10 May, 2017
The National Consumer Disputes Redressal Commission (“NCDRC”) is frequently allowing much needed relief to the homebuyers in India in cases of delays in delivery and defaults by the builders/developers (“builders”).
In this article, we discuss the pragmatic judicial approach of the NCDRC in its two full bench judgments. These judgments rule out the technical objections (frequently raised by the builders in consumer complaints) that have often troubled the homebuyers and delayed the adjudication process.
In a nutshell, the law now seems settled that:
A. Residents’ welfare associations (“RWAs”) can file a consumer complaint against the builders; and
B. Individual homebuyers can also file a consumer complaint against the builder, and if the homebuyers file a joint complaint, they can even invoke the jurisdiction of the NCDRC, rather than fighting their cases individually at the State Commissions or the District Consumer Forums.
Legal Background:
Governing law: Consumer Protection Act, 1986 (“Act”).
Cases Discussed/Considered:
1. Moulivakkam Trust Heights Flats Affected Buyers Association vs. Prime Sristi Housing Pvt. Ltd. & 29 Ors., Date of judgment – May 5, 2017
2. Ambrish Kumar Shukla & 21 Ors. vs. Ferrous Infrastructure Pvt. Ltd., Date of judgment: October 7, 2016
Applicable Law, in brief:
In terms of the Act, a consumer complaint, ordinarily, can only be filed by the following persons:
- Under Section 12(1)(a)- by a consumer to whom the goods are sold or delivered or agreed to be sold or delivered or services are provided or agreed to be provided; or
- Under Section 12(1)(b)- by any recognized consumer association; or
- Under Section 12(1)(c)- by one or more consumers where there are numerous consumers, provided it is filed on behalf of or for the benefit of all the consumers having the same interest; or
- Under Section 12(1)(d)- by the Government.
Legal Issues: The basic issues, that became necessary to decide in a number of consumer complaints pending before various consumer forums, including the NCDRC, were:
Issue I. Whether an RWA can file a consumer complaint against a builder on behalf of all homebuyers in a residential complex?
Issue II. Whether multiple homebuyers joining together can file a joint consumer complaint against a builder before the State Commission (if their claims put together exceed Rs. 20 Lakhs) and before the NCDRC (if their claims put together exceed Rs. 1 Crore)?
[The amounts stated herein above are the minimum value of the claim that can be filed directly before the State Commission or the NCDRC, respectively. The appeal against a judgment of NCDRC goes only to the Supreme Court of India, thereby shortening the life span of any litigation if it is commenced before the NCDRC.]
Judicial Conclusions:
On Issue I: In the case of Moulivakkam Trust Heights Flats Affected Buyers Association vs. Prime Sristi Housing Pvt. Ltd. & 29 Ors., the NCDRC has held that:
i. The RWAs which are registered under the Societies Registration Act, 1860 (as well as associations which are registered under any other law in India including the Companies Act, 1956) can file consumer complaints under Section 12(1)(b) of the Act.
ii. The RWAs can file the consumer complaints on behalf of not only their members but also on behalf of homebuyers in the same complex who are not their members;
iii. The RWA must however indicate in its objects/memorandum that it is formed for the purpose of (among others) pursuing, propagating, advancing, safeguarding or promoting of interests of the homebuyers in the complex.
On Issue II: In the case of Ambrish Kumar Shukla & 21 Ors. vs. Ferrous Infrastructure Pvt. Ltd., the NCDRC has clarified that:
i. Consumer complaints can be filed jointly by consumers/homebuyers;
ii. The consumers filing joint complaint shall have the same interest (such as homebuyers in the same complex alleging same/similar defaults against the same builder). In such cases, the District Forum, the State Commission or the NCDRC can give the necessary permission and direction for publication or personal service of the notice to all other consumers/homebuyers, so that they can join the consumer case if they wish.
iii. The aggregate value of the claims would determine the forum before which the consumer complaint would lie. For example, if the aggregate value of claims exceeds Rs. 1 Crore (while each individual complainant may have purchased a house below Rs. 1 Crore), the complaint can still be filed before the NCDRC.
Conclusion:
In many instances, it becomes impossible for an individual consumer to contest protracted legal battles. The NCDRC has clarified two vital options available to the groups of consumers while instituting consumer complaints against the service providers. The judgments discussed above advance the cause of the Act, which is to empower the consumers against the more powerful and resourceful service providers, such as builders.
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