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The delay in completion of projects followed by numerous complaints from the Buyers when flats are not delivered in tine as documented. What do Builders do when apartments are not finished on time? Some pay back their clients as part of a penalty clause.

It is a long ending tussle between builders and home buyers that never seems to end delivering projects on time. There are umpteen cases where builders have taken extra time to finish projects while leaving home buyers to suffer fiscal setbacks.

Imagine a situation where you have booked a house in an Apartment Complex while paying hefty EMIs and also the rent for the temporary place that you currently occupy. Any delay in getting into your own house obviously means a financial loss.

29 Oct 2012 Hindustan Times (Mumbai): Consumer forum ruled that a Builder is under contractual obligation once booking money is accepted.

Once a Token Advance has been given, the Builder is under contractual obligation to give possession of the flat, the State Consumer Commission held while dismissing the appeal filed by a city-based Builder.

As per the case, Sagar Shopping Builders, based in Santacruz (East), had taken token (booking) advance of Rs.3.00 lakh from Santacruz resident for selling a flat.

The amount was paid by cheques in November 2005. However, the Builder failed to give possession till 2007 and instead offered to return the money. When the complainant demanded possession of the house, the Builder refused, following which the former moved the District Consumer Forum.

On July 15, 2011, the Forum directed the Builder to give possession of the flat to the complainant on payment of the balance amount at the rate prevailing when he booked the flat. The Builder challenged the order before the State Consumer Commission.

The Builder, in his appeal, contended that there was no transaction of sale nor had they signed any Agreement as they had just accepted a token advance by cheque. The Builder further contended that they had offered to return the money as they could not construct the proposed building. However, during the course of hearing, it was revealed that the project was completed.

The Commission observed that the Builder had given receipts stating name of the project, floor and the flat number to be sold to the complainant.

The Commission observed that in absence of a Sale Deed or Agreement to Sale, the contractual relation of the parties based on receipt of earnest money does not cease to exist. It further stated that in was upon the consumer to decide whether they want to cancel the contract or not.

The Commission further observed that the complainant sought for the flat as against the payment of the token advance he had paid and that the project is now completed, though delayed, the complainant is willing to pay the balance amount.

According to Industry Watchers, most Builders face project delays. About 85-90 per cent projects are delayed in some way or the other and that a lot of the delays are not in the Builder’s control. The delays on account of various reasons do affect the overall budget of a Builder, increases the construction and storage cost and hit the brand image and future of the company. Of course, it has a direct impact on end-users as well.  

A project in which the Buyer has given a minimal advance, the pressure on the Builder is far less compared to heavy advance acceptances. The Buyer’s capital is stuck and they cannot go anywhere. In such a situation, strict penalty clauses are imposed. This is one reason why clients rely on top class BuilderS who are sure of their deliveries.

The Realty Industry experts say that in the last few years, Builders have taken up 10 times more projects compared to what they have done in their total lifetime. Have they thought where the availability of the labour, brick, steel and cement is? How will they manage all this? However, there are well-known construction companies who are trying to get more advanced technology for construction to match their deliveries. However, the cost of adopting such technologies in India is still very high and not many Builders are able to benefit from it.