Daily late payment penalty charged by builder

Querist : Anonymous (Querist) 08 August 2023 This query is : Resolved
I have invested in an under construction project in Mumbai.

Right at the onset, I changed 3 preferred bankers so that the builder gets priority funding considering the tie-up.

The builder has charged a late payment penalty of ₹ 3 Lakhs for a slab demand of ₹9 Lakhs which was funded 3 days after the due date mentioned on the installment demand letter.

The builder's office is saying that the late payment penalty is calculated by levying a rate of SBI MCLR + 2% on a daily basis (i.e. 10.5% on daily basis).

Can the builder use the MCLR? Because I understand that the MCLR was implemented by RBI in Apr 2016 which can be used by financial institution or banks?

How should this matter be approached?

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Quick Summary

A property investor in Mumbai was charged a significant late payment penalty by their builder, calculated daily using SBI MCLR + 2%. The investor questions the legality of using MCLR for such penalties and seeks advice on how to proceed. It's recommended to review the builder-investor agreement for any penalty clauses and consult a local lawyer for professional guidance. If the agreement is one-sided or the builder is unresponsive, pursuing action through the consumer forum may be an option.

kavksatyanarayana (Expert) 08 August 2023
Is there any agreement between you and the builder if so is there any such penalty clause? I think that is not mentioned in the agreement. If such a clause is not there, you shall file a case against the builder.

T. Kalaiselvan, Advocate (Expert) 09 August 2023
You have to revisit the agreement entered between the builder and you in the initial stages.
If the clauses are one sided and the builder is not responding to you query on this unjustified demand or levy, you may drag the builder to the consumer forum to get his one sided agreement cancelled and direct him to refund the excess amount recovered from you till this date.
The one sided agreement is not legally valid as held by supreme court

Dr. J C Vashista (Expert) 09 August 2023
Nothing can be presumed to form proper opinion and oblige by experts on this platform.
Show the agreement to a local lawyer for appreciation of terms and conditions and professional advise.

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