'Builders can't enforce unsigned contracts'

Money Today finds how Rajiv Bhargava fought a real estate giant which tried to enforce an unfair deal.

Priya Kapoor | Print Edition: February 21, 2008

Rajiv Bhargava

Rajiv Bhargava
The Case: DLF refused to refund the earnest money deposit

The Verdict: DLF was fined by the NCDRC, as no contract was entered into and no service was provided for the earnest money

What you can learn from how Bhargava fought his case:

Engage. Bhargava fought the case himself. Even if you have a lawyer, be present at the hearings

Involve. Bhargava attended every court hearing, and benefited from the disinterest shown by the builder's lawyers in arguing the case

Research. He highlighted similar judgements given by the courts in the past

Understand. Bhargava went through all the documents carefully to know how exactly he had been short-changed DLF refused to refund the earnest money deposit

Would you pay lakhs of rupees to honour a house sale agreement you never signed? Obviously not. But what if the developer or builder assumes that you have agreed to a contract simply because you have received it? Worse, what if you are told that you'll forfeit your earnest money deposit? Most people meekly pay up if the developer is known to be a large company with much more muscle power than any individual has.

But if you're Rajiv Bhargava, you'll take even giants like DLF to court. Bhargava, a Delhi-based entrepreneur, had booked a three-bedroom apartment in a DLF complex in 1999. At the time of booking, he paid about Rs 1 lakh as earnest money, but was not given a receipt. Two months later, he was sent a buyer's agreement, which he had not seen before, and was told that he needed to pay the first instalment.

"It was shocking. Before sending the agreement, the builder needs to inform the buyer about the allotment. This was not done. I was also given almost no notice for arranging the huge instalment amount. It was ridiculous."

Before paying, Bhargava studied the agreement. That's where he got a second shock. "In the brochure, the builder promised me an area size of 1,127 sq ft. However, in the agreement, much of this space was for common areas like lobby, staircases, shafts and lift well. That was pure cheating," he says.

Bhargava sought clarifications from DLF regarding this, but his requests were ignored. Since he did not want to pay for a smaller house, Bhargava asked for a refund of the initial Rs 1 lakh. But despite sending several reminders and letters to DLF, he got no reply. "It was like banging your head against the wall repeatedly," he says.

But this merely made him even more determined not to let the builder get away with his money. Bhargava filed a case against DLF with the district commission. "I have always believed that one should not sit calmly when someone does wrong to you. You should fight for it.

The earnest money is paid on trust and no company can make you forfeit it if you haven't signed on the dotted line," he says. However, the case was dismissed after four years. Despite his business, Bhargava made it a point to attend every hearing, but DLF did not bother to even send a representative. Conversely, the builder kept seeking extensions.

"It was the one hearing when I was absent that the court dismissed the case," he says. Undeterred, he took the case to the state commission, where DLF was found guilty and told to refund the earnest money along with Rs 5,000 as compensation. The court ruled that: "No person can be allowed to forfeit an amount for which he had neither entered into a contract nor has provided any service nor has the consumer availed any service (for) his illegally forfeited earnest money."

Several and sustained attempts to seek DLF's version have failed to elicit a response. Bhargava, though, has received the refund and compensation, which implies that DLF has accepted its mistake and is not appealing in a higher court. This is not the first time that a builder has been penalised by the consumer courts. In February 2006, Subir Kisan Datta took Ansal Housing to court regarding poor quality of construction of his flat.

The state commission directed the builder to pay a compensation of Rs 1 lakh besides Rs 10,000 for delivering poor facilities and deficiency in service. Then, in April 2007, in the case of Sood vs DLF, the national commission penalised the developer for giving delayed possession of a flat. With the courts now on the side of the buyer, builders' muscle need no longer hold any fear. As Bhargava says: "What makes me happy is the fact that my fight hasn't gone in vain. The ruling would deter builders from fooling buyers now.

Are you a financial freedom fighter?

If you have fought bad service from a company or government department and resolved it, with or without court intervention, you are the fighter we are looking for. If you would like to share your story with other readers, get in touch with us at:letters.moneytoday@intoday.com 


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