Consumer Protection Act. One sided agreement by developer constitutes ‘unfair trade practice’. The Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement. Supreme Court.

Ireo Grace Realtech Pvt Ltd vs Abhishek Khanna & others. Civil Appeal 5785 of 2019 decided on 11 January 2021.

Judgment Link: https://main.sci.gov.in/supremecourt/2019/23235/23235_2019_38_1501_25365_Judgement_11-Jan-2021.pdf

Held: 19.2 The aforesaid clauses reflect the wholly one-sided terms of the Apartment Buyer‘s Agreement, which are entirely loaded in favour of the Developer, and against the allottee at every step. The terms of the Apartment Buyer‘s Agreement are oppressive and
wholly one-sided, and would constitute an unfair trade practice under the Consumer Protection Act, 1986.

19.7 We are of the view that the incorporation of such one-sided and unreasonable clauses in the Apartment Buyer‘s Agreement constitutes an unfair trade practice under Section 2(1)(r) of the Consumer Protection Act. Even under the 1986 Act, the powers of the consumer fora were in no manner constrained to declare a contractual term as unfair or one-sided as an incident of the power to discontinue unfair or restrictive trade practices. An ―unfair contract‖ has been defined under the 2019 Act, and powers have been conferred on the State Consumer Fora and the National Commission to declare contractual terms which are unfair, as null and void. This is a statutory recognition of a power which was implicit under the 1986 Act. In view of the above, we hold that the Developer cannot compel the apartment buyers to be bound by the one-sided contractual terms contained in the Apartment Buyer‘s Agreement.

Compiled by S. Basavaraj, Advocate, Daksha Legal.