Pay delay penalty till flat is Delivered and Registered – NCDRC

The practice of stopping the delay penalty meter at the offer of possession is very common in Indian Real Estate. Even before the apartments are ready, the developer rolls out the possession letter and stop paying the delay penalty. In most of the cases, the apartments are not even ready. The registration and actual possession of the apartments are delayed by months in the name of obtaining the Occupancy Certificate or other clearances.

We had earlier discussed the Order of Hon’ble Chandigarh State Commission , the Commission had ordered that the delay penalty should be paid till actual possession and the delays pertaining to getting the Clearances are the developer’s responsibility.

The NCDRC have in another case put their stamp on this subject. The Commission ordered:

Pay simple interest to the buyers @ 12 % per annum from the committed date of possession till the date on which the possession of the flats is actually delivered to the buyers and the sale deeds of the said flats are executed in their favor, whichever be later.

Interestingly the buyers were able to move from District Commission to NCDRC in 2 years only.

Case Brief

The buyers who are brother and sister booked one residential flat each in a project in Central Street, Hindpiri, Ranchi. When the possession of the apartment was not offered even after a delay of many years, they moved to District Consumer Forum in 2014 which awarded them refund at @ 18% per annum.  Being aggrieved from the order passed by the District Forum, the buyers approached the concerned State Commission and later NCDRC. The NCDRC ordered to pay delay penalty at 12% per annum.

Court’s Observations

  • At no stage, the buyers requested the developer parties to cancel the booking and refund the amount paid by them. Therefore, there is no reason why the builder should not deliver possession of the said flats to the buyers coupled with the execution of the title deeds of the said flats in their favor.
  • The developer wrongfully and unjustly utilized the money paid to them by the buyers for more than 7 years by retaining the same for more than 5 years as against the stipulated period of two years.
  • The current rate of interest on housing loan is about 11-12% per annum. The builders could not have obtained finance even at that rate and would have paid higher interest, had they taken a loan from a bank. They cannot be allowed to use the money of the petitioners at a nominal or inadequate rate of interest. Otherwise, they will have no incentive to complete the construction, happy as they will be on getting finance at interest lower than the interest rate of interest for the builders.

The Order

  • Pay simple interest to the buyers @ 12 % per annum from the committed date of possession till the date on which the possession of the flats is actually delivered to the buyers and the sale deeds of the said flats are executed in their favor, whichever be later.
  • Deliver peaceful and vacant possession of the flats booked by the buyers with them and shall execute the sale deeds of the said flats in favor of the buyers  within four weeks from today.

Copy of the order is attached here: Nishant Jabeen vs Sharp Construction – NCDRC

Conclusion

If the Developer issued possession letters before the physical possession of the apartment, you can ask for delay penalty till actual date of possession and sale deed.

2 thoughts on “Pay delay penalty till flat is Delivered and Registered – NCDRC

  • January 25, 2016 at 9:43 pm
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    I had the unfortunate experience of buying a flat from Parsvnath in Exotica on Golf Course Road, Gurgaon but the builder has delayed possession by several years. If I know more affected buyers, we can approach NCDRC jointly to bring the builder to justice.

  • June 25, 2016 at 4:40 pm
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    NALINI WHAT WAS THE COST OF YOUR FLAT . YOU CAN GET IN TOUCH WITH ME AT eharinder@yahoo.com or at 9811451959.

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