Ten Significant Legal Cases of 2023

Case 1

·         Case Title: Goutam Roy vs Avolon Projects (NC)

·         CC No 1941 of 2018

·         Decided on 24^th January 2023 (NC)

  Issue: Legal Considerations Regarding Earnest Money Forfeiture in Real Estate (What is a reasonable amount to deduct when a home buyer cancels a booking?)

Facts:

·         The builder and homebuyer entered into an agreement that includes a forfeiture clause. If the homebuyer cancels the booking, 20% of the total basic sale price will be forfeited.

·         Question before the National Commission was as to how much deduction is reasonable and justifiable.

The National Commission, drawing upon various Supreme Court cases, invoked Section 74 of the Contract Act of 1872. According to this provision, in instances of contract breach, actual damages must be demonstrated to penalize the defaulting party. In cases involving the cancellation of a flat or property booking by the buyer, where the property remains solely with the builder and there is minimal loss incurred, the National Commission mandated the forfeiture of 10% of the total sale cost of the property.

Similar Cases Referred:

·         Moula Bux vs Union of India 1970 SC

·         Sirdar K B Ram Chandra Raj URS vs SC 2015theory of actual damage as per section 74 of contract act

·         Amit Gupta & Anr. vs M/S. Vatika Limited (National Commission) Consumer Case No. 425 Of 2018

Legal issue in above case: Whether there can be any forfeiture of earnest money or any money when agreement not signed by the parties due to objectionable clauses?

“Commission directed refund of the entire amount of Rs.37, 05,892/ which the said complainant had paid to the OP, along with interest on that amount @ 9% per annum.”

                       

Case 2

·         Case Title: National Insurance Company Ltd. vs the Chief Electoral Officer & Ors. (SC)

·         Civil Appeal No.4769 of 2022

·         Decided on 8^th February 2023 (Sanjay Kishan Kaul; J., Abhay S. Oka; J.)

Issue: Can we categorize a death due to heat stroke as accidental?

Facts:

On February 9, 2000, the National Insurance Company Ltd. and the Chief Electoral Officer of Bihar, Patna, entered into a Memorandum of Understanding. The purpose was to extend insurance coverage to individuals engaged in election-related duties for the Bihar Legislative Assembly Elections in the year 2000.

“The insurance is intended to provide for the payment of compensation in the event of death only resulting solely and directly from accident caused by external violent and any other visible means.”

Constable Late Deval Ravidas, serving in the Sheohar District Force, was deployed for election-related duties during the Bihar Legislative Assembly Elections in the year 2000. Unfortunately, he passed away due to a heat stroke on May 26, 2000, while performing election duty. The cause of death was not attributed to any external violent activity or accident.

Despite seeking compensation, the National Insurance Company rejected the claim. In response, the Chief Electoral Commission filed an appeal before the Supreme Court against the National Commission's decision.

 

SC confirmed the order of NC

Dismissed the appeal with the following observations –

“Death due to sun stroke during election duty will not come under the scope of the clause death only resulting solely and directly from accident caused by external violent and any other visible means. Proximate causal relationship between the accident and the body injury is a necessity”.

Reference was made to the earlier decide case of similar nature.

 Alka Shukla vs LIC ((2019) 6 SCC 64

Principal laid down for interpretation of law -

A distinction between “accidental means” and “accidental result”.

(a) a fatal heart attack while dancing would be called “accidental” but would fail to attract insurance cover as not due to “accidental means.

(b) Heart attack suffered as a result of over-exertion on being chased by a ferocious dog the death might attract the insurance cover as it was caused by “accidental means”.

 

Case 3

·         Case Title: Association of Vasanth Apartments’ Owners vs V. Gopinath & Ors. (SC)

·         Civil Appeal No. 1890-91 of 2010 (Directed against the judgment dated 19.10.2007 of Chennai HC)

·         Decided on 13^th February 2023

 

Issue: Building Rules

Regulation 19 of the Development Control Rules for the Chennai Metropolitan Area stipulates that builders are required to allocate open spaces within the plots they develop.

Facts:

·         Members of the Association of Vasanta Apartment own specific units within a complex comprising 12 blocks. According to Rule 19 of the Development Control Rules, a portion of the land was designated as Open Space Reservation (OSR) area. However, even after 12 years, this OSR area has not been transformed into a park. Interestingly, the Vasanta Apartments are separated from this OSR area by a compound wall, and the area is currently being utilized as an kaccha road. The claim put forth by Vasanta Apartments asserts that this land is integral to their layout.

·         Considering the presence of a kaccha road that has been actively used by a significant number of the public, the High Court concluded that altering the existing situation on the ground would result in substantial injustice. Consequently, the court issued a directive for the land to be exclusively utilized for the designated purpose of Open Space Reservation (OSR).

Supreme Court upheld rule

·         A regulation requiring builders to allocate open spaces in the plots they develop, specifically mandating a reservation of 10% open space area, was deemed not to infringe upon Article 14 and 300A of the Constitution. The court held that such a mandate does not constitute compulsory acquisition.

·         Areas covered by the Open Space Regulations cannot be diverted for any other purpose. The respondents (local authorities) are duty-bound to ensure that the area set apart as OSR is stringently utilised only for the purpose in the rule/regulation.

·         We direct that no area meant for OSR shall be utilised as dumping yards or any other purpose other than as OSR.

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