Home construction is a service under the Consumer Protection Act, hence it falls under the jurisdiction of consumer courts. Besides taking all possible precautions before purchase, purchasers should be vigilant even after paying the entire sales amount to the builder. They should not get complacent and think that the builder will deliver a defect-free property.
As for the builder, he will be held responsible for all defects in the building, and for delays in handing over possession. Consumer Courts and the Apex Court have awarded damages whenever they have found defects in the home. Let us study a few cases where the courts have awarded damages and held builders liable for their negligence.
In Ms. Ruchita D Mirchandani vs. Godrej Properties and Investment Ltd., the purchaser entered into an agreement with the builder for the purchase of a flat. But due to family problems, the purchaser sought to terminate the agreement. The builder informed that the purchaser had no right to terminate the contract.
The builder contended that he alone was entitled to exercise the option of terminating the contract. Hence, he said, if the purchaser did not pay the balance amount, she would have to forego the amount deposited by her.
The State Commission in its order observed that the right to terminate the contract should be made available to the purchaser too. In its absence it is unfair on the builder’s part to retain the amount paid by the purchaser. It amounts to “unfair trade practice” and also “deficiency in service” under provisions of the Consumer Protection Act.
Similarly in the M.P. Housing Development Board versus Virendra Kr. Garg case, the Apex Court observed that public authorities like Housing Boards do not deserve any sympathy. It said that in case of defective service the Board should pay compensation and also make good the loss to the purchaser.
In this case the MP Housing Development Board sold a defective flat to a purchaser. The Board failed to repair the flat even after the architect confirmed the defects. It was also found that the defects were serious and could lead to the collapse of the building. After examining the relevant file, the District Forum directed the payment of damages worth Rs. 50,000, and cost of Rs. 1,000. It also ordered a departmental inquiry for punishing the officials who had failed to discharge their duties.
The State Commission, after noticing the condition of the flat, directed the refund of the deposit amount with 18 per cent interest. It also enhanced the compensation amount to Rs 60, 000, and costs to Rs 5000.
The National Commission set aside the order pertaining to the compensation but awarded interest @18 per cent from the date of deposit.
The Apex Court in its order observed that the authority does not deserve any sympathy, and directed the allottee to keep the flat if he so desired, and use the compensation of Rs 60,000 to get it repaired. If not, the Court directed, the Authority should refund the deposit amount from the date of deposit @ 18 per cent interest.
In the Haryana Urban Development Authority (HUDA) versus Sitaram case, the purchaser applied for a flat to HUDA in 1982 and paid all dues to the authority. But possession was given to him in 2000. The District Forum awarded interest on the amount deposited by him at the rate of 15 per cent after the expiry of two years from the date of deposit.
The State Commission confirmed the said order. The National Commission increased the rate of interest from 15 to 18 per cent. The matter reached the Apex Court and the Hon’ble Court observed that the National Commission has awarded interest on the higher side. It also confirmed the District Forum’s order.
The courts have also held consumers liable if there is any delay on their side. In Hari Govinda Sharma vs. Punjab Urban Planning and Development Authority, the complainant deposited registration fee under a scheme for MIG house on hire purchase after seeing an advertisement issued by the Punjab Urban Planning and Development Authority.
The authority allotted a house to the complainant under a different scheme and demanded the balance money. The complainant contested, and took time to reply. As a result the liability swelled with the addition of interest and penal interest. The NCDRC observed that the complainant was duty bound to pay the said penalty.
The above decisions clearly show that consumers should bring defects to the notice of the authorities concerned immediately after it is detected. Consumers/ purchasers should keep all the relevant documents and other correspondence so that they are able to prove their case. Remember the maxim that the law protects only those who are vigilant.
- How to pursue errant builders (navimumbairealestate.org)