In a much needed break for homebuyers, the Hon’ble Supreme Court recently, in the case of “M/s Imperia Structures Ltd. vs. Anil Patni” settled the debate once and for all that Section 79 of the Real Estate (Regulation and Development) Act 2016 (“RERA Act“) did not bar a homeowner from seeking recourse to the Consumer Protection Act (“CPA”), and that such right of an allottee is specifically made “without prejudice to any other remedy available to him”.
The above pronouncement is also in tandem with a previous ruling by the National Consumer Disputes Redressal Commission (“NCDRC“) in “Ajay Nagpal Vs. Today Homes & Infrastructure Pvt Ltd“ (1) (on 15th April, 2019) where it was held that that Consumer Forums cannot be termed as “civil courts” and that only the power to grant injunction was taken away by the express provision under Section 79 of RERA. It further observed that there was no express provision under the CPA which could be termed as inconsistent with RERA and hence, both the legislations were supplemental to one another.
Thus, by virtue of the law laid down in Imperia Structures, an aggrieved homebuyer/ allotee has an option to initiate legal proceedings against the errant developer/builder under either Statute i.e RERA or the CPA. The main question: Should a homeowner should seek recourse under the CPA or RERA? The following guiding factors may be considered in this regard:
Penalties under RERA are more stringent
The penalties under CPA are limited to the extent of imposing fine, which may not be much of a deterrent despite the intent. There is no penal provision vis-à-vis imprisonment qua defaulting developers/builders, which is more of a deterrent. In contrast, penalties under RERA include the imposition of fine as well as imprisonment of the defaulting builders/ developers for a duration of upto 3 years. It must be borne in mind that imprisonment is subject to the discretion of Courts/ Authorities, intended as a deterrent to erring Developers/ Offenders under the RERA Act, and not intended as a mode of recovery. This could still open avenues for the Parties to resolve disputes amicably.
Ease of filing a Complaint under RERA
Various States have a specific prescribed manner in which complaints under RERA (including the format) are to be filed, making the process streamlined with little to no room for variation. The process is thus quite straight jacket. However, a complaint filed before the Consumer Forums under the CPA can involve an elaborate procedure, including documentary evidence and therefore, appears to be a more complicated and lengthy affair in contrast.
Valuation for approaching the NCDRC – Rs.10 Crore
In case where the value of the property i.e the plot/flat is more that Rs. 10 Crore, the aggrieved homebuyer/ allotee could directly approach the NCDRC. In such an event, the Supreme Court is the only judicial authority that any party can approach in appeal/ challenge the order of the NCDRC. In cases where the valuation is less than 10 Crore, the consumer would need to approach the District level authority. Although it is pertinent to note that last year, the Hon’ble Supreme Court had also observed that a consortium of buyers could come together and approach the Apex body. On the other hand, under RERA the aggrieved homebuyer/ allottee mandatorily needs to first approach the Regulator, then the Appellate Authority, then the concerned High Court and then finally the Supreme Court. This entire process can be time-consuming and may take much more time than approaching a Consumer Forum under CPA. Another challenge here would be the appreciation of founded principles of law which a Party may wish to rely upon. While such a practice is well recognized in Courts/ Tribunals, it remains to be seen how the same is appreciated by the authorities under RERA.
Accessibility of Consumer Forums and the evolution of the CPA
In comparison, RERA is still at its nascent stages regarding dispute resolution, and is still evolving when it comes to implementation in many States. Consumer Forums under the CPA on the other hand have a presence in every District of the Country and have since evolved, having run the tests of time. There is law in abundance settling various facets qua Consumer disputes through established principles over the years, leaving lesser scope for interpretation and jurisprudence. RERA on the other hand is yet to be tested in Courts and there will certainly be many principles which would need to be settled in accordance with past precedents.
While there is no doubt that RERA seeks to offer a revolutionary mechanism aimed at a speedy and specific forum for redressals, it is still some time away from being considered as the ‘go-to’ forum for homebuyers. No doubt there is tremendous potential, and given the right approach and evolution, it is bound to evolve and become the chosen forum for dispute resolution for home buyers. It certainly is much needed in prevailing times, where Courts and Forums are already heavily burdened. While the options to home buyers have increased with the enactment of RERA, whether one should consider RERA over the CPA would depend heavily on the facts of the case and on the ultimate goal of the aggrieved party. It goes without saying that the option is in the nature of ‘either/ or’, and that both options cannot be resorted to, lest it fall in the realm of forum shopping – a concept discouraged by Courts since time immemorial.
Shiv Sapra is Partner, L&L Partners Law Offices.
Ruchika Darira is Senior Associate, L&L Partners Law Offices.
(1) Consumer Case No. 1764 of 2017Disclaimer: The views or opinions expressed are solely of the author.