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This article is written by Karan Jayesh Shah, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.com. Here he discusses “What can a Consumer do if Builder is Delaying Delivery of a Flat Excessively”.

Introduction

Time is money and delay in delivery of flat by the developer/builder will attract both civil and criminal penalty. The hard earn money of an individual is invested in the flat and delay in delivering the flat would make them suffer both monetary and also in non-monetary form. The laws are very stringent after the passing of Real Estate (Regulation and Development) Act, 2016 (hereinafter RERA) and so the developer/builder is obliged and must deliver the possession within the pre-decided time to avoid any legal consequences.  

The Consumer i.e. home buyer can take resort under India’s civil, criminal and consumer laws, to take action against the developer/builder. The recent judicial announcements dictated by the court are mostly in favour of the consumer and very severe punishment against the builder is announced.   

What is Delayed Possession?

In simple terms, it means that delay in delivery of the possession of the flat to the home buyer within the stipulated time period set out in the agreement. The Agreement can be in the form of a builder – buyer agreement.  

It is observed that certain mal-practices such as shortage of funds, financial hiccups, altering the plans/ designs of the property without the consent or knowledge of the buyer to accompany the project within the stipulated time period are followed. 

The delay takes place after the exhaustion of the extended time period that might be set out in the agreement or is given by the operation of law. The liability is accounted only when the delay is caused due to the builder’s fault.  In case of natural calamity or any situation beyond human control, then the builder can’t be held liable for delay in delivery of possession of the flat up to a certain extent.

Actions Against the Developer in Case of Delay in Delivery

Before the passing of Real Estate (Regulation and Development) Act, 2016, there was no specific statute providing punishments and provisions for the delay in delivery by the developer of the flat. The following are the actions and remedies set out by the operation of different laws and acts:

1. RERA (REAL ESTATE REGULATORY AUTHORITY ACT)

Regulatory Authority needs to be established by each state under Real Estate (Regulation and Development) Act, 2016, which is a special body set up to deal with the matters that are connected to and ancillaries to the real estate sector.

The below mention are the important provisions given under Real Estate (Regulation and Development) Act, 2016, that can help ensure justice to the home buyer- 

  • Home Buyer’s right to withdraw from the project:  If the developer is not able to deliver the flat on the agreed time period set out in the agreement then the home buyer has right to withdraw himself from the project.  
  • Home Buyer’s right to compensation after withdrawing:   Once the home buyer withdraws himself from the project, he/she has right to be compensated for the entire amount paid till date, along with the interest. The right is vested with the home buyer only after the expiry of the time period set out in the agreement for the delivery of the flat. The home buyer directly can’t go to the court of law, the first thing that needs to be done is to give notice or request the developer to pay the amount and only on non-fulfilment, the home buyer can exhaust the other remedies available under the law.   
  • Home Buyer’s right to compensation without withdrawing: If the home buyer doesn’t want to withdraw himself from the project and want to continue the project irrespective of the fact that there is a delay in delivery of project then the developer is obliged to pay interest for each day or for each month of delay in delivery. The interest rate or compensation to be paid shall be as set out in the agreement or as per the operation of law.
  • Right to file a complaint against builder: When the developer is not ready to compensate for the delay even after request or notice, the home buyer can file a complaint against him. The complaint is filed before the Regulatory Authority, who is required to appoint an officer for the purpose of discharging the function of the judge. The officer has to conduct enquiry and pass such necessary order as he deems fit.  

The home buyer can either appear in person or appoint a representative. The Complaint needs to be disposed within 60 days, however, if required can be extended beyond the stipulated period but have to give a reason for doing so. 

The appeal can be filed within 60 days of passing of the order by the officer and for this; each state has to set up an appellate tribunal. 

The RERA is the recent development of law and is yet to be implemented in all the states and so in few states, Regulatory Authorities or Appellate tribunals might not be constituted yet and therefore in that case the home buyer need to seek other remedies as stated below.

2. Consumer Complaint in Case of Delay

The purpose for which the property is brought places a crucial role in deciding the jurisdiction of the consumer court. If it’s a source of income for the home buyer .i.e. getting rent out of it, or is the place of residence than the delay in delivery of the flat would attract the jurisdiction of the consumer court, instead of going to RERA.  

A home buyer can file a complaint in consumer forum for deficiency of service by the developer and it can be filed in the District, State or National Consumer Courts, depending upon the value of the subject matter and the compensation that the home buyer is claiming.

As the breach of contract takes place, the complaint should be filed at the earliest opportunity available with the home buyer, as it is seen in the past that the consumer court aids in getting faster relief than other authorities.    

The usual practice that is followed to file a written complaint about the delay in delivery to the appropriate consumer court is to take the help of a lawyer in drafting the appropriate documents. The following are the steps to be followed to file a complaint against the developer in the appropriate consumer court. 

  • Legal Notice: The first and foremost step is to send a legal notice to the developer and ask for the compensation for the delay or other reliefs that are available under the law.  
  • Response: The second step is to wait for a specific period so that the developer can respond.  
  • Complaint: The third step is to prepare a petition/complaint depending upon the unsatisfactory response or on the basis of no response stating all the facts, evidence, etc. 
  • Filing of the Complaint: The next step is to approach the appropriate consumer court and file the complaint/petitioner against the developer.

3. Civil Suit/Writ Petition in High Court

The right to file a civil suit or writ petition in the high court is only available when there is no appropriate regulatory authority in that particular state. It should be filed where the defendant resides or carries on his business or where the property is located.

4. Arbitration

The right to refer the dispute to arbitration can only arise if a clause for arbitration exists in the agreement. So it will be the first remedy available with a party which would be required to be exhausted to use the other remedies. In Arbitration, the Arbitrator will be the one to decide whether the builder has deviated from the agreement or not and would pass such award as he/she deems fit.

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The arbitrator will decide the amount of compensation liable to be paid by the developer for deviating from the terms of the agreement and to execute the award or to enforce it; appropriate civil court needs to be approached.

5. Criminal Case

The home buyer in certain cases or instances can also approach a criminal court for example when the developer is deliberately not handing the possession of the property and is thereby causing delay and is also not ready to pay back the amount of money paid by the home buyer.  The developer can be sued for cheating and dishonestly inducing delivery of property u/s 420 of the Indian penal code, 1860 and/or for criminal breach of trust u/s 405 of the Indian penal code, 1860.

In the criminal court, if the developer is found guilty then he/she might be made liable to pay some amount of penalty and/or compensation to the home buyer and/or would be sent to jail.     

Conclusion

The Real Estate (Regulation and Development) Act, 2016 is the recent development of law and is yet to be implemented in all the states and so in few states, Regulatory Authorities and Appellate tribunals might not be constituted yet and therefore in that case the home buyer need to seek other remedies. The implementation of RERA across all the states of India is the need of the hour. So that the Regulatory Authority and Appellate Tribunal could be constituted for each state for dealing with the issues connected with the delay in delivery of property and for other matters related to it. 

Before signing any contract, buyers should read all the points, including the disclaimers and check the builder’ financial credibility.


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