Can you imagine even after paying Rs 1.07 crore for a flat in an apartment you have to wait 10 years for a builder to finish its construction. Initially the homebuyer booked a flat in 2013 worth Rs 1.16 crore by paying about Rs 12 lakh as booking amount. Subsequently in 2014 a sale agreement was registered when he paid Rs 95 lakh thereby making the total payments to Rs 1.07 crore. However, when the homebuyer thought of checking out the flat, he was shocked to see that not even basic construction work was started by the builder. This was the experience of a couple who, impressed by the sales brochure, decided to invest crores for buying a flat in Gurgaon from a builder in 2013.As soon as the homebuyer found out this, he went to the builder’s office to cancel the booking and take the refund. The builder very skillfully prevented the homebuyer from taking his money out. Instead of getting a refund for cancellation of this booking, the builder managed to convince him to re-invest the money by buying another flat in a different project by the same builder at a higher price of Rs 1.55 crore. The surprising twist in this homebuyer’s story does not end here.
Even this Rs 1.55 crore flat also could not be finished on time by the builder, hence the buyer again approached the builder to cancel its booking and this time also the builder again convinced him to take another flat instead of getting a refund after cancelling this flat booking. This is the third time since 2013 when the homebuyer, despite paying Rs 1.07 crore in total, was left with nothing but promises of a flat which will someday be fully constructed. One relief or whatever, the builder took the homebuyer’s calls and meetings every time it was requested and did not shy away.
However, when the builder failed to deliver the flat on the promised date of July 21, 2022, the homebuyer lost his patience. The fact that after paying in crore and having to wait 10 years for construction of a flat began to take a toll on the homebuyer. He decided it was enough and hence filed a complaint against the builder with Haryana RERA and sought cancellation of his booking and refund of Rs 1.07 crore with interest as compensation.
Read below to understand how this homebuyer fought and why Haryana RERA using sections 2(za), rule 15, section 18(1), a precedent set by Delhi High Court, etc all of which gave an order mandating the builder to pay Rs 2.26 which included Rs 1.07 crore refund and 11.1% interest compensation.
A Flat was initially booked in 2013 however, the booking was shifted to other projects three times in past 10 years
Haryana RERA observed the following:
- In the present complaint, the complainant booked a unit in the project and a unit bearing no 3016 was allotted vide allotment letter dated November 18, 2013. Subsequently a Floor Buyer’s Agreement was executed between the complainants and the respondent on May 6, 2014.
- In 2017, this unit was cancelled and transferred the same to another project of the respondent. This unit in Sector-67 A unit bearing no. E-2144 was allotted to the complainants followed by execution of a Floor’s Buyer Agreement on January 9, 2018.
- A Memorandum of Understanding (MOU) was executed in respect of the unit bearing no. 1571- D block. As per para d of the M.O U, the respondent accepted the fact that there has been inordinate delay in handing over of possession of the previously allotted unit to the complainants and thus another unit is being allotted to the complainants. On January 21, 2021, the sale agreement was registered for this newly allotted unit.
- The due date for delivery of this newly allotted flat unit was July 27, 2022. However, the builder failed to obtain an occupation certificate from the concerned authorities till date and thus the flat could not be handed over to the homebuyer.
Haryana RERA said, “The respondent (builder) has been holding the amount paid by the complainant from 2013 and kept on changing the units of the complainants from one project to the other project on account of non-completion of the projects. The amount paid by the complainants has also been shifted and adjusted from one project to another. Even after a delay of more than 10 years, no unit has been delivered by the respondent to the complainants (homebuyer) till date.”
Haryana RERA’s investigation caught the builder telling lies red handed
The builder (M/s Ansal Housing & Construction Limited Now Known as: New Look Builders and Developers Private Limited) in his defence said he had every intention of delivering the flat(s) but ‘force majeure’ conditions prevented him. For those uninitiated, ‘force majeure’ is a legal term which means circumstances beyond the control preventing a party from performing an agreed upon task.
Haryana RERA however did a thorough investigation and caught the builder lying.
“The respondent is claiming benefit of lockdown which came into effect on 23.03 2020 much prior to the execution of agreement. Therefore, the Authority is of the view that outbreak of a pandemic does not fall under the force majeure circumstances in the present matter and thus the benefit of Covid-19 cannot be granted to the respondent,” said Haryana RERA.
Haryana RERA used these legal provisions to decide the judgement and orders Rs 2.26 crore including interest compensation
The RERA tribunal referred to section 2(za), rule 15, Section 11(4)(a), section 18(1), a related Delhi High court judgement (M/s Halliburton Offshore Services Inc’ V/S Vedanta Ltd), sub-section 7 of section 19, and other laws of Real Estate Regulatory Authority (RERA), 2016.
Once all of the legal terminology and related judgements have been referred to, Haryana RERA found the builder guilty and ordered him to refund the homebuyer Rs 1.07 crore plus 11.1 % interest from the date of each payment till actual realisation of the amount.
The provisional allotment letter was given on November 18, 2013, when the homebuyer paid about Rs 12 lakh. A Floor Buyer’s Agreement was registered on May 6, 2014, when the homebuyer paid Rs 1.07 crore.
If we assume the date of payment to be 2014 then the builder has to pay Rs 1.07 crore+11.1% of 1.07 crore*10 years= Rs 1.07 crore+Rs11,93,003.358*10= Rs 1,07,47,778+1,19,30,033.58= Rs 2,26,77,811.58 (2 crore 26 lakh seventy-seven thousand eight hundred eleven rupees fifty-eight paisa). This is just an approximate calculation as the final amount may vary as per the date of actual refund and the gap between receiving and refunding money.
“The respondent is directed to refund the full paid-up amount of Rs 1,07,47,778 along with interest at the prescribed rate i.e. 11.1% on the amount paid by the complainants, from the date of each payment till the actual realization of the amount within the timelines provided in rule 16 of the Haryana Rules 2017,” said Haryana RERA in its order dated December 11, 2024.
Pushkraj S Deshpande, Associate Partner, ALMT Legal, says, “One of the main reasons as to why the builder lost the case is its contention that the delay was due to reasons attributable to force majeure, i.e., Covid-19 lockdown, which came into effect only on 23 February 2020, whereas the buyer’s agreement was executed on 21 January 2021, which was much later than the occurrence of pandemic. Also, the builder repeatedly changed the units of the complainants from one project to project another due to non-completion and further failed to obtain an occupation certificate and handover the possession to the complainants within the stipulated time being an inordinate delay of more than 10 years, thereby failing to abide by the RERA guidelines.”
Avikshit Moral, Partner, S&R Associates says, “The Developer had received part consideration almost 10 years prior to the order. It had allotted multiple units in lieu of another and the final unit was also not delivered on time as was contractually agreed. Hence, the developer was in terms of Section 18 (1) of the Real Estate (Regulation and Development) Act, 2016, (“RERA”) was directed to refund the part consideration together with interest of State Bank of India (MCLR) + 2% interest.”
What might be the key legal takeaway from this RERA judgement?
ET Wealth Online has asked various experts about what the key legal takeaways from this judgement might. Here’s what they said:
Avikshit Moral, Partner, S&R Associates: “While there were multiple agreements done at different times for different units and as per the final agreement the possession was to be handed over on July 21, 2022, the order directed the Developer to pay interest from the date of each payment (of the part payment) not from July 2022. Thus, the interest component Also, since the buyers’ agreement was executed in 2021 January, much after the lockdown declared in March 2020, it was held that the outbreak of Pandemic could not be attributed to a force majeure event, justifying the delay in possession.
Another interesting point was that the MCLR rate was determined on the rate applicable on the date of the order i.e. December 11, 2024 (i.e. 9.8%), not on the rate prevailing on the date of the default i.e. July 21, 2022 (i.e. 7.8%).”
Sweta Upadhyay, Senior Associate, ALMT Legal: Companies engaged in real estate development must adhere strictly to timelines and deliverables as specified in their contracts with buyers as any delays or failure to meet obligations can lead to legal claims for compensation or specific performance.
In fact, it is a buyers’ right to timely possession of properties. Having said that, this case may underscore the importance of maintaining public confidence in the real estate sector, where developers must ensure that their actions and dealings are transparent and ethical to avoid litigation and reputational harm. Further, the buyers facing unnecessary delays due to builder’s negligence, as outlined in this judgment, can take action against the developers.
