The Maharashtra State Consumer Disputes Redressal Commission has ordered a Pune-based builder to pay a flat buyer Rs 45 lakh for a flat he purchased for Rs 6.5 lakh in 2001 but never received possession.

The commission also reprimanded the builder for creating third party interest by selling the same flat to another buyer. The commission stated that it is just and proper to compensate the flat buyer with an amount to match with the existing market price for similar property. “This is a best case to show how the builders/developers exploit the consumers,” the commission observed.

In February 2001, Prashant Kulkarni booked a flat measuring around 975 sq ft for Rs 6.5 lakh in the building which was to be constructed by the builder Vijay Wagh at Kothrud. The possession was to be handed over on or before May 2001.

However, possession was not granted on time. At this point Wagh demanded Rs 6.9 lakh as against Rs 6.5 the amount as per the agreement. Kulkarni had paid Rs 6.2 lakh. He alleged that Wagh deliberately did not complete the construction and did not hand over the possession of the flat. When Wagh did not pay heed to a legal notice sent by Kulkarni, the latter filed a consumer complaint praying for possession on payment of Rs 70,000.

In 2005, the District Consumer Disputes Redressal Forum, Pune directed Wagh to hand over the possession. Aggrieved, Wagh filed an appeal in the state commission in Mumbai. In the commission, Wagh’s counsel stated that as Kulkarni had failed to pay the remaining amount, Wagh had terminated the agreement. The counsel further contended that the flat had been sold to the third party after termination of the agreement.

The commission however observed that a stipulation in the agreement stated that Wagh could not terminate the agreement without giving Kulkarni a 15 day notice along with the reasons for the termination. Since Wagh did not abide by this, the termination was neither legal nor proper, the commission said. “The builder with a malafide intention has sold the flat to a third party. It amounts to deficiency of service and unfair trade practice,” the commission observed. The commission also ordered Wagh to pay Kulkarni Rs 10,000 towards legal costs.

Homebuyers and housing activists have welcomed the recent verdict of the Consumer commission, which penalised a builder for delayed delivery of constructed flats. The state consumer commission had directed the Lok Housing and Construction Limited to pay Rs 1 lakh to the complainant

Sudhakar Shetty for giving possession of the flats nine months after the scheduled date and that too without the copies of the three certificates issued by the civic body.

Ramesh Prabhu, president, Maharashtra Societies Welfare Association (MSWA), said he hoped this would make builders accountable. "Currently, homebuyers are left at the mercy of builders who barely adhere to deadlines," Prabhu said.

The Citizens Organisation for Public Opinion (COPO) said various regulations are required to rein in the builders. "A majority of the projects gets delayed and some even languish for years as builders hardly adhere to deadlines," said advocate Sanjeev Kanchan, president, COPO. "The homebuyers are the worst sufferers as they have to pay for living in rented apartments," he added.

Ironically, one of Lok Group's Director Mayank Gandhi is also co-ordinator of India against Corruption's Mumbai chapter and has been at the forefront of the anti-corruption agitation. When asked about the anti-consumer stand taken by his company, Gandhi said, "I am not aware of this case. I am not looking into day to day running of the company."

Homebuyers are happy with the verdict. "At least now, I will know when I can shift to my new house," said Sudhir Bantwal, who has booked a house at Thane.


Currently the Maharashtra Ownership Flats Act (MOFA) has the provision of 9% penalty with the refund of the original amount in case a consumer returns the flat on grounds of delayed possession. However, activists have called this impractical. "Most realty rates have doubled since I booked my flat two years ago and this rate of interest is very low," Bantwal said. 



Mrs. Veena Khanna of New Delhi Vs M/s. Ansal Properties and Adharshila Towers, New Delhi: Before National Consumer Disputes Redressal Commission, New Delhi: Order dated 9th July 2007

Due to abnormal delay in handing over the possession of flat, the Complainant had demanded refund of the deposited amount with interest @ 18% which the Opposite party refused to pay. Complainant filed a petition before the State Commission, Delhi. By judgment and Order dt.06-12-2005, the State Commission directed the Opposite Party to refund the amount of Rs.15,00,000 with interest @ 13% p.a. from the date of deposit of the last installment till the date of payment of refund. In the alternative it also directed that if the Opposite Parties choose to handover the possession of the flat, the order of refund with interest will not come into operation.

Against the above Order of State Commission, the Complainant Mrs. Veena Khanna filed an Appeal in the National Consumer Dispute Redressal Commission praying that the Opposite Parties be directed to deliver the possession of the flat and also compensation for delay in delivery or adequate compensation should be awarded so that she can purchase a flat of the size.

It was argued that as the afore-quoted order passed by the State Commission gave preferable alternative to the Opposite Parties, and the builder took undue advantage of it and refunded the amount deposited by the complainant with interest, as directed, because of the rise in the prices of the immovable properties.

Opposite Parties took advantage only because an option was given to either refund the amount or to hand-over possession of the flat and no adequate compensation was awarded. The National Consumer Dispute Redressal Commission commented that if such contentions of refunding of the money with payment of minimal interest are accepted, the builders would earn millions of rupees by delaying the delivery of the possession of the flat for months together for one reason or the other.

After considering the arguments of the counsels representing both the parties the National Consumer Dispute Redressal Commission decided that the Complainant is required to be compensated for delay in construction of the flat and for not allotting the same to her. Because of the delay in construction and delay in deciding the matter, it is practically impossible for a retired Govt. employee to purchase a flat at the present price.

The National Consumer Dispute Redressal Commission further stated that therefore, there are two alternatives – (a) one is to give adequate compensation for delay and to direct the Opposite Parties to hand-over possession of an alternative flat in the vicinity of the area where the flat was allotted to the Complainant; (b) or secondly, to pay adequate compensation to enable the Complainant to purchase a new flat of the same area in the same or similar locality.

The Opposite Parties were directed to pay a sum of Rs.7,50,000/- as compensation to the Complainant for the period she suffered financially. This was on the presumption that the value of the flat has escalated. However, if the builder considers that compensation of Rs.7,50,000/- (Rupees seven lakhs and fifty thousand) is more or excessive, it would be open to the builder to provide an alternative flat of the size and price agreed, in the same locality or near about, to the complainant for which an appropriate allotment letter will be issued by them in favor of the Complainant within a period of eight weeks from the date of the order. If the same is not issued, it shall pay compensation of Rs.7,50,000/- to the complainant, as directed.

The flat/premises buyers must insist to their builder for inclusion of penalty clause in their Agreement before execution of the same. The builder must deliver the project in time along with 100 per cent transparency in all the dealings. He must stick to the promised terms and conditions and pay penalty if the project delivery is late. Trust is the most important element in a society-builder relation and that should be well taken care of by the builder. Get all the promises or agreements made by builder in writing. It should outline the work to be done, date of completion, amenities or facilities promised.


SOURCE COURTESY: National Consumer Disputes Redressal Commission, New Delhi Link:



Mumbai: In an order that will cheer property buyers. As per the news item  appeared in "Times of India, dated 14 June' 2010, Mumbai edition, page 01" the Maharashtra State Consumer Commission recently directed a developer to shell out Rs. 20 lakhs at the rate of Rs. 2,000 a day for a delay in giving possession of a shop premises to a purchaser.

The significance of the order passed by a three-member bench comprising president S B Mhase, S R Khanzode and D Dhamatkar—is that it is “among the first times’’ that “per day’’ damage, as was specified in the sale agreement, has been charged, according to lawyer Bindu Jain. The lawyer represented the aggrieved party, Dharshi Dedhia.

Often, builders have an agreement clause that assures buyers a daily damage for delayed possession, but few buyers, if any, invoke it, Jain said. The lawyer said the judgment comes as a boost to purchases of flats and other property across the state.

The commission said, “To issue notice for delivery of possession without an occupation certificate was an illegal act. We find that there is no ground to justify the delay.”

Dedhia possessed a shop and godown in Rajhans building in Thane as a tenant. The original landlord sold the premises to Padmavati Enterprises who decided to redevelop the property and agreed to give a shop of 366 sq ft to Dedhia at a subsidized rate. The agreement was made in June 2005 to hand over possession in October 2005, but the possession was given in June 2007 that too without an occupation certificate. As a result, Dedhia claimed damages for the delay at Rs. 2,000 per day as stipulated in the agreement.

Dedhia’s other grievance was that a water connection wasn’t given to him. He took up the matter with the Thane district consumer forum, which ordered the builder to pay him Rs. 20,000 as an additional compensation for the “mental agony and financial loss’’.

As already pointed out above, there have been innumerable decisions in Consumer Forums concerning builders and flat owners. These decisions have been rendered mostly on the ground of “deficiency in service”. Which expression has been defined in section 2(1) (g) and section 2(1) (o) of the Consumer Protection Act. In cases of delay in giving possession of the flats, the consumer forums have directed the refund of the amount deposited by the potential purchasers with the builder/housing board along with 18 per cent. In another case, besides issuing order for refund of the entire amount of Rs. 1,09,000/- deposited and payment of 18 per cent interest, the builder was also ordered to pay Rs. 1 lakh as further compensation.

SOURCE COURTESY: Mumbai Property Exchange