Consumer Complaint By Allottee Against Builder Not Barred By RERA Act: Supreme Court [Read Judgment]

The Supreme Court has held that a complaint before Consumer Fora by allottees against builders is not barred by the Real Estate (Regulation and Development) Act, 2016.

In this case, the the complainants who had booked apartments by executing Builder Buyer Agreements in 2013, had approached the Consumer Commission which allowed their complaint and ordered refund of the amounts deposited by each of them with simple interest @ 9% per annum from the respective dates of deposits alongwith Rs.50,000/- towards costs. 

Before the Apex Court, the builder (the Appellant which is now registered under RERA) raised these two legal issues ; a) Whether the bar specified under Section 79 of the RERA Act would apply to proceedings initiated under the provisions of the CP Act; and b) whether there is anything inconsistent in the provisions of the CP Act with that of the RERA Act.

The court noticed the following Statutory provisions in RERA: Section 79 of the RERA Act bars jurisdiction of a Civil Court to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the RERA Act to determine. 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. It also noted that Malay Kumar Ganguli vs. Dr. Sukumar Mukherjee, it was held that a consumer forum/commission is not a civil court and therefore observed that 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 bench comprising Justices UU Lalit and Vineet Saran then took notice of the Proviso to Section 71(1) of the RERA Act which 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 court said:

"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 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"

The court also rejected the contention that since the RERA Act was enacted and considering the special expertise and the qualifications of the Chairpersons and Members of the Authority (Section 22) and the Appellate Tribunal (Section 46), such authorities alone must be held entitled to decide all issues concerning the Project registered under the RERA Act. The bench said:

"It is true that some special authorities are created under the RERA Act for the regulation and promotion of the real estate sector and the issues concerning a registered project are specifically entrusted to functionaries under the RERA Act. But for the present purposes, we must go by the purport of Section 18 of the RERA Act. Since it gives a right "without prejudice to any other remedy available', in effect, such other remedy is acknowledged and saved subject always to the applicability of Section 79."

The bench also noted the judgment in Pioneer Urban Land and Infrastructure Limited and another vs. Union of India in which it was observed that the remedies that are given to allottees of flats/apartments are therefore concurrent remedies, such allottees of flats/apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the IBC Code.

The court also said that it is significant that Section 100 is 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 court, therefore dismissed the appeals, imposing costs of Rs.50,000 to be paid by the builder in respect of each of the Consumer Case.

Case: IMPERIA STRUCTURES LTD. vs. ANIL PATNI [CIVIL APPEAL NO. 3581-3590 OF 2020 ]

Coram:  Justices UU Lalit and Vineet Saran

Counsel: Sr. Adv Vikas Singh and Adv Priyanjali Singh

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