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Discussions related to Real Estate matters, Real Estate laws, loans, financial queries

Battle against builders injustice and consumer rights

Postby webmaster » Sun Feb 10, 2013 11:56 am

Tireless campaigns by consumers against developers in Haryana have started to show results, thanks to the Punjab and Haryana High Court, consumer forums and the CCI

Housing is a basic human need and the quality of the house as well as its environment plays an important role in the growth of individuals, both physically and mentally. One of the root causes of the present day discontent and unrest in the working force is the lack of quality of life and the living environment. The widening gap between the rising population and the housing stock added every year has reached a point where providing adequate shelter and desirable standard of living seems impossible. The efforts made by the government as well as different agencies have not made much impact.

Haryana is predominantly an agricultural state and it is not advisable to use fertile lands for housing as it will ultimately negatively affect production of food grain. It is, therefore, essential to promote the concept of group housing.

It is equally important for the state to have some statute to control the building activities as well the ownership rights. It was with this objective that the Haryana Apartment Ownership Act, 1983 was enacted and brought into force.

The Act, along with certain other enactments and rules, has been in operation for almost three decades now, but the evils that were required to be curbed by the legislations have, unfortunately, grown multifold over the past few decades. The problem here is not the absence of laws for protecting the interests of the apartment buyers and consumers, it lies in the apparent collusion that exists between various governmental agencies involved in the real estate sector and the developers themselves. The nexus of collusion and fraud unfortunately is rooted in the system and has made provisions of the legislation almost redundant.

Till recently, people living in or owning apartments in Haryana did not even think, let alone know, the extent of rights that were available to them under the law. All apartment owners were bound into contracts that were so demonic and arbitrary that everything that belonged to them by law was by a single stroke whisked away from them. There are judicial precedents to suggest that these agreements have come to plague the entire sector due to lesser-known developers blindly aping larger players who had introduced this practice in the 1990s. The system has been perfected over the decades to such an extent that apartment owners have been led to believe by the developers that no matter what the law says, the contract they have entered into with the developer would govern their relationship.

Some people braved the odds and took up cudgels against injustice. Many unfortunately succumbed along the way. Understandable, considering that they were put in a situation where their hardearned funds were retained by the developer, possession of apartments was withheld for years, authorities constituted under the Act turned a blind eye to their complaints and the justice delivery system creaked under the massive workload. Compounded with the financial and other resources at the disposal of the behemoth developers, it is of little surprise that the Act became a dead letter and the builders were able to operate independently of all market and legal forces, as a law unto themselves.

All that has changed… at least there are long strides made by vigilante groups who refuse to bow to the dictats of the high and mighty. In the past few years, the judiciary has noticeably stepped up the task of controlling the spiraling growth in crime and in the real estate domain in Haryana. There have been resounding victories for consumers against various developers in Haryana from the Punjab and Haryana High Court, the consumer forums and the Competition Commission of India. People at the helm have been forced to take note of the complete inaction and apparent collusion between the government and developer lobbies in the state. Few people today dare to live in a fool’s paradise believing that they would be able to escape the long arm of the law only because they had managed to have everyone turn a blind eye to their escapades in the past.

It’s not that the rot has completely stemmed. The bad news is that there are still miles to go before the sector can really be reformed and the avowed purpose be achieved.

The good part is that there is a lot more clarity with regard to the laws, a lot more confidence in the institution of justice than there was in the past..

Vaibhav Gaggar is a partner at Gaggar & Associates, solicitors and advocates


  • The land and the building including any additional FAR for a group housing scheme will belong to the association of the members and not the builder
  • The builder cannot launch projects until it has obtained the requisite permissions
  • The projects have to be in accordance with the Floor Area Ratio and density norms sanctioned
  • The group housing scheme projects are made for the benefit of and belong to the allottees who purchase apartments within the project. The builder is only permitted to earn 15% profit from the entire project - nothing more
  • The maintenance of the project after possession is taken has to belong to the association. The builder cannot force the association to agree to arbitrary terms, including forcing its own maintenance agency on the association
  • The apartment allottees have the right to form their own association. They would all have voting rights and the builder cannot have any representation in the duly elected association except to the extent of the unsold apartments
  • All common areas and facilities such as car parking, clubs etc as defined in Section 3(F) of the Act cannot be sold. The allottees pay the price not just for the apartment but for the entire bouquet of services that they purchase along with the flat
  • Each apartment allottee as a matter of right has an indivisible and proportionate share in the entire land of the project (and not just the footprint of the building) as some developers mention in the agreement
  • The builder is duty bound to ensure that the laws are complied with. It cannot be the duty of the consumer to make sure that the builder acts in conformity with the law
  • The title of the lands where the project is constructed must be clear and transferable, since the land has to be transferred to the allottees eventually.
  • Time is of essence and, therefore, handing over of the possession in a timely manner is as important as the installments being paid on time by the allottees. In case the developer defaults in handing over of possession, then he would be liable to pay compensation to the allottee at the same rate as the allottee would be in case he delays paying for installment
  • The rights under the Act which have been provided to ensure the protection of the allottees cannot be waived off by the allottees
  • Electricity has to be supplied to the project by the state electricity board. If the developer takes it from a private entity then the developer has to pay the differential amount
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