Dubious developers can be nailed

Realtors should not forget that the consumer keeps a watchful eye, says K. Vijaya Bhaskara Reddy

With unprecedented rise in property prices, non-execution of sale deeds by real estate firms became a prevalent practice in recent years. Many of them are cancelling the agreements by citing reasons which could turn out to be dubious. This situation could be faced with the help of consumer courts and experiences of realty cases are showing that consumers can handle such frauds by being watchful. A case against Narne Estates Pvt. Ltd. provides some of the useful details in this regard.

O. Yella Reddy, a resident of Sainikpuri, bought a plot of 250 sq.yds. for Rs.27,000 in a project of Narne Estates in September, 1999. There was no mention of site development in project brochure or in allotment letter. He made the payment in monthly instalments, but couldn’t get his plot registered. Mr. Reddy shifted his residence from Musheerabad to Sainikpuri and informed the same to the company. After a long pause, he received a letter in February, 2006 saying that his deed was cancelled and the payment made by him was returned.The reason company showed for the cancellation was – Mr. Reddy failed to pay the instalments of development charges albeit continual correspondence from the company. After receiving this letter, Mr. Reddy tried to pay the development charges and also returned the cheque, but both were rejected by the company. His legal notice was firmly replied. Then, he filed a case in Hyderabad District Forum-I for registration of his plot . The company resisted the case. After considering the evidence, the district forum felt that the cancellation was an arbitrary decision and asked the company to register an alternative plot along with a compensation of Rs.50,000 and costs of Rs.2,000. It also asked Mr. Reddy to pay the development charges of Rs.42,550 along with registration charges. Not satisfied with the decision, Narne Estates challenged the verdict in A.P. State Consumer Disputes Redressal Commission (APSCDRC). It argued that there was a breach of contract on part of the consumer. The commission said - it was clear that Narne Estates notified Mr. Yella Reddy about the due of development charges from March 1996 to May 2004. But it sent all the letters to his old address despite notification of his present address. It also observed that while land rate was Rs.30,000, the development charges demanded was Rs.66,581.

At this point, Mr. Reddy submitted the photographs which showed there was no development whatsoever taking place, contrary to the claims of the company. With that, the commission stated that the company cannot collect the fee for the development which it hasn’t done. Mr. Reddy also got the information from HUDA that –nine alternative plots, which the company suggested to register at the time of case, didn’t have approval of HUDA.

With these evidences, the APSCRDC made a major modification in the verdict of district forum. It said allotting an alternative plot will not arise since there was no documentary evidence to show that the allotted plot was sold to a third party. It ordered that the same plot to be registered for Mr. Reddy and also damage charges of Rs.50,000. The time for compliance was four weeks.