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What to do when a Builder Delays Possession of Property

An individual invests his hard-earned income for buying new properties. But when the seller fails to transfer the property on time, the individual does face monetary loss and faces mental agony.

In the case of Mrs Saradamini Kandappan v. Mrs S. Rajalakshmi & Ors that old principle:
the time is not the essence in the sale of immovable property not of use in the present scenario.

Furthermore, in Chand Rani v. Kamal Rani, it was held that:
to find whether the time is of essence or not can be ascertained from the terms of the contract, nature of the property and the surrounding circumstances.

The delay in possession can occur due to many reasons like:

  • The buyer does not devote his time to possess the property, and over the paper works
  • The seller is at fault in delaying the process further and not doing the paperwork even after full payment. An example of this can be Amrapali Projects.
  • The seller denies possession over the property and threatens the buyer.

Where to go in case of delayed Possession?

In delayed Possession, a buyer has various legal remedies under civil, criminal, and consumer laws. However, the buyer can seek remedy under the Consumer Protection Act,  the Real Estate Regulation Act, 2016 and NCLT.

Consumer Protection Act:
When a person facing any issue of the possession of a property being delayed by the seller, the aggrieved can file or submit a complaint against the developer as per the Consumer Protection Act, 1986, to the forum under whose jurisdiction the property or the developer�s office lies. The forum to which the dispute the complaint is be submitted depends on the claims or compensation. The provisions of the Consumer Protection Act enable consumers to make complaints only when they highlight the unfair trade practice or any deficiency concerning goods or services.

Under the Consumer Protection Act, three redressal mechanisms are provided depending upon the amount of compensation.

The three redressal mechanisms are:

  1. The District Consumer Dispute Resolution Committee: The disputes claiming up to Rs. 20 lakhs is filed before it
  2. The State Consumer Dispute Resolution Committee: The dispute claiming between Rs. 20 lakhs and Rs. 2 crores are filed here.
  3. The National Consumer Dispute Resolution Committee: The dispute claiming above Rs. 2 crores is filed here.

Real Estate Regulation Act, 2016:

RERA is an act to establish the Real Estate Regulating Authority to regulate and promote real estate in India. However, it also ensures the sale of plot, apartments, buildings, real estate projects efficiently and transparently. The act is a complete package in itself for addressing the current day grievances in the real estate sector.

The Act provides for establishing an adjudicating mechanism for speedy dispute redressal. The features of the Act does not end here. Still, it also provides for the establishment of an Appellate Tribunal to hear appeals from the orders, directions, and decisions of the Real Estate regulatory authority and the adjudicating officers appointed in this behalf.

Under the act, it is provided that if any real estate agent does not comply or tends to contravene any directions of the Authority, then he shall be liable to be penalized for each day till this continuous default occurs. It may also increase cumulatively up to 5 per cent of the estimated cost of the plot, apartment, etc. the sale or purchase of real estate property facilitated by the Authority.

If the real estate agent violates the order of the Appellate Tribunal, he shall be punished with imprisonment of maximum one year or with a fine for every day for each continuous default. However, it may extend cumulatively up to 10 per cent of the estimated cost of an apartment, plot, building or whatever is the case, that is up for sale or purchase or both.

This act completely focuses on the protection of interest of the buyers. A complaint of any claim can be filed under RERA. But an exception to it is that in cases where occupancy certificate is granted, the complaint cannot be filed. The act enables the buyer to get a 100% refund and monthly or annual interest till the day delay is continued. The time period given to disposing of a RERA case is generally 60 days, but here the litigation cost is a little higher.

A buyer can file a complaint here irrespective of the states. The buyer can send a legal notice to the builder or even transfer its case from the State Consumer Dispute Resolution Committee to State Real Estate Regulatory Authority as per the RERA Act, 2016.

National Company Law Tribunal (NCLT):

In case the delivery of your property or flat is being delayed by the developer�s side due to the shortage of funds, then in that case, it is better to take the matter into your own hands. In such a situation approaching NCLT makes the most sense. The Supreme Court also, in its recent order, has upheld that a home buyer can take the seller or developer of property/flat into bankruptcy proceedings.

In cases where the seller cannot continue the project then in such cases, the buyer can resort to NCLT and can initiate Insolvency Proceedings against him under the Insolvency and Bankruptcy Code and claim any amount equal to or more than Rs 1 lakh. The average period to resolve the case, as per the act, is to be within 9 to 12 months.

The NCLT is an appellate body, proven to be a more popular choice for property buyers seeking quick relief from the builder, to resolve cases for the registered companies with a disputed amount above Rs 1 lakh. It enables the company�s owners to get their shares during the time of liquidation.

According to the Supreme Court ruling, the buyer becomes a financial creditor. Therefore, the buyers now are just like the other creditors entitled to get their shares for the seller�s or developer�s assets.

The delay in possession of the property can be caused due to many problems. But one must be cautious while purchasing a property. The buyer must read the points and the disclaimers in the buyer builder agreement thoroughly. One must check the financial credibility of the builder too. Once an agreement is signed containing no favourable terms, it could leave no legal remedy in the buyer�s judicial process. So the buyer must act diligently before executing real estate contracts.Written By: Adv. Raghavendra S. Mehrotra, Founder & Managing partner of Lawkhart Legal

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