Delay in possession of flats is quite common and can happen with anyone. Often, builders are unable to deliver the possession of a flat or apartment within the time stipulated in the agreement entered into by both parties.
In case of a delay to deliver the possession of flats by the builder, the buyer has the option to move to the court and send a legal notice to the buyer under the Real Estate (Regulation and Development) (RERA) Act, 2016.
Does a Consumer Court have the power to direct builders to provide refunds and compensation to homebuyers in case of a failure to deliver the apartment?
Are homebuyers entitled to recover the amount invested along with interest as land revenue arrears from builders?
The Supreme Court has observed that the Consumer Courts have the power to grant relief to aggrieved flat buyers because of the delay in the delivery of the apartment according to the agreement. Consumer Courts, therefore, have the power to direct refund and compensation to a consumer for the deficiency in delivering the apartment in accordance with the terms of the Agreement.
The Supreme Court has held that the amount invested by the allottees, which is often their life savings, along with the interest thereon as quantified by the regulatory authority or the adjudicating officer can be recovered as arrears of land revenue by them from the builders.
Experion Developers Pvt. Ltd. Vs. Sushma Ashok Shiroor
[Civil Appeal No. 6044 of 2019]
[Civil Appeal No. 7149 of 2019]
Pamidighantam Sri Narasimha, J.
1. These appeals under Section 23 of the Consumer Protection Act, 19861, arise out of the judgment dated 19.06.2019 passed by the National Consumer Disputes Redressal Commission2. The Commission directed the Appellant-Developer to refund an amount of Rs. 2,06,41,379 with interest @ 9% p.a. to the Respondent-Consumer3 for its failure to deliver possession of the apartment within the time stipulated as per the Apartment Buyers Agreement. In these appeals, we have upheld the Commission's order insofar as it directed the Developer to refund the amounts paid by the Consumer with interest for the unjustifiable delay in delivering the apartment.
On law, we have considered the interplay between the judicial remedies under the Act and the Real Estate (Regulation and Development) Act, 2016 and have explained the remedial choices of a consumer under these statutes. We have held that the Commission created under the Act has the power to direct refund under Section 14 of the Act. We conclude that the Act and the RERA Act neither exclude nor contradict each other and they must be read harmoniously to subserve their common purpose.
2. The brief facts of the case are that the Developer, M/s Experion Developers Private Ltd., is the promoter of apartment units, Windchants, in Sector 112, Gurgaon, Haryana. The Consumer booked an apartment measuring 3525 sq. ft. for a total consideration of Rs. 2,36,15,726/- in the Windchants and agreed for construction linked payment plan, which led to the execution of the Apartment Buyer's Agreement dated 26.12.2012. As per Clause 10.1 of the Agreement, possession was to be given within 42 months from the date of approval of the building plan or the date of receipt of the approval of the Ministry of Environment and Forests, Government of India for the Project or date of the execution of the agreement whichever is later. Clause 13 of the Agreement provided for Delay Compensation. Under this clause, if the Developer did not offer possession within the period stipulated in the Agreement, it shall pay liquidated damages of Rs. 7.50 per square foot per month till possession is offered to the Consumer.
3.1 The Consumer approached the National Disputes Redressal Commission by filing an original complaint being, Consumer Case No. 2648/2017, alleging that he has paid a total consideration of Rs. 2,06,41,379/- and possession was not granted even till the filing of the complaint. He, therefore, sought a refund of Rs. 2,06,41,379/- along with interest @ 24% p.a.
3.2 The Developer filed its Written Statement before the Commission stating that though the 42 months period expires on 26-6-20164, the purchaser will only be entitled to delay compensation under Clause 13, for a sum of Rs. 4,54,052/-. Justification for the delay is given by pleading that the Occupation Certificate for Phase-I of the project had already been obtained on 06.12.2017, and application for Occupation Certificate for Phase-2, had already been made. In the affidavit of evidence, the Developer contended that it secured the Occupation Certificate on 23.07.2018 and a notice of possession was issued to the Consumer on 24.07.2018. It was claimed that since possession can be handed over, the complaint must be dismissed.
4. The Commission, in its judgment dated 19.06.2019, allowed the complaint after referring to Clause 10 (relating to the project completion period), Clause 11 (relating to the possession and conveyance of the apartment), as well as Clause 13 (relating to delay in possession). The Commission found that the agreement is one-sided, heavily loaded against the allottee and entirely in favour of the Developers. Following the decisions of this Court in Pioneer Urban Land and Infrastructure Ltd. v. Govind Raghvan,5 ("Pioneer"), the Commission directed the Developer to refund the amount of Rs.2,36,15,726/- with interest @ 9% p.a.
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As observed by the Supreme Court, the power to direct refund of the amount and to compensate a consumer for the deficiency in not delivering the apartment as per the terms of Agreement is within the jurisdiction of the Consumer Courts (Section 14 of the Consumer Protection Act, 1986.
As per Section 40(1) of the RERA Act, “if a promoter or an allottee or a real estate agent, as the case may be, fails to pay any interest or penalty or compensation imposed on him, by the adjudicating officer or the Regulatory Authority or the Appellate Authority, as the case may be, under this Act or the rules and regulations made thereunder, it shall be recoverable from such promoter or allottee or real estate agent, in such manner as may be prescribed as an arrears of land revenue.”
It is not uncommon that a homebuyer faces delay in the delivery of the possession of the flat even after agreeing to a date of possession by entering into an agreement with the builder. Builders often delay the delivery of the possession of the flat due to non-completion for an indefinite extended period of time. The RERA Act stipulates certain provisions to protect the buyer from such delays. It is important that you consult an expert property lawyer for your case as they are well-versed with the complex court procedures and the relevant laws.
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