Are you waiting for possession of your flat?
A developer is considered ‘deficient in service’ if he fails to deliver apartments on time or to refund deposit money
Abig challenge faced by consumers investing in real estate projects is getting timely possession from the builder/developer. While delays in possession largely occur on account of circumstances beyond the control of the developer/builder and certain unforeseen force majeure conditions, sometimes it also happens due to lack of proper financial planning and delegation of resources by the developer.
The National Consumer Redressal Commission, in its judgment of 2012, had decided on a revision petition involving the deficient services of the builder/developer who despite being held liable to refund the consideration amount of the consumer, moved a revision petition before the National Commission citing unfounded infirmities in the orders passed by the district forum and the Karnataka State Commission, Bangalore.
In this case, with the intent of owning a flat, the consumer/ complainant had approached the builder and entered into a sale and construction agreement. At the instance of the builder, the complainant, after execution of the agreement, had paid approximately 50% of the consideration amount. However, the builder failed to complete the construction work on time. Even after a lapse of three years from the date of the agreement, possession of the property was not handed over to the buyer. Further, no sufficient cause was given for the delay. This led to the consumer losing interest in buying the property. Various emails were sent by the consumer for seeking refund of the deposit money from the builder. Despite agreeing to refund the money, the builder failed to do so. Therefore, the complainant filed a consumer complaint before the district forum.
The question was whether the builder’s act of keeping the consumer’s money for years (not refunding it nor delivering the apartment), amounted to deficiency in service.
The district forum decided the complaint in favour of the con- sumer by holding that there was a failure on the part of the builder to discharge his obligation by not completing the construction within the agreed time period and further failing to refund the consideration amount.
Such failure on the part of the builder/ developer tantamounts to ‘deficiency in service’ and ‘unfair trade practice’. The builder was, therefore, directed to refund the deposit money with interest from the date in which the agreement was signed.
The district forum also innovatively ordered, that in the event of the builder not making the payment to the consumer within 30 days from the date of the order, there shall be an escalation of interest and a further increase in rate of interest beyond 60 days.
T h e b u i l d e r / d e ve l o p e r appealed against this order of the district forum, which was dismissed at admission stage by the state commission. The builder then filed a review petition before the National Commission, which was also dismissed on the grounds that the detailed and reasoned order of the state commission did not suffer from any infirmity or erroneous exercise of jurisdiction. The National Commission not only upheld the order of two fora below but in addition also imposed punitive cost of R25,000 on the builder along with an interest at the rate of 9% per annum in case of nonpayment of the cost .
Given the present market conditions, timely delivery of possession of flats/apartments by the developer continues to be the challenge faced by consumers. Such cases highlight the plight of the consumers and the hurdles they face while investing their hard earned money on property.
A developer’s ability to deliver possession rights on time can make or mar his relationship with buyers