Builder charging exorbitant interest from buyers on delayed payment is unfair: NCDRC

Builder charging exorbitant interest from buyers on delayed payment is unfair: NCDRC

June 14, 2019 in Uncategorized

NEW DELHI: Forcing homebuyers to pay interest in the range of 18 per cent per annum for delay in payment of installment while the builders themselves pay a paltry 1.5-2 per cent for delay in project amounts to unfair trade practice by real estate companies which cannot be enforced, the apex consumer commission has ruled, bringing relief to homebuyers.
A bench of National Consumer Disputes Redressal Commission’s president Justice R K Agrawal and member M Shreesha said that such provisions in builder-buyer agreement are unfair and unreasonable and real estate company could not be allowed to bind home-buyers with one-sided contractual terms which protect the interests of the company at the cost of the buyers.
It said that there should be parity in the rate of interest to be paid by builders and homebuyers for not complying with the terms of agreement and suggested that the builders should be compelled to pay the same rate of interest as compensation for delay in project which they demand from buyers in case of delay in payment.
The court passed the order on a plea of a homebuyer who had booked a flat in 2012 in ‘Winter Hills 77’ residential housing project in Gurugram which was being developed by a real estate company Umang Realtech Pvt Ltd. The buyer was promised possession of the flat by December 2015 and had paid around Rs 83 lakh to the builder in different instalments. As the builder failed to deliver the project even four years after the promised dateline, the buyer sought refund of the money with 18 per cent interest per annum, at a rate at which he had paid penalty to builder for delay in payment on his part.
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The company, however, said that it was liable to pay compensation at the rate of Rs 5 per square feet for delay as per the agreement. Rejecting its contention, the commission said, “It is also an admitted fact that the opposite party (the company) charged interest at the rate 18 per cent per annum for any delayed payments made by the purchasers and there is no justification in offering a meager Rs 5- per square feet, which comes to approximately 1.4 per cent per annum which is only a paltry percentage of what the company was charging for any delayed payments”.
“In any case, such a clause, where the seller, in case of default on the part of the buyer seeks to recover interest a 18 per cent per annum but offers only Rs 5 per square feet for any delay in delivery of possession, amounts to unfair trade practice since it gives an unfair advantage to seller over the buyer. We are of the view that such terms in clauses are extremely unfair and one-sided and fall within the definition of unfair trade practice,” the commission said.
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Although the commission said if the seller is charging interest of 18 per cent per annum from buyer then logically buyer should also be paid at the same rate, it, however, directed the company to refund the money with 12 per cent interest taking into account that banks have lowered the interest rate in recent years. It also directed the company to pay compensation of Rs 1 lakh to the buyer.

Sources: realty.economictimes.indiatimes.com

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