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Home buyers may now get relief for delay in delivery by builders

08 Oct 2016

homebuyersNEW DELHI: In a judgment that is certain to put immense financial burden on already cash-crunched real estate engineers, every home buyers of a housing project will naturally be the party to a case filed against the builder.

Under Section 12 (1) (c) of the Consumer Protection Act, regardless of whether they have documented the case or not, purchasers will be qualified for the advantages, as indicated by a National Consumer Disputes Redressal Commission (NCDRC) on Friday.

“The failure of the developer to deliver possession of the flat sold to them and a complaint filed for the benefit of or on behalf of all such consumers and claiming same relief for all of them, would be maintainable under Section 12(1)(c) of Consumer Protection Act,’’ the commission said while interpreting the Section 12(1)(c) of the Act.

"The interest of the people for whose benefit the claim is brought must be common or they should have a typical grievance which they seek to get addressed. The imperfection or deficiency in the goods purchased, or the services hired or availed of by them ought to be the same for every consumers for whose sake or for whose advantage the complaint is filed. Therefore, the oneness of the interest is akin to a common grievance against the same person,’’ it added.

"This is a path-breaking judgment for purchasers, who might now get the benefits without experiencing legal process,'' said Sahil Sethi, senior partner at law office Saikrishna and Associates, who represented home buyers against Jaypee in Kalypso Court case.

However, Sethi feels this judgement would maximise the burden on builders as they will now have to pay everybody, which they might not be able to honour. Buyers can also now move NCDRC if the aggregate of the value of the goods or services and the compensation claimed in the complaint exceeds Rs 1crore. Also, in case the grievance of the consumer is common and an identical relief is claimed for all of the applicants, the cost, the size, area of the flat/plot and the date of booking/allotment/purchase would be wholly immaterial, according to the order.

He also added that “I also fear the automatic application of compensation on all buyers would now apply to investors as well, who might actually exploit the situation,’’.

Consumer activism has been on a rise in the recent past and favourable judgements against big real estate players have infused faith among the home buyers to move court. NCDRC has recently acted against many big names in the industry on complaint of home buyers. The commission recently asked Jaypee to pay 12% interest for for delaying its Kalypso Court project in Noida. In another order, it also asked Mumbai-based builder Lodha group to refund `1.02 crore to a buyer with 18% interest. NCDRC on May 6 directed Parsvnath Developers to refund the entire amount paid by around 70 home buyers in its Parsvnath Exotica project in Ghaziabad with 12% interest for failing to complete the apartments on time. The order would apply to all old and new such cases filed under Section 12 (1) (c) of the Act, according to Sethi, which would surely make life tough for defaulting real estate developers.

By Sanjay Bnasal | Founder & CEO | Affordable Homes India

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