The National Consumer Disputes Redressal Commission (the
"NCDRC") has recently passed stringent
directions1 against a builder taking strong objection to
delays in construction, coupled with failure of the builder to
share the EMI of the flat buyers
("Complainants") in agreed
The Complainants booked a flat with the builder in 2007. The
builder assured to share 3/4th portion of the EMI to be paid to the
bank, if the Complainants paid 95% of the basic sale price of the
flat to the builder upfront, and availed a bank loan in such
The Complainants took a loan and paid a total of 95% of the
basic sale price of the flat upfront. The Complainants even
received EMI payments from the builder for the initial few years.
Thereafter, reportedly, the construction of the project stalled,
and the builder even defaulted in EMI reimbursements.
The Complainants then approached the NCDRC. The builder cited
various defences and offered to pay the construction delay penalty
as per the flat buyer agreement. The NCDRC, while noting the
undertaking of the builder to pay the construction delay penalty,
passed various far reaching directions against the builder
including the following:
Builder shall complete the
construction of the flat by 31.03.2017. Any revision of plans to be
accommodated within this time at the cost of the builder;
Builder to obtain completion
certificate by 30.06.2017;
Builder shall then offer possession
of the flat to the Complainants by 31.07.2017;
If the builder is unable to offer
possession of the flat as above, it shall offer to the Complainants
a similar flat of the same size and on the same floor, in a
comparable locality at the same price which the Complainants had to
pay for the flat booked by them;
Builder to reimburse to the
Complainants by 30.06.2016, the arrears towards agreed EMI share
with 10% interest on delay;
Builder shall not increase the size
of the flat sold to the Complainants without their consent;
The Complainants would be entitled to
seek execution of the order through the NCDRC.
B. Significance of the NCDRC's Order:
While the NCDRC's order validates the contractual rights and
expectations of the Complainants, it has accorded additional
remedies to the Complainants in the event of failure of the builder
to comply with the directions of the NCDRC such as:
Entitling the Complainants to ask the
builder to buy a similar flat at the same price. There is no
restriction that the alternate flat should be of the same
The builder shall not increase the
size of the flat without the Complainants' consent. Increase in
flat size has been a common practice followed by many builders,
which in turn not only sets off the construction delay penalty but
also leads to demand of additional sums by builders from flat
This order shall pave the way for expeditious enforcement of
flat buyer agreements against deficient builders.
1. Case Referred: Shoibal Mukherjee & Anr. vs.
Parsvnath Developers Ltd.
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On March 10, 2015, the controversial amendments to the land acquisition law were finally passed by the Lok Sabha after facing severe criticism both from the opposition parties as well as from the government's own allies.
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