India: National Consumer Disputes Redressal Commission Rules On ‘Force Majeure' In Real Estate Projects

Last Updated: 2 January 2019
Article by Ruchit Dave, Sana Khan and Sonam Mhatre

The National Consumer Disputes Redressal Commission, New Delhi ("NCDRC") in its recent Order dated 12th December 2018 has come down heavily on the builders, DLF Homes Panchkula Pvt. Ltd. ("DLF") in the case of DLF Homes Panchkula Pvt. Ltd. vs. D.S. Dhanda ("said Order") wherein DLF had preferred 16 First Appeals against orders passed by the Chandigarh State Consumer Dispute Redressal Commission ("State Commission") in its project "DLF Valley". Prominent noting in the said Order was that delay caused in handing over possession of flat due to delay in obtaining the necessary approvals from the concerned authorities cannot be considered as force majeure.

All the 16 First Appeals were heard by the NCDRC together and disposed of by a common order dated 12th December 2018.


The facts pertaining to the lead-case of the 16 First Appeals filed by DLF under section 19 of the Consumer Protection Act, 1986 against the orders of the State Commission are stated herein. In the year 2016, flat buyer, Mr. D. S. Dhanda had filed a consumer complaint before the State Commission seeking possession of the flat allotted to him by DLF. It was his case  that he booked a flat in the project known as "DLF Valley" ("said project") being developed by DLF since the year 2010 and executed an Independent Floor Buyer's Agreement ("Agreement") for the same since 2011. In terms of the Agreement, possession of the flat was to be handed over to Mr. Dhanda  within 24 months from the date of execution of the Agreement. 

Further, it was also agreed that in case of delay in delivery of possession of the said unit, DLF shall pay a sum of Rs.10/- per square feet, per month to the flat buyer, Mr. Dhanda. 

In April 2012, the Hon'ble Supreme Court had stayed all construction activities of DLF with respect to the said project. The said stay came to be vacated by the Hon'ble Supreme Court by its Order dated 12th December 2012. Pursuant to the same, DLF had sought the consent of the flat buyers to get an extension of time of one year to handover possession of their respective flats.

Despite such extension, DLF failed to deliver possession of the flat booked.  Mr. Dhanda therefore preferred a consumer complaint with the State Commission in 2016. The State Commission whilst allowing the complaint, in its Order dated 2nd June 2016 directed DLF to hand over physical possession of the flat, execute and register the sale deed in respect of the said flat and directed DLF to pay interest @ 12% p.a. from 10th February 2014 i.e. from the expiry of the extended period. The State Commission also directed the Appellants to pay compensation of a sum of Rs. 3,00,000/- (Rupees Three Lakhs only) on account of mental agony and physical harassment caused to DLF and a further sum of Rs. 50,000/- as and by way of cost of litigation.

DLF preferred the present First Appeal inter alia:

a) questioning the jurisdiction of the NCDRC to pronounce compensatory relief beyond the scope of the agreement between the parties and

b) contending that the impugned State Commission Order had overlooked specific clauses pertaining to force majeure conditions laid down in the Agreement.


The NCDRC; examined the matter in the weight scale of the Consumer Protection Act, 1986 and found that DLF was responsible for deficiency of services and unfair trade practice in the present matter. Despite the fact that State Commission had exempted/deducted a period of 12 months in granting compensation to the flat buyer, NCDRC held otherwise. It ruled that stoppage of construction activities due to an interim Order of Hon'ble Supreme Court in litigation apropos acquisition of land cannot be construed to mean 'force majeure'.

NCDRC reasoned that "the material facts and consequences relating to availability of land (/acquisition of land) and approvals from concerned authorities were not brought to the notice of the consumer at the time of entering into the buyer's agreement. In the absence of the facts and the consequences thereof being specifically and explicitly brought to his notice, the buyer – consumer would reasonably (and correctly) understand that all aspects of project planning, execution and completion, inclusive of availability of land (/ acquisition of land) and approvals from concerned authorities at the due time, are the responsibility of DLF and have been / are being / would be duly taken care of by the builder co., without cost or time overruns."

Within the terms of section 2(1)(r) of Consumer Protection Act, 1986; NCDRC interpreted the conduct of DLF as unfair and deceptive for not bringing material facts and consequences to the notice of the consumer/flat buyer relating to availability/acquisition of land and approvals from the concerned authorities at the time of entering into an agreement.


The ruling laid down by NCDRC makes it evidently clear that the service providers; builder/promoter in the present case, must provide complete disclosures to the consumers while entering into any understanding with them. In order to impart consumer justice, NCDRC examined the veracity of the delay being within the permissible ambit of force majeure. Delay in delivery of possession of the units due to delay in obtaining the necessary approvals and sanctions is not a ground which can afford any concession to the builder/promoter. Thus, in light of the ratio laid down by the NCDRC order, it can no longer be argued that 'delay in obtaining approvals/sanctions' or 'a stay order being in force' amounts to force majeure.

The builders/ promoters ought to exercise caution while agreeing upon the date of handing over possession of the flats especially in view of the fact that the Courts and Tribunals are keeping equity as paramount factor. It is seen that Consumer redressal forums are working with an ameliorative mindset to bring about justice for the weaker sections of society.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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