Fine to the builder for charging the parking space separately on top of the fixed price; Know your legal rights

When you invest a substantial portion of your savings to buy your dream home, you expect the builder to strictly follow the law and not trick you into paying extra money. Unfortunately, an 81-year-old retired Indian Army major met misfortune when he bought a 3 BHK residence in Hill View Garden housing complex in Rajasthan. In this case, the developer sold you the parking space as a separate unit, despite real estate law prohibiting this practice and the homebuyer agreement stating otherwise.

The retired senior filed actions against the builder for various infractions, including the illegal sale of parking spaces and the delay in obtaining the occupancy certificate. A case was initially filed in the State Consumer Commission, but the dispute finally reached the National Consumer Disputes Redressal Commission (NCDRC) after a long legal battle that lasted seven years. The NCDRC found the developer guilty of violating both the law and the home purchase agreement and consequently supported the compensation claim.

Brief summary of the case.

According to the NCDRC order, some important facts of the case are given below:

• The retired major booked a 3BHK unit measuring 1350 sq ft in an upcoming project. Trehan Home Developers at Bhiwadi, Rajasthan, paying Rs 2.5 lakh as booking amount on October 25, 2006.
• The basic cost of this unit has been fixed at Rs 17,95,500 plus PLC, DC and other charges.
• The retired mayor claimed the developer offered him a larger apartment (39 square feet larger than the original) without his knowledge or consent, and without obtaining a certificate of occupancy. Finally, the developer charged Rs 50,000 for the covered parking space separately.

What did the NCDRC say about the developer charging separately for the covered parking space?

Lawyers representing the retired major told the NCDRC: “It is submitted that despite the established position that the builder/developer/promoter cannot sell parking areas as independent units as the same are extended as areas and facilities common to the owners, the builder, contrary to the established position of law and in contravention of clause 3 of the purchase agreement of the apartment forming part of the proceedings, charged the plaintiff Rs 50,000 for covered parking, which amounts to a commercial practice unfair”.

After a thorough evaluation of the case, NCDRC said: “The claim of the plaintiff regarding charging of Rs 50,000 per covered parking area is considered valid. Clause 1.2 of the buyers’ agreement specifies that the sale price includes the exclusive right of use Open/Covered Parking Accordingly, the charge of Rs 50,000 per parking space is considered arbitrary and therefore this amount will be refunded to the complainant.

NCDRC, in its order dated September 20, 2024, said, “The builder is directed to refund an amount of Rs 50,000 to the complainant collected in lieu of covered parking area with interest @ 6% per annum from the date of deposit until completion. “If Trehan Home Developers decides to pay compensation, the amount amounts to Rs 50,000 + 50,000 * 6% * 18 years = Rs 50,000 + 54,000 = Rs 1,04,000. An email was sent to Trehan Home Developers on October 8, 2024, but no response was received till the time of publication.

What does the law say about the sale of parking spaces separately?

Ashish Jain, partner at Cyril Amarchand Mangaldas, says there are two distinct aspects to consider in this case:
1. Home purchase agreementClause 1.2.
2. Rajasthan Apartment Ownership Act, 2015.

• Clause 1.2 of the home purchase contract: “The NCDRC, while accepting the claims/arguments of the plaintiff, held that it was contractually agreed between the builder and the plaintiff under clause 1.2 of the buyer’s agreement that the total sale price of the premises included the exclusive right to use the car park “Therefore, charging a separate amount for granting the parking space was arbitrary and amounted to breach of contract,” says Jain.
• Rajasthan Apartment Ownership Act, 2015: “In addition to the contractual obligation of the developer mentioned above, it may be noted that as per the Rajasthan Apartment Ownership Act, 2015, parking spaces are covered under the definition of ‘common areas and facilities’. Common areas and facilities, being attached to apartments, involve undivided interests of multiple apartment owners in a project, in which such undivided interests are presumed to have been purchased by the apartment owners together with the individual apartment in the project. Parking areas generally form part of the FAR area in a project and hence the same cannot be sold/transferred separately,” says Jain of Cyril Amarchand Mangaldas.

Sumant Nayak, senior partner at Desai & Diwanji agrees with Jain and says that the home purchase agreement is sacrosanct and cannot be modified once agreed and signed. “It is an established legal position that the clauses of the builder-buyer agreement (BBA) are sacrosanct and that the division of the total price of the apartment will include charges for the reserved parking spaces. Furthermore, the courts vide a chain of judgments that have held that the developer will be responsible for compensating the buyer in cases where the BBA is ambiguous and the developer subsequently attempts to charge the buyer separately for facilities such as car parking. Therefore, it is clear that a BBA entered into between the parties is. . fundamental and should succinctly capture all types of charges.”

According to Sadhav Mishra, Partner and Head – Real Estate, SNG & Partners, Advocates & Solicitors, “Before the enactment of RERA/MahaRERA, sale of car parks (on stilts/open) by the builder was prohibited in view of the historical judgment. by the Hon’ble Supreme Court of India in Nihalchand Laloochand Pvt. Ltd. Vs Panchali CHS Ltd., in which the Hon’ble Court, inter alia, held that stilt/open parking space of a building is no more. that a portion of the common areas and therefore only a flat within the meaning of section 2 (a-1) of the Maharashtra Flat Ownership Act (MOFA) can be sold along with the garage,” says Mishra .

According to Nishant Datta, lawyer of the Delhi High Court, “in this case cited above, the builder demanded additional money for the parking space, which has been held illegal through a series of long-standing judicial pronouncements and there has been no no deviation of opinions. or conflict of judgments also The Supreme Court of India upheld the 2011 Bombay High Court verdict in the case of Nahalchand Laloochand Pvt Ltd vs. Panchali Cooperative Housing Society. of parking as separate units to outsiders. To the objections of the residents of the society, the Supreme Court decision reaffirmed that the parking spaces are common facilities provided by the society and cannot be sold separately. Supreme Court in the case of Nahalchand Laloochand Pvt Ltd v. Panchali Co-operative Housng Society Ltd, held that the builders or promoters. Parking areas cannot be sold as independent units or apartments. These will be expanded as common areas and facilities.