• Builder is being liquidated. What is the position of the customer?

I have purchased an apartment in Bangalore from a builder who is based in Mumbai. This is a join development agreement between land owners and builder. After long delay we came to know Mumbai high court has ordered liquidation of the builder.

Payment status: I have made 95% payment to the builder when the last slab is placed.

Building status: Out of two towers one is almost complete and other basic structure is ready.

Legal Status: I have filed a consumer court case against the builder asking for refund in Aug 2014 and case has reached evidence stage.
Land owner got an arbitration award in June 2015 cancelling the joint development agreement and GPA. Arbitration award gave 6 months to the builder to complete the two towers. Builder has filed a case asking to nullify the arbitration award. This case is going on.

I need advice on these items.
1. Should I continue with consumer court case as builder is under liquidation.
2. Since land owner got the award do I have any rights on the land. I have a sale agreement signed by the builder (through GPA).
3. Should I join the liquidation process in Mumbai and ask for my money? Will I get anything if I take this approach.
4. As a buyer do I have any other option.
Asked 10 months ago in Property Law from Bangalore, Karnataka
Religion: Hindu
1) you should continue with your case . 

2) award would not affect validity of sale agreement executed through GPA by the builder 

3) it all depends upon financial position of builder . if secured creditors are more your chances of recovery of money are bleak . if official liquidator is appointed he would invite claims from both secured and unsecured creditors . lodge your claim 
Ajay Sethi
Advocate, Mumbai
23380 Answers
1227 Consultations
5.0 on 5.0
1. If the arbitration award which cancelled the JD agreement and GPA is upheld it will foreclose your right to compel the builder to deliver the apartment to you. The only remedy in your hands would be to sue the builder to refund with compensation the consideration paid by you. 

2. If you have moved the consumer forum to seek the refund of the consideration then the proceedings before the forum can continue untrammelled by the liquidation of the builder. However, the recovery cannot be executed if he is liquidated. You should file a motion in the High Court to implead yourself as a party as the liquidation of the builder will hamper your legal remedies against him. 
Ashish Davessar
Advocate, Jaipur
18246 Answers
450 Consultations
5.0 on 5.0
1. continue with the consumer case even if builder is under liquidation, this case if decided in your favour will entitle you to compensation from builder, which you can claim from the official liquidator appointed by the court in the liquidation case against the builder.
2. the arbitration award is under challenge till the outcome of this appeal your rights are not extinguished.
3. it is better to file an impleading application before the Mumbai court informing the court that your rights be protected at the time of liquidation of the builder.
4. as a buyer file an injunction suit against the land owner till the appeal against the award is not determined against the flat for which you have an agreement of sale.
Kiran N. Murthy
Advocate, Bangalore
766 Answers
51 Consultations
5.0 on 5.0
1. Should I continue with consumer court case as builder is under liquidation.
Do not withdraw the consumer case at this stage, you may proceed with the case and get a favorable order and then initiate process for executing the consume court award.


2. Since land owner got the award do I have any rights on the land. I have a sale agreement signed by the builder (through GPA).
The agreement was made while the GPA was effective, therefore the sale agreement is binding on the land owner on this date since he had given GPA to the builder and he is liable for the actions of his power agent.


3. Should I join the liquidation process in Mumbai and ask for my money? Will I get anything if I take this approach.
If there are any possibilities for an expeditious settlement, you may try hat route too or else you may stick to consumer case already in process.


4. As a buyer do I have any other option
As a buyer since you have opted for cancellation and refund, you may proceed in that direction itself.
T Kalaiselvan
Advocate, Vellore
14158 Answers
128 Consultations
5.0 on 5.0
1) file your application with the liquidator 

2) secured creditors will be given preference 

3) you would be an unsecured creditor 

4) since your  case is pending before consumer court you should continue your  case 
Ajay Sethi
Advocate, Mumbai
23380 Answers
1227 Consultations
5.0 on 5.0
Hi, based on the consumer court judgement you have to file an application in the Liquidation process in Mumbai so that you can recover your amount, after satisfying the Secured creditors.
Pradeep Bharathipura
Advocate, Bangalore
4105 Answers
133 Consultations
4.3 on 5.0
It will be an unsecured credit. If there is no property left with the builder there is nothing the court can attach, in which event the builder can be sent to jail. Show all the case documents to another lawyer if you want a comprehensive opinion.
Ashish Davessar
Advocate, Jaipur
18246 Answers
450 Consultations
5.0 on 5.0

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