Handing a major victory to customers who face inordinate delays in receiving possession of their homes, the National Consumer Disputes Redressal Commission (NCDRC) has held that a homebuyer is entitled to compensation for delays up until the point s/he actually receives possession of a completed unit. Possession offered by a builder over an incomplete unit will have no bearing in arriving at compensation, it stated in a recent verdict.
The consumer court noted that “it is inconceivable that a person will not like to take physical possession of his Unit after having made the entire payment.”
The ruling has come as a shot in the arm for homebuyers. While they have won some notable court battles with builders in recent years, most homebuyers prefer not to take the legal route. Rather than take on the might of the builders in courts, they swallow their frustration over delays and irregularities and choose to move on rather than incur additional costs or face more mental agony.
Vikas Mittal, however, took the road less travelled. After failing to get possession of his flat in a DLF Home Developers project in Delhi, he decided to seek redress in the National Consumer Disputes Redressal Commission. And he won, in a ruling that will not only ensure builders get serious about project completion and delivery timelines, but also assure consumers they can seek compensation for delays.
Mittal had booked a unit in the DLF project on September 29, 2009, after depositing a booking amount of Rs. 7.5 lakh. The allotment letter was issued to him on October 5, 2009. An Apartment Buyer’s Agreement was executed on October 27, 2010, wherein the total consideration for the apartment was mentioned as Rs 1.05 crore. According to the agreement, the housing unit was to be delivered by September 29, 2012, within three years of the date of application.
Noting that there had been a delay of almost five years (from a revised delivery date) in handing over possession of the apartment, the court directed the builder to pay a delay compensation (for late delivery) at the rate of 6 percent per annum to the buyer on the amount deposited by him, within six weeks of its order.
The consumer court ordered the compensation had to be paid with effect from the revised date of possession, i.e., September 29,.2014, till May 9,.2019, i.e., the date on which the buyer received possession of the unit.
It said that any delay in paying the compensation would attract an interest levy at 9 percent per annum.
DLF’s contention
On its part, the builder, DLF Home Developers Limited, contended that a buyer ceases to be a consumer after possession is offered. It informed the court that possession had been offered to the buyer on June 27, 2017, and that on receipt of the entire payment, a possession letter was issued on December 7, 2017. “It is due to delay on the part of the buyer himself that physical possession of the unit was not taken by him,” the builder said.
The buyer, however, informed the court that although the letter for receipt of possession was dated June 27, 2017, he had received it only on May 9, 2019.
The builder also said that the complaint was filed by the buyer on March 17, 2020, and that the buyer has not taken possession of the property for two years. It contended that the buyer was not a consumer but an investor who had purchased the property in order to obtain better returns and appreciation in value.
In addition, DLF Home Developers told the court that in 2012, it had informed the buyer, in a letter dated July 19, 2012, that there would be a delay of 16 months in obtaining approvals and that an exit option had been given to all the allottees with refund of the amount paid along with interest at 9 percent per annum.
This delay, it said, was due to approvals being awaited from the authorities as well as force majeure circumstances. The builder sought that disputes if any be referred to arbitration and in its absence be tried only in a civil court.
What the consumer court said
However, the consumer court order dismissed the builder’s arguments. It found that there was “an unreasonable delay in construction as the Unit … was not completed even as per the revised date of possession, i.e., 29.01.2014.” It noted that even though the buyer had paid the entire amount for the flat by August 21, 2017 and duly informed the builder, a letter of possession was issued on December 7, 2017 and actual possession taken on June 8, 2019.
“Even if the offer of possession on 07.12.2017 is taken into account, the delay is more than 5 years. The Occupation Certificate was only received in 2017. The Opposite Party (DLF Home Developers) has not given any reasonable justification for this delay also. Therefore, the Complainant is entitled for a fair and reasonable delay compensation,” the order said.
“The Complainant has stated that the Unit was not ready, which has been strongly contested by the Opposite Parties through their learned Counsel. In our considered view … the argument of the Complainant will have to be given credence as it is inconceivable that a person will not like to take physical possession of his Unit after having made the entire payment which was also a substantial amount. Credence may also need to be given to the fact that the … possession letter dated 07.12.2017 was actually received by the Complainant only on 09.05.2019 as evidenced by him,” the order said.
Moneycontrol has reached out to DLF with queries on the case but is yet to receive a response.
Speaking to Moneycontrol, Aditya Parolia who represented the buyer in the case, said: “Possession for just the sake of discharging an obligation to deliver doesn’t serve the purpose of a consumer. It further aggrieves an allottee who has been waiting for his home for a long time. The Commission has observed this to be an unfair practice of the builder and rightly granted compensation till the date when actual possession is taken. A consumer hopes to get a fully completed unit and not a half-baked pie which builders deliver just to evade delay penalties.”
Mittal, the buyer, told Moneycontrol that he had not expected such a delay in receiving possession from an established developer. He advises buyers investing in a project by a branded developer to ensure that possession is granted on time as well as to check the quality of services offered once a project is ready. “Ideally go for a project that has fewer units as it is easy to manage,” he said.
What the experts think
“This is a significant order by the consumer fora, both in terms of protecting consumers’ interests as well as imposing appropriate penalties on a builder for deficiency in services,” said Rakesh Warrier, Partner, JSA .
“Typically, builders tend to get their own way in such cases since individual consumers may not want to go through the hassle of chasing these huge corporates for delay (late possession) compensation. This order will not only act as a referral point for builders to ensure they adhere to project completion and delivery timelines, but also assure consumers they can seek compensation should there be an unjustified delay,” he told Moneycontrol.
Speaking to Moneycontrol, Nitish Sharma, Counsel, AnantLaw, said: “This order of the NCDRC not only falls in line with its previous orders but is also in line with various orders passed by the Supreme Court. Such orders serve as a guiding light for consumers who are stuck in similar situations. However, the developer also has the right to file a statutory appeal before the Supreme Court against the order passed by the NCDRC.”
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