Demand for extra money by Builder due to increase in sale area has been termed illegal by the Supreme Court.
Before the NCDRC, the builder cited a contractual clause which permitted him to raise additional money if the builder increased the sale area by up to ten per cent. This demand was quashed by the NCDRC and was termed as illegal. The NCDRC ruled in favour of homebuyers.
Aggrieved by the same, the builder filed an appeal in the Supreme Court.
The case before the Supreme Court
However, the Supreme Court dismissed the appeal and upheld the order passed by the NCDRC.
The homebuyer filed a cross-appeal stating that NCDRC did not grant any interest or compensation for delayed possession. The Apex Court admitted the cross-appeal, and the case is currently sub judice.
Observations of NCDRC
The Commission noted that the builder had raised the demand for extra money based on the architect’s certificate of a later date. The Commission did not accept the builder’s justification that he raised the demand after an architect’s internal report as the said report has not been filed in the Court. The Commission further observed that once the competent authority approves the original plan, the unit’s area cannot change until the area of the whole project changes.
The Presiding Member stated that it has become a common practice adopted by many builders and is used to extract extra money from buyers when their money is locked in the project and buyer is about to take possession.
In other words, the allottee has the right to know the change in the flat and building area, and until that is done, the builders cannot demand extra money. The Commission noted that as per the RERA Act builders must indicate the carpet area, but the super area’s problem has not been solved and further reforms are needed.
However, regarding compensation, the Commission stated that the builder is ready to rectify any defects and possession cannot be called a ‘paper’ possession as alleged by the complainant. Therefore, the complainant is not entitled to compensation.