Legal notices and letters

Reply to legal notice issued by builder demanding delayed payment and holding charges

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Law firm name & ASSOCIATES

LEGAL CONSULTANT & ADVOCATE

SUPREME COURT OF INDIA

Office No. Office addressMob: Advocate's mobile number

E-Mail: Advocate's email addressDate: Date of reply notice

REGD. POST / EMAIL

To,

Recipient advocate's name

Advocate

C/o Recipient's firm or chambers

Recipient advocate's address

Email: Recipient advocate's email

Sub: Reply to the legal notice dated Date of legal notice issued by you on behalf of your client in respect of Sector- Client's sector (address of builder's project).

Dear Sir,

With reference to your legal notice dated Date of legal notice, received on Date of receipt of legal notice, addressed to my client, Client's name, I have been instructed to furnish the following reply:

At the very outset, it is submitted that your notice is based solely on information supplied by your client. It is pertinent to mention that my client does not accept the contents and allegations of your notice, as my client has been willing to resolve the issue amicably. The performance of my client's obligations has become completely impracticable, and the change of circumstances caused by the nCovid-19 pandemic has completely upset the very foundation of my client's financial condition, thereby rendering such performance impracticable and impossible.

As your client is aware, the nCovid-19 virus ("Covid") infected the entire world, leading to a pandemic and widespread casualties. The Covid virus began to manifest significantly in India in Year in which Covid began manifesting in India and nationwide lockdown imposed, and, as a result, the entire country was forced into a nationwide lockdown. The said lockdown was thereafter extended till Year till which the lockdown was extended and is currently operational in one form or the other. This led to a situation whereby my client's entire earning operations have suffered colossal losses and are on the brink of shutting down. Hence, the question of performing obligations during that period did not arise, as such performance was impracticable, and the exaggerated charges levied by your client are liable to be waived as they are unreasonable and unacceptable.

The prevailing situation has led to a scenario where the allotted apartment has become useless to my client and is a burden. The performance of my client's obligations has become completely impracticable, and the change of circumstances caused by the nCovid-19 pandemic has completely upset the very foundation of the execution of the allotment, thereby rendering performance during the period of the pandemic impracticable and impossible for my client. For this reason, my client regularly contacted and visited your office, but the issue was lingered on by you on one pretext or another.

It is submitted that your client has levied exaggerated, unnecessary and unreasonable charges upon my client, and raised the demand after two years. My client personally visited your office regularly to make the payment and settle all the accounts, but no satisfactory answer was given to my client and the issue was lingered on on one pretext or another. Your client has now issued the present notice and is claiming an exaggerated amount on various accounts, such as CAM charges, holding charges, exorbitant interest and other charges, which are unfair, unreasonable and unacceptable.

In view of these activities of your client, it is evident that your client is furnishing false and unreliable information to you, which has no ground reality.

Parawise Reply On Merits:

1.Contents of para 1 of your notice are a matter of record and need no reply.

2.Contents of para 2 of your notice are a matter of fact and need no reply.

3.Contents of para 3 of your notice are a matter of record and need no reply.

4.Contents of para 4 of your notice are false, wrong, concocted and denied. It is submitted that your client did not offer possession to my client. The third tranche of payment, as per the Payment Plan, was supposed to be demanded by your client after the application of the Occupancy Certificate ("OC"). However, no demands for the completion of the project were raised by your client upon my client even until the promised date of handover of possession within 36 months. Possession was offered on Date of offer of possession only after a delay of Delay in possession (months) months, even after considering the grace period. It is pertinent to note that prior to Year of client's enquiries about project status-Month and year, my client regularly contacted your client to enquire about the status of the project and wished to make the payment and settle the accounts, but your client failed to respond to my client despite repeated physical visits. It was on this account that your client was misled to believe that the completion of construction was proceeding promptly, and therefore no demand for money was raised. It is submitted that my client had both the willingness and the capability to make the said payments as per the agreed schedule; however, the same was delayed solely on account of the delay in construction by your client. It is further pertinent to mention that my client made multiple attempts, via personal visits to your client's office, to make the payment and settle the accounts in Year of client's visits to settle accounts, but your client did not provide any satisfactory answers to my client's requests.

That Section 19(2) of the Real Estate (Regulation & Development) Act, Year of RERA Act entitles the allottees to know the status of construction of the concerned project and levies a duty on the promoter to inform the allottee about the status of construction as agreed as per the plan. Section 19(2) of the Act reads as follows:

"(2) The allottee shall be entitled to know the stage-wise schedule of completion of the project, including the provisions for water, sanitation, electricity, and other amenities and services as agreed to between the promoter and the allottee by the terms and conditions of the agreement for sale."

It is submitted that in blatant violation of the aforesaid Section 19(2), your client did not bother to inform my client regarding the status of construction, even though the agreed time limit for completion of construction and handover of possession, i.e. Originally agreed date of completion and handover of possession, had already passed. It is this delay caused by your client, coupled with the non-responsive nature and dilatory tactics adopted by your client, that developed a sense of deep distrust for your client in the mind of my client.

5.Contents of para 5 of your notice are false, wrong, concocted and denied. It is denied that my client was requested, through several letters/emails, including the email/letters dated Date of first letter/email and Date of second letter/email, to pay (i) the balance sale consideration, (ii) CAM charges/maintenance charges, (iii) the deposit, including the interest-bearing maintenance deposit and other charges, and (iv) to submit stamp papers showing payment of stamp duty and registration charges for registration of the conveyance deed in respect of the said apartment, as alleged. It is further denied that, despite repeated requests and reminders sent by your client, my client has failed and neglected to make the aforesaid payments, failed to register the conveyance deed and failed to take possession of the said apartment. On the contrary, it was your client who made no communication whatsoever to my client, despite repeated personal visits by my client to your client's office for settling the accounts and making the payments, regarding the fact that the completion of construction of the aforementioned project was facing considerable delays and that possession of the said unit would not be handed over to my client as per the originally agreed date. It is pertinent to mention here that your client continued to send further communications regarding payment for other stages but made no mention of the delays in the project.

6.Contents of para 6 of your notice are false, wrong, concocted and denied. It is submitted that your client has levied exaggerated, unnecessary and unreasonable charges upon my client, and raised the demand after two years of the completion of the project. My client personally visited your office regularly to make the payment and settle all the accounts, but no satisfactory answer was given to my client and the issue was lingered on on one pretext or another. Your client has now issued the present notice and is claiming an exaggerated amount on various accounts, such as CAM charges, holding charges, exorbitant interest and other charges, which are unfair, unreasonable and unacceptable.

REPLY TO LEGAL NOTICE

7.With reference to the contents of paragraph 7 of your notice, it is submitted that my client was fully aware of the provisions relating to registration and the consequences of any delay therein. The delay in offering possession as well as in the completion of the project was solely attributable to your client. My client regularly approached your client during the year Year in which my client approached the builder and made personal visits to your client's office on a regular basis to make the payment and settle all outstanding accounts, but your client failed to give any satisfactory response to my client and continued to defer the issue on one pretext or another.

8.The contents of paragraph 8 of your notice are false, wrong and concocted, and are accordingly denied. It is denied that my client failed to make payment towards the sale consideration, or that interest amounting to ₹ Interest amount (₹)/- has accrued as on date. It is submitted that my client regularly visited your client's office to settle the accounts and make the payments, but your client has remained unwilling to entertain my client and has refused to give any satisfactory response to date. As a result, the present notice has been issued on the basis of exaggerated charges levied upon my client, which are unreasonable and liable to be waived.

9-10. The contents of paragraphs 9 and 10 of your notice are false, wrong and concocted, and are accordingly denied. It is denied that my client is liable to pay any holding charges from the expiry of the due date towards payment of CAM up to the commencement date till the actual taking of possession of the apartment. It is further denied that your client had already offered possession and had thereafter sent several reminders regarding registration of the conveyance deed and taking possession of the said apartment. It is further denied that my client alone is responsible and/or liable for the non-registration of the conveyance deed and for not taking possession of the said apartment. It is further denied that my client failed and neglected to comply with the obligation to pay the stamp duty and registration charges to register the conveyance deed and take possession of the said apartment. It is further denied that my client is liable to pay an amount of ₹ Cost of legal notice (₹)/- as the cost of the legal notice. With regard to the alleged offer of possession and the several reminders purportedly sent to my client, your client misrepresented the facts with a mala fide intention. My client did not make any further payments in respect of these demands as no proper demand was raised by your client, and when my client approached your client to settle the accounts and make the payments, you failed to give any satisfactory response. It is submitted that the project was facing considerable delays and the originally agreed date of handover of possession had already passed without any communication from your client regarding any expected delays. My client, already cautious owing to the misrepresentations of your client, despite repeated requests, did not receive any satisfactory response from your client on any of the clarifications sought, and therefore refrained from making any further payments towards the allotted project owing to the mala fide intentions of your client. Possession was offered after a delay of approximately Delay in possession (months) months from the originally agreed date, and your client has, to date, not offered any explanation whatsoever, in writing, to my client regarding such considerable delays. Your client has not taken these charges into account while calculating the final pending balance of my client, and has instead imposed arbitrary and additional payment obligations upon my client.

My client, without due consideration of the payments already deposited, has continued to arbitrarily charge exponential delayed payment/holding charges and has continued to misrepresent and conceal material facts over the years with a mala fide intention. The erosion of trust caused by such constant misrepresentations has caused great distress to my client, who, despite having attempted to clarify the status of their Unit, was confronted with nothing but unfair charges for shortcomings attributable entirely to your client.

Without prejudice to the foregoing, it is further submitted that your client has conveniently and maliciously failed to provide even the detailed calculation or rate of interest applied in raising the delay penalty/interest charged upon my client. Your client has failed to substantiate its demand and is merely attempting to mislead my client.

Section 18 of the RERA Act provides for return, interest and the amount of compensation to be allowed to allottees, and reads as follows:

"18. (1) If the promoter fails to complete or is unable to give possession of an apartment, plot, or building —

(a) by the terms of the agreement for sale or, as the case may be, duly completed by the date specified therein; or

(b) due to discontinuance of his business as a developer on account of suspension or revocation of the registration under this Act or for any other reason, he shall be liable on demand to the allottees, in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment, plot, building, as the case may be, with interest at such rate as may be prescribed in this behalf including compensation in the manner as provided under this Act:

Provided that where an allottee does not intend to withdraw from the project, he shall be paid, by the promoter, interest for every month of delay, till the handing over of the possession, at such rate as may be prescribed."

Accordingly, it is submitted that, in consonance with the provisions of Section 18(1) of the Act, your client is liable to cancel the allotment in favour of my client in light of your client's default, and to refund the entire amount already paid by my client together with applicable interest. It is stated, without prejudice, that alternatively, your client is liable to pay my client interest for every month of delay until the date of handover of possession.

It has been held by the Hon'ble Supreme Court of India in the judgment titled Pioneer Urban Land and Infrastructure Limited v. Govind Raghavan & Ors. that ex facie one-sided, unfair and unreasonable terms in agreements with buyers constitute an unfair trade practice. Further, the Hon'ble NCDRC, in a recent judgment, categorically held that there should be parity in the rate of interest payable by builders and homebuyers for non-compliance with the terms of the agreement, and suggested that builders should pay the same rate of interest for delay in completing the project as they demand from buyers in case of delay in payment. The same proposition has been further reinforced by the advent of the RERA legislation.

Without prejudice to the foregoing, it is submitted that my client is not liable to pay any additional charges/penalty as mentioned in paragraph 10 of the reply. Any resultant delay is solely attributable to the delay and negligent conduct of your client itself.

Further, your client has failed to substantiate its demand for additional amounts on account of the said charges with any proof, and has merely fabricated false and fictitious figures to harass my client in an attempt to conceal your client's own defaults. It is therefore submitted that the demands made by your client are false and should not be accepted. On the contrary, it is your client who is liable to pay interest on account of the delay in offering possession to my client.

11.That the contents of paragraph 11 of your notice are false, wrong and concocted, and are accordingly denied. It is submitted that your client is not entitled to hand over the existing project of my client to any society, as doing so would cause grave prejudice to my client, which cannot be compensated in monetary terms. That you have not been inclined to accept the request of my client and have repeatedly demanded interest for the delayed payment from my client; the amount of interest so demanded ought to be waived. Your client had presented an unduly rosy picture and had made false promises to my client.

That time was of the essence of the contract in this case, inasmuch as the project was required to be completed within 36 months. The apartment was never ready to be offered for possession.

My client is well within his right to avoid the contract when possession is not offered within a reasonable time and there has been an inordinate delay extending over a considerable number of years.

My client is entitled to compensation, that is to say, his actual loss, expected loss, and even compensation for physical, mental or emotional suffering, insult, injury or loss, together with payment of interest for the injustice suffered by him.

As such, the grounds and contents raised in your notice are false, baseless, shocking and frivolous. That the contents of your notice under reply are wrong and are denied as stated.

My client is no longer prepared to bear this shocking situation and has instructed me to initiate appropriate proceedings; however, I have considered it advisable to give you yet another opportunity — the last one — to withdraw the notice.

I trust, however, that by timely action you will obviate the necessity of any unpleasant steps being taken against my client. It will be in your client's own interest to withdraw the notice.

This notice has no legal force, and if your client still proposes to take any legal action against my client, your client shall do so at its own costs, risks and consequences thereof, which you may please advise your client accordingly.

In view of the foregoing, it appears that a dispute has arisen between my client and your client. Through this response, my client requests your client to hold one meeting to settle the accounts mutually, so as to avoid any unwarranted proceedings against each other.

My client hereby calls upon your client to settle the accounts mutually at the earliest and to advise us, enabling withdrawal of the present notice.

A copy of this notice has been retained in my office for further reference and action.

(Advocate's name (signature))