Introduction:

The Supreme Court of India has ruled that landowners cannot escape liability in a consumer case for deficiency of service, even after revoking a Power of Attorney (PoA) executed with a builder. This significant judgment affirms that the revocation of the PoA does not absolve landowners from joint and several liability in agreements made before the revocation. The case stemmed from a dispute where the landowners had entered into a Joint Venture Agreement (JVA) with a builder, who later failed to deliver promised flats to buyers. Despite the PoA’s revocation, the Supreme Court upheld the decisions of the lower courts, holding the landowners accountable for the builder’s actions.

The Supreme Court was tasked with reviewing a challenge to an order by the National Consumer Disputes Redressal Commission (NCDRC), which had upheld the liability of both the landowners and the builder for failing to complete the construction of flats as per the JVA. The Court observed that the JVA remained valid, and the landowners’ liability extended to agreements and obligations entered into before the PoA’s revocation.

Appellants’ Argument:

Senior Advocate Kailash Vasdev, representing the landowners, argued that the revocation of the PoA on August 12, 2014, effectively terminated their liability for any actions taken by the builder thereafter. Vasdev asserted that the landowners should not be held responsible for the builder’s failure to fulfill construction agreements with buyers since these failures occurred after the PoA had been revoked. He further argued that the landowners were not direct parties to the agreements between the builder and the buyers, rendering any consumer complaints against them under the Consumer Protection Act baseless and unwarranted.

Respondent No. 2’s Argument:

Senior Advocate Siddarth Dave, representing the builder, contended that the builder was committed to completing the construction as per the terms of the JVA. Dave emphasized that the builder was willing to fulfill the remaining obligations, and any issues raised by the buyers were contingent upon the builder’s continued performance under the JVA.

Respondent Buyers’ Argument:

Senior Advocate Gopal Sankaranarayan, representing the flat buyers, argued that the revocation letter dated August 12, 2014, specified that the landowners would not be liable for the builder’s actions “henceforth,” meaning only after the revocation. Sankaranarayan contended that this limitation did not absolve the landowners from liability for any actions or agreements undertaken by the builder before the revocation. He maintained that the buyers were entitled to hold the landowners accountable for the deficiency in service that occurred before the PoA was revoked.

Court’s Judgement:

The Supreme Court, comprising Justices Bela Trivedi and S.C. Sharma, carefully examined the evidence and legal arguments presented by both sides. The Court made two key observations:

• JVA Remains Operative: The Court noted that despite the revocation of the PoA, the Joint Venture Agreement (JVA) between the landowners and the builder remained in effect. The landowners had not revoked the JVA, meaning their contractual obligations towards the buyers persisted. The Court emphasized that the JVA continued to bind the landowners to the builder’s actions concerning the delivery of flats to the buyers.
• Meaning of ‘Henceforth’: The Court interpreted the term “henceforth” in the revocation letter as indicating that the landowners would not be liable for actions taken by the builder after the revocation date. However, this did not exempt them from liability for actions or agreements made by the builder before the revocation. The Court clarified that the landowners were still responsible for any deficiency in service that occurred prior to the PoA’s termination, as the JVA was still operational during that time.

The Court also noted that the landowners had not taken any legal action against the builder for failing to comply with the JVA, suggesting that they tacitly accepted the builder’s actions under the agreement. Consequently, the landowners could not evade liability for the builder’s failure to deliver the promised flats to the buyers.

In conclusion, the Supreme Court upheld the NCDRC’s decision, which found the landowners and the builder liable for deficiency in service and ordered them to complete the construction, transfer possession, and compensate the buyers. The appeal was dismissed, with the Court affirming that the lower courts’ orders were justified and that the appellants’ challenge lacked merit.

This ruling underscores the ongoing obligations of landowners under joint venture agreements and highlights the limited protection offered by the revocation of a Power of Attorney in cases involving consumer rights.