Introduction:
In Srigganesh Chandrasekaran & Others v. M/s Unishire Homes LLP & Others (2026 LiveLaw (SC) 185), the Supreme Court of India, through a Bench comprising Justice P.S. Narasimha and Justice Alok Aradhe, addressed a significant question arising under the Consumer Protection Act, 2019: whether landowners who enter into a Joint Development Agreement (JDA) and execute a General Power of Attorney (GPA) in favour of a developer can be held vicariously liable for delay in construction of flats caused by the developer. The appeal was preferred by homebuyers challenging the decision of the National Consumer Disputes Redressal Commission (NCDRC), which had held the developer solely liable for delay while exonerating the landowners. The Supreme Court affirmed the NCDRC’s view and dismissed the appeal, holding that mere authorization to develop, construct, and sell flats does not automatically impose liability on landowners for construction delays when the contractual framework clearly assigns responsibility to the developer and indemnifies the landowners.
Arguments on Behalf of the Appellants (Homebuyers):
The appellants contended that the landowners could not escape liability merely by drafting clauses in the Joint Development Agreement absolving themselves of responsibility. According to them, the execution of a General Power of Attorney in favour of the developer established a principal–agent relationship. Once such a relationship was created, the landowners, as principals, were legally bound by the acts of their agent carried out within the scope of authority. The homebuyers argued that the developer was acting not independently, but under the authority granted by the landowners. Therefore, any deficiency in service, including inordinate delay in construction and delivery of possession, ought to be attributable to both the developer and the landowners.
The appellants emphasized that under consumer jurisprudence, liability cannot be evaded by contractual arrangements that dilute consumer protection. They submitted that the buyers had entered into agreements believing that the project was backed by both the landowners and the developer. The land itself belonged to the landowners; without their title and consent, the project could not have been launched. The landowners had allowed the developer to use their property, obtain statutory sanctions, market the project, and execute sale deeds. This, according to the appellants, amounted to active participation and facilitation in the development process.
They further argued that the doctrine of vicarious liability is well-recognized in Indian law. When a principal authorizes an agent to act on its behalf, the principal cannot disown responsibility for acts done within the scope of such authority. The execution of the GPA, they contended, was not a mere formality but a substantive empowerment enabling the developer to act in the name of the landowners. The landowners had reposed trust in the developer and conferred upon it wide-ranging authority. If that authority resulted in deficiency in service, the liability should attach to both.
The appellants also placed reliance on the object and spirit of the Consumer Protection Act, 2019, especially Section 67, under which the present appeal was filed. They argued that consumer law is intended to provide effective and speedy redressal. If landowners are allowed to insulate themselves through indemnity clauses, consumers would be forced to pursue only the developer, who might become insolvent or financially unstable. In such a scenario, buyers would be left remediless despite having invested life savings.
According to the appellants, the project had been delayed by more than six years, causing severe financial and emotional hardship. Many buyers had been compelled to pay both rent and EMIs simultaneously. The NCDRC had rightly granted interest against the developer but erred in absolving the landowners. The appellants submitted that the landowners were beneficiaries of the development arrangement and were entitled to a share in the constructed area or revenue. Hence, they could not claim to be strangers to the construction activity.
The homebuyers thus urged the Supreme Court to adopt a purposive interpretation of the JDA and the Consumer Protection Act and to hold that landowners, having enabled and authorized the project, must bear joint and several liability for delays and deficiencies arising in the course of development.
Arguments on Behalf of the Respondents (Landowners and Developer):
On behalf of the landowners, it was argued that the Joint Development Agreement clearly delineated responsibilities. The developer was exclusively responsible for obtaining sanctions, undertaking construction, mobilizing finances, marketing the project, and executing sale transactions. The landowners had merely contributed land as their share in the arrangement. They had no role in day-to-day construction activities, no control over timelines, and no involvement in execution.
The respondents contended that the GPA was executed solely to facilitate implementation of the development project. It enabled the developer to secure approvals, enter into agreements with purchasers, and complete procedural formalities. However, the GPA did not transform the landowners into developers, nor did it impose upon them a supervisory obligation over construction. The landowners were passive stakeholders who had entrusted the entire development process to the professional developer.
They highlighted that the JDA contained a specific indemnity clause whereby the developer undertook to indemnify the landowners against acts of commission or omission relating to construction and marketing. This clause, they argued, demonstrated the intention of the parties: the developer would bear full responsibility for execution and any resulting liabilities.
It was further contended that consumer complaints must be examined on the basis of contractual obligations. Deficiency in service can be attributed only to the party who undertook to render the service. In the present case, construction and delivery of flats were obligations exclusively assumed by the developer. The landowners had not promised to construct or deliver flats to buyers. Therefore, fastening liability upon them would amount to rewriting the contract.
The respondents also submitted that imposing vicarious liability in such circumstances would discourage landowners from entering into JDAs, which are common in urban development. It would create uncertainty and risk for landowners who have neither expertise nor control over construction. The law does not impose liability merely because a person owns the land on which a project is developed.
In support of the NCDRC’s findings, the respondents maintained that the Commission had correctly appreciated the contractual framework and the factual matrix. The delay was attributable solely to the developer. Hence, the NCDRC was justified in directing the developer to pay interest and compensation while absolving the landowners.
Court’s Judgment:
The Supreme Court, in a judgment authored by Justice Alok Aradhe, examined the Joint Development Agreement, the General Power of Attorney, and the findings of the NCDRC. The Court noted that under the JDA executed in February 2012, the developer was entrusted with the responsibility of obtaining sanctions, constructing the project, and marketing and selling flats. The landowners’ role was confined to providing land and facilitating execution through the GPA.
The Court observed that the construction activity was entirely within the domain of the developer. The delay in delivery of possession related specifically to flats falling within the developer’s share. The landowners neither undertook to construct nor exercised control over construction timelines. Therefore, the primary obligation to complete the project rested upon the developer.
Addressing the argument of vicarious liability, the Court held that mere authorization to develop and sell flats does not automatically render landowners liable for deficiencies committed by the developer. The existence of a principal–agent relationship does not, in every circumstance, impose liability for independent contractual obligations undertaken by the agent. Liability must be examined in the context of the nature of obligation and the allocation of responsibilities under the contract.
The Court emphasized that the JDA clearly absolved the landowners from liability relating to construction. Furthermore, the developer had expressly indemnified the landowners against acts of commission or omission in construction. This indemnity clause reinforced the understanding that the developer alone would bear consequences of delay or deficiency.
In a significant observation, the Court stated: “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 Court thus underscored the importance of respecting contractual allocation of risk and responsibility.
The Bench further clarified that consumer law does not override clear contractual stipulations unless they are unconscionable or contrary to statutory provisions. In the present case, the contractual framework was unambiguous. The developer had assumed full responsibility for construction and delivery. Therefore, fastening liability upon landowners would be inconsistent with both contract law and principles governing deficiency in service.
Accordingly, the Supreme Court dismissed the appeal filed under Section 67 of the Consumer Protection Act, 2019, and affirmed the NCDRC’s decision exonerating the landowners. The developer remained liable to comply with the directions regarding interest and compensation for delay.