Supreme Court’s decision on “Unreasonable Delay” can bring relief to Home Buyers

Delay in possession by builders can result in refund and compensation, after this Supreme Court ruling. Read on to know more.

Supreme Court’s decision on “Unreasonable Delay” can bring relief to Home Buyers

The Supreme Court has upheld the decision of the State Consumer Commission and the National Commission in a case of compensation to a home buyer. The commissions had ordered a refund of payment, with interest, to a home buyer who had to wait for over seven years to get the possession of a flat booked with a Kolkata-based builder. The apex court proclaimed that a home buyer cannot be made to wait indefinitely before handing over the possession of the house. It said that the buyer can be made to wait for a reasonable period and in this particular case, the seven-year taken is not at all a reasonable period. 

This decision was taken by the SC bench comprising Justice DY Chandrachud and Justice Hemant Mehta while hearing the case filed against the order by the concerned builder in question, Kolkata West International City Pvt Ltd. An umbrella organisation of home buyers, Fight for RERA, welcomed this decision, calling it a landmark decision and hoped that it will establish the RERA provision regarding refunds.

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In this particular case, the home buyer paid close to Rs 40 lakh to the builder in 2006 and was supposed to get possession of the house latest by mid-2009. He filed a complaint in 2011 before the state consumer commission seeking compensation of Rs 20 lakh in addition to full refund along with 12% interest thereon. The commission directed the builder to pay the refund along with a compensation of Rs 5 lakh. The buyer challenged the order in the National Commission Disputes Redressal Commission, which only reduced the compensation to Rs 2 lakh while keeping the remaining order intact. 

Of late, RERA regulators have been discouraging refund orders in order to ensure completion of projects. They had also barred home buyers from approaching consumer commissions who would often order refunds without considering the effect on project completion.

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How can we complain if possession of the house is delayed?

With the help of a property lawyer, you can file a complaint against the builder for the delay, at the appropriate consumer forum. Depending on the total value of the case, you can approach the District Consumer Dispute Redressal Forum, State Consumer Dispute Redressal Commission or even the National Consumer Dispute Redressal Commission. Besides, there are the Regulatory Authorities under RERA that will be applicable for bookings done before the RERA Act.  However, for cases above 1 crore, it is advisable to approach the National Commission rather than RERA. You can also combine your complaint with other aggrieved home buyers and fight the case against the common builder.

Has the SC traditionally ruled in favour of refund to home buyers?

The SC has been consistent in directing refunds in favour of home buyers. In 2016 the SC directed Unitech Residential Resorts to pay Rs 17 crore in a refund to 39 buyers. Apart from this ruling, the court also recently directed builders Emaar MGF to repay home buyer’s money at 10.7% interest.

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How does this ruling negate RERA’s stand on refunds?

Section 18 of The Real Estate (Regulation and Development) Act, 2016 specifies that the promoter has to compensate the home buyer if he fails to complete or is not able to grant possession as per the agreed timeline. However, the stand of the regulatory authorities under RERA has been to keep the project completion in mind. Granting refund to homebuyers can slow down the project completion due to the cash outflow. Besides, when a portion of home buyers walk out of the project after pocketing the compensation, the viability of the project can get affected which can adversely affect the remaining home buyers of the project. Confused in Real Estate Investment? Here are 6 myths you can stop worrying about.


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