Supreme Court Consumer Complaint Against Builder is Not Barred by RERA Act

Supreme Court Consumer Complaint against Builder is Not Barred by RERA Act

The Supreme Court on 2nd November, 2020 held that Real Estate (Regulation and Development) Act, 2016 (RERA Act, 2016) does not exclude the National Consumer Disputes Redressal Commission (NCDRC) or the Consumer Forum from entertaining any complaint under Consumer Protection (CP) Act.

The two judge's bench, Hon'ble Justices UU Lalit and Vineet Saran in the case of M/S Imperial Structures Ltd vs Anil Patni and another, held that real estate allottees are eligible to approach NCDRC apart from authorities under the REAR Act and that there is no provision under RERA which specifically bars the same for initiating a consumer complaint filed under the Consumer Protection Act.

The judgment was delivered out of an appeal arising out of the September 2018 decision made by the NCDRC which had ordered the developer, Imperia Structures to refund purchase to the buyers as they were found to be violating the terms of the builder-buyer agreement.

In the present case, the complainants had booked apartments through executing Builder Buyer Agreements in 2013, had moved to the Consumer Commission which allowed their complaint and ordered that refund of the sum deposited must be made by each of them with simple interest @ 9% per anum from the particular dates of deposits along with Rs. 50,000/- towards cost.

Two questions were raised before the Supreme Court was that by the builder (Appellant) that, whether the bar specified under Section 79 of the RERA Act would apply to proceedings initiated under the provisions of the Consumer Protection Act and secondly, whether there is anything inconsistent in the provisions of the Consumer Protection Act along with RERA Act. Section 88 specifies that the provisions of the RERA Act would be in addition to and not in derogation of the provisions of any other law, while in terms of Section 89, the provisions of the RERA Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

The Apex Court noted that Section 79 of the RERA Act restricts the jurisdiction of a civil court to entertain any suitor proceeding concerning a matter that RERA can decide. However, the Apex court relied on the following case Malay Kumar Ganguli v. Dr. Sukumar Mukherjee in which it had ruled that NCDRC cannot be considered a civil court under the Code of Civil Procedure though it has all the trappings of a civil court.

The Apex Court observed, "On the strength of the law so declared, Section 79 of the RERA Act does not in any way bar the Commission or Forum under the provisions of the CP Act to entertain any complaint." The Court reasoned that the proviso under Section 71(1) of the RERA Act entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or NCDRC and file an appropriate application before the adjudicating officer under the RERA Act.

"The proviso thus gives a right or an option to the concerned complainant but does not statutorily force him to withdraw 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 court stated.

The court remarked that it was significant that Section 100 was enacted with an intent to secure the remedies under the new Consumer Protection Act dealing with protection of the interests of Consumers, even after the RERA Act was brought into force.

The judgment stated, "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." Finally, the court dismissed the appeals and imposed a fine of Rs. 50,000 which were to be paid by the builder with respect of each of the Consumer Case.