The Supreme Court of India has ruled that homebuyers are entitled to seek compensation for delays in the delivery of flats, even after taking possession of the property. This decision was made in the case of TKA Padmanabhan v. Abhiyan Cooperative Group Housing Society Ltd.
A Bench comprising Justices Vikram Nath and V Mohana clarified that the act of taking possession does not nullify a homebuyer’s right to pursue compensation for any delay in the possession of their property. The Court reinstated a consumer complaint that had previously been referred to arbitration, emphasizing the need for adjudication on its merits.
“The subsequent receipt of possession cannot, by itself, extinguish the right of the allottee to seek adjudication of a claim for compensation for the alleged delay,” the Court stated. It was further clarified that the presence of an arbitration clause in the housing agreement does not automatically remove the jurisdiction of consumer forums. The Court stressed that a consumer complaint, once admitted, should not be diverted to arbitration simply because there exists an agreement to arbitrate disputes.
Case Background
This landmark ruling was delivered in response to an appeal by TKA Padmanabhan against Abhiyan Cooperative Group Housing Society Limited. Padmanabhan had approached the district consumer forum in 2005, alleging a deficiency in service due to the delayed handover of a flat allotted to him. He sought compensation for this delay.
Initially, after Padmanabhan’s complaint was admitted and notice was served, the housing society invoked an arbitration clause from their agreement, seeking to refer the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996. Although the district forum initially rejected this request, it later referred the matter to arbitration following a remand by the Delhi High Court for reconsideration.
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The decision to refer the dispute to arbitration was upheld by the Delhi State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission (NCDRC). The NCDRC also ruled that Padmanabhan was not a “consumer” at the time of filing the complaint since he had already accepted possession of the flat without objection.
Supreme Court’s Analysis and Decision
The Supreme Court disagreed with the NCDRC’s interpretation. It noted that Padmanabhan’s complaint focused on compensation for the delay in possession, rather than the possession itself. The Court emphasized that issues such as whether there was a delay, whether it was attributable to the housing society, and the eligibility for compensation, required examination on their merits.
The Court found that these crucial questions had not been addressed by the consumer forums, which had instead directed the parties to arbitration. Reiterating the principles under Section 12(4) of the Consumer Protection Act, 1986, the Court declared that a complaint, once admitted, should not be transferred to any other forum.
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Consequently, the Supreme Court set aside the previous orders by the district forum, State Commission, and NCDRC, restoring the consumer complaint for merit-based adjudication. Acknowledging the prolonged pendency since 2005, the Court urged the Commission to resolve the case within one year.
This case had been pending before the Supreme Court for a decade. Padmanabhan represented himself, while Advocates Chandrachur Bhattacharyya, Sahil Tagotra, and Shreya Kasera represented the cooperative society.
