The Supreme Court has firmly stated that the real estate developers' presentations made in project brochures have a significant place, and promises made to prospective customers cannot just be viewed as the company's sales propaganda. The court emphasized that the developers have to build and handover the flats consistent with what was written in brochures and plans.
This view was expressed by the court during the hearing of a case on DLF Home Developers' The Primus residential project in Sector 82A, Gurugram. At the time of the hearing, the court checked the allegations that there were material changes between the way the project was presented to the customers and its actual condition.
Supreme Court Examines Project Deviations
A major issue before the court concerns a 24-metre-wide road shown in the original project plan and brochure. According to the findings placed before the court, the road does not exist in the manner represented in the original plan across substantial portions of the project.
The Supreme Court bench of Justices Ahsanuddin Amanullah and R Mahadevan described the deviation as “not minor, but substantial” and indicated that if the project was not brought into conformity with the representations made in the brochure, it could “proceed to pass appropriate orders” as per HT.
The court's observation places emphasis on the obligations arising from representations made to consumers at the time of marketing and selling residential properties. This means that features and infrastructure presented to prospective buyers can become relevant when assessing whether a project has been delivered as represented.
Road Shown in Brochure Under Scrutiny
The disputed road was planned over a stretch of approximately 147 metres. The court noted that around 52 metres of this stretch had been developed as a green patch. Another substantial portion, while retaining the appearance of a road, was being used for parking by residents and visitors.
As a result, approximately 100 metres of the planned road was either being used as a green area or for parking. The court questioned why the deviation had not been rectified despite repeated opportunities.
The matter gained further importance following a status report submitted by the Central Bureau of Investigation (CBI). The Supreme Court had directed the agency to undertake a preliminary fact-finding exercise concerning the road and other complaints related to the project.
“We are at a loss to understand why, despite repeated opportunities having been granted to ensure that the project is brought into conformity with what was represented in the brochure, the aforesaid deviation has not yet been rectified,” the court bench said.
Based on maps, photographs and other material, the CBI report indicated that the road did not exist within the project in the manner represented in the original plan and brochure. The Supreme Court said the report left “no manner of doubt” on this aspect.
Homebuyers Raise Multiple Concerns
The proceedings before the Supreme Court originated from a consumer dispute involving homebuyers of The Primus. The project was marketed by DLF around 2012 as a premium residential development.
According to the complaints, buyers had been offered several facilities and infrastructure features, including two 24-metre-wide access roads, banquet facilities, tennis courts and swimming pools.
Homebuyers subsequently alleged that several aspects of the project did not correspond with the representations made during the sale process. Among their concerns were issues relating to access, infrastructure and permanent utilities.
The buyers also alleged that the project was effectively landlocked, with agricultural land surrounding it. Questions were also raised about the availability of proper roads, water and electricity infrastructure and how a partial occupation certificate had been obtained.
DLF, however, has maintained that possession of the apartments was offered with the required water, electricity and other compliances.
Dispute Reached the Supreme Court
The dispute initially came before the National Consumer Disputes Redressal Commission (NCDRC), following complaints filed by five allottees.
The consumer body passed its judgment on May 29, 2023. Both the homebuyers and DLF Home Developers subsequently approached the Supreme Court.
During the proceedings, the Supreme Court examined whether the project delivered to consumers corresponded with the project represented to them when the apartments were marketed and sold.
In an earlier order dated February 25, the court observed that there appeared to be a “huge mismatch” between statutory requirements and the conditions found on the ground. The bench also noted that representations made to prospective buyers “may not have been fully translated into reality.”
The court expressed concern about the implications such cases could have for ordinary consumers if similar situations occurred elsewhere in the organised real estate sector.
The bench had earlier observed that it was “more concerned” about the possibility of such instances occurring in the organised real estate sector and questioned what their wider impact could be on ordinary homebuyers.
CBI Preliminary Investigation Still Going On
The Supreme Court has ordered the CBI director to deploy two more inspectors to help police superintendent Saurabh Gupta, who is currently in charge of the preliminary inquiry.
The CBI has been instructed to review matters without prejudice and impartially. Besides that, the court emphasized that CBI investigation findings should not be swayed by what was said in the court.
Besides others, the issue the investigation will look at closely is: was the road shown as 24 metres wide on the project documents really maintained as a road or was its use modified afterwards?
The case has been deferred by the Supreme Court till October 12 when the court tends to take up the CBI's comprehensive report for final consideration.
Implications for Developers and Homebuyers
The high Court decision has a major impact on project brochures and the promises made in them as sources of information for buyers and consumers when they decide to purchase the project.
In the view of the judge, developers cannot be excused of their duties to consumers merely because what is offered in promotional materials is separate from what is actually delivered as part of their contract. That means, promotional representations are treated as part of a developer's obligations to consumers.
The court has been very adamant that what is finally delivered to consumers should be in "strict conformance with the representations made in the brochure/plain" which were given to prospective purchasers.
That's why, it is a more essential part of the project marketing material that is accurate. Developers must guarantee that what is depicted to the buyers as to roads facilities amenities, and other project developments will be reflected in the actual plans and developments made available.
To homebuyers, this development is another reminder that it is prudent that they keep project brochures, approved plans advertisements, allotment documents, and other documents furnished while buying. These documents, for instance, may come in very useful in a dispute involving amenities promised, access rights, infrastructure works, or project layout plans.
In this case, it is also brought out that one should be careful about the correspondence of the advertised project facilities to the approved plans and the development finally offered to the consumers.
The court has repeatedly focused on the requirement that the project sold to consumers should be delivered “strictly in accordance with the representations made in the brochure/plan” provided to prospective buyers.
Image source- sci.gov.in
