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Is the concept of ‘Caveat Emptor’ (Buyer beware) still relevant? Ref: Campa Cola Buildings

In this age of layered complexity, how CAN buyers be aware?

I specifically refer to the Campa Cola Case of South Mumbai

From wikipedia : Generally, caveat emptor is the property law principle that controls the sale of real property after the date of closing, but may also apply to sales of other goods.

The phrase Caveat Emptor arises from the fact that buyers often have less information about the goods or service they are purchasing, while the seller has more information. Defects in the goods/service may be hidden from the buyer, and only known to the seller. Thus, the buyer should beware.

United States:

The modern trend in the US, however, is one of the Implied Warranty of Fitness that applies only to the sale of new residential housing by a builder-seller and the caveat emptor rule applies to all other sale situations (i.e. homeowner to buyer).

United Kingdom:

In the UK, consumer law has moved away from the caveat emptor model, with laws passed that have enhanced consumer rights and allow greater leeway to return goods that do not meet legal standards of acceptance.

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I ask :

In India how can Caveat Emptor be enforced when:

– Public records are so difficult and onerous to obtain?

– Court cases take 30 years to be heard?

– Various government agencies act in conflicting ways, sending different signals to innocent consumers?

Let’s consider the Campa-Cola case:

Suppose I wanted to buy a flat in one of the now known ‘illegal floors’ that the Supreme Court has clearly demanded to be demolished.

Assume that this is the dialog between seller Mr. Sharma and myself:

Alok: “Mr. Sharma, I understand that there is a legal problem of ownership in these flats in the building compound?”

Sharma: “Alok, there is no problem. It’s just a long court case that is going on and on and will be settled in our favour.”

Alok: “And what makes you so sure?”

Sharma: “Boss, I’m paying electricity charges for my flat for years! Check out these bills! How can BEST supply electricity to a flat that’s illegal??”

Alok: “But I understand that the water you get in the building is all from tankers! There is no BMC supply because of the illegality?”

Sharma: “No Alok. It’s a silly issue between us and the BMC. The builder got into some fight with them.”

Alok: “But what about the court case?”

Sharma : “It will be in our favour. Also, the building has LOTS of FSI. If required, we will convert that FSI to adjust for these flats. You see how redevelopment is going on? It will apply to us also…”

Alok: “I’m not still convinced…”

Sharma: “Let me convince you by making you meet my neighbour who has a BANK LOAN to finance his house!! Now, banks won’t give loans to illegal flats, right?”

You get the drift. This sounds amateur but it illustrates the CONFUSION that can be created in a Buyer’s mind.

Think of innocent, helpless old couples and families being the buyer… how much can they question and riddle around?

campacolacompoundtherodinhoodsImage courtesy – hindustantimes.com

TO MAKE BUYERS BEWARE, why doesn’t the Govt:

– Issue press ads in the newspapers stating which buildings are ILLEGAL?

– Post court notices outside and inside building compounds alerting buyers?

– Have all govt. agencies speak one language?

– Create ONE DILIGENCE agency (like a Sebi) that either ticks a building and its flat Green or Red?

– STOP all banks from lending money to finance flats that may be illegal?

I mean just read the misguided promises made by the Chief Minister when the matter blew up last few weeks! WHY didn’t he say, “Sorry – you guys are illegal”…? WHY did he ‘promise’ asking the Attorney General (who he didn’t!!!) ????

How does an Indian buyer beware when the government is committed to creating confusion , or is at worst NOT EVEN AWARE???

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4 Comments

  1. I am sure Campa Cola case is only one of the many cases which are yet to come to light in India. You are correct, the government should certainly take due diligence in spreading awareness of illegal buildings in the city; however, it needs to be backed by more stringent laws at the grass-root level for development. At the end of the day, lot of illegal monies are being used to fund these buildings – and that same money bends the laws at every office – right from BMC to even the new regulatory body which might come into play. The illegal money flow will surely not stop – considering that it is a parallel economy which is now – you can say part of our economy; but at least we can put that money to legal use so consumers don’t keep getting duped.

    A regulatory body probably working closing with the judiciary might help but as history has suggested in our nation, even this body will add to the red-tape for consumers and a green light for the body itself to make money from builders!

  2. Same Issue happened in Delhi. Government decided to declare a piece of property Residential or Commercial as per today’s requirements or their personal whims but in fact years ago government agencies would have approved MAPS. Just because things arent conducive now government cannot decide suddenly if things work in their favor or not.

    There is another side here – That is if Campa Cola Falts wouldnt have been in such a POSH area and wouldnt have been so highly priced would these people still fight for their homes or just vacate and move on.

  3. Calls for a change of Government. 😉

    Also our attitudes, the laws in western lands have evolved over years of consumer interest conflicts. We are at the beginning of our innings, we must protest and fight tooth and nail – logic and reason on how the future of consumer interests are affected when the Government does not deliver a just rule that ensures consumer interest.

    We lack the courage to continue a fight. A man is run over with a car; a few look on, families cry and a few complain a few procrastinate and everything is settled with passing time as a time pass effort on change!!

    This is what has got to change!!!

    Campa Cola is at least in the news and has better prospects of a reversal in judgment compared to countless other buildings which were just razed to the ground along with a generation of hard earned money.

    #India needs change……

  4. Why do you need a Government Body to let us know what is legal or illegal? The laws in our country are so old, so numerous and so confusing that no one is sure about anything. This is of great help to the crooks in the Government.

    Any policeman can stop us any time and take us to the police station for questioning and harass us in the name of questioning. They can even book us on any false charge. We will probably come out of the false case but it will take us long time and effort but the erring policeman will never be brought to book for committing the crime.

    The answer to such problems is less laws, less government and more transparency. We should strive for a day when our rules will enable / empower us to know for ourselves if a building or an act is legal or not without waiting for directions from Government Agencies.

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