By Accommodation Times Bureau
When housing projects get delayed, builders often at tempt to capitalize on price escalation by trying to get rid of their earlier commitments so that the same flat can be sold to another buyer at a higher rate. Can a consumer who has paid the booking deposit approach the consumer forum to force the builder to execute the agreement?
Case Study: Wasim Iqbal Mamdani had booked a flat in a being constructed by RK Constro Projects near Aurangabad.Cost of the flat was Rs13.75 lakh, of which he had paid Rs 2.82 lakh as booking amount. Due to financial problems, Mamdani transferred the booking with the advance payment to Sonal Devendra Jain, through a transfer agreement dated October 7, 2011. The builder transferred the receipt for booking de posit in favour of Jain. It was decided that Jain would pay the balance to the builder in instalments linked to stages of construction. However, agreement for sale of the flat was not executed by the builder.
Construction work did not commence till May 2013, and the first slab of building was completed in July 2013. Yet the builder avoided executing the agre ement. Jain learnt that the builder was trying to sellthe flat to a third party .
Jain filed a complaint in Aurangabad District Forum against the builder and Mamdani who had transferred the booking in her favour. She contended that Maharashtra Flat Owners Act (MOFA) mandates execution of the agreement for sale on receipt of 20% of total consideration. She pointed out that the builder was legally bound to execute the agreement as payment of Rs 2.82 lakh exceeded 20% of the cost.
The builder blamed Jain for defaulting on payment as per a demand letter issued on October 8, 2012, due to which the booking was cancelled on September 1, 2013. The builder said there was no deficiency in service and that the complaint should be dismissed.
The Forum directed the builder to execute the agreement for sale. It ordered him to execute a Sale Deed on receipt of balance amount. Jain was awarded Rs 50,000 compensation.
The builder challenged this order in the Aurangabad Bench of Maharashtra State Commission, which upheld the Forum’s order and dismissed the appeal.
The builder filed a revision before the National Commission, questioning the correctness of orders against him as Jain had defaulted on payment. The National Commission observed that the payment schedule was linked to progress of construction. There was an inordinate delay in commencing the construction. Construction begainin April 2013 and the first slab was completed in July 2013. So demand for payment of installment prior to this date was unjustified. Also, it was mandatory to execute the agreement.
The Commission dismissed the builder’s revision, observing that the orders in Jain’s favour were correct.
Conclusion: A builder cannot accept more than 20% of total cost of a flat unless he executes an agreement. In case of breach, a consumer forum can compel the builder to execute the agreement.