National Commission nullified builders sale agreement on not handing over timely possession

If a builder is unable to give possession of a flat within the agreed time, then he is liable to pay interest to the purchaser until the handover, the National Consumer Disputes Redressal Commission (NCRDC) ordered Runwal Homes to hand over a 1,215-square-foot Nahur flat to a Kemp’s Corner family and also pay them around Rs 69 lakh interest on the amount paid so far. The commission said the builder may adjust the interest amount against the family’s balance payment for the flat.

Ankur Saha

In 2013, complainants approached the builder and booked a residential flat for purchase and deposited booking charges, in the office of the builder. In June, 2013, a registered sale agreement was executed between the parties. By that time the complainant had deposited an amount of Rs 73,51,426 to the builder. The balance amount was to be paid in instalments.

What went wrong?

Complainants paid the amounts of instalments as mentioned in the agreement as and when it was demanded by the builder. According to the complainants, thereafter they neither received any demand letter nor possession of the allotted flat was handed to them till March, 2016. They received a demand letter but as in this letter no date of delivery of possession was mentioned as such, they did not deposit the amount demanded in it, rather wrote letters requesting to handover possession over the flat allotted to them.

It was also stated that the complainants were not allowed to go to the site and verify the progress in construction. The builder assured the complainants that they would be given possession within a short time. When the registered notice was served to the builder, they unilaterally cancelled the agreement, mentioning therein that in spite of the demand letter, they had not deposited the instalment as fixed in the agreement.

The builder failed to complete the construction till March 2016 and in order to cover its default, the agreement was cancelled in a high-handed manner, to harass the complainants and divert their mind from asking possession.

The Commission said that it was imperative for the builder to complete the construction and obtain the completion certificate and hand over possession to the flat allottee till March 2016. From the additional evidence, it is proved that the Building Completion Certificate was issued on July 17, 2019. Neither any allegation nor any proof has been filed to show that due to force majeure or for the reasons mentioned in the agreement, the construction could not be completed within the stipulated period.

When the agreement stands mala fide

The builder had terminated the agreement after the complainants, Arun Kedia and his family, who had already paid Rs 2.3 crore of the total value of Rs 2.5 crore until August 2015, did not want to pay further until the builder assured possession after the March 2016 deadline lapsed. “Due to lapses on the part of the opposite party (builder), the complainants are suffering a loss. The agreement for sale has been cancelled illegally and is mala fide,” the commission said.

The commission pointed out the agreement fixed reciprocal liabilities upon both the parties. It said, “If the builder has not abided by the terms of the agreement and committed a serious breach, then it cannot blame the complainants that they have not deposited the instalments well within time or within seven days of the issue of the letter of demand.” The commission further said there was nothing on record to prove the letters demanding the instalments were actually issued to the flat owners before March 2016. It said, through the letters issued in February, March and September 2016, excessive demands were made.

Commission held that there was nothing on record to prove that the demand letters were actually issued to the complainants. Therefore, the allegation that the complainants committed default in payment on instalment for which the agreement was cancelled was not proved.

It said the agreement required that the flat buyers be given 30 days’ notice in writing before terminating the agreement. “No such notice was issued. Cancellation of agreement, of which the intimation was given through a letter dated March 15, 2017, was illegal,” it said. Due to latches on the party of the builder, the complainants suffered a loss. The agreement for sale had been cancelled illegally and mala fide, in a high-handed manner and the complainants were forced into litigation.