Builder has to compensate RWA in case of unfinished projects, says SC
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Builder has to compensate RWA in case of unfinished projects, says SC

Such cases and feuds between RWAs and builders are not new

Builder has to compensate RWA in case of unfinished projects, says SC

New Delhi: The Supreme Court on Wednesday put an end to an 18 years old legal battle by stating that builders have to compensate RWA if they hand over unfinished projects. The Supreme Court said that the builder cannot get away by handing over the maintenance and administration of the unfinished projects to the residents welfare associations.

The Supreme Court order has come after 18 years of a project’s handover to the resident association, under Civil Appeal Number 2998 of 2010 with Civil Appeal Number of 4085 of 2010, as the bench headed by Justices Hemant Gupta and V Ramasubramanian directed the company Padmini Infrastructure to pay Rs 60 lakh to the Royal Garden Resident Welfare Association. This happened as the builder failed to provide facilities like a water softening plant, a second health club, a swimming pool in addition to putting in place a fire fighting system.

Such cases and feuds between RWAs and builders are not new and this new order has come as a hope for homebuyers who have faced or might face such issues.

The society has 282 flats and its handover happened from 1998-2001. The Residents Welfare Association was formed and registered in 2003 under Societies Registration Act. The RWA went into an agreement with the builder in November 2003 and took over the administration and maintenance of the project.

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However, the builder didn’t fulfill the promises made in the agreement and the RWA approached the National Consumer Disputes Redressal Commission. The NCDRC sent a local commissioner on the ground to file a report and on its basis, NCDRC allowed the plea of the RWA.

The real estate company approached the Supreme Court which had in an interim order in 2010 stayed the order of consumer commission. However, it also directed the company to deposit 60 lakh rupees in its registry.

Almost after a decade, the court has ordered the sum to be given to the RWA and has put an end to this years-old legal fight.

“The complainant shall be entitled to all told monetary compensation in a sum of Rs. 60 lakhs, now lying in deposit with the Registry of this court, together with the interest accrued thereon, in lieu of the reliefs sought in the prayer of the complaint. The opposite party(builder) shall, within two weeks, remove all building material stored by them in the club house in the basement of Tower Eden and hand over possession of the club house to the complainant,” the bench said.

CitySpidey talked to RP Singh, President, Royal Garden RWA, who has been associated with this case for the past 10 years. He said, “The amenities we had been asking for were basic and necessary. The sewage treatment plant, swimming pool, etc. are the things that were promised to us but never delivered. The case had been going even before I was a part of it. At first, when we won at consumer court, we thought we’d be relieved. However, the builder decided to go to the apex court and that is a different fight in itself.”

“We didn’t get any results when we hired the first lawyer and thus decided to hire a new lawyer. The case took about 18 years to complete so you can only imagine how long of a fight it was. We have spent days at the court and now finally, as the decision is in our favour, it's a respite for us. We are happy but things don’t end here, in fact, now is when we have to make sure all the amenities are fulfilled and the work is finally done,” he further added.

We also talked to Manish Kumar, senior vice president of Noida Extension Flat Owners Welfare Association (NEFOWA) to understand if RWAs often face such problems and how the decision will help them. He said, “The case had been going on for several years now and the order passed by the Supreme Court has come as a respite for the RWAs, AOAs and the residents as well. The situation of builders handing over unfinished projects is very prevalent.”

Further explaining the formation of AOAs, he said, “In group housing societies, it is important to have at least 60 per cent possession of the flats to form an AOA, as per the law. However, when builders don’t finish their projects and the possession is less than 60 per cent, the residents suffer as they can’t form an AOA to fight for them. There have been instances when builders have forced residents to form AOA so that they can handover the projects without fulfilling the promises.”

“Especially in the new societies, facilities like sewage treatment plant, clean water, fire security system, things which are absolutely basic and necessary aren’t present and poor RWAs and AOAs have to bear its consequences. This decision will help to put a full stop to these things and builders won’t be able to leave the residents hanging with unfinished projects,” he concluded.