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.