Remedies Available To Home Buyers Against Builders

Published on 08 Feb 2018 by Tushar

The law as has been laid down by the Supreme Court as well as National Consumer Dispute Redressal Commission (“NCDRC”) in recent cases against top builders like Jaypee, Amrapali, Unitech etc has followed trends which are generally seen to be in the favour of the buyer/ consumer.

The precedent set through recent high profile cases is 

  1. In one of the most crucial judgments with respect to home buyers right timely possession and for builders to uphold the promised terms of the contract the highest Consumer Court of the land National Consumer Dispute Redressal Commission (“NCDRC”) had given a full refund of Rs 60 Lakh for a delay of 8 years against Unitech, one of the most prominent builders in north India.
  2. NCDRC has recently acted against many big names in the industry on the complaint of home buyers. The commission recently asked Jaypee to pay 12% interest for delaying its Kalypso Court project in Noida. In another order, it also asked Mumbai-based builder Lodha group to refund 1.02 crore to a buyer with 18% interest. 
  3. NCDRC has also recently directed Parsvnath Developers to refund the entire amount paid by around 70 home buyers in its Parsvnath Exotica project in Ghaziabad with 12% interest for failing to complete the apartments on time.
  4. NCDRC has made it clear that cases where the builder is not in a position to offer possession of the apartment, the consumer or buyer cannot be expected to wait for possession of the apartment for an indefinite period.

Time-lines accountability- New regime under RERA

  1. Delayed possession of flats or homes has been the single biggest issue plaguing the real estate sector in India. For many of the homebuyers, across locations with various reputed builders, the delay has extended to almost six years or more now, with no possession in sight.
  2. The problem was the absence of any regulator which could exercise control over builder's activities and real estate sector in general. With the lack of any regulatory body, there was a dearth of any concrete rules governing the builder-buyer battle. 
  3. Now, the real estate sector has got its own regulator from May 1, 2017, the date when the Real Estate (Regulation and Development) Act, 2016 (RERA) became effective in the entire country. Each state and UT will have its own Regulatory Authority (RA) which will frame regulations and rules according to the Act. 

Delay in Possession- Options available with the aggrieved buyer

In case of delay in delivery of possession by the builder, the legal options that are available to the buyer are-

Primary Options-

  1. File Consumer complaint to Consumer Court or NCDRC (if the independent or joint claims of multiple aggrieved buyers are more than 1cr in value)
  2. File Complaint to Regulatory Authority under RERA through a property lawyer in India.

Other Options-

  1. File a civil suit against the builder if there is a clear case of fraud on the part of the builder
  2. Register an FIR for criminal liability of the builder (which can serve to be an effective tactic when civil remedies are not working out)
  3. file a complaint with the Competition Commission of India if the builder is a dominant entity in the market and using his dominant position to the detriment of the buyer.
  4. For the refund of the amount paid to the builder and the interest thereon.

 Buyer entitled to compensation plus interest in case of delayed possession

The Supreme Court has held that when possession of the property is not given within the stipulated period, the delay is ‘denial of service’. The following certain things to keep in mind while negotiating any compensation or dealing with builders who have delayed possession of flats-

  1. Exemplary compensation- possible in special cases where the buyer can prove mental/ physical harassment. The Supreme Court has held that in a specific case, where it is found that the delay was culpable and there is no contributory negligence by the allottee resulting in harassment/injury, both mental and physical, the forum/commission would not be precluded from making an award in excess of 12% per annum.
  2. National Consumer Commission has also held that the buyer is entitled to a refund of the entire money with reasonable interest, and any deduction by the builder is unjustified.

Additional reliefs that a buyer can claim if there is delay in possession of the flat/ plot

  1. The buyer can seek as one of the reliefs the money required to buy alternate accommodation at the ongoing market value in the respective area when possession of the flat/ plot has been delayed in certain circumstances. The purchaser can also claim the money given to the builder.
  2. The purchaser can claim damages for loss of opportunity caused to the purchaser, had he invested his money elsewhere.
  3. If the purchaser/ complainant is sure to get possession of the flat in a few months or years, he can claim compensation for the money that he will spend as rent on an alternate accommodation. This will be applicable if he is a first-time home purchaser, or if his building is being redeveloped.

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