Builder must pay interest for delay

The Commission refused to believe that the builders had sent several letters for payment. Instead it was Bajpai who was chasing the builders

Sushma Bajpai had booked two flats in a building being constructed by Harsh Constructions and Siddhivinayak Developers. The agreed price for one flat was Rs 1,804,820, out of which Rs 469,254 was paid.

As per the agreement dated February 8, 2006, the possession was to be handed over in June 2008. However, the builders failed to construct the building. Repeated requested to accept the balance payment and complete construction went unheeded. So the coupled filed two separate consumer complaints for the two flats. The builders contested the case. They claimed that they could not be held liable as the delay was due to certain Public Interest Litigations (PILs) filed in the High Court. The builders also alleged that Bajpai had defaulted in payment of the subsequent instalments, and offered to refund the money with some interest.

The Maharashtra State Commission observed that no stay on construction had been granted during the pendency of the PILs. However, there was no justification for further delay after the PILs were disposed of in 2012. The Commission observed that the payment made by Bajpai worked out to 26 per cent of the total consideration. This was compared with the payment schedule in the agreement that 15 per cent was to be paid on execution of the agreement, then 5 per cent on completion of the plinth, and 12 per cent after completion of the fourth floor. Even after the complaint was filed in 2013, the fourth floor was not completed. So the Commission, in its order of October 29, 2018, delivered by P B Joshi for the Bench along with S K Kakade concluded that the amount paid by Bajpai was in proportion to the construction work which had been carried out up to the third-floor level.

The Commission refused to believe the builders that several letters had been sent to Bajpai for payment of the instalments, as there was no proof of these having been sent. On the contrary, it was Bajpai who had written several times requesting the builders to collect the instalments, complete construction and hand over possession. The Commission held this to be a clear-cut deficiency in service.

The Commission noted that Bajpai was willing to pay the balance amount to get possession. The Commission upheld the complaint's claim for possession. The complainant was ordered to deposit the remaining amount of Rs 1,335,566 with the State Commission, and intimate the builders about this deposit, after which the builders would have to give possession within two months. Only thereafter would the amount deposited be released to the builders.

As regards compensation, the Commission noted that the agreement provided that the flat purchaser would be required to pay 18 per cent interest if payment was delayed. So it would be proper and reasonable to hold the builders liable to pay interest at the same rate of 18 per cent when possession is delayed. Accordingly, the builders were directed to pay 18 per cent interest on the amount of Rs 469,254 which had been paid from January 2013 (after the litigation in the High Court had come to an end).

Also, the Commission directed the builders to pay Rs 200,000 to Bajpai as compensation for mental agony. Litigation costs of Rs 25,000 were also awarded.
 

The writer is a consumer activist