Legal Corner » Consumer Court

What should be done if the builder is demanding extra money for an apartment?

atoneplace — Tue, 27 Oct 2009 10:34:42 +0000

Question asked by Mr. Siddharth from Mumbai, India:
Hi, I need your guidance.
I had booked a flat 2.5 years back from a reputed builder in Mumbai. Even though I have already paid all the amounts as agreed and mentioned in the registration document, the builder is not giving possession of the flat. He wants additional Rs.15000 which is a new demand from him (since May, 2008) and not a part of the registration document, even the demand note from him that I got in April 08 had any mention about it.
I have been writing letters to him for last 4 months but he doesn’t reply and their sales office says that whatever you do, you have to pay this amount without which you won’t get the possession. Those who paid that amount, they got the possession in May, 2008 itself.
My point is that I have paid everything that was part of registration document. How can you hold the possession for something which is not a legal demand? If this demand of Rs. 15000 is legal, please give this to me in writing that you won’t give possession till I pay this money. They refuse to reply to my letters in writing and also refuse to give the possession.
I am already incurring almost Rs. 35000 as interest cost per month on the flat amount. With every passing day, I am incurring additional cost but at the same time, I don’t want to agree to his unreasonable demands. I am mentally harassed as well as financially losing the money.
He doesn’t give the possession date in writing. Even in registration document, he had forced me to sign even without a possession date. I understand he did that to everyone. His point was that sign or else cancel your booking, choice is yours. I had already spend more than Rs. 5.0 Lakhs in booking this flat in 2005 itself and had lost more than 1 years because his building got stuck in environmental clearance after 26th July 2006 rain in Mumbai. So, after waiting for 1 year, I didn’t want to cancel the booking.
What is the recourse I have? I will certainly go to Consumer Court but settling the case will take more than a year or so and there is no guarantee that I will get the justice and win the case. Till that time, I can’t afford to lose the money on my flat.
Can I pay the money that he is demanding and take the possession of the flat and then file a case in Consumer forum? What should be the process? I know, if I file a complaint/case first, he won’t give me the possession at all till the case is heard & closed. In the process I may lose more than even 1 year, knowing the judiciary system of our country for a common man.
Please advice. I will be highly obliged.
Best regards,
Siddharth
Vatsala Answers:
There is no mention in your letter as to why the builder is demanding the extra money, i.e. towards what category? It seems to me that you should either fight it out in the consumer forum or pay up and take possession. If you go to the forum, you should take your chances there. The third option is to pay the sum now, and seek a refund later. You can allege that there was delay and lapses in getting possession and seek compensation for illegal demands of extra money and compensation for it.Vatsala
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Is it correct to stop Association’s services to defaulters, in case of apartments?

atoneplace — Tue, 27 Oct 2009 08:25:22 +0000

Question asked by Narayan Aras from Karnataka, India:
BACKGROUND:
Our nearly 3 years old apartment is registered under Karnataka Apartments Ownership Act, 1972.
(available here: http://www.karnataka.gov.in/dpal/pdf_files%5CAPARTMENT%20OWNERSHIP%20ACT,%201972-new-9.pdf)
(hereinafter, called KAOA in short)
All our expenses are shared through (a) interest on the corpus collected by the builder, and (b) monthly contribution. (The interest on corpus pays for 40% of the total monthly requirement.)
PROBLEM:
Some owners are not paying their monthly dues for more than 3 months.
Because of the corpus, this amounts to non-payment of 60% of the monthly dues.
CAUSE:
There is no reason for the non-payment, as explained below:
We provide the following opportunities for anyone to raise objections about budget, accounting or management:
• We have weekly association meetings and the annual AGM.
• Our monthly financial statement is published in the Yahoo Group, for all to see and comment.
• Even the petty cash account is kept open for scrutiny in the office.
The defaulters have not used any of these mechanisms to express their objections.
Our accounts are subjected to annual audit; which have not attracted any adverse comments.
Thus the defaulters have no possible reason for withholding the payment.
They have not replied to any of the public notices, emails or Yahoo Groups posts urging them to pay up.
Our estate manager has personally visited them to get the dues, but they have not responded.
Looking at their financial status and lifestyle, lack of funds is not the reason for the non-payments.
POSSIBLE SOLUTION:
We have provision in our bye-laws to stop our own services (which we provide at our shared expenses) to such people. The intention is to force them to pay up.
Examples are :
(a) water (which is bought in tankers, treated in our own water-treatment plant and then pumped to overhead tanks)
(b) DG backup in case of power failure (each apartment gets 500 VA which is not metered)
(c) Electrician
(d) Plumber
(e) Clubhouse+swimming pool+gym
We have no intention of interrupting the services provided by third-parties (e.g. electricity, newspaper, milk, etc.). The cutting of services is not permanent (only till the dues are paid).
DOUBTS:
Some of the committee members have a doubt whether stopping of services is lawful.
They think these may be considered as “essential services”, which have to be provided even to non-payers.
But other members think that even BESCOM and BWSSB cut off electricity and water to defaulters.
Therefore, it should be OK if we cut our services too.
Personally, I think the Karnataka Essential Services Maintenance Act does not apply to our situation.

http://164.100.80.70/acts/ACTS%20E/58e.pdf

Is that correct?
KAOA does not mention what to do in case of (partial) non-payment..
So is there any state/central act that allows or prohibits this?
The BESCOM electricity comes through our own substation, for which we have to pay maintenance and inspection charges.
Considering that, can we rightfully cut electricity supply?
We do not want to take the defaulters to court for the simple reason that it would be costlier than what is due!
Is that a free/cheap alternative? (fast courts, arbitration, etc?)
Please provide reference to the applicable laws/acts.
Thanks and regards,
Narayan Aras
Vatsala Answers:
There is a precedent declaring that it is not lawful for the Association to cut off essential services. It is required that you go to court for collecting the same. However you can try to settle the matter through arbitration or mediation. In any case the unpaid dues will constitute a lien on the property which can be enforced. Unfortunately there are no short cuts to the legal system.
Vatsala
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Will I become party to evasion of stamp duty?

atoneplace — Sat, 24 Oct 2009 08:20:39 +0000

Question asked by Anonymous:

Hi I have a question to ask. I bought a house from Builder in Hyderabad in August 2006. The agreement of sale was for 33 lakhs. The registry was done at a lower cost 18 lakhs in august 2006 itself. The flat was under construction that time. I also took a loan of 27 lakhs from the bank for it. Now I am selling the house for 62 lakhs. The buyer is taking over my loan. The bank will give me a difference between loan amount sanctioned and selling price i.e. 30 lacs (Cheque) and the buyer will give me 5 lacs. So in total I am getting 35 lakhs in my account. Now the questions are:

1. The Buyer wants to get the registry of the flat done at 25 lacs. How is that possible as he is giving everything in white? How will I explain to income tax authorities as to where this 35 lac came from when I sold the house for 25 lacs (as per the registry) and where did I get the money (27 lacs) for prepayment of loan. Will I become party to evasion of stamp duty in this case? (There are two agreements, one is agreement of sale which shows the correct price on which the bank finances and the other is the sale deed which shows the amount in the registry and is registered)

2. What documents do IT authorities refer when calculating Capital Gains?

3. The builder is the agent through which I am reselling the flat. And I am paying him a commission of 100/- sq. ft. Now, I got to know that he is fooling the new customer by collecting service tax and VAT from him which is not applicable on Resale Flat. And he will keep that amount with him. Now the question is if the new customer some day knows that Service Tax and VAT was collected from him and is not applicable then can I be in trouble as the builder is just the agent, I am the Seller of the flat? What should I do?

Thanks in advance

Vatsala Answers:

1. The agreement of sale showing the full amount will protect you against income tax queries, despite the lesser value in the sale deed. You can show the extra amount towards fittings, furniture, right of use of car park, right of use of common amenities, deposits kept with builder for water, electricity and maintenance charges.

2. It is open to the IT authorities to rely on the sale agreement (if it is deposited with the bank) and the sale deed.

3. It is not correct for the builder to collect VAT and service tax again from the new purchaser. It should be accounted for under brokerage or some other account. In any case you need not collect it in your name. Vatsala

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What is the normal procedure for filling a case in consumer court?

atoneplace — Tue, 30 Jun 2009 06:57:19 +0000

Question asked by Mr. Surya Mishra from Bangalore:

Hello, I am thinking of buying a property in Bangalore, but horror stories from people have scared me so long. I need some advice regarding various scenarios faced by my friends and how to resolve them.
1. The builder arbitrarily scraps the project and refuses/delays to pay back the amount. The usual answer is going to consumer court. But please be more specific. How to go about consumer court? What is the normal procedure? How much time and money do I have to spend over there? What kind of paper work is required?
2. The builder changes the layout plan. The swimming pool is smaller, no tennis court, no fountain, children playing area is smaller.
3. Builder completes the project but is not completing other facilities (swimming pool, land scaping, club house)
4. At the time of possession, builder is charging exorbitant amount for maintenance.
Thanks
-Surya Mishra
Bangalore

Vatsala Answers:

1. The consumer forum is relatively quick. You can appoint an advocate or appear in person. Your complaint along with affidavits should be filed. There is no court fee. Your matter could be disposed within 8 months to a year. But you should keep appearing in court every time the matter comes up.
2. The specifications of the common amenities and facilities and time for its completion can be shown in the construction agreement itself. However this is not presently done. You can insist on the same and if the builder does not oblige, you could try to find another builder who will enter into such a contract.
3. The maintenance charges are also subject matter of contract and are usually mentioned clearly in the agreement. It is collected for 1 year after which the association is formed and it takes over the maintenance.
Vatsala

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What measures can be taken against the builder if he doesn’t fulfill the specifications agreed upon in the agreement?

atoneplace — Sat, 27 Jun 2009 10:23:50 +0000

Question asked by Mr. Anil Kumar from Bangalore, Karnataka:

Dear Sir/Madam,
I recently bought a apartment in Bangalore, my problem is recently I was drilling a hole in the wall to hang some pictures, for my surprise I did not find any cement plastering on the wall it was a layer of plaster of paris instead of cement, the nail directly went into the hallow block, curious about this I tried in different parts of the house, only the outside of the apartment is been plastered with cement all the interior walls are been plastered with plaster of paris, what can I do, can I take this issue legally, whom do I contact,
Kindly help me.
Thanking you
Anil Kumar
Bangalore

Vatsala Answers:

The specifications listed in the construction agreement between you and the builder has to be scrutinized. Subject to that you can call upon the builder to rectify the defect free of cost if the possession has been taken by you within the past year. Otherwise a suit for deficiency in service in the consumer court can be filed after sending a legal notice.Vatsala

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Is A POA Sufficient To Execute A Sale Agreement?

atoneplace — Wed, 04 Mar 2009 03:39:52 +0000

Question asked by Mr Vasudev Rao:

Dear Sir / Madam, I am planning to purchase a flat in Bangalore. The developer has built 8 flats on a land â€“ and selling one of the four flats owned by him. This is based on a POA, issued 2 years ago from the owner of the land to the developer.
Is this POA sufficient to execute the sale agreement? One of my friend suggested to get an affidavit from the owner for current date â€“ stating that the POA is still valid. This affidavit is difficult as the owner is in foreign country and very old man. Please advise if this POA is sufficient or affidavit is a must.
Appreciate your quick response
Vasudev Rao

Vatsala Answers:

Any POA coupled with consideration is irrevocable. You can proceed to purchase the flat if the title is clear.Vatsala

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Can A Society Deprive A Resident From Using Parking Space?

atoneplace — Wed, 04 Mar 2009 02:18:16 +0000

Question asked by Mr Brijesh Vora:

I have purchased the Flat and the society has been formed thereafter ( apprx after a year). In a societyâ€™s first meeting, the society has allotted the parking space to the members for a sum of Rs. 50000/- . However, I could not get parking space open as one of the space identified for me by the society has been objected by other member who has purchased stilt parking from the Builder saying that it is right opposite to my parking space. The other member has got 2 parking of which one is stilt and other is open. There are other members who has got parking space but does not have vehicle.
Society is now not allotting the parking space to me even though I have agreed to Pay Rs.50000 and also ask for parking in right first meeting of the society after formation.
What are the rights I have to claim from the society
1. Can society deprive me from parking
2. Can I ask society to take away the parking from member who has 2 parking i.e. one stilt and one open
3. Can I use the parking for which one member is objecting but feasible
4. Do other member has to surrender the parking as they have no vehicle
5. Can I file suit against society
Please advice me in this regard I shall be thankful
Regards
Brijesh Vora

Vatsala Answers:

You can take your complaint to the competent authority in charge of co-operative societies and file a case there. It will be heard more quickly than the courts and summarily disposed off on merits. You are advised to hire a local lawyer.Vatsala

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What Should Be Done To Get A Place Vacated By A Tenant?

atoneplace — Wed, 04 Mar 2009 02:07:58 +0000

Question asked by Mr Ashok Mathew from Kuwait:

Dear Sir,
I am a NRI staying in Kuwait. My flat in new bombay was rented to one person by my sister in law in new bombay after making an agreement for 11 months between me and the person . I gave him a notice 15days before finishing the period to move from my house. Now it is 12 months and he has not moved. Now what is next the action to be taken . Please advice.
Thanks & Regards
Ashok

Vatsala Answers:

A local lawyer must be consulted to determine the grounds for eviction. You should then send a legal notice to the tenant to vacate which, if not complied with, should be followed by filing a suit in the concerned court, which has jurisdiction over the property. Vatsala

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Does A NRI Still Have Right On The Property In India?

atoneplace — Fri, 20 Feb 2009 05:00:11 +0000

Question asked by Mr Sangeetha Heblera:

Hello I used to live in India about 15 years ago. My husband and I had purchased a flat and lived in it for about 6 years.We then moved overseas but did not sell the flat. A friend who is a foreigner asked if they could live in it while we were away and as we were not sure of how long we would be overseas we said yes.Now we are citizens of this country. We want our house back in India as we would like to sell it. Do we still have the rights that an Indian citizen would have regarding this.I would be really grateful if you could reply to my query.
Thanks in advance.
Sangeetha Heble

Vatsala Answers:

Yes all your rights are still intact. You can sell the flat now as any resident of India does in the normal course of events.
Vatsala

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Can A Legal Action Be Taken Against The Builder If He Doesnt Meet His Commitments?

atoneplace — Fri, 20 Feb 2009 02:52:41 +0000

Question asked by Ravi B. Singh from Kolkatta :

Hi,
I had purchased an apartment in Kolkata and made the full payment at one time. I was promised that the possesion of the flat would be given within 2 yrs but that it has been more then two years and still i have not been given possesion of the flat. Can i take legal action against the builder?
Thanks
Ravi B Singh

Vatsala Answers:

This is a matter of deficiency in service and you can approach the concerned consumer forum for relief.

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