Homebuyers Can’t Be Made To Wait For Unreasonable Period: SC

Homebuyers cannot be expected to wait for their homes for an unreasonable period, and the developer would be liable to compensate the former in such a scenario, India’s top court has ruled.

Passing its verdict in the Kolkata West International City versus Devasis Rudra case where it affirmed the orders of state and national consumer forums, the Supreme Court on March 25 directed the builder to pay the buyers Rs 39.29 lakh with a nine per cent annual interest, along with an additional compensation of Rs 2 lakh.

Devasis Rudra has booked a row house in the Kolkata West International City in 2006. The builder-buyer agreement stated he would be offered possession by December 2008. The agreement provided the developer a six-month grace period to the builder. When the buyer was not offered possession, he moved the West Bengal State Consumer Disputes Redressal Commission in 2011 which ruled in favour of the buyer. Subsequently, the matter reached the National Consumer Disputes Redressal Commission (NCDRC), which also ruled in favour of the homebuyer in 2016.

“Even in 2011, when the buyer filed a consumer complaint, he was ready and willing to accept possession. It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession,” the SC said.

“A buyer can be expected to wait for possession for a reasonable period ... a period of seven years is beyond what is reasonable,” it added.

The SC Bench, comprising justices Dhananjaya Y Chandrachud and Hemant Gupta, also stated that the agreement was drafted to favour the builder.

The agreement said that the company would be liable to pay prevailing four per cent saving bank interest of the State Bank of India for each month of delay on the money given by the buyer as compensation. It also stated that the builder would not be liable to pay any compensation in case of force majeure.

“Interestingly, where the buyer is in default, the agreement stipulates that interest at the rate of 18 per cent from the date of default until the date of payment would be charged for a period of two months, failing which the allotment would be cancelled, by deducting five per cent of the entire value of the property. The agreement was evidently one sided," the Bench said. 

Last year, the NCDRC had said that real estate developers responsible for causing “unreasonable” delays in housing projects cannot get away by paying the paltry compensation as prescribed under the compensation clause in almost all builder-buyer agreements.

Buyers have the right to seek higher compensation or demand refund of the amount they have given to the developer, the NCDRC had ruled.