Court’s critical look at excuses made by builders may help homebuyers
It’s an established fact of law that builders who do not complete their housing projects in time have to pay damages to consumers. Yet, builders resist paying such compensation and come up with all kinds of excuses (Force Majeure!) to escape their liability.
A recent order of the apex consumer court has critically looked at each of these excuses raised by the builder and dismissed them as untenable, thereby strengthening the rights of homebuyers. Since these are the common defences raised by builders in almost all cases of delays in completion of the project, this order is of utmost import to consumers. So I give below the justifications for delay given by the builder and the rebuttal of the court to it.
The first excuse of the builder was that because of the economic slowdown and the consequent recession in the real estate market, adequate funds were not available, leading to delays in construction. Holding this as unsustainable, the Commission pointed out that since some of the buyers had paid almost 95% of the sale consideration and others were to make the payment linked to the progress of construction, the builder cannot use non availability of funds as a plea.
The second reason given for delay was shortage of labour due to implementation of social schemes such as National Rural Employment Guarantee Scheme (NREGS) Dismissing this argument, the Commission said there was no evidence of the builder attempting to recruit labour and having failed.
Besides, if the labour was scarce, it would have affected all other builders as well as those individuals constructing houses, but that was not the case.
The third argument of the builder was that the use of ground water for building purposes was stayed by Punjab & Haryana High Court through its order of July 16, 2012. Again holding this as an invalid reason, the Commission referred to the order of the High Court, wherein it had pointed out that builders were using ground water for construction, despite a public notice issued under Section-5(3) of the Environment Protection Act, 1986, way back in December 2000, imposing a complete prohibition on the use of underground water for construction, without prior approval of the competent authority. So the builder was aware of the prohibition and should have taken it into account before fixing the time for completion of the project, the Commission said.
It similarly dismissed the contention of the builder about reduction in the availability of bricks in the market on account of certain restrictions placed by the Ministry of Environment and Forests on the manufacture of clay bricks and said the “wages of labour and the cost of the building material may have gone up with the passage of time but it would be difficult to accept that neither the required labour nor the building material in sufficient quantity was available in the open market”.
To the other excuse that there was a delay in obtaining the environmental clearance, the Commission pointed out that since the size of the project was more than 20,000 sq.ft. of built up area, the builder knew that environmental clearance would be necessary and that the clearance would be given only after the project was approved by State Environment Impact Assessment Committee and then by State Level Environment Impact Assessment Authority. So he should have obtained the necessary environmental clearance before accepting the booking or informed the buyers that the construction would commence only after the environmental clearance. Having done neither, he cannot now use this as an excuse for delay, the Commission said. (Ashish Gupta Vs M/S Unitech Pvt Ltd, Consumer case no 594 of 2016, Order: November 28, 2016)
So the message from the apex consumer court is clear- don’t come up with excuses, complete your project in time.