Developer fined Rs18 lakh for delay in handover of flat

A developer has been ordered to pay over Rs18 lakh for failing to hand over a flat in Bhandup to its buyers for about one-and-a-half years.

The additional district consumer forum for Mumbai suburban district directed Mahindra Lifespaces to pay interest at the rate of 10% a year on the Rs86.11 lakh paid by the buyers, Chakroborti VK Kondapalli and his wife Seetha, for the period of the delay. The forum also directed the developer to reimburse the Rs4.80 lakh that the couple had spent on rent during the period and Rs35,000 for litigation costs.

The couple had booked a 1,600-square-foot flat in a project by Mahindra Lifespaces at Bhandup and paid about 10% of the cost of the flat – Rs1.06 crore – in August 2009. The purchase agreement was executed the next month and possession of the flat was to be given by October 31, 2010. Though the couple had paid the remaining Rs 86.11 lakh by then, Mahindra Lifespaces delayed the possession of the flat and ultimately gave them possession of it in February 2012.

The couple then approached the consumer forum, seeking interest on the money they had paid at the rate of 12% a year, reimbursement of the amount of the rent they had paid during the delay, and compensation for mental agony and the cost of the litigation.

The developer contested the complaint, contending that the complainants had repeatedly asked them to make changes to the flat and at one point even asked them to change the entire flooring, claiming this is what caused the delay. Mahindra Lifespaces also objected to paying compensation, on the grounds that there was a specific provision in the flat purchase agreement that prevented the buyer from seeking compensation on account of delays in handing over possession.

The forum, however, rejected the developer’s contentions, noting that a unilateral clause in the agreement – which empowered the developer to charge interest on late payments but restrained the buyer from seeking compensation — was contrary to the law.

“Agreements contrary to public policy are void,” said the bench, comprising forum president SS Vyavhare and member SV Kalal, while holding the developer guilty of deficiency in service and unfair trade practices. “Clauses which go against public policy cannot be binding on the flat purchaser,” they added. A spokesperson for Mahindra Lifespaces said, “We are yet to receive a copy of the order and can only comment after we review it.”