Delay in construction is builder’s problem

Unitech was allotted land by the Greater Noida Industrial Development Authority for developing a Group Housing Complex — Unitech Horizon. Since the booking phase was over, Sameer Dewan was put in touch with brokers to get the booking transferred from allottees who were no longer interested.

One broker introduced Dewan to Ranjiv and Geetika Jaggi who wanted to sell their allotment rights to flat number 403 in Tower 22. On inquiring with Unitech, Dewan was informed that the construction was going on at a rapid pace and the flat should be available by November 15, 2008, as scheduled. After builder's assurance, Dewan purchased the allotment rights from Jaggis and asked Unitech to transfer the booking in his favour. The builder agreed. The price was fixed at ~4,782,207.

Dewan paid ~4,572,761 in instalments. The balance was payable on possession. But the builder failed to give the delivery. Dewan filed a complaint before the National Commission for a refund along with

18 per cent interest and litigation costs. Unitech contested, contending that the farmers whose lands had been acquired by the Noida Development Authority had gone on agitation for a hike in compensation, which hampered construction. Also, the National Green Tribunal had restrained Unitech from extracting ground water for construction. The delivery was delayed due to reasons beyond its control.

The Commission observed that Unitech had failed to produce any evidence to substantiate its defence. Besides, the flat was not ready even now, despite more than seven years have elapsed since the promised date of possession.

The builder tried to argue that the agreed date of possession was November 15, 2008, while the complaint was filed in 2016, so it would be barred by limitation and ought to be dismissed. Rejecting the argument, the National Commission observed that possession had neither been offered nor refused. So, there is a recurrent cause of action when a complaint pertains to non-delivery of possession. The Commission concluded that the complaint was in time.

On compensation, the builder tried to argue that its maximum liability for delay in delivery would be governed by the terms stipulated in the agreement for sale, which provide for a compensation of ~5 per sq ft a month.

The Commission rejected the contention. It observed that the clause would be applicable only when the delay is for a reasonable period due to unavoidable circumstances, which need to be substantiated. The builder cannot shield himself behind such a clause. It also observed that if such contention is accepted, it would wrongly encourage developers to use buyers’ money paid at a nominal cost instead of borrowing funds at the market rate.

Accordingly, by its order of June 6, 2018, delivered by Justice Ajit Bharihoke, the National Commission ordered Unitech to refund the entire amount of Rs 4,572,761 along with 10 per cent interest computed from the date of payment of each instalment. Additionally, Rs 10,000 was awarded as litigation costs.

Agreement terms can be considered only when the delay is for a reasonable period due to unavoidable circumstances