One of the most flourishing industries
in India today is the real estate industry. The number of builders and
developers who offer special features to attract prospective buyers as the
demand for residential and commercial property is increasing day by day. The
Builders/Developers’ role in this industry is very important. Naturally there is mismatch between the
promises made and what actually delivered, which is the rising cause for the
consumers, i.e., buyers, dissatisfaction and grievances.
The Consumer Courts plays an important
role in redressing the grievances of the Buyers / Consumers who have suffered
in the hands of the Builders/Developers.
In
cases where the builders make false promises to the flat purchasers and do not
comply with their statutory obligations, the allottee has an option to file a
criminal case in a criminal Court for cheating, breach of contract, not
responding the grievance and delivery of poor quality construction against the
builder along with the consumer complaint to be filed in consumer forum.,. The allottee
can issue a statutory notice to the builder. In case the builder does not
respond to the notice, parties have a right to approach the Criminal
Court. A police complaint can be filed after the issue of notice and then
a criminal complaint can be filed before the Metropolitan Magistrate. The
complainant should bring out irregularities committed by the builders while
executing the constructions of the building.
Following are the general
complaints/grievances of the buyers, apart from some specific complaints:
1. Sub standard work:
The
Builders/Developers, in the competitive market, throw number of promises,
discounts and lucrative description of the property at the time of booking for
a property by a prospective buyer.
Ø In one of its judgment the Supreme Court of India has held
that if a builder uses sub-standard material in construction of a building or
makes false and 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.
Ø In cases where the end product delivered to the buyer is of
substandard in quality, the buyer has the remedy to file a consumer complaint
in the Consumer forum against the Builder/Developer for deficiency in services. In such cases the consumer forums have
ordered the builders to remove the defects and also pay compensation to the
allottee. The allottee also has an option to file a civil suit against the
builder claiming damages for breach of obligations.
2. Construction without
approvals:
Ø The consumer forums have held that where the plot has been
sold by the authorities/Builders without taking proper approval of the layout
plans and as a result of which the possession could not be delivered to the
prospective allottee, such an act on the part of the builder amounts to
deficiency in service.
Ø In case where the builder constructed the property without
the required approvals from the authorities, the allottee/buyer can file a
consumer complaint against the builder for deficiency in service. He can also
file a civil suit against the builder for refund of the amount. In such cases
the allottee can also approach the regulatory authority that was to issue the
required approval which can statutorily force the builder to obtain the
approval.
Ø In such case, subsequent to allotment of the plots, the
Supreme Court had banned the construction activity in five km radius of Badkhal
Lake and since the complainants’ plot fell within the said Supreme Court
directions and the Commission directed the builder/developer to refund the
amount along with interest, holding that the complainants/ allottees were
entitled to compensation.
3. Construction on illegally
acquired land:
Ø In cases where the construction has been made on illegally
acquired land, the buyer/allottee can approach the consumer forum or the civil
court for his grievance redressal. In such cases the allottee can either claim
the refund of the amount invested by him in the property or he can ask for an
alternate accommodation by the same builder.
Ø The Supreme Court has held that even the advertisements
inviting applications for allotment without having title to the land was
deceptive and unfair trade practice of the builders.
4. Fraud in booking:
Ø In cases of fraud in booking, the buyer/allottee can file a
complaint against the builder in the consumer forum or file a civil suit in
civil court. In case of fraud, the allottee can also file a criminal complaint
before the police.
Ø Note:
Ø The Supreme Court has held that the name of the applicant
not being considered at the time of the draw notwithstanding that the applicant
had fulfilled all the requirements of the advertisement was held to be a
deficiency in service, as such, an applicant
had a right for consideration of his application along with similarly situated
persons and if at the appropriate time his name had been considered and
allotted a plot, he would have been able to raise construction thereon with the
resources at his disposal.
Ø It was held that by unduly and unlawfully denying him the
opportunity of allotment, a reasonable and just compensation was required to be
fixed and paid.
Ø It was also held that a period of 9 months to a year is
justifiable period to return the application fee without any interest, but if
it can be demonstrated that the delay on the part of the Authorities in
refunding the application fee was unreasonable, the courts have awarded
interest notwithstanding that the brochure inviting the applications clearly
provided that no interest would be paid by the Development Authorities.
5. Change of land use, layout
plan and structures without the approval of the buyer:
Ø If the builder wants to undertake additional construction,
which is not part of the layout plan shown to flat buyer at the time of
executing the purchase agreement he must obtain the consent of the buyer. In
cases of the builder/developer makes changes in the use of land or in the
layout plan and the structures with respect to the one given in the agreement,
the buyer must send a legal notice to the builder and if he does not respond to
the same the allottee can file a complaint against the builder in the consumer
forum or file a civil suit in a civil court.
Ø The buyer can also file a complaint before the Competition
Commission of India if he is able to show that the builder is a dominant entity
in the market and is misusing his position to the detriment of the allottee by
unilaterally altering the layout plan or structures of the building.
6. Hidden charges:
Ø If the allottee is overburdened by the excessive hidden
charges in the Buyer Builder agreement, the buyer can file a civil suit in a
civil court.
Ø The allottee can also file a complaint before the
Competition Commission of India if he is able to show that the builder is a
dominant entity in the market and is misusing his position to the detriment of
the allottee by unilaterally imposing exorbitant hidden charges.
7. Enhanced external development
charges:
Ø If the builder demands enhanced development charges from the
allottees, the allottee can file a civil suit in a civil court.
8. Cancellation of
booking/project:
Ø After receiving the booking amount, if the builder cancels the
booking, the allottee can send him a legal notice regarding the same and in
case the no solution comes out or the builder does not respond to the notice,
then the allottee can file a consumer
complaint against him for refund for his booking amount.
Ø The allottee can also file a civil/Criminal case against the
builder.
9. Forfeiture of amount:
Insertion of a penalty clause which
is biased in favour of builder/developer is also one of the unfair practices
committed by the builders. In most of the cases, the agreement contains a
penalty clause in which the buyer is charged a penalty @ 18% for delayed
payments in the purchase of a flat, when the builder delays the delivery of the
same flat, the rate at which the builder pays is only about @ 1 to 2 % showing
an unfairly loaded contract. Precautions to be taken by a prospective buyer
Ø The terms and conditions of the agreement entered into
between the builder and the allottee determines the refund of the booking
amount. If the agreement contains an expert clause that the builder has right
to forfeit certain percent of the booking amount, then there is no legal
recourse. But if the agreement does not contain any such clause then the
allottee can issue a legal notice to the builder.
Ø The allottee can also approach a consumer forum in case the
cancellation is on account of the delay caused by the builder in the completion
of the project. The National Commission has held that if the request for refund
is made by the allottee on the ground that there has been a considerable long
delay in development or handing over of the possession of the plots, then the
allottee can approach the consumer along with 18 per cent interest.
10. Delay in delivering
possession:
Non-delivery of possession on time is one of the major areas of
conflict between the developers and the buyers. There are numerous cases where
builders have taken more than the required time to finish projects while
leaving home buyers to suffer financial loss. Whatsoever be the reason, the
delay in completion of the project has a direct impact on the buyer. The buyer
has to pay the EMIs of the bank and also the rent for his current residence.
The financial loss and mental agony that the buyer has to face cannot be
compensated except by giving him the physical possession of his house. The
Supreme Court has held that when possession of the property is not given within
the stipulated period, the delay is denial of service. Such disputes or claims
are not with respect to immovable property but 'deficiency in rendering of
service' of a particular standard, quality or grade.
In case of delay in delivery of
possession by the builder, the legal options that are available to the allottee
/ buyer is:
Ø to file a consumer complaint or file a civil suit against
the builder for the refund of amount paid to the builder and the interest
thereon.
Ø file a complaint before the Competition commission of India
if the builder is a dominant entity in the market and using his dominant
position to the detriment of the buyer.
Ø Note:
Ø A person who applies for allotment of a building site, or
flat constructed by the development authority or entered into an agreement with
a builder or contractor is a potential user and the nature of construction is
covered in the expression service of any description.
Ø The Court also held that the compensation awarded by the
consumer courts in such cases should serve the dual purpose of recompensing the
individual while simultaneously bringing about a qualitative change in the
attitude of service providers towards consumers.
Ø In another case the Supreme Court has held that in a
specific case, where it is found that the delay was culpable and there is no
contributory negligence by the allottee resulting in harassment/injury, both
mental and physical, the forum/commission would not be precluded from making an
award in excess of 12% per annum.
Ø National Consumer Commission has also held that the buyer is
entitled to a refund of the entire money with reasonable interest, and any
deduction by the builder is unjustified.
11. Creation of third party
interests:
Ø Where a builder creates a third party interest in the flat
allotted to a person, the allottee /buyer can serve a legal notice to the
builder and in case there is no response from the builder the allottee /buyer can file a consumer complaint against the
builder or can file a civil case. The allottee / buyer can also file a criminal
complaint against the builder for cheating and fraud.
12. Not providing completion
certificate:
Ø In case the builder has not received the completion
certificate from the concerned authority, the allottee/buyer can file a RTI
application with the SPIO of the local Municipality demanding the copies of all
the documents submitted for seeking approval of the concerned authorities and
can file the required NOCs with the concerned authority and can obtain the
completion certificate himself.
Ø If the builder has obtained the completion certificate and
not willing to give it to the allottee, then he can file a consumer complaint
or file a civil suit against the builder.
No comments:
Post a Comment