• Delay in construction and pledging of apartment

I have booked an apartment in Trivandrum in March 2012 by paying the full amount as advance. As per the agreement, the builder was supposed to complete the construction and register the apartment in my name by December 2013. The construction was going very slow and by December 2015, only 90% of work was completed. For the past 10 months no work is progressing at the site. I understand that the builder is having financial crisis.

The land and apartment complex is now in the name of the builder.
As the registration was getting delayed too much, I requested the builder to register the apartment in my name and, then complete the remaining 10% works. However the builder was not ready for registration. 

Now, it is found that the builder has pledged the apartment complex with a financial institution and taken loan. The loan is not being repaid regularly.

Is it right to pledge the property by the builder with a financial institution without my written consent, as the apartment is constructed by the money collected from me and similar other persons in advance? 
Is it not a case of cheating?
What will happen if the builder does not pay back the loan to financial institution?
What are my rights on the apartment?

It is found that there is a court attachment on another apartment complex by the same builder.
How can I prevent court attachment on the apartment constructed with my money, for any liability of the builder?

Please suggest further course of action for making the builder
(a) release the pledge with financial institution and get the property registered in my name. (b) complete of remaining works. (c) give compensation for delay in construction and handing over.

Will it be easier to get the money paid by me alongwith interest from the builder, rather than getting the apartment constructed and handed over?

Please give me your valuable advice.
Thank you.
Asked 1 month ago in Property Law from Trivandrum, Kerala
Religion: Hindu
1) file complaint before consumer forum and seek orders to direct builder to execute regd sale in your favour 

2)to pay interest for delay in delivery of possession , seek compensation for mental torture undergone by you 

3)in the alternative  cancel the booking  seek refund of money paid by you with interest at 18%pa 

4) in order to raise finance builder  must have pledged the property . all sale proceeds are to be placed in an escrow account . the agreement entered into between builder and bank contains such a clause . 

5) in the event of default by builder in repayment of loan bank would take recovery proceedings against the builder 
Ajay Sethi
Advocate, Mumbai
23217 Answers
1219 Consultations
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consumer forum is an additional remedy . arbitration clause in an agreement between the parties does not oust the jurisdiction of the Consumer Forum.

2) in Fair Air Engineers Pvt. Ltd. And another vs. N.K. Modi [(1996) 6 SCC 385], 

SC has held that though the District Forum, State Commission and National Commission are judicial authorities, for the purpose of Section 34 of the Arbitration Act, in view of the object of the Act and by operation of Section 3 thereof, we are of the considered view that it would be appropriate that these forums created under the Act are at liberty to proceed with the matters in accordance with the provisions of the Act rather than relegating the parties to an arbitration proceedings pursuant to a contract entered into between the parties. The reason is that the Act intends to relieve the consumers of the cumbersome arbitration proceedings or civil action unless the forums on their own and on the peculiar facts and circumstances of a particular case, come to the conclusion that the appropriate forum for adjudication of the disputes would be otherwise those given in the Act."

3)delay in completion of flat is a continuing offence . your claim is not barred by limitation 
Ajay Sethi
Advocate, Mumbai
23217 Answers
1219 Consultations
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1. Why did you pay the full amount in advance? This is bizarre and suicidal. No prudent buyer does not this. Due to the heavy disparity between supply and demand the builders are happy to book the property even with 10% of sale consideration as advance.

2. If the court order has mandated attachment then you may implead yourself as a party in the ongoing suit to resist attachment.

3. A separate suit for recovery of money and a criminal prosecution for cheating and criminal breach of trust should be launched against the builder to bring him to book and recover your money. 

4. The limitation is 2 years to move the consumer forum. The clock is ticking ever so fast, so act swiftly. 
Ashish Davessar
Advocate, Jaipur
18102 Answers
448 Consultations
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Is it right to pledge the property by the builder with a financial institution without my written consent, as the apartment is constructed by the money collected from me and similar other persons in advance? 

The builder cannot do so becasue he has already  sold the property to a third person. 




Is it not a case of cheating?

Yes it wold be considered as cheating and breach of trust etc. 





What will happen if the builder does not pay back the loan to financial institution?

The finance company may big the property into auction under saresi act.





What are my rights on the apartment?

Is the sale agreement registered in your name, then you may file a specific performance suit agaisnt him
T Kalaiselvan
Advocate, Vellore
14006 Answers
127 Consultations
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In my Agreement with builder, there is a clause that:
"In the event of any disputes/differences arising in relation to this Agreement, then the matter will be referred to Arbitration under the provision of Arbitration and Conciliation Act 1996". 
Will this clause prevent me from going to the consumer forum?

You can still approach consumer forum.





My agreement with the builder was in March 2012 and the builder was supposed to complete construction and hand over the flat to me by December 2013. So far it has not happened as the construction was getting delayed. Is any time limit for me to approach the consumer forum?


Since he has still not completed the construction, the case is not yet barred by limitation.
T Kalaiselvan
Advocate, Vellore
14006 Answers
127 Consultations
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