Investing in real estate is often one of the most significant financial commitments individuals make. However, when a builder fails to deliver the premises as per the agreed terms, specifications, or timelines, investors find themselves in a distressing situation. Fortunately, Indian laws provide various legal remedies to protect the rights of allottees and investors. This blog explores these rights, relevant legal provisions, and landmark case laws that establish and reinforce the legal safeguards available to investors.
Legal Provisions & Case Law:
·
Section 18 of RERA empowers allottees to file complaints with the State
Real Estate Regulatory Authority (RERA) if the promoter fails to complete or
give possession as per the agreement.
·
In Arun
Singh v. Union of India (2018), the Supreme Court emphasized that RERA
aims to protect homebuyers’ rights and ensure timely delivery, making refunds
with interest a statutory entitlement.
2. Right to Compensation
Investors can claim compensation for any losses caused due
to delays, deficiencies in construction, or deviations from the agreed
specifications.
Legal
Precedent:
·
The Supreme
Court in the case of P. C. Pande v. Union of India (2019) highlighted
that builders must compensate buyers for loss of time and inconvenience caused
due to breach of contractual obligations.
3. Right to Possession
If construction is finished but
possession is unduly delayed, the allottee can demand immediate
possession through legal channels.
Legal
Recourse:
·
Under Section
18 of RERA, the authority can direct the builder to deliver
possession.
·
The landmark case of K. Raheja Constructions Ltd. v. Nirmala Devi
(2018) confirmed that delay in possession is a violation of statutory
rights, and courts can direct builders to hand over possession promptly.
4. Filing Complaint under RERA
Investors have the right to file complaints before the respective
State RERA Authority for any non-compliance, including failure to deliver
possession, non-adherence to approved plans, or other breaches.
Legal
Framework:
·
RERA mandates transparent grievance redressal
mechanisms, with Section 31
providing for filing complaints.
5. Rights under the Consumer Protection Act,
2019
The Consumer
Protection Act, 2019 complements RERA by providing civil remedies for
deficiency in service or unfair trade practices by builders.
Key
Point:
·
Investors can approach the Consumer Disputes Redressal Commission
for relief, including damages for mental agony and harassment.
Case
Law:
·
In K.K.
Verma v. Union of India (2017), the Supreme Court highlighted that
consumers’ rights include protection against unfair trade practices, which
applies to real estate transactions.
6. Right to Approach NCLT (Insolvency
Proceedings)
If the builder defaults significantly
and the amount paid is substantial, investors can initiate insolvency proceedings under Section 7 of the Insolvency and Bankruptcy Code,
2016 (IBC), treating the builder as a corporate
debtor.
Legal
Precedent:
·
The NCLT
(National Company Law Tribunal) has admitted insolvency petitions
filed by homebuyers against defaulting builders, such as in Jaypee Infratech Ltd. case (2019), to
ensure project completion and safeguard investors’ interests.
7. Right to Seek Specific Performance
Investors can seek specific performance of the
builder-buyer agreement through civil courts if the builder refuses to fulfill
contractual obligations.
Legal
Authority:
·
Order 6 Rule 17 of
the Civil Procedure Code, 1908,
permits courts to order specific performance of contractual obligations,
reinforced by Section 14 of the Specific
Relief Act, 1963.
8. Damages for Mental Harassment & Legal
Harassment
Courts recognize that long delays and
fraudulent conduct cause mental agony. Therefore, courts or consumer forums may
award damages for harassment
and mental distress.
Landmark
Case:
·
In Union
of India v. S. R. Chaudhary (2014), the Supreme Court held that
damages for mental harassment are permissible when a party suffers due to
negligence or unfair conduct.
Conclusion
The legal landscape in India provides a robust framework
to protect the rights of investors and allottees against builder defaults. Laws
like RERA, the Consumer Protection Act, and the IBC collectively offer avenues
for refunds, compensation, possession, and even insolvency proceedings against
defaulting builders. However, investors should remain vigilant, document all
transactions, and seek legal counsel promptly when their rights are infringed.
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