This, case commentary focuses on the Judgement delivered in the case of Ambrish Kumar Shukla vs Ferrous Infrastructure Pvt. Ltd., by the National Consumer Disputes Redressal Commission (NCDRC) which is a pioneer case in Indian consumer law. It solves problems for consumers which often suffer from delays in possession of flats in the real estate sector. This case went a long way in defining the relationship between the Consumer Protection Act, of 1986, which has been repealed, and the Consumer Protection Act, of 2019 regarding real estate issues.

• Citation: National Consumer Disputes Redressal Commission (NCDRC), New Delhi
• Complainant: Ambrish Kumar Shukla, Niraj Pratap, Dr. M.V. Padma and 21 others
• Respondent: Ferrous Infrastructure Pvt. Ltd.
• Date of judgment: 26 April 2023, CC.NO: 97 of 2016
• Bench: Hon'ble Mr. Justice Ram Surat Ram Maurya, Presiding Member
• Hon'ble Dr. Inder Jit Singh, Member

Facts Of The Case:
In this case, the complaints led by Ambrish Kumar Shukla purchased flats in a residential project for the complainant developed by Ferrous Infrastructure Pvt. Ltd. The developer undertook to deliver possession of the flats at the agreed time. However, what contributed to many of these projects was that buyers received an interim certificate much later than the agreed time and hence waited for their houses beyond the stipulated time.

The consumers filed a complaint before the NCDRC under the provisions of the CPA, 1986 on the ground that they had suffered a deficiency in service because the developer had failed to hand over the possession of the flats after the promised date.

Legal Issues:

• Whether the delay in handing over the possession of the flats would fall under the purview of the Consumer Protection Act, 1986 in respect of the service component.
• Whether the force majeure clauses can be relied upon or not as a defense to escape any liability that the developer might suffer due to delay.

Procedural History:

The case was filed directly to NCDRC under its original side due to the high value of the flat and consumers had mutual complaints. The consumers instituted legal proceedings by filing a class action lawsuit for damages, and the cost of the delay and mental anguish as well as inconvenience.

Judicial Reasoning:

In this regard, however, the NCDRC held that delay in handing over possession of the flats does amount to a deficiency in services as contemplated under the Consumer Protection Act. Thus, the court dismissed force majeure conditions which the developer tried to invoke citing market conditions and a shortage of workers as compelling reasons for the delay. The tribunal highlighted that it is a wrong approach to breach contractual provisions and submitted that delay in possession cannot be condoned without reasons having a proximate nexus with events beyond reasonable control. The NCDRC argued that since the consumers have paid good amounts of money for the flats, they legally expected to be handed over possession by the developer. This is because consumers, especially in real estate purchases, rely on several promises by the developers and any delay without sufficient regard for the consumers' interest has been held to be detrimental to the consumers. The tribunal also realized that the consumers had tried to negotiate with the developer in order to solve the problem before seeking the intervention of the court. Because the flats were never delivered, or there was inadequate compensation, the tribunal held that the developer was liable for both the compensation and the damages.

Key Findings:

• The NCDRC affirmed consumers' rights under the CPA to recover possession when due and affirmed that developers cannot resort to force majeure to absolve them from such liability.
• The tribunal also added that the developers should also replace the buyers for the annoyance and loss of money which the buyers had to suffer because of the delay.

Legal Principles:

The case clarified several key legal principles related to consumer protection in the real estate sector:

• Deficiency in Service: Construction of residential buildings and delivery of flats fall squarely within the consumer category of goods and services, so delay in delivery constitutes a failure to deliver satisfactory services provided that the delay is unreasonable and unjustified.
  • Real estate developers are bound by contract timelines, and it becomes their legal duty to complete contracts within these timelines, if not done the Act provides for legal liability upon failing to do so without reasonable cause.
• Class Action: The case also underscores the concept of a group of consumer actions (the class action suit). An individual consumer's complaint is not sufficient to warrant an investigation; however, when many consumers have similar complaints, their complaints can be grouped to warrant an investigation.
• Compensation for Mental Agony: The tribunal recognized that possession delays had psychological effects and stated that developers were legally responsible for consumers' sufferings due to delayed possession.
• Force Majeure Defense: The NCDRC recently appeared as a court of appeals to set the legal understanding of the force majeure clauses, stating that developers cannot abuse these clauses to avoid the responsibility that arose from unforeseeable events without specifying that such events had caused direct and unavoidable harm to a development project.

All these principles have been used in other cases to influence consumer disputes over delayed real estate projects among others.

Impact on the Legal System:
Unfortunately, the Indian property market will remain depressed for the next five to six years and this case had a large influence over the real estate business in India. It did create a precedent of allowing consumers to sue developers for delay where there is no adequate reason for the delay, and recover the cost of damages and for negligence, including mental anger.

The judgment availed itself in enhancing consumer rights especially where possession delays are a common practice in the real estate Industry. That way it also served as a message to developers and contractors on compliance with their contractual requirements.

Societal Impact:
This case has paved the way for consumers to demand their rights in real estate transactions especially where big developments are involved wherein delay is a common factor.

It has also led to an increase in class action cases to encourage many consumers with similar complaints to address their problems as a group which makes it quick and effective.

Critical Evaluation:
The judgment passed by NCDRC can be appreciated because not many consumers' interests are protected against powerful real estate developers. The court was however right to assert that developers cannot rely on market conditions or general clauses such as force majeure to justify delays.

Perhaps the only criticism that could be leveled at the NCDRC is that it could have looked at the details of the force majeure defense more carefully. That was an area that, had the developer supplied more tangible evidence of circumstances outside its control, could have been argued further.

So, in summary, the decision of the court is reasonable and correct to safeguard consumer interest where it cannot sacrifice developers' legitimate demands for contractual performance.

Conclusion
This is the unique case of Ambrish Kumar Shukla vs Ferrous Infrastructure Pvt. Ltd which is also now considered as one of the landmarks of Indian Consumer Law with special reference to the real estate sector. It reestablished the fact that undue delay in possession raises an issue of shortcomings in service and laid the foundation for compliance on consumer rights in housing projects. Having identified the time consumption and money loss for the consumers the judgment stated the necessity of delivery & accountability which is a part of the principle of contract involving real estate transactions.

The case has carried forward till the contemporary consumer law relating to the liability of products and inadequacy of service in real estate and referencing or referring as a benchmark in handling similar disputes under the Consumer Protection Act, 2019.

References:

• BnB Legal, 'Ambrish Kumar Shukla & Or's v Ferrous Infrastructure Pvt Ltd' (BnB Legal) https://bnblegal.com/landmark/ambrish-kumar-shukla-ors-vs-ferrous-infrastructure-pvt-ltd/ accessed 11 October 2024.
• Indian Kanoon, 'Ambrish Kumar Shukla & Or's v Ferrous Infrastructure Pvt Ltd' (Indian Kanoon) https://indiankanoon.org/doc/179173221/ accessed 11 October 2024.
• Case mine, 'Ambrish Kumar Shukla & Or's v Ferrous Infrastructure Pvt Ltd' (Case mine) https://www.casemine.com/judgement/in/5a6576d94a9326024ada5a11 accessed 11 October 2024.

Award Winning Article Is Written By: Mr.Sujit Parganiha, BBA.LLB 5th Year

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