Hence, it is vital for a buyer to know about the various legal remedies at his disposal. Furthermore, it is crucial to understand which of the various legal remedies is the best approach. This article analyses the various legal recourses available and the forum that would best redress the buyers’ concerns.
The Real Estate (Regulation and Development) Act, 2016
RERA prescribes that the promoter shall not accept more than 10% (ten percent) of the total value of the real estate property before entering into the agreement for sale. Further, the promoter is required to maintain a separate account with 70% (seventy percent) of the project funds. If the builder wants to modify the sanction plan under RERA, he requires the consent of two-thirds of the allottees. Under RERA, if any defect is brought to the attention of the promoter within a period of 5(five) years of handing over possession of the property, it shall be the duty of the promoter to rectify the defect.
RERA mandates that every real estate project be registered with the Real Estate Regulatory Authority. Without the registration of the real estate project, the promoter is not allowed to book, sell, or invite any person to purchase the project. The applications must be filed addressing it to RERA with the necessary approvals from the local authorities, along with a development plan, proforma of all agreements that are signed by the company, details relating to contractors, real estate agents, architects, structural engineers, and other people concerned with the project, the details of the total carpet area of the apartments for sale in the project and a declaration signed with an affidavit confirming that it is free from all encumbrances. The following provisions bind the promoters as well as the real estate agents, providing the buyers with holistic protection.
Non-compliance or default with any of the aforementioned provisions resulted in a penalty of up to 10% (ten percent) of the total project cost and up to three years in prison. The builders are also mandated to deposit 70% (seventy percent) of the project funds into a separate bank account to avoid the problem of builders diverting the funds of the project to another new project.
Grievances with regard to violations of the RERA can be filed on the RERA website, which acts as a single repository for all real estate project data and filing grievances. The Real Estate regulatory authority has been prescribed a resolution time of 60 (sixty) days from the date of receipt of the application. Further, the tribunal can hear appeals of the authority’s rulings within 60 (sixty) days. Any appeal from the tribunal lies before the High Court and must be filed within a period of 60 (sixty) days of the decision. If there is a pending case before the Consumer Forum pertaining to the damages caused by the false advertisements and non-adherence to the project specification, approved plan, or failure to complete the project on the specified date, the case can be withdrawn and filed before the RERA adjudicating officer.
Overview of the Consumer Protection Act, 2019
The Consumer Protection Act of 1986 and the new Act of 2019 were enacted to provide a simple and quick solution to consumers’ grievances against any deficiency in services or defect in goods. It is organised into three levels: the District Forum, the State Commission, and the National Commission (“Consumer Forum”). The Act defines “product seller,” and it includes a seller of immovable property only if that person is engaged in the construction of flats or homes or the sale of constructed homes. As a result, builders and real estate agents are covered by the Act.
Under the said Act, only consumers can file a complaint, the term consumer is defined as a person who buys goods for consideration but doesn’t include a person who obtains such goods for commercial or resale purposes. As a result, for the purposes of this article, those individuals are considered consumers who purchase a home or other property for personal use rather than commercial use.
In case of any defect or deficiency in the product or services, the consumer can file a complaint before the consumer forum within a period of 2 (two) years from the date on which the cause of action arose. The consumer forums have a pecuniary limit. Hence, the District forum entertains complaints where the value of goods and services is not more than 1 crore rupees, State Commissions can entertain complaints that are above 1(one) crore and below 10 (ten) crore and all complaints above 10 (ten) crores need to be filed with the National Commission.
Under the Act, the complaint is disposed of within a period of 3 (three) months from the date of receipt of the notice by the opposite parties. The Act empowers the forums to grant compensation for loss incurred and punitive damages in appropriate cases.
Does RERA Reduce the Scope of CPA?
Before the enactment of the RERA, the Consumer Forum used to deal with matters relating to allottees. Following the enactment, the Consumer Forum’s jurisdiction to deal with allottee-related issues was not barred by the RERA. The standing committee also clarified that the jurisdiction of the Consumer Forums was not taken away by the establishment of the Real Estate Tribunal. Further, the consumer also has the discretion to withdraw the complaint pending before the Consumer Forum, with the permission of the said forum, and file an application before the adjudicating officer under RERA.
In Experion Developers Pvt. Ltd. v. State of Haryana and Ors. the court referred to Section 71 of the RERA, which enables the consumer whose complaint is pending before the Consumer Forum to withdraw and go before the adjudicating officer. But the court held that the said provision has to be read with Section 88 of the said act, which explicitly states that the provision of RERA is in addition to and not in derogation of any other law. As a result, the court concluded that the complainant was not required to withdraw and transfer the complaint before the adjudicating officer. The complainant was empowered to simultaneously pursue remedies in both the forum on the strength of section 88 of the act.
The Apex Court, in Pioneer Urban Land and Infrastructure Ltd v. Union of India and Ors , held that buyers of flats could avail concurrent remedies under Consumer Protection Act and RERA.
In M3M India Pvt Ltd v. Dinesh Sharma the court considered the question of whether the proceedings before the consumer forum can commence after the commencement of the RERA. It was held that the remedies that are provided under RERA and the Consumer Protection Act are concurrent in nature and the jurisdiction of the commission or the Consumer Forum will not be ousted by RERA, specifically Section 79 of the Act.
In Malay Kumar Ganguly v. Dr. Sukumar Mukherjee the Supreme Court held that even though the proceeding in the National Commission is a judicial proceeding, within the definition of the Civil Procedure Code it is not a Civil Court. Although the National Commission has the trappings of a Civil Court, it cannot be termed a Civil Court. Therefore, the bar that has been provided under Section 79 of RERA is not applicable to the Consumer Forum. This judgement was strongly relied on in the below-mentioned judgement.
Further, in M/s Imperia Structures Ltd v Anil Patni & Another Section 79 of the RERA bars the civil court from entertaining any suit or proceeding in respect of any matter over which the Authority, the adjudicating officer or the Appellate Tribunal is empowered by the RERA. The Apex Court held that it did not bar the complainant from filing complaints under the Consumer Protection Act. The section only imposes limitations on the Civil Courts’ ability to try issues that the adjudicating authority is empowered to entertain. As the Consumer Forum is not the same as the Civil Court the limitation does not apply.
Section 18 of the Act states that there is no bar to any aggrieved party from pursuing any other remedy that is available. Section 88 of the Act states that the provisions of the Act are in addition to and not in derogation of any other laws in force. However, on the contrary, Section 89 of the act provides that RERA shall have an overriding effect. The court cleared up the confusion by stating that even though Section 89 states that the Act shall have an overriding effect, the buyers can still approach the other forums under Section 18 of the Act. Thus, it is clear that parallel proceedings in different forums can exist. The court established that the aggrieved party could avail of parallel remedies under RERA as well as under the Consumer Protection Act.
A Comparative Study of RERA and Consumer Protection Act
The following are the requisite pointers that can be considered to determine which forum best serves the needs of homebuyers.
RERA has not provided any limitation period within which a complaint needs to be filed. However, according to the Consumer Protection Act, the complaint must be filed within two years of the cause of action. Hence, if the time period since the cause is more than 2 years, then the complainant can’t file a complaint before the Consumer Forum; the only remedy available at the complainant’s disposal is adjudication under the RERA.
Filing of a Complaint
Under RERA, any person who has been aggrieved by the builder or developer can file a complaint. However, under the Act, only a person who is a consumer can file a complaint. As a result, if a person does not fall within the definition of “consumer,” or if he has purchased a property for commercial purposes, or if any other person is dissatisfied with the developer, the only recourse is to approach RERA for adjudication.
Under RERA, the complaints are filed on the RERA website, and the process is simplified with minimal to no opportunity for modification because many States have distinct prescribed methods for filing complaints under RERA (including the format). However, under the Act, the complaint must be submitted in writing to the relevant authorities; it involves a complex procedure and includes documentation evidence; as a result, it appears to be a more time-consuming process.
The Act has prescribed pecuniary limitations based on the value of the property. Suppose the complainant’s property is above Rs. 1 crore, then he has to approach the State Commission and if its above Rs. 10 crores, he has to approach the National Commission for filing a complaint. Whereas RERA does not have any pecuniary limitations based on the value of the property. Hence, the complaint can be filed before the regulatory authority of the state in which the property is situated. Suppose the value of the property is more than Rs. 10 crores, then it is convenient for the buyer to adjudicate the dispute before RERA as the National Commission that is given jurisdiction under the Consumer Protection Act is situated in New Delhi.
The Act is empowered only to grant pecuniary compensation. It doesn’t enforce any preventive measures nor does it provide for any specific performance or imprisonment of the defaulting party. RERA, however, is exclusively empowered to provide certain non-compensatory remedies. Further, it is also empowered to impose imprisonment for up to 3 (three) years on the defaulting developers. If the consumer is only seeking compensatory relief, then the consumer forum is the right forum to approach. But if the buyer is looking for a deterrent remedy, then filing a complaint before RERA is a better option.
The Consumer Forum doesn’t deal with commercial issues. RERA has no such bar on the adjudication of commercial issues. Therefore, if an individual doesn’t fall within the definition of “Consumer” as defined under the Act, then the best and only recourse available in the hands of the buyer is to file a complaint under RERA.
Time Period for Disposal of Dispute
The resolution time specified under RERA is 60 (sixty) days. Similarly, the Act states that every complaint shall be disposed of as expeditiously as possible within a period of 3(three) months from the date of receiving notice from the other party. However, in practice, disposing of matters in both forums takes much longer.
For regulating the “real estate” sector, the “Real Estate Regulatory Authority Act” is a landmark piece of legislation imposing time-bound obligations on promoters. Consumers’ or homebuyers’ rights are intended to be protected by ensuring fair play.
It is worth noting that RERA has not only been actively involved in maintaining transparency and accountability in the real estate sector, but has also assisted consumers and homebuyers in obtaining possession quickly and easily.
From the above analysis, we can deduce that RERA has finally ended up being an extension of the “Consumer Protection Act” which helps to address the growing need for transparency in favour of consumers as well as builders.
In light of the preceding comparative study and judicial pronouncements, we can safely conclude that it is entirely up to the allottee to choose either a concurrent remedy or a single forum to resolve his or her disputes. But it is a tedious process for a common man to simultaneously approach two different forums, the RERA or the Consumer Forum.
The concurrent remedy has broadened the range of remedies available to home buyers. Both acts have their benefits and drawbacks in terms of resolving the buyers’ issues. The most effective forum for the buyer to approach for resolving his issue is highly dependent on the facts of the case and the remedy that the aggrieved party is seeking from the respective forum.