Builder to pay Compensation for Delay in handing over possession of Flat

An analysis of the judgment passed by the National Consumer Disputes Redressal Commission, New Delhi by Adv. R. P. Rathod.

The said judgment is issued in the matter of Mrs. Veena Khanna of New Delhi Vs M/s. Ansal Properties and Adharshila Towers, New Delhi: Before National Consumer Disputes Redressal Commission, New Delhi: Order dated 9th July 2007.

Due to abnormal delay in handing over the possession of flat, the Complainant had demanded refund of the deposited amount with interest @ 18% which the Opposite party refused to pay. Complainant filed a petition before the State Commission, Delhi. By judgment and Order dt. 06-12-2005, the State Commission directed the Opposite Party to refund the amount of Rs.15,00,000 with interest @ 13% p.a. from the date of deposit of the last installment till the date of payment of refund. In the alternative it also directed that if the Opposite Parties choose to handover the possession of the flat, the order of refund with interest will not come into operation.

Against the above Order of State Commission, the Complainant Mrs. Veena Khanna filed an Appeal in the National Consumer Dispute Redressal Commission praying that the Opposite Parties be directed to deliver the possession of the flat and also compensation for delay in delivery or adequate compensation should be awarded so that she can purchase a flat of the size.

It was argued that as the a fore-quoted order passed by the State Commission gave preferable alternative to the Opposite Parties, and the builder took undue advantage of it and refunded the amount deposited by the complainant with interest, as directed, because of the rise in the prices of the immovable properties.

Opposite Parties took advantage only because an option was given to either refund the amount or to hand-over possession of the flat and no adequate compensation was awarded. The National Consumer Dispute Redressal Commission commented that if such contentions of refunding of the money with payment of minimal interest are accepted, the builders would earn millions of rupees by delaying the delivery of the possession of the flat for months together for one reason or the other.

After considering the arguments of the counsels representing both the parties the National Consumer Dispute Redressal Commission decided that the Complainant is required to be compensated for delay in construction of the flat and for not allotting the same to her. Because of the delay in construction and delay in deciding the matter, it is practically impossible for a retired Govt. employee to purchase a flat at the present price.

The National Consumer Dispute Redressal Commission further stated that therefore, there are two alternatives – (a) one is to give adequate compensation for delay and to direct the Opposite Parties to hand-over possession of an alternative flat in the vicinity of the area where the flat was allotted to the Complainant; (b) or secondly, to pay adequate compensation to enable the Complainant to purchase a new flat of the same area in the same or similar locality.

The Opposite Parties were directed to pay a sum of Rs.7,50,000/- as compensation to the Complainant for the period she suffered financially. This was on the presumption that the value of the flat has escalated. However, if the builder considers that compensation of Rs.7,50,000/- (Rupees seven lakh and fifty thousand) is more or excessive, it would be open to the builder to provide an alternative flat of the size and price agreed, in the same locality or near about, to the complainant for which an appropriate allotment letter will be issued by them in favor of the Complainant within a period of eight weeks from the date of the order. If the same is not issued, it shall pay compensation of Rs.7,50,000/- to the complainant, as directed.

The flat/ premises buyers must insist to their builder for inclusion of penalty clause in their Agreement before execution of the same
says Adv. R. P. Rathod. The builder must deliver the project in time along with 100 per cent transparency in all the dealings. He must stick to the promised terms and conditions and pay penalty if the project delivery is late. Trust is the most important element in a society-builder relation and that should be well taken care of by the builder. Get all the promises or agreements made by builder in writing. It should outline the work to be done, date of completion, amenities or facilities promised concludes Adv. R. P. Rathod.

-      Adv. R. P. Rathod.