Homebuyers Can Approach RERA, As Well As Consumer Fora: SC

Even though homebuyers have a specific platform to get their grievances addressed after the arrival of the real estate law in 2016, they also have the option to approach the consumer protection forums if they so desire, India’s top court said, in a benchmark ruling on November 2, 2020.

Passing its order on an appeal by a Delhi-based real estate developer against an order of the National Consumer Disputes Redressal Commission (NCDRC) , a bench of the Supreme Court also clarified that despite the judicial nature of the proceedings, consumer fora are not akin to civil courts in India.

The builder, Imperia Structures, had moved the SC, opposing a 2018 order of the NCDRC, in which it has ordered the Delhi-based builder to refund money to 10 homebuyers, because of a delay in providing possession in its Gurgaon-based project. Launched in 2011, the project, The Esfera, was scheduled for delivery in 2015. It is, however, yet to be completed.

Rejecting the claims of the developer, which said other agencies should not be taking up cases that pertain to building construction and project delays in the presence of a sector-specific body like the RERA, the apex court told it to refund the amount to the homebuyers, as directed by the NCDRC earlier.

“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 SC said in its 45-page verdict.

The SC order assumes significance in the backdrop of the fact that several developers have, in the recent passed, raised concerns over consumer bodies taking up cases for hearing that pertain to project delays.

“On the strength of the law so declared, Section 79 of the RERA Act does not in any way bar the (consumer) commission or forum under the provisions of the Consumer Protection Act to entertain any complaint,” the SC ruled.

"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," it added.

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There is a reason why the Real Estate (Regulation & Development) Act, 2016, is often referred to as a game-changing law. The law promises to exclusively protect homebuyers, a safety buyers of property did not enjoy before the law came into force. Of course, the legal remedy was available to homebuyers earlier, too. They had the option to approach the National Consumer Dispute Redressal Commission (NCDRC) , the apex consumer rights body in India, in case of a discontent.

However, the forum could only so much.

Budget cap: The NCDRC entertains a complaint valued more than Rs 1 crore.  In case a buyer has to file a complaint against a developer where the total amount involved is less than Rs 1 crore, they have to first go to the district-level authority and then the state-level authority to claim justice before they could approach the NCDRC. Last year, however, the Supreme Court in a landmark ruling said that buyers can get together and form groups to directly move the apex body. Homebuyers still needed a real-estate centric law for other reasons, too.

Bureaucratic procedure: Unless a consumer files a complaint, the NCDRC cannot initiate an action. It can also not run a probe into a matter. The same is not true of the Real Estate Regulatory Authority (RERA) .

Only a registered agency or consumer can file a complaint with the NCDRC which is not the case with the RERA.

Softer penalties: The NCDRC can only impose a fine on a defaulting developer; it cannot award on him a jail term. The RERA, on the other hand, can slap a fine on a defaulting promoter or impose a jail time. It can also choose to do both.

Is it legal to approach consumer panel after the arrival of the RERA?

Let’s be clear about this. Homebuyers have every legal right to approach either the RERA or the consumer panel or both at the same time to seek relief in case of an issue with a developer. According to the Delhi High Court (HC) , both the bodies have concurrent jurisdiction.

While rejecting over 60 petitions filed by various developers in the national capital region which argued that buyers cannot simultaneously sue them at both the platforms and that cases pending against them in the consumer courts be withdrawn because the same case is pursued by the NCDRC, the court said even the country’s top court was of the opinion that buyers could seek relief from both the platforms simultaneously.

Earlier, RERA chiefs of several states had also opined that homebuyers be barred from approaching the consumer forums. Buyers approaching consumer forums, they say, is acting as a major hurdle in effective implementation of the real estate law.

Is the consumer forum still relevant for homebuyers?

Make no mistake. The powers of consumer forums might be limited, but, let us not lose sight of the fact that the NCDRC does not lose its relevance for homebuyers altogether after the arrival of the RERA.

For starters, the panel has a great track record as far as litigation success rate is concerned, an area where the RERA has yet to prove its credentials. Over the years, the panel has modified laws to make them more consumer-friendly.

Recently, the NCDRC made changes in the Consumer Protection Act to provide major relief to homebuyers.  It ruled that developers cannot force buyers to settle their disputes through arbitration by restraining them from approaching consumer forums. State real estate authorities can follow this example to attain a greater success.

Also Read: Buyer Associations Can Approach Apex Consumers' Panel Against Builders, Rules SC