Pay delay penalty till actual possession – No more “Offer of Possession”

It is a common practice that even before the flats are ready, developers rolls out the “Offer of Possession“. The actual possession of apartment happens after months of making final payments. Sometimes the possession is delayed further for reason like no Occupancy Certificate etc. Developers may give various excuse like the fitting and fixtures shall only be installed after final payment.

The State Consumer Forum, Chandigarh have set the rules straight. The commission observed that the penalty for delay should be calculated till the date of actual possession and not the Offer of Possession or Offer of Fit-outs. The court also ordered that the increase in Super Area should be calculated at allotment rate and not the revised rate.

In the case of Omaxe Silver Birch, Chandigarh Extension, The State Consumer Disputes Redressal Commission, Chandigarh, has ruled that the builder is liable to pay penalty for delayed possession up to the date on which the possession is delivered after completing it in all respects. the commission ignored the provisional offer letter of possession issued by Omaxe Chandigarh Extension Developers Private Limited, and told it to pay the prescribed penalty up to the date of handing over legal physical possession of the flat.

Date of filing: 27.07.2015 and Date of Judgement: 03.11.2015 [A decision in only 4 months]

Buyer’s Grievances

  • Buyer received a demand for payment alongwith offer of provisional possession dated 23.8.2014.
  • The developer did not honour its commitment to pay Rs.10/- per sq. feet per month for delay in delivering possession.
  • The developer has not delivered the actual physical possession of the independent floor till date.

Developer’s Arguments

  • Buyers have delayed deposit of final payment.
  • As per agreement, the increased area was to be paid at the prevailing Company’s rate/market rate.
  • Buyers were offered to take over possession  and to get registration of his flat subject to clearing the remaining due amount.

Court’s Observations

  • The increased area was to be charged at the original booking rate.
  • Developer admitted that the final finishing touches to the residential unit would be taken up and on completion of formalities and registration of conveyance deed for said unit in favor of the buyers, possession of the above said unit would be handed over to the complainants as per the terms of the allotment letter.
  • It was in the process of getting the conveyance deed registered with the concerned authorities, which meant that uptill 17.7.2015, the developer was not in position to deliver physical possession of the allotted unit.
  • The developer was deficient in rendering service by not offering physical possession of the unit, in question, complete in all respects, to the complainants within the stipulated period aforesaid. Thus, delay of around 1½ year is attributed to the developer.

The Order

  • The developer shall hand over the legal physical possession of the unit, in question, within a period of two months, to the buyers.
  • The developer execute the sale/conveyance deed and get it registered in the name of the complainants after handing over the actual physical possession of unit, within a period of one month thereafter.
  • Pay penalty @Rs.10/- (Rupees ten only), per sq. ft. per month, from 15.03.2014 [i.e. after completion of 30 months from the date of start of construction and allotment letter dated 27.6.2011 respectively] up-to 31.10.2015.
  • Pay Penalty @Rs.10/- per sq. ft. per month for delay in delivering possession beyond 31.10.2015 by the 10th of following month till actual handing over of physical possession.
  • Refund an amount of Rs.42,083/- to the complainants, which it excessively charged on account of increased area.
  • Pay Rs.50,000/- (Rupees Fifty Thousand Only) to the complainants as compensation for mental agony and physical harassment
  • Pay Rs.50,000/- to the complainants as cost of litigation.

Order copy: Omaxe Silver Birch, Chandigarh Extension – State Commission Order

Conclusion

This a landmark judgement from the Honorable Consumer Forum. In order to save penalties, developer offer possession of unfinished apartments. However, from now onward, home buyers can insist on calculation of delay penalty till actual date of possession. Non payment of delay penalty by mere application of Occupancy Certificate shall not be accepted anymore. This judgement is equally applicable for Offer of Fit-outs.

5 thoughts on “Pay delay penalty till actual possession – No more “Offer of Possession”

  • December 14, 2015 at 7:05 pm
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    Great but if builder is insistent on payment what we can do?
    Takes lot of time in court

  • January 13, 2016 at 8:21 pm
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    Sandeep,

    Court does take time but we got nothing to loose. Consumer forums are fast and go a group of buyers to save time and cost.

  • January 25, 2016 at 9:40 pm
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    I had the unfortunate experience of buying a flat from Parsvnath in Exotica on Golf Course Road, Gurgaon but the builder has delayed possession by several years. If I know more affected buyers, we can approach NCDRC jointly to get the bulder to justice.

  • May 10, 2016 at 5:08 pm
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    I am representing an association of greater noida AMRAPALLI LEISURE VALLEY were we nearly 801 buyers are suffering from late delivery , no buy back option, forcible payment of maintainance , no possesion letter NOC COMPLETION CERTIFICATE
    Despite of several meetings MOM and written assurances they have not given the Ownership to us

    The villas were booked in 2010.
    And since then the buyers are waiting to get the ownership of the villa but all our efforts are in vein . The distressed buyers are paying rent and EMI on the money they have taken on loan or from open market

    There is no clarity regarding
    PCC OC OR TRI PARTY AGREEMENT NOR ANY CLEAR ASSURANCE REGARDING THE OPENING OF Registration

    I will be oblidged on behalf of the buyers
    It there can be a concrete suggestion given
    Regarding the steps we should follow to get our villas

    Amrapalli Leisure valley Association

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