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LAWYERS SUGGESTION KEY POINTS:

  1. Buyers association either registered or unregistered can represent the case. However, registration would give more benefits so  the builder is forced to talk to one identify who represents buyers benefit. Builder will naturally respond / negotiate once an association is formed.
  2. Registration can be done before Occupancy Certificate (OC)  but need to get the sale deed clearly checked line by line, by lawyer on this channel showed his suspicion of only 2 blocks ready out of 8 blocks: chances of many issues. Registration agreement needs clear scanning by lawyer to avoid future mistakes as the project isn’t complete.Buyer can register the property but do not tie registration to OC as that will clear all the uncertainty of owning the flat.
  3. Possession without OC is at builders cost. Builder is liable to bear all cost such as taxes, power, maintenance etc. Buyer can take possession if builder is giving alternate power but should be at his cost not owners.
  4. Maintenance agreement: There is no legal binding to sign any maintenance agreement during registration you can deny as it is one sided. Strictly No to maintenance agreement of 10 yrs..Builder cannot enforce this for signing. Demanding 1 year maintenance cost in advance is ok. Maintenance payments to be in the name of different or specific bank account. Need not pay more than 1 year.
  5. Arbitration clause is not applicable for filing case in consumer court. There is only consumer court for this issue and can be through association and effective through association rather individual. Interim relief for completion of amenities/services can be claimed at consumer forum.
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THE BEGINNING OF CLASS ACTION LAWSUIT “REAL ESTATE”

  • All home buyers can join a existing complaint filed

  • Judgement of the case will be binding on all the buyers

  • Only one complaint to be filed against the Builder /Developer Under Section 12.1 C as a group of buyers

  • All other complainants can  join as a group after the Public Notice is served

  • Judgement to be based on Agreement Value and not Market Value

The NCDRC have clarified its position on Section 12 (1) (c) of Consumer Protection Act 1986.  NCDRC has allowed complaints by a group of buyers under Section 12 (1) (c).

If we have to go by layman’s interpretation, all builder related cases can by filed in NCDRC, thus skipping the lower forums.

There has been a lot of confusion and ambiguity in the interpretation of complaints filed under Section 12 (1) (c). Different benches of NCDRC had a different view on this section of the Act.

This led to the matter being referred to a three-member bench of NCDRC. These three question/issues arose in front of the commission: Whether complaint under Section 12 (1) (c) filed on behalf of or for the benefit of only some the numerous buyers are maintainable or it must be filed on behalf of all consumers having a common interest.

Where complaint under this section is maintainable where the value of goods, service, compensation in respect of none of the allottees exceeds rupees one crore.

Where complaint under this section is maintainable where the value of goods, service, compensation in respect to individual allottee exceeds rupees one crore.

Where complaint under this section is maintainable where the cost of the apartment, the area of the apartments is different and the apartments were booked on different dates.

Court’s observation

Here are the key observations in full bench judgement concerning the interpretation of Section 12 (1) (c) of the Consumer Protection Act. We have tried to explain court’s order in laymen’s terms.

  •  If a complaint is against a builder under Section 12 (1) (c), i.e by an unregistered group of persons, it can be filed only on behalf of or for the benefit of all buyers who have the same interest and grievance against the builder. It cannot be filed seeking relief for the benefit of only some of the buyers.
  •  A complaint under Section 12 (1) (c) is maintainable before the NCDRC where the aggregate value of the all the apartments combined and the total compensation claimed in respect of all the buyers exceeds Rs. 1 crore. The value of each individual apartment is wholly irrelevant in such a complaint.
  • So long as the grievance of the buyers is common and an identical relief is claimed for all of them, the cost, the size, area of the flat/plot and the date of booking/allotment/purchase would be wholly immaterial. The relief claimed will be the same if for example, in a case of delay in possession, refund, or possession or in the alternate refund, with or without compensation, is claimed for all the buyers. Different reliefs for one or more consumers on whose behalf or for whose benefit the complaint is filed cannot be claimed in such a complaint.
  • The jurisdiction of the NCDRC shall be decided on the agreed sale consideration ,i.e.value at the time of booking the apartment, not the market value of the apartment. e. A cooperative society or a group of cooperative societies, firms, an association shall not be entitled to file a complaint under Section 12 (1) (c) unless the cooperative society itself is the consumer.
  • The Act does not allow more than one complaints in a representative character. The decision in one complaint filed in a representative capacity will bind all the buyers of the project. Therefore once a complaint in a representative capacity is filed under Section 12 (1) (c), and requisite permission for filing the same is given by the consumer forum, the second complaint under Section 12 (1) (c) will not be maintainable for the same project for the same relief. A second complaint, if filed, having the same interest and seeking the same relief is liable to be dismissed with liberty to seek impleadment in the complaint already instituted.
  • Since a complaint in a representative capacity shall be binding on all the buyers, an individual complaint expressing the same grievance will not be maintainable and the only recourse available to such buyer is to seek impleadment in the complaint filed in the representative capacity. However, as far as individual complaints instituted prior to grant of requisite permission under Section 12 (1) (c) is concerned, such complainants cannot be compelled to withdraw their individual complaint.
  • The consumers who are already before the consumer forum when the requisite permission in terms of Section 12 (1) (c) is accorded, will be out of purview of the representative complaint. The order passed in the representative complaint will not be binding on them.
  • However, if such persons want to withdraw their pending complaints and join the complaint instituted in the representative capacity, there is no bar on their adopting such a course of action. h. Considering the binding effect of a decision rendered under Section 12 (1) (c) on all the consumers on whose behalf such a complaint is filed, even if they choose not to join as a party to the complaint, It is necessary to exercise due care and caution while considering such a complaint while granting the requisite permission under Section 12 (1) (c).
  • It would be necessary for the bench to either give individual notices or an adequate public notice of the institution of the complaints, to all the persons on whose behalf or for whose benefit the complaint is instituted. Such a notice should disclose the subject matter of the complaint including particulars of the project, class of persons on whose behalf or for whose benefit the complaint is filed, the common grievance is sought to be addressed, the alleged deficiency in the service and the reliefs claimed.
  • It will also be necessary to hear the opposite party before taking a final view on grant of necessary permission under Section 12 (1) (c).
  • Court’s observation on existing complaints Individual complaints filed prior to the grant of requisite permission under Section 12 (1) (c) have been validly instituted and they can not be compelled to withdraw their individual complaint and compelled to become a party of subsequent complaints filed in a representative capacity. If, however, such persons want to withdraw their individual complaints and join the representative suit, they shall be allowed.
  • JUDGEMENT CAN BE FOUND BELOW ON SECTION 12 (1) (c)
    ncdrc-full-bench-judgement-on-section-12-1-c

Advantages of filing case against builder as an association

Home Buyers are increasingly engaging builder on various issues related to projects. Builders also find it difficult to silence individuals when confronted as groups. Although social media and informal groups are good for raising collective voice, buyers should look forward to registering their associations.
Home buyers associations can file cases on behalf of its members at various forums including Consumer forums. Cumulative value of cases when filed by association can easily exceed one crore and case can directly be filed in NCDRC. A legally recognised and registered association gives an impression of seriousness of people involved. A legally recognised group can present the grievances of home buyers group at various forums.
It is also worthwhile to mention that various defamation cases are being filed by builders against individuals. A registered association can always stand up against such tactics by builders and back those who are targeted by builders.
To sum it up, it is very advantageous to form a legally registered association to file a case cumulatively against a builder.

Builder has to pay compensation if project is delayed

Building projects are often delayed due to disputes between a builder, land owner and developer. Builders try to term these as force majeure, which means due to circumstances beyond their control, to avoid being held liable for deficiency in service. In a recent ruling, the National Commission has held that such disputes cannot be termed force majeure, and a consumer would be entitled to claim a refund along with interest and compensation when the builder is unable to complete the housing project in time. However, a builder can neither unilaterally extend the date of possession nor insist on allotting alternate flat or plot to escape refunding the amount.
Case Study: Shahin Mulla wanted to purchase a residential unit in “Amar Prem”, a housing project in Goa, to be developed by Utopia Projects. The entire consideration of Rs 30 lakh was paid in two instalments of Rs 15 lakh each.
The agreement for construction and sale was executed thereafter on February 24, 2012. It stipulated that possession would be given by September 2013, but the builder would be entitled to a grace period of four months, i.e. till January 2014.
When Mulla visited the site in August 2013, she found that even the foundation had not been laid. She got a legal notice issued to the builder, which was ignored. So she filed a complaint before the Goa State Commission.
The builder contested the complaint, explaining that they had been assigned development rights by RPC Builders and Developers, who had later committed various breaches and were also demanding extra payment for the property. As a result of the dispute, work could not commence. The builder termed the dispute as force majeure and not due to any wilful default. Utopia Projects also pointed out that the complaint was premature as it had been filed prior to January 2014, which was the date of possession inclusive of the grace period.
The state commission observed that the agreement provided that in case of any delay beyond the grace period, the builder would pay the purchaser a monthly compensation at Rs 50 per sq.ft. The defence of force majeure cannot be invoked as the agreement had not been terminated due to inability to perform it.
The state commission concluded that there was deficiency in service and ordered the builder to refund the amount of Rs 30 lakh along with 5% interest from the date of payment of each instalment till the extended date of possession. For the delay, the commission directed payment of a monthly compensation of Rs 50 per sq. ft. from February 1, 2014 till the date of payment. For mental agony, a further amount of Rs 1 lakh was awarded, which would carry 9% interest if not paid within 30 days.

Utopia Projects appealed to the National Commission, contending that the company had formulated a revised schedule, but Mulla was not willing to accept it. In its judgment of April 1, 2015 delivered by M Shreesha for the Bench along with Justice DK Jain and Vinay Kumar, the National Commission held that a consumer is not concerned with the internal disputes between the landowner, developer or contractor. A builder cannot take shelter by wrongly terming internal disputes as force majeure. It ruled that Mulla was well within her rights to demand possession within the stipulated time or else seek a refund along with compensation. Accordingly, the National Commission rejected the builder’s appeal, holding that the state commission had rightly allowed Mulla’s claim.

 Conclusion: The consumer has the right to refund along with compensation when a builder delays possession beyond the agreed time.

 

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Can you claim tax deduction for your under-constructed house? Can you claim tax for the home loan taken from your friend and not from Bank ? These are some of the questions which are not generally discussed over and lot of investors have no idea about actual rules. In the video below I will talk about four not so known rules of home loans . Keep reading ! . Readers on email can watch the video on this article.

eTutorial – TDS on sale of property

Click here to download eTutorial – TDS on sale of property-HOW TO PAY TDS ON PURCHASE OF NEW PROPERTY

1% TDS rule on sale of property explained:The 1% TDS rule on sale of property was introduced in the 2013-14 Budget to put a check on underhanded property deals.

In effect since June 2013, the regulation mandates that on sale of property exceeding Rs. 50 lakhs in India, a tax of 1% has to be deducted on the total sale consideration before making the payment to the seller.

The buyer must then deposit this 1% TDS to the Government. PAN of both the buyer and seller must be compulsorily specified while filling out Form 26QB to ensure that sellers don’t avoid taxes on the capital gains they make.This rule does not apply on sale of agricultural land.

What is the procedure to deposit TDS?

  1. Calculate 1% TDS on the total sale consideration. For a property getting sold for Rs. 60 lakhs, the seller would receive Rs.59,40,000 after tax.
  2. Make the payment online on Form 26QB. A challan is generated. Note that this must be done within 7 days from the end of the month in which TDS is deducted.
  3. The payment is reflected on the seller’s Form 26AS under the head Part F within 7 days.
  4. The buyer is then required to furnish a TDS certificate called Form 16B to the seller. This can be downloaded from the TRACES website.
    -For this, register on the TRACES website with your PAN and challan number.
    -Click on “Application for request of Form 16B” from the header.

Read Ahead:TDS rule on sale of property