The Supreme Court has delivered a ruling that protects homebuyers

It is an issue that has affected thousands of would-be homeowners throughout the country. What happens to people who’ve booked one plot of land and then find they’ve been given another? Until recently builders have often changed allotments and even charged extra for it.

The Supreme Court has now ruled in favour of the homebuyer. In Haryana Urban Development Authority (HUDA) vs Rajnish Chander Sharda and GDA vs Dhamesh Chander Goel (January 12, 2001) it has laid down that the developer cannot charge extra if it allots a different plot in a more expensive area. Also, allottees can reclaim their deposit with 18 per cent interest if they turn down the alternative plot and demand their money back instead.

This issue has launched several legal suits. And, the courts have, over the years, handed down conflicting verdicts. Now, the Supreme Court and the National Consumer Disputes Redressal Commission have both returned verdicts in favour of the home-buyer.

The latest judgements have contradicted an earlier ruling by the Monopolies and Restrictive Practices Commission (MRPC). The MRPC held in S P Anand vs HUDA (1999 CTJ 326) that a person given an alternative plot of land in a costlier area, “could not be extended undue advantage and he had to pay the higher price”.

The allottee argued that he had not asked for the more expensive plot that had been allotted to him. The commission turned down the allottees argument and ruled that the complainant, “could not say that he should pay only the price which he was to pay for the plot originally allotted to him”.

The Supreme Court has now rejected this reasoning. In its January 12 ruling it laid down that allottees should be paid 18 per cent interest on their deposits if they don’t want the new plot allotted to them.

In addition, there should be a reasonable compensation for the worry and suffering caused by the builders. The court also held that the builders could not charge extra for the new plot given in lieu of the one that had been booked.

The consumer courts are now following the Supreme Court’s example. The latest decision in HUDA vs R P Chawla was delivered on August 31. In this case the complainant’s father had been allotted a plot of land by HUDA in Gurgaon for Rs 40,480 which was paid in instalments as per the time schedule. On July 20, 1992 HUDA asked the allottee to pay an additional Rs 39,494 because the price of land had risen.

The allottee replied that he was willing to pay if he was given possession of the land. HUDA did not reply to the allottee’s letter and he died in March 1995.

The plot was transferred to his son R P Chawla who filed a complaint before the district consumer disputes redressal forum asking HUDA to either allot the original plot or a different one at the same price. He also claimed compensation of Rs 2 lakh from HUDA for inordinate delays.

The district forum ordered that Chawla be allotted a plot of the same size in the same sector or in any other developed sector at no extra cost. HUDA was further directed to pay interest at the rate of 18 per cent to Chawla on the amount deposited by him. HUDA filed an appeal before the Haryana State Commission which was dismissed. It then approached the National Commission in revision.

In its judgement the National Commission, following the Supreme Court’s judgement, has observed that the MRTP Commission was wrong when it said that the allottee should pay more for a more expensive plot.

In a clear-cut decision, the National Commission has held that, “if for no fault of the allottee, he is deprived of the plot allotted to him and in lieu of that he is allotted some other plot in the same or any other sector he cannot be asked to pay the price over and above that of original plot”.

The verdict of the Supreme Court as followed and elaborated by the National Commission settles the law once and for all. It will help consumers who have suffered heavily on two counts. First for not receiving the possession from the developing authorities for years and secondly for being forced to pay a higher price for no fault of their own.

(The author is an advocate and the editor of the Consumer Trade Practices journal)