Builder sending plot demand letter but not having authority approvals

746 votes

The Supreme Court has held that a consumer has the right to approach the Civil Court or the Forum under the Consumer Protection Act for relief in a situation where the builder commits breach of his obligations. There are well laws such as the Maharashtra Ownership Flats Act or the Development Control Rules under which the case can be filed before a Civil Court for damages for refund of amount and interest on the said amount.

The Supreme Court has held that advertisements inviting applications for allotment without having title to the impugned sites was deceptive and unfair practice of the builder. In another case it has held that a clause containing an escalation cost in an apartment buyer’s agreement without disclosing the maximum enhancement amounted to vesting of unrestricted power to increase the cost of the flat and hence it is an unfair trade practice. If a builder uses sub-standard material in construction of a building or makes false misleading representations about the condition of the house then it is denial of the facility or benefit of which a consumer is entitled to claim value.

The Consumer Protection Act, 1986 is the Act which seeks to provide for better protection of the interests of consumer. Any person who hires any services for consideration is a consumer under the Act. It provides remedies to a consumer against deficient services. When a land is allotted or developed by a statutory authority or it constructs a house for the benefit of a common man, it is as such, “service” as by a builder or contractor. When the possession of the property is not delivered within stipulated period, the delay so caused is denial of “service”. Such disputes or claims are termed as deficiency in rendering of service of particular standard, quality or grade. A person who applies for allotment of building site or for a flat constructed by the Development Authority or entered into an agreement with a builder or a contractor is a potential user and the nature of construction is covered in the expression “service” of any description. Thus, the Consumer Protection Act provides protection against the malpractices of the builders and developers. Any person dissatisfied by the services or delayed delivery of possession can approach the consumer forum for his redressal. The consumers can approach the Redressal Forums for deficiency in service at different stages of housing.

The Consumer Protection Act provides a three tier machinery for redressal of consumer grievances. The District Forum is at the lowest level. The District Forums are established in each District and have jurisdiction to entertain complaints where the value of goods or services and the compensation if any, claimed does not exceed Rs.20, 00, 00 (Twenty Lakhs). The State Commission is established in each state and have jurisdiction to entertain complaints where the value of goods or services and the compensation if any, claimed exceeds rupees twenty lakhs but does not exceed rupees one crore. The National Commission has jurisdiction to entertain complaints where the value of the goods or services and compensation if any claimed exceeds rupees one crore. A consumer can file a complaint in the consumer forum against the builder/developer. The complaint must be filed within two years from the date of the dispute.

In a recent landmark judgment the Supreme Court has held that when the possession of the property is not handed over to the allottee in time it amounts to denial of service and the allottee, who has been affected by the delay in delivery of possession is entitled to compensation.

In another landmark judgment the National Commission has held that the allottee is entitled to opt out of a project if there is a delay in delivery possession of the house by the real estate developers. It was also held that the allottee is entitled to a refund of the entire money with reasonable interest and any deduction on the said amount is unjustified. In another judgment it was held that a builder cannot refuse to pay interest on the refund, if such refund is being sought on account of deficient service rendered by the builder, or on account of unfair trade practice perpetrated by him.

Advocate Siddhant Sharma LawRato

903 votes

Hi you can send a legal notice to the builder for not giving NOC and give an ultimatum to do so, in case of failure from his side you can approach consumer court and file a case against the builder from deficiency in services.

LawRato LawRato

525 votes

Dear Sir,

This seems to be a case of trade malpractice. You must send out a stern legal notice to them stating that you wish to cancel your allotment and want full refund as the builder has duped you by hiding the fact that the required sanctions/permissions have yet not been obtained and that now the builder is pushing you to take loan from a particular financial institution only. Not only is this a malpractice, this is also anti-competitive.
Thereafter, if you do not get a full refund along with interest, feel free to file a consumer complaint against them for refund, interest and damages.

thanks

LawRato LawRato