• Interest charged by builder for amount before CMDA approval

I booked an Apartment in Jan 2014. At that time they didn't get CMDA(TN State) Approval. Builder told they're waiting for the CMDA approval and will get it in a month. Believing this, I paid the 20% of the booking amount from my pocket. I told remaining 80% of the amount to come from Bank as loan which can be done only after CMDA Approval. Sales person that time agree for that. I have not signed the agreement on that.
But somehow CMDA approval got delayed more than 6 months and they got the approval only on Nov 2014. I processed the loan afterwards and first disbursement from the Bank Loan including the 80% of initial booking amount was done on Dec 2014.
Now after 10 Months delay they completed the apartment and raised the final demand. In the final demand they raised the interest for the initial 80% booking amount at the rate of 24% for 300 days from Jan 2014 to Dec 2014.
In this situation am I liable to pay the interest for the period where I haven't signed the agreement and they don't have approval to build. Can you please suggest me on this.
Asked 7 years ago in Property Law
Religion: Hindu

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8 Answers

Dear Sir.......

Its consumer court matter.........court of law award you compensation ...

Regards

Mob-No-[deleted]

Feroz Shaikh
Advocate, Navi Mumbai
407 Answers
58 Consultations

4.4 on 5.0

1) you are not liable to pay interest for period when plans were not sanctioned

2) since plans were sanctioned only in Nov 2014 you would be liable to pay only after said date ie for period of one month

3) further you have not siugned any agreement which mentions levy of interest for period of delay in making payment

4) raise issue with builder to with draw demand for interest

Ajay Sethi
Advocate, Mumbai
95221 Answers
7612 Consultations

5.0 on 5.0

Hi

1) It is absolutely illegal on part of the builder to claim interest , when the Builder has not got CMDA approval at the time of you making Advance payment.

2) Also the builder cannot collect any payment whatsover including advance till he had the CMDA approval, but whereas you in good faith and trust had paid him an advance of 20%.

3) Also given that your bank has made payment to the builder with in 1 month from the date of the builder obtaining CMDA approval, you are NOT liable to pay any interest whatsoever to the builder.

4) On the contrary, the builder has to pay you interest at the rate of 12% per annum for the advance monies so received by him from the date of you making payment till the date he got CMDA approval.

5) You should issue notices to the builder for illegal and arbitrary claim of interest monies in absence of CMDA permission.

6) You can approach the Consumer Commission or Lok adalat in case the builder is still persisting with his illegal claim and delays the registration of property in your name or handing over of possession.

7) In the given scenario where the Supreme Court , Consumer commissions have imposed severe penalties on Salarpuria, L&T, Godrej Housing Projects, Shobha builders, Unitech etc for delayed possession, making illegal claims (similar to yours), i am sure the builder will change his stand for the fear of being punished by these courts and will withdraw his illegal and arbitrary demands.

Hope this information is useful

Rajgopalan Sripathi
Advocate, Hyderabad
2173 Answers
394 Consultations

5.0 on 5.0

1. The exorbitant demand for interest is not only impermissible in law but beyond the scope of sales agreement you made with the builder.

2. In that context the developer is guilty of deficiency of service and unfair trade practices.

3. So don't make any payments as per demand of the developer and file case in consumer forum against the builder wherein the forum would adjudicate the dispute and grant you the compensation as well.

Devajyoti Barman
Advocate, Kolkata
22921 Answers
498 Consultations

5.0 on 5.0

The builder's demand for interest for 300 days is exorbitant and not maintainable.

If there was no sale agreement entered into with the builder i the interim period, there is no reason for this claim at all.

This appears to be an unfair trade practice by builder.

There are numerous cases where builders have taken more than the required time to finish projects while leaving home buyers to suffer financial loss.

Besides the late delivery of the possession a number of other malpractices are complained against the builders

Insertion of a penalty clause which is biased in their favour is also one of the unfair practices committed by the builders.

Before buying a house, a buyer must do a thorough due diligence of the building. A prospective buyer must thoroughly go through the original copy of the agreement with the builder.

A buyer who is the victim of the unfair practices of the builder can approach the following forums for his redressal:

He can file a civil suit in a Civil Court

He can file a complaint before the consumer Forum.

He can file a complaint before the Competition Commission of India.

He can approach Regulatory Forums.

He can file a Criminal Case.

You may adopt anyone of the step as suggested if you feel aggrieved but before that you send a notice conveying your decision to refuse to pay the demanded penal interest for the reasons you rely upon and after that if the builder is still insisting you can adopt any option as suggested.

T Kalaiselvan
Advocate, Vellore
85422 Answers
2239 Consultations

5.0 on 5.0

Hi

The best option is to make payment under protest, take possession and the go legally so as to get the interest and compensation reimbursed.

The reason is that the litigation process will take anywhere between 6-12 months and being in possession of the flat will reduce the mental stress to a certain extent.

Rajgopalan Sripathi
Advocate, Hyderabad
2173 Answers
394 Consultations

5.0 on 5.0

it should take around 2 years for case before consumer forum to be disposed of

2) you can aobtain orders from consumer forum to direct builder to hand over flat to you during pendency of case and depsoit disputed amount in court

3) in the alternative pay amount under protest take possession of flat and then file complaint to seek refund of interest paid by you and claim compensation / litigation costs

Ajay Sethi
Advocate, Mumbai
95221 Answers
7612 Consultations

5.0 on 5.0

If you approach consumer forum then it may take between 18 months to 30 months.

Any court case is deemed to be a stay on the proceedings hence they may intentionally delay handing over possession citing court case as reason.

It will depend on the mutual and amicable settlement between you and the seller in this regard should there be any invitation to participate.by the seller to the buyer in this regard.

T Kalaiselvan
Advocate, Vellore
85422 Answers
2239 Consultations

5.0 on 5.0

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