The Supreme Court has upheld the authority of consumer forums to award fair compensation for delayed possession of flats, holding that contractual clauses limiting compensation cannot override statutory consumer protections.
The bench of Justice B.V. Nagarathna and Justice R. Mahadevan has observed that consumer forums derive their powers from statute and not merely from contractual terms. It ruled that housing construction falls within the definition of “service” and delay in handing over possession amounts to “deficiency in service.”
The case arose from multiple consumer complaints filed by homebuyers who had booked flats in a residential project in Sector-53, Gurgaon. The buyers had paid almost the entire sale consideration but did not receive possession within the agreed timeline of 36 months plus a grace period of six months.
The NCDRC had directed the developer to complete construction and obtain the occupancy certificate, hand over possession within a specified timeline, pay compensation in the form of 8% annual interest for delay, provide rebates where applicable, pay litigation costs, and bear any increase in stamp duty after specified dates.
The developer approached the Supreme Court contending that the NCDRC had exceeded its jurisdiction and ignored the compensation clause in the flat buyer agreement.
The developer argued that the flat buyer agreement contained a clause specifying compensation for delay at a fixed rate per square foot per month and barred any additional claims. It was submitted that the NCDRC could not award compensation beyond what was contractually agreed.
The developer also contended that delays were caused by factors beyond its control, including shortage of labour and financial constraints, escalation in construction costs, delays in statutory approvals, and changes in government policies affecting occupancy certificates.
The homebuyers argued that they had paid nearly the entire sale consideration years earlier but were forced to wait for possession for more than a decade. They contended that the developer failed to complete construction within the promised timeline and did not comply with NCDRC orders promptly.
In one case, possession was offered without an occupancy certificate and accepted only due to urgent need, without waiving the right to compensation.
The Court emphasized that consumer forums are empowered to award just and reasonable compensation for loss and hardship suffered by buyers. Contractual clauses that limit compensation cannot restrict statutory remedies, particularly where such clauses are one-sided or unfair.
A key issue before the Court was a clause in the agreement that provided only nominal compensation for delay while allowing the developer to charge high interest from buyers for late payments.
The Court observed that such clauses are inherently one-sided and disproportionate, and cannot prevent consumer forums from awarding appropriate compensation.
It held that consumer forums have the authority to depart from contractual terms where enforcement would result in injustice to homebuyers.
By upholding the NCDRC’s directions, the Supreme Court reaffirmed that homebuyers are entitled to fair compensation for delayed possession and that statutory consumer protections prevail over one-sided contractual clauses. The decision strengthens the legal position of homebuyers and underscores the accountability of developers in delayed housing projects.
Case Details
Case Title: Parsvnath Developers Ltd. Versus Mohit Khirbat
Citation: JURISHOUR-54-SC-2026
Case No.: CIVIL APPEAL NO. 5289 OF 2022
Date: 20/02/2026
