If you have been to Consumer Forum for real estate issues, you would be aware of the ambiguities in the orders of the various benches/judges. In the absence of any law to reference while deciding the cases, the judges have been giving judgments at their own discretion. While the Real estate bill (RERA 2015) shall take some time to become reality and there is no clarity on its effectiveness on existing projects, it certainly will help the consumers who are fighting for their rights in various Consumer Forums.
Here are some judgements on issues like delay penalty and refund of money from the highest court in consumer forum i.e NCDRC. There is inconsistency in the deciding the compensation for delays.
- One bench says delay penalty should be 12% while other says it should be 8% or 10%.
- It is difficult to convince certain benches to award higher compensation than agreed in the BBA i.e 7 or 10 rupees psf.
- There are judges who are of the opinion that when you are asking for a home, you can’t ask for too high penalty and monthly rent of 20000/- shall be enough to compensate you.
Refund of money
There have been cases where the money was refunded with 12% to 18% interest when buyers wanted to exit the project and then there are those where buyers could only get a simple interest of 4% on the premium paid to the builder.
Why is there inconsistency in the orders by same court (NCDRC)?
The Consumer Protection Act was never enacted keeping in mind the real estate issues the buyers of this country are facing. There is no provision in the Act that defines the quantum of compensation. In the absence of such guidelines, various judges decide compensation on their discretion and it’s case to case basis. This results in inconsistency in the quantum of compensation awarded to homebuyers. Often, these decisions are challenged in higher courts.
How would RERA Bill help?
The Real Estate Regulatory Authority (RERA) Bill 2015 says the delay penalty a home buyer is entitled to should be same as the penalty imposed by the developer in case of delays in payments by buyers. In simpler terms, if the agreement asks you to pay 18% for the delayed payments, you are also entitled to claim delay compensation at 18%.
The consumer forums now get a central law to refer while deciding the quantum of compensation and the penalty imposed on the developers can be fair and uniform.
What’s the big deal?
NCDRC in 2015 for the first time awarded 12% delay compensation to the Unitech buyers. This judgement was challenged by Unitech in Hon’ble Supreme Court and the matter is still sub-judice. Unitech contested that the consumer forum was incorrect in awarding a compensation of 12% and they have no jurisdiction to impose a penalty higher than as agreed in the agreements. Because there was no law to refer, Hon’ble Justice V.K. Jain on this own discretion imposed such penalties. Supreme Court had to admit the appeal of Unitech in this case for this reason.
However, with the RERA Bill becoming reality, this can not be challenged anymore and the delay penalties of the case like Unitech can be justified in any court in the country.
We are still sceptical about the effectiveness of RERA Bill on ongoing project and time the state governments shall take to implement it. However, the provision of this central law shall certainly help thousand of cases that are being fought in Consumer Forums across India.