Status as on- 11/11/2021

Various Flat Buyers Associations have been suffering because of malpractices of the builders due to deficiency in construction services and it has also been seen in various projects, that the builder wrongly occupies space in the projects even after the handover of the projects. Deciding a case on this issue, the Supreme Court has recorded various observations:

• The Supreme Court vide its judgment in Padmini Infrastructure Developers (I) Ltd. V/s General Secretary, Royal Garden Residents Welfare Association have upheld the legal status of the Flat Buyers Associations as consumer and have ruled that they are also entitled to file complaint before Consumer Forum.
• Appeals were filed by both the parties, the Association and the Builder, challenging the order passed by the National Consumer Dispute Redressal Commission (NCDRC).
• Total 282 apartments were offered. The possession delivered in 1998-2001, but completion certificate was issued in December 2001. The Association took over maintenance from date of agreement 15.11.2003.
• The dispute involved in consumer complaint were:

1. 1. 1. Payment of monthly maintenance charges for unsold flats. (Rs. 9,05,810/-).
      2. Non-completion of the water softening plant.
      3. Non-completion and non-operational fire frightening equipments.
      4. Non-completion of second health club in basement of Tower Blue Heaven-2.
      5. Non-completion of second swimming pool.
      6. Non-completion of furnished space for a club house in basement of Eden Tower.
      7. To get vacated rented portion of terrace of Eden tower, rented to Hutch (P) Ltd, and pay the rent received alongwith interest.
      8. Builder may not be allowed to sell vacate flats till facilities provided.
      9. Builder may not be allowed to sell further stilt and open car parking.
      10. Cost and damages for harassment, mental torture, agony etc. to the complainant.

• During pendency of proceedings, NCDRC appointed local commissioner (Architect Amit Bahl) and the report was submitted by the LC. Architect also submitted estimated costs which was Rs. 1,16,34,962/- to make all things working.
• NCDRC, considering report of LC and objections filed by builder, was pleased to partly allow the complaint with cost of Rs. 25,000/­ with direction to the opposite party to make the systems/facilities as at Sl. Nos. 2,3,4,5 and 6 operational/complete and to obtain and supply fire safety certificate of the complex to the complainant association within ten weeks from today.
• The complainant association was aggrieved as all prayers were not granted. The builder was aggrieved by the order for allowing said prayers. Both filed appeals before the Hon’ble SC.
• Builder challenged order of NCDRC on ground of limitation submitting that the complaint was filed after expiry of limitation period. The Hon’ble Supreme Court observed that limitation period is 2 years therefore complaint within limitation as work continued till Dec 2005 & complaint filed in Feb 2007.
• During pendency of Appeal, the Hon’ble Court allowing interim relief to builder directed the builder to deposit Rs. 60 Lakh with the court.
• Finally considering appeal of the Builder, SC observed:

“In   view   of   the   fact   that   the   possession   of   the   commonamenities   were   handed   over   by   the   opposite   party   to   the complainant   Association   18   years   ago (under   the   Agreement dated 15.11.2003), it may not be possible at this distance of time to compel the opposite party to make those facilities/systems at relief clauses 2, 3, 4, 5 and 6, fully operational now.  The cost of estimate   which   works   out   to   approximately   Rs.1.16   crores, includes within itself the cost of fire frightening equipment and this constitutes the major component (it works out to Rs. 83 lakhs). As seen from the Commissioner’s Report, the mistake committedby the opposite party was in removing a part of the equipmentbut not putting them back.  This finding is as per the fire safetycertificate.   Therefore,  it   may   not   be   appropriate   to   ask   the opposite party to bear the entire burden.”

• The Hon’ble Court dismissed the appeal filed by the builder and upholded the reliefs provided by NCDRC and ordered in complainants appeal no. 4085 of 2010:

1. Association be given whole deposited amount Rs. 60 Lakh alongwith interest accrued.
2. Builder must remove material and vacate club house in basement of Eden Tower.

Conclusion-

The Hon’ble Supreme Court has reiterated and upheld that legal position of the Flat Buyers Association as consumer and has also made it clear that the builder cannot occupy any place, without the permission of the association, after the project is handed over.

Disclaimer: The above article is based on the personal interpretation of the related orders and laws. The readers are expected to take expert opinion before relying upon the article. For more information, please contact us at rera@centrik.in

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