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  • Commercial Law Advisors

SC upholds homebuyers’ right to choose consumer forums for grievance redressal

The Supreme Court has stated that homebuyers can still approach consumer forums, notwithstanding the Real Estate (Regulation and Development) Act, 2016 (RERA). After the enactment of RERA, real estate companies have often claimed that the consumer forum is not available for homebuyers wishing to file grievances under RERA. However, the Supreme Court, while delivering its verdict in MS Imperial Structures Ltd v. Anil Patni, stated that the enactment of RERA does not preclude real estate allottees from approaching the National Consumer Disputes Redressal Commission (NCDRC) or the Consumer Forum in case of delay in handing possession of the property.

The Supreme Court was hearing an appeal against a decision of the NCDRC directing the developer to refund purchase amount and interest to the homebuyers. This was because the NCDRC found that even after the purchase amount had been paid and 42 months having been lapsed, the project was not completed by the developers, resulting in a violation of the builder-buyer agreements. Aggrieved by the NCDRC’s direction, the builder challenged its jurisdiction before the Supreme Court, arguing that the bar under Section 79 of RERA was applicable to proceedings under the Consumer Protection Act. It had earlier argued before the NCDRC that the apartments in question were booked for commercial purposes and therefore the buyers did not come under the ambit of ‘consumer’ under Section 2(d) of the Consumer Protection Act.

Section 79 of RERA indeed bars the jurisdiction of a civil court to entertain any suit or proceeding concerning a matter that RERA can decide. However, primarily, the Supreme Court noted its decision in Malay Kumar Ganguli v. Dr. Sukumar Mukherjee, where it was ruled that NCDRC cannot be considered a civil court under the Code of Civil Procedure. Further, the Apex Court observed that the proviso under Section 71(1) of the RERA Act entitles a complainant who had initiated proceedings under the Consumer Protection Act before the RERA Act came into force, to withdraw the proceedings under the Consumer Protection Act. Justices UU Lalit and Vineet Saran, after examining the parties’ contentions, noted that this proviso gives the complainant a choice, rather than a mandate, to withdraw such complaint. Provisions within RERA do not create any mechanism for transfer of such pending proceedings to authorities under RERA. Although special authorities have been created under RERA, Section 18 of the Act gives a right ‘without prejudice to any other remedy available’. The Court also recognized its previous judgement in Pioneer Urban Land and Infrastructure Limited v. Union of India, where it was held that remedies given to real estate allottees were concurrent remedies. Therefore, dismissing the appeal, the Supreme Court imposed costs of Rs. 50,000 on the builder, in respect of each consumer complaint. Homebuyers and real estate allottees have welcomed the verdict, emphasizing that the choice of forum should be left to the homebuyers for grievance redressal.

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