixed by the Company for offering
B
possession of the said Apartment to the Allottee. The Allottee
shall be entitled to payment/adjustment against such ‘Delay
Compensation’ only at the time of ‘Notice of Possession’ or at
the time of payment of the final installment, whichever is earlier.
13.5. Subject to Clause 13.3, in the event of delay by the Company
in offering the possession of the said Apartment beyond a period C
of 12 months from the end of the Grace Period (such 12 month
period hereinafter referred to as the “Extended Delay Period”),
then the Allottee shall become entitled to opt for termination of
the Allotment/Agreement and refund of the actual paid up
installment(s) paid by it against the said Apartment after adjusting D
the interest on delayed payments along with Delay Compensation
for 12 months. Such refund shall be made by the Company within
90 days of receipt of intimation to this effect from the Allottee,
without any interest thereon. For the removal of doubt, it is clarified
that the Delay Compensation payable to the Allotee who is validly
opting for termination, shall be limited to and calculated for the E
fixed period of 12 months only irrespective of the date on which
the Allottee actually exercised the option for termination. This
option may be exercised by the Allottee only up till dispatch of the
Notice of Possession by the Company to the Allottee whereupon
the said option shall be deemed to have irrevocably lapsed. No F
other claim, whatsoever, monetary or otherwise shall lie against
the Company and/or the Confirming Parties nor be raised otherwise
or in any other manner by the Allottee.
13.6. If, however, the completion of the said Apartment is delayed
due to Force Majeure as defined herein, the Commitment Period G
and/or the Grace Period and/or the Extended Delay Period, as
the case may be, shall stand extended automatically to the extent
of the delay caused under the Force Majeure circumstances. The
Allottee shall not be entitled to any compensation whatsoever,
including Delay Compensation for the period of such delay.
H
18 SUPREME COURT REPORTS [2021] 2 S.C.R.

A 13.7. Under no circumstances shall the possession of the said
Apartment be given to the Allottee and the Allottee shall not be
entitled to the possession of the said Apartment unless and until
the full payment of the Sale Consideration and any other dues
payable under the Agreement have been remitted to the Company
and all other obligations imposed under this Agreement have been
B
fulfilled by the Allottee to the complete satisfaction of the
Company.
13.8. The Allottee hereby agrees and affirms that upon taking
possession of the said Apartment, the Allottee shall be deemed to
have waived all claims against the Company/Confirming Parties,
C if any, in respect of the area, specifications, quality, construction
and/or any item, amenity or provision in the said Apartment or
The Corridors Project.”
(emphasis supplied)
D Clause 21.3 reads as under:
“21. TIME IS OF ESSENCE; TERMINATION AND
FORFEITURE OF EARNEST MONEY
21.1 Not with standing anything contained in this Agreement, timely
performance by the Allottee of all its obligations under this
E Agreement or exercise of any options wherever and wherever
and whenever indicated herein this Agreement including without
limitation its obligations to make timely payments of the Sale
Consideration, maintenance charges and other deposits and
amounts, including any interest, in accordance with this Agreement
F shall be of essence under this Agreement. If the Allottee neglects,
omits, ignores, or fails in the timely performance of its obligations
agreed or stipulated herein for any reason whatsoever or acts in
any manner contrary to any undertaking assured herein or fails to
exercise the options offered by the Company within the stipulated
period or to pay in time to the Company any of the instalments or
G other amounts and charges due and payable by the Allottee as
described in Clause 7.7 herein, the Company shall be entitled to
cancel the allotment and terminate this Agreement in the manner
described hereunder.
21.1.1 In case any failure or breach committed by the Allotee is
H incapable or rectification or is in the opinion of the Company
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 19
& OTHERS [INDU MALHOTRA, J.]

unlikely to be rectified by the Allottee or where the Allottee is a A
repetitive defaulter or such failure or default is continuing despite
the Allottee being given an opportunity to rectify the same, then
this Agreement may be cancelled by the Company with immediate
effect at its sole option by written notice (“Notice of Termination”)
to the Allottee intimating to the Allottee the decision of the
B
Company to terminate the Agreement and the grounds on which
such action has been taken.
…..
21.3 The Allottee understands, agrees and consents that upon such
termination, the Company shall be under no obligation save and C
except to refund the amounts already paid by the Allottee to the
Company, without any interest, and after forfeiting and deducting
the Earnest Money, interest on delayed payments, brokerage/
commission/charges, service tax and other amounts due and
payable to it, only after resale of the said Apartment. Upon
termination of this Agreement by the Company, save for the right D
to refund, if any to the extent agreed hereinabove, the Allottee
shall have no further right or claim against the Company and/or
the Confirming Parties which, if any, shall be deemed to have
been waived off by the Allottee and the Allottee hereby expressly
consents thereto. The Company shall thenceforth be free to deal E
with the said Apartment in any manner whatsoever, in its sole and
absolute discretion and in the event that the Allottee has taken
possession of the said Apartment and everything whatsoever
contained therein and in such event, the Allottee and/or any other
person/occupant of the said Apartment shall immediately vacate
the said Apartment and otherwise be liable to immediate ejectment F
as an unlawful occupant/trespasser. This is without prejudice to
any other rights available to the Company against the Allottee.”
(emphasis supplied)
9. On 27.12.2017, Respondent No.1 filed a Consumer Complaint G
being Consumer Case No.3823 of 2017 before the National Commission,
wherein it was inter alia prayed that the Developer be directed to refund
the amount of Rs.1,44,72,364/- paid by the Apartment Buyer alongwith
interest @ 20% per annum compounded quarterly till realization, and
compensation towards damages on account of harassment, mental agony
and litigation charges. H
20 SUPREME COURT REPORTS [2021] 2 S.C.R.

A The Apartment Buyer inter alia submitted that the Developer
had invited applications from the public for booking flats in the housing
complex “The Corridors”, by misrepresenting that all necessary
approvals/pre-clearances with respect to the and constructions had
already been obtained from the office of the Director, Town and Country
Planning, Haryana, and other civil authorities. The Developer had
B
misrepresented at the time of booking that the project would have a 90-
meters motorable access road approaching the project from Junction
63A to 67A which was shown in the Apartment Buyer’s Agreement in
the layout plan. However, there was no access road of 90-meters to the
project, and/or 24-meters in the revised plans. The Apartment
C Buyerswere induced to book apartments on false representations made
by the Developer that construction of the project would be completed
the project within 42 months from the collection of the initial booking
amount.
As per Clause 13.3 of the Agreement, possession was to be handed
D over within a period of 42 months from the date of approval of the
Building Plans, with a GracePeriod of 180 days. Despite the aforesaid
terms, the Developer had not offered possession to the Apartment Buyers
till the date of filing the complaint, even though the “Commitment
Period”for handing over possession had expired on 22.01.2017, and also
the Grace Period had lapsed on 22.07.2017.TheApartment Buyers had
E regularly paid instalments as per the demands raised by the Developer.
As on December 2016, a total sum of Rs.1,44,72,364/- had been paid by
the Respondent No. 1 to the Developer. To date, no offer of possession
has been made to Apartment Buyers.
The Apartment Buyerssubmitted that the Building Planswere
F revised in 2017, when the entire layout was changed whichled to the
scrapping of some of the residential towers, so that the same could be
converted to commercial towers in the project. It was further mentioned
that the office of the District Town Planner (Enforcement), Gurgaon,
Haryana, vide a restraint order dated 20.02.2017 issued Memo No.525-
G 526 to the Developer to immediately stop the construction with respect
to Tower-A and Tower-B for causing harassment to the buyers.
10. The Developer filed its reply to the Consumer Complaint
submitting that there was no delay in offering possession of the flats,
since as per Clause 13.3 of the Agreement, possession was to be handed
H over to the allottees within 42 months from the date of approval of the
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 21
& OTHERS [INDU MALHOTRA, J.]

Building Plans, which included fulfilment of the conditions imposed A
thereunder. The Building Plan approval had been granted on 23.07.2013,
which stipulatedcompliance with several pre-conditions, including
obtaining Fire Safety Scheme approval. This approval was granted only
on 27.11.2014. Consequently, the 48 months’ time period for delivery of
possession of the apartment would commence only on 27.11.2014,and
B
expire on 27.11.2018. Consequently, there was no delay in offering
possession of the apartments. Hence, the complaint was premature and
liable to be dismissed.
11. The National Commission in another case titled as “IREO
Grace Realtech Pvt. Ltd. v. Ritu Hasija”being CC No.190 of 2017
and connected matters, decided on 18.09.2018, held that clause 44 of C
that Agreement was wholly unfair and one-sided, which gave only a
limited right to the Apartment Buyers to terminate the agreement, and
seek refund of the amount paid by them.Clause 21.3 of the Flat Buyers
Agreement read in conjunction with the other Clauses of the Agreement
would result in a situation where a flat buyer, despite the failure of the D
builder to offer possession within the time stipulated, would be practically
left remediless for 1½ years from the date of default, with no interest or
compensation payable to him, even though the money was utilized by
the builder. Even the principal amount would be refunded at an uncertain
future point, after the builder had sold the apartment allotted to the
complainant. Such a term was wholly unfair and unjust since the E
Developer had the right to terminate the agreement even if a single
default occurred on the part of the Buyers, and forfeit the earnest money,
and deduct other charges specified in Clause 21.3 of the Buyers
Agreement. Clause 44 postponed the right of the flat buyer to terminate
the agreement and seek compensation even after the Grace Period had F
expired, which was wholly unfair and one-sided. The contract could be
terminated after a delay of 12 months, and would be entitled to only
delay compensation, without interest.
The Commission held that since the Developer had failed to deliver
possession of the allotted flats to the Apartment Buyers, it amounted to G
deficiency in service, and the complainants were entitled to refund of
the amount alongwith appropriate compensation.
The Developer has filed SLP (C) No.40286 of 2019 against this
judgment, which has been tagged to the present batch of appeals.
H
22 SUPREME COURT REPORTS [2021] 2 S.C.R.

A 12. This judgment was followed by the National Commission in
the case of Subodh Pawar v. IREO Grace Realtech Pvt. Ltd. & Others,
decided on 24.09.2018.The SLP filed by the Developer against this
judgment,was dismissed by the Supreme Court vide order dated
28.01.2019, on the statement made by the Counsel for the Developer
that the amount due and payable as per the order of the National
B
Commission, shall be refunded within a period of four weeks withinterest
@ 10% p.a. w.e.f. 27.05.2018 till the date of payment.
A similar order was passed by this Court in IREO v. Surendra
Arora Civil Appeal (Diary) No. 48101 of 2018 on 28.01.2019.
C 13. With respect to the same project, an Apartment Buyer filed a
complaint under Section 31 of the Real Estate (Regulation &
Development) Act, 2016 (“RERA Act”) read with Rule 28 of the
Haryana Real Estate (Regulation & Development) Rules, 2017 before
the Haryana Real Estate Regulatory Authority, Gurugram (“RERA”).
In this case, the Authority vide order dated 12.03.2019 held thatsince the
D environment clearance for the project contained a pre-condition for
obtaining Fire Safety Plan duly approved by the Fire Department before
starting construction, the due date for possession would be required to
be computed from the date of Fire Approval granted on 27.11.2014,
which would come to 27.11.2018. Since the Developer had failed to
E fulfil the obligation under Section 11(4)(a) of this Act, the Developer
was liable under the proviso to Section 18 to pay interest at the prescribed
rate of 10.75% p.a. on the amount deposited by the complainant, upto
the date when the possession was offered. However, keeping in view
the status of the project, and the interest of other allottees, the Authority
was of the view that refund cannot be allowed at this stage. The
F Developer was directed to handover possession of the apartment by
30.06.2020, as per the Registration Certificate for the project.
14. The present batch of consumer complaints was decided by
the National Commission vide judgment and order dated 28.03.2019,
which has been impugned herein. The National Commission has allowed
G the consumer complaints in terms of the earlier order passed in the
Subodh Pawar case (supra). The National Commission recorded the
statement of the counsel for the complainants that in order to avoid any
further litigation, the complainants were restricting their claim for refund
of the principal amount paid to the Developer, alongwith compensation
H @ 10% S.I. p.a. w.e.f. from 10.07.2017, which was awarded by this
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 23
& OTHERS [INDU MALHOTRA, J.]

Court to another allottee in the same project as per Consent Order dated A
28.01.2019 passed in Civil Appeal Diary No.48101 of 2018.
15. We have heard the learned Counsel for the parties. The issues
which have arisen for consideration are:
(i) Determination of the date from which the 42 months period
for handing over possession is to be calculated under Clause B
13.3, whether it would be from the date of issuance of the
Fire NOC as contended by the Developer; or, from the
date of sanction of the Building Plans, as contended by the
Apartment Buyers;
(ii) Whether the terms of the Apartment Buyer’s Agreement C
were one-sided, and the Apartment Buyers would not be
bound by the same;
(iii) Whether the provisions ofthe Real Estate (Regulation and
Development) Act, 2016 must be given primacy over the
Consumer Protection Act, 1986; D
(iv) Whether on account of the inordinate delay in handing over
possession, the Apartment Buyers were entitled to terminate
the agreement, and claim refund of the amounts deposited
with interest.
E
16. The counsel for the Appellant – Developer inter alia submitted
that :
(a) On the first issue, it was submitted that the period of 42
months for handing over possession would commence only
after the conditions mentioned in the Building Plans were
F
fulfilled. The ApartmentBuyer’sAgreement in Clause 13.3
provides that the 42 months period would commence from
“the date of approval of the Buildings plans and/or fulfilment
of the pre-conditions imposed thereunder”.
Clause 17(iv) of the Building Plans duly sanctioned on 23.07.2013
issued by the Directorate of Town and Country Planning, stipulated G
that:-
“17(iv). That the Coloniser shall obtain the clearance/NOC as
per the provisions of the Notification No.SO 1533(E) dated
14.09.2006 issued by the Ministry of Environment & Forests,
H
24 SUPREME COURT REPORTS [2021] 2 S.C.R.

A Government of India before starting the construction/execution
of development works at site.”
(emphasis supplied)
This stipulation has been affirmed by the RERA, a specialised
fact-finding authority in respect of real estate projects, while interpreting
B the starting point of the 42 months period from the date of fire safety
approval.Since the fire safety approval was obtained on 27.11.2014, the
period of 42 months would commence from this date.
The due date for handing over possession of apartments must be
taken to be 27.11.2018 i.e. 42 months from the date of obtaining the Fire
C Safety NOC on 27.11.2014, and a Grace Period of 6 months. In this
view of the matter, the complaint filed before the National Commission
was premature and liable to rejected.
(b) The Apartment Buyers were bound by the terms of the
Apartment Buyer’s Agreement, which clearly states that
D the “Commitment Period” would start only after fulfilment
of the pre-conditions under the Building Plan, and must be
given effect to by any adjudicatory body.
(c) Under Sections 15(2) and (3) of the Haryana Fire Service
Act, 2009, it is the duty of the Authority to grant a provisional
E NOC within a period of 60 days from the date of submission
of the application. The delay/failure of the Authority to grant
a provisional NOC cannot be attributed to the Developer.
(d) The Apartment Buyers was not required to pay the entire
consideration amount at the commencement of the
F agreement, in a lump sum amount, since the consideration
was linked to the construction plan, and was payable in
instalments at various stages of the construction.
The Developer had not taken any instalment prior to
27.11.2014, when the Fire Safety NOC was granted. The
G first instalment was taken on 27.01.2015, when a demand
for casting the lower roof slab was made from the allottees.
All substantial payments of the project were based on
milestones linked to construction.
(e) It was submitted that in large development projects, where
H multiple towers are being constructed, delays are inevitable.
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 25
& OTHERS [INDU MALHOTRA, J.]

The Agreement contemplated a reasonable Grace Period A
of 180 days, which is a standard clause in the construction
industry. The Apartment Buyer is not entitled to seek refund
unless the Extended Delay Period is over. In any event, the
Apartment Buyer is being paid Delay Compensation for
the period of delay which has occurred during the course
B
of construction.
(f) The finding recorded by the National Commission that the
clauses of the Apartment Buyer’s Agreement were one-
sided and unfair was illegal and without jurisdiction, under
the Consumer Protection Act, 1986. It was only under the
Consumer Protection Act, 2019, which came into effect C
from 20.07.2020, that the State Consumer Forum and the
National Commission were conferred with the power to
declare contractual terms that were as unfair to consumers
as null and void. Such power did not exist under the 1986
Act. D
(g) It was further submitted that the National Commission was
not justified in passing the impugned order by directing a
full refund of the principal amount with interest @10% S.I.
p.a. as compensation from 10.07.2017 till the refund was
made within four weeks, failing which, interest would be E
payable from the date of each deposit to the Developer, till
the entire amount was refunded.
(h) It was submitted that the Respondents in Civil Appeals
No.7615, 7975, 8454, 8480, 8482, 8785-8794, 9139, 9216
and 9638 of 2019; and the Appellant in Civil Appeal No.3064 F
of 2020, are defaulters since they had paid only between
30 to 40% of the total consideration. These buyers had
breached their obligation to make payments as per the
construction linked payment plan. Despite this, the
Developer had made an alternate offer of similar units in
the completed towers in Phase 1 of the project where the G
Occupation Certificate had been granted, before the expiry
of the Extended Delay Period.
(i) It was contended that the decision of the RERA must be
given primacy over the National Commission. The impugned
H
26 SUPREME COURT REPORTS [2021] 2 S.C.R.

A judgment passed by the National Commission was in direct
conflict with the judgment passed by the RERA, Haryana
since the National Commission had assumed the due date
for offer of possession as 23.01.2017.The RERA had
correctly held that the due date for delivery of possession
of apartments under the Agreement was 27.11.2018. RERA
B
had directed the Developer to hand over possession by
30.06.2020, as mentioned in the Registration Certificate filed
before the RERA. In view of the conflicting views taken
by the two Fora which exercise original jurisdiction, it is the
order of RERA which ought to be upheld. Particularly, since
C RERA is a specialized fact-finding authority with respect
toreal estate projects, it is the special law which must prevail
over the general law. RERA has been established under
the Real Estate (Regulation & Development) Act, 2016
(“RERA Act”), for regulation and promotion of the real
estate sector.
D
(j) It was submitted that by 21.07.2017, the construction of
Phase I of the project had been completed, which comprised
of Towers A6 – A10, B1 – B4, and C3 – C7, for which the
Occupation Certificate was issued on 31.05.2019, and an
offer of possession was made to the apartment buyers.
E
With respect to the remaining Towers in Cluster-A
comprising of buildings A1 to A5; Cluster-B comprising of
buildings B5 to B8; and, Cluster-C comprising of buildings
C8 to C11, the application for grant of part Occupation
Certificate was submitted on 10.09.2019, which is pending
F approval.
The Developer made an alternate offer to the apartment
buyers whose allotments were in Phase-II of the project,
where the Occupancy Certificate has yet to be obtained, to
transfer their allotment to a ready to move-in apartment in
G Phase-I of the project,wherethe Occupation Certificate
hadbeen issued.
The construction and development of “The Corridors” group
housing project has now been completed, with Occupation
Certificate having been issued with respect to 700
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 27
& OTHERS [INDU MALHOTRA, J.]

apartments, out of a total of 1356 apartments in Towers A6 A
to A10, B1 to B4, and C3 to C7.
(k) The Consent Order passed in IREO Grace Realtech Pvt.
Ltd. v. Surendra Arora could not be relied upon to grant
relief in this batch of cases, since it was a Consent Order
passed by the Court, and couldnot be treated as a precedent. B
17. In response, the Apartment Buyers have inter alia submitted
as under :-
(a) The building plans were approved on 23.07.2013, and the
Developer wasrequired to hand over possession of the
apartments within a period of 42 months from the date of C
approval, which expired on 22.01.2017. If the Grace Period
of 6 months under Clause 13.3 was added, the Developer
was required to give possession by 22.07.2017. The
Developer received the Occupation Certificate for certain
Towers of the Project on 31.05.2019. Possession was D
offered to the Apartment Buyers in Phase I of the project
in 2019, after a delay of 1½ years.
Assuming that the date for possession would begin from
the date of issuance of the Fire NOC i.e. 27.11.2014, the
Developer was required to offer possession by 27.11.2018. E
The Developer offered possession in Phase I of the Project
to certain Apartment Buyers only after it received the
Occupation Certificate in 2019.
With respect to the majority of the apartment buyers before
this Court, their allotments were in Towers which were in F
Phase II of the project, where O.C. is yet to be obtained
even as on date. Consequently, there has been a delay of
over 3 ½ years.
(b) The grant of Fire NOC was not apre-condition for
commencement of construction work. In fact, the
G
Developer had started the construction before the grant of
Fire NOC. Therefore, it could not becontended that the
delay in issuance of the Fire Safety clearance had impeded
the construction of the units allotted to the respondents.

H
28 SUPREME COURT REPORTS [2021] 2 S.C.R.

A (c) The Developer had sought payment of the first three
instalments prior to receiving the Fire NOC.The third
instalment was paid on 18.03.2014, before the grant of Fire
NOC.
(d) It was further submitted that neither the Building Plan
B Approval nor Section 15 of the Haryana Safety Act, 2009
places any restriction on the commencement of
construction, which wouldbe evident from the fact that the
Developer had started theconstruction before the grant of
the Fire NOC.
C (e) The sanctioned Building Plans stipulated thatthe NOC for
Fire Safety (Provisional) was required to be obtained within
a period of 90 days from the date of approval of the Building
Plans, which expired on 21.10.2013. The Developer applied
for the Provisional Fire Approval on 24.10.2013 after the
expiry of the mandatory 90 days’ period got over. The
D application filed was deficient and casual and did not provide
the requisite details. The appellant submitted the corrected
sets of drawings as per the NBC-2005 Fire Scheme only
on 13.10.2014, which reflected the laxity of the Developer
in obtaining the Fire NOC.
E The approval of the Fire Safety Scheme took more than 16
months from the date of the Building Plan approval i.e. from
23.07.2013 to 27.11.2014. The Builder failed to give any
explanation for the inordinate delay in obtaining the Fire
NOC.
F (f) The Respondents placed reliance on the order passed in
the case of IREO Victory Valley Pvt. Ltd. v. Shamshul
Hoda Khan,1 wherein the National Commission held that
the Fire NOC was not a pre-condition for commencement
of the construction work. The Appeal of the Developer was
G rejected by this Court vide order dated 03.05.2019, and the
Review Petition was dismissed on 15.10.2019.
(g) The Agreement contained one-sided clauses, which were
not final and binding on the apartment buyers, and would
constitute an unfair trade practice. Reliance was placed on
1
H Civil Appeal No.4801 of 2019 decided on 03.05.2019.
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 29
& OTHERS [INDU MALHOTRA, J.]

the judgment of this Court in Pioneer Urban Land and A
Infrastructure Ltd v. Govindan Raghavan.2
(h) The respondents submitted that they had availed of loans
to pay the instalments, on which interest @ 7.90% was
being paid. On account of the inordinate delay which had
occurred, they were unable to pay further instalments, and B
insisted on refund of the amounts paid.
DISCUSSION & ANALYSIS
18. Determination of the date for handing over Possession
The first issue which has been raised by the Appellant-Developeras C
also the Apartment Buyers, is the relevant date from which the 42 months’
period is to be calculated for handing over possession. Clause 13.3 of
the Agreementstates that the Developer proposed to offer possession of
the apartment to the allottee within a period of 42 months from the date
of approval of the Building Plans and/or fulfilment of the pre-conditions
imposed thereunder, referred to as the “Commitment Period”. The D
Company would be entitled to a further “Grace Period”of 180 days’
after the expiry of the Commitment Period for unforeseen delays beyond
the reasonable control of the Company.This would work out to 42+6
months i.e. 48 months.
18.1 The point of controversy is whether the 42 months’ period is E
to be calculated from the date when the Fire NOC was granted by the
concerned authority, as contended by the Developer; or, the date on
which the Building Plans were approved, as contended by the Apartment
Buyers.
18.2 Section 15 of the Haryana Fire Safety Act, 2009 makes it F
mandatory for a Builder/Developer to obtain the approval of the Fire
Fighting Scheme conforming to the National Building Code of India, and
obtain a No Objection Certificate before the commencement of
construction. Section 15 is extracted hereinbelow for ready reference:
“15. Approval of Fire Fighting Scheme and issue of no G
objection certificate.—(1) Any person proposing to construct a
building to be used for any purpose other than residential purpose
or a building proposed to be used for residential purpose of more
than 15 meters in height, such as group housing, multi-storeyed
2
(2019) 5 SCC 725. H
30 SUPREME COURT REPORTS [2021] 2 S.C.R.

A flats, walk-up apartments, etc. before the commencement of
the construction, shall apply for the approval of Fire Fighting
Scheme conforming to National Building Code of India, the
Disaster Management Act, 2005 (53 of 2005), the Factories Act,
1948 (Act 63 of 1948) and the Punjab Factory Rules, 1952, and
issue of no objection certificate on such form, alongwith such
B
field as may be prescribed.
(2) The Director or any officer duly authorised by him in this
behalf, may take cognizance of any application and issue such
instructions and orders regarding the building plan and for
construction by issuing a provisional no objection certificate before
C the construction is taken up.
Explanation. –In case any person proposes to increase the number
of floors on any building already constructed in such a manner
that it shall qualify for being termed as a high rise building, shall
before construction, apply for no objection certificate.
D
(3) The provisional no objection certificate shall be issued within
60 days of submission of application along with such fee, as may
be prescribed, giving all the details of the construction being
undertaken as well as the rescue, fire prevention and fire safety
details required to be incorporated during the period of
E construction.
(4) During the process of construction, the inspection of the
construction may be conducted and the advice about any additions,
deviations, modifications that are required to be carried out from
the precaution and prevention point of view, may be tendered.
F Such advice shall be made on a prescribed proforma and handed
over to the party concerned.
(5) On completion of the construction of the high-rise building, a
no objection certificate shall be obtained. In the absence of such
certificate, the owner shall not occupy, lease or sell the building.”
G
(emphasis supplied)
18.3 Clause 13.3 of the Apartment Buyer’s Agreement provides
that the 42 months’ period has to be calculated from the date of approval
of the Building Plans and/or fulfilment of the pre-conditions imposed
thereunder.
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 31
& OTHERS [INDU MALHOTRA, J.]

18.4 The Building Plans sanctioned by the Directorate of Town A
and Country Planning, Haryana contained the Terms & Conditions of
Approval, which included a provision for Fire Safety contained in Clause
(3). The Developer was directed to submit Fire Safety Plans indicating
the complete Fire Protection Arrangements, and means of escape/access
for the proposed building with suitable legend and standard signs.
B
Clause 3 of the Building Plans contained a provision for Fire Safety,
which reads :
“3. FIRE SAFETY
On receipt of the above request the Commissioner, Municipal
Corporation, Gurgaon after satisfying himself that the entire fire C
protection measures proposed for the above buildings are as per
NBC and other Fire Safety Bye Laws, and would issue a NOC
from Fire safety and means of escape/access point of view. This
clearance/NOC from Fire Authority shall be submitted in this office
along with a set of plans duty signed by the Commissioner, D
Municipal Corporation, Gurgaon within a period of 90 days from
the date of issuance of sanction of building plans. Further, it is
also made clear that no permission for occupancy of the building
shall be issued by Commissioner, Municipal Corporation, Gurgaon
unless he is satisfied that adequate fire fighting measures have
been installed by you and suitable external fire fighting E
infrastructure has been created at Gurgaon, by Municipal
Corporation, Gurgaon. A clearance to this effect shall be obtained
from the Commissioner, Municipal Corporation, Gurgaon before
grant of occupation certificate by the Director General.”
18.5 On receipt of the Fire Plans, the Commissioner, Municipal F
Corporation, Gurgaon, after satisfying himself with the entire fire
protection measures as in conformity with the National Building Code,
2005 (“NBC”) and the Fire Safety Bye-Laws, would issue an NOC for
Fire Safety.This NOC/Clearance was required to be submitted before
the Municipal Corporation, within a period of 90 days’from the issuance G
of the sanctioned Building Plans.
18.6 Clause 17(iv) of the sanctioned Plan stipulated that the
Developer shall obtain an NOC from the Ministry of Environment &
Forests, before starting the construction/execution of development works
at site.
H
32 SUPREME COURT REPORTS [2021] 2 S.C.R.

A “17 (iv) That the Developer shall obtain the clearance/NOC as
per the provisions of the Notification No. S.O. 1533(E) dated
14.09.2006 issued by Ministry of Environment and Forest,
Government of India before starting the construction/execution
of development works at site.”
B (emphasis supplied)
18.7 The Environmental Clearance granted by the Ministry of
Environment & Forest Government of Haryana on 12.12.2013 required
the Developer to submit a copy of the Fire Safety Plan approved by the
Fire Department, before commencing construction of the project.
C General Condition (vi) under Part B of the Environmental
Clearance stipulated that the Developer shall obtain all other statutory
clearances, including the approval from the Fire Department, prior to
construction of the project.
Clause (vi) provides that :
D
“(vi) All other statutory clearance such as the approvals for storage
of diesel from Chief Controller of Explosive, Fire Department,
Civil Aviation Department, Forest Conservation Act, 1980 and
Wildlife (Protection) Act, 1972, Forest Act, 1927, PLPA 1900 etc.
shall be obtained as applicable by project proponents from the
E respective authorities prior to construction of the project.”
(emphasis supplied)
18.8 We are of the view that it was a mandatory requirement
under the Haryana Fire Safety Act, 2009 to obtain the Fire NOC before
commencement of construction activity. This requirement is stipulated
F
in the sanctioned Building Plans, as also in the Environment Clearance.
18.9 The 42 months’ period in Clause 13.3. of the Agreement for
handing over possession of the apartments would be required to
becomputed from the date on which Fire NOC was issued, and not from
the date of the Building Plans being sanctioned.
G
18.10 In the present case, the Developer obtained approval of the
Building Plans from the Directorate, Town and Country Planning, Haryana,
on 23.07.2013.The Developer applied for issuance of Fire NOC for the
Fire Fighting Scheme of the Group Housing Colony within the 90 days
period before the Director, Fire Service, Panchkula.
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 33
& OTHERS [INDU MALHOTRA, J.]

The Commissioner vide letter dated 30.12.2013 raised 16 objections A
with respect to the proposed Fire Fighting Plan.
The Developer vide letter dated 22.01.2014 responded to the
objections, submitting that the objections had been cured, and requested
that the approval of the Fire Fighting Scheme be granted on a priority
basis. B
The Fire Department informed the Developer vide letter dated
28.03.2014 that the deficiencies in the application for Fire NOC had not
been cured. The Developer was granted a further period of 15 days’ to
cure the defects, failing which, its application would be deemed to be
rejected. C
The Developer submitted revised drawings as per the NBC Fire
Scheme alongwith its letter dated 18.08.2014. This letter was received
in the office of the Municipal Corporation on 13.10.2014, as per
endorsement on the said letter.
18.11 On 27.11.2014, the Director, Haryana Fire Service granted D
approval to the Fire Fighting Scheme subject to the conditions mentioned
therein. The computation of the period for handing over possession would
be computed from this date. The Commitment Period of 42 months plus
the Grace Period of 6 months from 27.11.2014, would be 27.11.2018, as
being the relevant date for offer of possession. E
The aforesaid chronology for obtaining Fire NOC would indicate
a delay of approximately 7 months in obtaining the Fire NOC by the
Developer.
19. Whether the terms of the Apartment Buyer’s Agreement
are one-sided? F
The second issue which has been raised by the Apartment Buyersis
that the Agreement in this case, contains wholly one-sided clauses, and
would not be bound by its terms.
19.1 We have carefully perused the terms of the Agreement, and
an analysis of the same reveals that : G

a) Under the construction-linked plan, Clause 6 provided that
the apartment buyers would be required to deposit 20% of
the sale consideration within 45 days of booking of the
apartment.
H
34 SUPREME COURT REPORTS [2021] 2 S.C.R.

A b) Clause 7.4 of the Agreement provides that if there is a delay
in payment of an instalment, the apartment buyer would be
required to pay Interest on every delayed payment of such
instalment @ 20% S.I.p.a.
c) Clause 13.2 of the Agreement provides that if the allottee
B fails, ignores or neglects to take possession of the said
Apartment in accordance with the Notice of Possession,
the allottee shall be liable to pay “Holding Charges”on the
super area @ Rs.7.5 per sq. ft. per month.
d) In contrast, Clause 13.3 of the Agreement provides that if
C the Company fails to offer possession by the end of the
Grace Period i.e. 42+6 months, it would be liable to pay
Delay Compensation@ Rs.7.5 per sq. ft. of the super area
for every month of delay.
Delay compensation at Rs. 7.5 per sq. ft. works out to
D approximately 0.9% to 1 % Interest per annum.The price
per sq. ft of an apartment under the Apartment Buyer’s
Agreement was Rs. 10,350/- per sq. ft. The compensation
payable for delay was Rs. 7.5 per sq. ft. The compensation
payable by the Developer for delay in offering possession
works out to :
E
7.5___ x 100 x 12= 0.9 % to 1% p.a.
10,350
e) Clause 13.5 provides that the allottee may opt for
termination, only after 42 months from the date of issuance
F of Fire NOC + 6 months’ Grace Period, plusa further period
of 12 months.
The Delay Compensation would be payable to the allottee
only if the termination was “validly opted”. The
compensation was limited to a fixed period of 12 months
G only, and that no other claim whatsoever, whether monetary
or otherwise, was payable by the Developer.
f) Clause 13.8 of the Agreement provides that the allottee
shall be deemed to have waived all its claims in respect of
the area, specifications, quality, construction, any other
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 35
& OTHERS [INDU MALHOTRA, J.]

provision in the apartment against the Developer upon taking A
possession of the apartment.
g) Clause 21 provides for termination of the Agreement and
forfeiture of earnest money by the Developer, if the allottee
neglects or fails to make timely payments as stipulated in
the Agreement, or fails to exercise the options offered by B
the Developer.
Clause 21.3 provides that upon such termination, the Appellant
Company shall be under no obligation, except to refund the amounts
already paid by the allottee, without any interest, and after forfeiting and
deducting the earnest money, interest on delayed payments, brokerage / C
commission / charges, service tax and other amounts due and payable to
it. The principal amount after the aforesaid deductions are made, would
be refunded at an uncertain future date i.e. after the Developer had sold
the apartment allotted to the complainant.
In contrast, the allottee is given a very limited right to cancel the D
Agreement solely in the event of the clear and unambiguous failure of
the warranties of the Company, which leads to frustration of the
Agreement on that account. In such case, the allottee will be entitled to
a refund of the instalments actually paid, along with interest @ 8% p.a.
within a period of 90 days from the date of determination to this effect.
No other claim, whatsoever, monetary or otherwiseshall lie against the E
Company.
19.2 The aforesaid clauses reflect the wholly one-sided terms of
the Apartment Buyer’s Agreement, which are entirelyloaded in favour
of the Developer, and against the allottee at every step.
F
The terms of the Apartment Buyer’s Agreement are oppressive
and wholly one-sided, and would constitute an unfair trade practice under
the Consumer Protection Act, 1986.
19.3 Section 2(1)(c) of the Consumer Protection Act, 1986 defines
a ‘complaint’ as :
G
“2.(1)(c) “complaint” means any allegation in writing made by a
complainant that –
(i) any unfair trade practice or a restrictive trade practice has
been adopted by any trader or service provider;
H
36 SUPREME COURT REPORTS [2021] 2 S.C.R.

A (ii) the goods bought by him or agreed to be bought by him suffer
from one or more defects.
….”
(emphasis supplied)
B Section 2(1)(g) of the Act defines the expression “deficiency” to
include any fault, shortcoming or inadequacy in the quality, nature and
manner of performance which is required to be maintained under law, or
in pursuance of a contract, or in relation to a ‘service’.
The term “service” has been defined by S. 2(1)(o) to include a
C service of any description which is made available to potential users.
S. 2(1)(o) was amended by Act 50 of 1993 w.e.f. from 18.06.1993
to include “housing construction” within the purview of “service”. The
amended Section 2(1)(o) reads as follows :-
“2(1)(o) “service” means service of any description which is made
D avail-able to potential users and includes, but not limited to, the
provision of facilities in connection with banking, financing
insurance, transport, processing, supply of electrical or other energy,
board or lodging or both, housing construction, entertainment,
amusement or the purveying of news or other information, but
does not include the rendering of any service free of charge or
E
under a contract of personal service;”
(emphasis supplied)
In Lucknow Development Authority v. M.K. Gupta,3 this Court
discussed the legislative intent of including “housing construction” within
F the ambit of ‘service’ as :
“2. …. A scrutiny of various definitions such as ‘consumer’,
‘service’, ‘trader’, ‘unfair trade practice’ indicates that legislature
has attempted to widen the reach of the Act. Each of these
definitions are in two parts, one, explanatory and the other
G explanatory. The explanatory or the main part itself uses
expressions of wide amplitude indicating clearly its wide sweep,
then its ambit is widened to such things which otherwise would
have been beyond its natural import. Manner of construing an
inclusive clause and its widening effect has been explained in
3
H (1994) 1 SCC 243.
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 37
& OTHERS [INDU MALHOTRA, J.]

Dilworth v. Commissioner of Stamps [1899 AC 99 : 15 TLR 61] A
as under:
“‘include’ is very generally used in interpretation clauses in
order to enlarge the meaning of the words or phrases occurring
in the body of the statute, and when it is so used these words
or phrases must be construed as comprehending, not only such B
things as they signify according to their natural, import, but
also those things which the definition clause declares that they
shall include.”
It has been approved by this Court in Regional Director,
Employees’ State Insurance Corpn. v. High Land Coffee Works C
of P.F.X. Saldanha and Sons [(1991) 3 SCC 617] ; CIT v. Taj
Mahal Hotel, Secunderabad [(1971) 3 SCC 550] and State of
Bombay v. Hospital Mazdoor Sabha [AIR 1960 SC 610 : (1960) 2
SCR 866 : (1960) 1 LLJ 251] . The provisions of the Act thus
have to be construed in favour of the consumer to achieve the
purpose of enactment as it is a social benefit oriented legislation. D
The primary duty of the court while construing the provisions of
such an Act is to adopt a constructive approach subject to that it
should not do violence to the language of the provisions and is not
contrary to the attempted objective of the enactment.
6….. As pointed out earlier the entire purpose of widening the E
definition is to include in it not only day to day buying and selling
activity undertaken by a common man but even such activities
which are otherwise not commercial in nature yet they partake of
a character in which some benefit is conferred on the consumer.
Construction of a house or flat is for the benefit of person for F
whom it is constructed. He may do it himself or hire services of a
builder or contractor. The latter being for consideration is service
as defined in the Act. Similarly when a statutory authority develops
land or allots a site or constructs a house for the benefit of common
man it is as much service as by a builder or contractor. The one is
contractual service and other statutory service. If the service is G
defective or it is not what was represented then it would be unfair
trade practice as defined in the Act. Any defect in construction
activity would be denial of comfort and service to a consumer.
When possession of property is not delivered within stipulated
period the delay so caused is denial of service. Such disputes or H
38 SUPREME COURT REPORTS [2021] 2 S.C.R.

A claims are not in respect of immoveable property as argued but
deficiency in rendering of service of particular standard, quality
or grade. Such deficiencies or omissions are defined in sub-clause
(ii) of clause (r) of Section 2 as unfair trade practice.
….
B A person who applies for allotment of a building site or for a flat
constructed by the development authority or enters into an
agreement with a builder or a contractor is a potential user and
nature of transaction is covered in the expression ‘service of any
description’. It further indicates that the definition is not exhaustive.
C The inclusive clause succeeded in widening its scope but not
exhausting the services which could be covered in earlier part. So
any service except when it is free of charge or under a constraint
of personal service is included in it. Since housing activity is a
service it was covered in the clause as it stood before 1993.”

D 19.4 Clause 2(1)(r) of the Consumer Protection Act, 1986 defines
“unfair trade practice” as follows :-
“2(1)(r) “unfair trade practice” means a trade practice which, for
the purpose of promoting the sale, use or supply of any goods or
for the provision of any service, adopts any unfair method or unfair
E or deceptive practice including any of the following practices,
namely:-
… …. … ’’
(emphasis supplied)
The said definition is an inclusive one, as held by this Court in
F
Pioneer Urban Land & Infrastructure Ltd. v.Govindan Raghavan,4
whereinthis Court speaking through one of us (J. Indu Malhotra) held :-
“6.1 …. The inordinate delay in handing over possession of the
flat clearly amounts to deficiency of service. In Fortune
Infrastructure v. Trevor D’Lima [Fortune Infrastructure v. Trevor
G D’Lima, (2018) 5 SCC 442 : (2018) 3 SCC (Civ) 1] , this Court
held that a person cannot be made to wait indefinitely for possession
of the flat allotted to him, and is entitled to seek refund of the
amount paid by him, along with compensation.

4
H (2019) 5 SCC 725.
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 39
& OTHERS [INDU MALHOTRA, J.]

6.2. The respondent flat purchaser has made out a clear case of A
deficiency of service on the part of the appellant builder. The
respondent flat purchaser was justified in terminating the apartment
buyer’s agreement by filing the consumer complaint, and cannot
be compelled to accept the possession whenever it is offered by
the builder. The respondent purchaser was legally entitled to seek
B
refund of the money deposited by him along with appropriate
compensation.
6.3 The National Commission in the impugned order dated 23-
10-2018 [Geetu Gidwani Verma v. Pioneer Urban Land and
Infrastructure Ltd., 2018 SCC OnLine NCDRC 1164] held that
the clauses relied upon by the builder were wholly one-sided, unfair C
and unreasonable, and could not be relied upon. The Law
Commission of India in its 199th Report, addressed the issue of
“Unfair (Procedural & Substantive) Terms in Contract”. The Law
Commission inter alia recommended that a legislation be enacted
to counter such unfair terms in contracts. In the draft legislation D
provided in the Report, it was stated that:
“… a contract or a term thereof is substantively unfair if such
contract or the term thereof is in itself harsh, oppressive or
unconscionable to one of the parties.”
6.8. A term of a contract will not be final and binding if it is shown E
that the flat purchasers had no option but to sign on the dotted
line, on a contract framed by the builder. The contractual terms of
the agreement dated 8-5-2012 are ex facie one-sided, unfair and
unreasonable. The incorporation of such one-sided clauses in an
agreement constitutes an unfair trade practice as per Section F
2(1)(r) of the Consumer Protection Act, 1986 since it adopts unfair
methods or practices for the purpose of selling the flats by the
builder.”
19.5 In a similar case, this Court in Wg. Cdr. Arifur Rahman
Khan & Others v. DLF Southern Homes Pvt. Ltd.,5 affirmed the view G
taken in Pioneer (supra), and held that the terms of the agreement
authored by the Developer does not maintain a level platform between
the Developer and the flat purchaser. The stringent terms imposed on
the flat purchaser are not in consonance with the obligation of the
5
2020 SCC Online SC 667. H
40 SUPREME COURT REPORTS [2021] 2 S.C.R.

A Developer to meet the timelines for construction and handing over
possession, and do not reflect an even bargain. The failure of the
Developer to comply with the contractual obligation to provide the flat
within the contractually stipulated period, would amount to a deficiency
of service. Given the one-sided nature of the Apartment Buyer’s
Agreement, the consumer fora had the jurisdiction to award just and
B
reasonable compensation as an incident of the power to direct removal
of deficiency in service.
19.6 Section 14 of the 1986 Act empowers the Consumer Fora to
redress the deficiency of service by issuing directions to the Builder, and
compensate the consumer for the loss or injury caused by the opposite
C party, or discontinue the unfair or restrictive trade practices.
19.7 We are of the view that the incorporation of such one-sided
and unreasonable clauses in the Apartment Buyer’s Agreement
constitutes an unfair trade practice under Section 2(1)(r) of the Consumer
Protection Act. Even under the 1986 Act, the powers of the consumer
D fora were in no manner constrained to declare a contractual term as
unfair or one-sided as an incident of the power to discontinue unfair or
restrictive trade practices. An “unfair contract” has been defined under
the 2019 Act, and powers have been conferred on the State Consumer
Fora and the National Commission to declare contractual terms which
E are unfair, as null and void. This is a statutory recognition of a power
which was implicit under the 1986 Act.
In view of the above, we hold that the Developer cannot compel
the apartment buyers to be bound by the one-sided contractual terms
contained in the Apartment Buyer’s Agreement.
F 20. Whether primacy to be given to RERAover the
Consumer Protection Act
20.1 The Consumer Protection Act, 1986 was enacted to protect
the interests of consumers, and provide a remedy for better protection
of the interests of consumers, including the right to seek redressal against
G unfair trade practices or unscrupulous exploitation.
The Statement of Objects and Reasons of the Consumer Protection
Bill, 1986 reads as :
“STATEMENT OF OBJECTS AND REASONS
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 41
& OTHERS [INDU MALHOTRA, J.]

The Consumer Protection Bill, 1986 seeks to provide for better A
protection of the interests of consumers and for the purpose, to
make provision for the establishment of Consumer councils and
other authorities for the settlement of consumer disputes and for
matter connected therewith.
2. It seeks, inter alia, to promote and protect the rights of B
consumers such as:—
(a) the right to be protected against marketing of goods which are
hazardous to life and property;
(b) the right to be informed about the quality, quantity, potency,
purity, standard and price of goods to protect the consumer against C
unfair trade practices;
(c) the right to be assured, wherever possible, access to an
authority of goods at competitive prices;
(d) the right to be heard and to be assured that consumers interests D
will receive due consideration at appropriate forums;
(e) the right to seek redressal against unfair trade practices or
unscrupulous exploitation of consumers; and
(f) right to consumer education.
3. These objects are sought to be promoted and protected by the E
Consumer Protection Council to be established at the Central and
State level.
4. To provide speedy and simple redressal to consumer disputes,
a quasi-judicial machinery is sought to be set up at the district,
State and Central levels. These quasi-judicial bodies will observe F
the principles of natural justice and have been empowered to give
relief of a specific nature and to award, wherever appropriate,
compensation to consumers. Penalties for non-compliance of the
orders given by the quasi-judicial bodies have also been provided.”
(emphasis supplied) G

20.2 Section 3 of the Consumer Act provides that the remedies
underthe Act are in addition to, and not in derogation of any other law
applicable. Section 3 reads as :

H
42 SUPREME COURT REPORTS [2021] 2 S.C.R.

A “3. Act not in derogation of any other law.—The provisions of
this Act shall be in addition to and not in derogation of the provisions
of any other law for the time being in force.”
In Secretary, Thirumurugan Cooperative Agricultural Credit
Society v. M. Lalitha (dead) through LRs and others,6 this Courtheld
B that:
“11. From the Statement of Objects and Reasons and the scheme
of the 1986 Act, it is apparent that the main objective of the Act is
to provide for better protection of the interest of the consumer
and for that purpose to provide for better redressal, mechanism
C through which cheaper, easier, expeditious and effective redressal
is made available to consumers. To serve the purpose of the Act,
various quasi-judicial forums are set up at the district, State and
national level with wide range of powers vested in them. These
quasi-judicial forums, observing the principles of natural justice,
are empowered to give relief of a specific nature and to award,
D wherever appropriate, compensation to the consumers and to
impose penalties for non-compliance with their orders.
12. As per Section 3 of the Act, as already stated above, the
provisions of the Act shall be in addition to and not in derogation
of any other provisions of any other law for the time being in
E force. Having due regard to the scheme of the Act and purpose
sought to be achieved to protect the interest of the consumers
better, the provisions are to be interpreted broadly, positively and
purposefully in the context of the present case to give meaning to
additional/extended jurisdiction, particularly when Section 3 seeks
F to provide remedy under 19 the Act in addition to other remedies
provided under other Acts unless there is a clear bar.”
In National Seeds Corporation Limited v. M. Madhusudhan
Reddy,7 the jurisdiction of the District Consumer forum was challenged
on the ground that there was an arbitration clause in the Agreement
G between the parties. It was contended that the provisions of the Seeds
Act, 1966 would prevail over the Consumer Protection Act. Relevant
extracts of the ruling are extracted hereinunder :

6
(2004) 1 SCC 305.
7
(2012) 2 SCC 506.
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 43
& OTHERS [INDU MALHOTRA, J.]

“57. It can thus be said that in the context of farmers/growers A
and other consumers of seeds, the Seeds Act is a special legislation
insofar as the provisions contained therein ensure that those
engaged in agriculture and horticulture get quality seeds and any
person who violates the provisions of the Act and/or the Rules is
brought before the law and punished. However, there is no
B
provision in that Act and the Rules framed thereunder for
compensating the farmers, etc. who may suffer adversely due to
loss of crop or deficient yield on account of defective seeds
supplied by a person authorised to sell the seeds. That apart, there
is nothing in the Seeds Act and the Rules which may give an
indication that the provisions of the Consumer Protection Act are C
not available to the farmers who are otherwise covered by the
wide definition of “consumer” under Section 2(1)(d) of the
Consumer Protection Act. As a matter of fact, any attempt to
exclude the farmers from the ambit of the Consumer Protection
Act by implication will make that Act vulnerable to an attack of
D
unconstitutionality on the ground of discrimination and there is no
reason why the provisions of the Consumer Protection Act should
be so interpreted.
….
62. Since the farmers/growers purchased seeds by paying a price E
to the appellant, they would certainly fall within the ambit of Section
2(1)(d)(i) of the Consumer Protection Act and there is no reason
to deny them the remedies which are available to other consumers
of goods and services.”
…. F
64. According to the learned counsel for the appellant, if the
growers had applied for arbitration then in terms of Section 8 of
the Arbitration and Conciliation Act the dispute arising out of the
arbitration clause had to be 23 referred to an appropriate arbitrator
and the District Consumer Forums were not entitled to entertain G
their complaint. This contention represents an extension of the
main objection of the appellant that the only remedy available to
the farmers and growers who claim to have suffered loss on
account of use of defective seeds sold/supplied by the appellant
was to file complaints with the Seed Inspectors concerned for
taking action under Sections 19 and/or 21 of the Seeds Act. H
44 SUPREME COURT REPORTS [2021] 2 S.C.R.

A 66. The remedy of arbitration is not the only remedy available to
a grower. Rather, it is an optional remedy. He can either seek
reference to an arbitrator or file a complaint under the Consumer
Protection Act. If the grower opts for the remedy of arbitration,
then it may be possible to say that he cannot, subsequently, file
complaint under the Consumer Protection Act. However, if he
B
chooses to file a complaint in the first instance before the
competent Consumer Forum, then he cannot be denied relief by
invoking Section 8 of the Arbitration and Conciliation Act, 1996.
Moreover, the plain language of Section 3 of the Consumer
Protection Act makes it clear that the remedy available in that
C Act is in addition to and not in derogation of the provisions of any
other law for the time being in force.”
Subsequently, the judgments in Thirumurugan Cooperative
Agricultural Society (Supra) and National Seeds were followed in
Virender Jain v. Alaknanda Cooperative Group Housing Society
D Limited and others.8
20.3 Various judgments of this Court have upheld the applicability
of provisions of Consumer Protection Act as an additional remedy, despite
the existence ofremedies under special statutes, including the Arbitration
and Conciliation Act, 1996. In Emaar MGF Land Ltd. v. Aftab Singh,9
E this Court has held that the remedy under the Consumer Protection Act,
1986 is confined to the Complaint filed by a Consumer as defined by the
Act, for defects and deficiency caused by the service provider. The
existence of an arbitration clause was not a ground to restrain the
Consumer Fora from proceeding with the consumer complaint.

F 20.4 We will now consider the provisions of the RERA Act, which
was brought into force on 01.05.2016.
The Statement of Objects and Reasons of the RERA Act, 2016
read as follows :
“THE STATEMENT OF OBJECTS AND REASONS
G
The real estate sector plays a catalytic role in fulfilling the need
and demand for housing and infrastructure in the country. While
this sector has grown significantly in recent years, it has been

8
(2013) 9 SCC 383.
9
H (2019) 12 SCC 751.
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 45
& OTHERS [INDU MALHOTRA, J.]

largely unregulated, with absence of professionalism and A
standardisation and lack of adequate consumer protection. Though
the Consumer Protection Act, 1986 is available as a forum to the
buyers in the real estate market, the recourse is only curative and
is not adequate to address all the concerns of buyers and promoters
in that sector. The lack of standardisation has been a constraint to
B
the healthy and orderly growth of industry. Therefore, the need
for regulating the sector has been emphasised in various forums.
In view of the above, it becomes necessary to have a Central
legislation, namely, the Real Estate (Regulation and Development)
Bill, 2013 in the interests of effective consumer protection,
uniformity and standardisation of business practices and the C
transactions in the real estate sector. The proposed Bill provides
for the establishment of the Real Estate Regulatory Authority (the
Authority) for regulation and promotion of real estate sector and
to ensure sale of plot, apartment or building, as the case may be,
in an efficient and transparent manner and to protect the interest D
of consumers in real estate sector and establish the Real Estate
Appellate Tribunal to hear appeals from the decisions, directions
or orders of the Authority.
(emphasis supplied)
20.5 Section 18 of the RERA Act, 2016 provides the remedy of E
refund with interest and compensation to allottees, when a Developer
fails to complete the construction or give possession as per the Agreement
of Sale. The remedies under Section 18 are “without prejudice to any
other remedy available”.
20.6 Section 71 of the RERA Act empowers the RERA Authority F
to determine compensation payable under Sections 12, 14, 18 and 19 of
the Act. The proviso to Section 71 provides that a consumer has the
right to withdraw its complaint before the consumer fora in respect of
matters covered under Sections 12, 14, 18 and 19 of the Act, and file the
same before the RERA. G
Section 71 reads as :
“71. Power to adjudicate.– (1) For the purpose of adjudging
compensation under sections 12, 14, 18 and section 19, the
Authority shall appoint, in consultation with the appropriate
Government, one or more judicial officer as deemed necessary, H
46 SUPREME COURT REPORTS [2021] 2 S.C.R.

A who is or has been a District Judge to be an adjudicating officer
for holding an inquiry in the prescribed manner, after giving any
person concerned a reasonable opportunity of being heard:
Provided that any person whose complaint in respect of matters
covered under sections 12, 14, 18 and section 19 is pending before
B the Consumer Disputes Redressal Forum or the Consumer
Disputes Redressal Commission or the National Consumer
Redressal Commission, established under section 9 of the
Consumer Protection Act, 1986 (68 of 1986), on or before the
commencement of this Act, he may, with the permission of such
Forum or Commission, as the case may be, withdraw the complaint
C pending before it and file an application before the adjudicating
officer under this Act”.
20.7 Section 79 of the RERA Act bars the jurisdiction only of civil
courts in respect of matters which an authority constituted under the
RERA Act is empowered to adjudicate on.
D
Section 79 reads as :
“79. Bar of jurisdiction: No civil court shall have jurisdiction to
entertain any suit or proceeding in respect of any matter which
the Authority or the adjudicating officer or the Appellate Tribunal
E is empowered by or under this Act to determine and no injunction
shall be granted by any court or other authority in respect of any
action taken or to be taken in pursuance of any power conferred
by or under this Act.”
20.8 Section 88 of the RERA Act is akin to Section 3 of the
F Consumer Protection Act, and provides that the provisions of the RERA
Act shall apply in in addition to and not in derogation of other applicable
laws. Section 88 reads as :
“88. Application of other law not barred: The provisions of
this Act shall be in addition to, and not in derogation of, the provisions
of any other law for the time being in force.”
G
20.9 An allottee may elect or opt for one out of the remedies
provided by law for redressal of its injury or grievance. An election of
remedies arises when two concurrent remedies are available, and the
aggrieved party chooses to exercise one, in which event he loses the
right to simultaneously exercise the other for the same cause of action.
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 47
& OTHERS [INDU MALHOTRA, J.]

20.10 The doctrine of election was discussed in A.P. State A
Financial Corporation v. M/s GAR Re-rolling Corporation,10 in the
following words :
“15. The Doctrine of Election clearly suggests that when two
remedies are available for the same relief, the party to whom the
said remedies are available has the option to elect either of them B
but that doctrine would not apply to cases where the ambit and
scope of the two remedies is essentially different. To hold otherwise
may lead to injustice and inconsistent results. …. Since, the
Corporation must be held entitled and given full protection by the
Court to recover its dues it cannot be bound down to adopt only
one of the two remedies provided under the Act. In our opinion C
the Corporation can initially take recourse to Section 31 of the
Act but withdraw or abandon it at any stage and take recourse to
the provisions of Section 29 of the Act, which section deals with
not only the rights but also provides a self-contained remedy to
the Corporation for recovery of its dues. If the Corporation chooses D
to take recourse to the remedy available under Section 31 of the
Act and pursues the same to the logical conclusion and obtains an
order or decree, it may thereafter execute the order or decree, in
the manner provided by Section 32(7) and (8) of the Act. The
Corporation, however, may withdraw or abandon the proceedings
at that stage and take recourse to the provisions of Section 29 of E
the Act. A ‘decree’ under Section 31 of the Act not being a money
decree or a decree for realisation of the dues of the Corporation,
as held in Gujarat State Financial Corpn. v. Naatson Mfg. Co. P.
Ltd. [(1979) 1 SCC 193, 198 : AIR 1978 SC 1765, 1768] recourse
to it cannot debar the Corporation from taking recourse to the F
provisions of Section 29 of the Act by not persuing the decree or
order under Section 31 of the Act, in which event the order made
under Section 31 of the Act would serve in aid of the relief available
under Section 29 of the Act
16. The doctrine of election, as commonly understood, would, thus, G
not be attracted under the Act in view of the express phraseology
used in Section 31 of the Act, viz., “without prejudice to the
provisions of Section 29 of this Act”. While the Corporation cannot
simultaneously pursue the two remedies, it is under no disability to
10
(1994) 2 SCC 647. H
48 SUPREME COURT REPORTS [2021] 2 S.C.R.

A take recourse to the rights and remedy available to it under Section
29 of the Act even after an order under Section 31 has been
obtained but without executing it and withdrawing from those
proceedings at any stage. The use of the expression “without
prejudice to the provisions of Section 29 of the Act” in Section 31
cannot be read to mean that the Corporation after obtaining a
B
final order under Section 31 of the Act from a court of competent
jurisdiction, is denuded of its rights under Section 29 of the Act.
To hold so would render the above-quoted expression redundant
in Section 31 of the Act and the courts do not lean in favour of
rendering words used by the Legislature in the statutory provisions
C redundant. The Corporation which has the right to make the choice
may make the choice initially whether to proceed under Section
29 of the Act or Section 31 of the Act, but its rights under Section
29 of the Act are not extinguished, if it decides to take recourse to
the provisions of Section 31 of the Act. It can abandon the
proceedings under Section 31 of the Act at any stage, including
D
the stage of execution, if it finds it more practical, and may initiate
proceedings under Section 29 of the Act.”
The doctrine of election is based on the rule of estoppel. In P.R.
Deshpande v. Maruti Balaram Haibatti,11 it was held that :
E “8. The doctrine of election is based on the rule of estoppel —
the principle that one cannot approbate and reprobate inheres in
it. The doctrine of estoppel by election is one of the species of
estoppel in pais (or equitable estoppel) which is a rule in equity.
By that rule, a person may be precluded by his actions or conduct
or silence when it is his duty to speak, from asserting a right which
F he otherwise would have had. (vide Black’s Law Dictionary, 5th
Edn.)”
In National Insurance Co. Ltd. v. Mastan & Ors.,12 claims for
compensation were filed both under the Workmen’s Compensation Act,
1923 and the Motor Vehicles Act, 1988. This Court held that the doctrine
G of election was incorporated in Section 167 of the Motor Vehicles Act.
The relevant extract from the judgment reads as follows :

11
(1998) 6 SCC 507.
12
(2006) 2 SCC 641.
H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 49
& OTHERS [INDU MALHOTRA, J.]

‘23. The “doctrine of election” is a branch of “rule of estoppel”, A
in terms whereof a person may be precluded by his actions or
conduct or silence when it is his duty to speak, from asserting a
right which he otherwise would have had. The doctrine of election
postulates that when two remedies are available for the same
relief, the aggrieved party has the option to elect either of them
B
but not both. Although there are certain exceptions to the same
rule but the same has no application in the instant case.
….
27. The first respondent having chosen the forum under the 1923
Act for the purpose of obtaining compensation against his employer C
cannot now fall back upon the provisions of the 1988 Act therefor,
inasmuch as the procedure laid down under both the Acts are
different save and except those which are covered by Section
143 thereof.
33. On the establishment of a Claims Tribunal in terms of Section D
165 of the Motor Vehicles Act, 1988, the victim of a motor accident
has a right to apply for compensation in terms of Section 166 of
that Act before that Tribunal. On the establishment of the Claims
Tribunal, the jurisdiction of the civil court to entertain a claim for
compensation arising out of a motor accident, stands ousted by
E
Section 175 of that Act. Until the establishment of the Tribunal,
the claim had to be enforced through the civil court as a claim in
tort. The exclusiveness of the jurisdiction of the Motor Accidents
Claims Tribunal is taken away by Section 167 of the Motor
Vehicles Act in one instance, when the claim could also fall under
the Workmen’s Compensation Act, 1923. That section provides F
that death or bodily injury arising out of a motor accident which
may also give rise to a claim for compensation under the Workmen’s
Compensation Act, can be enforced through the authorities under
that Act, the option in that behalf being with the victim or his
representative. But Section 167 makes it clear that a claim could
G
not be maintained under both the Acts. In other words, a claimant
who becomes entitled to claim compensation under both the Motor
Vehicles Act, 1988 and the Workmen’s Compensation Act, because
of a motor vehicle accident has the choice of proceeding under
either of the Acts before the forum concerned. By confining the
H
50 SUPREME COURT REPORTS [2021] 2 S.C.R.

A claim to the authority or the Tribunal under either of the Acts, the
legislature has incorporated the concept of election of remedies,
insofar as the claimant is concerned. In other words, he has to
elect whether to make his claim under the Motor Vehicles Act,
1988 or under the Workmen’s Compensation Act, 1923. The
emphasis in the section that a claim cannot be made under both
B
the enactments, is a further reiteration of the doctrine of election
incorporated in the scheme for claiming compensation. The
principle “where, either of the two alternative Tribunals are open
to a litigant, each having jurisdiction over the matters in dispute,
and he resorts for his remedy to one of such Tribunals in preference
C to the other, he is precluded, as against his opponent, from any
subsequent recourse to the latter” (see R. v. Evans [(1854) 3 E &
B 363 : 118 ER 1178] ) is fully incorporated in the scheme of
Section 167 of the Motor Vehicles Act, precluding the claimant
who has invoked the Workmen’s Compensation Act from having
resort to the provisions of the Motor Vehicles Act, except to the
D
limited extent permitted therein. The claimant having resorted to
the Workmen’s Compensation Act, is controlled by the provisions
of that Act subject only to the exception recognised in Section
167 of the Motor Vehicles Act.”

E (emphasis supplied)

In Transcore v. Union of India, 13 this Court considered the
provisions of the Securitisation and Reconstruction of Financial Assets
and Enforcement of Securities Interest Act, 2002 (“SARFAESI Act”)
and the Recovery of Debts due to Banks and Financial Institutions Act,
F 1993 (“RDDB Act”), wherein it was held that there are three elements
of election viz. existence of two or more remedies, inconsistencies
between such remedies, and a choice of one of them. If any one of the
three elements is not there, the doctrine will not apply.

The judgment in Transcore was subsequently followed in Mathew
G
Varghese v. M. Amritha Kumar,14 where it was held that :

“46. A reading of Section 37 discloses that the application of the
SARFAESI Act will be in addition to and not in derogation of the
13
(2008) 1 SCC 125.
14
H (2014) 5 SCC 610.
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 51
& OTHERS [INDU MALHOTRA, J.]

provisions of the RDDB Act. In other words, it will not in any A
way nullify or annul or impair the effect of the provisions of the
RDDB Act. We are also fortified by our above statement of law
as the heading of the said section also makes the position clear
that application of other laws are not barred. The effect of Section
37 would, therefore, be that in addition to the provisions contained
B
under the Sarfaesi Act, in respect of proceedings initiated under
the said Act, it will be in order for a party to fall back upon the
provisions of the other Acts mentioned in Section 37, namely, the
Companies Act, 1956, the Securities Contracts (Regulation) Act,
1956, the Securities and Exchange Board of India Act, 1992, the
Recovery of Debts Due to Banks and Financial Institutions Act, C
1993, or any other law for the time being in force.”

20.11 In a recent judgment delivered by this Court in M/s Imperia
Structures Ltd. v. Anil Patni and Anr,15 it was held that remedies under
the Consumer Protection Act were in addition to the remedies available
under special statutes. The absence of a bar under Section 79 of the D
RERA Act to the initiation of proceedings before a fora which is not a
civil court, read with Section 88 of the RERA Act makes the position
clear. Section 18 of the RERA Act specifies that the remedies are “without
prejudice to any other remedy available”. We place reliance on this
judgment, wherein it has been held that : E
“31. Proviso to Section 71(1) of the RERA Act entitles a
complainant who had initiated proceedings under the CP Act before
the RERA Act came into force, to withdraw the proceedings under
the CP Act with the permission of the Forum or Commission and
file an appropriate application before the adjudicating officer under F
the RERA Act. The proviso thus gives a right or an option to the
complainant concerned but does not statutorily force him to
withdraw such complaint nor do the provisions of the RERA Act
create any mechanism for transfer of such pending proceedings
to authorities under the RERA Act. As against that the mandate G
in Section 12(4) of the CP Act to the contrary is quite significant.

32. Again, insofar as cases where such proceedings under the
CP Act are initiated after the provisions of the RERA Act came
15
(2020) 10 SCC 783.
H
52 SUPREME COURT REPORTS [2021] 2 S.C.R.

A into force, there is nothing in the RERA Act which bars such
initiation. The absence of bar under Section 79 to the initiation of
proceedings before a fora which cannot be called a civil court
and express saving under Section 88 of the RERA Act, make the
position quite clear. Further, Section 18 itself specifies that the
remedy under the said section is “without prejudice to any other
B
remedy available”. Thus, the parliamentary intent is clear that a
choice or discretion is given to the allottee whether he wishes to
initiate appropriate proceedings under the CP Act or file an
application under the RERA Act.”

C 21. Whether the Apartment Buyers are entitled to terminate
the Agreement, or refund of the amount deposited with Delay
Compensation.

21.1 The issue which now arises is whether the apartment buyers
are bound to accept the offer of possession made by the Developer
D where the Occupation Certificate has been issued, along with the payment
of Delay Compensation, or are entitled to terminate the Agreement.

The factum of delay in completing the construction and making
the offer of possession is an undisputed fact in this case.
E 21.2 In the present case, the allottees before this Court in the
present batch of appeals, can be categorised into two categories:-

i) Apartment Buyers whose allotments fall in Phase 1 of the
project comprised in Towers A6 to A10, B1 to B4, and C3
F to C7, where the Developer has been granted occupation
certificate, and offer of possession has been made, are
enlisted in Chart A;

ii) Apartment Buyers whose allotments fall in Phase 2 of the
project, where the allotments are in Towers A1 to A5, B5
G to B8, C8 to C11, where the Occupation Certificate has not
been granted so far, are set out in Chart B below.

H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 53
& OTHERS [INDU MALHOTRA, J.]

CHART A A
APARTMENTS WHERE O.C. OBTAINED BY DEVELOPER

B

C

D

E

CHART B
APARTMENTS WHERE NO O.C. AVAILABLE EVEN AS ON
DATE F

G

H
54 SUPREME COURT REPORTS [2021] 2 S.C.R.

A

B

C

D

E

F

G

H
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 55
& OTHERS [INDU MALHOTRA, J.]

A

B

C

D

E

F

Chart A allottees
(i) We are of the view that allottees at Serial Nos. 1 and 2 in G
ChartA are obligated to take possession of the apartments, since the
construction was completed, and possession offered on 28.06.2019, after
the issuance of Occupation Certificate on 31.05.2019. The Developeris
however obligated topay Delay Compensation for the period of delay
which has occurred from 27.11.2018 till the date of offer of possession
was made to the allottees. H
56 SUPREME COURT REPORTS [2021] 2 S.C.R.

A (ii) Insofar as the allottee at Serial No.3 in Chart A is concerned,
he has filed Civil Appeal No.3064 of 2020 under Section 62 of the
Insolvency and Bankruptcy Code, 2016 before this Court. We were
informed by theCounsel for the allottee that the Developer had filed an
affidavit dated 16.09.2019 before the National Company Law Tribunal
(“NCLT”) stating that it was willing to refund the principal amount of
B
Rs.1,59,29,016/- in four equal instalments, and had produced photocopy
of the cheques. The relevant portion of the affidavit filed by the Developer
before the NCLT is extracted hereunder :-
“3. Without prejudice to contentions and averments raised during
the course of arguments by the Corporate Debtor, the Corporate
C Debtor explored the possibility of the settlement with the Petitioner
and had offered to pay the entire principal amount i.e. 1,59,29,016/
- in a time bound manner by way of 4 equal instalments, wherein
1st instalment starting from 16.09.2019. Copy of the Cheques by
the Corporate Debtor for payment of the principal amount in full
D is annexed herewith and marked as Annexure-A.”
Despite the said Undertaking given before the NCLT, the
Developer has failed to refund even the principal amount so far.
We direct the Developer to refund the amount deposited by the
said Appellant within a period 4 weeks from the date of this judgment
E with interest @ 9% p.a. from 16.09.2019 (date of the affidavit filed by
the Developer before the NCLT). If this direction is not complied with,
the Developer will be liable to pay Default Interest @12% p.a. on the
entire amount.
Chart B allottees
(i) Insofar as the allottees in Chart B are concerned, they have
F
paid part consideration, in most cases up to the 4th instalment till 2017,
when they found that there was no progress being made in respect of
the Towers in which the apartments had been allotted to them.It is an
admitted position that Occupation Certificate for Towers A1, A2, A3,
B7, C9 and C11, in which the allotments have been made for this category
G has not been issued by the Municipal Corporation.
The apartments have not been ready for allotment even as on
30.06.2020, as per the date fixed before the RERA Authority.
(ii) The allottees submitted that they were facing great hardship
since they had obtained loans from Banks for purchasing these
H apartments, and were paying high rates of interest. In 2017, when they
IREO GRACE REALTECH PVT. LTD. v. ABHISHEK KHANNA 57
& OTHERS [INDU MALHOTRA, J.]

realised that there was no construction activity in progress, they were A
constrained to file consumer complaints before the National Commission,
and then discontinued payment of further instalments.
(iii) The Developer made an alternate offer of allotment of
apartments in Phase 1 of the project. The allottees are however not
bound to accept the same because of the inordinate delay in completing B
the construction of the Towers where units wereallotted to them. The
Occupation Certificate is not available even as on date, which clearly
amounts to deficiency of service. The allottees cannot be made to wait
indefinitely for possession of the apartments allotted to them, nor can
they be bound to take the apartments in Phase 1 of the project. The
allottees have submitted that they have taken loans, and are paying high C
rates of interest to the tune of 7.9% etc. to the Banks.
Consequently, we hold that the allottees in ChartB are entitled to
refund of the entire amount deposited by them.
(iv) In so far as awardof compensation by payment of Interest is
concerned, clause 13.4 of the Apartment Buyer’s Agreement provides D
that the Developer shall be liable to pay the allottee compensation
calculated @ Rs. 7.5 per sq. ft. of the Super Area for every month of
delay, after the end of the Grace Period. The compensation will be payable
only for a period of 12 months.
The Apartment Buyers in their Complaint filed before the National E
Commission made a prayer for refund of the amount deposited alongwith
Interest @ 20% p.a. compounding quarterly till its realisation. The
Apartment Buyers, in their submissions have stated that they have
obtained home loans on which Interest @ 7.90% p.a. is being paid, even
as on date.
F
We have considered the rival submissions made by both the parties.
The Delay Compensation specified in the Apartment Buyer’s Agreement
of Rs. 7.5 per sq. ft. which translates to 0.9% to 1% p.a. on the amount
deposited by the Apartment Buyer cannot be accepted as being adequate
compensation for the delay in the construction of the project. At the
same time, we cannot accept the claim of the Apartment Buyers for G
payment of compound interest @ 20% p.a., which has no nexus with
the commercial realities of the prevailing market. We have also taken
into consideration that in Subodh Pawar v. IREO Grace, this Court
recorded the statement of the Counsel for the Developer that the amount
would be refunded with Interest @ 10% p.a. A similar order was passed
H
58 SUPREME COURT REPORTS [2021] 2 S.C.R.

A in the case of IREO v. Surendra Arora. However, the Order in these
cases were passed prior to the out-break of the pandemic.
We are cognizant of the prevailing market conditions as a result
of Covid–19 Pandemic, which have greatly impacted the construction
industry.
B In these circumstances, it is necessary to balance the competing
interest of both parties. We think it would be in the interests of justice
and fairplay that the amounts deposited by the Apartment Buyers is
refunded with Interest @ 9% S.I. per annum from 27.11.2018 till the
date of payment of the entire amount.
C The refund will be paid within a period of three months from the
date of this judgment. If there is any further delay, the Developer will be
liable to pay default interest @ 12% S.I. p.a.
(v) The Developer shall not deduct the Earnest Money of 20%
from the principal amount, or any other amount as mentioned in Clause
21.3 of the Agreement, on account of the various defaults committed by
D the Developer, including the delay of over 7 months in obtaining the Fire
NOC.
(vi) In Civil Appeal No.9139 of 2019, we were informed by the
learned counsel that the Respondent had made a request for refund of
the amount deposited since his wife was critical and required a lung
E transplant, to meet the huge expenses of hospitalisation. However, the
Developer failed to refund the amount. During the pendency of
proceedings, the wife has since expired on 08.12.2020, and there are
pending hospital bills to the tune of Rs.50 to 60 lakhs to be cleared.
We direct the Developer to refund the entire amountdeposited by
F this respondent alongwith Interest @ 9%S.I. p.a. within a period of 4
weeksfrom the date of this judgment. The failure to refund the amount
within 4 weekswill make the Developer liable for payment of default
interest @ 12% S.I. p.a. till the payment is made.
The Civil Appeals are accordingly disposed of, with no order as to
costs. All pending applications are disposed of.
G
Ordered accordingly.

Devika Gujral Appeal disposed of.

H