The Supreme Court has held that landowners do not become liable for construction delay just because they authorised a developer to build flats, secure statutory approvals, and market or sell units. The Court said this authorisation alone does not make landowners responsible for delays caused by the developer.
A Bench of Justice P.S. Narasimha and Justice Alok Aradhe dismissed an appeal filed by a homebuyer. It upheld the National Consumer Disputes Redressal Commission (NCDRC) order that cleared the landowners of liability arising from the delay.
Background: JDA and the developer’s role
The dispute arose from a Joint Development Agreement (JDA) executed in February 2012 between the landowners and Unishire Homes. Under the JDA, the developer had to obtain sanctions, construct the project, and sell flats. To support these functions, the landowners also executed a General Power of Attorney (GPA) in favour of the developer.
Proceedings before the NCDRC
When the project allegedly faced a delay of over six years, homebuyers approached the NCDRC seeking possession and compensation. The NCDRC held the developer solely liable for the delay. It directed the developer to pay interest to buyers. At the same time, it absolved the landowners, since the construction duties did not lie with them.
Appeal before the Supreme Court
The homebuyers moved the Supreme Court under Section 67 of the Consumer Protection Act, 2019. They argued that the landowners, as principals who executed the GPA, should carry vicarious liability for the developer’s alleged deficiency in service.
The Court rejected this argument. In a judgment authored by Justice Alok Aradhe, it held that the landowners could not be held liable when the JDA terms clearly excluded any construction responsibility on their part. The Court also noted that the developer had indemnified the landowners against acts of commission or omission related to construction.
The Court observed:
“For the lapse on the part of the developer, the landowners, who are in no way concerned with the construction, cannot be held liable for deficiency in service, particularly when the developer has indemnified them against acts of commission or omission in construction.”
It further held:
“The construction has to be carried out by the developer. The delay in delivery of possession is in respect of flats falling to the share of the developer.”
Accordingly, the Supreme Court dismissed the appeal.
Cause Title: SRIGANESH CHANDRASEKARAN & OTHERS VERSUS M/S UNISHIRE HOMES LLP & OTHERS
