Flat buyers can proceed against builders for remedy, SC had said

Swati Deshpande TNN 

Mumbai: As residents of the 35 floors held illegal by the Supreme Court in seven buildings of Worli’s Campa Cola compound face an uncertain future, a question being raised is who should be held liable to compensate those families that bought flats on these floors in good faith. 
    In its February 27 order that the illegal floors be demolished, the apex court said the “flat buyers shall be free to avail appropriate remedy against the developers/ builders”. 
    “The flat owners could be entitled to compensation after demolition, but the compensation can come only from the builder and/or promoter, it cannot come from the BMC which had sanctioned the plans,’’ said a lawyer not willing to be named. 
    In the law of contracts, “good faith” is a general presumption that the parties to a contract will deal with each other honestly and fairly so as not to destroy the right of the other party or parties to receive the benefits of the contract. 
    For bona fide buyers, shouldn’t the builder or their heirs be held liable to compensate the people who now stand to lose their homes? “Usually the residents or flat buyers are helpless in the face of violations committed by the developers… Under the Maharashtra Ownership of Flats Act, the builders in the city usually enter into sale agreements based on initial permission required for any construction (even before the commencement certificate) from the civic authorities and though the law mandates that further amendments may be made with approval from the buyers, the provision is routinely flouted,” said advocate Y P Singh. 
    Another issue that arises is whether the authorities who had the responsibility to sanction the building plan and to monitor the construction and its progress should be accountable too. 
    “Does the civic body or the officers attached to departments that sanctioned the development as part of their statutory duty or permitted amendments to the original building plans and were meant to monitor their development at various stages escape liability and blame completely? Is there no accountability of those officers who were to act against the irregularities at the appropriate time?” said senior counsel Amit Desai.

Source:::: The Times of India, 30-04-2013, p.02, http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

HC declines to intervene in Worli case, cites petition in apex court Residents To Weigh Future Legal Course

Rosy Sequeira TNN 

    The Bombay High Court on Monday declined to intervene and grant interim relief from demolition to residents of the illegal upper floors of all buildings at the Campa Cola compound at Worli. 
    Rejecting their plea, the court said so long as the Supreme Court’s order continues to operate, it should not interfere with the Brihanmumbai Municipal Corporation’s (BMC) action under Section 488 of the Mumbai Municipal Corporation Act, more so when a review petition is pending before the apex court. It noted that there is no interim relief granted in the review petition. 
    A division bench of Justice Abhay Oka and Justice A R Joshi heard two petitions, one by residents who live above the fifth floor and another, by those who live up to the fifth floor. The SC had on February 27, 2013, upheld the BMC’s notice under Section 351 (stop work) notice. 
    Advocates Rajendra Pai and Sandeep Aole argued on behalf of all residents facing demolition that the BMC is “going hammer and tongs’’ to undertake the demolition even while their review petition is pending in the Supreme Court. “It is an enormous, gross work. Nowhere in Mumbai has demolition taken place of an occupied building,’’ said Pai. The judges said the BMC notice has been confirmed by the Supreme Court. “What else is there to be done? Once the apex court says demolish, can anybody say he wants to continue to stay?” asked Justice Oka. 
    The judges said the residents could have gone to the Supreme Court with their grievances instead of approaching the HC. “You’ve adopted remedy of review, you go there. In the teeth of this direction, can we stop the demolition?” asked Justice Oka. Pai said residents moved the HC after flats above the fifth floor were issued notice under Section 488 (power to commissioner to enter premises) of the MMC Act on April 26, 2013 in which they were asked to vacate their premises by April 29, 2013. He said the SC order does not say demolition should be carried out hastily. 
    To a query, the judges were informed that demolition has not started. “Demolition of a building where a person is residing is against fundamental rights,’’ said Pai, adding, “They must not take hasty decisions. Don’t dis-house me like this. We appeal to the conscience of the court.” Pai said time to exhaust legal remedy must be given. 
    The judges said they were not going to hear the petitioners on merit. They made extensive reference to the Supreme Court’s order. They pointed out that the SC said it was not dealing with illiterate people but those who were fully aware that the upper floors were illegal. Also, the SC had expressed that the BMC will undertake the demolition at the earliest and that its officers/employees shall not put hurdles and obstacles in its way. 
    “We are contemplating the legal options available and should decide on the next course of action by Tuesday,” said Aole, a partner in the law firm which handled the High Court case for the residents. 
    Counsel M P Rao, appearing for residents living up to the fifth floor, argued the BMC does not have technical ability and specialised knowledge to undertake demolition of only the occupied part of the structure. “They must make sure the demolition does not affect our flats,’’ said Rao, adding the BMC must get a structural stability report. 
    BMC counsel S U Kamdar said it has appointed consultant Shashank Mehendale and Associates for the job. “The work will be carried out in a phased manner,” said Kamdar. “While carrying out demolition, the BMC is bound to ensure safety of the structures held to be legal,” the court said. 

 

‘ONLY SUPREME COURT CAN GRANT INTERIM RELIEF’ 
HC declines to intervene as the review petition is pending in the SC 
The judges said they were not going to hear the petitioners on merit. Any interim relief or remedy available to the affected residents should be taken up in the pending SC review petition 
We are contemplating the legal options available and should decide on the next course of action by Tuesday 
Sandeep Aole | LAWYER FOR AFFECTED RESIDENTS

Affected residents plan a hunger strike on Thursday

 

 

Source:::: The Times of India, 30-04-2013, p.02, http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

2L  COMPENSATION

Developer to pay for ‘unfair trade practice’

Rebecca Samervel TNN 

Mumbai: The Maharashtra State Consumer Disputes Redressal Forum has recently ordered a builder to pay Rs 2 lakh as compensation to a Kurla resident for demanding Rs 9.68 lakh “interest payment” just before handing over the possession of a flat. Runwal Developers Pvt Ltd will also have to pay back Dinesh Hegde the Rs 9.68 lakh. 
    “It exhibits the builder’s unfair trade practice for having made such an unlawful demand. It also shows deficiency in service for raising the demand and withholding the handing over of the flat’s possession unless the said payment was made,” the commission said. 
    In 2005, Hegde bought two flats from Runwal Developers, the possessions of which were to be handed over to him on October 31, 2006. The construction was completed in April 2008 and Hegde made the last payment in December 2008. But when he claimed the possession, he was denied. After repeated requests, the builder demanded Rs 9.68 lakh, as interest for the delayed payment and only after the amount was paid in May 2010 was the possession given to him. 
    The builder contended that according to the agreement terms, Hegde had opted for ‘Advance Disbursement Facility (ADF)’ and hence, got the flat at a discounted rate. The builder said Hegde had agreed to pay the balance Rs 30 lakh at a go and a delay of seven days in payment, would attract an interest rate of 21% pa. In April 2011, the district forum dismissed Hegde’s complaint. 
    The state commission observed that it can be seen that the builder did offer him a concession and let him make payments as per the construction stages. It said that the demands were duly honoured by Hegde and raising a demand of Rs 9.68 lakh after keeping silent for a long time was unjustified. “At no point any interest was charged for delayed payment. If any interest was applicable, it ought to have been demanded at that time itself,” it observed.

Source:::: The Times of India, 19-09-2012,  p.7.  http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

Man wins 7L payout for not getting flat possession

Rebecca Samervel TNN 

Mumbai: Failing to give possession of a flat and creating third party interest by selling it to another buyer has cost a builder Rs 6.80 lakh. Alongwith the Rs 9.22 lakh paid as advance and registration charges for the flat, Rishabh Enterprises will have to pay Rs 6.80 lakh compensation to a Goregaon man who had purchased flat in the former’s project but not received possession. 
    Darshan Thakkar had booked the 1BHK flat worth Rs 19 lakh and the agreement was signed on April 30, 2008. Thakkar also paid a total of Rs 9.22 lakh to the builder. But the flat was never handed over to him. After repeated requests, the builder gave a cheque to Thakkar, which bounced. The builder then gave Thakkar three cheques amounting to Rs 3 lakh each. They also bounced due to insufficient funds. Thakkar alleged that the builder had sold the flat to another person. Alleging deficiency and unfair trade practice Thakkar filed a complaint in the Mumbai Suburban District consumer Disputes Redressal forum on May 6, 2011. 
    The forum sent a notice to the builder, but he refused it. An order was passed ex-parte. The forum said the builder had accepted that Thakkar had paid a part of the flat amount. This was evident from the fact that the builder made attempts to return the money to Thakkar. The forum took into consideration documents submitted by Thakkar, including a copy of the cheque and letter sent by the bank after it bounced. The forum held the builder guilty of deficiency in service.


Source::::: The Times of India, 03-09-2012, p.02 . http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

Pay 5% VAT for flats bought from 2006-10

TIMES NEWS NETWORK 

Mumbai: Thousands of people who bought flats between 2006 and 2010 will have to pay value added tax (VAT) at the rate of 5% of the value with retrospective effect. On August 6, the state’s sales tax department issued a circular to developers saying VAT would be levied on flats, shops and bungalows sold by them between June 20, 2006 and March 31, 2010 . Several Mumbai-based developers said they would soon send VAT collection notices to such flat purchasers. 
 
    The new burden on a customer who bought a flat at Rs 50 lakh works out to a minimum of Rs 2.5 lakh. ‘VAT on flat will hit buyers’ Mumbai: The state government intends to collect around Rs 1,000 crore from VAT on sale of flats for this four-year period. The Bombay HC recently rejected real estate developers’ appeal against the tax. MCHI-CREDAI and CREDAI-Pune Metro, which represented the developers, have now moved the SC with a special leave petition. 
 
    MCHI-CREDAI said each flat buyer in Maharashtra will have to pay up to 5% additional taxes for flat purchased by them along with interest at 15% per annum and penal interest at 25% that the state government is levying. Flat buyers are already reeling under the pressure of 3.09% service tax which has been implemented by the central government. Atul Puranik of the Centre for Fair Business Practices, said: “The cost of living is going up every day. The 5% VAT plus penal interest will further cripple the common man. We appeal to the government to scrap VAT on sale of flats altogether and give much-needed relief to the customer.’’ 
 
    The Maharashtra government had imposed 5% VAT on flat sales following the order of the Supreme Court in the case of K Raheja versus Karnataka government. Property experts said this led to an anomaly as the taxation system followed in Karnataka is totally different from the one prevailing in Maharashtra. “Unlike Maharashtra, Karnataka does not have the ‘Ownership of Flat Act’ and therefore developers in that state prepare two separate sets of documents—one for the share of land on which stamp duty is levied and another on construction on which no stamp duty is paid,’’ they said. The Maharashtra government subsequently reduced VAT on sale of flats to 1% from April 1, 2010.

Source:::: The Times of India, 24-08-2012, p.01. http://epaper.timesofindia.com/Default/Client.asp?Daily=TOIM&showST=true&login=default&pub=TOI&Enter=true&Skin=TOINEW

Builder giving hard time? Go to consumer forum

Rakesh Bhatnagar l New Delhi

All those who have been waiting for years to get possession of their flats or are unhappy with the construction work can now move the consumer protection forum against builders. The forum has been empowered to take cognisance of any deficiency in service by a builder. The builder will now have to ensure that ownership documents are registered in the flat owner’s name. Terming a builder “service provider” and an applicant for a flat under construction “consumer”, the Supreme Court on Friday gave buyers the power to move the forum against the builder. If a builder uses substandard material or makes false or misleading comments about the condition of the flat, it would “amount to denial of facility or benefit of which a consumer is entitled to claim compensation under the Consumer Protection Act”, a bench of justices TS Thakur and Gyan Sudha Misra ruled. Dismissing an appeal filed by a group of contractors saying construction business cannot be termed “service” and a buyer cannot be called “consumer”, the court said when a builder undertakes to construct a house/flat, he has to “perform his obligation as agreed upon”. “A flat with a leaking roof or walls with cracks is denial of service.” Source::: DNA, 14-05-2012, p.01: http://epaper.dnaindia.com/