Force majeure not an excuse to delay handover

LEGAL CLEARANCE If a builder-buyer agreement including the force majeure is executed but conceals vital facts, the document is not binding on the buyer.

As per the terms and conditions of the agreement, the builder had to deliver the plots within a period of 24 months, with a grace period of six months. Despite the fact the buyers/ allottees had made substantial payment against the consideration amount, the builder failed to deliver possession of the respective plots within the stipulated time. This forced the complainants to raise a consumer dispute before the state commission for which they received a favourable verdict.

The builder pleaded before NCDRC that it had obtained necessary wild life clearance, forest clearance, letter of intent issued by department of town and country planning department Haryana (DTCP) for setting up of residential plotted colony on the additional land before seeking application of allotment of plots from the public at large. It was pleaded by the builder that in response to their letter dated March 16, 2011, it was instructed by the DTCP not to carry out any work unless he received clearance from the irrigation department, Haryana. This condition was imposed for the first time although there was no mention of such condition either in the letter of intent or the licence for development issued in favour of the appellant.

The requisite clearances and permissions from the competent authorities took nearly three NCDRC held that since the agreement containing the force majeure clause was executed and concealed material facts on the part of the appellant, the aforesaid agreement is not binding on the complainants to four years from the date of issuance of the said letter dated March 16, 2011 and there was stay against the development on the subject land by the order of Supreme Court which remained in operation from April 19, 2012 to Dec 12, 2012. It is also argued that the state commission has ignored the aforesaid aspects which caused delay in the development of the project and delivery of plots to the respondents and the obstructions were not within the control of the appellant. Thus, in view of the force majeure clause, the complaint ought to have been dismissed.

On the other hand, it was contended on behalf of the respondents that benefit of force majeure clause is not available to the appellant for the reason that the appellant entered into the plot buyer’s agreement with the respondents by concealing material facts.

NCDRC did not find any merit in the contention of the appellant and held that the protection of force majeure clause in the agreement between the parties was not available to the appellant for the reason that it was the stand of the appellant that vide letter dated March 16, 2011, DTCP Haryana had directed the appellant not to carry out any earth work or construction work at the subject site without obtaining no objection certificate from the irrigation department Haryana. Despite the restraint, the appellant executed the plot buyer’s agreement with the complainants during the period June 23, 2011 and June 24, 2011. NCDRC also observed that while entering into the agreement, the appellant did not mention the restraint letter dated March 16, 2011 issued by DTCP Haryana. NCDRC opined that by concealing material facts, the appellant defrauded the respondents/ complainants to execute the agreement that contained the force majeure clause, which is an unfair practice and amounts to deficiency in service. The author is a senior partner, ZEUS Law Associates, a corporate commercial law firm. One of its areas of specialisation is real estate transactional and litigation work.