National Consumer Forum awards 12% delay compensation to Sahara Grace buyers

Yet another landmark judgement from the “National Consumer Disputes Redressal Commission (NCDRC)”.  With government delaying Real Estate Regulatory Bill yet again, it appears that courts are the only viable option a home buyer has. NCDRC has always come to the rescue of home buyers who are impacted by the unreasonable delays and demand of builder.

On August 11, 2015, Justice V.K. Jain announced compensation of 12% for delay in delivery of apartments. He further directed builder to pay 200000/- for the agony and harassment.

The Logical Buyer will try to simplify the complex judgement  of NCDRC in buyer’s friendly language.

Highlights of the case: 

Sahara India launched a project called “Sahara Grace” in  year 2003. All the apartments were to be delivered between April 2006 to March 2007. Builder failed to complete the project and deliver possession of the apartments to the flat buyers.  The occupancy certificate for the flats was received by the opposite party only in January 2008 and the possession was eventually offered in April 2008 to January 2009.

Buyer’s Grievances: 

  • Compensation for the delayed payment with interest @ 18% per annum.
  • Compensation for mental agony and harassment quantified at Rs.2,00,000/- per flat buyer.

Builder’s defence: 

  • Builder contest that allottee are bound by Force Majeure Clause which, inter alia, include delay on account of non-availability of construction material for road and other purposes or water supply or electric power or slow down, strike or due to a dispute with the construction agency employed by the Company.  Civil commotion or by reason of war or enemy action or earthquake or any act of God, delay in decision/clearances from statutory body or if non delivery of possession is as a result of any notice, orders rules or notification of the Government and / or any other public or Competent Authority or for any other reason beyond the control of the company and in any of the aforesaid event the company shall be entitled to a reasonable corresponding extension of time of delivery of possession of the said unit on account of force majeure circumstances.
  • In case all the payments are made timely by the allottee and if there is any delay in handing over of the possession of the floor by the company, the company shall pay penalty charges calculated @ Rs.10/- sq.ft/month for delay period

Court’s contention: 

  • Builder could not, in law, have offered possession to the flat buyers before obtaining the occupancy certificate issued by the Town & Country Planning Department, Government of Haryana nor could the flat buyers have occupied their respective flats before issue of the said certificate.
  • There is no evidence of Force Majeure such as shortage of construction material, water supply or electricity not being available.
  • There is no allegation or evidence of workers employed by the construction agency engaged by the opposite party having gone on strike or having resorted to slow down the work at the aforesaid project.
  • There is no allegation or evidence of civil commotion, war or enemy action, earthquake or any act of God delaying the completion of the construction.
  • There is no evidence of the construction or handing over of the possession to the flat buyers having been delayed on account of reasons beyond the control of the opposite party.
  • In our opinion, considering that the flats could not have been occupied by the buyers without issue of occupancy certificate by Town & Country Planning Department of Gurgaon, the opposite party was under an obligation not only to complete the construction and provide all the services, but also to obtain the occupancy certificate within the time it had committed for offering possession to the flat buyers.  Since, there was delay on the part of the opposite party in offering possession to the flat buyers, it is under a contractual obligation to pay compensation to them @ Rs.10/- per sq. ft. per month of the super area, for the period there was delay in offering possession of the flats to them.

The Judgement and Compensation:

There were two set of buyers and judgement is a combined judgement. a) Those who demanded 18% for the delay. b) Those who asked for as per BBA.

  • Group a): Pay 12% per annum for the period there was delay in handing over possession to buyers. We also direct the builder to pay Rs.2,00,000/- to each of the aforesaid flat buyers as compensation / damages for the mental agony and harassment suffered.
  • Group b): We also direct the opposite party to pay Rs.2,00,000/- to each of the aforesaid flat buyers as compensation / damages for the mental agony and harassment suffered by them on account of the said delay. We further direct the opposite party to pay a lump sum amount of Rs.50,000/- as the cost of litigation to the complainant in CC 47 of 2009. [Note that this group did not ask for 18% delay penalty but penalty only as per BBA]

Getting No claim form signed at the time of possession: 

Builder while offering possession got a letter signed by the home buyers that they shall have no further claims against the builder. However, buyers all the time kept asking for compensation and did not give up the right to compensation. They submitted documents in court to prove that.

Court observed that, in view of the aforesaid correspondence between the parties, we have no doubt that the flat buyers did not voluntarily give up their right to receive compensation for the delayed possession and they were compelled to do so on account of the refusal of the opposite party to amend the conveyance deed and its claiming holding charges, in case the execution of the deed was delayed.

Maintainability of the case: 

With builders running out of reasons to defend willful default, they are have been resorting to dirty tactics of challenging courts jurisdictions and maintainability of complaints from buyers associations.

Court junked such arguments and observed that, since the complainant is registered under the provisions of Societies Registration Act, it is a recognized Consumer Association in terms of Section 12 of the Act and consequently competent to file this complaint, even if it is presumed that the flat buyers are not its members.  Therefore, we find no merit in the objection as regards the maintainability of the complaint.

Legal Take:

Sahil Sethi, a prominent lawyer representing many associations in NCDRC says “This judgement clears the air as regards right of a buyers’ association to claim delay compensation for its members. Sadly,  the association concerned restricted its claim to contractual compensation. The NCDRC however,  in addition to directing payment of contractual compensation of Rs. 10 per Sq.  Ft., granted Rs. 2 lakh to each member as compensation. Once again the NCDRC has shown that lack of pleadings won’t come in the way of NCDRC compensating buyers adequately.  ”

Full judgement can be downloaded from The Logical Buyer’s database: Sahara Grace NCDRC Judgement

The Logical Buyer suggest that buyers should move on from the statements like “Kuch nai hoga, ( nothing will happen from courts as well)”.

[update] : While this judgement is good for projects where buyers can foresee the delivery, for projects which are stuck for long time and buyer want to exit the project, NCDRC awarded refund with 18% interest. The Logical Buyer simplified that judgement for you to understand: NCDRC orders refund at 18% for long delays

Good luck 🙂

2 thoughts on “National Consumer Forum awards 12% delay compensation to Sahara Grace buyers

  • November 30, 2015 at 10:25 pm
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    I have booked a flat in Sahara Prime City Limited on 15.03.2005.
    I am sorry to say uptil now it was not handed over to us though we paid 90%. SBI Bank loan we have taken. Due to Sahara – SEBI litigations now work is held up.
    We are paying regular EMI of Rs 21,000/month.
    Also paying house rent. I am retired now with no pension.

    As SBI, Jaipur sponsored the project and we get attracted and taken teaser house loan on 25th Feb,2010 of Rs 22.95 Lacs. They have done Triapartite Agreement – Myself, SBI and Sahara.

    Now only I am suffering. Sahara is in problem due to his own reasons.
    SBI put blame totally on us.
    My questions to Sahara is –
    1. Why construction they have stop. Supreme Court has not told them to stop construction. Court hold the bank accounts only. Why customers should suffer.
    Sahara is liable for our harassment charges and delay possession 18% interest.

    My questions to SBI, Jaipur for home loan account –
    As SBI sponsored the Sahara, Jaipur project and done triapartiate they should be responsible for his decisions and financially should share the botheration of customer/client.
    Till the Sahara SEBI Supreme Court is not resolved SBI,Jaipur is having no right to take EMI from the customer.
    I have send Speed Post in August,15 requesting to hold EMI and personally also met them but uptil now no response I got.

    Such type plenty customers are their in Jaipur who are seriously suffering.
    So please further guide.

  • May 26, 2016 at 12:16 pm
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    Hi Logical Buyer it will be great if you could let us know what are the liabilities of the Banks who fund these projects which get either stuck or get delayed inordinately. These banks get into TPA 3rd party agreement but don’t share financial implications of these delays.

    Banks keep enjoying interest from consumers then what is the meaning of these TPA?

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