Builders can't end deals if their demands aren't met

Last Updated: Mon, Dec 10, 2012 03:54 hrs

pReal estate developers who sell apartments during recession sometimes try to extract money later at the time of possession or try to illegally end the agreement with buyers on some pretext so that the same flat can be re-sold at a higher price In a recent judgment the Maharashtra State Commission has come down heavily on one such builderppAmeet Arjundas Israni and his wife Meenal had booked a flat with Bhumiraj Constructions in an under-construction building in Navi Mumbai The cost of the 1249-sq ft terrace flat was Rs 3465 lakh The agreement was stamped and registered for Rs 179 lakh Parking space was sold for Rs 1 lakhppAfter the buyer paid a substantial amount the builder demanded interest for stage-wise construction for areas constructed The Isranis refused to pay as the agreement was prospective in nature and did not provide for retrospective interest prior to its execution The builder terminated the deal for this but still sent a demand letter for the subsequent instalments and accepted paymentbr br table cellpadding2 width400 tbody tr styleheight 15pt height20 td width1137 bgcolor95acb3 height1font faceTahoma colorffffff size2strongCHECKLIST FOR FLAT PURCHASERSstrongfonttd tr tr styleheight 15pt height20 td width1137 bgcolorccd7dd height18font faceTahoma size21 An apartment buyer has the right to demand inspection of documents before agreeing to buyfonttd tr tr styleheight 15pt height20 td width1137 bgcolorccd7dd height18font faceTahoma size22 The buyer must ascertain the identity and the status of the builder &mdash whether the builder is an individual a registered partnership firm or a companyfonttd tr tr styleheight 15pt height20 td width1137 bgcolorccd7dd height34font faceTahoma size23 The buyer must check the title to the land to ascertain if it is freehold or leasehold and whether the builder has the title or the right to develop the land If the land is leasehold the tenure of such a lease and its assignment must be verfiedfonttd tr tr styleheight 15pt height20 td width1137 bgcolorccd7dd height18font faceTahoma size24 A builder cannot demand more than 20 per cent of the total purchase price of the flat before executing a written agreementfonttd tr tr styleheight 15pt height20 td width1137 bgcolorccd7dd height18font faceTahoma size25 The agreement must specify the carpet areafonttd tr tr styleheight 15pt height20 td width1137 bgcolorccd7dd height18font faceTahoma size26 The agreement must specify the date of possessionfonttd tr tbodytableppThe Isranis paid 97 per cent of the agreed amount and only three per cent was left It was payable during handing over of the flat Construction of the building was completed but the builder refused to give possession claiming the agreement had been terminatedppThe Isranis filed a consumer complaint on February 3 2006 seeking possession of the flat and compensation for delay During the pendency of the case the state commission granted an interim injunction restraining the builder from creating any third party interest in the flatppThe builder filed a suit before the civil judge in Thane on April 18 2006 for a direction that the agreement had been validly terminated The court dismissed the suit saying the builder had not been able to prove the Isranis had delayed payments and so the builder did not have the right to demand Rs 250177 as interest The court concluded the builder&rsquos demand was against the terms of the agreement and the deal termination was illegalppThe builder defended the consumer court case by claiming the deal was validly terminated The builder contended an appeal had been filed against the civil court&rsquos judgment and so it ought to be disregarded though no order had been passed in appealppIn the judgment dated October 11 2012 the state commission observed that even though the agreement specified a schedule for payment it was silent on if it would be retrospectively applicable to an agreement executed after the construction was underwayppAlso there was no clause in the agreement providing for delay in payments due prior to execution of the agreement The commission noted the payments were made on time after execution of the agreementppAccordingly the state commission held the termination of the agreement was illegal and constituted a deficiency in service The commission said the Isranis should be compensated for being deprived of a shelter for over six years despite having paid 97 per cent of the agreed considerationppThe panel directed Bhumiraj Construction and its partners to accept the balance three per cent consideration of Rs 103950 and hand over vacant possession of the flat without demanding delayed payment interest The order was to be complied within two months of receipt of the balance amountppThe builder and its partners were also held liable to pay Rs 5 lakh as compensation for the mental harassment and agony caused The amount would attract an interest of 12 per cent a year if the amount was not paid within two monthshr pp alignrightemThe author is a consumer activistemp

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