Allahabad High Court Imposes ₹2.5 Lakh Costs On Builder For Harassing Homebuyer For 13 Yrs Through Frivolous Litigation
The Allahabad High Court has imposed a cost of Rs. 2.5 Lakhs on a builder for making the homebuyer go through multiple rounds of frivolous litigation for 13 long years.
Justice Prashant Kumar held,
“Taking note of the hardships and vulnerabilities faced by home-buyers, the Government of India had enacted the Real Estate (Regulation and Development) Act, 2016 with the object of ensuring greater transparency and accountability in the real estate sector and providing an expeditious and effective mechanism for redressal of the grievances of allottees. However, in the present case, the very object and purpose of the Act has been frustrated by the builder, through the institution of various frivolous and vexatious litigation, apparently with a view to delay and evade the discharge of its statutory obligations and liabilities arising under the Act of 2016.”
Respondent booked a flat in the appellant-builder's project 'Golf City' at Plot No. 7, Sector-75. A builder-buyer agreement was executed on 9th April 2011, under which possession was promised by June, 2013 against a total consideration of Rs.34,44,250/-. The buyer paid Rs.35,90,252/-, but possession was not delivered.
She complained to the Real Estate Regulatory Authority, Gautam Budh Nagar. By order dated 26th July 2018 directed the builder to hand over possession immediately and to pay interest at 24% from 30th June 2013, the date by which possession was due. The builder neither paid nor delivered possession. On the buyer moving execution, a recovery certificate for Rs.41,21,411.88 was issued on 6th March 2019.
It was only thereafter that the builder appealed to the U.P. Real Estate Appellate Tribunal. It also moved a writ petition seeking stay of the recovery proceedings, which was dismissed, and a special leave petition against that dismissal was withdrawn. The appeal before U.P. Real Estate Appellate Tribunal was dismissed for want of prosecution, having twice earlier been dismissed on that ground and restored.
The buyer then obtained a direction from the High Court to the District Magistrate to execute the recovery certificate and, when that went unenforced, instituted contempt proceedings. A fresh recovery certificate followed. The builder applied to recall the order of dismissal with a delay of 721 days. The Tribunal rejected the application for want of sufficient cause and for non-compliance with Section 43(5) of the Act.
After its bank accounts were attached, the builder deposited Rs.67,77,518/- in December, 2022 and filed the present appeal under Section 58.
The Court held that pandemic disruption was not sufficient cause on these facts. The only explanation offered for the two years following the dismissal order was that the appeal had escaped the builder's attention until the recovery amin arrived at its office.
“… the Courts must not condone gross negligence, deliberate inaction, or casual indifference, for to do so would undermine the maxim interest reipublicae ut sit finis litium and destabilise the certainty that limitation law seeks to secure.”
Even after excluding the period from 15.03.2020 to 28.02.2022 in terms of the Supreme Court's directions on extension of limitation, the Court held, the restoration application remained out of time. It held that the builder had not shown that it was reasonably diligent, and the test for condonation was therefore not satisfied.
Further, the Court held that Section 44(4) of the Act, which requires the Appellate Tribunal to send a copy of every order to the parties, had been complied with. It observed that the Tribunal had issued a public notice on resumption of work after the lockdown, had sent the dismissal order by e-mail, and maintained the status of every case on its portal, so it could not be said that the builder was unaware of the proceedings.
It held that the interest a builder must pay an allottee for delay in handing over possession under the Real Estate (Regulation and Development) Act, 2016 is the same rate which the builder could have charged the allottee had the allottee defaulted. Rejecting a builder's plea that its liability was confined to MCLR+1%, the Court upheld an award of interest at 24% per annum because the builder-buyer agreement itself provided for interest at that rate against a defaulting buyer.
The Court read Section 2(za) of the Act, 2016 as placing the rate payable by the builder at parity with the rate chargeable from the allottee on default. Since interest under Section 18 is compensatory in character, it held, levying it from a promised date of possession falling before the Act came into force was neither illegal nor arbitrary.
On the issue of possession, the Court observed that the builder held no occupancy certificate even at the date of judgment, and that possession could not be handed over in its absence. It observed that the letter it relied on was pre-formatted and offered possession only for fit-out work.
The Court observed that the statute enacted to secure transparency and speedy redressal for allottees had been defeated here.
“The present case is a classic example of a homebuyer, who invested her lifetime savings with the hope of securing a roof over her head. The respondent booked a residential flat in the year 2011 and paid almost the entire sale consideration. The builder had assured that possession of the flat would be handed over within two years, i.e., by June, 2013. However, after lapse of more than 13 years and receipt of almost the entire consideration amount, the builder has failed to complete the project and deliver possession of the flat to the respondent. Such inordinate delay, without any justifiable cause, has deprived the respondent of the fruits of her investment and subjected her to prolonged financial hardship and mental agony.”
Setting out the chronology, the Court counted seven rounds of litigation initiated by the builder over the same dispute, against four rounds the buyer had been forced into merely to enforce an order already in her favour. Having pursued enforcement since 2018 without receiving its benefit, she had, the Court held, made out a fit case for exemplary costs.
Accordingly, finding no illegality in the order of the Appellate Tribunal, the Court dismissed the appeal and imposed a cost of Rs.2,50,000/- on the builder, payable to the buyer within four weeks.
Case Title: M/s Aims Max Gardenia Developers Pvt. Ltd. Thru. Authorized Signatory vs. Mrs. Pratibha Gupta 2026 LiveLaw (AB) 547
Case Citation: 2026 LiveLaw (AB) 547
Counsel for Appellant :- Shuchita Singh
Counsel for Respondent :- Aprajita Bansal, Shri Anilesh Tewari