RERA does not bar Homebuyers complaint under Consumer Protection act against builders

The Real Estate sector has seen a significant growth the past years, however it was unregulated. The absence of any regulation created a havoc in the sector as the developers were unable to complete the projects in the stipulated time and provide timely possession to the homebuyers. The aggrieved homebuyer was left with an option to approach the Consumer forum which fell inadequate to address all the concerns of buyers and promoters in that sector. The Real Estate (Regulation and Development) Act 2016 (hereinafter referred to as “RERA Act”) came into force on May 01, 2016, with the objective to bring relief for homebuyers and developers will have to give timely possession for projects. In the judgement dated April 17, 2019 “Ajay Nagpal Vs. Today Homes & Infrastructure Pvt Ltd” the National Consumer Disputes Redressal Commission (hereinafter referred to as “NCDRC”) has held that RERA Act does not bar filing of a complaint under the Consumer Protection Act 1986 against a builder/developer.

The bench headed by Justice R K Agrawal was dealing with a batch of complaints filed by homebuyers for compensation from “Today Homes & Infrastructure Pvt Ltd” for not delivering possession of flats as stipulated in the builder-buyer agreement.

The inference was drawn from the judgement passed by the Hon’ble Supreme Court of India in “Aftab Singh v. Emaar MGF Land Limited & Anr in Consumer Case No. 701 of 2015” on December 10, 2018 reiterated the well-established law that valid arbitration agreements do not bar the jurisdiction of National Consumer Disputes Redressal Commission (“NCDRC”) and other consumer forums.

In “Aftab Singh v. Emaar MGF Land Limited & Anr in Consumer Case No. 701 of 2015” passed by NCDRC in December 2017., the dispute was between a group of home owners (“Buyers”) and Emaar MGF Land Private Limited (“Builder”), who failed to complete the construction and deliver the villas within the timeline stipulated terms and conditions in the builder buyer agreement between the parties. The Builder filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (provides that a judicial authority shall, on the basis of the arbitration agreement between the parties, direct the parties to go for arbitration) to refer the case for arbitration as the agreement contained a valid arbitration clause. The Buyers, on the other hand, contended that the jurisdiction of consumer forums available to them through the Consumer Protection Act, 1986.

The summary of conclusions of the judgment passed by the Hon’ble NCDRC in “Aftab Singh v. Emaar MGF Land Limited & Anr” are as follows:

1. The Consumer Protection Act, 1986 is a supplement Act and not in derogation of any other Act; The Consumer Fora constituted under the Consumer Protection Act, 1986 are not Civil Courts. A Consumer cannot pursue two remedies for the same cause of action. However, if a Consumer has not approached for redressal of its grievance under the particular Statute, the Consumer can approach the Consumer Fora under the Consumer Protection Act. But, if the Consumer had already approached the Authority under the relevant Statute, he cannot simultaneously file any complaint under the Consumer Protection Act.

1. Mere availability of a right to redress the grievance in a particular Statute will not debar the Complainant/Consumer from approaching the Consumer Fora under the Consumer Protection Act. Even though various provisions have been made which are to be followed by the Developer/Promoters and the rights and duties and the return of amount as compensation as also rights and duties of Allottees, yet same cannot mean to limit the right of the allottee only to approach the Authorities constituted under the RERA, he can still approach the Consumer Fora under the Consumer Protection Act. Section 71 of RERA which gives the power to adjudicate, does not expressly or impliedly bar any person from invoking the provisions of the Consumer Protection Act. It has also given a liberty to the person whose Complaint is pending before the Consumer Fora to withdraw it and file before the RERA Authorities.

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It was observed that the Arbitration agreement does not bar a consumer complaint as held by the National Consumer Disputes Redressal Commission (NCDRC) while referring to the Supreme Court decision in “Emaar MGF Land Ltd. vs. Aftab Singh, Review Petition (C) No’s. 2629-2630 of 2018 in Civil Appeal No’s .23512-23513 of 2017”, the Commission held that the fact that Arbitration can be proceeded under the Arbitration and Conciliation Act, 1996 is not a ground to restrain the Consumer Fora from proceeding with the Complaints.

Conclusion

From this judgment, the inference we can withdraw is that years back we were left with only an option to  file a case in consumer court but after the advent of RERA, an aggrieved homebuyer has now an option to initiate legal proceedings against the errant developer/builder in both RERA Forum as well as Consumer Courts, but it has to be seen whether these complaints are timely concluded and or some relief is provided to the aggrieved homebuyer.