Delayed penalty not given by the builder
I booked a 2 room flat in Aug-2006 with a delivery timeline of 3 years (2009). The builder has now issued me the offer of possession letter (in May-2015) . There is a clear delay of 5-6 years from the promised delivery date. The contract has a penalty clause of 5 rs psft per month. The offer letter issued by builder states that the builder is not liable to pay any penalty if there was any delay in past in the payments made by customer for the demands the builder made. The builder has even added 30K Rs as delayed interest to be paid to the builder. This has come as a surprise as the builder never told me about any late payment. I have always paid in time.
The builder has also stated in the offer of possession letter that since the cost of construction has gone up by 46% since the date of my booking, the escalated cost of around 5.6 Lac should be paid by me to the builder. The builder may excercise his discretion to waive off this amount to arrive at a amicable solution.
It seems the builder is playing all kind of tricks to avoid paying any penalty for delayed possession.
I am yet to negotiate with the builder on this letter. I have following queries:
1. Can builder deny me delayed penalty in case of any delayed payment by me?
2. Can builder ask for cost escalation charges? This is not mentioned in the contract.
3. In case the negotiations doesn't work in my favor, shall I take the flat possession first and then file case in consumer court?
Asked 3 years ago in Property Law from Gurgaon, Haryana
1) if you have not paid instalments on time builder can refuse to pay interest for delayed possession as per the contract
2) builder cannot demand cost escalation charges as contract does not contain any provision for same
3) take possession of flat under protest and then move consumer forum against the builder for deficiency of service
Hi, it is the duty of the builder to deliver the possession of the buildings as per time and if he fail to deliver the possession of the building he has liable to pay penalty as per Rupees 5 per square feet.
2. From your narration there is no delay in payment so don't pay the Rupees 30,000/- as delayed interest charges and so also you are not liable to pay the escalation charges of sum of Rupees 5 to 6 lacks as it is not in the part of the agreement and also delay in completing the building is from the builder side so you are not responsible for the delay so you are not liable to pay the escalation charges.
3. It is my considerable opinion better negotiate with the builder and register the property in your name and thereafter file a consumer complaint for recovery of penalty amount.
1) it is your case that you have paid all instalments on time
2) call upon builder to furnish evidence of late payment made by you . Whether he has in his possession any demand letters issued by him ?
3) if there is no late payment you can claim interest for period of delayed possession
4) also claim rentals if any paid by you for taking any flat on rent
First accept possession of the flat.
Once such possession is in your control file a suit for recovery of damages.
Since all these documents are in connection to the same subject property hence these will be regarded as a part of the same contract and according to rules of interpretation the prior clause will always prevail over the latter clause.
Consumer court might be a good option for such delay but you must take possession before filing litigation. This way in case of any stay you stand to benefit from the Status Quo.
One can ask for many things but adjudication will ultimately happen upon law.
1.The builder is wrong. He is liable to pay the penalty in accordance with the penalty clause.
2. Did you default in paying the amount? If the answer is no then you are not liable to pay the delayed interest.
3. The delayed penalty can be set off against the delayed interest, but the differential amount has to be paid by you or builder, as the case may be.
4. In so far as cost escalation charges are concerned the builder can enforce it against you only if the agreement provides for it,
5. You can take the possession under protest by issuing a lawyer's notice to the builder and then go to court against the builder.
1.No,he can not.
2.No,he can not.
3.bettet to move Consumer Forum before taking possession.
1. All the demands made by the builder are illegal,
2. He should pay the penalty and comply with all the terms of the agreement,
3. Take possession of the flat since otherwise the builder may armtwist you by not giving possession, if you file any case against him,
4. Avoid signing any document giving him no-due certificate,
5. After taking possession of the said property, file a consumer complaint before the local Consumer Forum.
Thank you all for your valuable advice.
We met the builder and tried to negotiate but the builder is not willing do any changes in the settlement amount. They are not willing to pay the delayed penalty of (3.75 Lacs) and saying that if we ask for penalty, the escalation cost of 5.64 lacs will be levied on us and then the penalty of 3.75 Lacs will be adjusted.
The max he can do is to waive off the late penalty interest of 30K.
When we said we will make the payment “under protest”, the builder is saying if you make the payment “under protest”, you will have to pay the escalated cost of 5.64 lacs as well and builder will not give any late penalty.
We had a delay of 2 months on 1 payment because of delay in loan sanctioning from the bank and signing of TPA from bank and builder. 2-3 more payments were delayed by 4-10 days because of unavoidable circumstances.
Request you to kindly go through the content from demand letter and relevant Buyer agreement (written at end) and suggest what all options I have among the following:
1. I agree to the builder demand letter. I do not ask for late penalty (3.75 Lac) from builder. This way builder will not levy any cost escalation charge (5.6 L) on me. He is also willing to waive off 30K late penalty interest If I write an application for waive off with some valid reasons. I am sure builder will ask me to sign no dues agreement so that I do not have any option to contest in the court of law.
2. I agree to pay the cost escalation charge of 5.6 L and then get it adjusted with late penalty of 3.75L which builder has to pay. I anyway stand to lose as I will pay 1.85 L extra from the current demand.
3. I pay under protest. In this case also builder will not pay me the late penalty (3.75 Lac). BUT will ask me to pay extra 5.6 Lac towards cost escalation. This way I will have an option to go to consumer court after taking possession. Is it worth giving 5.6 L extra now in the hope that I will get this and the penalty of 3.75 L back. Isn’t this too much of a risk?
4. Kindly suggest If any other option.
Just to add to this, I have been living on rent all this time paying an average 15K rent per month which for 5 years comes out to be 9 Lacs. Plus I didn’t get any tax advantage on the home loan that I have taken as the construction was not complete within 3 years of taking the loan. In all the losses to me has been (9 L rent + 1 L tax rebate + 3.75 L penalty = 13.75 L).
Also important to note that my tower structure was completed by 2011 (4 years from booking) and builder just did nothing after that. Almost 85% payment had gone by then. The builder is calculating escalation cost by subtracting present cost (2015) with the cost at the agreement date (2006). The cost calculation itself is debatable. He is not willing to entertain any arguments. This shows the high handedness of the builder. The builder is a prominent member of CREDAI.
----------- Content from Offer of Possession letter. -----------
Balance payment due: 397193 (including late penalty of 29701).
Note: It is pertinent to mention that there has been an escalation of around 49% (which works out Rs 564531/-) in prices of raw-material and labour etc. from the year of booking which is an exorbitant rise liable to be paid by you towards cost/consideration of your unit in accordance with agreed terms of the buyers agreement. This escalation on prices has been calculated on the basis of comparison of respective RBI indexes as published in RBI monthly bulletin for steel, cement, fuel and power, other building construction material and labour for the period of construction. However, in lieu of full and final settlement of all your claims, if any, against the company and to arrive at an amicable solution etc., the company, in the larger interest of its allottee(s) may exercise its discretion to waive off the escalation.
--------------------- Content from Buyers Agreement --------------
1. That the total basic sale price as aforesaid and other charges shall be paid by the Buyer/Alottee to the Developer/Seller as per the payment plan opted by the buyer at the time of booking and which is annexed hereto as schedule-1.
2. That the price mentioned above is firm and is not subject to any escalation towards cost of construction unless there is an exorbitant rise is the prices of material and labour. However all statuary charges including EDC, IDC and other levies demanded or to be imposed from time to time by the authorities shall be payable proportionately by the applicant/allottee(s) from the date of booking as per demand raised by the company. Delayed payments, if any, shall attract Interest/Penal Interest as per policy of the Govt./DTCP Haryana.
3. That the timely payment of installments and other dues is the essence of this Agreement. It shall be incumbent on the Buyer to comply with the terms of payment as per payment plan and Buyer has agreed that Seller is under no obligation to send reminders for payments. In exceptional circumstances, the seller may in its absolute discretion condone the delay om making payments by charging interest @ 18% p.a on the amount outstanding upto 2 months delay from the due date of payment and @ 24% p.a thereafter for total period. It is however clearly understood by the intending allottee that the payment made by them shall be first adjusted towards interest due, if any and the balance amount shall be adjusted towards the principal amount.
4. That the Company shall endeavor to give the possession of the unit to the Intending allottee within a period of 36 months from the date of execution of the Buyer’s agreement subject to force majeure circumstances and on receipt of all payments as per payment plan and other charges due/demanded and payable upto the date of possession according to the payment plan opted by him/her. The company on completion of the construction shall issue final call notice to the intending allottee, who shall within 30 days thereof, remit all dues and take possession of the unit. In the event of his/her failure to take possession for any reason whatsoever, he shall be deemed to have taken possession of the allotted unit and shall bear all maintenance charges and any other levies on account of the allotted unit.
5. In case of delay in construction of the said unit attributable to delay on the part of intending developer/Seller, the intending developer/seller would pay a penalty to the Unit Buyers @Rs 5/- per sq ft. per month for the period of delay. Likewise, if the unit Buyer fails to take possession within 30 days from the date of issue of offer of possession, he would be liable to pay holding charges @Rs 5/- per sq ft per month for the period of delay. Further, in the event of his failure to take possession for any reasons whatsoever, he shall be deemed to have taken possession of the said unit on expiry of 30 days of offer of possession for the purpose of payment of maintenance charges or any other taxes, levies , outflows on account of the said unit.
Asked 3 years ago
1) you can move consumer forum against the builder for un fair trade practice and deficency in service .
2) seek interest for delay in delivery of possession of 6 years as per the contract
3) also rentals as you had to pay Rs 9 lakhs towards rent on account of delay in delivery of possession .
4) delay in making payment by you was nominal on account of signing of TPA between builder and bank .
5) you are not liable to pay cost escalation charges as builder has delayed delivery for 6 years
6) please note that cases before consumer forum take 2 years to be disposed of
7) an amicable settlement is better option
1. I find no reason in telling the builder that I will pay in protest,
2. Just negotiate with him to pay the least amount and take possession of the flat,
3. If possible, audio record all his unjustified demands and conditions put by him,
4. After getting out of his clutches, file a complaint case before the consumer forum
1. You may in your wisdom agree to the demand raised in the demand letter. It is your call. Once you agree to an offer the contract will come in existence.
2. However, what the builder is doing is legally wrong. No escalated cost is to be paid if you pay under protest.
3. You may issue a lawyer's notice to the builder to claim the delayed penalty.