ABSTRACT

Since the enactment of RERA, real estate firms have been taking stands that the consumer forum has no right to deal with the complaints of home buyers against them. Often a question is raised before the Courts as to whether the complainant can claim the benefits under the Consumer Protection Act if there is an alternative remedy available. The courts have often tried to give an affirmative response to such questions. However, the issue was not clear as far as home buyers are concerned, as it was argued that since RERA is special legislation to govern the real estate matters, the remedy can be sought only as per the provisions of the Act.

But recently the Supreme Court while deciding an appeal in Imperial Structures Limited v. Surinder Anil Patni and Another adjudicated that the Homebuyers are ‘Consumers’ as per the CP Act and the availability of an alternative remedy under RERA would not bar them from initiating a complaint under CP Act.

The author in this article tries to reflect upon the current position of homebuyers and the interplay of availing remedies between the RERA and Consumer Protection Act. The author addresses the issue of whether the availability of an alternative remedy under RERA is a bar in entertaining a complaint under the Consumer Protection Act. Further the Author analysis the recent landmark judgment of the Apex Court in deciding the issue at hand. In the end, the article is concluded by discussing the implications which lie ahead in the future.

KEYWORDS: RERA, Homebuyers, Consumer, Consumer protection Act, Remedy.

INTRODUCTION

The Supreme Court of India recently held that the homebuyers are at liberty to approach the consumer forum for claiming the compensation in cases where the payment has been made but the developer is either delaying or denying the possession of the flats. The homebuyers can approach the consumer forum once the promised date of delivery of possession has expired as per the agreement between the homebuyers and developers. The above ruling was propounded by the Apex Court of the country in the matter of M/s Imperia Structures Ltd vs Anil Patni and another [1]. The Division Bench comprising of Justices UU Lalit and Vineet Saran delivered the judgment. The Court also observed that the date for calculating the delay would start from the date of buyers agreement and not on the basis of registration of development project under the Real Estate Regulation and Development Act (RERA Act).

FACTS:

The homebuyers booked the flats under a housing project by the builder via Builder Buyer Agreements in 2013. The possession of the flats was promised to be delivered in the year 2018. But even after four years from the date of buyer’s agreement, no construction work was carried out by the developer on the proposed site of construction. In order to claim the compensation, the buyers approached the National Consumer Disputes Redressal Forum in 2017. The NCDRC passed an order to return the deposited money to all the homebuyers along with the interest from the date of deposition of money. The Forum also ordered to pay fifty thousand as litigation cost to every homebuyer involved in the litigation before the forum.

Aggrieved by the order of the National Commission the developers approached the Supreme Court challenging the jurisdiction of the National Commission to entertain the dispute.

Arguments from Developers:

  • The homebuyers can approach the Court only under the RERA act, as this is special legislation and the Project was registered under RERA act.
  • The Homebuyers are not ‘Consumers’ as required under the Consumer Protection Act, since the possession was intended as an investment for the commercial purpose and not for residential purposes.

JUDGMENT:

The Supreme Court of India recognized the importance of the RERA act, in providing benefits to the homebuyers as well as to the developers. The Court observed that even though RERA is special legislation it does not bar the jurisdiction of other Courts merely by its special nature. This Act must not be interpreted in isolation but must be read in addition to the other acts. Since the Consumer Act provides the remedies in the form of compensation to the aggrieved consumers, it has jurisdiction over all the matters as long as the complainant fulfills the criteria of ‘Consumer’ as per the CP Act. The CP act will have jurisdiction if the buyers fall under the definition of Consumer as required by the law. The Court further observed that the RERA act does not contain any provisions which refrain the buyer from initiating the complaint under the Consumer Protection Act. In addition to this the act also does not contain any provision which specifies the transfer of a pending case from the Consumer forum to RERA in order to substantiate the fact that it can only be initiated under RERA act. Further, the Consumer Protection Amendment Act,2019 came into force after the RERA became operational, but even this amendment does not contain a provision that bars or limits the jurisdiction of the Consumer Forum to entertain the complaint of Homebuyers.

The Court relied on the earlier judgments and derived the legislative intent of RERA that it provides an opportunity to the buyer as to whether he wants to initiate a proceeding under the Consumer Protection Act or want to file an application under RERA act. The Court interpreted section 71(1) of RERA act which provides an option to the buyer to withdraw the application from the consumer forum with the consent of the forum to initiate it under RERA. Based on these provisions the Court concluded that therefore this section provides a right or a choice and not a compulsion on the buyer to transfer the case before RERA. The Court also made recourse to section 18 of RERA which states that the ‘rights without prejudice towards any other remedy available’, based on this section refraining a buyer from initiating a complaint under CP Act would amount to prejudice to remedy available under CP Act.

The Court also relied on National Seeds Corporation Limited vs. M. Madhusudhan Reddy and Another[2] and Secretary, Thirumurugan Cooperative Agricultural Credit Society vs. M. Lalitha[3] and made a purposive interpretation and held that the purpose of CP Act is to provide the best possible protection to consumers and should always be read on addition to the remedies contained in other laws. Further the Court observed that as far as the restrictions of jurisdiction are concerned under section 79 of RERA, there are only applicable for Civil Courts and Consumer forums are not Civil Courts as per the Code of Civil Procedure, 1906. Lastly, the Supreme Court held that the remedies provided under Consumer Protection Act should not be regarded as mutually exclusive with other legal remedies available to homebuyers.

ANALYSIS

This judgment has uncertainly explained that the allottees have the freedom to choose among RERA and the Consumer Forum to practice their privileges in a land project. As the land business keeps on wrestling with the uncommon difficulties introduced by steadily developing liquidity emergencies and the current pandemic, the postponed ventures should plan for longer fights in court by virtue of conceivable commencement of new cases before RERA or the Consumer Forum. This judgment also paves a path for ending the dominance of Developers over buyers by virtue of money power in litigation matters.

However, such liberty of buyers may always be misused and may further add on to the already pending heavy backlog of pending cases. This may also result in diluting the purpose of special legislation (RERA) and its objectives with which it was brought into force. This decision may also acts as a hurdle in attainment of uniformity and standardization of business practices and transactions in the real estate sector, as now there are two separate forums to adjudicate on the same matter.

This move can be welcomed in the sense that it can ensure endeavors to balance the interests of the consumers and promoters by imposing certain responsibilities on them. This is an attempt to make sure that the interests of the homebuyers are not sacrificed at the cost of irregularities of the big developers. However, in the midst of all of this the fast-track dispute resolution mechanism is always prone to suffer, which is the genesis of the incorporation of this Act.

The question of whether the RERA regime was the solitary panacea to the anathema that had afflicted the real estate sector through exclusive jurisdiction of regulation and control has been considerably dwelt upon in this judgment. This judgment has made it a settled principle of law that the provisions of RERA are in addition to, and not in derogation to any other law in force. Further, it can be inferred from the above ruling that those allottees that squarely fall within the ambit of the expression ‘Consumer’ can approach the Consumer Forum in order to avail remedy available therein, and whilst it provides a relatively expeditious remedy as compared to RERA on account of greater appellate provisions, it reduces the efficacy of RERA. This move might result in drawing more consumer complaints from the real estate sector considering the fact that here appellant layers are fewer.

However, in a real sense, it might not affect the efficiency of RERA as it would have concurrent as well as exclusive jurisdiction and in case of overlapping of the jurisdictions, the buyer would have the right to choose the forum as per his needs.

CONCLUSION

Accordingly, it could be said from the Court’s ruling that this judgment had clarified the legal position of the option of choosing a forum for starting grievances against the builder must lie with the homebuyers and they must be at liberty in order to select between both RERA and/or the Consumer Forum. Thus now the homebuyers cannot be forced to select a forum of adjudication as per the suitability of the builders. A balanced approach has been adopted to identify the interest of the homebuyers and balance it with the promoter’s interests. However, through the recent amendment of the Consumer Protection Act, the monetary limits to approach the consumer forum has been raised from the previous amount, which in a way provides a big relief to Builders in restricting the homebuyers to approach the consumer forum frequently. Although the efficiency of RERA may seem to be challenged, it is merely an illusion as there lie other exclusive jurisdictions with RERA. Thus, in a nutshell, RERA regime continues to be a force to reckon with and promises to deliver stellar services in the real estate space and in its domain and jurisdiction, in close coordination with the Consumer Protection Act and other laws in force.

[1] Judgement dated November 2, 2020 in Civil Appeal No. 3581-3590 of 2020.

[2] (2012) 2 SCC 506

[3] (2004) 1 SCC 305.

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