• Builder wants to cancel allotment of flat

During the sales process, I was told that I need to pay 40% at time of booking, 30% on completion of structure and remaining 30% on possession. The same is written in my builder buyer agreement. I was also told that I can pay 20% on booking and rest will be funded by bank. The builder asked me to approach Allahabad bank for loan. The bank denied to make payment to builder stating that the project is not approved by NOIDA authority. This is for the 1st time I come to know that the property is unauthorised. After a couple of months the Builder asked me to approach Andhra Bank for loan. Andhra bank as well denied to pay the builder as the project is unapproved. Now the builder has sent me a letter that if I do not pay balance amount then he will cancel my allotment. Over a telephonic call the builder suggested to approach India bulls for loan. 
I have following question
1. Am I wrong in not making balance 20% payment at time of booking?
2. Can a builder ask for money when the project plan is awaiting approval?
3. Can they pressurize him for taking loan from India Bulls?
4. Is there a case for mis-selling? I bought property from an agent and not directly from builder. The agent is authorised by builder to sell property. I do not have any documentation that happened during sales process.

I have documented every communication with builder from the time I came to know the property is unapproved.

Please advice.

I am currently staying in Mumbai and Property is in Noida Extension.
Asked 2 years ago in Property Law from Mumbai, Maharashtra
1. Have you already made payment of 20%?

2. You should have conducted property search before deciding for buying it whcih you have not done,

3. The company can not offer to sale a property which has not yet been sanctioned by the competent authority,

4. The builder or its agent also can not force you to take loan from their chosen lender,

5. Send a lawyer's notice claiming refund of the amount byou have paid with damage for cheating you by collecting advance payment supressing the fact that the plan of construction of the property was not sanctioned at all,

6. If the builder or its agent fails to act, You can file a complaint case alleging deficiency in service and unfair business practice claiming the said refund, interest, damage amd cost.
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
226 Consultations
5.0 on 5.0
1. Well, only because the banks are not giving loan you can take plea of making delayed payment . Once you sign any agreement you have to abide by its terms and conditions.

2. On the basis of title whatever the project that you have to decide whether you want proceed with the dal or not. If you want to buy this property then you have to make payments as per terms of the agreement. Approval or delayed approval if plan has nothing to do with you schedule of payment.

3. Builder can not certainly force you to take loan from any bank or NBFC.

4. For fault of agent who may not be employed by the builder , you can delay the payment.

The non approval of plan does not give you right to delay the payment. if want this deal then you have to make the payments in time. Else you are free to cancel the agreement.
Devajyoti Barman
Advocate, Kolkata
5131 Answers
54 Consultations
4.9 on 5.0
Hello,
1) It is quite a difficult proposition to advise you exactly what your legal remedies are if you do not possess the documents that spell out the terms and conditions of your agreement with the seller/builder.

2) However as every contract has two sides to it if the builder has not fulfilled his part of the agreement  you can not be compelled to fulfill yours as well.If the agreement says that you have to pay 40% of the consideration, you ought to have done so. Was there a clause that said that the builder would arrange the loan?

3) If the project has no approval the builder can not compel you to pay. I would say do not purchase the property and get the 20% you paid back with interest and seek compensation for having kept you in dark about lack of approval.

4) they can not pressurize you into obtaining loan from any particular lender.More than securing a loan what you are now dealing with is a building without approval.You need to choose as to whether you want to make a calculated risk, hoping that the builder will eventually be able to obtain requisite approval.

5) There is indeed a case of mis selling and you can certainly demand the builder to fulfill his part of the promises/agreement. It was alright to have bought the property from the builder's agent as he was authorised to act on his behalf.
S J Mathew
Advocate, Mumbai
1949 Answers
65 Consultations
5.0 on 5.0
1. What are the terms and conditions of the agreement which have executed with the builder? What does the refund clause say? Once an agreement is entered into between parties it ranks sacrosanct and both the parties have to act in terms thereof. You ought to have carried out due diligence on your own before booking the flat, which you apparently did not.

2. When you approached the banks for loan you became cognizant of the builder not having obtained the necessary approvals. 

3. A residential or commercial project which has come up in violation of the building plans or has not been given the necessary approvals can be demolished at any time by the authorities. It is an active volcano which may erupt at any time.

4. The builder cannot coerce you to obtain loan from any financial institution. 

5. The builder induced you to apply by misrepresenting to you that the project has got the necessary clearances.

6. You can now send a notice through your lawyer to the builder seeking the refund of the amount paid to him. If he does not refund the amount then you may file a suit for recovery against him in the court.

7. The fact that the builder has not secured the necessary clearances does not pale into insignificance the agreement. The agreement has to be carried out by you and the builder. If you do not wish to go ahead with the purchase then issue a lawyer's notice to the builder to cancel the agreement.
Ashish Davessar
Advocate, Jaipur
18049 Answers
444 Consultations
5.0 on 5.0
1. Your query is silent on the refund clause. There must be a clause in the agreement touching on the refund or lack of it of the advance amount. Also, does the agreement make the builder liable to arrange loan for you? You can refuse to perform your duties under the agreement if there is a corresponding and preceding failure by the builder in performing his duties. 
 
2. You have applied for allotment of flat in a project which has not been given the necessary approvals. If you decide to go ahead and buy the flat then you ought to make the payment in terms of the agreement entered into between you and the builder. The absence of necessary approvals does not give to you the latitude to delay the payment. It also does not emasculate the right of the builder to require you to comply with the agreement. Either you carry out the agreement or you cancel it.

3. If you do not pay the remaining amount in terms of the agreed payment schedule the builder has the right to cancel the allotment.
Ashish Davessar
Advocate, Jaipur
18049 Answers
444 Consultations
5.0 on 5.0
Hi, have you entered any agreement to sell or construction agreement and as per the agreement if you fail to pay the amount then builder is liberty to cancel the booking amount.

(2) You have not taken any legal opinion whether the construction made by the builder is in accordance with law.

(3) It is better writer a letter to him and ask him to refund the amount as your building is not  in accordance with law and bank will not provide any loan.
Pradeep Bharathipura
Advocate, Bangalore
4104 Answers
133 Consultations
4.3 on 5.0
1) you have signed the agreement with builder wherein you are required to pay 40%^at time of booking . 

2) you have before entering into agreement not done any due diligence to check whether building plans are approved or not . 

3) you have till date paid 20%^of flat amount to builder . you have been unable to py balance 20%as project is not approved . 

4) you should cancel the agreement with builder on grounds that both andhra/ allahabad bank have refused to sanction loan as project is unapproved by authorities . 

5) seek  refund of 20% payment made with interest . 

6) also seek compensation from builder
Ajay Sethi
Advocate, Mumbai
23079 Answers
1212 Consultations
5.0 on 5.0
1) builder cannot force you to obtain loan from india bulls . 

2) once you have signed agreement terms are binding upon you but you wiggle ot of your commitments on grounds that building is unauthorized 

3) builder cannot seek funds from flat owners without approvals in place 

4) the documentary evidence in your possession will help in making out a case against the builder
Ajay Sethi
Advocate, Mumbai
23079 Answers
1212 Consultations
5.0 on 5.0
1. If the brochure or any agreement states that you are required to pay 40% of the price of the flat towards booking amount then you were supposed to pay the said 40%. If it was told only and there is nothing in wrtiting, then you can also very well claim that your were told to pay 20% of the price towards booking amount,

2.  However, if the builder and/or its agent has called for booking of flats to be constructed illegally supressing the fact that no sanction of the building/project plan has yet been obtained by them which is a must for condtucting a building/project, then their entire act of collecting booking amount, be it 40% or 20%, is illegal and can be challenged before the appropriate Forum/Court,

3. You can file a complaint case alleging deficiency in service and unfair business practice claiming the said refund, interest, damage amd cost as suggested in my earlier post.
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
226 Consultations
5.0 on 5.0

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