Despite RERA, Home Buyers Can Pursue Remedies Against Real Estate Firms At Consumer Fora: SC

New Delhi, Nov 2: In a significant verdict, the Supreme Court on Monday held that despite the enactment of a special 2016 law, RERA, to deal with real estate firms, home buyers can still approach the consumer forum to seek remedies including refund and compensation from such companies for delay in handing over possession of their dream homes. 

The top court rejected the contention of real estate firm M/s Imperia Structures Ltd that once the Real Estate (Regulation and Development) Act (RERA) came into force, all questions relating to construction and completion have to be dealt with under this law and the National Consumer Disputes Redressal Commission (NCDRC) ought not to have entertained the consumers' complaints.

Dealing with various provisions of the RERA and the Consumer Protection (CP) Act, a bench of Justices U U Lalit and Vineet Saran referred to various judgements and said it has been held that though the proceedings before the NCDRC are judicial proceedings, the commission “at the same time, is not a civil court within the meaning of the provisions of the Code of Civil Procedure”.

“It may have all the trappings of the civil court but yet it cannot be called a civil court. 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 CP Act to entertain any complaint,” Justice Lalit said in the 45-page judgement. 

After the enactment of RERA, real estate firms have been taking stands that the consumer fora have no right to deal with the complaints of home buyers against them. 

The apex court settled the issue and said though the special 2016 legislation has many features to the advantage of home buyers, still the consumer fora have the authority to keep entertaining the complaints of home buyers 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 judgement said. 

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.

"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,” it said.

The verdict came on an appeal of the M/s Imperia Structures Ltd against the judgement of the NCDRC on the complaint of ten home buyers 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 ten 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 respective dates of deposits till the date of realization together with costs of Rs 50,000 to be paid to each of the Complainants”. 

“The directions are to be complied within four weeks from the date of receipt of a copy of the order, failing which, the amount shall attract interest at the rate of 12 per cent per annum for the said period,” the apex consumer body had said. 

The top court upheld the verdict of the NCDRC and said “as promised, the construction should have been completed in 42 months. The period had expired well before the Project was registered under the provisions of the RERA Act. Merely because the registration under the RERA Act is valid till December 31, 2020 does not mean that the entitlement of the concerned allottees to maintain an action stands deferred.”

“Resultantly, we reject all the submissions advanced by the Appellant (real estate firm). These appeals are accordingly dismissed affirming the view taken by the Commission. We quantify the costs at Rs 50,000 to be paid by the appellant in respect of each of the Consumer Cases, over and above the amounts directed to be made over to the Complainants and shall form part of the amount payable by the Appellant to the Complainants,” the judgement said.