Real Estate India

Builder-buyer agreements normally in favour of builders: NCDRC

NEW DELHI: The builder-buyer agreements are normally framed in favour of the builders and such terms and conditions are “unconscionable”, the apex consumer commission has said.

The National Consumer Disputes Redressal Commission (NCDRC) also said that if builders exercise their right to charge penalty or interest at 18-24 per cent in case of delayed payments from homebuyers, the same must be applicable in case the builders are at fault.

The NCDRC’s observations came on the plea of two UP-based buyers seeking interest on the amount deposited by them withthe Kanpur Development Authority (KDA) to procure a plot in2005.

The commission, while granting relief to the buyers,asked Kanpur Development Authority (KDA) to pay an amount ofRs 8,91,880 as interest on an amount of over Rs 1.53 crorepaid by Prakash Gupta and Sanjay Gupta for purchasing a plotthrough an auction in 2005.

“It is a common parlance that in builder-buyer agreementsthe terms are framed as favorable and suitable to builders. Inour view, these are unconscionable contracts. The builderexercises his right to charge penalty or interest at 18-24 percent on the delayed payment of instalments.

“Thus, in our view, in the interest of natural justice,the consumers at large deserve to receive same interest fromopposite parties in cases of fault or deficiency,” the benchheaded by presiding member B C Gupta said.

According to the complaint, Prakash and Sanjay werealloted a plot in 2005 for Rs 1,53,62,528.

However, due to temporary injunction from a Kanpur civilcourt, the authority cancelled the allotments, they alleged.

After the Allahabad High Court order in 2006, the KDArefunded the amount to the buyers without any interest.

The buyers approached the Uttar Pradesh State ConsumerCommission seeking an interest amount of Rs 32,49,174, whichwas dismissed.

The KDA had contended that they had refunded the entiredeposit amount to the buyers in 2006, as per their rules. Theyalso claimed that the purchasers here were not consumers.

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