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Can't deny refund on a delayed project; even on homebuyer's default - says Supreme Court.


Homebuyers who cease making payments when construction dates are not fulfilled now have relief from the Supreme Court. in its recent decision it has been held that default on buyer's part does not constitute a valid reason to withhold refund in a project that has been delayed. In the case, a builder in Faridabad, Haryana, was challenging the National Consumer Disputes Redressal Commission's (NCDRC) previous order to return the whole amount paid by two customers as the possession of the home was not delivered on time.

The NCDRC had ordered the builder to comply with the judgement within two months and return the whole amount paid by the buyers along with delay compensation at the rate of 10% per annum on the deposited amount from the respective dates of deposits until realisation. "There will be no reason for tampering with the fundamental element of the Commission's judgement in a situation where the Occupational Certificate has not been received," the Supreme Court ruled in its order.

However, the court decreased the amount of interest ordered by the NCDRC from 10% to 8% per year and issued a warning that if the money was not paid in full within two months, interest would be assessed at a rate of 12% per year. According to this ruling by the Supreme Court When the allotees don't perceive any development in the project's construction or any chance of on-time delivery, they sometimes quit making payments. In certain circumstances, allottees' defaults cannot be used against them, and their entitlement to a refund cannot be questioned. It is illogical to assume that allottees continue to abide by the builder's requirements despite a halted or delayed project.

The purchasers had made a reservation payment of Rs. 7.01 lakh for an apartment in the Royal Heritage development in Faridabad's Sector-70. 2017 was the suggested time of possession. Even after waiting five years, the builder still did not give the buyer possession of the unit, so the buyer filed a complaint with the consumer court.

The purchasers claimed that they had "diligently" complied with the builder's demands, and by June 2016 they had paid about Rs 77.88 lakh, or almost 70% of the entire cost for the unit. In addition, they had gotten a mortgage loan from a bank in 2014 for Rs 70 lakh to buy the property. They claimed that despite receiving payment, the builder did not provide possession by 2017.

The purchasers claimed that they had sent emails to the builder in 2017 asking them to revoke the unit's allocation and return their full payment plus interest. As a result, the builder "unilaterally" and "without any justification" shifted the date of possession to February 2019 and notified them of this by email dated July 2018. However, they did not get a response. They said that neither the builder had promised to give them possession of the unit nor given them their money back.

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