Over the years, Judicial forums — including the Supreme Court and consumer courts — have repeatedly said that the homebuyers can't be made to wait indefinitely.
However, in a recent delay in possession case, where the builder failed to complete the project, a Delhi-resident Shalabh Nigam approached the National Consumer Disputes Redressal Commission for either refund or time-bound possession of the flat against Orris Infrastructure Private Limited.
Now, the Commission has held that allottees have the right to ask for refund if possession is inordinately delayed, particularly beyond one year.
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How the case was won
The BBA of Mr. Shalabh Nigam stated that in case of delay in giving possession of the flat, compensation will be given to home buyers at the rate of Rs.5/- per square foot of the super area. Such clauses have become an order of the day and a home buyer is forced to sign such contracts having the terms of the builders. Homebuyers are forced to accept 2-3% of the investment amount as compensation for delay in giving possession of the flat, while being forced to pay compound interest of 18% if he delays in making payment.
Hence, the question was put forth before the court: Should a builder be liable to pay compensation that is mentioned in Builder-Buyer Agreement (BBA) or should he be liable to pay compensation for the loss suffered by the builder for deficiency of services?
The court held that if a builder fails to complete the construction and deliver possession on or before the date committed by him, such an act would be an act of negligence on the part of the builder, causing loss to the flat buyer. Hence, the home buyer is entitled to compensation for negligence and deficiency in services on the part of the builder.
The court, in this case, took the view that the compensation payable to the buyers in such cases cannot be restricted to the compensation stipulated in the wholly one-sided BBA and has to be based upon the loss suffered by the consumer on account of deficiency in the services rendered to him. Despite having compensation clause in the agreement, the home buyers are entitled to a just and fair compensation for the period of delay.
The court further held that in case the project has delayed, the homebuyer has a right to seek refund. In this case, the court gave time to the builder till 30th September 2019 to complete the construction and handover the possession after obtaining the Occupancy Certificate and ordered the builder to pay compensation at the rate of 6% from the date of possession (as mentioned in BBA) till the date of actual possession. If the builder fails to do so, the builder will refund the deposited amount along with an interest of 10% per annum from the date of deposit till the date of actual payment.