News: Verbal understanding cannot replace written builder-buyer agreement: Bombay HC-05-06-2022
It found no merit in a builder's plea that a flat buyer's presence at a meeting to extend the project completion date from July 2015 to 2018 amounts to implied consent for such extension.
MUMBAI: Bombay high court recently held that a written agreement between a builder and a buyer cannot be substituted by a subsequent oral understanding.
It found no merit in a builder's plea that a flat buyer's presence at a meeting to extend the project completion date from July 2015 to 2018 amounts to implied consent for such extension. HC upheld a RERA Appellate Tribunal Order which directed refund of over Rs 1 crore to the flat buyer for a residential project in Kurla over delay.
Justice Bharati Dangre last month held the written document can only be altered or rescinded by a subsequent written document, and merely an oral agreement will not have the effect of changing the original terms and conditions. She dismissed the builder's appeal against a 2020 order of an appellate tribunal established under RERA or Real Estate (Regulation and Development) Act.
The agreement between the builder and the buyer clearly contemplated possession by July 2015 and set out six contingencies where the possession date would automatically stand extended, else failure to deliver would entitle the buyer to a refund of the amount paid with 9% simple interest. With no delivery and none of the agreed contingencies cited, the buyer sent a notice for refund.
The builder's lawyer said refund was sought on the ground of a daughter's higher education expenses abroad, not delay. The HC accepted the buyer's claim that they wished to walk out of the project because it was getting delayed. The HC said, "Merely asking about update on the project from the builder will not denude the complainants of their right to claim refund (under RERA)."
Justice Dangre noted till date the building is not complete. She said, "Breach of the condition in the agreement is thus apparent and merely on the ground that an oral arrangement was worked out with consent of one of the complainants to extend the period of completion of the project, resulting in depriving the right vested in complainants under Section 18 (refund and compensation to buyer for builder's failure to give possession) of the RERA, cannot be argued".
Justice Dangre said, "If a party has entered into an agreement, which is reduced in writing, the parties shall be permitted to modify its terms and conditions or substitute the same, by executing another contract/agreement reduced into writing."
HC said, "Where the agreement between the parties is a written agreement, the parties are bound by its terms and conditions." Indian Evidence Act's Section 91 doesn't permit any party to refer to oral evidence to ascertain its meaning and it is "only when the written contract itself does not contain the whole of the agreement or if there is any ambiguity, then oral evidence can be permitted to be adduced, to prove the other conditions, provided it is not inconsistent with the written contract".
