Why Home Buyers In Delhi Are Choosing Alternative Dispute Resolution

Home buyers in Delhi and other parts of the National Capital Region (NCR) are coming to grips with the fact that court procedures are expensive and time-consuming. If home buyers refuse to settle disputes with developers through cooperation,  this may leave both parties worse off. Many home buyers in the NCR have decided that it is much better to collaborate with real estate developers by funding the completion of projects by paying their dues and seeing to it that the project is completed on time. Approaching courts would have delayed their flats even further.

The underlying principle behind this is that when you amicably negotiate disputes, the chances of reaching a settlement that is beneficial for both the parties are higher.

On the other hand, Indian home buyers are still unwilling to enter contracts with strangers and more willing to deal with real estate agents, contractors and developers they know and trust.

Collaboration with real estate developers in the completion of projects will also lead to greater trust between buyers and developers. In such arrangements, developers need the approval of the representatives of buyers to withdraw the money in the escrow account or to spend it on other projects.  In many cases in the NCR, buyers have been waiting for nearly five years for the delivery of their flats. When private associations of home buyers negotiated with developers and promised to extend their cooperation, things started to move quickly.

Though there is near unanimous agreement that the public judicial system is often time-consuming and expensive, but there are a large number of commercial disputes that are settled by private arbitration. In Justice Without Law?, Jerome Auerbach estimated in 1983 that over 75 per cent of such disputes are resolved through private arbitration.

When home buyers can choose their tribunals or associations to settle disputes, such associations are more likely to be keen on ensuring that disputes are resolved on time, at a low cost to buyers and developers. Moreover, the needs of every home buyer is unique. Legislations like the Real Estate (Regulation and Development) Act, 2016, are likely to impose a one-size-fits-all solution on home buyers, regardless of the context. Private arbitration would lead to services which are customised to the needs of home buyers.

Private resolution of disputes would also set precedents that government courts, agencies and regulatory authorities can follow. For example, private arbitration of commercial disputes in the United States do not involve juries, and in many cases avoid lawyers. 

This is not all. Developer Niranjan Hiranandani recently said that imprisoning real estate developers for not complying with the real estate regulatory bill was draconian because such cases were civil and not criminal in nature. It is obvious that punishment should be proportionate to crime. One of the major flaws with the public judicial system is that punishment is rarely proportionate to the crime.

But private arbitrators or associations of home buyers in the NCR have tried to find a resolution that is acceptable to both home buyers and developers, as it should be.