Delay in possession of the flat or apartment property purchased and allotted is a common occurrence, it is also the principal ground on which a property buyer or allottee usually relies (and often succeeds) in legal action against the builder, developer or promoter. The measure of the delay can be quantified where the agreement for sale between the parties, such as a builder-buyer agreement, specifies the exact time on or within which possession will be offered. 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 and substantially honored the terms of the agreement till the point of taking legal action.
Summary of important case laws
Demanding payment installments and claiming equity despite no construction activity
In the recent case of Laureate Buildwell Pvt. Ltd. v. Charanjeet Singh [Civil Appeal No. 7042 of 2019 decided by the Hon’ble Supreme Court on 20.07.2021] the Supreme Court has upheld the adverse findings and observations of the National Consumer Dispute Redressal Commission (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 installments from the allottee, including penal interest.
Reasonable period cannot extend to 7 years
In the case of Kolkata West International City Pvt. Ltd. v. Devasis Rudra, II (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.
“Endeavour” to hand over possession
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 in the case of NBCC (India) Limited v. Shri Ram Trivedi [Civil Appeal No. of 20 decided by the Hon’ble Supreme Court on 08.03.2021] 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 Hon’ble Court has further held that such a term requires the builder to “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”.
Routine delays caused by business exigencies not covered by force majeure
In DLF Home Developers Ltd v. Capital Greens Flat Buyers Association [Civil Appeal Nos. 3864-3889 of 2020 decided by the Hon’ble Supreme Court on 14.12.2020], 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”.
Legal options under civil law for property buyer/allottee
For delay in possession the property buyer or allottee can approach the appropriate judicial forum under the Consumer Protection Act 2019 (CPA 2019) or Real Estate (Regulation and Development) Act 2016 (RERA) and applicable Rules thereunder.
Under CPA 2019, such delayed possession may constitute deficiency in services justifying a complaint under section 2(6) of the said Act, whilst one-sided terms and conditions in favour of the builder/developer to justify delay in construction or possession may be similarly dealt with as an “unfair contract”.
Section 18(1) of RERA provides the allottee an option to withdraw from the real estate project, without prejudice to any other remedy available, if the promoter fails to complete or is unable to give possession of an apartment, plot or building in accordance with the terms of the agreement for sale.
Under either option, the buyer/allottee can seek full refund of the principal amounts paid with interest as compensation, or the latter where delayed possession is offered and taken by the buyer/allottee.
Author: Anand Chaudhuri | Advocate @Legalrisk | JD (UNSW) LL.B (CLC, Faculty of Law, University of Delhi) | Website: https://legalrisk.in/. | Email: [email protected]
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