Homebuyers Can Approach Consumer Court Even After Rera Act Came Into Force--Landmark Ruling By Supreme Court

Introduction

The Real Estate (Regulation & Development) Act, 2016 (RERA) was established to specifically safeguard homebuyers by offering a streamlined grievance redressal process. Prior to RERA, homebuyers primarily sought remedies through the National Consumer Disputes Redressal Commission (NCDRC), India’s apex consumer rights body. However, with RERA’s introduction, a common perception arose that all project-related disputes, especially those involving construction and completion, would fall exclusively under RERA’s jurisdiction. This raised an important question: should homebuyers now exclusively approach RERA, or can they still opt for NCDRC? This article examines RERA’s provisions alongside those of the Consumer Protection Act in light of the Supreme Court’s decision in Imperial Structures Ltd. v. Anil Patni [2020]

Case of Imperial Structures Ltd. (Supra)

In this case, appeals under Section 23 of the Consumer Protection Act, 1986, were filed against an order passed by the NCDRC. The appellant, Imperial Structures Ltd., launched a housing project named "The ESFERA" in Gurgaon, Haryana, in 2011, for which homebuyers entered into Builder-Buyer Agreements. However, even years after the project's initiation, delays persisted, leading the respondents (homebuyers) to file a consumer complaint with the NCDRC, seeking compensation for incomplete construction and claiming deficiencies in the developer’s service.

The complaint was assessed for Rs. 1.16 crores with compensation. Despite registering the project with the Haryana Real Estate Regulatory Authority, Panchkula, in 2017, the developer contended that due to the RERA registration, the NCDRC had no jurisdiction in this matter.

Developer's Contention Before the NCDRC

The developer argued that since the property was registered under RERA, all related issues should be governed by RERA alone. They also contended that the apartment was booked for commercial purposes, disqualifying the buyers from being "consumers" under the Consumer Protection Act. Moreover, the developer claimed force majeure due to demonetization and lack of labor as reasons for delays, even though alternative accommodations had been offered.

Homebuyers' Arguments

The homebuyers asserted that the Buyer Agreement was non-negotiable and mandated them to sign under standard terms. They argued that the developer’s offer of alternative accommodation was an admission that the project remained incomplete. Additionally, they emphasized that their home loans and regular EMIs evidenced their status as consumers, thus entitling them to remedies under the Consumer Protection Act.

NCDRC Judgment

The NCDRC ruled in favor of the complainants, ordering the developer to refund the deposited amounts with 9% simple interest per annum, along with an additional Rs. 50,000 in costs for each complainant. The developer was directed to comply within four weeks, failing which a higher interest rate of 12% per annum would apply.

Appeal Before the Supreme Court

The developer escalated the matter to the Supreme Court, arguing that the Consumer Protection Act’s provisions should not apply due to the project’s registration under RERA. However, the developer did not raise RERA’s applicability before the NCDRC or in the appeal memorandum initially.

Supreme Court’s Analysis of Legal Position and Case Law

The Supreme Court addressed whether the remedies under the Consumer Protection Act would be supplementary to those under RERA. Citing precedents, the Court reiterated that the Consumer Protection Act’s remedies are additional and concurrent with other statutory remedies. Importantly, Section 88 of the RERA Act specifies that its provisions are supplementary and not a substitute for other laws. Similarly, Section 100 of the Consumer Protection Act affirms that its provisions complement other existing laws, making it clear that RERA does not prevent consumers from approaching consumer forums.

Homebuyers’ Rights Pre-RERA and Post-RERA

Before RERA’s enactment, an allottee had the following recourses:

Consumer Protection Act: If the allottee qualified as a "consumer," they could pursue claims under the Consumer Protection Act in addition to civil remedies.

Civil Remedies Only: If not classified as a "consumer," only civil remedies were available.

Arbitration: If stipulated in the agreement, the developer or allottee could invoke arbitration for dispute resolution.

With RERA in place, Section 18 allows buyers to claim refunds or withdraw from a project for unfulfilled possession timelines without prejudice to other legal remedies.

Interpretation of RERA’s Jurisdictional Scope

RERA’s Section 79 restricts civil courts from handling matters within the purview of RERA authorities. However, consumer commissions are not civil courts, meaning RERA does not preclude them from entertaining consumer complaints. Additionally, Section 71(1) of RERA allows pre-existing consumer complaints to proceed, granting complainants the choice of continuing under the Consumer Protection Act or switching to RERA proceedings.

Conclusion

The Supreme Court’s ruling affirms that homebuyers retain the choice to pursue remedies under the Consumer Protection Act even with RERA’s implementation. This landmark decision supports the notion that consumer forums remain accessible to homebuyers, and RERA is not an exclusive remedy but an additional one.