Never trust builder agreement, says homebuyer who won Rs 1.19-crore order from real estate developer

Indian real estate has long been synonymous with delays in possession or the reasons listed by Rastogi.  Before COVID-19 stuck, a report by Anarock said there are as many as 220 projects equalling 1.74 lakh homes that are completely stalled in the top seven cities across the country. Construction activity has since slowed and completion deadlines for almost all 4.66 lakh housing units across seven cities that were to be delivered by year-end have got extended, said Anarock.

Buyers like Rastogi can pursue legal options before the Supreme Court, high courts, consumer courts, or the Real Estate Regulatory Authorities (RERA). But securing legal relief is hard because they are up against a battery of lawyers, often senior advocates, who represent developers.

“The biggest names in the legal fraternity are hired by builders. It is not an easy task,” says Mihir Kumar, an advocate who represented homebuyers in the high-profile Amrapali case.

The decision in the Rastogi case — the homebuyer filed a lawsuit in 2017 — was fast by real estate standards, according to Kumar.    “Builders generally try and delay matters.”

Reacting to the order, BPTP told Moneycontrol that it will file an appeal. “The litigation was filed post the receipt of occupation certificate and issuance of the offer for possession. Over 400 families are already in residence in the said complex since 2017. The said fact clearly showcases that the customer was never interested in taking possession of the unit and was an investor merely looking at commercial gains,” the company said in a statement.

No Legal Cakewalk

Rastogi invested in the project named Astaire Gardens in Gurgaon along with a friend. He paid BPTP Rs 7 lakh as booking amount in May 2012. The total cost of the unit was Rs 1.26 crore, including Rs 2 lakh for club membership. He ended up paying 80 percent of the unit's total price to the builder.

Problems began soon after the purchase.  Rastogi said he was charged around Rs 10 lakh as escalation cost.  “Despite paying up 80 percent of the amount in 2015 itself, there was no question of escalation.”

The allotment letter said possession of the apartment would be gven within 30 months from the date of signing the Floors Buyers Agreement (FBA) or within 36 months from the date of the sanctioning of the building plan. The FBA promised possession to the buyer or execution of the FBA and also allowed a grace period of 180 days.

Rastogi signed this agreement on October 25, 2012, after paying Rs 17.25 lakh. But the builder “unilaterally” extended the time period of the delivery from 30 months in the allotment letter to 36 months in the FBA, according to him.

He was also not pleased with the quality of construction, saying it was awful. “The house that was offered was unfinished and it had hardly any facilities.”

One day, he said, he decided enough was enough. He filed a complaint through his lawyer Aditya Parolia of PSP Legal at National Consumer Disputes Redressal Commission on November 30, 2017, under Section 21 read with Section 12 (1) (a) of the Consumer Protection Act 1986.

Today, despite his hard-fought legal victory, Rastogi is distraught. “The biggest challenge before me was to see my hard-earned money of almost Rs 80 to 90 lakh getting blocked for six years. The same amount could have been deployed elsewhere at better returns,” he told Moneycontrol.

Rastogi said the biggest lesson he learnt from the episode is that “never ever believe any Indian builder barring the big brands”. He also cautioned against trusting the builder buyer agreement (BBA). “It is always in the builders’ favour.”

He advised homebuyers to ask for the BBA once the advance money is paid to a developer. “If you find it is not in your favour, stop payment immediately,” he said.

Is NCDRC a better forum than RERA? 

Is NCDRC a better platform than RERA? Despite the early promise, RERA rules in several states have diluted much to the dismay of homebuyers. “RERA has no teeth,” said Rastogi.

Legal experts agree for two reasons. One, NCDRC has more execution powers. Two, cases in RERA, a quasi-judicial forum to resolve disputes, can drag for an ungodly period.

“NCDRC has wider powers to give comprehensive relief to buyers and it is empowered to issue injunctions, compensation for mental harassment, to enforce orders and also send defaulters to jail which RERA cannot,” said the lawyer Kumar. “RERA can at best issue a recovery certificate to the district matter who eventually enforces the order,” he said.

The key hurdle with NCDRC is that a buyer can approach it only of the valuation of a complaint or refund is more than Rs 1 crore. Still, it offers another advantage — the only legal option left after NCRDC is the Supreme Court, which means a complainant can hope for a resolution without the case dragging through several legal forums.

Rastogi said he will purchase a house, but “not until I come across an excellent option by a branded developer who has a track record of delivering on time”. “Otherwise, I am not interested in investing in a property.”