A builder is liable to provide facilities as per agreement within the stipulated time, or compensate the consumer.

Case Study: Hussainee Lilamwala, a businessman, wanted to lead a peaceful retired life away from Mumbai, yet not too far off. He came across a Tata Housing Development project in Boisar, Thane district. The brochure stated that the project was being undertaken by a quality conscious
developer, and that it was conceptualized, designed and implemented in association with best-in-the-business architects and landscape designers. The brochure assured timely possession of flats, affording a new lifestyle in a township with amenities that every flat purchaser always wanted and at a price that was never thought possible. Lilamwala booked two flats in the project. 

But Lilamwala's dreams received a blow when he did not get the flats' possessions by Decemeber 30, 2011, as per the agreement. The possession was given on March 26, 2013, but without the promised facilities, which were still under development. He was also charged Rs 60,000 for the clubhouse membership, which had not yet become operational. Another Rs 50,000 was charged for allotment of parking space. For water and electricity, an additional amount of Rs 35,300 was charged over and above what was stated in the agreement. Aggrieved, Lilamwala filed a complaint before the Central Mumbai consumer forum. 

The Tatas contested the complaint, alleging that Lilamwala was an investor and not a consumer. In view of an arbitration clause in the agreement, the Tatas wanted the dispute to be referred to arbitration instead of being decided by the consumer forum. It justified the delay by arguing that it had faced difficulties in development of the project, due to factors beyond it's control, such as having to provide for a water pipeline over a distance of 18 km. For parking, the firm said it was entitled to charge the cost as the facility had not been provided initially but was developed subsequently on request from customers. 

In its judgment of February 9, delivered by presiding officer B S Wasekar for the bench along with member H K Bhaise, the forum upheld the complaint. The forum observed that the arbitration clause in the agreement would not oust the jurisdiction of the consumer forum as the Consumer Protection Act provided an additional remedy. The forum over ruled Tata Housing Development's objection that Lilamwala was an investor, as there was no evidence to substantiate this contention. 

The forum observed that a builder is expected to know what development work is required to be carried out for a project of such a magnitude. The company cannot escape its liability by attributing such delay to slow moving government machinery. The forum ruled that Lilamwala would be entitled to Rs 3,26,250 towards interest on the amount of Rs 29 lakh paid for the flat, computed at the rate of 9% per annum for the period of delay. The forum also observed that the agreement was inclusive of car parking. The firm was directed to refund the parking charge of Rs 50,000. The forum also directed the firm to refund the excess amount of Rs 70,600 charged for the electric and water meter connections for the two flats. All the refund amounts would carry interest at 9% per annum. 

Since the clubhouse was not operational, the forum directed the Tatas to pay 9% interest on the membership fee of Rs 60,000 till such time as the clubhouse was made operational. The firm's claim for increase in maintenance charges was allowed by the forum as the amount stated in the agreement was provisional. The forum also awarded Lilamwala Rs 25,000 towards compensation and Rs 10,000 towards costs. 

Conclusion: A builder cannot demand increased charges because of cost overrun, which may be incurred due to inexperience or mismanagement.