Second-hand flat buyers have same rights as original allottees: Supreme Court

New Delhi: In a major relief to homebuyers who purchased flats from original allottees but were not delivered the apartments, the Supreme Court on Thursday said a builder cannot deny their right to get possession within a reasonable period of time and that they, like the original allottees, are also entitled to get refund of their money.

A bench of Justices U U Lalit, Hemant Gupta and S Ravindra Bhat said the rights of such purchasers are the same as that of original allottees. “It cannot be said that a subsequent purchaser who steps into the shoes of an original allottee of a housing project in which the builder has not honoured its commitment to deliver the flat within a stipulated time, cannot expect any — even reasonable time — for the performance of the builder’s obligation. Such a conclusion would be arbitrary, given that there may be a large number — possibly thousands — of flat buyers waiting for their promised flats or residences; they surely would be entitled to all reliefs under the Consumer Protection Act. In such case, a purchaser who no doubt enters the picture later surely belongs to the same class,” the court said.

The bench passed the order on a plea filed by real estate company Laureate Builwell Pvt Ltd challenging an NCDRC order directing it to make refunds for delay in handing over possession of flats. The court, however, ruled against the builder, which took the ground that the paid amount cannot be refunded as the purchaser is not the original allottee and he/she purchased the flat knowing that the project was getting delayed.


The bench said, “The purchaser agrees to buy a flat with a reasonable expectation that delivery of possession would be in accordance within the bounds of the delayed timeline that he has knowledge of, at the time of purchase of the flat. Therefore, in the event the purchaser claims refund, on an assessment that he too can (like the original allottee) no longer wait, and face intolerable burdens, the equities would have to be moulded. It would no doubt be fair to assume that the purchaser had knowledge of the delay. However, to attribute knowledge that such delay would continue indefinitely, based on an a priori assumption, would not be justified.”