Legal Options Against Builders

[yomkippur]

Let us take a look at the options for redressal and compensation open to a consumer who has been short changed by a builder. There are multiple options currently available, each with its own degree of effectiveness and investment in terms of time and money. We visit each one of them and then try and seek an answer to the question: is a regulator really required for the real estate sector? But first, the redressal options.

Civil Court

The oldest and actually, one of the best ways to enforce your rights is by going to Court. There are well framed laws such as the Maharashtra Ownership Flats Act or the Development Control Rules and usually the court will give the consumer a well-reasoned judgement, which is solid and can withstand the test of a challenge in appeal.

To cite an example, in the 2004 case of Nahalchand Laloochand Pvt Ltd versus Panchali CHS Ltd, the City Civil Court passed an order stating that the builder had no right to sell open/stilt parking as these were common areas, which could not be sold. The builder appealed to the Bombay High Court who actually the entire issue and held that no area which had not consumed FSI was capable of being sold by a builder. The case then went up to the Supreme Court which upheld the decision of the Bombay High Court.

The downside?

A well fought battle may take a few years to culminate and both the time and cost of litigation can be daunting enough to drive most people to seek alternate means to resolve their dispute.

Consumer Forum

In recent years, various consumer fora have proved to be of great service to the hapless individual who lacks the resources to fight a builder.

Created as they are, for the benefit of the consumer, there is a decided tilt in favour of the consumer and we have seen some very practical judgements coming from this platform.

Besides, the time taken for a decision is relatively shorter than a civil court and the costs significantly lower. Case in point, if a consumer were to sue a builder for delayed possession under the Maharashtra Ownership Flats Act (MOFA), he would only be entitled to a refund of his monies with interest at the rate of 9 per cent per annum as prescribed under that Act.
This is grossly inadequate as property prices would have shot up considerably in the interregnum and the consumer would not be able to buy another similar property.

Consumer fora have handed down judgements awarding compensation as high as Rs 37.50 lakh in the Delhi-based developer Ansal’s case in 2009 — compensation based upon current valuation of the property and interest at 18 per cent per annum, which is twice the rate payable under MOFA. A recent judgement sentenced a builder in Thane, Kishore Sawant, to two years imprisonment for failing to comply with the consumer forum’s orders.

Arbitration

Even though consumer fora take less time as compared to civil courts in general, there are provisions for appeal which may lead to lengthy litigation and delayed justice. Another excellent avenue for dispute resolution is arbitration. Under the Arbitration and Conciliation Act, 1996, parties to an agreement may appoint one or more arbitrators to settle any dispute which may arise between them in the future.

The effectiveness of arbitration lies in its informality and simplicity. Parties can appoint anyone they both trust to act fairly and arbitration proceedings are not bound by the formal rules of evidence one finds in court proceedings. Unfortunately, most builders fail to incorporate arbitration clauses in their agreement with consumers and even if they do, the clauses are one sided granting them the sole right to appoint the arbitrator(s) rendering this valuable tool completely meaningless.
Enter The Regulator

Another point that consumers have discovered much to their chagrin is that builders will go to great lengths to tire them out and even after losing the legal battle, some of them will refuse to obey the orders of the court.

Builders’ associations such as CREDAI or even government-backed bodies such as the National Real Estate Development Council (NAREDCO) have failed to provide any effective redressal mechanism to the consumers. It is in this backdrop that the government has decided to introduce a Real Estate Regulatory Bill and appoint a real estate regulator in each state to oversee builders and their activities

That is all very well, but what should this regulator do and what is the wish list that a consumer should draw up? Let us attempt to enumerate some of the most important areas that need to be addressed.

Licensing: First, there should be some form of licensing and norms for allowing someone to operate as a builder. A promising start would be an insistence that builders must have a corporate structure. This will prevent fly by night operators from cheating the public by forming partnership firms or association of persons specifically for a project and then promptly dissolving such entities to avoid their responsibilities once all units are sold.

Clear Guidelines: Second, a clear set of conditions that builders must adhere to. For example, an immediate and complete stop to the pernicious practice of “pre-launch” sales, which means that builders cannot sell units till the plans are approved by the concerned authority. A strict adherence to the sanctioned plans while constructing and a blanket ban on plan amendments which may result in denial of any amenity which may have been promised to a consumer at the time of booking.
On Monies: Third, a total ban on acceptance of any monies from a unit buyer unless the agreement is executed and duly registered. A similar provision already exists in MOFA, the governing law for Maharashtra but is observed more in the breach.

Legalities: Fourth, a mandatory provision whereby the builder must furnish copies of all approvals, permissions, plans, draft agreement and a current title certificate with detailed explanation of every negative comment by the advocate evaluating the probable impact upon the title wherever possible. The consumer must also be given a suitable window, say 30 days, to have the documents vetted by professionals and be entitled to demand a refund with suitable interest if he finds any discrepancy.

Possession: Fifth, a clear date for granting possession and compensation based upon market realities in the even the builder fails to meet the deadline. No increases should be permitted on account of changes in costs of materials or labour. After all, the builder should carry the risks of increase in input costs just like any other businessman.

Society formation: Sixth, clear methodologies and deadlines for formation of society, condominium and the like as well as for conveyance of the property to such body along the lines of the provisions contained in MOFA. As stated earlier, builders should be barred from disbanding the entity until all legal obligations are fulfilled.

Dispute resolution: Seventh, a fair and mandatory provision in all agreements for reference of disputes to an independent arbitrator within a fixed time frame.

Penalties: Finally, none of this will work unless stiff financial penalties combined with disbarment from construction activities and mandatory imprisonment for failures is prescribed in the Bill and the regulator is empowered to enforce this swiftly with minimum opportunity for time consuming appeals.

One lacunae builders point out is that the proposed regulator will only oversee builders and not other stakeholders such as sanctioning authorities and financial institutions. A very valid point and in my opinion, the effectiveness of the regulator will be impaired somewhat unless these players too are held accountable to some extent.

Regulatory Agenda

(a) End pernicious practices such as “pre-launch” sales that are patently illegal
(b) Strict adherence to sanctioned plans and a blanket ban on plan amendments that result in denial of an amenity promised during booking
(c) A total ban on acceptance of monies unless the agreement is executed and duly registered
(d) A mandatory provision where the builder furnishes copies of approvals and gives time for due diligence
(e) A clear date for granting possession and compensation based on market realities if deadline is not met

http://www.indianexpress.com/news/must- ... r/870915/0

[Adarsh Aggarwal]

Wish all of you a very happy new year.

Actually there are many options available in the law against builders/anybody.

1. Civil Court
2. Writ Court
3. Criminal Court
4. Consumer Forum
5. Company Court
6. Competition Commission of India
7. Regulatory Forums such as DTP in Case of Haryana.

Each remedy is independent of each other and some times complimentary. Depending upon the Contract, Issue and document each remedy can be availed.

However cry on forum by asking Government to take action against builder will lead any person to no where. The legal way is to make representation to Government upon legal issue and then take remedial action if Government do not listen. As it is common in this Country for every action you have to go to Court, though you may not succeed every time, but whenever you succeed result will be sweet.

e.g. People keep on crying that DD Group has taken money and gave not plots and sold the land to BPTP. The proper course of action is to file a civil suit for cancellation of sale deed, as persons who have entered into agreement with DD Group can file suit for specific perfomance.

Do Remember Builder wins not because Government is on their side but becasue they are willing to fight and have resources for that, however whenever public takes a cause and fight it properly and strategically, public is bound to win.

Pls feel free to share your views

Adarsh Aggarwal Advocate

[Adarsh Aggarwal]

Dear Moderator
Pls open a legal queries forum, Under the title LEGAL QUERIES I will try to reply to legal queries if any.

Adarsh Aggarwal Advocate

[asiapole]

I fully agree with Adarsh Aggarwal. With due respect to each GFWA members, I think we need to stop crying and take legal actions. Though there have been legal initiatives, but not adequate.

[webmaster]

Dear Moderator
Pls open a legal queries forum, Under the title LEGAL QUERIES I will try to reply to legal queries if any.

Adarsh Aggarwal Advocate

Hi Mr. Adarsh,

Thank you for this gesture and offering legal support to the forum members. I am sure this will benefit all of us.

I have created a Real Estate Legal Matters and Queries topic here which can be used for legal questions and answers.

real-estate-legal-matters-and-queries-t932.html

[Adarsh Aggarwal]

Hi Jayanta

Pleasure is all mine. You and Dheeraj and other members of Forum has done a great job by bringing a platform of this kind. Though legally my firm view is that as each individual is buyer and builder is seller, so as per law legally you can move individually but this kind of platform provides, required inputs which ultimately helps in building the case. Secondly there is not much in the hand of Administration against the builders. As individual buyers enters into contract with each builder seperately. But if number of buyers are in 100's and 1000's then it put pressure upon the Authorities.

I will try to help as much as possible.
Regards
Adarsh Aggarwal, Advocate 9810240789, rpalegal@hotmail.com


Ada

[Adarsh Aggarwal]

COMMON PROBLEM

DELAY IN POSSESSION:

Delay in possession can be challanged by buyer in Civil Court and consumer Forum and suitable compensation as per agreement as suffering of the buyer can be granted by both the Courts.

Change in Area/Increase in Area OMAXE,

Builder cannot unilaterly change the area of flat in voilation of agreement. It is common plea by builder that Area has increased, how area can increase when the builder is as per plan approved and there can be no change in approved plan. Meaning thereby that Builder new from the begining or atleast during the start of construction that the area of flat will be............... Sq. Ft. at the time of possession this cannot be argued that area has increased. This is suddenly not a lottery which opened today and builder got to knew of that only at the time of delivering the posession. One should go to the court for his. only problem in Courts are one requires time, money and patience, which normally buyer do not have but builder do have, that's why they win.

Regards
Adarsh Aggarwal
Advocate, 9810240789, rpalegal@hotmail.com

[anujgarg]

Thanks for the Info, But somehow no body has filled petition against Omaxe anticipating Harassment and cancellation of allotment.

I would like to have one more info from your side. Before Possession Omaxe is asking for Affidavit asking that buyer will not have any claim against delay in possession ( He refused to give penalty to buyer on a clause that possession will be given 36 months after date of signing of agreement and himself delayed the agreement signing).

And without giving handover asking us to state that flat is in working condition and I am satisfied with that.

If I give affidavit on that effect, will i not be able to file any case against Omaxe.

Moreover he has collected EDC amount from buyers with 24% penalty and one of latest RTI has revealed that he has still not deposited that with HUDA.

What can we do on that account.

[s3.3army]

I am customer of bptp elite floors in parkland 180 sq yard flats
We are in trap of bptp now ... and have to pay what they will ask for No other option .........all credit goes to government who is not having any rules and regulations........ Because of it we are now in total trap ............... Govt should have rules like when a builder is promising a flat with some amount in the initial booking they should stick to the charges and the time of possession should not be altered and builders should in any time can not increase its build up area it should be decided in the beginning of the construction or before the booking amount ........ Now I believe that any thing is possible in INDIA any one can make its own rule if you have money and power........ SAD !!!!!!!! BUT IT is TRUE !!!!!!!!!!!!! WE are in developing country which is not having any for seen future to become a super power ........
People like anna are True fighter !!!!!!!!!!!!!
I invested to have my home and when we started invested it was costing 16 lacs but it is now going to cross 28 lacs !!!!!!!!!!!!!!!!! Depressed !!!!!!!!!!!!!

[Adarsh Aggarwal]

Query:-

I would like to have one more info from your side. Before Possession Omaxe is asking for Affidavit asking that buyer will not have any claim against delay in possession ( He refused to give penalty to buyer on a clause that possession will be given 36 months after date of signing of agreement and himself delayed the agreement signing).

And without giving handover asking us to state that flat is in working condition and I am satisfied with that.

If I give affidavit on that effect, will i not be able to file any case against Omaxe.

Answer:

Dear Anuj Garg,
This is another common example of fight of an individual against an Institution such as Builder. In legal language, this type of act, like getting affidavit asking that buyer will not have any cliam against delayed possession, can be called coercive act on part of the Builder. But the problem is that actually nobody is willing to fight, either out of 1000 flat owners, 5 to 10 will fight, or they will fight by making an association, in first case, either builder settles the matter or pays up when he loses, in case of association, he proves that he donot have any agreement with association and every agreement is an individual agreement, he wins the case after dragging it for 5-6 years.

The proper Course of action is to file civil suit and then pay the proceeds, if you have to, if any, before Court, so that claim of refund can be made escaping this type of action, where Omaxe, BPTP, or any other builder can say that you have agreed and waived claim for delayed possession, now you cannot claim them again.

Hoping it solves your query,
Regards
Adarsh Aggarwal
Advocate
9810240789, rpalegal@hotmail.com

[Adarsh Aggarwal]

Dear Anuj Garg,

Moreover he has collected EDC amount from buyers with 24% penalty and one of latest RTI has revealed that he has still not deposited that with HUDA.

What can we do on that account.

Answer.

This action, if Omaxe has really done it, then amounts to cheating against which an FIR can be filed before Police Station or Court if police do not take any action.

However from experience i know that normally every real estate developer goes unpunished because nobody is really interested to take things to its logical end.

BUT IT YOU HAVE PROPER PAPER WORK AND THIS IS TRUE THAT BUILDER HAS TAKEN THE EDC AND HAS NOT DEPOSITED WITH GOVERNMENT AND IT WAS SUPPOSED TO BE DEPOSITED WITH GOVERNMENT, THEN DEFINETLY THIS IS CHEATING UNDER SECTION 420 IPC AND CAN BE PUNISHED BY CRIMINAL COURT.

Hope this will solve your query.

Regards
Adarsh Aggarwal
Advocate
9810240789
rpalegal@hotmail.com

[Adarsh Aggarwal]

I am customer of bptp elite floors in parkland 180 sq yard flats
We are in trap of bptp now ... and have to pay what they will ask for No other option .........all credit goes to government who is not having any rules and regulations........ Because of it we are now in total trap ............... Govt should have rules like when a builder is promising a flat with some amount in the initial booking they should stick to the charges and the time of possession should not be altered and builders should in any time can not increase its build up area it should be decided in the beginning of the construction or before the booking amount ........ Now I believe that any thing is possible in INDIA any one can make its own rule if you have money and power........ SAD !!!!!!!! BUT IT is TRUE !!!!!!!!!!!!! WE are in developing country which is not having any for seen future to become a super power ........
People like anna are True fighter !!!!!!!!!!!!!
I invested to have my home and when we started invested it was costing 16 lacs but it is now going to cross 28 lacs !!!!!!!!!!!!!!!!! Depressed !!!!!!!!!!!!!

Dear S Army

Have you not entered into agreement after reading it with BPTP,
if yes
are they charging anything against agreement

HOW A THING COSTING RS.16 LACS CAN COST RS. 28 LACS
if it is in fine prints of agreement, it is your fault having not read that then why blame Government.


BLAME IS ENTIRLY UPON THE BUILDER WHO DOES THIS KIND OF THING OR UPON US WHO DO NOT TAKE ACTION BY NOT TAKING THE REMEDY AND ARE USED TO SLEEP OVER OUR RIGHTS.

Remember
GOD HELP THEM WHO HELP THEMSELVES!!!!

IF ANY THING IS CHARGED AGAINST AGREEMENT THEN DEFINETLY YOU CAN TAKE REMEDIAL MEASURE.
Post your actual problem, so that can be solved
Regards
Adarsh Aggarwal
Advocate

[s3.3army]

Dear Adarsh Aggarwal
Advocate
Yes I agree that every thing is according to agreement and every thing was hidden in the agreement !!!!!!!
like 1)build up area is tentative
2) administration charges will be charged but how much not mentioned
3) EDC may increased
4) And not only this if construction cost increases during the period of construction they can charge additional but how
much additional not mentioned
Believe me the flat prices now after 2.5 years are going to cross 28 lacs
we in the time of ressession booked this flat when they proposed the cost of flat 15 lacs
now as the time is passing they are charging aal the hidden cost to it
Tell me if I booked my flat in the highlighted figure of 15 -16 lac and sanctioned the loan amount
upto 14 lacs then tell me now additional charges are going to be burden on me or not ?
I do not at all agree with the argumenr you proposed ......
Because of this agreement they can not charge upto maximum ...... They are charging every charges upto their maximum
How and why before addvertisement of the flats they could not measure the constructed area
they increased the build up area later on and charged us in last installment . Were they sleeping before ?
If they were then credit goes to government only why they can not do check these builders flat before letting them a launch in market .
I think gov. people knew all this happen and they were sleeping because of some resons ............
And I strongly believe that we are not first who are facing such problems and GOVT. know this very well ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

[asiapole]

Also, I have seen that builders are asking for huge amount to transfer the flat in the name of new buyer. For example, Shiv Sai is charging 150 Rs per Sq, Ft. For 1500 Sq Ft flat, we need to pay 2.25 Lac as transfer fee. Is it legal. What is GFWA doing about this.

[Adarsh Aggarwal]

Dear Adarsh Aggarwal
Advocate
Yes I agree that every thing is according to agreement and every thing was hidden in the agreement !!!!!!!
like 1)build up area is tentative
2) administration charges will be charged but how much not mentioned
3) EDC may increased
4) And not only this if construction cost increases during the period of construction they can charge additional but how
much additional not mentioned
Believe me the flat prices now after 2.5 years are going to cross 28 lacs
we in the time of ressession booked this flat when they proposed the cost of flat 15 lacs
now as the time is passing they are charging aal the hidden cost to it
Tell me if I booked my flat in the highlighted figure of 15 -16 lac and sanctioned the loan amount
upto 14 lacs then tell me now additional charges are going to be burden on me or not ?
I do not at all agree with the argumenr you proposed ......
Because of this agreement they can not charge upto maximum ...... They are charging every charges upto their maximum
How and why before addvertisement of the flats they could not measure the constructed area
they increased the build up area later on and charged us in last installment . Were they sleeping before ?
If they were then credit goes to government only why they can not do check these builders flat before letting them a launch in market .
I think gov. people knew all this happen and they were sleeping because of some resons ............
And I strongly believe that we are not first who are facing such problems and GOVT. know this very well ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

Dear S Army
You have to understand the things in correct perspective. Government is not sleeping it is in active connivance with the builders for the reason we all know. But question is will change of government is the issue here, or assuming government changes, what will happen than?
So the only option is to fight with the might of Builder.
To fight with builder you have only two options. one go to the Government or second go to the Court.
If as per your case government is in active connivance, then only option left is to go the court.

But i from experience tells you that out of 1000 flat buyers in a builder's premises only 10 goes to court and that to half heartedly. Rest keeps on complaining and do nothing except blaming government. That's why builder's version will keep on going till perpetuity.

Regards
Adarsh Aggarwal
Advocate