Homebuyers Can Move To Consumer Courts For Refunds, Compensation For Delays Despite RERA: Supreme Court

In a victory of sorts for homebuyers, the Supreme Court has made it clear that buyers can still approach the consumer forum for redressal, including refund and compensation from real estate firms, for delay in handing over possession of their homes, despite the enactment of Real Estate (Regulation and Development) Act, 2016.

The matter concerned buyers who had booked apartments by executing Builder Buyer Agreements in 2013 and had approached the Consumer Commission which allowed their complaint and ordered refund of the amounts deposited by each of them with simple interest at the rate of 9 percent per annum from the respective dates of deposits along with Rs.50,000 towards costs.

After RERA came into force almost three years ago, real estate companies have held that the consumer for a does not have the right to deal with complaints filed by homebuyers against them.

The apex court on November 2 made it clear that though the special 2016 legislation has many features that benefit the homebuyers, consumer courts still have the authority to entertain grievances of homebuyers if they fall under the definition of consumer under the law.

The RERA does not statutorily force a person to withdraw any such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act, the apex court judgment said.

Also, as far as cases where such proceedings under the Consumer Protection Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation.

“Again, insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. The absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a Civil Court and express saving under Section 88 of the RERA Act, make the position quite clear. Further, Section 18 itself specifies that the remedy under said Section is “without prejudice to any other remedy available”.

Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act, the court said.

The verdict came on an appeal of the M/s Imperia Structures Ltd against the judgment of the NCDRC on the complaint of 10 homebuyers of its housing scheme called the ESFERA in Sector 13C, Gurgaon, Haryana.

The project was launched in 2011 and the complainants had booked their apartments in 2011-12 by paying the booking amounts and later approached the NCDRC alleging that despite the lapse of 42 months there was no chance for them to get the possession of their dream homes.

The NCDRC, in 2018, allowed the complaints of 10 home buyers including Anil Patni by directing the developer to refund the amounts deposited with simple interest at the rate of 9 per cent per annum from the dates of deposits till the date of realisation together with costs of Rs 50,000 to be paid to each of the complainants.

The builder had approached the Supreme Court and raised legal issues pertaining to whether the bar specified under Section 79 of the RERA Act would apply to proceedings initiated under the provisions of the CP Act; and whether there is anything inconsistent in the provisions of the CP Act with that of the RERA Act.

The bench comprising Justices UU Lalit and Vineet Saran took into account the Proviso to Section 71(1) of the RERA Act which entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or Commission and file an appropriate application before the adjudicating officer under the RERA Act. The court said:

“The proviso thus gives a right or an option to the concerned complainant but does not statutorily force him to withdraw such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act. As against that the mandate in Section 12(4) of the CP Act to the contrary is quite significant.”

The court also rejected the contention that since the RERA Act was enacted and considering the special expertise and the qualifications of the chairpersons and members of the Authority (Section 22) and the Appellate Tribunal (Section 46), such authorities alone must be held entitled to decide all issues concerning the project registered under the RERA Act.

“It is true that some special authorities are created under the RERA Act for the regulation and promotion of the real estate sector and the issues concerning a registered project are specifically entrusted to functionaries under the RERA Act. But for the present purposes, we must go by the purport of Section 18 of the RERA Act. Since it gives a right “without prejudice to any other remedy available’, in effect, such other remedy is acknowledged and saved subject always to the applicability of Section 79.”

The bench also noted the judgment in Pioneer Urban Land and Infrastructure Limited and another versus the Union of India in which it was observed that the remedies that are given to allottees of flats/apartments are therefore concurrent remedies, such allottees of flats/apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the IBC Code.

The court, therefore dismissed the appeals, imposing costs of Rs.50,000 to be paid by the builder in respect of each of the Consumer Case.

Homebuyers have welcomed the apex court’s judgment.

“This judgment once again clarifies the legal position which also has been our stand since the beginning that the option of choosing a forum for initiating complaints against the builder lies with the homebuyers and they are at liberty to choose between both RERA and the Consumer Forum,” said Abhay Upadhyay, president, Forum For People’s Collective Efforts and member, Central Advisory Council, RERA, MoHUA.

“Further, it is now legally validated that homebuyers cannot be forced to choose a forum as per the convenience of builders. We hope that all cries of builders to bar the Consumer Forum for homebuyers will now be put to rest permanently,” he told Moneycontrol.

It is also relevant to point out that builders have been partially successful in their endeavour to bar homebuyers from approaching the Consumer Forum following the government’s decision to raise the pecuniary jurisdiction through a recent amendment in the Consumer Forum Act at their behest, he added.

The new Consumer Protection Act that took effect from July 20 has changed the jurisdiction of the National Consumer Disputes Redressal Commission (NCDRC) to Rs 10 crore from the earlier Rs 1 crore. This means that only homebuyers who have paid an amount in excess of Rs 10 crore can file a case in the commission.

Other cases up to Rs 1 crore can be filed with the district commission and those between Rs 1 crore to Rs 10 crore with the state commissions.

Real estate developers represented by Naredco and Credai had earlier suggested to bar the jurisdiction of consumer forums as presently done for civil courts under section 79 under RERA Act to avoid conflicts with judgments of RERA authorities and consumer forums which are presently both forums for RERA disputes.

This was opposed by homebuyers who were of the opinion that consumers have the right to decide the forum before which they wish to claim relief. “Rera should be the preferred forum that home buyers should approach rather than being forced to go to,” Upadhyay said.

It was also proposed that presently some cases related to defaulting builders are directly being adjudicated by NCLT. While RERA Act does not presently provide for references of cases of defaulting builders to NCLT, it is suggested that such cases be initially referred to RERA authorities for resolution of dispute within 180 days before invoking the insolvency proceeding. If RERA authorities fail to resolve, the dispute may be referred to NCLT for adjudication.

(Source: Moneycontrol)