Delay in permissions can’t be termed force majeure | Business Standard Column***

Clipped from: https://www.business-standard.com/article/opinion/delay-in-permissions-can-t-be-termed-force-majeure-122121100808_1.html

The National Commission found that delay was caused due to submission of plans which were not in consonance with the statutory rules and regulations

Jehangir B Gai

B Rudragouda and seven other family members had individually booked apartments in Godrej Platinum, a housing project by Godrej Buildwell at Hebbal Village, Kasaba Hubli, North Bengaluru.

The agreement between Rudragouda and Godrej executed in October 2013 was for the purchase of a four-bedroom apartment measuring 3,905 sq ft, along with two parking slots, for a consideration of Rs 1,79,82,000. Delivery was to be given in September 2015, with provision for a grace period of six months. The agreement provided that the builder would pay compensation for any delay by paying 12 per cent interest.

Even after the expiry of the grace period in March 2016, the builder did not hand over possession. Delivery was offered a year later in March 2017. At the time of offering possession, the builder demanded the balance payment without adjusting the interest payable as compensation for delay in possession.

Godrej defended the case. It attributed the delay to a stop work notice issued by the Bruhat Bengaluru Mahanagara Palike, which had questioned the height of the project and ordered the builder to obtain a no objection certificate (NOC) from the Airport Authority of India (AAI). Since AAI ordered a reduction of the height from 78.20 metres to 49.85 metres, Godrej stated it had to submit a revised plan for approval after limiting the building to 13 floors instead of 21. It pointed out that after the revised plan was approved, the building was completed expeditiously, and occupancy certificate was obtained on January 21, 2017. It argued that compensation was not applicable as delay was due to force majeure, meaning due to circumstances beyond the builder’s control. The builder blamed Rudregouda for not taking possession and justified the demand for the balance consideration of Rs 17,43,836, interest of Rs 2,74,979 for delay in payment, and Rs 2,40,000 towards holding charges. The builder also claimed money towards maintenance charges and sinking fund.

When representations for payment of interest were made, the builder offered four additional parking slots in lieu of compensation. The buyers declined this offer and also did not take possession. The builder applied pressure on the flat purchasers by demanding holding charges for refusal to take possession. After issuing a legal notice, consumer complaints were filed before the National Commission. The flat purchasers argued that the offer of four additional parking slots established the builder’s liability to compensate them for delay in possession.

The National Commission found that delay was caused due to submission of plans which were not in consonance with the statutory rules and regulations, for which it held the builder to be at fault. Besides, developers are aware that delays in approvals are the norm, and so such delays would not constitute force majeure. Hence the Commission concluded that delay in possession constituted an unfair trade practice.

Regarding holding charges, the Commission noted that the flat purchaser had failed to pay the amounts that were legitimately due to the builder. The Commission also observed that possession of the apartment was taken on June 23, 2021 during the pendency of the litigation, under directions of the Commission, after furnishing an undertaking to make payment of all the charges demanded by the builder. So the Commission held that the builder would be entitled to receive holding charges from the agreed date of possession till June 23, 2021.

By its order of December 6, 2022 delivered by Subhash Chandra, the National Commission ordered the builder to pay 12 per cent interest as compensation for delay, computed from the agreed date of possession till June 23, 2021 when physical possession was given. In addition, Rs 50,000 was awarded as litigation expenses.The writer is a consumer activist

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