NCDRC order that builders cannot cite excuses for delay in delivery to have pan-India impact

In its recent order, the apex consumer commission - National Consumer Disputes Redressal Commission (NCDRC) - has ruled that a real estate developer cannot cite excuses such as delay in approvals by authorities, issues of land acquisition to justify late delivery of projects.

This order, say real estate and legal experts, is expected to have repercussions on most projects located across the country.

The bench directed a subsidiary of real estate major DLF to hand over possession to 16 homebuyers who have booked units in Panchkula in Haryana.

It directed the company to pay compensation of Rs 1 lakh per annum as delay and interest on the amounts paid by homebuyers and ordered the builder to complete the process of getting the sale deeds registered.

So, what are the excuses that real estate developers are most likely to make or have made in the past?

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Vandana Ramnani

Associate Editor, Real Estate|Moneycontrol News

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According to Mihir Kumar, advocate, these range from NGT ban, land acquisition issues, labour problems, restrictions on extraction of groundwater.

“The issue here is that these problems existed even when builders took money from homebuyers to book the flats. Also, an issue such as the NGT ban was put in place only in 2013 which was way past the period of possession for most of these projects located in Noida and Greater Noida. The handing over period according to most agreements was 2011 onwards.”

This is likely to have a pan-India an impact. This will be a law in so far as all the consumer forums are concerned. National commission orders are binding on the state commissions and on the district forums.

This order is bound to set a benchmark. Excuses for delay by developers such as delay in cement supply, lack of bank funding hopefully will come to an end. It will provide a direction to the presiding officers and ensure that excuses for delays will not be entertained. RERA cannot copy the order but may take a cue from it, says Abhay Updhayay, president, Forum for People's Collective Efforts.

NCDRC is an apex court for consumer matters. Most apartment acts clearly lay down that developers cannot take bookings and collect money from homebuyers without having permissions in place. If a developer decides to do so it is a statutory violation. Homebuyers too on their part should do some basic due diligence and ensure that the builder has a licence and has plans approved by the authorities, advises S K Pal, Lead Counsel, Advocates and Consultants.

vandana.ramnani@nw18.com