In a significant ruling for homebuyers and real estate stakeholders, the Supreme Court has held that landowners cannot be made jointly liable for delay compensation when construction responsibility rests solely with the developer.
The verdict came in Civil Appeal Nos. 10527–10528 of 2024, filed by flat buyers against M/s Unishire Homes LLP and others .
A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe delivered the judgment on February 20, 2026.
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Background of the Case
The dispute arose from a housing project developed under a Joint Development Agreement (JDA) signed on February 24, 2012. Under this arrangement, the landowners provided the land, and the developer undertook construction.
The sanctioned building plan was obtained in February 2013. Soon after, the developer began executing sale agreements with homebuyers. As per the agreements, possession of flats was to be handed over within 36 months.
The deadline expired in August 2016. Even after a six-month grace period, the project remained incomplete. Homebuyers issued a legal notice in June 2017 and later approached the National Consumer Disputes Redressal Commission (NCDRC), alleging deficiency in service and unfair trade practices.
In October 2023, the Commission held the developer guilty of delay exceeding six years. It directed completion of construction, handover of possession, and payment of 6% annual interest on the buyers’ deposits.
However, the landowners were initially not held liable.
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Review Petition and Further Proceedings
The buyers sought a review, demanding that the landowners also be held jointly responsible and that compensation be increased to ₹5 per square foot per month, as mentioned in their agreements.
The NCDRC initially modified its order, holding landowners jointly and severally liable. But this order was set aside by the Supreme Court in May 2024 because it was passed without hearing the landowners.
After rehearing the matter, the Commission, in July 2024, concluded that landowners could not be held jointly liable for construction delays. It, however, directed both the developer and landowners to transfer title and execute sale deeds in favour of the buyers.
The buyers then approached the Supreme Court again, challenging the finding that landowners were not liable for delay compensation.
What the Buyers Argued
Counsel for the buyers contended that the landowners had executed a General Power of Attorney (GPA) in favour of the developer. This, they argued, created a principal-agent relationship.
“The principal is responsible for the acts of the agent,” the counsel submitted, urging the Court to hold both parties jointly liable.
They relied on several previous Supreme Court judgments to support their claim.
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Landowners’ Defence
The landowners countered that the JDA clearly placed the entire responsibility of construction and delivery of flats on the developer.
They pointed out that:
- The developer had full authority to construct, sell, and collect payments for its share of flats.
- The JDA contained indemnity clauses protecting landowners from liabilities arising out of construction.
- The landowners were not signatories to the sale agreements executed with buyers.
Their counsel argued, “The delay is not attributable to any act or omission on the part of the landowners.”
Supreme Court’s Observations
The bench carefully examined the clauses of the JDA and GPA.
The Court noted that the developer had exclusive authority to:
- Undertake construction
- Enter into sale agreements
- Receive consideration
- Transfer possession
- Execute conveyance deeds
On the issue of delay, the Court observed that it concerned flats falling within the developer’s share.
Importantly, the bench recorded that the buyers had not alleged any specific act or omission by the landowners that caused the delay.
“The landowners are in no way concerned with the construction,” the Court observed, adding that they were indemnified by the developer against liabilities arising from construction-related lapses .
The judges clarified that while landowners are jointly responsible for transferring title, this does not automatically make them liable for construction delay.
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Decision
The Supreme Court upheld the NCDRC’s view that the developer alone was liable for delay compensation.
It ruled that fastening liability on landowners, who neither undertook construction nor were shown to have caused delay, would be legally incorrect.
The bench concluded:
“For the aforementioned reasons, we do not find any merit in these appeals. The same fail and are hereby dismissed.”
With this, the appeals were dismissed, and the direction to the developer to pay compensation for delay remained intact, while landowners were required only to ensure transfer of title along with the developer.
Case Title: Srigannesh Chandrasekaran & Others v. M/s Unishire Homes LLP & Others
Case No.: Civil Appeal Nos. 10527–10528 of 2024
Decision Date: February 20, 2026
