The Supreme Court, while hearing a housing project dispute, has clarified that where the responsibility for construction rests solely with the developer, landowners cannot be held jointly liable for delay in compensation merely because they had executed a General Power of Attorney (GPA) in favour of the developer.
Emphasising the contractual allocation of responsibilities, the Court observed that,
“On a conjoint reading of the JDA and the GPA, it is evident that,in respect of the flats falling in developer’s share, the developer has the right to enter into sale agreements, undertake construction, receive consideration, transfer possession and convey title. 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.”
The judgment was delivered by a Division Bench comprising Justice P.S. Narasimha and Justice Alok Aradhe, and upheld the orders of the National Consumer Disputes Redressal Commission (NCDRC) and dismissed the appeal filed by the Sriganesh Chandrasekaran & Others.
The dispute arose out of a Joint Development Agreement (JDA) executed on 24 February 2012 between landowners and the developer. The landowners had granted a Power of Attorney to enable the developer to undertake construction and related activities. The developer subsequently entered into Memoranda of Sale Agreements with flat purchasers, promising delivery of possession within 36 months.
The stipulated period expired in 24 August 2016, and even the six-month grace period lapsed in 24 February 2017. However, the project remained incomplete for the relevant period. The purchasers approached the consumer commission in 2017. The Commission found a delay of more than six years in handing over possession and directed the developer to complete the construction of the flats which has been allotted to the appellants.
Besides this, the Commission also directed the developer to hand over the possession of the flats to the appellants within three months from the pronouncement of the order.
The developer was further directed to pay interest at the rate of 6% per annum on the amounts deposited by the appellants, calculated from the due date of possession within a period of six weeks, failing such compliance, the delay interest shall stand enhanced to 9% per annum.
The Commission also found that landowners were not liable for such delay, as it was the responsibility of the developer to complete the construction.
Further, appellants filed review petition for enhancement of the compensation awarded. The Commission partly allowed the petition and held landowners were jointly and severally liable for completion of construction and for payment of delay compensation to the appellants.
The said order was challenged by landowners in Special Leave Petition and Commission was directed to give adequate opportunity to the landowners.
In pursuance of the abovementioned order, the Commission found that,
“…….in view of JDA and Sale Agreement, the landowners cannot be held jointly and severally liable for the deficiency in service. However, the landowners and the developer were directed to transfer the title of the property in question and proceed with the execution of the sale deed in favour of the appellants. The Review Petition was thus partly allowed.”
The aforesaid order has been challenged in the instant appeals.
On behalf of the flat purchasers, it was argued that since the landowners had executed a power of attorney in favour of the developer, a principal-agent relationship existed. Therefore, the landowners should also be held responsible for the developer’s failure.
The landowners, however, asserted that the JDA placed complete responsibility for construction and delivery upon the developer. They clarified that they were not parties to the sale agreements with the purchasers and had no participation in the building process. Under the agreement, any liability connected to construction was to be shouldered by the developer alone.
After examining the facts and contractual clauses, the Supreme Court concluded that,
“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.”
The Bench also discussed the Clause 7of JDA and Clauses 2 and 3 of GPA in detail.
The Court specifically referred one of the judgment in which State Commission and the NCDRC had held that the developer alone liable for payment of delay compensation.
The Court affirmed the Commission’s findings and observing that,
“The Commission has partly allowed the Review Petition and has rightly fastened the liability for delay compensation on the developer as it was responsible for the delay in construction.”
The Court ruled that the landowners did not take part in the construction and cannot be blamed for the delay. The grant of a power of attorney does not, in law, override the express contractual allocation of responsibility that placed the obligation to construct and deliver the flats solely upon the developer.
Case: Sriganesh Chandrasekaran & Ors vs M/s Unishire Homes LLP & Ors
Date of Order: 20.02.2026
See the Order: Sriganesh Chandrasekaran & Ors vs M/s Unishire Homes LLP & Ors
