Builder Penalized: impact of closing of Right to File Written Statement

Table of Contents

• 1. Bibliographic Details and the Legal impact of closing of Right to File Written Statement
• 2. Brief Facts of the Dispute Between Homebuyers and the Developer
  • 2.1 The Construction Agreement (2012) and the Promised Possession (2014)
  • 2.2 Procedural History: How the Hon’ble Supreme Court Enforced the consequence of losing right to file the written statement
  • 2.3 Chronological Timeline: From Project Booking to the Forfeiture of the Builder’s Defense
• 3. Legal Principles on the Forfeiture of Defense
  • 3.1 Analyzing the consequence of losing right to file the written statement and General Law
  • 3.2 Rights of the Opponent to Participate and Cross-Examine Without a Written Statement
• 4. Distinction Between written statement Vs written submissions
  • 4.1 Defining “Pleading” and Material Facts under Order VI of the CPC
  • 4.2 The Legal Rigour Against Raising New Grounds and the bar on introducing new defences via written submissions
  • 4.3 Establishing the Principle: Evidence Cannot Prove a Case Not Set Up in Pleadings
• 5. Procedural Scrutiny of the Hon’ble NCDRC Proceedings
  • 5.1 Evaluating the impact of closing of Right to File Written Statement on NCDRC’s Findings
  • 5.2 can written submissions replace written statement when right to file the written statement is closed?: Analyzing Judicial Oversight
  • 5.3 Determining if the Builder’s Data Influenced the Final Judgment
• 6. Substantive Challenge to the Possession and Compensation Formula
  • 6.1 whether the impugned order invites interference on any other ground: The Failure to Consider Clause 6.1
  • 6.2 Correcting the “Due Date of Possession” and Applying Delayed Possession Compensation
  • 6.3 Validating the 6% Interest Rate and Findings on Allied Claims
• 7. Learnings for Complainant and Opponent
• 8. Final Operative Portion and Summary of the Decision
• 9. Frequently Asked Questions Regarding the impact of closing of Right to File Written Statement

1. Bibliographic Details and the Legal impact of closing of Right to File Written Statement

In this section, we provide the essential legal identifiers of the case. Understanding the impact of closing of Right to File Written Statement begins with identifying the specific litigation that reached the Hon’ble Supreme Court of India. This case serves as a benchmark for the consequence of losing right to file the written statement when a builder defaults on procedural timelines.

• Title of the Case: Kaushik Narsinhbhai Patel & Ors. Versus M/s. S.J.R. Prime Corporation Private Limited & Ors.
• Name of the Judges: Hon’ble Mr. Justice C.T. Ravikumar and Hon’ble Mr. Justice Sanjay Kumar
• Citation Number of the Judgment: 2024 INSC 542
• Date of the Judgment: July 22, 2024

As we transition from these formal details, we must look at the real-world dispute that forced 46 homebuyers to seek justice against a major developer.

2. Brief Facts of the Dispute Between Homebuyers and the Developer

The dispute began when a group of 46 homebuyers booked flats in the ‘Fiesta Homes by SJR Prime’ project, lured by the developer’s representations. While the homebuyers fulfilled their payment obligations, they faced an inordinate delay in receiving their homes, leading to a legal battle where the impact of closing of Right to File Written Statement became a central procedural issue. From the perspective of the Complainant, the delay of approximately four years in handing over possession constituted a clear deficiency in service. Conversely, the Opponent later tried to offer justifications for the delay, but their failure to respond to the initial legal notice within the statutory period led to the severe consequence of losing right to file the written statement.

2.1 The Construction Agreement (2012) and the Promised Possession (2014)

On March 31, 2012, the parties entered into a Construction Agreement. This document explicitly defined when the homes were to be delivered under Clause 6.1:

“The possession of the Schedule ‘C’ apartment in Schedule ‘A’ Property will be delivered by the Second Party to the First Party after completion of construction as far as possible on or before the month of March year 2014 with Six months grace period additionally”.

Going by these terms, the due date for possession was September 2014. However, the actual delivery was delayed significantly, prompting the homebuyers to approach the Hon’ble 2.2 Procedural History: How the Hon’ble Supreme Court Enforced the consequence of losing right to file the written statement

The procedural history is where the impact of closing of Right to File Written Statement took shape. After the homebuyers filed their complaint (CC No. 945 of 2019), the builder failed to file a written statement. Initially, the Hon’ble NCDRC issued a fresh notice on January 27, 2021. The homebuyers challenged this extension, and on August 11, 2021, the Hon’ble Supreme Court declared the forfeiture of the builder’s defense. The court noted:

“The conduct on the part of respondent-builder in not filing written statement does not entitle him to any further benefit. It must, therefore, be declared that the respondent has forfeited his right to have filed written statement and it is hereby declared so”.

This established the irreversible consequence of losing right to file the written statement.

2.3 Chronological Timeline: From Project Booking to the Forfeiture of the Builder’s Defense

• March 31, 2012: The Construction Agreement is signed between the homebuyers and the builder.
• March 2014: Original promised date for construction completion.
• September 2014: Final due date for possession after the grace period.
• May 2019: Homebuyers file Consumer Complaint No. 945 of 2019.
• January 27, 2021: Hon’ble NCDRC initially grants extra time to file a written statement.
• August 11, 2021: Hon’ble Supreme Court order declaring the consequence of losing right to file the written statement.
• September 15, 2022: Hon’ble NCDRC passes the impugned Judgment.

3. Legal Principles on the Forfeiture of Defense

3.1 Analyzing the consequence of losing right to file the written statement and General Law

The general law suggests that the consequence of losing right to file the written statement puts the party back in the position they were in at the time the default occurred. If no written statement was filed before the right was closed, the party cannot be permitted to file it later under the guise of subsequent proceedings.

3.2 Rights of the Opponent to Participate and Cross-Examine Without a Written Statement

The impact of closing of Right to File Written Statement does not mean the Opponent is completely barred from participation. Even if the forfeiture of the right to file written statement has occurred, the party retains the right to cross-examine the witness(es) produced by the Complainant. However, they cannot build a new factual case of their own.

4. Distinction Between written statement Vs written submissions

4.1 Defining “Pleading” and Material Facts under Order VI of the CPC

To understand the bar on introducing new defences via written submissions, we define what constitutes a “pleading”. According to Order VI of the CPC:

“Pleading. – ‘Pleading’ shall mean the plaint or written statement”.

4.2 The Legal Rigour Against Raising New Grounds and the bar on introducing new defences via written submissions

There is a clear bar on introducing new defences via written submissions because no pleading can raise new grounds inconsistent with previous records. The builder in this case attempted to use submissions to explain the delay, but the impact of closing of Right to File Written Statement prohibited these new explanations.

4.3 Establishing the Principle: Evidence Cannot Prove a Case Not Set Up in Pleadings

We find that no amount of evidence can prove a case not originally set up in the pleadings. This answers the query: can written submissions replace written statement when right to file the written statement is closed?. Since the Opponent failed to lay a foundation, any factual reasoning introduced later was inadmissible.

5. Procedural Scrutiny of the Hon’ble NCDRC Proceedings

5.1 Evaluating the impact of closing of Right to File Written Statement on NCDRC’s Findings

The Hon’ble Supreme Court scrutinized whether the Hon’ble NCDRC gave weight to the builder’s unauthorized defenses in the written submissions. The builder introduced reasons to support the stand that homebuyers did not deserve compensatory interest.

5.2 can written submissions replace written statement when right to file the written statement is closed?: Analyzing Judicial Oversight

The builder used written submissions to introduce new facts. Regarding whether can written submissions replace written statement when right to file the written statement is closed, the court noted:

“the first respondent who is bound by Annexure P-18 order could not have been permitted to introduce its case to defend the case of the complainants through written submissions though it was rightly permitted to participate in the proceedings”.

5.3 Determining if the Builder’s Data Influenced the Final Judgment

The Hon’ble Supreme Court found that the Hon’ble NCDRC had not actually accepted the builder’s specific defenses. However, the commission still made a technical error in its compensation formula by ignoring Clause 6.1.

6. Substantive Challenge to the Possession and Compensation Formula

6.1 whether the impugned order invites interference on any other ground: The Failure to Consider Clause 6.1

The homebuyers argued the Hon’ble NCDRC failed to consider the impact of Clause 6.1. The commission instead used a formula based on the payment of the 11th installment. The Hon’ble Supreme Court found no rationale for this deviation.

6.2 Correcting the “Due Date of Possession” and Applying Delayed Possession Compensation

The due date must be fixed by the Construction Agreement. The correct date for Delayed Possession Compensation was September 2014. Non-furnishing of a payment schedule by buyers could not justify deviating from the contract.

6.3 Validating the 6% Interest Rate and Findings on Allied Claims

Following the precedent in R.V. Prasannakumaar, the court approved interest at 6% per annum. Other claims, such as refund of car parking and legal fees, were declined based on previous precedents or lack of evidence.

7. Learnings for Complainant and Opponent

This case serves as a lesson in procedural discipline where the impact of closing of Right to File Written Statement shifts the litigation balance. The Complainant should ensure the consequence of losing right to file the written statement is strictly enforced. By securing a forfeiture, they prevent the introduction of unproven facts. For the Opponent, the impact of closing of Right to File Written Statement restricts them to legal grounds. There is a strict bar on introducing new defences via written submissions. They cannot use submissions to bypass their failure to file a timely written statement.

8. Final Operative Portion and Summary of the Decision

The appeal filed by the homebuyers was allowed in part. The possession date is corrected and fixed as per Clause 6.1 of the Construction Agreement. Compensation is set at 6% interest per annum from September 2014 until the offer of possession. The Hon’ble NCDRC must verify specific offer dates for each of the 46 purchasers. The direction to construct the Green Jogging Track and Convenience Store was maintained, while other claims were declined.

9. Frequently Asked Questions Regarding the impact of closing of Right to File Written Statement

9.1 What is the impact of closing of Right to File Written Statement on a builder?
The impact of closing of Right to File Written Statement is that it creates a legal barrier preventing the builder from introducing its case or evidence to support a defense. The builder is barred from bringing in pleadings indirectly once this right is forfeited.

9.2 Can a builder file a written statement after the Hon’ble Supreme Court has declared the right forfeited?
No, the Hon’ble Supreme Court declared that the respondent forfeited the right, and the case must proceed without it.

9.3 What is the legal difference between a written statement Vs written submissions?
A written statement is a formal pleading containing material facts for a defense. Written submissions are for arguing legal questions based on existing pleadings and cannot introduce new facts.

9.4 Is there a strict bar on introducing new defences via written submissions?
Yes, there is a strict bar on introducing new defences via written submissions because no pleading can raise new grounds or allege facts inconsistent with previous records.

9.5 Can written submissions replace written statement when right to file the written statement is closed?
No, written submissions cannot replace a written statement because what cannot be done directly cannot be done indirectly through submissions.

9.6 What is the consequence of losing right to file the written statement for the builder’s participation?
The consequence of losing right to file the written statement is that participation is confined to legal questions and cross-examining witnesses, without bringing forth an admissible factual defense.

9.7 How should Delayed Possession Compensation be calculated if the builder’s defense is closed?
It must be fixed in terms of the specific conditions in the Construction Agreement, such as Clause 6.1.

9.8 Does the impact of closing of Right to File Written Statement mean the builder cannot participate at all?
No, the builder is permitted to participate and cross-examine witnesses, but they do so without a written statement on record.

9.9 Can a builder use a “Construction Linked Payment Plan” to justify a new possession date after forfeiture?
No, a construction-linked plan cannot be a reason for fixing a new due date in disregard of the promised date in the agreement.

9.10 What happens if the Hon’ble NCDRC relies on facts not present in the pleadings?
The Hon’ble Supreme Court holds that no amount of evidence can prove a case for a party who did not set up the same in their pleadings.

9.11 Are car parking fees refundable if the builder’s defense is closed?
No, the refund was declined based on previous precedents confirmed by the Hon’ble Supreme Court.

9.12 How does Clause 6.1 of the Construction Agreement affect the due date of possession?
It specifically mentions the promised date, which must be the basis for fixing the liability for delay.

9.13 Can builders explain the reasons for construction delay in their written submissions?
No, this is considered an attempt to introduce pleadings, which is prohibited once the right to file is closed.

9.14 What are the legal rights of a Complainant when the Opponent’s right to file a written statement is closed?
The Complainant has the right to have the case proceed without the builder’s defense and to enforce the bar on introducing new defences via written submissions.

9.15 What interest rate did the Hon’ble Supreme Court approve for Delayed Possession Compensation?
The court approved interest at the rate of 6% per annum from the due date until the offer of possession.