The delay in delivery of possession of property purchased and allotted takes place after the exhaustion of the extended time period that might be set out in the agreement or is given by the operation of law. It is a principal ground on which a property buyer or allottee usually count on in a legal action against the builder, developer or promoter. Greater the delay the more law is expected to lean towards the buyer or allottee, especially if the latter has already paid a significant percentage of the total purchase consideration for the subject property.
The buyer has various legal remedies under civil, criminal and consumer laws. However, the buyer can seek remedy under the Consumer Protection Act, The Real Estate Regulation Act and NCLT. In case of natural calamity or any situation beyond human control, the builder can’t be held liable for delay in delivery of possession of such property up to a certain extent.
ACTIONS AGAINST THE DEVELOPER IN CASE OF DELAY IN DELIVERY
The following are the actions set out by the operation of different laws and acts: –
I. Real Estate Regulatory Authority (RERA)
- Under the Rural Estate (Regulation and Development) Act, 2016, a Regulatory authority is needed to be established in every State as an adjudicating mechanism for dealing with matters related to and ancillaries to the real estate sector.
- Occupancy Certificate (OC): It is an important certificate that every builder needs to obtain before handing out the possession to the homebuyers. The Occupancy Certificate signifies that the particular building or establishment is built according to the plan and is fit to live in and is habitable.
As per RERA laws, the builders have to mandatorily require the OC before they let the homebuyer have the possession of the unit. Offering the possession without OC is a breach of the law and punishable. Any building that has not received the OC from the authorities is considered under-construction projects.
- Complaint: In case of delay in possession of property, complaint against the builder can be filed under Section-31 of the Act. It can be filed by home-buyer or Association of Allottees. The format of filing complaint is different for different states but the basic structure remains the same. The complaints filed can be for any claim amount.
- Enforcement of Order: According to Section 40, if the buyer doesn’t comply to the orders of RERA within 45 days, then the buyer can approach the RERA Authority for execution.
- Jurisdiction: As per Section 71, complaint filed under Section 31 must be argued before the Adjudicating Officer of RERA (having the rank of District Judge). The decision has to be made within 60 days period.The factors to be considered by Adjudicating Officer have to be provided under Section 72.
- Appeal: As per Section 44, an appeal can be filed before the Appellate Tribunal set up under the law within 60 days, if the aggrieved party is not satisfied with the decision of the officer. After that appeal can be made to High Court of the state where property is situated and then finally to the Supreme Court.
- Penalties: The builders can be imprisoned for up to three years, or have to fill a fine extended to 10% of the estimated cost of the real estate project, or both, if being non-compliant with the Act. Also, the developers are liable to rectify the structural defects arising within five years of handing over the possession of the project to buyers without the charges.
II. Consumer Dispute Redressal Commission
- A person who is facing any issue regarding possession of property being delayed by the promoter, can file complaint as per The Consumer Protection Act, 1986, to the forum under whose jurisdiction the property lies.
- The provisions of the Act enable the consumer to make complains only when they highlight the unfair trade practice or any deficiency concerning goods and services.
- Legal Notice: A legal notice has to be sent to the developer for asking compensation or other reliefs for the delay caused by him. If the response is unsatisfactory then the complaint can be made.
- Complaint: As per Section 24A, the complaint should be filed within two years from the date on which the allottee was supposed to get the possession.
- Jurisdiction: There are three Redressal mechanisms:
- District Consumer Dispute Redressal Commission: The disputes claiming up to Rs. 20 lakhs are filed. (Section 11)
- State Consumer Dispute Redressal Commission: The disputes claiming Rs 20 lakh to Rs 2 Crores are filed here. (Section 17)
- National Consumer Dispute Redressal Commission: The disputes claiming above Rs 2 Crore are filed here. (Section 21)
- Appeal: As per Section 23, any person aggrieved by the order of NCDRC, may appeal against such orders to Supreme Court within a period of 30 days.
III. National Company Law Tribunal (NCLT)
- If the delivery of the property has been delayed by the developer due to shortage of funds, and can’t continue with the project further, in such case the buyer can resort to NCLT and can initiate Insolvency proceedings against him under the Insolvency and Bankruptcy Code, 2016and can claim any amount equal to or more than Rs 1 Lakh.
- Remedy: It compensates the company owner with the dissolution of the company and enables them to claim their share upon liquidation.
- Time period: The average time period to resolve the case is within 9 to 12 months.
IV. Civil Suit
- The right to file a civil suit or writ petition in the high court is only available when there is no appropriate regulatory authority in that particular state. It should be filed where the defendant resides or carries on his business or where the property is located.
V. Criminal Action
Where the builder or developer is purposely not handing over possession of the property in order to keep the money for herself, you can also file a criminal complaint. There are provisions in the general law of crimes, the Indian Penal Code, 1860 which punishes such crimes. For instance, Cheating (Section 415, IPC) and criminal breach of trust (Section 405, IPC).
REMEDIES FOR DELAYED POSSESSION TO THE BUYER
- Real Estate Regulatory Authority (RERA)
Section 18(1) provides that allottee has an option to withdraw from the project, without prejudice to any other remedy available.
Section 18of the Act provides for the remedies to the consumer if the possession is delayed:
a) Terminate the agreement and seek for refund, in this case promoter shall be liable to return the entire amount paid by the consumer with interest.The interest imposedis 10 percent of the amount invested by the buyer. In case of non-compliance, a builder might face imprisonment for a term which may extend to three years or a fine up to 10 percent of the estimated cost of the real estate project, or both.
b) Continue with the real estate project and assert compensation from the builder for every month of delay till the possession of property is delivered.
c) Promoter shall compensate the allottee if any loss is caused to him due to defective title of the land, like payment for rent on any alternate accommodation; loss of opportunity caused, as the same money could have been invested elsewhere.
d) Consumer can ask for the sum required to buy an alternate accommodation at the current market price in the same area.
If the the builder unilaterally changes the possession date of the project, then the buyer has a right to withdraw from the project and claim refund of the invested amount within 45 days.
Interest Rate: The rate of interest to be payable by the promoter are prescribed under the RERA Rules being which may vary from State to State.
- Consumer Protection Forum
a) Terminate the agreement and seek for refund, in this case promoter shall be liable to return the entire amount paid by the consumer with interest.
b) Compensation for the mental agony, litigation cost etc, suffered by the buyer. Damages can also be sought rent of the alternate property.
Precedents on Delayed Possession
Kolkata West International City Pvt Ltd. v. Devasis Rudra, 2019 CPJ 29 (SC)
- The Supreme Court has held that whilst the buyer can be expected to wait for possession for a reasonable period, 7 years after the extended date for the handing over of possession prescribed by the agreement was unreasonable or to construe the contract between the parties as requiring the buyer to wait indefinitely for possession.
NBCC (India) Limited v. Shri Ram Trivedi, 2021 AIR (SC) 1422
- Where the agreement uses clever drafting language, such as the developer would “endeavour” to hand over possession within a period of time from date of allotment.
- The Supreme Court has held that even if the expression does not mean an absolute commitment to hand over possession on or before a specified date, this expression has to be read in the context of the entirety of the clause. To construe the expression as leaving the date for handing over possession indefinite and at the absolute discretion of the developer would leave the purchaser at the mercy of the builder.
- The court also held that the builder should “make all reasonable efforts to comply with the duty to hand over possession by the stipulated date” and the “burden would lie on the developer to explain the steps taken to comply with the contractual stipulation”.
Fortune Infrastructure v. Trevor D’Lima, (2018) 5 SCC 442)
- The complainants cannot be expected to wait for an indefinite time period to get the benefits of the hard-earned money which they have spent in order to purchase the property in question.
Laureate BuildwellPvt. Ltd. v. Charanjeet Singh, 2021 All SCR 1755
- The Supreme Court has upheld the adverse findings and observations of the NCDRC against the builder to the effect where such builder has taken refuge against a National Green Tribunal (NGT) order to justify delay in construction and therefore possession, equity cannot be claimed if the builder also continues to demand payment instalments from the allottee, including penal interest.
Ireo Grace RealtechPvt. Ltd. v. Abhishek Khanna, 2021 AIR (SC) 437
- Several purchasers filed complaints before the National Commission seeking a refund of the instalments they had paid, plus interest, because the plaintiff had failed to give possession within the agreed period of 42 months + 6 months grace period.
- The Supreme Court said that a delay in delivering possession amounts to a deficiency in service entitling the buyer to receive a refund of the moneys paid along with reasonable compensation. The Supreme Court has directed the payment of interest at 9% from the stipulated delivery date till the actual date of refund to buyers.
Imperia Structures Ltd. v. Anil Patni, (2020) 10 SCC 783
- The Supreme Court held that remedies under the Consumer Protection Act were in addition to the remedies available under special statutes. The absence of a bar under Section 79 of the RERA Act to the initiation of proceedings before a fora which is not a civil court, read with Section 88 of the RERA Act makes the position clear. Section 18 of the RERA Act specifies that the remedies are “without prejudice to any other remedy available”.
Manmeet Singh v. Unitech Hi-Tech Developers Ltd., 2019 NCJ 322
- The possession was not delivered within 42 months as agreed. The NCDRC directed the Respondent to refund the entire amount to the complainants, along with compensation in the form of simple interest @ 10% per annum from the date of each payment till the date of refund. The opposite party also had to pay the litigation cost of Rs. 25,000 to the complainants.
Jitendra Balani v. Unitech – Consumer Case No. 510 of 2015 Dated 8th February 2016
- Commission found that none of the reasons given by the Builder for the delay, such as non-availability of construction material or labour, were tenable. In case of delay in payment by the Complainant, an interest at a rate ranging from 18% to 24% per annum compounded annually was charged.
DLF Home Developers Ltd v. Capital Greens Flat Buyers Association, 2021(5) SCC 537.
- In this case, against the defence of force majeure, the Supreme Court has upheld the findings of the NCDRC to hold that the “delay in the approval of building plans is a normal incident of a construction project. A developer in the position of the appellant would be conscious of these delays and cannot set this up as a defence to a claim for compensation where a delay has been occasioned beyond the contractually agreed period for handing over possession”.
DLF Homes Panchkula Pvt. Ltd. v. D S Dhanda, 2019 SCC OnLine SC 689
- It was held that a person deprived of use of money to which he is legitimately entitled has a right to be compensated for the deprivation which may be called interest, compensation or damages. Such interest will take into its ambit, the consequences of delay in not handing over his possession.
Kaushal Rana v. DLF Commercial Complexes, Dated 9th September 2014
- The complainant applied for allotment on 11.03.2008. but when construction did not begin on the proposed site by 2009, the Complainant sought a refund of his money.
- The Commission directed the Builder to refund the entire deposited amount with interest @ 18% p.a., from 20.02.2008, till realization. It also imposed costs of Rs. 2 Lakh towards harassment, mental agony and litigation charges. This was payable within 90 days from the date the Order, failing which interest would be charged on it at 18% p.a., till realization.
Wg. Cdr.Arifur Rahman Khan &Aleya Sultana &Ors vs. DLF Southern Homes Pvt. Ltd.,
2020 SCC Online 667 (SC)
- It was held by the Supreme Court that breach on the part of the developer to handover possession within a period of 36 months’ amounts to deficiency of service under Section 2(1)(g) of CPA. Therefore, the flat buyers are entitled to compensation in excess of the amount stipulated in the AFS.
Pradeep Narula v. Granite Gate Properties – Consumer Complaint No. 315 of 2014
Dated 23rd August, 2016
- The Commission held that the Builder was under a contractual obligation to complete the construction and hand over possession of the apartments to the Complainant within 39 months from the date of allotment, and the Builder had failed to do so and none of the reasons given by the Builder were justified. Builder was to pay compensation in the form of simple interest @ 10% per annum from the committed date of possession till the date possession is offered to the apartment owner. The Builder was also required to pay Rs. 10,000/- as cost of litigation to the Complainant.
Bikram Chatterjee v. Union of India, 2019 SCC OnLine SC 901
- The bench cancelled the registration of Amrapali Group of Companies under RERA for defrauding homebuyers. The Court also cancelled the various lease deeds granted in favour of Amrapali Group of Companies by Noida and Greater Noida Authorities for projects in question.
- The Supreme Court held that “Because of their failure to fulfil the obligations towards the buyers and the serious kind of fraud which has been played by them upon the home buyers, the registration of Amrapali group of companies under the Real Estate Regulation and Development Act, 2016 deserves to be cancelled.”
Geetanjali Chopra vs M/S Supertech Ltd. on 9 March, 2021 (Delhi SCDRC)
- That the Opposite Party had given false assurance to the complainant with respect to the time for delivery of possession of the apartment and kept the hard-earned money of the complainant for about 6 years. Thus, the Opposite Party is deficient in providing its services to the Complainants. Therefore, the court directed the Opposite Party to pay compensation for the delay in handing over the possession.
Nidhi Kumar v. Supertech Limited, 2014 (76) R.C.R (Civil) 393
- There was Delay in delivery of possession, it was a clear case of deficiency in service and unfair trade practice. The Complainant was held entitled to refund of his money along with interest. Compensation part on account of harassment and mental agony was taken care of by the rate of interest awarded.
Aruna Nanda v. Supertech Builders, decided on 24.01.17 by DSCDRC upheld by NCDRC.
- The complainant purchased the flat in 2010 but did not get the possession due to constantly changing offers by the builder.
- The commission held that Supertech had no right to unilaterally change the flat, its size and price without the consent of the homebuyer. Therefore, commission found the developer deficient in service and directed it to refund Rs 40.98 Lakh within three months.
Pioneer Urban Land & Infrastructure Ltd. vs Govindan Raghavan, 2019 AIR (SC) 1779
- The Supreme Court has held that if there is inordinate delay in handing over the possession, the complainant cannot be compelled to take the possession even if the unit is complete and occupation certificate has been obtained.
Ghaziabad Development Authority vs. Balbir Singh(2004)5 SCC 65
- The Apex Court held that there cannot be same yardstick in all the cases to determine the compensation as the compensation has to be based on a finding of loss or injury and has to co-relate with amount of loss or injury.
Prior to enactment of RERA, the disputes between developers and consumers/allottees were dragged for years before the Consumer forums.The RERA has palpable benefits over consumer forums that can be understood in the terms of ease of filing complaints with the RERA which has jurisdiction by way of situation of property as opposed to the consumer courts which have a pecuniary limitation. Moreover, RERA has the power to investigate a matter and issue notice on its own motion as also to imprison the errant promoter which the consumer courts clearly lack.
To conclude, RERA has brought timely disposal of real estate matters at the door steps of the consumer. Despite of myriad challenges faced by the legislation, it offers speedy remedial regulatory and adjudicatory provisions to benefit the home-buyers.