Homebuyers cannot be kept in the dark, pre-litigation with landowners should be disclosed by the developer, says NCDRC

Any unreasonable escalation of flat cost by the builder ‘unfair’, the consumer court said

Providing relief to a homebuyer who paid almost 90 percent of the cost of the apartment to the builder, the National Consumer Disputes Redressal Commission, has provided refund with 10 percent interest from the date of receipt. The commission said that any unreasonable escalation on the part of the builder was ‘unfair’ and that a developer could not continue taking bookings in case of problems with landowners keeping the buyer in the dark.

It also noted that pre-litigation with the landowners should be disclosed by the builder.

In this particular case involving a buyer who had booked a unit in Faridabad and paid 90 percent of the cost, the consumer court noted that as per the agreement, the apartment’s possession was to be handed over within 24 months, plus a reasonable time, subject to force majeure events and to timely payments.

The said apartment was to be delivered by January 28, 2013. However, despite the buyer depositing 90 percent of the total amount in 2012 which amounted to Rs 41.39 lakh, the unit was not handed over to the buyer.

“The date of offer of possession, that too without the OC, 09.07.2016, was more than three years, much too large to be simply explained away as a delay due to dispute between the landowners and the OP. In fact this argument has no leg to stand on for it means that the OP, aware of the problems that some land owners could raise, yet went ahead with taking bookings and signing agreements,” the order said.


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“This was clearly unfair to the complainant. It is not enough to say that the complainant was fully aware; it was the OP’s bounden duty to have kept the complainant fully informed at all times,” it said.

Builder’s conduct unfair and amounts to deficiency in service

“It has to be appreciated that the OP was not doing the complainant a favour by taking his money for constructing a flat and then, for whatever reason and howsoever justified, delaying possession for the reason that it was under an injunction order. Indeed, if that was the case, then the OP ought not to have demanded or accepted any payments during this entire period… Thus, in my considered opinion, the OP's conduct clearly amounts to unfair trade practice and deficiency in service,” the order said.

The case concerned a homebuyer Sandeep Nagar who had filed a consumer complaint under section 21 of the Consumer Protection Act 1986 (Act) against the builder RPS Infrastructure Limited.

Also Read: Flat delayed by four years, NCDRC tells builder to refund homebuyer Rs 3.4 crore with interest

The buyer booked an apartment in Sector 88, Faridabad with a super area of approximately 1620 square feet against total consideration of Rs. 50.27 lakh.

The Apartment Buyers Agreement signed on January 28, 2011 had promised delivery within 24 months until January 28, 2013. The buyer had taken a loan from a bank worth Rs 30.98 lakh.

The total amount paid by the buyer to the builder was Rs 49.53 lakh but the builder failed to handover possession of the apartment by January 28, 2013. The builder also arbitrarily issued a notice of cancellation on January 8, 2014 to the buyer following which the buyer issued a legal notice on June 16, 2014 but he did not receive any response from the builder.

The buyer’s complaint was to do with delay in handing over an offer of possession lakh by over three years and an additional demand of over Rs 19 lakh from the builder of which Rs 8.5 lakh was on account of delayed payment charges at the rate of 24 per cent per annum.

The buyer had written to the builder on this matter but did not receive a response following which he approached the Lok Adalat on September 21, 2016 but later withdrew the application. He eventually filed a complaint in the NCDRC in August 2018 alleging deficiency in service and unfair trade practice.

The buyer has demanded a refund of the full amount of Rs 49.53 lakh with 18 percent per annum from date of receipt of payments; compensation of Rs. 5 lakh for mental agony, discomfort and undue hardship and a sum of Rs 1 lakh towards litigation cost.

The builder, on the other hand had claimed that the buyer was offered possession in July 2016 but he had delayed taking possession. It was alleged that the buyer was an investor looking to blackmail and extract money from the developer.

“Land disputes can jeopardise the interests of homebuyers, which in this case it did by delaying the project substantially. Such suppression of facts has rightly been adjudicated as unfair by the court,” said Aditya Parolia of PSP Legal.
Vandana Ramnani
first published: Sep 2, 2020 10:32 am

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