Force Majeure Not Ground For Builder To Seek Condonation Of Delays In Giving Possession Of Flats [Read Order]

Availability of land and approvals from competent authorities are fundamental requirements of a housing project and the responsibility of builder and non-fulfillment of its overall responsibilities of project planning, execution and completion are not grounds for condoning or overlooking delay in completion and handing over possession of residential units, the National Consumer Disputes Redressal Commission has held.

A bench of Dr SM Kantikar and Dinesh Sharma said so while directing DLF Homes Panchkula Private Limited to pay compensation of Rs 1 lakh to the buyers besides Rs 1 lakh as cost of litigation and Rs 25,000 to be deposited in the Consumer Legal Aid Account of the State Commission, within four weeks on account of unfair trade practice in each of the 16 cases before the Commission.

“The shelter of force majeure conditions cannot be taken by the builder co. as it did not take requisite approvals/sanctions from the competent authorities before launching the project in question,” said the commission while dismissing the argument of the builder that the construction work had been stayed by the Supreme Court in April 2014.

The commission also directed the builder company to hand over physical possession of the subject unit, complete in all respects as per the terms and conditions of the subject agreement and specifically as per the agreed and assured specifications and amenities, on payment of the total cost in full by the complainant as per the agreed schedule of payment (inclusive of penal interest for delay in payment of any instalment/s), within four weeks.

“The builder company shall execute and get registered the sale-deed of the subject unit, on payment of registration charges and stamp duty by the complainant to the registering authorities, along with completion certificate and other documentary requisites from the concerned authorities and requisite structural drawings & plans relating to civil work, electrical work, water / plumbing, sanitation, etc. as are necessary and required for the buyer – complainant for future maintenance and upkeep of his unit, within four weeks,” it ordered.

In its order, the commission said, “It is significant that the material facts and consequences relating to the availability of land (/ acquisition of land) and approvals from concerned authorities at the due time were not brought to the notice of the consumer at the time of entering into the buyer’s agreement. In the absence of the facts and the consequences thereof being specifically and explicitly brought to his notice, the buyer – consumer would reasonably (and correctly) understand that all aspects of project planning, execution and completion, inclusive of availability of land (/ acquisition of land) and approvals from concerned authorities at the due time, are the responsibility of the builder co. and have been / are being / would be duly taken care of by the builder co., without cost or time overruns. Not bringing the material facts and consequences relating to availability of land (/ acquisition of land) and approvals from the concerned authorities at the due time to the notice of the buyer – consumer while entering into its buyer’s agreement was unfair and deceptive of the builder co. [within the meaning of section 2(1) (r) of the Act 1986]”.

It criticized the company for its high-handedness in extending the deadline for delivery of residential units in time.

“The litigation apropos land acquisition had initiated prior to the entering into of the buyer’s agreement. The facts and consequences thereof were not brought to the notice of the complainant at the time of entering into the buyer’s agreement. The letter dated 05.06.2013 was issued after about four months of expiry of the 24 month period to complete construction and deliver possession. An offer of refund with 9% simple interest per annum on the deposited amount was made about four months after the construction should have been completed and the possession delivered. An unreasonably short time of 10 days was granted to either agree to delay of 12 -42 months in completing construction and delivering possession or to take the deposited amount back with 9% simple interest per annum, with a stipulation that if confirmation is not received within the 10 days it will be deemed that the complainant agrees to continue with the allotment with the changed terms and conditions. Construction activities were stopped for about 8 months (19.04.2012 to 12.12.2012), (but) the builder co. assigned to itself an extended time period of 12 months. The construction was not completed even after expiry of the said 12 months’ extended time period (assigned, by the builder co., by itself, to itself). The 12 months’ extended time period expired on 09.02.2014. The complainant went to the State Commission on 14.03.2016 i.e. 25 months thereafter. The arbitrariness and highhandedness of the builder co. is well evident. The builder co.’s unfair and deceptive acts [within the meaning of section 2(1) (r)] are also well evident,” said the commission.

The commission said it did not find anything wrong with the order of the State Commission in awarding compensation in two parts— one, by way of interest on the deposited amount from the ‘promised’ / assured date after taking in view the extension sought vide letter dated 05.06.2013 i.e., 12 months after the 24 months’ conveyed and understood time period for completing construction and handing over possession, and, two, a lumpsum amount.

The NCDRC also protected the interests of the banks when it said, “…it would be inappropriate not to protect the lawful interests of the bank / financial institution that provided loan (if any) to the complainant, for the subject unit, when the actual dispute is between the complainant and the builder co. only and the bank / financial institution but provided loan to the complainant in the normal wont of its functioning.

“We are thus of the considered view that the compensation and the cost of litigation should, first, go to the bank or financial institution from which the consumer – complainant has availed loan facility (if any) for making payments to the builder co. towards the total cost of the unit. The first charge on the amount payable, to the extent, should be of the bank or financial institution from which the consumer – complainant has taken loan for making the payment for the said dwelling unit”.

Read the Order Here