In a recent ruling, the National Consumer Disputes Redressal Commission (NCDRC) has shifted responsibility to landowners, often joint venture partners, for compensating homebuyers in cases of project delays. This ruling is expected to enhance the prospects of recovery and compensation for homebuyers, particularly in situations where developers are absent or insolvent. The NCDRC's order mandates landowners to complete construction within three months, obtain occupancy certificates, and pay 6 percent annual delayed interest from the possession date. The decision departs from the norm, establishing joint development partners' responsibility for project delays, providing homebuyers with additional avenues for recovery.
In a landmark decision, the National Consumer Disputes Redressal Commission (NCDRC) has paved the way for increased chances of recovery and compensation for homebuyers in stalled projects. The ruling holds landowners, often joint venture partners, responsible for compensating homebuyers in cases of project delays. Legal experts predict that this ruling will be particularly beneficial in situations where developers are absconding or facing insolvency.
The NCDRC's order, dated December 15, 2023, mandates that the responsible parties complete the construction of flats within three months, obtain occupancy certificates, and pay a delayed interest of 6 percent annually from the possession date.
The case in question involved Unishire Homes LLP and its joint development partners, who were found liable for delayed compensation in a Bengaluru-based project with a handover date originally set for 2016. Advocate Chandrachur Bhattacharyya, representing the homebuyers, revealed that the pending compensation in this case amounts to approximately Rs 4-5 crore.
This ruling signifies a departure from the norm, where homebuyers typically held only the developers accountable for project delays. Bhattacharyya emphasized that the judgment establishes joint development partners' responsibility for project delays.
The Unishire Terraza project in north Bengaluru, launched in December 2012, saw homebuyers booking apartments between 2012 and 2015 for prices ranging from Rs 1-8 lakh. Despite an expected delivery date in 2017, the developers and their partners failed to complete the project, prompting ten homebuyers to seek relief from the NCDRC.
The commission noted a delay of more than six years in handing over the project and, in October 2023, ordered the developer to pay 6 percent per annum delayed interest to the affected homebuyers. Subsequently, the homebuyers filed a review application, seeking joint liability for landowners and joint development partners, which the NCDRC found meritorious.
The ruling gains further significance with a December 2019 circular issued by Karnataka RERA, which clarified that landowners with revenue share in real estate projects should be treated as promoters.
Dhananjaya Padmanabhachar, Founder and Convenor of the Karnataka Home Buyers' Forum, highlighted that developers often form companies and enter joint development agreements with landowners. However, in cases of delay, developers might abscond, leaving homebuyers stranded.
The judgment is expected to empower homebuyers by providing additional avenues for recovering investments, especially in instances of developer absconding or company insolvency. Bhattacharyya urged homebuyers to recognize the shared responsibility of landowners in completing projects, thereby expanding the scope of recoveries.
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