Simultaneous proceedings a relief for homebuyers
Homebuyers have been subjected to excessive delays under the justice delivery system because construction projects have long gestation periods.
Homebuyers have been subjected to excessive delays under the justice delivery system because construction projects have long gestation periods. From a mere contractual dispute to instances of fraud and delays in handing over the property, homebuyers face a lot of challenges. So remedies under one particular legislation may not be sufficient to cover all the offences and problems. Consequently, there is a need to give expansive remedies to them under different Acts.
In case of any dispute, they can now approach three possible forums under three different Acts: The Consumer Protection Act, 2019, as a consumer; Real Estate (Regulation and Development) Act, 2016 (RERA Act) as an allottee; and Insolvency and Bankruptcy Code, 2016, as a financial creditor.
The new Consumer Protection Act, 2019, has been a relief in more ways than one and has wide-ranging provisions with respect to both defining the offence under the Act and dispute resolution. It is also not specific to resolution like the Insolvency Code. Therefore, it is important to understand that the remedies should be simultaneous and not mutually exclusive.
The fact that the RERA Act contains a ‘bar of jurisdiction’ clause has not stopped the courts from providing the homebuyers with simultaneous remedy under the Consumer Protection Act for issues that go beyond the RERA Act. This has been for various reasons. The Punjab and Haryana HC has held in two judgments—Experion Developers Pvt. Ltd. v. State of Haryana and Ors., and Janta Land Promoters Private Limited v. Union of India and Ors—that remedies under RERA are in addition to and not in derogation of the other laws in force, taking recourse to Section 88 of the Real Estate Act.
It has held that the appropriate forum may be approached under the Consumer Protection Act in case of remedies that may not be available under RERA. This has been furthered by a recent Supreme Court judgment on the same issue in the case of M/S Imperial Structures Ltd v. Anil Patni. In the said case,
the project had not been completed even after substantial booking amounts had been paid by the allottees. In 2017, the National Consumer Disputes Redressal Commission (NCDRC) was approached under the Consumer Protection Act 1986 (now amended to Consumer Protection Act, 2019); it ordered refund of the amount paid with 9% interest per annum and costs to the tune of Rs 50,000.
The NCDRC also dismissed the claim of the builder that it had no jurisdiction to adjudicate on that particular issue as the project was approved by RERA and therefore, the Regulatory Authority under the Real Estate Act was the appropriate forum. Consequently, an appeal was filed by the builder in the Supreme Court. The Division Bench at the apex court held that there was no bar in approaching the NCDRC under the provisions of RERA. This was because of two distinct reasons.
First, the court relied on its decision in Malay Kumar Ganguli v. Dr Sukumar Mukherjee, where it has been held that the NCDRC is not to be treated as a civil court as defined under the Civil Procedure Code; and Section 79 of RERA, which deals with bar on jurisdiction of other courts, will thus not cover the NCDRC. Second, that Section 71 deals with the authority’s power to adjudicate and the proviso to Section 71(1) states that the complainant under RERA may withdraw a complaint that is pending before any of the Consumer Disputes Redressal Commissions after taking permission from such forum or authority and then file a complaint under the Real Estate Act.
This clearly indicates at a legislative intent of giving an option to the complainant to either proceed simultaneously or in any of the forums distinctly, rather than mandatory withdrawal of a complaint under the Consumer Protection Act to file a complaint under RERA. These judgments are a much-needed respite to homebuyers as the remedies under the specialised Acts are very selective and may also limit the cause of action. The three reasons given above can offer an opportunity to the homebuyers to make complaints under the preferred Act or expand their rights by making simultaneous complaints in order to get exhaustive remedies.
However, while these are protective legislations, the courts shall endeavour to prevent any overlaps if the homebuyers choose to pursue simultaneous remedies. For instance, Section 12 of RERA penalises the promoter for misleading advertisements in the context of layout, plan or model of the building. Such penal consequences for misleading advertisements are also available under the Consumer Protection Act under Sections 2(28) and 10(1) more generally, which relate to any aspect of the false and misleading advertisement. Therefore, the compensation awarded will have to prevent any overlaps in these areas; otherwise, it will lead to unjust enrichment of the complainant, which is not the purpose of these Acts.
Kavya Lalchandani (firstname.lastname@example.org)
Legal scholar based out of Delhi