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Cci

The other violations and abuse of consumer rights, according to the CCI, are:

• They (builders) issue advertisements for launching projects without the land being actually
purchased, registered in their names and possession taken and without taking prior approval of
competent authorities.

• Builders don’t specify the total area of the plot/flat/house, indicating clearly the carpet area and
utility area.

• They don’t specify the date of delivery and consequential remedies available to the consumer in
case of delay.

• They don’t deposit the amounts collected from allottees against a particular project in a
designated escrow account that will be utilised only for the construction of the concerned
building.

• They don’t inform buyers about the progress of works and status of account of each allottee in
a transparent manner.

• They don’t inform buyers of built-in hidden costs other than the initial set price.

• They don’t post all the relevant information on the internet and make them available in the
public domain. There is no transparent and participatory mechanism put in place to deal with
price escalations, if any.

• In cases of inordinate delays, there is no provision for the payment of pre-determined penalties
to buyers.

• There is no fair, participatory and transparent mechanism to tackle any substantive and major
changes in the project mid-way, before taking approval of the authorities for the revised scheme
and commencing construction thereon.

• The agreements don’t include ‘changes’ in FAR, or density per acre, or some common facilities
in the category of ‘substantive’ or major changes.

Real estate project delays: Some of the options available to buyers to sort
problems

National Consumer Commission

1. Buyer is entitled to opt out of a project if there is a delay in delivery.


A buyer is entitled to opt out of a housing project if there is delay in delivery of possession of the
house by the real estate developers, the commission has held. It has also said that the buyer is
entitled to a refund of the entire money with reasonable interest and any deduction on the said
amount is unjustified. The commission passed the order on a petition of an Agra resident, Indira
Gupta, seeking the quashing of UP State Commission’s direction to deduct 20% from the amount
to be refunded to the complainant.

2. Buyer is entitled to withhold payment if the construction does not proceed with payment.
In the Ansal Housing vs Renu Mahendr case (revision petition 1218 of 2006), the commission
has held: “If company has not apprised the respondent about the status of the project, which was
associated with payments, the respondent withholding the payment was not at fault. The
company, while making these communications, had been insisting on the respondent to release
the payment, and did not adhere to the terms of the allotment letter, letting the respondent know
about the progress of the construction.”

3. A buyer is not constrained by the agreement for a court of his choice.


In the Neha Singhal vs Unitech case (first appeal no 426 of 2010), the commission has held: “To
emphasise, the clause relating to jurisdiction of ‘courts’ in the agreement between the parties
cannot by itself over-ride the statutory right of the appellant/ complainant conferred by the
above-mentioned provision of the Act. That would defeat the purpose and object of the Act. This
view is also in accordance with the provisions of Section 28 of the Indian Contract Act, 1872 (as
amended with effect from 8th January 1997).

4. Bank should call for original papers before sanctioning the loan.
In the revision petition 753 of 2006: Jagmohan Lal Mohan vs ICICI Home Finance, NCDRC
observed: “The bank should have called the original papers before sanctioning the loan, but once
the loan had been sanctioned, the queries raised by the respondent bank have become irrelevant.
In the present case, we find that the petitioner has been unduly harassed. The loan, after having
been sanctioned, was not disbursed, which forced the petitioner to approach another bank to get
the loan and incur additional expenses. Accordingly, in order to compensate the petitioner, we
direct the respondents to pay, in addition to what has been awarded, a sum of Rs 30,000 by way
of compensation for mental agony and harassment caused to him.”

5. It is the bank’s job to satisfy itself about the borrower before taking over the loan from
another bank.
In the HSBC Limited vs Sridhar Gajula case (revision petition no 1383 of 2009), the NCDRC
observed: “When the petitioner-bank had got the loan sanctioned by another bank transferred in
its favour, it must have satisfied itself that all the requisite documents and securities were intact.
Therefore, to ask for any further document was only an excuse not to release the sanctioned loan
amount.”
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