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RERA does not bar Proceedings under the Consumer Protection Act; RERA acknowledge other remedies: SC

M/s. Imperia Structures Ltd v. Anil Patni and Another

Civil appeal no. 3581-3590 of 2020 with civil appeal no.3591 of 2020

Decided on November 02, 2020.

Counsel for the Appellant: Mr. Vikas Singh

Counsel for the Respondent: Ms. Priyanjali Singh

A two-judge bench consisting of Justice Uday Umesh Lalit and Justice Vineet Saran decided the present case. In addressing the appeal filed under Section 23 of the Consumer Protection Act, the Court clarified that the RERA Act does not bar initiation of proceedings under the CP Act.

A Housing Project was launched by the appellant in 2011 and all original complainants executed Builder-Buyer agreement by booking their respective apartments and paying for the same. The respondents booked an apartment for which the basic price was Rs.56,01,750/- and the aggregate price was Rs.76,43,000 after including additional charges. On 01.05.2016, the Real Estate (Regulation and Development) Act, 2016 (hereinafter “the RERA Act”) came into force. Over the years, the Respondents had paid Rs.63,53,625/- out of the total sum of Rs.76,43,000/-. However, even after four years there were no signs of the Project getting completed; the Respondents filed Consumer Case No.3011 of 2017 before the National Consumer Disputes Redressal Commission by submitting that the appellant deliberately did not construct the towers in which the complainant’s house was situated and hence claimed refund and compensation in accordance with the terms of the Buyer’s Agreement and that they were entitled to the value of goods/services, both exceeding one crore rupees.

On 17.11.2017, the Project was registered with Haryana Real Estate Regulatory Authority, Panchkula (hereinafter Haryana Authority) with certain terms and conditions. The Appellant challenged the jurisdiction of the Commission on the ground that the apartment was booked for commercial purposes, and thus the Respondents would not come within the definition of “the consumer” under Section 2(d) of the CP Act. No reference was made to the fact that the Project had been registered under the RERA Act. The Commission in its order dated 12.09.2018 granted relief to the respondents by concluding that the appellant was deficient in rendering service and directed that the amounts be deposited within four weeks. The Appellant being aggrieved preferred the instant appeals on 14.03.2019.

After issuance of notice on 05.04.2019, it was submitted by the Respondents that the Appellant had partially refunded the amounts in terms of the directions of the Commission. The learned advocate for the appellant submitted that the appellant had offered alternative accommodation to all the allottees but was rejected by all the complainants, meaning they had booked it for investment purposes and therefore the Complainants were not “Consumers” within the meaning of the CP Act as the apartments were booked merely for profit motive. He contended that since the company was registered under the RERA Act, all issues would be under the exclusive control and jurisdiction of the authorities under the RERA Act. The counsel prayed that the orders passed by the Commission be set aside and instead the Complainants be granted interest @ 10.75% p.a. on the amounts deposited so that the Project would be completed without putting the Appellant under any financial strain and at the same time the relief in the nature of interest on investment would also be accruable to the allottees.

The advocate for the Respondents as well as some of the Complainants submitted that all the Complainants had purchased only one residential apartment each for self-use and had taken home loans except for one of the Complainants who used all his retirement dues to book the apartment; therefore, the Complainants satisfied the requirements of being “Consumers” under the provisions of the CP Act. The counsel contended that there was no reasonable explanation on record to support the claim that the delay occurred due to force majeure events. Further, she submitted that at no stage, any plea was taken before the Commission that the Project was registered under the RERA Act or about the effect of the RERA Act; consequently, it would not be open to the Appellant to raise any submissions about the applicability of the RERA Act. In conclusion, the counsel submitted that the position remained unchanged even after the enactment of the RERA Act as the remedy afforded by the CP Act is an additional remedy to a consumer.

The Court, on hearing both sides of the dispute, observed that the conclusions drawn by the National Commission in relation to these issues are absolutely correct and do not call for any interference.

Interpreting Section 3 of the CP Act, the Court held that the remedy provided under the CP Act would be in addition to the remedies provided under the other Acts by placing reliance on the judgments of this Court in Secretary, Thirumurugan Cooperative Agricultural Credit Society vs. M. Lalitha (dead) through LRs. and others, (2004) 1 SCC 305 and Virender Jain vs. Alaknanda Cooperative GroupHousing Society Limited and others, (2013) 9 SCC 383.

The Court observed:

In terms of Section 18 of the RERA Act, if a promoter fails to complete or is unable to give possession of an apartment duly completed by the date specified in the agreement, the Promoter would be liable, on demand, to return the amount received by him in respect of that apartment if the allottee wishes to withdraw from the Project. Such right of an allottee is specifically made “without prejudice to any other remedy available to him”. The right so given to the allottee is unqualified and if availed, the money deposited by the allottee has to be refunded with interest at such rate as may be prescribed. (Para 23)

The Court came to the conclusion that the RERA Act thus definitely provides a remedy to an allottee who wishes to withdraw from the Project or claim return on his investment.

The Court further crystallized the main issues by stating:

As regards the allottees who can be called “consumers” within the meaning of the CP Act, two questions would arise; 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. (Para 26)

The Court answered these two issues by observing that:

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. (Para 28)

The Court held that the entitlement of the Complainants must be considered in the light of the terms of the Builder Buyer Agreements and was rightly dealt with by the Commission. The proceedings initiated by the complainants in the present cases and the resultant actions including the orders passed by the Commission were fully saved by relying on Section 100 of the CP Act, 2019 and Section 18 of the RERA Act which is subject to Section 71 of the RERA Act. The Court quantified the costs at Rs.50,000/- to be paid by the Appellant in respect of each of the Consumer Cases, over and above the amounts directed to be made over to the Complainants and was to form part of the amount payable by the Appellant to the Complainants.

The Court accordingly dismissed the petition.

Jhanavi M