The Supreme Court recently paved the way for home buyers to claim refunds from builders under RERA in the case of unreasonable delay in handing over their homes – Kolkata West International City Pvt Ltd Vs Devasis Rudra.
In this case, the buyer paid Rs 39,29,280 in 2006 to the builder and as per the agreement the builder had to handover the flat in the last month of 2008, with a grace period of six months ending in June 2009.
Despite the agreement the buyer had to wait till 2011 when he decided to file a complaint before the West Bengal State Consumer Dispute Redressal Commission. By 2016, the buyer had waited almost seven years for possession. The builder sought the builder-buyer agreement to justify the delay which was rejected in the court.
The Apex Court in this case said, “It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on March 29, 2016. This was nearly seven years after the extended date for handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund. In the circumstances, we are of the view that the orders passed by the SCDRC and by the NCDRC for refund of moneys were justified.”
However, it is still not easy for home buyers to claim refunds in case the project gets delayed for a period longer than reasonably expected. What can buyers do in cases where builders have no money to refund? In such cases, RERA can mediate and help buyers to either get their homes or refunds to avoid their loans being declared non-performing assets (NPAs) in the bank.
Balvinder Kumar, member, UP Real Estate Regulatory Authority (RERA) says, “RERA is a buyer-centric law and there are clear provisions that if a builder fails to deliver a project within the prescribed time frame then the buyer has a right to cancel the project and get refund.
However, the problem arises when we pass an order for refund or handover and the builder says he has no money. We are then forced to issue a recovery certificate and it goes to district magistrate for compliances. He then takes so many steps to recover back the amount but again we are not getting success.”
Kumar further suggests a solution to this problem, “What is feasible as on date is that we have to infuse additional funds into the system. Whether banks come forward or the State government or local development authorities or NBCC and create trust funds to either complete the project or help builders to refund the money.”
It is not easy to execute refund orders in cases where a developer does not have money to complete the project or refund home buyers. Banks and local authorities hardly do anything to help home buyers, who keep paying EMIs and still keep waiting for their homes.
All stakeholders including banks, local authorities and RERA need to come forward to resolve cases where buyers are waiting for their homes for years to complete. They should either get their homes or refunds as the Supreme Court decided in Devasis Rudra’s case.