Complaint filed before Consumer Fora against builder is not barred by RERA

The Supreme Court has recently held that the Real Estate (Regulation and Development) Act, 2016 (‘RERA Act’) does not bar the initiation of ‘consumer complaints’ by the apartment allottees against builders under the extant consumer protection laws.

Brief Facts:

The appellant launched a Housing Scheme (‘Project’) wherein all the original complainants booked their respective apartments by paying the booking amount and thereafter executed Builder Buyer Agreements. The lead original complainant paid more than 75% of the total amount over a period of time. However, even after the agreed period of four years (approximately) there were no signs of the Project getting completed. Pursuant to the above, relevant consumer cases were filed with the National Consumer Dispute Redressal Commission (‘Commission’) against the builder for deficiency in rendering service. The Commission granted relief to the complainants and directed the Appellant to refund the amounts deposited by the complainants (allottees) along with an interest at the rate of 9% per annum from the date of deposit till the date of realisation along with costs. Being aggrieved with the order passed by the Commission, the appellant challenged the same in the Supreme Court.

Submissions by the Appellant:

• The complainants were not ‘consumers’ within the meaning of the Consumer Protection Act, 1986 (‘CP Act’) as the apartments were booked merely for profit motive.
• Once the RERA Act came into force, all questions relating to the construction and completion of the Project would be under the exclusive control and jurisdiction of the authorities under the RERA Act. The Commission, therefore, ought not to have entertained the complaints. Therefore, Commission had no jurisdiction.
• Since the registration of the Project under the RERA Act and rules framed thereunder was valid till December 2020, the order passed by the Commission be set aside and instead the complainants be granted interest at the rate of 10.75% per annum on the amounts deposited; whereby the Project would be completed without putting the Appellant under any financial strain.

Submissions by the Respondents:

• All the complainants had purchased only one residential apartment each for self-use. Moreover, the issue whether the complainants satisfied the requirements of being ‘consumers’ under the provisions of the CP Act was rightly decided in favour of the complainants.
• At no stage, any plea was taken before the Commission that the Project was registered under the RERA Act or about the effect of the RERA Act. No such plea was taken even in the appeal memo. Thus, it would not be open to the Appellant to raise any submissions about the applicability of the RERA Act at this stage of the matter.
• Additionally, the remedy afforded by the CP Act would be an additional remedy to a consumer and said legal position remained unchanged even after the enactment of the RERA Act.

Decision:

• The Court in the case Imperia Structures Limited Anil Patni and Another noticed that an allottee placed in similar circumstances to that of the complainants could have initiated following proceedings before the RERA Act came into force:
  1. If he satisfied the requirements of being a ‘consumer’ under the CP Act, he could have initiated proceedings under the CP Act in addition to normal civil remedies;
  2. However, if he did not qualify as a ‘consumer’ under the CP Act, he could initiate and avail only normal civil remedies;

• If the agreement with the developer or the builder provided for arbitration –
  • In cases covered under Clause ii above, he could initiate or could be called upon to invoke the remedies in arbitration, and
  • In cases covered under Clause i above, in accordance with the law laid down in Emaar MGF Ltd and Anr Aftab Singh [(2019) 12 SCC 751], he could still choose to proceed under the CP Act.
• As per Section 79 of the RERA Act, an allottee described in category ii above, would stand barred from invoking the jurisdiction of civil court. The Court further relied on yet another judgment[1] and held that initiation of proceeding in the Commission shall not be considered to be an initiation of proceeding in the civil court. It held that Section 79 of the RERA Act does not in any way bar the Commission or any other forum under the provision of the CP Act to entertain any complaint. Further, Section 18 of the RERA Act itself specifies that the remedy under the said Section is ‘without prejudice to any other remedy available’. It held that the parliamentary intent was 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.
• The Apex Court noted that the remedies available under the provisions of the CP Act are additional remedies over and above the other remedies including those made available under any special statutes. Further, the availability of an alternate remedy was no bar in entertaining a complaint under the CP Act.
• Merely, because the registration of the Project under the RERA Act was valid until the month of December 2020, it does not mean that the entitlement of the concerned allottees to maintain an action stands deferred.
• Lastly, the Court observed that Section 100 of the Consumer Protection Act, 2019 (‘New Act’) is akin to Section 3 of the CP Act (now repealed). Thus, Section 100 of the New Act is enacted with an intent to secure the remedies under the New Act dealing with protection of the interests of Consumers, even after the RERA Act was brought into force.

Resultantly, all the submissions made by the appellant were dismissed affirming the stand taken by the Commission. Relevant costs were also imposed on the appellant. It is pertinent to note here that the Apex Court did not deliberate upon the simultaneous initiation of proceedings under the CP Act and the RERA Act.

[1] (2009) 9 SCC 221