• Penalty clause for delay in delivery of possession

I have booked a property which was supposed to be delivered by Aug 2015, however when I contacted the builder in Feb 2016, I was told that it might get Delivered by Dec 2017. The builder-buyer agreement has penalty clause of Rs.5 per sq ft per month in case of delay by builder, whereas builder will charge 18% interest per annum in case of delay in payment from customer. Can I ask builder to pay delay charges@ 18%. If yes, then what are the option available to me.
Asked 2 years ago in Property Law from New Delhi, Delhi
Religion: Hindu
as per agreement penalty clause agreed to be paid in the event of delay is Rs.5/- per sq ft you will be entitled to this amount only till possession from builder.
Issue a legal notice to the builder demanding this payment, if he complies with this demand good otherwise you will need to file a complaint before the District Consumer Court, New Delhi and seek this amount along with other amounts such as litigation costs, damages or compensation etc., if you are staying in a rented accommodation then enclose a copy of the latest rental agreement copy and seek compensation  on this amount, court might grant it.
Kiran N. Murthy
Advocate, Bangalore
1019 Answers
91 Consultations

5.0 on 5.0

1) the agreement is completely one sided 

2) if builder is charging you 18 per cent pa for delayed payment he should also pay same  rate for delay m delivery of possssion 

3) it is doubtful builder will agree to pay you 18 per cent for delay in delivery of possession 

4) you will have to move consumer forum. against builder to claim 18 per cent pa 
Ajay Sethi
Advocate, Mumbai
46788 Answers
2768 Consultations

5.0 on 5.0

Yes why not. Firstly decide whether you want to continue the agreement or cancel it. If you wish to continue it then at the time of taking of possession you can demand the penalty through a lawyer's notice to him. Alternatively, you can issue a legal notice to cancel the agreement and claim the refund with penalty prescribed in the agreement.
Ashish Davessar
Advocate, Jaipur
23140 Answers
640 Consultations

5.0 on 5.0

You have agreed and signed the sale agreement paper in which both the clauses are mentioned.
Therefore you cannot claim 18%  from him, he  may refuse the same, however you may drag him to consumer forum and claim this compensation, let the court decide about it.
T Kalaiselvan
Advocate, Vellore
36925 Answers
403 Consultations

5.0 on 5.0

The Supreme Court (SC), in the landmark judgement in the case of Lucknow Development Authority vs MK Gupta, made it clear that “when possession of property is not delivered within the stipulated period, the delay so caused is denial of service” and a consumer who is a victim of such delay is entitled to compensation.

2) the case of Shri JL Sethi Vs Senior Citizen Home Complex Welfare Society   National Consumer Disputes Redressal Commission has dealt in detail with the question of payment of interest to consumers in cases of delayed construction and the percentage of interest that can be paid.n this case, the District Consumer Disputes Redressal Forum had awarded 18% interest on the ground that the builder was charging 18% for delayed payment from consumers.
While upholding this, the National Commission quoted two SC orders: In the case of Sovintorg India Ltd vs State Bank of India, (1999), the apex court had held that interest can be awarded in lieu of compensation or damages in appropriate cases. It can also be granted on equitable grounds.
Ajay Sethi
Advocate, Mumbai
46788 Answers
2768 Consultations

5.0 on 5.0

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