2025 (4) TMI 878 - SC - Indian Laws

Builders Granted Relief: NCDRC Oversight Allows Direct Flat Sales with Balanced Dispute Resolution Mechanism

The SC dismissed the contempt petition against the builder, finding no wilful disobedience of court orders. The court modified previous directives, ... Allotment of flats on payment of balance due to the builder and also requisite registration charges to be paid to the Competent Authority - HELD THAT:- It is almost 2 years and 10 months and according to the learned counsel for the builder not a single flat has been sold by the Court Commissioner so appointed by the NCDRC. The submission made by the learned counsel on behalf of the builder is that in case liberty is granted to the builder to sell the flats directly and the direction contained in the order dated 18th April 2022 of not permitting the builder to sell and further provide that the sale to take place through Court Commissioner be modified as the same is not benefitting either of the parties. He further submitted that the builder would sell the apartments within one year and deposit the entire sale consideration with the NCDRC for being disbursed to the claimants. The above liberty may be granted subject to terms and conditions as may be fixed by this Court. There are substance in the submission of the builder. However it is not inclined to fix any terms and conditions and would leave it for the NCDRC to determine the same. Accordingly, the order dated 18th April 2022 is modified and withdraw the directions to the NCDRC to put the sale of flats through Court Commissioner and further we withdraw the direction restraining the builder or any associate from selling the flats. Conclusion - The NCDRC is empowered to regulate the sale of flats, impose appropriate conditions, and monitor the proceedings to protect the rights of buyers and the builder alike. Application disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether continued non-execution of conveyance deeds and non-delivery of possession by a judgment-debtor amounts to contempt of the Court where the alleged cause is non-payment of demanded dues by allottees. 2. Whether the Court should adjudicate the reasonableness or excessiveness of demands raised by the judgment-debtor for payment of balance consideration and registration charges in contempt proceedings, or direct the aggrieved parties to statutory authorities. 3. Whether an earlier direction restraining the judgment-debtor (and associates) from selling flats and directing sale through a Court Commissioner should be modified where the Commissioner has not effected any sale for an extended period, and what supervisory mechanism should replace the earlier direction. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Contempt liability for non-execution of sale deed where allottees have not cleared dues Legal framework: Contempt for disobedience of court orders requires wilful non-compliance with a Court's direction. Where compliance is conditioned upon performance by the other party (e.g., payment of balance consideration and registration charges), the obligation is contingent upon satisfaction of that condition precedent. Precedent treatment: The judgment does not cite or rely upon any specific prior authorities; the Court applied general principles of conditional obligations and contempt jurisdiction. Interpretation and reasoning: The Court examined whether the respondent-builder's alleged failure to allot flats or execute conveyance deeds constituted wilful defiance of the order. The Court accepted the respondent's contention that allotment and execution were dependent on the applicants clearing the outstanding dues. The Court further noted that the applicants had been served demands which, if unpaid, prevented the builder from performing the conditional obligation. The Court declined to investigate the substance of the demand in contempt proceedings, treating non-payment as a legitimate impediment to compliance. Ratio vs. Obiter: Ratio - Where compliance with a court order is conditioned on the other party performing an obligation (such as payment of balance consideration and registration charges), a judgment-debtor who does not perform because the condition precedent remains unsatisfied is not, on that account alone, in contempt, unless wilful disobedience is otherwise established. Obiter - The Court's acceptance of the builder's factual assertion that dues remained unpaid is case-specific and does not establish a blanket rule for disputed claims of non-payment. Conclusions: The Court found no basis to continue contempt proceedings and discharged notices; the contempt petition was closed. The Court left open the factual contest over payment by directing that other appropriate fora may address disputes over demands. Issue 2 - Appropriateness of adjudicating the reasonableness of demands within contempt proceedings; forum for challenge Legal framework: Questions regarding the reasonableness or excessiveness of commercial or registration demands fall within the competence of specialized regulatory or adjudicatory authorities established by statute (here, the Real Estate Regulatory Authority (RERA) is identified as the appropriate forum). Courts exercising contempt jurisdiction should not typically resolve underlying disputes of quantum or reasonableness that are remediable by statutory bodies. Precedent treatment: The Court did not cite specific precedents but followed the established principle that specialized tribunals are the appropriate fora for technical or statutory disputes. Interpretation and reasoning: The Court declined to determine whether the demands were excessive, arbitrary or unreasonable within the contempt proceedings, observing that aggrieved applicants have a remedy before RERA to get such demands adjudicated. The Court thereby bifurcated the issues: contempt requires inquiry into wilful non-compliance with clear, unconditional directions; price or demand disputes are matters for the regulatory forum. Ratio vs. Obiter: Ratio - Contempt proceedings are not the appropriate vehicle to adjudicate disputes over the reasonableness of contractual or statutory demands where a specialized authority has jurisdiction; such disputes should be pursued before that authority. Obiter - The suggestion that applicants should seek relief before RERA is procedural guidance grounded in the facts of the case. Conclusions: The Court refused to entertain reduction or adjudication of the demands in the contempt petition and directed applicants to pursue remedies before RERA; contempt proceedings were closed on that basis. Issue 3 - Modification of prior order restraining sale by builder and directing sale through Court Commissioner where Commissioner has not effected sale for prolonged period Legal framework: A court retains the supervisory power to modify its earlier orders in light of changed circumstances or when the mechanisms ordered for execution are failing to produce the intended result. Execution and sale directions issued to tribunals or commissions (such as the National Consumer Disputes Redressal Commission - NCDRC, in this context) may be altered where prolonged inaction frustrates the object of the decree. The executing authority is entitled to impose conditions and supervisory safeguards to protect the interests of all parties. Precedent treatment: No precedents were invoked; the Court relied upon its institutional power to modify prior directions to ensure effective execution and protect parties' interests. Interpretation and reasoning: The Court noted that almost three years had elapsed with no sale effected by the Court Commissioner appointed by the NCDRC under the earlier order. Recognizing that continued prohibition on the judgment-debtor (and associates) from selling the flats and the insistence on sale through a Court Commissioner had not served the parties' interests, the Court found substance in the applicant-builder's submission for modification. However, the Court declined to itself set terms and conditions for such sales, preferring to entrust the NCDRC with the task of prescribing conditions, monitoring sales, and exploring modes of sale to secure the best price. The Court expressly withdrew the earlier directions restraining the builder and mandating sale only through a Court Commissioner, thereby restoring the possibility of sale by the builder subject to NCDRC oversight. Ratio vs. Obiter: Ratio - Where execution mechanisms previously ordered (e.g., sale through appointed Court Commissioner) have failed to effect realization within a reasonable period, the supervisory court may modify its directions and permit alternative modes of execution, subject to appropriate conditions and monitoring by the executing tribunal. Obiter - The Court's decision to leave the formulation of specific conditions to the NCDRC reflects institutional allocation rather than a prescriptive rule about the content of such conditions. Conclusions: The Court modified the earlier order by withdrawing the direction that sales be effected only through a Court Commissioner and the restraint on the judgment-debtor selling flats. The NCDRC was empowered to determine terms and conditions for any sale, to explore alternative sale mechanisms to secure best price, to monitor the sale proceedings, and to impose safeguards as it deems fit. The miscellaneous application seeking modification was allowed accordingly. Cross-References and Practical Directions 1. Cross-reference between Issues 1 and 2: The Court's dismissal of contempt proceedings rests on the factual finding of unpaid dues (Issue 1) and its refusal to adjudicate the reasonableness of demands within contempt jurisdiction (Issue 2), directing that such challenges be pursued before RERA. 2. Cross-reference between Issues 2 and 3: While the Court declined to adjudicate demand disputes in contempt, it recognised the broader execution problem (Issue 3) created by prolonged inaction in implementing prior sale directions and therefore reallocated the execution role to the NCDRC with liberty to impose terms protective of claimants' interests.