Extra demand of money by builders alleging increase in sale area illegal: Supreme Court

Extra demand of money by builders alleging increase in sale area illegal: Supreme Court

A Supreme Court bench headed by Justice Dr. D.Y. Chandrachud has held that extra money demanded by builders beyond the contractual sale consideration on account of alleged excess sale area is illegal.

The Court was hearing a builder's appeal against the decision of the National Consumer Disputes Redressal Commission (NCDRC) by which the builder had demanded extra money from the homebuyer citing a contractual clause which allegedly permitted the builder to raise additional demand if sale area increases upto 10%.

The said demand was quashed by the NCDRC and the demand on account of excess sale area was held to be illegal and the issue was ruled in favour of the homebuyer.

A cross-appeal has also been filed against the judgment of the NCDRC by the home-buyer. They filed an appeal on the issue that the NCDRC did not grant any interest in compensation for delayed possession. The Top Court admitted the appeal of the home-buyers and it is currently sub judice in the Supreme Court.

The NCDRC in its findings noted that regarding the excess area, there was a complaint against the builders that they had without any basis sent the demand for the excess area and the certificate of the architect was sent on a later date.

The Commission had stated, "The real test for excess area would be that the opposite party should provide a comparison of the areas of the original approved common spaces and the flats with finally approved common spaces/ buildings and the flats. This has not been done." "Thus, the possession cannot be called a paper possession as alleged by the person making the complaint."

The NCDRC had further stated in its judgment that the builder was already ready to rectify the defects noted in the joint inspection and hence the person who made the complaint would be entitled to compensation for delay only upto 3 months beyond the offer of possession from the date of due possession in each case.

The bench headed by Justice D.Y. Chandrachud referred to the contractual clause that permitted the builders to raise additional demand if the sale area increases up to 10%. The SC reiterated that Builder's demand for extra money beyond the contractual sale consideration on account of excess sale area is illegal.

The SC affirmed the findings of the Commission and canceled the demand for extra money by the builders and held that the demand on account of excess sale area is illegal. The issue was ruled in favor of the homebuyer.