Builder's Demand For Extra Money On Account Of Alleged Increase In Sale Area Illegal: SC Affirms NCDRC Order By Dismissing Builder's Appeal

The bench headed by Justice D. Y. Chandrachud was hearing the builder's appeal against an August, 2020 decision of the NCDRC by which the builder, citing a contractual clause which permitted them to raise additional demand if sale area increases upto 10 %, the said demand was cancelled / quashed by the NCDRC and the demand on account of excess sale area was held to be illegal and the issue was ruled in favour of the homebuyer.

The builder had appealed in the Supreme Court on the issue of cancellation by the NCDRC of demand of money in the name of excess sale area and the said appeal was dismissed in limine on 12.1.2021 and thus, the NCDRC finding on excess area stands affirmed. 

"In respect of excess area, the complainant has made a point that without any basis the opposite party sent the demand for excess area and the certificate of the architect was sent to the complainant, which is of a later date. The justification given by the opposite party that on the basis of the internal report of the architect the demand was made for excess area is not acceptable because no such report or any other document has been filed by the opposite party to prove the excess area", the NCDRC had noted.

It went on to observe that once the original plan is approved by the competent authority, the areas of residential unit as well as of the common spaces and common buildings are specified and super area cannot change until there is change in either the area of the flat or in the area of any of the common buildings or the total area of the project (plot area) is changed. "The real test for excess area would be that the opposite party should provide a comparison of the areas of the original approved common spaces and the flats with finally approved common spaces/ buildings and the flats. This has not been done", the Commission had said.

The Presiding Member continued to state that in fact, this is a common practice adopted by majority of builders/developers which is basically an unfair trade practice, that this has become a means to extract extra money from the allottees at the time when allottee cannot leave the project as his substantial amount is locked in the project and he is about to take possession.

"There is no prevailing system when the competent authority which approves the plan issues some kind of certificate in respect of the extra super area at the final stage. There is no harm in communicating and charging for the extra area at the final stage but for the sake of transparency the opposite party must share the actual reason for increase in the super area based on the comparison of the originally approved buildings and finally approved buildings. Basically the idea is that the allottee must know the change in the finally approved lay-out and areas of common spaces and the originally approved lay-out and areas. In my view, until this is done, the opposite party is not entitled to payment of any excess area", opined the Commission.

It noted that though the Real Estate Regulation Act (RERA) 2016 has made it compulsory for the builders/developers to indicate the carpet area of the flat, however the problem of super area is not yet fully solved and further reforms are required.

As regards the compensation for the delay in handing over the possession, it was seen that the possession has been offered after obtaining the occupation certificate. "Thus, the possession cannot be called a paper possession as alleged by the complainant. The opposite party is already ready to rectify the defects noted in the joint inspection. In these circumstances, the complainant will be entitled to compensation for delay only upto 3 months beyond the offer of possession from the date of due possession in each case", it was observed.