 Supreme Court order on builders in respect of delay in

delivery of possession
Focusing upon one of the sectors that has witnessed phenomenal growth in
the last two decades is none other than the Real Estate Sector in India. It is
considered to be the sectors that has drawn huge investments and people
with the hope of unlocking their dream homes have spent their hard earned
money concerning its realization.
Delay in delivery of possession of Flats –
In present era majority of home buyers are aggrieved by the delay
confronted in timely delivery of projects and in construction aspects too.
This prolonged delay in delivery of housing projects cripples the sole
purpose of investing in real estate and converts an asset into liability.
However, the good news is that this oppression of delay in delivery of
possession by the builders have often been objurgated by the Judiciary.
Some cases which highlight the injustice meted out to homebuyers and
consequent observations have been enumerated below:
 Brig. (Retd.) Kamal Sood vs M/S. DLF Universal Ltd.
(Causing delay due to delay in governmental permissions, such as, approval
of zoning plan, layout plan and schematic building plan)- This case raised
some interesting issues before the National Consumer Dispute Redressal
Commission (NCDRC), for instance:
1. Can a builder give alluring advertisement promising delivery of
possession of the constructed flat to the consumer within the
stipulated time, and, subsequently, on his failure, turnaround and
contend that as governmental permissions, such as, approval of zoning
plan, layout plan and schematic building plan, were not given, the
delay in construction should not be the ground for grant of
compensation to the consumer?
2. Secondly, whether the consumer should suffer by paying escalation
cost due to such delay?
The NCDRC observed that the aforesaid practices were unfair trade practice
on the part of the builder to collect money from the prospective buyers
without obtaining the required permissions such as zoning plan, layout plan
and schematic building plan.
NCDRC stated that it was the duty of the builder to obtain the requisite
permissions or sanctions such as sanction for construction, etc., in the first
instance, and, thereafter, recover the consideration money from the
purchaser of the flat/buildings.
Secondly, in such a case, if there is any express promise that the premises
would be delivered within the stipulated time, and, if not done so, escalation
cost is required to be borne by the builder.
A similar view was taken by the Commission in 2015 in the case of Shri
Yogesh Sharma & Anr., vs M/S Unitech Limited. The NCDRC in the case
observed that the builder ought not to have accepted money and entered
into agreement with the buyers without approval of the building plans by
GNIDA (Greater Noida Development Authority). If the opposite party chose
to accept money from the flat buyers and enter into agreements, undertaking
to give possession within a particular time frame, without having possession
of the land and without approval of the building plans, it is only itself to
blame for a situation in which the construction got delayed on account of the
delay in approval of building plans and physical delivery of the land to it on
the spot.
Further, in the case of Satish Kumar Pandey & Anr. v. Unitech Ltd., CC No.427
of 2014 NCDRC opined that: condemned the practice of builder charging
compound interest @ 18% per annum in the event of the delay on the part
of the buyer in making payment to him but seeks to pay less than 3% per
annum of the capital investment, in case he does not honour his part of the
contract by defaulting in giving timely possession of the flat to the buyer.
Such a practice, in my view, constitutes unfair trade practice within the
meaning of Section 2(r) of the Consumer Protection Act, 1986 since it adopts
unfair methods or practice for the purpose of selling the product of the
builder.
 Where the Consumer fails to pay instalment(s) of the consideration
amount
In J.L Sharma v. Krishna Continental First Appeal No. 167 of 2011 Dated
8th January 2015 [NCDRC] The NCDRC found that under the agreement
executed by the parties, though the obligations of the Complainant were time
bound, no time limits were contemplated for the Builder. Therefore, the
NCDRC felt the need to balance the equities of the situation and award
interest for the delay.
Moreover, The NCDRC awarded 9% interest per annum and a lump sum
compensation of Rs.75,000/- to the Complainant, however, the Builder was
allowed to deduct the earnest money from the amount of compensation
payable.
DLF Southern Towers v. Dipu Seminlal Revision Petition No. 1973 of 2014
Dated 7th Janurary 2015 [NCDRC]
The National Consumer Disputes Redressal Commission (NCDRC) found
that the Complainant had failed to sign the Apartment Buyers’ Agreement,
and pay any of the instalments, which were due under the Agreement.
Therefore, the Builder had every right to forfeit the earnest money. The
NCDRC further distinguished the case from that of Kushal K. Rana v. DLF
Commercial Complexes Ltd., Consumer Complaint No. 88 of 2012 dated
9th September, 2014, wherein the complainant was allowed a refund on
entire deposited amount along with interest on the ground that in Kushal
Rana’s case, the builder had unilaterally changed position of flat and area
and delayed construction by a year whereas in this case the Complainant had
applied for relief before expiry of the 36 month deadline.
In October 2016, the apex court held that a property developer cannot delay
the grant of possession of flats to the buyers beyond the period of contract.
And, if there is delay, the buyers are entitled for refund of their amount. A
three-judge Bench had ordered Unitech Residential Resorts to refund the
principal amount of Rs 17 crore to 39 respondent-allotted in the National
Capital Region, who had been waiting for their flats for over seven years. In
its ruling, the Bench had said, "the appellant builder by delaying or
procrastinating the completion of the flats cannot base its stand on excuses
or any subterfuge to advance the stand that the constructions take time. It is
"flat" or "money". And nothing else." Keep this in mind if the property you
have purchased is also being delayed indefinitely under the force majeure
banner.
Similarly, in September 2017, expressing concern "about the tears of the
homebuyers who cannot be taken for a ride by builders", the Supreme Court
asked Jaypee Associates to pay Rs 5 lakh each to 10 homebuyers who got
their flats in a Noida project 5 years later than the promised time. This ruling
came during a hearing on an appeal filed by Jaypee against a 2016 NCDRC
order that slapped a 12 per cent per annum penalty for the delay in delivery.