Builders of botched projects cannot withhold refunds | mumbai | Hindustan Times
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Builders of botched projects cannot withhold refunds

mumbai Updated: Jun 17, 2012 01:43 IST
Charul Shah
Bharat Jani

The builder cannot withhold money of a flat purchaser when the construction is unlikely to finish or is unauthorised, the district consumer forum held while finding the developer guilty of deficiency of services. The forum has asked the builder to return the money with interest.


The forum was hearing a complaint filed by a Chembur couple - Bharat Jani and his wife Vilas. In the complaint filed in 2006, they alleged that the Tilak Nagar Sahyog Cooperative housing society was allotted a plot in Chembur on lease of 99 years. The society was to develop the plot through a builder for residential purposes. Accordingly, the society entered in to an agreement with the builder, Mahalaxmi Bindu Developers, to construct a three-storied building.

In 2001, the complainants purchased two flats in the building and entered into a three-party agreement - between the family, society and the builder. As per the agreement, the builder was to give possession of the flats by 2002. They were later told the building would be ready by 2003, and the complainants would be given possession immediately. The complainants had paid Rs6.43 lakh for the flats.

However, while the construction was going on, the civic body took objection and ordered demolition. It was alleged that the builder had not followed the sanctioned plan and constructed extra flats. The civic body, after a survey, stated that the building was not as per the sanctioned plan.

The society challenged the order before the Bombay high court. While the legal battle was on, and the project was stuck in the litigation, the Janis moved the consumer forum through advocate Uday Wavikar seeking possession of the flat or return of the money at current market value.

During the hearing , the builder submitted that the high court had directed the builder to complete the construction of the building. Hence, they would be able to give possession of the flats.

However, the forum disbelieved the contention and observed that the high court order merely suggested to the civic body to reconsider its decision .

The forum also observed that in such kind of circumstances, there is very little likelihood that the builder would be able to complete the construction.

The forum directed the builder to return the sum with 9% interest. It also ordered the builder to pay the money in three months, failing which the interest rate would increase to 12%.