NCDRC Allows Homebuyers To Seek Full Refund From The Builders

First Published @ May 20, 2019 5:05 pm

In  a  major  relief  to  lakhs  of  aggrieved  home buyers, the  National Consumer  Disputes  Redressal  Commission  (NCDRC)  in  its  order  has ruled  that  the  home buyers  can  now  seek  a  full  refund  from  builders if  the  possession  of  the  flats  is  delayed  by  a  year  from  the  promised date  of  final  delivery.

The  NCDRC  has  passed  this  judgment  in  order  to  provide  relief  to  all those  home buyers  who  do  not  get  the  timely  possession  of  their  flats in  the  wake  of  incessant  delays. A  bench  of  Prem  Narain  said, “It  is now  established  that  allottees  have  the  right  to  ask  for  a  refund  if possession  is  inordinately  delayed, particularly  beyond  one  year,” Times of  India  reported.

The  commission  passed  the  order  on  a  plea  by  a  Delhi  based home buyer  Shalabh  Nigam, who  had  bought  a  flat  in  a  housing project, Greenopolis, Gurgaon  in  the  year  2012. This  luxury  residential project  was  being  developed  by  Orris  Infrastructure  and  3C  company. The  customer  had  made  a  payment  of  around  Rs 90 lakh  to  the builder. According  to  the  agreement  between  the  builder  and  the buyer, the  flat  was  to  be  handed  over  to  him  within  36  months  along with  a  grace  period  of  six  months  valid  from  the  date  of  allotment.

However, when  the  builders  were  unsuccessful  to  complete  the  project at  the  stipulated  given  timeline, Nigam  approached  the  NCDRC, seeking its  direction  for  either  the  time-bound  possession  of  the  flat  or  a refund  of  the  total  amount  paid  to  the  builder. Since  the  buyer  had preferred  to  take  possession  of  the  flat, the  Commission  ordered  the builder  to  complete  the  construction  of  the  flat  in  all  respects  as  per their  agreement  by  the  end  of  September  2019  and  deliver  it  to  the aggrieved  party  after  obtaining  occupancy  certificate. Moreover, the Commission  also  directed  the  builder  to  compensate  the  buyer  at  the rate  of  6%  per  year  on  the  total  amount  for  the  delayed  period  even after  transferring  the  possession. Besides, in  the  case  of  non-delivery  of the  flat  within  the  prescribed  deadline  by  the  Commission, the  builder would  have  to  refund  the  total  paid  amount  with  a  10%  interest.

[Also read this Supreme Court Allows Homebuyers To Directly Approach NCDRC Against Builder]

However, the  builder, on  the  other  hand, had  argued  that  since  the buyer  had  stopped  paying  installments  later  on, then  there  would  be  a forfeit  of  10%  of  the  amount  as  earnest  money  as  per  the  mutually agreed  upon  clause, in  case  the  refund  is  ordered. The  Commission, however, rejected  this  argument  by  saying  that  the  installments  were paid  up  to  the  seventh  stage  and  the  buyer  had  discontinued  further payments  only  because  there  was  no  progress  in  the  construction process.

Mostly, in  the  case  of  delayed  residential  projects, builders  compensate the  buyers  according  to  the  clause  in  the  agreement  which  ranges from  Rs 5-10  per sq  feet  per  month. But, the  amount  is  inadequate considering  the  huge  investments  by  buyers  in  the  properties.

The  Supreme  Court  and  various  consumer  courts  have  in  the  past held that  the  end  buyers  cannot  be  made  to  wait  endlessly  to  take  the ownership  of  their  flats, but  did  not  give  clarity  on  the  timeline  to claim  the  refund  in  case  of  delay. Now, the  NCDRC  has  qualified  a time-frame  of  one  year  beyond  which  they  can  claim  a  full  refund from  the  builders  if  possession  of  their  flats  is  delayed  by  one  year beyond  the  date  promised  by  their  builder.

Now, since  the  implementation  of  RERA, all  ongoing  residential projects are  required  to  be registered  under  it  by  the  builders  for  selling  their units  and  comply  with  the  new  rules. Since, the  new  rules  call  for much  stricter  compliance  and  transparency,  which  includes  control  on the  management  of  funds  and  timely  delivery  of  projects, there  is more pressure  on  developers  to  deliver  the  projects  on  time. Therefore, developers  should  be more  cautious  in  the  completion  of  their  projects within  the  stipulated  time frame.

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