Offer of possession without completion certificate invalid: Supreme Court orders refund, 9% interest and ₹15 lakh compensation
In Dharmendra Sharma v. Agra Development Authority, the Supreme Court held that an offer of possession could not be treated as valid and lawful when the development authority failed to provide the requisite completion certificate and firefighting clearance certificate.
- A possession offer made without the requisite completion certificate and firefighting clearance certificate was held to be legally deficient.
- The Court accepted that both sides had contributed to the dispute: the allottee delayed payment of an additional demand, while the Agra Development Authority failed to meet its statutory obligations relating to the certificates.
- The Court directed refund of the entire amount deposited by the allottee with 9% interest per annum from 11 July 2020 until refund.
- An additional compensation of ₹15,00,000 was awarded, and the non-judicial stamp paper worth ₹3,99,100 was directed to be returned.
- The connected appeal filed by the Agra Development Authority was dismissed.
Background of the dispute
Dharmendra Sharma applied on 28 July 2011 for a residential apartment in the ADA Heights group housing project at Agra and deposited a booking amount of ₹4,60,000. He was allotted Flat No. DT-1/1204 through a lottery held on 29 August 2011. The allotment letter dated 19 September 2011 stated a tentative price of ₹56,54,000.
The allottee opted for full payment and substantially paid the tentative sale price. Under the scheme, possession was expected within six months. After the period expired, he sought possession, but the construction was not ready for delivery.
Offer of possession and demand for certificates
4 February 2014: ADA issued a communication offering possession subject to an additional payment of ₹3,43,178 and submission of non-judicial stamp paper for execution of the deed.
15 February 2014: The allottee visited the site, deposited stamp papers worth ₹3,99,100, and complained of construction deficiencies after inspection.
2014-2019: ADA raised further demands and reminders. The allottee repeatedly asked for confirmation that the flat was fit for physical possession and sought the completion certificate.
4 June 2019: ADA encashed the allottee's cheque for ₹3,43,178, but no possession date was communicated.
23 November 2019: The allottee again sought the completion certificate and firefighting clearance certificate. According to the judgment, these were not provided.
10 July 2020: The allottee filed a consumer complaint before the National Consumer Disputes Redressal Commission alleging deficiency in service and unfair trade practice.
NCDRC proceedings
The NCDRC rejected ADA's objections regarding limitation and pecuniary jurisdiction and partly allowed the consumer complaint on 15 September 2023. The allottee's review application was later dismissed on 30 October 2023. The dispute then reached the Supreme Court through the allottee's appeals, while ADA also filed a connected appeal.
Supreme Court's ruling
The Supreme Court treated the availability of the completion certificate and firefighting clearance certificate as central to deciding whether the offer of possession was legally valid. The Court noted that the allottee had repeatedly sought these documents and that ADA had not produced them before the NCDRC.
Balancing the shortcomings on both sides, the Supreme Court granted additional compensation of ₹15 lakh over and above the relief awarded by the NCDRC. It directed refund of the entire amount deposited with interest at 9% per annum from 11 July 2020 until the date of refund, and ordered return of the non-judicial stamp paper worth ₹3,99,100. The amount was directed to be paid within three months.
Current legal position: completion and occupancy certificates
The judgment arose from consumer proceedings governed by the Consumer Protection Act, 1986, as recorded by the Supreme Court. For present-day real-estate transactions, the Real Estate (Regulation and Development) Act, 2016 expressly requires a promoter to obtain the completion certificate or occupancy certificate, or both, as applicable, from the competent authority and make it available to allottees.
Section 18 of the RERA Act also provides remedies where a promoter fails to complete or is unable to give possession in accordance with the agreement or the specified completion date, including return of the amount with interest and compensation where the allottee chooses to withdraw. Consumer remedies under the Consumer Protection Act, 2019 may also be available depending on the facts and forum.
Practical point for homebuyers: A letter described as an "offer of possession" should not be viewed in isolation. Whether possession is legally valid can depend on statutory approvals, the applicable local law, the project documents and whether the competent authority has issued the required completion or occupancy permissions.
Case details
Cause title: Dharmendra Sharma v. Agra Development Authority
Appeals: Civil Appeal Nos. 2809-2810 of 2024; connected Civil Appeal No. 6344 of 2024
Decision date: 6 September 2024
Neutral citation: 2024 INSC 667
Download the judgment
Download the Supreme Court judgment dated 6 September 2024