Pay delay penalty until project is complete from all aspects – Consumer Forum

It has become a fashion to develop the project in phases and offer possession even when the basic amenities are not ready. There have been cases where the roads, sewage lines were not in place and developers forced homebuyers to pay last payment and stops the delay penalty meter.

Someone rightly said: “If there’s anything a public servant hates to do it’s something for the public.Wish our elected government took care of such malpractices. While some choose to wait for the government to turn things over in the name of RERA, others are simply fighting for their right.

Once such case is of Mrs. Sundari Mehtab Kaur w/o Mr. Manoj Garg who stood up against the wrongs of the developer. Their possession was delayed by years and when they were finally offered possession in 2015, they found that the construction was incomplete from all aspects and basic amenities were missing. The Commission came heavily on the developer who demanded final amount by threatening the buyers of consequence.

The State Consumer Commission, Chandigarh in its order against Omaxe Developer made two significant observations:

  1. Possession should be offered after completion of development and amenities of the plot from all aspects.
  2. Possession date should be calculated from the date buyer submitted signed allotment letter. Allotment execution delays should be borne by the developer.  In this case, it was 4 months.

Date of filing: 12.08.2015 | Date of Judgement: 02.02.2016  | Judgment in 6 months

Case Brief

Buyers booked a plot with Omaxe Chandigarh Extension Developers in 11.12.2010.  Buyers submitted signed copy of the agreement on 3.12.2011 and received the complete and legal copy of allotment letter only on 9.4.2012. The possession was required to be given within 18 months i.e. by 09.10.2013 or within a further extendable period of 6 months.

When the possession was finally offered in 9.4.2015, the buyers on visiting the site were shocked to see that the said residential plot is approximately eight feet below the actual road level, which has neither been rectified to ensure structural stability of any future construction, which is prone to flooding etc. There is no provision of water, electricity & sewerage at the said residential plot. There exists no road connecting the residential plot and the same is nothing but leftover construction material thrown upon an open and barren land. Although the buyers had made the complete payment towards the sale consideration as per the demand of the developers, the work at the site had been slowed down to snail pace.

On requesting for a meeting to resolve the matter, the developers sent threatening and intimidating demand letters/reminders (Annexure C-11 Colly.) to the buyers qua penal charges @18%-24%. Intimidated by such tactics, the buyer moved the Consumer Forum, Chandigarh for redressal of their issues.

Builder’s Submissions

The construction/development of the plot/project was to be completed within 18 months or within an extended period of six months from the date of signing of the allotment letter, subject to force majeure conditions.

The buyers did not turn up to complete the necessary formalities and instead of taking possession of the plot even after possession was offered. The residential plot offered has been ready in all respects as per the terms and conditions of the statements duly executed between the parties

Courts Observations

The hard earned money of the buyers remained with the builder and besides delay in executing allotment letter, possession was delayed beyond the period stipulated in the allotment letter. It is evident from record that the buyers made payments in time. The buyers are, therefore, entitled to interest for the period from 03.12.2013 till handing over of actual, complete and legal physical possession of the plot, in question, @12% per annum [in the event of delayed payment due or payable by the allottee, in terms of Clause 14 of the allotment letter, the developers charge penal interest @18% per annum on the amount outstanding up to one month delay from the due date of outstanding and @24% per annum thereafter on all outstanding dues from their respective due dates.

Clearly, the buyers made 95% payment of the plot, in question, (Rs.75,79,893.43), during the period December, 2010 to November, 2011 much prior to execution of allotment letter. The allotment letter/agreement duly signed was submitted to the developer on 3.12.2011 but the developer executed and issued the same on 9.4.2012 after delay of about four months. Despite deposit of huge sum of Rs.75,78,893.43Ps, the buyers were not offered possession of the plot, in question, by the developer within the stipulated period of 18 months and even by availing 6 months extended period. The developer cannot be allowed to take benefit of delay caused in executing and issuing allotment letter.

The Order

  1. TheDevelopers shall hand over the legal physical possession of the plot, in question, complete in all respects, after obtaining completion certificate, within a period of three months, to the complainants, from the date of receipt of a certified copy of this order.
  2. The developers are further directed to pay interest @12% per annum on Rs.75,79,893.43  to the buyers from 03.12.2013 till 31.01.2016, within a period of one month from the date of receipt of a certified copy of the order, failing which, it shall carry penal interest @15% per annum from the date of default till actual payment.
  3. Interest @12% per annum, accruing w.e.f. 01.02.2016 onwards till handing over of actual physical possession of the plot, in question, shall be payable by the developers at the time of handing over of possession, to the complainants, failing which the same shall carry penal interest @15% per annum for the entire defaulted period.
  4. The developers are further directed to pay Rs.2,50,000/- to the buyers as compensation for mental agony and physical harassment.
  5. The developers are further directed to pay Rs.50,000/- to the buyers as cost of litigation, within a period of one month from the date of receipt of a certified copy of the order, failing which, the same shall carry interest @12% per annum from the date of default till actual payment.

Copy of the order: Sundari Mehtab Kaur – Mr. Manoj Garg Vs Omaxe Developers CC – 167 of 2015 Chandigarh


If the developer offers possession without completing the basic amenities and the apartments is complete from all aspects, you may approach the consumer forum and fight for your rights.

3 thoughts on “Pay delay penalty until project is complete from all aspects – Consumer Forum

  • February 8, 2016 at 2:12 pm

    We are living in a Society in Noida , Builder has given possession last year and we all are living here from last one year . What ever the facilities builder has promised at the time of booking , only 30% he has delivered . Please update in this case Builder is liable to provide delayed compensation or not . Since we are living in this society from last one year as a illegal resident .

  • February 8, 2016 at 8:09 pm

    Dear Pankaj,

    The judgements from the Consumer Forums and not blanket orders and not binding on everyone. So, the developer would not agree to pay the penalties.

    However, just by citing the above case, you should first send a legal notice and than move to the Consumer Forum to get similar orders.

  • April 2, 2016 at 1:23 pm

    Hi, I had paid 80% of the total cost of a flat in Jaypee Greens Noida in Feb 2011. I have yet not got the possession (due is 2014) and I fear it will take many more years for the project to complete. I am currently residing in Mumbai, can you please let me know what legal remedies can I avail? Do I need to file a complaint in a consumer court in Delhi / Noida or can I file it here in Mumbai?

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