Builder-buyer agreements normally in favour of builders: NCDRC

[NCDRC also said that if builders exercise their right to charge penalty or interest at 18-24% in case of delayed payments from home buyers, the same must be applicable in case the builders are at fault]

The builder-buyer agreements are normally framed in favour of the builders and such terms and conditions are "unconscionable", the apex consumer commission has said.

The National Consumer Disputes Redressal Commission (NCDRC) also said that if builders exercise their right to charge penalty or interest at 18-24 per cent in case of delayed payments from homebuyers, the same must be applicable in case the builders are at fault.

The NCDRC's observations came on the plea of two UP-based buyers seeking interest on the amount deposited by them with the Kanpur Development Authority (KDA) to procure a plot in 2005.

The commission, while granting relief to the buyers,asked Kanpur Development Authority (KDA) to pay an amount ofRs 8,91,880 as interest on an amount of over Rs 1.53 crore paid by Prakash Gupta and Sanjay Gupta for purchasing a plot through an auction in 2005.

"It is a common parlance that in builder-buyer agreements the terms are framed as favorable and suitable to builders. Inour view, these are unconscionable contracts. The builder exercises his right to charge penalty or interest at 18-24 percent on the delayed payment of instalments.

"Thus, in our view, in the interest of natural justice,the consumers at large deserve to receive same interest from opposite parties in cases of fault or deficiency," the bench headed by presiding member B C Gupta said.

According to the complaint, Prakash and Sanjay were alloted a plot in 2005 for Rs 1,53,62,528.

However, due to temporary injunction from a Kanpur Civil Court, the authority cancelled the allotments, they alleged.

After the Allahabad High Court order in 2006, the KDA refunded the amount to the buyers without any interest.

The buyers approached the Uttar Pradesh State Consumer Commission seeking an interest amount of Rs 32,49,174, which was dismissed.

The KDA had contended that they had refunded the entire deposit amount to the buyers in 2006, as per their rules. They also claimed that the purchasers here were not consumers.

The NCDRC, however, noted that after the temporary injunction, the KDA "kept the matter lingering" and refunded the amount only after the buyers approached the high court.

Courtesy: ET