A) ABSTRACT / HEADNOTE

This case examines the legal liability of landowners under a Joint Venture Agreement (JVA) and an Irrevocable Power of Attorney (IPA) executed in favor of a builder (Respondent No. 2) for property development. Disputes arose when the builder failed to meet contractual terms, leading buyers (complainants) to seek remedies against both the builder and the landowners. The State Commission and National Consumer Disputes Redressal Commission (NCDRC) held the landowners and builder jointly and severally liable for deficiencies in service. Despite the landowners’ claim of revocation of the power of attorney, the courts upheld their liability, emphasizing the JVA’s continued enforceability and the principle of consumer protection.

Keywords: Consumer Dispute, Joint Venture Agreement, Irrevocable Power of Attorney, Landowners’ Liability, Deficiency in Service.

B) CASE DETAILS

i) Judgement Cause Title: Akshay & Anr. v. Aditya & Ors.
ii) Case Number: Civil Appeal Nos. 3642-3646 of 2018
iii) Judgement Date: August 29, 2024
iv) Court: Supreme Court of India
v) Quorum: Hon’ble Bela M. Trivedi, J., and Hon’ble Satish Chandra Sharma, J.
vi) Author: Hon’ble Bela M. Trivedi, J.
vii) Citation: [2024] 8 S.C.R. 847
viii) Legal Provisions Involved: Consumer Protection Act, 1986
ix) Judgments overruled by the Case: None
x) Case is Related to: Consumer Protection, Civil Law, Real Estate Development.

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

This case stems from a dispute involving land development under a Joint Venture Agreement (JVA) and sale of residential flats. The appellants, landowners, had executed a JVA and an Irrevocable Power of Attorney (IPA) in favor of the builder (Respondent No. 2). Buyers (complainants) purchased flats based on agreements made by the builder under the authority of the IPA. Complaints were lodged citing non-compliance with construction timelines and terms, alleging deficiency in service under the Consumer Protection Act, 1986. The State Commission ruled against the landowners and builder, holding them jointly and severally liable. The NCDRC affirmed this decision, leading to the present appeals.

D) FACTS OF THE CASE

1. The appellants owned land developed under a Joint Venture Agreement dated July 6, 2013, with Respondent No. 2.
2. An Irrevocable Power of Attorney was executed on the same date, authorizing the builder to enter into sale agreements with third parties for the proposed flats.
3. Buyers (complainants) entered into agreements with the builder but alleged significant delays and non-compliance with the contractual terms.
4. Complaints were filed before the State Commission, seeking declarations of deficiency in service and specific performance of construction obligations.
5. The State Commission held both the builder and landowners liable.
6. The NCDRC dismissed the appellants’ appeal, finding no merit in their claim of revocation of the IPA.
7. The appellants challenged this ruling before the Supreme Court.

E) LEGAL ISSUES RAISED

i) Are the landowners jointly and severally liable for deficiencies in service by the builder under the JVA and IPA?
ii) Does the revocation of the IPA absolve the landowners of liability for acts done prior to the revocation?
iii) Can the landowners escape liability under consumer protection laws despite the JVA’s continued enforceability?

F) PETITIONER/APPELLANT’S ARGUMENTS

1. The appellants argued that they revoked the Irrevocable Power of Attorney on August 12, 2014, and issued public notices of the same.
2. They contended they were not privy to the agreements between the builder and the complainants.
3. They claimed the complaints were not maintainable against them under the Consumer Protection Act, 1986, as the agreements were solely between the builder and buyers.

G) RESPONDENT’S ARGUMENTS

1. The respondents (buyers) argued that the JVA had not been terminated and continued to bind the landowners.
2. They highlighted that the Irrevocable Power of Attorney was operative when the agreements were signed.
3. They emphasized consumer protection principles, arguing that the landowners’ liability could not be evaded.

H) JUDGEMENT

a. Ratio Decidendi:
The landowners remained liable under the JVA, as the Irrevocable Power of Attorney was valid when the agreements were executed. Revocation of the IPA post facto could not absolve them of liability for acts undertaken prior to the revocation.

b. Obiter Dicta:
The court underscored the importance of safeguarding consumer interests in real estate transactions, especially where joint ventures are involved.

c. Guidelines:

1. Landowners and Builders’ Liability: Both parties in a JVA are jointly liable for obligations to third parties.
2. Irrevocable Power of Attorney: Such instruments bind the principal until revoked in compliance with law.
3. Consumer Protection: Developers and landowners must ensure timely and effective fulfillment of contractual obligations.

I) CONCLUSION & COMMENTS

The ruling reinforces accountability in joint ventures, emphasizing that landowners cannot evade responsibility for acts performed under their authority. It sets a precedent for interpreting irrevocable agreements in real estate law, bolstering consumer protection.

J) REFERENCES

1. Faqir Chand Gulati v. Uppal Agencies Pvt. Ltd. (2008) 10 SCC 345
2. Sunga Daniel Babu v. Sri Vasudeva Constructions & Ors. (2016) 8 SCC 429
3. Consumer Protection Act, 1986