Homebuyers are entitled to compensation for delays in actually taking possession of an apartment: consumer court

Handing a major victory to customers who face undue delays in taking possession of their homes, the National Consumer Dispute Recovery Commission (NCDRC) has ruled that a homebuyer is entitled to compensation for delays until he actually takes possession of a unit. Possession offered by a builder on an incomplete unit will have no bearing on obtaining compensation, he said in a recent verdict.

The consumer court noted that “it is inconceivable that a person does not like to take physical possession of his accommodation after having made full payment”.

The decision came as a boost to homebuyers. Despite winning notable court battles with builders in recent years, most homebuyers prefer not to go the legal route. Rather than confront the power of builders in court, they swallow their frustration at delays and irregularities and choose to move on rather than incur additional costs or face more mental agony.

Vikas Mittal, however, took the road less travelled. After failing to take possession of his apartment in a DLF Home Developers project in Delhi, he decided to seek redress from the National Consumer Disputes Redressal Commission. And he won, in a decision that will not only ensure builders take project completion and delivery times seriously, but also assure consumers that they can seek compensation for delays.

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Mittal had reserved a unit in the DLF project on September 29, 2009, after depositing a reservation amount of Rs. 7.5 million. The award letter was issued to him on October 5, 2009. An apartment purchase agreement was signed on October 27, 2010, in which the total consideration for the apartment was mentioned at Rs 1.05 crore. According to the agreement, the accommodation was to be delivered no later than September 29, 2012, within three years of the date of the request.

Finding that there had been a delay of almost five years (from a revised delivery date) in repossessing the apartment, the court ordered the builder to pay compensation for delay (for delay delivery) at the rate of 6% per year to the buyer on the amount deposited by him, within six weeks of his order.

The consumer court ordered that the compensation be paid from the revised date of possession, which is September 29, 2014, until May 9, 2019, which is the date on which the buyer took possession of the property .

He said any delay in paying compensation would result in interest being charged at 9% per annum.

The assertion of the DLF

For its part, the builder, DLF Home Developers Limited, argued that a purchaser ceases to be a consumer after the offer of possession. She informed the court that possession was offered to the purchaser on June 27, 2017, and upon receipt of full payment, a letter of possession was issued on December 7, 2017. is due to a delay on the part of the purchaser. himself that physical possession of the unit was not taken by him,” the builder said.

The buyer, however, informed the court that although the letter of possession was dated June 27, 2017, he did not receive it until May 9, 2019.

The builder also indicated that the complaint was filed by the buyer on March 17, 2020 and that the buyer has not taken possession of the property for two years. She argued that the buyer was not a consumer but an investor who bought the property in order to get better returns and capital appreciation.

In addition, DLF Home Developers told the court that in 2012 it advised the purchaser in a letter dated July 19, 2012 that there would be a 16 month delay in obtaining approvals and that an exit option had been given to all recipients with reimbursement of the amount paid as well as interest at 9 per cent per annum.

This delay, he said, was due to awaited approvals from authorities as well as force majeure circumstances. The builder has requested that disputes, if any, be submitted to arbitration and, in its absence, be adjudicated only in civil court.

What the consumer court said

However, the consumer court order rejected the builder’s arguments. He concluded that there was “an unreasonable delay in construction as the unit…was not completed even on the revised possession date, i.e. 29.01.2014”. He noted that even though the buyer had paid the full amount of the apartment before August 21, 2017 and had duly informed the builder, a letter of possession was issued on December 7, 2017 and actual possession was taken on June 8, 2019.

“Even if the takeover offer of 07.12.2017 is taken into account, the delay is more than 5 years. The occupancy certificate was not received until 2017. The opposing party (DLF Home Developers) also provided no reasonable justification for this delay. Therefore, the plaintiff is entitled to fair and reasonable compensation for delay,” the order reads.

“The Complainant stated that the Unit was not ready, which was strongly contested by the opposing Parties through their distinguished Counsel. In our opinion, … Complainant’s argument should be given credit as it is inconceivable that a person would not like to take physical possession of his Unit after making full payment which was also a substantial amount. It may also be necessary to give credence to the fact that the … letter of possession dated 07.12.2017 was not actually received by the plaintiff until 09.05.2019, as evidenced by the latter,” the order states.

Moneycontrol has contacted DLF with questions about the case but has not yet received a response.

Speaking to Moneycontrol, Aditya Parolia, who represented the buyer in the case, said: “Possession for the sole purpose of fulfilling a delivery obligation does not serve a consumer’s purpose. It also hurts a recipient who has been waiting for his house for a long time. The Commission found that this was an unfair practice by the builder and rightly awarded compensation up to the date of actual possession. A consumer hopes to get a fully completed unit and not a half-baked pie that builders deliver just to escape late penalties.

Mittal, the buyer, told Moneycontrol he did not expect such a delay in taking possession from an established developer. He advises buyers investing in a brand promoter’s project to ensure possession is taken on time and to check the quality of the services offered once the project is ready. “Ideally go for a project that has fewer units because it’s easy to manage,” he said.

What the experts think

“This is a significant order from consumer forums, both in terms of protecting consumer interests and imposing appropriate penalties on a builder for failure to provide services,” said Rakesh Warrier, partner, JSA.

“In general, builders tend to fend for themselves in such cases, as individual consumers may not want the embarrassment of chasing after these huge corporations for compensation for delay (late takeover). This order will not only serve as a benchmark for builders to ensure they meet project completion and delivery deadlines, but will also assure consumers that they can seek compensation in the event of undue delay.” , he told Moneycontrol.

Speaking to Moneycontrol, Nitish Sharma, Barrister, AnantLaw, said: “This NCDRC order is not only consistent with its previous orders, but also with various orders passed by the Supreme Court. Such orders serve as a guide for consumers who are stuck in similar situations. However, the developer also has the right to appeal to the Supreme Court against the order made by the NCDRC. »
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