How to deal with delay in housing projects

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Our reader Desiree Pinsent-Hiwale had posted this query on our facebook page:

How to handle a builder in Bangalore that has still not completed a project and the amenities despite having collected the payments ?

After consulting with experts and referring to similar cases, here is our advice :

Delays in construction of residential projects are common in India. Developers include a grace period, generally six months, in their agreement with buyers. Most homebuyers take a delay of 6-12 months as granted. Sometimes, possession is delayed even beyond the expected tenure.

Buyers need to be alert to avoid risk of getting locked in a delayed project. The builder is likely to offer possession on time if a project has necessary approvals along with funding from a bank. Several projects boast of 100% funding from foreign private equities and other investors, which means delays are less likely for lack of funds.

  • Usually the contracts mention the penalties for delay in payments by buyers but obligations of timely delivery by builders are usually played down or very minimal interest rates (1-3 percentage).

What you can do

A buyer who is the victim of the unfair practices of the builder can approach the following forums for redressal:

Housing Project

  • He/she can file a complaint before the Consumer Forum
  • He/she can file a civil suit in a Civil Court
  • He/she can file a complaint before the Competition Commission of India
  • He/she can approach Regulatory Forums
  • He/she can file a Criminal Case

Consumer Forum

The Consumer Protection Act, 1986 is the Act, which seeks to provide for better protection of the interests of consumer. It provides remedies to a consumer against deficient services.

When the possession of the property is not delivered within stipulated period, the delay so caused is denial of service. Any person dissatisfied by the services or delayed delivery of possession can approach the consumer forum for his redressal.

The Consumer Protection Act provides a three tier machinery for redressal of consumer grievances.

  • The District Forums are established in each District and have jurisdiction to entertain complaints where the value of goods or services and the compensation if any, claimed does not exceed Rs. 20,00,000 (Twenty Lakhs).
  • The State Commission is established in each state and have jurisdiction to entertain complaints where the value of goods or services and the compensation if any, claimed exceeds rupees twenty lakhs but does not exceed rupees one crore.
  • The National Commission has jurisdiction to entertain complaints where the value of the goods or services and compensation if any claimed exceeds rupees one crore.

A consumer can file a complaint in the consumer forum against the builder/developer. The complaint must be filed within two years from the date of the dispute.

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You can also register a complaint through the website of National Consumer Helpline.
NCH provides information, advice or guidance through their National Toll Free No : 1800-11-4000

Judgements

  • In a recent landmark judgment the Supreme Court has held that when the possession of the property is not handed over to the allottee in time it amounts to denial of service and the allottee, who has been affected by the delay in delivery of possession is entitled to compensation.
  • In another landmark judgment the National Commission has held that the allottee is entitled to opt out of a project if there is a delay in delivery possession of the house by the real estate developers.
  • It was also held that the allottee is entitled to a refund of the entire money with reasonable interest and any deduction on the said amount is unjustified.
  • In another judgment it was held that a builder cannot refuse to pay interest on the refund, if such refund is being sought on account of deficient service rendered by the builder, or on account of unfair trade practice perpetrated by him.

Competition Commission of India

The Competition Act, 2002 was enacted to prevent practices having adverse effect on competition, to prohibit use of dominance and to protect the interests of the consumers.

Regulatory Forums & Criminal Case

  • An allottee can approach the regulatory authorities complaining against the non compliance of the statutory obligations by the builders.
  • In cases where the builders make false promises to the flat purchasers and do not comply with their statutory obligations, the allottee has an option to file a criminal case in a criminal Court against the builder along with the consumer complaint to be filed in consumer forum.
  • The allottee can file a criminal case under the provisions of the Indian Penal Code, 1860 for cheating, breach of contract, not responding the grievance and delivery of poor quality construction.
  • The allottee can issue a statutory notice to the builder. In case the builder does not respond to the notice, parties have a right to approach the Criminal Court.
  • A police complaint can be filed after the issue of notice and then a criminal complaint can be filed before the Metropolitan Magistrate.
  • The complainant should bring out irregularities committed by the builders while executing the constructions of the building.

Related : Types of properties that NRIs can buy in India

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