NCDRC Allows Homebuyers To Seek Full Refund From The Builders

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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.