DLF begins process of rental arm stake sale to PE investors. In Picture: A man cycles past the construction site of a residential apartment building by Indian property developer DLF Ltd. in Gurgaon Jan. 27, 2010Reuters file

Real estate developer DLF has been sued by home buyers for Rs 900 crore over delay in the delivery of 330 flats in Bengaluru (Bangalore). 

The Hindu reported Wednesday that around 330 flat buyers in the developer's DLF Westland Heights in Bengaluru (Bangalore) have petitioned the National Consumer Disputes Redressal Commission (NCDRC) seeking Rs 900 crore in damages from DLF for "delay in giving possession of flats and hiking prices among other issues."

The company failed to deliver the flats to the buyers, even after four years of the promised deadline of three years from 2009 when they had paid for the flats.

The real estate (regulator) bill recently passed by the Indian parliament addresses such issues.

Some of the salient features of the Bill are:

    • The provisions of the Bill are applicable to both residential and commercial real estate projects.
    • Real estate projects with plot areas of 500 square metres, or 8 apartments or more, and real estate agents will have to register with the regulator. Projects that are under construction at present also come under ITS purview.
    • Mandates maintenance of separate escrow accounts for all projects, and 70% of the amount realised from buyers to be put in the escrow account has to cover land and construction costs.
    • Developers must deposit 70 percent of the collections from buyers in separate accounts towards construction and land (as against 50 percent proposed).
    • Provision to imprison developers for up to three years and real estate agents up to one year for any violation of the Tribunals and Regulatory Authorities. Civil courts are prohibited from taking up matters defined under the Act, consumer court will hear such cases.
    • Developers will be liable to pay penalties if the project deviates from the original plan by more than 10 percent. Plans/designs cannot be changed without consent of consumers.
    • Both builders and buyers will have to pay the same rate of interest in case of any delay on each other's part.
    • The liability of developers for structural defects has been increased from two years to five years.
    • Developers will not be able to change plans without the consent of two-third of the buyers.
    • Sale of flats only on a 'carpet area' basis and not on super built-up area and mandatory disclosures to be made on facilities/amenities provided on the regulatory authority's website. 
Also read