Pay 9% interest until all defects are fixed – NCDRC to Ansals

Unfinished apartments, uneven plaster, broken floor tiles, seepage on walls, missing features are very common in today’s real estate developments. Most homebuyers come across the situation where developer refuse to fix the defects in the apartment even after taking the full amount. To add to the misery of the homebuyers, the maintenance meter also starts from day one irrespective of the readiness of the apartment.

Developers across the country often resort to the practice of handing over the possession of the apartment only after all dues are cleared. In most cases, the buyer don’t even get to see the actual flat before he makes the final payments. These practices are adopted so that the developer can extort the balance amount from the buyer and leave them with no option if there are deficiencies on his part.

Homebuyers of Ansal Housing were also taken for a rude shock when they found that the developer is trying to offer them unfinished flats. They claimed that there were seepages on walls, modular kitchen, and the chimney was missing, electrical and bathroom fittings were incomplete and much more. Homebuyers were forced to cough up the final payments without letting them see the apartments and the penalty meter started the day payments were made.

Angry homebuyers approach the National Consumer Forum and the commission ordered that:

  • The developer must fix all the issues and deliver the apartment.
  • Pay 9% interest till apartments, complete in all forms is delivered.

Case study

The buyer, Hemjeet Singh booked an apartment with Ansal’s project in Zirakpur, Mohali. The apartment was booked in 2007 and was supposed to be delivered by 2009. However, the possession was offered only in 2012 with undue demands on maintenance charges which were duly paid.

However, when the buyer went to see the apartment, they found the bathrooms were not complete, electric wiring etc. had not been provided and there were several defects and deficiencies in the flat offered to him. The buyers, therefore, refused to take possession of the flat and asked the builder to remove the aforesaid defects and deficiencies.

The developer, however, failed to remove the said defects and deficiencies but kept on raising the bills for maintenance charges, through its maintenance agency.

The following deficiencies were brought by the buyer to the notice of builder vide letter dated 25.9.2012:

1.      Electrical fitting, meters, wiring are not complete;

2.      Modular Kitchen with chimney;

3.      Bathroom fitting incomplete;

4.      Many places seeping is there, require immediate attention;

5.      Doors and locks etc.

6.      TV security system.

State Commission’s Order

The State commission ordered that the developer must pay delay charges at 9% and pay 1L for the harassment. This order was challenged in NCDRC.

NCDRC’s Observations

No sensible buyer is expected to accept the possession of the flat in such a pathetic condition.  The buyer, therefore, was fully justified in not accepting the possession of the flat in the aforesaid condition.

Since the defects found by the buyers in the flat offered to him by builder came to be removed not earlier than 31.3.2016, the builder, in my view, must pay compensation to the buyer for the period from 23.11.2010 to 31.3.2016.

The Order (FIRST APPEAL NO. 870 OF 2015)

The State Commission has awarded compensation in the form of interest @ 9% per annum on the amount of Rs.24,92,976/-.  Considering the interest rates prevailing at the relevant time, compensation by way of interest @ 9% per annum cannot be said to be excessive or unjustified.

Maintenance agency is also required to refund the amount of Rs.49,045/- recovered as maintenance charges along with interest on that amount @ 9% per annum, in terms of the order of the State Commission since maintenance charges could not have been recovered, without first completing the construction and finishing off the flat in all respects and then offering its possession to the flat buyer.  No maintenance charges shall be recovered by the builder from the buyers for the period prior to the date on which the possession of the flat was actually delivered to him, pursuant to the directions given by this Commission.

Logical Buyer’s view

This is a welcome order from the NCDRC. It’s been observed that most developers force buyers to pay the full amount and sign the undertaking before giving the possession. Buyers are often seen chasing developers to fix the snags which are hardly fixed after making all the payments.

If you are being forced to pay maintenance charges before the apartment is handed over in right state, you can approach the commisiion for compensation.

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