Builder Cannot Force Buyers To Accept One-Sided Contractual Terms In Builder-Buyers Agreements: NCDRC

Brief Facts of the Case

The complainant booked a flat in Omaxe City's project by M/S Omaxe Ltd/builder and was allocated a specific unit. Despite the builder's attempts to finalize the Builder Buyer Agreement (BBA), which was left unsigned due to disagreements over certain terms, the complainant expressed concerns regarding using substandard materials and sought a refund of the deposited amount. The complainant contended that the Builder Buyer Agreement (BBA) provided by the builder was one-sided, favoring the builder, which is why it was not signed. The complainant filed a complaint with the State Commission, and the complaint was allowed. The Commission directed the builder to refund the deposited amount, excluding the earnest money of Rs. 5,75,000, but denied the claim for interest due to lapses in agreement signing and payment. Aggrieved by this, the complainant filed an appeal before the National Commission.

Contentions of the Builder

The builder argued that, despite multiple opportunities given to the complainant to make payments, the allotment was cancelled, and the earnest money was forfeited. After the cancellation was revoked, the unit was re-allotted, but the complainant still did not sign the agreement, leading to another cancellation and forfeiture of the earnest money.

Observations by the Commission

The commission observed that the forfeited amount of Rs. 5,75,000 would have constituted liquidated damages as specified in the application form. The complainant was informed of this provision when signing the form. The ability to claim liquidated damages, as affirmed in legal precedents like Kailash Nath Associates v. DDA (2015), validated the builder's action in this case. The commission observed that the above condition envisaged the complainant signing the Buyer's Agreement within 30 days from its dispatch by the builder. Although the application form did not mention a period within which the builder should dispatch the Buyer's Agreement, it ought to have been done within a reasonable period from signing the application form. Even according to the builder's case, the draft agreement was sent to the complainant with a significant delay, followed by a reminder after another gap. The builder did not produce the initial letter sending the draft agreement, only the reminder letter. Furthermore, the builder did not provide the copy of the draft Buyer's Agreement claimed to have been sent initially. The commission held that, in this case, the builder itself delayed sending the draft Buyer's Agreement to the complainant for signing by about one year. The commission highlighted that while the application form condition stated that if the complainant failed to execute within 30 days of dispatch by the builder, the builder could treat the application as cancelled and forfeit the earnest money, the question arose whether a builder could impose such a unilateral condition and subsequently add further conditions in the Buyer's Agreement which were not part of the application form. If an allottee disagreed with the inclusion of such subsequent conditions, could the builder use the stated condition of the application form to cancel and forfeit the money? The commission cited the Supreme Court case Ireo Grace Realtech Pvt. Ltd. vs. Abhishek Khanna & Anr., which held that a builder cannot compel apartment buyers to be bound by one-sided contractual terms contained in an apartment buyers' agreement. In this case, the complainant specifically stated that he did not sign the Buyer's Agreement as he found some terms and conditions unacceptable, conveyed his objections to the builder, and despite this, the builder refused to amend the agreement, leading to further correspondence between the parties. The commission held that in this case, the builders were not justified in forfeiting the complainant's earnest money on the ground of not signing the Builder Buyer Agreement, and the complainants were justified in seeking a refund due to the builders not agreeing to amend the objectionable terms and conditions. Accordingly, the State Commission's order for refund minus forfeiture of earnest money without interest could not be sustained and needed modification.

The Commission allowed the appeal and directed the builder to refund the principal amount of Rs. 27,90,418 to the complainant with an interest rate rate of 9%

Case Title: Kailash Kumari Vs. M/S. Omaxe Ltd. & Anr

Case Number: F. A. No. 66/2018