Builders usually come up with some excuse to in an attempt to justify their lapses and delay. In a recent ruling, the Maharashtra State Commission (MSC) has held that this is not permissible.
Case Study: Rachana Shukla had booked a flat in a building, Divyam Heights, being constructed by Harsh Construction. An agreement for sale was executed on February 15, 2006, for the flat which was to measure 675 sqft carpet area, and was to be sold for Rs.28,67,335. Likewise, Sarita Mishra had also booked a flat in the same project, for which an agreement was executed on February 2, 2006, for a 425 sqft carpet area flat costing Rs.18,04,820.
Harsh Construction had promised to hand over possession by June 2008. The project was meanwhile take over by Siddhivinayak Developers, who promised to compete the project by June 2009, and thereafter obtain the occupation certificate within a maximum period of one year.
The flat purchasers had paid around 25% of the total consideration, partly to Harsh Construction and partly to Siddhivinayak Developers. The builders later asked the flat purchasers to cancel their booking and terminate the agreements. Feeling aggrieved, Shukla and Mishra approached the consumers welfare association. In July 2013, the association, along with the respective flat purchasers, filed two separate complaints before Maharashtra State Commission.
The builders contested the case, stating that the construction had been delayed due to a public interest litigation on account of which approvals from the Municipal Corporation had not been received. They also argued that the complaint was premature since the building had not yet been completed.
The state commission observed that a flat purchaser has a duty to pay the agreed consideration, and the builder is legally obliged to obtain all the necessary permissions and complete the construction of the building as required under the terms of the contract. The only exception would be when some event occurs due to which it would become impossible to fulfil the obligations under the agreement for sale of the flat.
The Commission noted that if any litigation is pending, the builder has a duty to apply to the court for suitable orders to enable him to complete the construction so as to fulfil his obligations to the flat purchasers from whom he has received monies. In this case, even though there was a public interest litigation, the court had not issued any stay order which would act as an impediment to completing the construction.
Concurring with the arguments of Mr. Mascarenhas, the Hon. Secretary of Consumers Welfare Association, the State Commission held both the builders liable to fulfil their obligations under the agreement for sale of the flats. Accordingly, by order dated 21.6.2016 delivered by Justice A.P. Bhangale for the Bench along with Narendra Kawde, the Commission directed the builders to accept the balance amount, execute a registered Sale Deed, and hand over possession of the respective flats within three months.
The Commission also ordered that if the builders failed to hand over possession within the stipulated period, they would have to pay the present market value of the respective flats which would be Rs.68,67,958/ in Shukla’s case, and Rs.42,70,523/ in Mishra’s case. Additionally, each of the flat purchasers were awarded Rs.1 lakh towards compensation and Rs.25,000/ as litigation costs. These amount would have to be paid within six months, or along with 18% interest if payment was delayed.
Conclusion: In the absence of a stay, mere pendency of a litigation is no excuse for delay in construction of a project. The builder has a duty towards the flat purchaser to complete the construction in time as provided under an agreement for sale.
Author: Jehangir Gai, is a consumer activist and has won the Govt. of India’s National Youth Award for Consumer Protection. His email is firstname.lastname@example.org
Credits ET Realty