Claim escalation cost for delayed project

Delay in civic and other permissions can't be considered force majeure. It is deficiency in service

Dattatray Wavhal had booked a flat at Chembur in Mumbai, by Srushtri Raj Enterprises. The agreed price of the flat with a carpet area of 540 square feet (sq. ft.) was Rs 34.61 lakh. Wavhal paid about Rs 17.30 lakh in installments, around half the property price, but the builder did not execute the agreement. The builder also failed to construct the building.

Wavhal approached the Consumers Welfare Association, which filed a complaint before the Maharashtra State Commission against the builder. The builder contested the complaint on technical and legal grounds. His stand was that the complaint was time barred, and that only the civil courts could adjudicate the dispute, as the consumer forum would not have the power to grant specific relief. The builder also contended that the terms of sale were ambiguous and so it was not possible to enforce the sale.

The State Commission observed that in the reply to the consumer complaint, there was an admission that a flat had been reserved for Wavhal, but possession could not be given as permissions had not been received from civic and other statutory authorities. The builder blamed the delay to bureaucratic inertia, and termed is as force majeure, meaning that it is caused due to reasons beyond his control. The Commission rejected this defence and held the builder is responsible and liable for obtaining necessary permissions from the authorities to complete the construction, as agreed.

The State Commission noted that the flat was booked in 2009 while the complaint was filed in 2014. The Commission observed that a builder is legally bound to enter into an agreement for sale and give possession of the flat which has been booked. The failure to do so would constitute a deficiency in service. So it held the complaint to be maintainable.

Accordingly, by its order of July 7, 2017, delivered by P B Joshi for the Bench along with A K Zade, the Maharashtra State Commission concluded that Wavhal was entitled to seek possession of the flat. It ordered the builder to complete construction, obtain the occupation certificate, and hand over the flat within three months of receipt of the balance amount of Rs 17.31 lakh. If the builder would refuse to accept this amount, Wavhal could deposit it with the State Commission and intimate the builder.

In the alternative, since 50 per cent of the total consideration had been paid, the State Commission gave an option to Wavhal to seek 50 percent of the current market value of the flat, as per the ready reckoner rate of Rs 92,000 per sq mtr of built-up area prevailing at the time of instituting the legal proceedings. This amount worked out to Rs 30.05 lakh. The Commission ordered that if Wavhal opted for getting his money instead of the flat, the builder would be liable to pay Rs 30.05 lakh, along with 12 per cent interest from the date of filing of the complaint until payment. This amount would have to be paid within two months, else the interest rate would stand enhanced to 15 per cent for the period of delay. In addition, Wavhal was also awarded Rs 2 lakh as compensation and Rs 15,000 towards litigation costs.

The author is a consumer activist