‘Model builder-buyer’ agreement needed, says Supreme Court

The court was hearing a petition filed by an advocate on the lack of a ‘uniform or model’ form for agreements entered into between builders, agents and buyers.

The Supreme Court on October 4 stepped in to protect home buyers from exploitation by builders, who delay transfer of possession and often re-draft delivery schedules on their whim and fancy.

A Bench of Justices D.Y. Chandrachud and B.V. Nagarathna issued notice on a petition filed by advocate Ashwini Kumar Upadhyay on the lack of a “uniform or model” form for agreements entered into between builders, agents and buyers.

The absence of “model builder-buyer and agent-buyer” agreements which provide uniform or standard terms and conditions of sale and purchase of residential flats across the country has been the main cause behind the fraud, lack of transparency, criminal conspiracies and unfair and arbitrary trade practices which plague the real estate sector.

Justice Chandrachud said Mr. Upadhyay, in his petition, had brought to the fore a “very serious issue”. Hard-earned savings of ordinary citizens who aspired to have their own home were invested in the bottomless pit of real estate sector. However, many became penniless waiting for a roof over their heads the builders had promised them.

‘RERA Act hardly implemented’

The petition said Real Estate Regulatory Authority (RERA) Act of 2016 had hardly been implemented.

“Frame a model builder-buyer agreement and model agent-buyer agreement to infuse transparency, ensure fair play, reduce frauds and deliberate delays, restrain builders/promoters/agents from indulging into arbitrary, unfair and restrictive trade practices and to protect the rights and interests of customers in the spirit of the RERA Act of 2016,” the petition said.

Senior advocate Vikas Singh, for Mr. Upadhyay, and senior advocates Menaka Guruswamy and Anupam Lal Das drew the court’s attention to Section 41 and 42 of the RERA. The first provision mandated the establishment of a Central Advisory Council. The second Section said the Council would ensure the implementation of the Act, drive major policy changes, assure that consumer interests were not thwarted by builders and promoters and craft the faster growth of the real estate sector.

The court prima facie said the RERA did provide “sufficient” enabling powers to the Central Advisory Council to make Rules to prevent buyers from being exploited.

‘Compensation must be ensured’

Mr. Upadhyay said the builders, who had caused losses to buyers due to inordinate delays on the part of promoters/builders, should be asked to pay compensation.

Amounts fraudulently misappropriated by builders/promoters from buyers under the garb of taxes, interests, penalties and other charges ought to be compensated.

Mr. Singh argued that not a single State had framed agreements to infuse transparency. There were many cases of deliberate delay in handing over possession. The police did not register First Information Reports on the complaints lodged by buyers.

“Builders issue revised delivery schedule again and again, adopted unfair practices… All this amounts to cheating, conspiracy, criminal breach of trust, dishonestly inducing delivery of property, violation of corporate laws,” the petition said.

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