Builder Failed To Commence Construction Even After Two Years From Agreement Date, Karnataka RERA Orders Refund To Homebuyer

Background Facts

The homebuyer (complainant) purchased a flat in the builder's (Respondent) project named Grandeur Park, with a total sale consideration of ₹74,92,800. At the time of entering into the agreement for sale on 10.01.2022, the homebuyer paid an initial amount of ₹15,53,601 to the builder.

The homebuyer applied for a home loan with the State Bank of India (SBI), and both the homebuyer and builder entered into a tripartite agreement on 27.01.2022. The homebuyer received approval for a home loan of ₹57,65,000, of which ₹54,00,000 was disbursed and paid to the builder on 28.01.2022.

As per the agreement for sale, the builder was supposed to hand over possession of the flat to the homebuyer by December 2022. It was agreed that if the project was delayed, the builder would pay the entire amount of the EMIs to SBI, as stipulated in the tripartite agreement. However, the builder neither completed the project on time nor paid the EMIs to the bank.

Aggrieved by the delay and unsatisfactory responses from the builder, the homebuyer filed complaint before the authority seeking a refund with interest.

Observation and Direction by Authority

The authority held that the builder failed to abide by the terms of the agreement for sale for several reasons. Firstly, the builder did not complete the project within the agreed timeframe. Despite committing to hand over possession of the flat to the homebuyer on or before January 2023, builder failed to do so. Furthermore, the builder did not start the construction work even after 2 years from the agreement date, indicating a significant breach of the agreement.

Additionally, the homebuyer made several attempts to contact the builder to inquire about the progress of the construction work but received no response. This lack of communication further highlighted the builder' disregard for their contractual obligations. Moreover, the homebuyer had availed a loan under the pre-EMI scheme, under which the builder were supposed to pay the EMIs. However, the builder also did not fulfill this obligation, resulting in the homebuyer having to pay pre-EMIs amounting to ₹2,62,500 to the bank.

Furthermore, the Authority observed that as per Section 18 of the RERA, if the Homebuyer wishes to withdraw from the project, the builder is liable, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, or building, as the case may be, with interest at such rate as may be prescribed in this behalf, including compensation in the manner provided under the act. Therefore, as per Section 18(1) of the RERA, the builder is liable to refund the amount received along with interest and compensation if the builder fails to complete or provide possession of an apartment or plot in accordance with the sale agreement.

Therefore, the Authority directed the builder to refund the amount of ₹21,21,380 paid by the homebuyer to purchase the flat, along with interest, within 60 days.

Case – Dabasish Gayen Versus GVG Infrastructure Pvt. Ltd. and others

Citation - COMPLAINT NO: CMP/00249/2023