CIVIL APPEAL NO. 3581-3590 OF 2020
(@ CIVIL APPEAL DIARY NO.9796/2019)

There was a lot of confusion, even amongst lawyers, whether after the coming of RERA, aggrieved flat purchasers could file Complaints under the Consumer Protection Act.

In the above judgement, the Supreme Court of India has held that the redressal mechanism / provisions under the Real Estate (Regulation and Development) Act 2016 (RERA) do not act as a bar to complaints under the Consumer Protection Act 1986 (CP Act).

Brief Facts of the dispute

The matter before the Supreme Court arose out of an appeal from an order from the NCDRC in relation to a group of complaints made by homebuyers. The homebuyers filed complaints under the CP Act due to delay in handover of possession of the apartments by the builder. These complaints were filed just a week before the registration of the said project with the jurisdictional RERA authority, in this case – the Haryana Real Estate Regulatory Authority (Haryana Authority). The builder (the Appellant before the Supreme Court) challenged the jurisdiction of the NCDRC inter alia on the ground that the apartments had been booked for commercial purposes and the homebuyers (the Respondents before the Supreme Court) were not ‘consumers’ within the provisions of the CP Act. No reference was made by the Appellant before the NCDRC that the project had been registered under RERA. The NCDRC allowed the complaint of the Respondents and by its order dated 12 September 2018 directed refund of the monies paid by the homebuyers along with interest and costs. When the Appellant filed the appeal before the Supreme Court, the project registration letter issued by the Haryana Authority was produced. An order dated 17 January 2019 passed by the Haryana Authority in a RERA complaint filed by another homebuyer in respect of this project was also produced under which the Haryana Authority, instead of directing refund of monies to be paid, had directed payment of interest on the amount deposited, as delay possession charges for each month of delay till the handing over of possession of the project.

Proceedings before the Supreme Court

The Appellant made various submissions in support of its Appeal – that the Respondents were not ‘consumers’ since the apartments were booked for earning profit; the NCDRC ought not to have entertained the complaints once RERA came into force since issues relating to delayed construction fell within the ambit of RERA and the authorities formed thereunder. The Appellant also submitted that the order of the NCDRC be set aside and the Respondents be granted interest and the Appellant ought not to be directed to refund the entire amount, so that the project could be completed without financial strain on the Appellant. The Respondents argued that the remedy under the CP Act was an additional remedy and the legal position remained unchanged even after enactment of RERA. The Respondent submitted that the order of the NCDRC was justified and no plea regarding the project’s RERA registration had been taken in the Appeal, hence the Appellant could not raise such submissions now.

Judgment of the Supreme Court

At the outset, the Supreme Court concurred with the factual findings of the NCDRC that the Respondents were ‘consumers’ as defined under the CP Act and that there was a delay in completing construction and handing over the apartments.

The Court also referred to its earlier judgments of the Hon’ble Supreme Court and the judgments of the various Hon’ble High Courts which consistently held that the remedies available under the provisions of the CP Act are additional remedies over and above the other remedies including those available under any special statutes; and that the availability of an alternate remedy is no bar in entertaining a complaint under the CP Act.

The Supreme Court found that though Section 79 of RERA bars jurisdiction of civil courts, the NCDRC and other consumer dispute forums could not be called ‘civil courts’ particularly in view of the law already declared in this regard in previous decisions of the Supreme Court. It further held that though RERA entitles a complainant who had initiated proceedings under the CP Act to withdraw proceedings under the CP Act and file an appropriate application before the adjudicating officer under RERA, this was a right or option available to the complainant. However, such right or option available to the complainant cannot statutorily force the complainant to withdraw such complaint and in any case, there is no provision in RERA for transfer of such pending complaints to the RERA authorities.

Having heard the Appeal, it was held that RERA did not bar the NCDRC or consumer forums under the CP Act from entertaining any complaints.

The Supreme Court further observed that in cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars initiation of such proceedings. The Court also observed that Section 18 of RERA itself specifies that the remedy under said Section is “without prejudice to any other remedy available” which provision, in effect acknowledges such other remedy available to the allottee.

The Court also held that a reading of Section 88 and 89 of RERA which specifies that the provisions of RERA would be in addition to and not in derogation of any other law and that the provisions of RERA would have effect notwithstanding anything inconsistent in any other law in force – made the position even clearer.

So far as the registration of the project under RERA is concerned, the Court held that the period of 42 months promised for construction in terms of the Builder buyer agreement had expired well before the Project was registered under the provisions of the RERA Act, and therefore, the validity of such registration being for a further period did not mean that the entitlement of the concerned allottees to maintain an action stood deferred. It held that the entitlement of the Complainants must be considered in the light of the terms of the Builder Buyer Agreements. The Court also referred to a Full-Bench judgment of the Supreme Court1 dealing with RERA and the IBC laws where it was held that concurrent remedies were given to allottees under the RERA and IBC as well as under the CP Act.

Interestingly, the Court also referred to the newly introduced Consumer Protection Act 2019 (New Act) and found that the new Act saved all actions taken or purported to have been taken under the CP Act, and the savings provision thereunder has been enacted with an intent to secure the remedies under New Act dealing with protection of the interests of Consumers, even after the RERA Act was brought into force. As such, it held that the proceedings initiated by the complainants in the present cases and the resultant actions including the orders passed by the NCDRC were fully saved.

This judgment of the Supreme Court follows a recent judgment of the Delhi High Court in a group of petitions decided in September 20192 where the Delhi HC had also held that that the remedies under the CP Act and RERA are concurrent.

Conclusion

28. Proviso to 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 Commission 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. As against that  (2009) 9 SCC 221*  AIR 1950 SC 188 : 1950 SCR 459*  (2009) 6 SCC 635* CIVIL APPEAL NO. 3581-3590 OF 2020 @ CIVIL APPEAL DIARY NO.9796/2019 M/s Imperia Structures Ltd. vs. Anil Patni 40 the mandate in Section 12(4) of the CP Act to the contrary is quite significant.

Again, insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. The absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a Civil Court and express saving under Section 88 of the RERA Act, make the position quite clear. Further, Section 18 itself specifies that the remedy under said Section is “without prejudice to any other remedy available”. 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.

 Further, the Supreme Court (while upholding the decision of the NCDRC) has come down heavily on delayed delivery of projects. These observations should give developers enough impetus to complete projects and handover flatsto allottees in a timely manner to avoid being directed to refund monies with interest and possible costs being imposed.

Link to the decision. https://main.sci.gov.in/supremecourt/2019/9796/9796_2019_34_1502_24555_Judgement_02-Nov-2020.pdf