It's important to have model builder-buyer agreement: Supreme Court

The Supreme Court Monday said it is important for the country to have a model builder-buyer agreement in the real estate sector for consumer protection because developers try to put numerous clauses in it, which common people may not be aware of.

A bench of Justices D Y Chandrachud and B V Nagarathna issued notice to the Centre on the plea and sought its response.

It is very important for consumer protection, because builders try to put any number of clauses in the agreement which common people may not be aware of. There should be some uniformity in the agreement. It is important that this (model builder buyer agreement) is achieved in the country, the bench said.

Senior advocate Vikas Singh, appearing for petitioner advocate Ashwini Upadhyay, said there should be a model agreement prepared by the Centre as some states have it and some don't, and there is no uniformity in those agreements.

The bench said that it is an interesting matter as it has earlier dealt with Real Estate Regulations Act and knows its importance.

Singh said that in states which have model agreements, builders try to influence the conditions to be incorporated and hence, the Centre should frame it and directions be issued to all the states and Union Territories to implement the model agreement.

Senior advocate Maneka Guruswamy, appearing for a group of home buyers, said that they are also seeking the implementation of the model agreement to safeguard the interest of consumers.

She said they support the submissions of Singh.

The bench said it is issuing notice to the respondents and seeking the Centre's response.

The PIL filed by Upadhyay has sought direction to the Centre to frame model pacts for builders and agent buyers to protect customers and bring in transparency in the realty sector in line with the Real Estate Regulatory Authority (RERA) Act, 2016.

The plea, which was filed in October last year, has also sought a direction to all states to enforce 'Model Builder Buyer Agreement' and 'Model Agent Buyer Agreement' and to take steps to avoid "mental, physical and financial injury" to customers.

"Promoters, builders and agents use manifestly arbitrary one-sided agreements that do not place customers at an equal platform with them, which offends Articles 14, 15, 21 of the Constitution. There have been many cases of deliberate inordinate delays in handing over possession and customers lodge complaints but the police don't register FIRs, citing arbitrary clauses of the agreement, the plea said.

Due to deliberate excessive delays in possession, real estate customers are not only suffering mental and financial injury but also a brazen violation of their right to life and livelihood, stated the PIL filed through advocate Ashwani Kumar Dubey.

"Builders issue revised delivery schedules again and again and adopt arbitrary unfair restrictive trade practices. All this amounts to criminal conspiracy, fraud, cheating, criminal breach of trust, dishonestly inducing delivery of the property, dishonest misappropriation of property and violation of corporate laws," said the plea.

It contended that many developers across the country still follow a common practice of pre-launching a project without securing requisite approvals from the authorities and term it "soft launch" or "pre-launch", thus openly violating the law, but no action has been taken against any builder till date.

"It is necessary to state that registration of the project with the regulatory authority has been mandatory before it is launched for sale and for registration the basic pre-requisite is that the developer must have all the requisite approvals.

"Thus the buyer is protected as the project is ring-fenced from the vagaries of non-approvals or delays in approvals which are one of the major causes of delay for the project," the plea said.

It has also sought directions to compensate the buyers for losses incurred due to inordinate delays on the part of Promoters-Builders and to recover their money.