Can I challenge one-sided clauses in a builder-buyer agreement?

Question

My builder-buyer agreement has heavy penalty clauses for my delay in payment but almost no penalty on the builder for delayed possession. Can such one-sided terms be challenged? What I am unsure about is the procedure — where the application goes, what it costs, and how long one-sided builder agreement clause matters usually take. A plain explanation of the steps, in order, would help more than a general answer.

MyVakeel Legal Desk · Accepted Answer

The law that applies to one-sided builder agreement clause here is Real Estate (Regulation and Development) Act 2016, Section 13, Consumer Protection Act 2019, Section 2(46) and Indian Contract Act 1872, Section 23. The detail below matters, because Real Estate (Regulation and Development) Act 2016, Section 13 draws the line differently depending on what your documents show.

Section 13 of RERA prohibits a promoter from accepting more than ten percent of the cost as advance without first entering into a written, registered agreement for sale, and the model agreement prescribed under most state rules is meant to ensure reciprocal obligations.

The Supreme Court has held in Pioneer Urban Land and Infrastructure v. Govindan Raghavan that one-sided clauses imposing heavy interest on the buyer's delay while giving the builder a token or no penalty for its own delay constitute an unfair trade practice and are not binding.

Section 2(46) of the Consumer Protection Act 2019 defines unfair contracts, including terms that impose a disproportionate penalty for breach on the consumer compared to the impact caused to the other party, allowing a consumer commission to strike them down.

Under Section 23 of the Indian Contract Act, an agreement whose object or the consideration is opposed to public policy is void, and courts have applied this to unconscionable builder-buyer clauses that defeat the reciprocity RERA intends.

An allottee can raise the unfairness of specific clauses either as a defence when the builder invokes them or proactively before the RERA Authority or a consumer commission seeking a declaration that such clauses are void and unenforceable.

What to do next: 1) Highlight the specific one-sided clauses and compare the buyer's versus the builder's penalty and interest rates; 2) Cite the Pioneer Urban judgment and the unfair contract provisions when disputing enforcement of such clauses; 3) File a complaint before the RERA Authority or the appropriate consumer commission challenging the clause; 4) Do not sign amendments that further tilt obligations in the builder's favour without legal review.

If you are unsure whether your facts fall inside Real Estate (Regulation and Development) Act 2016, Section 13, that is worth checking with an advocate before you commit to a route, because switching later costs time. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in property law.