Builder Fined Rs. 20 lakhs for Delayed Possession

An analysis of the Judgment passed by the Maharashtra State Consumer Disputes Redressal Commission by Adv. R. P. Rathod.

In a Landmark Order 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.

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

The commission has further held that, “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’’.

Adv. R. P. Rathod points out that, 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.


Adv. R. P. Rathod further states that 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.

-      Adv. R. P. Rathod.