As a leading law firm ‘Law Offices of Kr. Vivek Tanwar Advocate and Associates’ specializing in Real Estate Regulation and Development Act (RERA) matters, we are committed to providing insightful analysis and legal perspectives on cases that significantly impact the real estate industry. In this regard, we delve into a pivotal case, “The Westend Heights Case,” which has far-reaching implications for both consumers and developers in the realm of real estate transactions and the enforcement of RERA regulations. This landmark Supreme Court decision sets a precedent in safeguarding consumer rights and ensuring accountability in the real estate sector. In the following sections, we will examine the key aspects and implications of this case.
Case Background:
The respondents were responsible for developing residential flats in the Westend Heights project in New Town, Bengaluru. The project covered 27.5 acres and consisted of four blocks, 1980 units, and 19 towers. The developers’ brochure made representations about project amenities. Based on these representations, flat purchasers entered into Apartment Buyers Agreements (ABAs) with the developers. Clause 11(a) of the ABA set a 36-month completion target, subject to force majeure conditions.
However, the developers couldn’t deliver possession within 36 months and failed to provide certain amenities. Clause 14 of the ABA established compensation for delay (Rs 5/- per sq. ft. per month). Some flat purchasers filed a complaint under Section 12 (c)4 of the Consumer Protection Act, alleging deficiency in services.
The National Commission dismissed the complaint, stating no deficiency existed, and the compensation couldn’t exceed the ABA’s amount. The case was appealed to the Supreme Court.
Flat Purchasers’ Arguments:
Flat purchasers argued there was substantial delay and breach of promised amenities. They deemed the ABA terms one-sided and unreasonable.
Developers’ Arguments:
Developers contended that ‘endeavor’ in Clause 11(a) meant the 36-month period wasn’t binding. They believed flat purchasers couldn’t demand more than stipulated compensation. They argued flat purchasers failed to prove the prescribed rate was inadequate or their actual loss.
Key Findings:
1. Unilateral ABA: The ABA was one-sided, favoring developers with a lower interest rate for delays compared to flat purchasers.
2. Breach of Representations: Developers invited flat purchasers based on promised amenities, and not delivering them constituted a deficiency in services.
3. Compensation Not Restricted: Compensation wasn’t limited to the ABA; it had to reflect the actual delay.
4. Consumer Forums’ Jurisdiction: Consumer forums could grant compensation exceeding contractual limits to protect consumers’ rights.
Conclusion:
The Supreme Court’s consumer-oriented approach reinforces consumer rights under the Consumer Protection Act, 2019. However, this may have implications for builders and developers despite contractual limitations, as delays in project delivery can result in compensation beyond contract terms.
Written by : Adv. Anjali Bablani
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