News: Builders can’t forfeit homebuyer money for seeking cancellation due to delay in project: NCDRC-13-06-2019
Updated On : Jun 13, 2019
NEW DELHI: The apex consumer commission has held that a builder cannot forfeit any amount deposited by homebuyer incase he/she seeks cancellation of allotment of flat due to delay in project and directed Supertech to refund entire amount of over Rs 1 crore to a buyer for delay of two year in delivering the house in Noida.
In order to discourage homebuyers from cancelling the allotment, the builders always put stringent clause in the agreement allowing it to forfeit a substantial amount deposited by buyers. But the National Consumer Disputes Redressal Commission (NCDRC) held that real estate company cannot invoke such harsh clause in cases where the buyers are forced to seek cancellation due to inordinate delay in completion of project.
A bench of Justice V K Jain restrained Supertech from forfeiting 15% of the cost of the unit as cancellation charges after a buyer sought refund of his money after the company failed to deliver the house in its Noida housing project by December 2016 as per the agreement.
he commission passed the order on a complaint filed by one Chandan Gupta who had booked a residential flat with Supertech’s project ‘ORB Towers’in Sector 74 of Noida for a consideration of Rs.2.36 crore. As per the agreement, the flat was to be delivered to him by June 2016 or latest by December 2016 after including the grace period of six months which was available to the company.
As the developer failed to hand over the possession within the stipulated period, the homebuyer sought cancellation of allotment and approached the commission after the developer refused to refund Rs 1.08 crore which he had deposited so far. As the commission came to the conclusion that the amount had to be refunded to the buyer, the developer contended that it was entitled to forfeit 15% of the cost of the unit as cancellation charges as per clause 37 of the agreement between the parties.
The court, however, rejected its claim saying that there was no merit in the contention. “In my opinion, the aforesaid clause would apply to a case where the allottee, for his own reasons, seeks cancellation of the allotment and does no and does not apply to a case where he is forced to seek cancellation of the allotment and refund of the amount paid by him to the developer on account of the failure of the developer to deliver possession of the house within the time period committed by him in this regard. Had the complainant sought cancellation of the allotment before December 2016, by which the possession was to be delivered to him even after giving benefit of the grace period to the builder, there could have been some merit in the contention.But, he having filed the complaint after expiry of the aforesaid timeline, clause 37 of the agreement would have no application,” it said.
It directed Supertech Ltd to refund the buyer within three months the entire principal amount of Rs.1.08 crore along compensation in the form of simple interest at 10% per annum from the date of each payment till the date of refund.
