The Supreme Court order that flat buyers are entitled to compensation in excess of what is stipulated in the agreement with the developer, for delayed handing over of possession and failure to provide basic amenities, should come as a relief to thousands of people investing on their dream homes. While the Real Estate Regulatory Act (RERA), 2016, has a provision for refund with interest or damages in case of a delay in completion of the project, the apex court order is significant as it provides for compensation beyond what has been agreed upon by the developer and the buyer in the agreement. In the instant case, 339 buyers had approached the National Consumer Disputes Redressal Commission (NCDRC) which, while agreeing with their grievance over delayed possession and failure to provide the promised amenities, had held that they were not entitled to any additional compensation other than Rs 5 per square feet per month as provided in the flat purchase agreement.
Setting aside the NCDRC order, the top court directed that the appellants be paid an additional 6 per cent on the total amount of money advanced for the flat for the period of delay and cautioned that an additional 9 per cent penal interest would be imposed in case of failure to comply with the order. Home buyers are often swindled of their lifelong savings by unscrupulous builders who do not fulfil many of the tall promises made at the time of booking a flat. While delay in handing over possession is common, even some reputed builders default on basic utilities like power and water supply, besides other assured amenities like a clubhouse or health centre. While in some cases, even land papers are not in order, illegal construction in violation of the sanctioned plan is another major problem. Often, the buyer is left high and dry, as in the case of Amrapali Group case, in which the Supreme Court held that nearly 50,000 people were cheated by the company which had sold them nonexistent flats.
While the apex court order on compensation may serve as a warning to builders and offer some succour to buyers, it would nevertheless be prudent for investors to exercise abundant caution while getting into real estate deals and not be swayed by glossy publicity material. RERA, no doubt, has come as solace to home buyers but many builders continue to violate even RERA court orders. The real estate sector desperately needs a clean-up in its own interest, but for that to happen, the unholy nexus between developers, civic authorities, police and politicians should first end.