What To Do If Your Developer Has Defaulted?

Project delays are one of the biggest problems plaguing the real estate sector. Recently, the Supreme Court directed Jaypee Infratech (JIL) to deposit Rs 2,000 crore to cover its liability towards 22,000 homebuyers. Jaypee is not the only one which has invited the SC ire; real estate biggies such Amrapali, Supertech, Unitech and Parsvanath have also been reprimanded by the apex court.

The SC had earlier directed Supertech to deposit Rs 20 crore against the refund claims of homebuyers in its Emerald project in Noida. Last year, Parsvnath Developers was instructed to refund Rs 22 crore to 70 homebuyers, who had invested in the project.  Over two dozen buyers have filed a case before the National Consumer Disputes Redressal Commission (NCDRC) to get the possession.

In case you are caught in a similar situation, what are your options as a homebuyer?

Approach RERA

You can file a complaint before the Real Estate Regulatory Authority (RERA) under Section 31 of the Real Estate (Regulation & Development), Act, 2016.

Under the law, if a developer fails to give possession as per the terms of the agreement for sale, the buyer can withdraw from the project, and is entitled to receive the amount paid so far and along with the interest.

If a homebuyer wishes to continue with the project, he is entitled to receive interest for every month of delay. Also, if there is any fault with the construction or if the homebuyer has not got the facilities as promised by the developer, he can file a case before the RERA.

File a consumer complaint

A homebuyer can file a consumer complaint if there is a deficiency in services on the part of the developer. This is a cost-effective method as the court fee charged is nominal.

Under the Consumer Protection Act, there is a three-tier machinery for redressal of consumer grievances. The District Consumer Forum is the initial forum and can entertain complaints where the value of the house and the compensation if any, claimed does not exceed Rs 20 lakh. Where the value of the house and the compensation if any claimed exceeds Rs 20 lakh but does not exceed Rs 1 crore, the complaints will be entertained by the State Consumer Commission which is established in each state. If the value of the property and the compensation if any claimed exceeds Rs 1 crore, the NCDRC will have the jurisdiction to entertain such complaints.

You can file a consumer complaint either where the registered/ branch office of the builder is located or where the flat you purchased from the builder is situated.

Civil suit

If the developer fails to deliver the property on the date as stipulated in the agreement, a homebuyer can file a civil suit for injunction and damages. If he approaches the civil court, he can get an immediate order for injunction under Order 39 Rule 1 and Rule 2 of CPC. However, there is no stringent timeline for adjudication of the suit and it may take longer as compared to other alternatives. 

Arbitration

If there is an arbitration clause in the builder-buyer agreement, you can opt for an out-of-court settlement through arbitration instead of going to the court. Usually, it can take up to six months to resolve a matter through arbitration. There is no trial under this alternative, and no evidence is considered while passing the award. In a recent judgement, the NCDRC has held that even when there is an arbitration clause in the builder-buyer agreement,  the developer cannot force the buyer to go for arbitration.

Criminal courts

A homebuyer can also file a criminal complaint under the provisions of the Indian Penal Code for cheating, etc. A bailable warrant can be issued against the developer if a homebuyer opts to file a criminal complaint.

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