Paid Rs 14.51 lakh for a home in Gurugram, buyer finds no progress at construction site as builder lost registration; HRERA directs refund with 10.80% interest

What happens if your builder’s registration gets cancelled and you are still awaiting the delivery of a flat for which you paid around 50% of the amount? This happened with an Allahabad-based man who booked a unit in an affordable housing project in Gurugram but got “caught in the web of false promises of the agents of the company”.

The man booked a 642 sq ft unit in the project located at Village Dhanwapur, Sector-104, Gurugram. He paid an amount of Rs 14.51 lakh as against the total consideration of Rs 26 lakh and was issued an allotment letter in December 2021.

In his complaint, the man claimed that he “was caught in the web of false promises of the agents of the respondent company”. He initially paid an amount of Rs 1,28,470 to the builder, after which the payment was acknowledged, and he was allotted one unit.

What went wrong?

According to the complaint made by the homebuyer, he has made a payment of Rs 14.51 lakh till now, which amounts to almost 50% of the total cost. He contacted the developer on several occasions; however, on visiting the construction site, the buyer was shocked to see no progress in the construction activity.

“The respondent was never able to give any satisfactory response to the complainants for delay in construction of the unit and was never definite about the delivery of the possession,” the homebuyer stated, adding that he kept pursuing the matter.

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Even without completing the necessary construction, the builder asked for additional payment from the buyer. He refused to pay instalments any further and asked for a refund. But even to get his money back, he was subjected to delays, with the builder saying that “due to some unavoidable circumstances we are unable to release your refund on a given time. Request you to please be with us 10 to 15 days more.”

After losing all hope and losing a considerable amount of money, the homebuyer approached Haryana RERA for redressal of his grievance.

What relief did the homebuyer seek?

After repeated delays and finding that there was no progress in the construction activity, the homebuyer sought the following relief(s):

- Builder be directed to give a full refund of the amount paid till date together with interest, from the date of booking till the date of actual payment.

- Builder be asked to pay a compensation amount of Rs 2 lakh for causing huge financial loss, mental agony and harassment.

- Builder be ordered to pay Rs 1 lakh towards the litigation charges.

- Any other order as the Authority may deem fit in the interest of justice.

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What happens to the homebuyer’s money already paid if a developer loses its registration?

In situations like these, Section 18 of the RERA Act, 2016 is invoked which deals with the return of the paid amount and compensation. According to this Section:

If the promoter fails to complete or is unable to give possession of an apartment, plot or building, in accordance with the terms of the agreement for sale or, due to discontinuance of his business as a developer on account of suspension or revocation of the registration or for any other reason:

-he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed including compensation.

What did Haryana RERA find in this case?

The Haryana Real Estate Regulatory Authority found that the possession of the unit was to be offered within 4 years from the approval of building plans (25.10.2021) or from the date of environment clearance (27.04.2022), whichever is later, which comes out to be 27.04.2026, calculated from the date of environment clearance, being later.

“On knowing about the status of the project, the complainant requested the respondent to refund the amount paid by the complainant as she wanted to withdraw from the project,” the authority said. It added that although the due date of possession has not lapsed yet, the promoter is unable to hand over the possession as per the terms of the agreement.

HRera stated that due to discontinuance of its business as developer on account of suspension or revocation of the registration under the RERA Act, 2016 or any other reason, the complainant shall be entitled to an entire refund of the amount paid to the builder along with the interest.

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Since the registration certificate of the project stands revoked, the developer cannot carry out the business. Also, due to the builder's serious violations, there seems to be no possibility of completing the said project by the due date, the authority said in its order, maintaining that the homebuyer is entitled to a refund along with interest.

Final order in the case

In this case, the builder has been directed to refund the amount paid by the homebuyer i.e., Rs.14,51,866 along with interest at the rate of 10.80% per annum, from the date of each payment till its actual realisation.

The authority has given the developer 90 days to comply, warning of legal consequences if it defaults on payment.

What did HRera say on Rs 2 lakh compensation and Rs 1 lakh payments towards litigation costs?

The Authority declined to decide these itself, ruling that compensation and litigation charges fall under the jurisdiction of the Adjudicating Officer (under Sections 71/72 of the Act), not the Authority.

The homebuyer was told that he may separately approach the Adjudicating Officer for that relief.