The Apex Court has recently held in the case of Akshay & Anr. v/s Aditya & Ors that landowners are jointly and severally liable along with builders in consumer cases for deficiency of services.

The Apex Court held that landowners cannot absolve themselves from liabilities by revoking power of attorney (“POA”) between them and builders executed for development of land. A Joint Venture Agreement (“JVA”) remains operative even after the POA gets revoked. The Apex Court explained the scope of the term ‘henceforth’ used in the revocation letter by observing that absolution of any liability of landowner for any action of builder will occur after revocation of POA and not absolve the landowner for liability for any agreement entered by the builder before the termination. The Court observed as under:

“In the letter dated 12-8-2014, the appellants had stated to be not liable “Henceforth”, i.e. after the said letter was sent. The appellants therefore were bound by the acts/deeds of the Respondent No.2 carried out pursuant to the irrevocable Power of Attorney till it was terminated, in accordance with law.”

The factual background was that appellants (landowners) and respondent 2 (builder) had entered into a Joint Venture Agreement (JVA) for building and selling flats. The builder executed sale agreements for sale of flats. The respondents filed a complaint before the Maharashtra State Consumer Disputes Redressal Commission alleging unfair trade practices and deficiency of service in failing to complete and hand over possession of flat units by the landowners and builder. Appellants pleaded that they cannot be held liable for the acts of builder and they were not privy to the agreement therefore they cannot be held liable under the Consumer Protection Act.

The Apex Court upheld the decision of the National Consumer Dispute Redressal Commission and dismissed the appeal. Observing that appellants are jointly and severally liable, the apex court observed that revocation of POA does not revoke the JVA and the term ‘henceforth’ operated to cease liability of appellants only for the actions of Respondent 2 after August 12, 2014. This implies that they are still liable for the agreements entered by the builder with the flat buyers.