Landowner’s Exoneration from Construction Delay Liability: Supreme Court's Authoritative Resolution in Sriganesh Chandrasekaran & Ors. V. M/S Unishire Homes LLP & Ors
Introduction
The Supreme Court of India, in Sriganesh Chandrasekaran and Ors. Vs. Unishire Homes LLP and Ors.[1] (“Judgment”), had recently considered whether landowners who execute a Joint Development Agreement (“JDA”) and a General Power of Attorney (“GPA”) (collectively referred to as “JDA-cum-GPA”) in favour of a developer can be held jointly liable for construction delays where the developer fails to complete the project within the stipulated timeline, thereby, constituting deficiency in service under the Consumer Protection Act, 2019 (“CP Act”) and attracting liability for delay compensation.
Certain judicial precedents had recognised joint liability in certain joint development arrangements. In Faqir Chand Gulati Vs. Uppal Agencies Pvt. Ltd. and Ors.[2], the Supreme Court explained that the joint development arrangements between a landowner and a developer are not merely internal contractual dealings, but involve a commercial understanding for construction and sale of units and that the nature of the arrangement may bring both parties within the scope of obligations arising from such transactions, depending on their respective roles. Similarly, in Wadhwa Group Housing Private Ltd. Vs. Vijay Choksi and Ors.,[3] the Bombay High Court clarified that once companies register themselves as promoters, they cannot use their private contracts with each other to escape their duties toward homebuyers.
This expansive judicial approach is echoed in the statutory framework of the Real Estate (Regulation and Development) Act, 2016 (“RERA”), where section 2(zk) (i) and (vi) adopt a broad definition of ‘promotor’ enabling both landowners and developers to be treated as jointly responsible where construction and sale are undertaken by different entities. This reflects a clear legislative intent to prevent fragmentation of responsibility and to ensure that parties involved in a project cannot evade accountability through inter se contractual arrangements.
The Judgment clarifies that joint liability in joint development arrangements depends on the contractual allocation of obligations and is not automatic. This brief case study examines the Supreme Court’s approach in the Judgment, particularly its reliance on contractual terms to determine liability.
Factual Matrix
The dispute stemmed from the JDA-cum-GPA where the landowners provided the land while M/s Unishire Homes LLP (“Developer”) handled planning, construction, and marketing. The parties agreed to split the developed property in the ratio of 64:36 in favour of the Developer. The landowners also gave the Developer authority through the GPA to sell units, execute conveyances, collect payments, and complete registrations for the Developer's share. The Developer promised homebuyers delivery within 36 months, with a six-month grace period. The project, however, suffered delays and remained unfinished well past the deadline.
Aggrieved unit purchasers filed a complaint before the National Consumer Disputes Redressal Commission (“NCDRC”), contending that the Developer's failure amounted to deficiency in service under the CP Act. While the NCDRC initially held only the Developer liable for delayed possession, however in subsequent review proceedings, the NCDRC reviewed precedents, including Wing Comdr. Arifur Rahman Khan v. DLF Southern Themes Pvt. Ltd.[4] and DLF Home Developers Ltd. v. Capital Greens Flat Buyers Association[5], wherein the Supreme Court affirmed that interest @ 6% per annum from the promised possession date until the actual possession constitutes appropriate compensation for delay.
The NCDRC, by order dated October 19, 2023 ordered the Developer to complete construction, obtain occupancy certificates, and hand over possession within three months, while paying 6% interest from the original possession date and 9% for further delays, plus INR 50,000 in costs. The NCDRC exempted the landowners from delay compensation but made both parties jointly liable for title transfer and sale deed execution with the flat purchasers. The flat purchasers filed review petition, demanding joint liability for landowners and enhancing delay compensation to INR 5 per square foot monthly compensation with 6% interest. The NCDRC, by order dated December 15, 2023, imposed joint liability on the landowners, but refused higher compensation. The landowners challenged this in Supreme Court, which by order dated May 3, 2024 set aside the NCDRC order for breach of natural justice and directed to reconsider the review petition.
On reconsideration, the NCDRC, by its order dated July 30, 2024 held that the JDA and sale agreements didn't impose joint liability on landowners for delays or service deficiencies. However, both parties remained obligated to transfer title and execute sale deeds. Aggrieved by this, the flat purchasers appealed to the Supreme Court with the present case. The principal issue before the Supreme Court was whether landowners, who merely contributed land under a JDA-cum-GPA, could be held jointly liable with the developer for delay in possession and compensation under the CP Act.
Contentions Advanced by the Parties Before the Supreme Court
The flat purchasers built their case on two points. First, the GPA created a principal-agent relationship making landowners vicariously liable for the Developer's actions. Second, the JDA imposed joint liability for service failures and delays. Absolving landowners from liability would deprive any real remedy for the flat purchasers.
The landowners argued that the Developer was contractually responsible for construction and execution under both agreements. The GPA gave the Developer authority to execute sale agreements on their behalf, with no construction duties attached. Beyond that, the JDA included indemnity clauses protecting them against the Developer's defaults. The delays arose entirely from the Developer's conduct, therefore the Developer should bear the liability alone.
Supreme Court’s Authoritative Holdings
The Supreme Court backed the NCDRC's order dated October 19,2023 on all counts including the liability, compensation, the landowners' limited involvement. The Apex Court upon reading the terms of theGPA concluded that the responsibility for construction delays was solely with the Developer and not the landowners, who, being indemnified under the JDA and having assumed no construction obligations. However, the Court clarified that both the Developer and landowners had to transfer title and execute sale deeds to protect the flat purchaser’s ownership rights. The Court further highlighted that joint and several liability under joint development agreements must be decided based on the contractual arrangements, indemnification terms, and the parties' actual involvement.
Conclusion
The Judgment makes an important determination: liability for construction delays is based on how the contract allocates responsibilities between the parties. It confirms that indemnity provisions protect landowners from the consequences of a developer's actions or failures. Most significantly, simply executing a power of attorney does not automatically saddle a landowner with vicarious liability, particularly when the developer bears the contractual obligation to complete the project.
More broadly, the Judgment takes a contract-centric approach to assess landowner’s liability and reinforces that joint development arrangements are not homogeneous; the legal consequences of such arrangements depend on the precise contractual architecture governing the relationship between landowners and developers. The Judgment thus strikes a careful balance between contractual autonomy and consumer protection, stating that accountability must ultimately fall to the party responsible for the underlying fault.
References
[1] Civil Appeal Nos. 10527-10528 of 2024- MANU/SC/0173/2026
[2] Civil Appeal No. 3302 of 2005- MANU/SC/3133/2008
[3] Second Appeal (Stamp) No. 21842 of 2023- MANU/MH/1177/2024
[4] (2020) 16 SCC 512-[MANU/SC/0607/2020]
[5] (2021) 5 SCC 537- [MANU/SC/1003/2020]