Sriganesh Chandrasekaran & Others v. M/s Unishire Homes LLP & Others. The hon’ble Supreme Court of India has clarified the scope of liability of landowners under a Joint Development Agreement in cases involving delay in construction. The Hon’ble Court held that landowners cannot be held liable for delay compensation where the obligation to construct and deliver possession rests solely with the developer.
The appeals arose from proceedings before the National Consumer Disputes Redressal Commission alleging deficiency in service on account of delay in delivery of flats. The landowners had entered into a Joint Development Agreement dated 24.02.2012 with the developer and had executed a General Power of Attorney in favour of the developer. Under the contractual arrangement, the responsibility for construction and sale of the flats falling to the developer’s share vested exclusively with the developer.
The Commission recorded a delay of more than six years in handing over possession and directed completion of construction along with payment of delay compensation. The homebuyers challenged this before the hon’ble supreme court judgement under section 67 of the consumer protection act, 2019 and the question arose whether the landowners were jointly and severally liable along with the developer for payment of such compensation.
The hon’ble court examined the terms of the Joint Development Agreement and the General Power of Attorney and observed as follows:
The obligation to undertake construction and deliver possession vested entirely with the developer.
The delay in handing over possession was not attributable to any act or omission on the part of the landowners.
The execution of a General Power of Attorney did not, in the facts of the case, create liability upon the landowners for delay in construction.
The landowners were responsible only to the extent of transfer of title and execution of sale deeds.
The indemnity clause in the Joint Development Agreement protected the landowners against consequences arising from the developer’s breach.
The Hon’ble Court held that for lapse on the part of the developer in completing construction, the landowners who were not concerned with the construction activity cannot be held liable for deficiency in service.
Accordingly, the appeals were dismissed and the finding of fastening liability solely upon the developer was upheld. The judgment reiterates that liability arising out of Joint Development Agreements must be determined strictly in accordance with the contractual allocation of obligations snd landowners cannot be fastened with liability for construction delays where such responsibility exclusively rests with the developer.
