Buying a home and getting its possession can be two different things, and in many cases the latter is delayed, causing grievance to the homebuyer. In one such case, a man based in the US bought a house in India but the possession of the flat was repeatedly delayed, prompting a legal fight.The homebuyer also ended up paying much more than the initial amount decided for the flat, and finally got relief with the consumer commission. Let’s read on to know what happened:
What the case is about
A man, who was working in the US, booked a 1,208-square-foot flat along with a car parking space in Patna. The booking was confirmed in 2005, and the agreement for sale was signed in 2007.The total price agreed upon for the flat and parking space was Rs 10,41,250. Before the agreement was executed, the man had already paid Rs 9 lakh to the builder. He also paid Rs 2 lakh as commission to a partner in the construction company.Also Read | She bought shares for Rs 13.5 lakh and sold them for Rs 77.47 lakh after 18 months; taxman denied capital gains exemption, but ITAT gives relief and deletes Rs 79 lakh in additionsThe outstanding amount of Rs 1,41,250 was scheduled to be paid in two installments, due in 2007, and 2008. The possession was expected by August 2008. However, the man kept waiting for several years for the flat and eventually decided to take the builder and the company to court in 2012.He initially filed a complaint that year, but it was dismissed in 2017. In 2019, he approached the National Commission, which sent the matter back to the State Commission for consideration. The present case was heard by the State Commission following that remand, according to an ET report.
Builder demands additional payment
Even before the scheduled handover, the man was asked to pay an additional Rs 4 lakh into the account of the construction company’s partner on the grounds that “the construction cost has gone up”. Although he objected to the demand, he eventually paid the amount through two cheques in 2007.Despite paying more than the agreed price, the man still did not get possession of the flat. His mother subsequently visited the builder’s office to find out why the property had not been handed over. During the visit, the builder and the company’s partner demanded another Rs 2 lakh as the final payment before giving possession of the flat and parking space.Also Read | He bought a home, gave it for redevelopment years later and sold new flat for Rs 1.95 crore within 8 days; taxman denied LTCG exemption and added Rs 80.14 lakh, but ITAT grants reliefThe man paid this additional amount by cheque in 2008. His total payments to the builder thus reached Rs 13 lakh against the original consideration of Rs 10.41 lakh. This amount was over and above the separate Rs 2 lakh commission he had paid to the company’s partner.Even after receiving the money, the builder did not hand over the property. Instead, the man;s mother was informed that construction remained incomplete and that work had been halted because of litigation. The builder assured her that possession would be given once the work was finished.The man expected the builder to hand over the flat once the litigation was resolved. However, after waiting for another three years, he travelled to Patna in 2011 and visited the builder’s office with his sister to seek an update on possession.According to the allegations, a director of the construction company refused to hand over the property and demanded an additional Rs 20 lakh before granting possession. The director also allegedly threatened them. Following this incident, the man lodged a first information report (FIR) at Kotwali Police Station.In June 2012, the man was again asked to come to Patna to take possession of the flat. But when he reached the office, the builder and the director allegedly insisted that he withdraw the criminal case and pay another Rs 20 lakh. They cited an increase in the flat’s valuation as the reason for the additional demand.Also Read | Man enters JDA for land, gets 6 flats from builder and transfers 5 to wife, but gets tax notice; ITAT Delhi deletes Rs 4.14 crore additions after finding no stock-in-trade conversion or sale
Why did the homebuyer get relief in the consumer commission?
In its written response, the builder and the construction company claimed that the dispute over the project’s construction was pending before the High Court when they sent the man three registered letters asking him to clear the outstanding amount under the agreement.They alleged that he did not respond to these communications. Consequently, the builder claimed to have cancelled the allotment and terminated the agreement through a letter in 2008.After considering the submissions from both sides, the Bihar State Consumer Disputes Redressal Commission in Patna noted that the builder had not specified when construction was completed or when the flat became ready for possession.The commission also found that the homebuyer had paid a total of Rs 15 lakh, substantially more than the agreed purchase price of Rs 10.41 lakh. Despite receiving this amount, the builder had withheld possession, citing the alleged non-payment of Rs 1,41,250.The commission held that this conduct amounted to an unfair trade practice. It also rejected the builder’s claim regarding the three letters allegedly sent to the homebuyer, describing the documents relating to cancellation of the allotment and termination of the agreement as false, concocted and manufactured.The builder and the construction company had also failed to clarify what had happened to the flat or whether it had subsequently been sold to another buyer at a higher price. Commenting on their conduct, the commission observed: “The conduct of opposite parties has been unjust, unfair, dishonest, immoral, unethical and fraudulent.”Also Read | Tenant claims protection from eviction under unregistered rent agreement signed by owner’s brother; Madras High Court denies saying he failed to prove tenancy and was an unlawful occupantObserving that the builder had taken undue advantage of the man’s residence outside India, the Bihar Consumer Commission directed the builder, the construction company and its director to provide the following relief:
- Refund Rs 15 lakh: Return the amount deposited by the homebuyer, along with 12% interest calculated from the respective date of deposit until payment. The refund was to be made within 60 days.
- Pay Rs 10 lakh as
compensation : Compensate the man for the harassment and mental agony he endured. - Pay Rs 2 lakh towards litigation costs: Reimburse the expenses incurred in pursuing the case.
Bhargav KS, Managing Partner at K.S & B.K.S Law Associates, Bengaluru, told ET that the buyer’s case was strengthened by the payment receipts, the agreement acknowledging receipt of Rs 9 lakh and the additional payments that the builder had not disputed.“Importantly, it did not merely treat the cancellation correspondence as unproven: it expressly held the letters fabricated, unserved and legally ineffective.” Bhargav added that the builder’s failure to reveal the flat’s current status, along with its deliberate absence from the proceedings after the case was remanded, further influenced the commission’s assessment of its conduct.Also Read | Father got 3 bigha of land from Himachal government, but patta was never signed; why HC allowed married daughter’s inheritance appeal & what role Hindu Succession Act plays