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Home Buyers Can Seek Higher Compensation Than Token Amount Specified In Contract For Delayed Delivery Of Possession

In EMAAR MGF LAND LTD vs GOVIND PAUL, a review petition was filed by the builder before the NCDRC against the order of the State Forum.

The complainant, Mr. Govind Paul, had entered into an agreement with Emaar in September 2011 for a property that was supposed to be handed over in 36 months. After a delay of about 20 months, Paul approached the consumer commission of Chandigarh seeking refund of his payment and compensation for the delay. The State Commission had ordered refund of the principal amount of Rs 38.9 lakh at 15% interest compounded quarterly and Rs. 3 lakh compensation to be paid by Emaar. It had further directed the builder to pay Rs. 25,000 to Paul as cost of litigation. The builder argued before the National Forum that the builder-buyer agreement allowed compensation of Rs. 5 per sq. per month.

The NCDRC while dismissing the review petition has ruled that builders cannot shield themselves behind the clause in the builder-buyer agreement to pay Rs. 5 per sq. feet per month as compensation for delay in handing over flats for an “unreasonable” period and that the buyers have the option to seek higher compensation after taking possession of the property, or seek refund of the amount paid.

Explaining that the builder would have to hand over possession within 36 months and that only a “short reasonable delay” would attract the token compensation provided for in the agreement, it asserted that the two natural corollaries flow from this assertion: 1. the consumer-complainant has the fundamental option to obtain the possession of the unit as and when it is offered by the builder and in addition seek equitable and just compensation for the delay; or 2. the consumer-complainant can claim refund of the principal amount; interest thereon; compensation; and cost of litigation if the offering of possession of the unit is unreasonably delayed.

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