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Builder delaying possession? NCDRC says only booking amount non-refundable; rest to be returned if buyer pulls out of purchase

One-year delay in completion of a housing project is ‘reasonable’ and a buyer cannot seek refund on that ground

The Consumer Disputes Redressal Commission (NCDRC) has ruled that if a homebuyer decides not to take possession of an apartment, the builder can at best retain the earnest money but will have to refund the rest of the amount paid by the buyer.

It also said that a one-year delay in completion of a housing project is ‘reasonable’ and a buyer cannot seek refund on that ground.

The NCDRC bench of Justice V K Jain was hearing a matter that concerned two senior citizens who had booked a flat for their son with Emaar MGF Land Limited worth Rs 1.68 crore and paid Rs 10 lakh at the time of booking it in 2013. They paid the builder an amount of over Rs 1 crore by taking a loan from HDFC but asked for a refund after the builder offered possession after a delay of 14 months in 2018.

A provisional allotment letter dated February 27, 2013 was issued to the buyers followed by execution of agreement on April 15, 2013. As per the agreement the possession was to be delivered within 42 months from the start of construction and grace period of three months was also available to the builder. The payment was to be made in installments linked with the progress of the construction.

Homebuyers had alleged that the terms of the buyers agreement were wholly one sided and they had taken a loan of Rs 1 crore from HDFC Bank for making payment to the builder for which tripartite agreement was also executed on March 30, 2015.


“The complainants paid an initial amount of Rs. 10 lacs to the builder for booking a residential flat allotted to them. The said amount being the initial deposit made by them would constitute earnest money despite definition to the contrary given in the buyer agreement executed between the parties. The builder, in my opinion, should deduct only a sum of Rs 10 lakh out of the total amount received by it in the complainants either directly or through OP number 2 and the balance amount be refunded along with interest with effect from 25.06.2017,” the bench ruled.

The complainants have taken substantial loans from HDFC Bank. The amount with the complainants had raised by way of loan from HDFC Bank should be refunded by the builder along with same interest which the complainants had paid to the said bank, the NCDRC order said.

The interest on the balance amount if any contributed by the complainants, considering all the facts and circumstances of the case should carry interest at the rate of 10 per cent per annum, the order said.

The homebuyers had said in their complaint that they were not interested in taking possession of the flat and had approached the consumer court to seek a refund of the amount paid by them to the builder along with interest and compensation. The flat was booked by them for their son, who seeing the failure of the builder to complete the timely construction, had left for overseas and they therefore did not require the flat any more.

The builder had responded saying that possession had been offered to the buyers even before the institution of the consumer complaint and that the complainants had defaulted in taking possession by paying the balance amount due from them.

The counsel appearing for the builder had submitted that the flat allotted to the complainants is still available with them and its possession can be given to the complainants on payment of the balance amount due from them. The builder also said that the occupancy certificate was obtained by him before offering possession to the buyers.

The developer said that it was ready and willing to give possession on payment of the balance dues.

“The ground taken by the complainants for refusing to take possession of the flat does not seem to be justified, considering that the possession as per the agreement could be delivered by 11.08.2017, whereas the complainant number 3, according to the complainants number 1 and 2, left India way back in the year 2014. Therefore, the ground given by them for refusing to take possession does not seem to be justified,” the consumer court ruled.

“…As per the terms of the agreement, in a case where the buyer does not  take possession after making the balance payment, the builder is entitled to deduct the earnest money as defined in the agreement as well as non-refundable advances and is liable to pay the balance amount, if any, without any interest, after selling the allotted flat,” the court ruled.
Moneycontrol News
first published: Jul 3, 2020 12:23 pm

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