Mahadevan (Consultant) 08 August 2011

Builder seeks interest for delayed payments by bank

Hello Sir,

I'm buying a flat from a builder in chennai. Its now alomost ready 95% over. I have also paid 95% (both my part + housing loan from LIC). Now, the builder asks interest for delayed payment for each and every stage. LIC has been disbursing payments after every completion of stages after the builder request for payment. They normally takes 1 to 2 weeks to disburse the amount from the date of payment requested by the builder.

My agreement with the builder states that there is an interest of 24% for the delayed payments.

I do not want to pay this interest as I have fully co-operated in paying the installments. Please advise me If there is a possibility of waiving this interest if I pursue a suit in the court of law.

Thanks,

Mahadevan

Reply Follow

3 Replies

adv. rajeev ( rajoo ) (practicing advocate) 08 August 2011

if there is an agreement between you and builder to pay the delayed period interest then you will have to pay, if not then no question of paying interest.

1 Like

Dr. MPS RAMANI Ph.D.[Tech.] (Scientist/Engineer) 09 August 2011

There are three parties in your case, i. e. you, the Builder and LIC. Do you have separate agreements, one with the Builder and the other with LIC? Or is there a tripartite agreement among all the three parties? If there is a bi-partite agreement between you and LIC, does it mention any grace period for releasing payments?

If there was delay in your payments, you would have pay interest. If the delay was only in payments made by LIC and if there was a direct relation between LIC and the Builder, one will have to look into the details of the agreement. In all payment contracts there will always be a grace period between the date of demand or submission of documents and the actual payment. If the payment is delayed beyond the grace period only interest will be payable. You may or may not have a case, depending on the various things mentioned above. Is the interest demanded a very large amount?

You can try to negotiate with the Builder. In case you are very particular about not paying and you strongly feel that you have a case, you can file a complaint in the Consumer Court. If you fear delay in getting possession of the flat, you can first pay under protest and then go to court to recover the amount paid with interest.

1 Like

Mahadevan (Consultant) 09 August 2011

Hello Sir,

Thanks so much for the advise given. To clarify further on my case, there is no separate agreement between LIC and the builder and my agreement with the builder had been submitted to LIC at the time of approving the loan as one of the required documents.

Moreover, my agreement with the builder doe not mention the grace period to pay the installments. LIC has their own processes to disburse installments at every stage based on the completion of the stage completed.

Now the builder asks Rs.87,000/- as the interest for delayed payment. Im very particular not to pay this interest because I have paid 95% of my flat cost now and the work done in my flat is 90-95%. It is a small project, only 4 flats with car parks. As per the agrement, the completion of flat mentioned is 31/12/2011.Though the 95% of work done in my flat, I do not think, he can finish the complete work including car park and compound gate atc before atleast Nov 2011. Now, my flat can not be occupied, but I need to pay both EMI/interest to LIC and rent for the current residence. On top of it, I do not want to pay this interest.

Please advise me further based on my above clarifications.

Thanks in advance

Mahadevan