Builder Liable to Compensate Buyer for Delay: Court
Builders cannot demand hidden charges which are not part of their contract with buyers and are liable to pay compensation for delaying delivery of property, a Delhi court has said, observing that they are "not holy cows" who cannot be questioned by their customers.
Holding that builders cannot levy any additional charges without any justification, the court said they were adopting tactics to achieve their illegal purposes and arm-twist the buyers to extort more money by raising the cost price or levying additional charges which do not form part of the original contract.
Additional District Judge Kamini Lau made the observations while directing real-estate major TDI Infrastructure Ltd to withdraw its demands for overdue and other charges and hand over a plot's possession booked by two brothers in the firm's project in Sonepat within two months.
"Unless these hidden/extra charges form an essential part of the contract within the knowledge of customer, the builder cannot charge the same without offering any justification...
"A builder cannot take shelter by wrongly terming the internal dispute as a force majeure, as the defendant (firm) is attempting to do, and plaintiffs (brothers) are well within their rights to demand delivery of actual physical possession within the stipulated time or else the builder would be liable to compensate purchasers for financial and physical sufferings caused to them," the court said and restrained the firm from cancelling the allotment of the plot.
It added that any builder who delays handing over plots or buildings to buyers on one pretext or the other by creating artificial claims, commits a civil misconduct and can be made liable to pay damages to the buyer.
"The defendants who are the builders are not holy cows whose conduct cannot be questioned by their clients," it said.
The judge noted that, of late, there has been a spurt in litigations where prospective house owners have been compelled to rush to courts while trying to grapple with the "incorrigible attitude" of builders whose sole intention is to make money at any cost, cheating gullible customers.
The court passed the order in a civil suit filed by Central Delhi residents Rajesh and Manoj Mittal, who had booked a plot in TDI City in Haryana's Sonepat in January 2006. They were asked to pay Rs 42.7 lakh by the builder, out of which they had already paid Rs 38.8 lakh.
In February 2008, the firm gave a letter to Mittals of a revised payment schedule and asked them to pay Rs 21.8 lakh, including additional and late payment charges, the petition said.
This additional payment was made through cheques which were encashed by the firm, which yet again raised illegal and exorbitant demands claiming Rs 9.5 lakh more was due, it said.
The plaintiffs alleged that in 2010, the firm started threatening to cancel the provisional allotment of the plot due to non-payment of "baseless, illegal and arbitrary dues".
The firm, in its defence, claimed the demands of external development charges (EDC) being raised by it were the charges legally payable to the Haryana government for obtaining the licence.
It also said that plaintiffs were not entitled to any relief as they have not honoured the terms and conditions of the contract and not made the balance payments.
The court, however, said the company has not disputed receiving additional charges from the plaintiffs and asked how these charges could be levied by them and under what heads.
It also said after handing over constructive possession, a builder cannot demand extra charges by withholding the possession as was done in this case and added that it was "illegal and impermissible and for delaying such delivery the builder can be made legally liable".
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