Monday, 8 March 2021

Legal remedies available to a home buyer in case builder delays in delivering the possession

 1. Approach Consumer Forum- This is the most common forum to bring an action against the builder for deficiency in services under the agreement between the homebuyer and the builder. The homebuyer is covered under the definition of “consumer” as defined in Consumer Protection Act, 1986 only if the house is purchased for his own use and not for any commercial purpose. Deficiency in services includes a delay in possession. This is a cost-effective manner as the court fee charges are very nominal.

There is a three-tier machinery for redressal of consumer grievances under the Act. The District Commission is the initial forum and has jurisdiction to entertain complaints where the value of the house and the compensation if any, claimed does not exceed Rs. 1 Crore. Where the value of the house and the compensation if any claimed exceeds Rs. 1 Crore  but does not exceed Rs 10 Crore, the complaints will be entertained by State Consumer Commission which is established in each state. If the value of the house and the compensation if any claimed exceeds Rs 10 Crore, the National Commission Disputes Redressal Commission will have the jurisdiction to entertain such complaints.

You can file a consumer complaint either where the registered/ branch office of the builder is located or where the flat you purchased from the builder is situated.

2. File a case before Regulatory Forum- You can also file a complaint with Real Estate Regulatory Authority under section 31 of the Real Estate (Regulation and Development) Act, 2016. This authority is specifically constituted for speedy and effective adjudication of buyer- builder disputes. Under RERA if the builder fails to give possession as per the terms of the agreement for sale, then the buyer if he wishes to withdraw from the project, he can withdraw and is entitled to receive the amount paid so far and along with the interest.

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If the homebuyer wishes to continue with the project, he is entitled to receive interest for every month of delay.


3. File a Civil Suit- If the builder fails to deliver the property on the date as stipulated in the agreement then you can file a civil suit as there is a breach of obligations as per the agreement. You can approach a civil court and file a suit for injunction/damages or claim refund of the amount paid to purchase the flat and interest thereof. If you approach the civil court, you can get an immediate order for an injunction under Order 39 Rule 1 and Rule 2 of Code of Civil Procedure. However, there is no stringent timeline for adjudication of the suit and hence it may take longer as compared to other alternatives. In case, you are not a consumer, for instance, if you have bought flats for reselling purposes then you are not covered within the ambit of “consumer” and hence you can opt for filing a civil suit.

4. Initiate out of Court settlement- You can also opt for arbitration if there is an “Arbitration clause” in the builder- buyer agreement. Usually, it takes 3-6 months for resolving a matter through arbitration. There is no trial under this alternative and no evidence is considered while passing the award. In a recent judgment, NCDRC has held that even when there is an “arbitration clause” in the builder- buyer agreement. 

5. File a Criminal complaint- If your builder has cheated or defrauded you then you can file a criminal complaint under the provisions of Indian Penal Code for cheating, etc. A bailable warrant can be issued against the builder if you opt to file a criminal complaint.

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Note: While claiming the compensation you can claim interest on the payment made till date. If the homebuyer is staying in a rented accommodation, then the money spent on rent till the possession is delayed. Also, he can claim loss of opportunity caused to the purchaser, had he invested his money elsewhere.


Should you hire a lawyer?

It is highly recommended that an aggrieved buyer hires a lawyer for any action against the builder. This is because a property lawyer would be able to assess what is the best remedy that you should seek, the best legal recourse that should be taken, etc. A lawyer can better draft your complaints/suits and would also be able to represent you better than you would be able to represent yourself. This is because he is experienced and has studied and has been taught how to draft and represent clients. In addition to this, a property lawyer knows the requisite laws, and can interpret judgements and research more effectively. Hiring a lawyer is thus a good practice which would only work in your favour. 

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