Builders Frauds: Consumer Plight

was pleasantly surprised when I read todays newspaper. It carried a news where Supreme Court has ordered a Parshwanath Developer to deliver a flat within 2 days. The aggrieved consumer in this case was Information & Broadcasting Minister of the Country. It also talked about he was taken for a ride by the Builder and how he ran from pillar to post. After reading this post, I felt the drive to write about Builders, who have grown so bold that they do not give a damn about the law of the land. These builders make fraudulent promises from day one and always renege on these promises. The fact that they have this time dared to defraud a Minister of government shows how confident they have come about justice system. These facts show what is happening at ground level and how our legal system is causing sufferance to everyone. Builders are playing with something, which is dear to every Indian heart “HOME SWEET HOME”.

Home Sweet home is the dream of every Indian. It is deep rooted in our culture to try to build our home and we don’t feel we have achieved anything till we have our own home or flat. Builders and Developers across the country sell dreams to people, they talk about building a home within time and at low cost. But from day one their intention is to defraud people. And the economics of the trade allows them this possibility. Interesting thing about Real Estate Sector is that a Builder receives bulk of payment in advance. He incurs only 20% of the cost till completion of Construction, whereas he receives 80% of the payment by that time. His major cost comes at the time of Interior and finishing and taking Completion and Occupation Certificates. What he does with the payment received is make part payment to landowner and start taking money for the project, even before change of land use is done. These shameless creatures sometimes start accepting booking amount at time they make token payment to the farmer or landowner and continue accepting money from gullible Buyer even when the deal is not completed or approval for change of land use does not come.

Buying a flat has become synonymous with accepting to blackmail and exploitation as entire Industry has become an ongoing fraud with blatant non compliances with laws of the land and the guidelines laid down by the Court including Hon’ble Supreme Court. Builder Community has grown rich on the money swindled from hapless consumers. They claim recession and lack of funds but what they comfortably fail to mention that they took money of the hapless consumer and used it to acquire rights of another property or simply siphoned off the money abroad. I have often people crying about Real Estate Bill and how it can stop the abusive practices of the Builders. But, I don’t believe this as I know that there are more than enough laws already in place and one more will not change anything. What is missing in our country is enforcement of laws and creation of awareness about laws? Our Law enforcement authority particularly Consumer Courts and Police Authorities, SFIO have become ineffective because of rampant corruption and procedural issues. However, biggest hindrance to getting justice to consumers is lack of awareness about law of the land. I am often surprised by laws pretending to be consumer experts (sometimes non Lawyers), who are not aware about remedial options available to the consumer.

Builders flout the diktats of law and Supreme Court with impunity because of lack of awareness among consumers. Common violation by the Builders are as follows:

  1. Demand of Cash: Buyers need to understand that it is difficult to prove payment of cash amounts to the Builder and that is the reason builders love it. Legally, no builder can ask for cash payments, it is against Income tax laws. 
  2. Delay in Delivery: Delay in delivery has become very common. I distinctly remember one of our family friends buying a flat of BPTP, where construction was complete and the Builder promised to deliver within 3-4 months after finishing off. Actual delivery happened in 3-4 years. 
  3. Charges of Open/Parking Space: Supreme Court has clarified that it is illegal to charge for open/parking laws. But as usual our builders continue to flout Supreme Court Orders mostly because of lack of awareness of consumers.
  4. Poor Quality of Construction: Builders often resort to substandard construction. The Consumers often are forced to accept such substandard quality work because of lack of work or their belief in karma. Buyers can seek refund of amount paid with interest on the grounds of poor quality of construction
  5. Lack of Basic Amenities: Often the Builder is unable to get Completion certificate or occupation certificate because of non compliance with building bye-laws of the relevant authority for the area, which in turn lead to lack of basic amenities as above certificates are needed for electricity and water connection.
  6. Charging additional amounts on account of increased costs etc: Often builders demand additional amounts because of increase of costs. This is something which is against various laws and buyers such incremental costs for fear of cancellation of Allotment.

In the end, I want to summarise that laws or Court judgements cant achieve anything until consumers rise up against such practices and seek legal help. What is needed is awareness among consumers about their rights and willingness to fight? Our laws are framed in a way which can get you justice despite crooked system if you have perseverance and your complaints etc are well drafted. We need to work together to educate consumers about their right and save them from the clutches of greedy builders and corrupt system which supports them.

Deepmala is a practising lawyer. She practices in Dwarka Court and has specialisation in Consumer Laws and Matrimonial Disputes.