Ronica S. Dass
Comparative Analysis between Real Estate (Regulation and Development) Act and Consumer Protection Act: Is RERA gaining precedence over CPA?
In this research article, the author seeks to address the provisions of ‘Real Estate (Regulation and Development) Act’ (herein after referred to as ‘RERA’) and ‘Consumer protection act, 2019, herein after referred to as ‘CPA’ and draw an analysis comparing the above.
WHAT IS THE PURPOSE FOR ENACTING CPA?
> Understanding Consumer Protection Act: Brief Pointers
WHAT IS THE PURPOSE FOR ENACTING RERA?
> Understanding Real Estate (Regulation and Development) Act, 2016
The author seeks to address the below research question with the help of this research article which is addressed in the later part of this article.
1. Whether there is any correct forum for the homebuyers to approach “RERA” or the “Consumer Court”?
2. Does the RERA reduce the scope of Consumer Courts?
3. Does the RERA bars remedy under the CPA?
4. Whether civil courts can be approached in case when the remedy sought for is initiated in the RERA or the Consumer Courts?
SOME POINTERS BETWEEN RERA AND CPA FOR CONSIDERATION
A. REMEDIES AVAILABLE TO THE HOMEBUYERS
♦ RERA- Under RERA various remedies available for the damages to the buyers are as below
(i) Under Section 7 of the Act, the regulatory authority may revoke the registration of the promotor who is involved in unfair trade practises or makes default in consideration with the rules or regulation of this act upon the complaint filed by aggrieved or Suo motu by giving a 30 days’ notice to the promotor or instead of revocation of the registration may take necessary actions to protect the interest of the allotees
(ii) Under Section 8 of the act, the remedy being provided for lapse of registration or on revocation of registration is to carry out the remaining development work by the competent authority as determined by the authority under Section 13 of the Act, a promoter is not liable to accept payment in advance which is more than 10 percent of the cost of the apartment without first entering into a written agreement for sale, under Section 14(1) of the act no alteration in the previously approved sanctioned plan without consent of that person and can only make alterations as may be required by the allotee
(iii) As per Section 12 of the Act “where any person makes an advance or a deposit on the basis of the information contained in the notice advertisement or prospectus, or on the basis of any model apartment, plot or building, as the case may be, and sustains any loss or damage by reason of any incorrect, false statement included therein, he shall be compensated by the promoter in the manner as provided under this Act”.
(iv) Under Section 13 of the Act, a promoter is not liable to accept payment in advance which is more than 10 percent of the cost of the apartment without first entering into a written agreement for sale,
(v) Section 14(3) provides that In case any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter is brought to the notice of the promoter within a period of five years by the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects without further charge, within thirty days, and in the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled to receive appropriate compensation in the manner as provided under this Act.
(vi) Section 15 of the Act provides that the promoter cannot transfer his rights and liabilities in respect of real estate project to a third party without obtaining prior consent from the two-third allotees and without written approval from the authority
(vii) Under Section 17(1) the promoter has to execute the conveyance deed in favour of the allottees within three months from the date of issue of occupancy certificate, in the absence of any local laws, and in the absence of the same, the promoter has to handover the necessary documents and plans within 30 days after issuing the occupancy certificate.
(viii) Section 18(1) provides that if the promoter fails to provide the possession of the apartment in accordance with the provision of the act, and the allotee wants to withdraw from the project shall be liable to receive the compensation along with interest or if does not want to withdraw, shall be liable for interest each month till the delayed possession of the apartment is allotted.
(ix) Section 18(2) provides that in case of defective title of the land the promoter is liable to compensate the allottees for the same and seeking compensation under this clause would not be barred by limitation.
(x) Section 19 provides for the rights of the allotees such as the allottees has the right to know regarding the stage wise completion of the project, they can claim the refund of the compensation with interests, if possession of apartment not yet made, etc.
(xi) Under Section 19(10) the allottee has to take the physical possession of the flats/apartment or the building as the case may be without a period of 2 months of issuance of occupancy certificate.
♦ CPA- The parties can seek compensation under the consumer protection act under District Commission, State Commission or National Commission as per the pecuniary limits for the compensation
B. REFUND WITH/WITHOUT INTERESTS
♦ RERA 1. The homebuyer can get refund for Loss or damage sustained by homebuyer due to false/incorrect statement/information included in an advertisement or project prospectus by the Promoter. The homebuyer shall be returned his entire investment along with interest at such rate as may be prescribed. (Section 18(1))
2. In case the allottee does not wish to withdraw from the project due to the failure of the Promoter to complete or give possession in accordance with the terms of the agreement for sale or due to discontinuance of his business, 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. (Section 18(1))
♦ CPA- If District/State/National Forum is satisfied that the allegations contained in the complaint about the services are proved, it shall issue an order to the opposite party directing him to refund of price/charges paid by the complainant along with interest
C. WHO CAN FILE COMPLAINTS/ACTIONS?
♦ RERA- As per Section 31(1) of the act “Any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this Act or the rules and regulations made thereunder against any promoter allottee or real estate agent”. Therefore, any aggrieved person may file a complaint under RERA. The “person” in this section signifies that it shall include any association of allotees or any consumer association i.e., it is not limited to a single person
♦ CPA- Under Section 2(d) of the act a Consumer who satisfies the requirement under Section 2(d) of CPA can file a CPA complaint. An Individual who enters into agreement for purchase of Flat can file complaint when he purchases the same for his individual use and residence.
D. PECUNIARY LIMIT FOR FILING THE COMPAINT
♦ RERA- RERA does not provide for any pecuniary limit for filing of any Complaint
♦ CPA- Chapter- IV of the Act deals with Consumer protection redressal commissions i.e., District, State and National Commission provides for entertainment of complaints based on the pecuniary limit which varies from the case-to-case basis.
Section 28 of the Act provides for the establishment of the District Commission which is to be established by the State Government.
Section 31(1) of the Act provides for jurisdiction of the district commission which provides that the complaints would be entertained where the value of goods and services paid as consideration does not exceed 1 crore rupees
As per Section 41(1) of the Act:-
“Any person aggrieved by an order made by the District Commission may prefer an appeal against such order to the State Commission on the grounds of facts or law within a period of forty-five days from the date of the order, in such form and manner, as may be prescribed”
Section 42 of the Act provides for establishment of the State Consumer Dispute Redressal Forum established by the State Government.
Section 47(1) of the Act deals with the pecuniary limit of State Commission which is greater than 1 crore but not exceeding 10 crores.
Section 51(1) of the Act provides that: –
“Any person aggrieved by an order made by the State Commission in exercise of its powers conferred by sub-clause (i) or (ii) of clause (a) of sub-section (1) of section 47 may prefer an appeal against such order to the National Commission within a period of thirty days from the date of the order in such form and manner”
Section 53(1) of the Act provides for the establishment of National Consumer Disputes Redressal forum which is to be established by the Central Government.
Section 58 of the Act provides for the jurisdiction which is for the matters wherein the value of goods and services is exceeding 10 Crores.
E. LIMITATION PERIOD
♦ RERA- RERA does not specifically provides for any limitation period for filing of complaints from the date of cause of action.
♦ CPA- As per Section 69(1) of the Act the limitation period for entertainment of the complaints in the district, State and National Commission is 2 years from the date on which the cause of action arises.
F. RESOLUTION TIME
♦ RERA- Section 29(4) of the Act provides for the time period within which the authority shall expeditiously dispose of any questions that comes up before the authority which is a period of 60 days.
♦ CPA- Section 38(7) of the Act provides that any complaint shall be disposed of within a period of 3 months from the date of receipt of notice by the opposite parties.
G. OUT OF COURT SETTLEMENTS?
♦ RERA- Section 32(g) of the Act provides that “measures to facilitate amicable conciliation of disputes between the promoters and the allottees through dispute settlement forums set up by the consumer or promoter associations”. Therefore, this section provides that out of court settlements can be made through the conciliation forums which is set up by various states in accordance with this provision
♦ CPA- Chapter 5 of the CPA in detail provides for the settlement of disputes through mediation.
> Can Civil Courts be approached in spite of remedies being available under RERA or NCDRC?
The supreme court in one of the recent case of Imperia Structures vs. Anil Pati held that remedies which are available in the consumer protection Act are in addition to any other remedies and therefore the allotees of the project where it is registered as a real estate project under RERA can approach the National Consumer Dispute Redressal Commission (NCDRC) in case of any deficiency of services. However, Section 79 of the RERA provides for the bar of jurisdiction of civil courts over the matters that may lie before the RERA Authority. If a regulatory authority has been set up in the state, one cannot file a case before the civil court or file a civil writ petition before the High court. This has been held in earlier case scenarios as well wherein the courts who approached the civil court to file a petition before the regulatory authority of that state which was held earlier in the case of Noor City versus State of Punjab.
> Which forum should be approached in case of deficiency of Services related to real estate Sectors.
RERA is a special law which was enacted for the purpose of regulating the real estate sector so that the mechanism can be transparent between the promoters and the homebuyers as opposed to the CPA 2019 which is a general law. Therefore, specific remedies for the homebuyers are available under the RERA. Speedy disposal of cases is another merit for the real estate regulatory authority Act. It cannot be said that the RERA is reducing the scope of CPA but it acts as an extension to the growing needs for transparency in favour of the homebuyers and the builders. The recourse available under the CPA 2019 is only curative and not preventive in nature because the CPA only seeks to provide for pecuniary damages and it does not provide for specific performance. RERA also provides for remedies which are non-compensatory in nature such as under Section 8 of the act, the remedy being provided for lapse of registration or on revocation of registration is to carry out the remaining development work by the competent authority as determined by the authority , under Section 13 of the Act, a promoter is not liable to accept payment in advance which is more than 10 percent of the cost of the apartment without first entering into a written agreement for sale and many other such remedies. Under a “consumer dispute redressal forum”, if a builder is found guilty of default or non- compliance, he/she is punished with imprisonment. However, this would give no relief to the consumer imprisoning the builder will only add to the delay in the consumer’s possession of the apartment/ building which will lead to further escalating his misery
> Can simultaneous remedies be sought in both the courts of RERA and Consumer court?
In one of the Supreme Court Judgements in the case of M/s Imperia Structures Ltd vs Anil Patni & Another held that RERA does not restrict the jurisdiction granted under CPA to deal with the complaints filed by the homebuyers under consumers (homebuyers) of real estate projects registered under the RERA. The court was of the view that despite ongoing legislation going case at RERA, a consumer forum will always have the power to entertain cases wherein the homebuyers would classify as consumers under the consumer protection Act. Section 71 and 88 of the RERA Act reads as
71. “Provided that any person whose complaint in respect of matters covered under sections 12, 14, 18 and section 19 is pending before the Consumer Disputes Redressal Forum or the Consumer Disputes Redressal Commission or the National Consumer Redressal Commission, established under section 9 of the Consumer Protection Act, 1986, on or before the commencement of this Act, he may, with the permission of such Forum or Commission, as the case may be, withdraw the complaint pending before it and file an application before the adjudicating officer under this Act”
88. “The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.”
Similarly, Section 100 of the CPA act reads as: –
“The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.”
Thus, interpretation of the above provisions, points towards concurrent nature of the remedies provided under all these statutes and therefore, the option to choose the forum for complaint initiation lies with the homebuyer who has the liberty to select either of the forum or all of the forums as can be seen from the above-mentioned judgement.
1. Real Estate (Regulation and Development) Act, 2016.
2. Consumer Protection Act,1986
3. Imperia Structure versus Anil Patni and Others (SC), CIVIL APPEAL NO. 3581-3590 of 2020. Can be found as provided below: –
4. Noor City versus State of Punjab and Others, 2017.
The author has contributed this write-up during her research assistantship at M/s. Black Robes Legal. The views, thoughts, and opinions, as are so expressed, belong solely to the author, and not to any other person in any manner whatsoever.