Consumers beware!
Read the fine print in an agreement
Pushpa Girimaji

Pushpa GirimajiFour years ago, I had booked a flat with a developer/builder, who had promised to give me possession in two years. Accordingly, the EMIs were fixed and by the end of the second year, I had paid 90 per cent of the total cost of the flat. However, till today the project is not complete and now I want to buy a ready flat somewhere else and want my money back with interest. However the builder is saying that as per the agreement that I signed with him (he never gave me a copy), I will be entitled to only 50 per cent of the amount paid if I cancelled the booking. What are my options?

The builder’s behaviour is highly unfair and unethical. However, since you need the money urgently to buy a flat, I suggest that you take the 50 per cent that he is offering, but under protest (in writing ) and then seek the help of the consumer court to get what is really due to you. The builder in this case is not only guilty of deficient service, but also of unfair trade practice and he must not only return the entire amount paid by you, but also pay interest and compensation for the harassment and financial loss caused to you.

I will quote below four important case laws that will help you and all other consumers who face similar situations.

The order that I would quote first is that of the Supreme court in Lucknow Development Authority vs M.K.Gupta (CA No 6237 of 1990 decided on 5-11-1993) wherein, the highest court in the country described such delays in handing over possession as “denial of service” and made it amply clear that a consumer, who is a victim of such delay is entitled to compensation.

The second question is about one of the conditions in the agreement that you signed, forfeiting 50 per cent of the amount paid. Now that is a highly unfair and unreasonable term and he cannot bind you to it. In Central Inland Water Transport Corporation vs Brojonath Ganguly (date of order: 6-4-1986), the Supreme court made it clear that the courts will strike down unfair and unreasonable terms in a contract, when they are between two parties having unequal bargaining power.

Similarly, in PUDA vs Shakuntala Devi Saini, (RP no 1490 of 2008), the National Consumer Disputes Redressal Commission held that a party which is at fault, cannot exploit a clause in an agreement to deny refund to a party which is not at fault. This case was about a forfeiture clause and the apex consumer court’s point was that a party which does not stick to its part of the bargain cannot demand that the other party abide by it.

In Shri J.L. Sethi vs Senior Citizen Home Complex Welfare Society (RP no 3129 of 2005), the National Commission agreed with the lower consumer courts that the builder, who was charging 18 per cent interest from the consumer for delayed payment, should also pay the same rate of interest for delays on his part in completing the construction.

Dismissing the argument that interest should be calculated on the current rate, the commission quoted two Supreme Court orders and said that the principle that interest must be granted at the current rate of interest was only applicable where the proceedings were for recovery of debt or damages and did not apply to grant of compensation.

Having said that, I must tell you that the next time you sign any agreement, please read it carefully and always keep a copy.