The new Consumer Protection Act that took effect from July 20 has changed the jurisdiction of the National Consumer Disputes Redressal Commission (NCDRC) to Rs 10 crore from the earlier Rs 1 crore. This means that from today, only homebuyers who have paid an amount in excess of Rs 10 crore can file a case in the commission.
Other cases up to Rs 1 crore can be filed with the district commission and those between Rs 1 crore to Rs 10 crore with the state commissions.
Homebuyers pointed out that instead of directly approaching the NCDRC earlier, they would now have to go through several layers of the judicial process which would not only delay justice but also lead to incremental litigation costs.
“The pecuniary jurisdiction of the NCDRC has now been enhanced to entertain cases where the value of goods or services paid as consideration, exceeds Rs 10 crore and not the total consideration of the goods and services,” explained advocate Aditya Parolia of PSP Legal.
This also means that homebuyers who may have paid a total amount of Rs 10 crore in a project to a builder can come together through an association or as a class to file a case with the NCDRC directly, he says.
Inadequate infrastructure at district and state level a challenge
However, unavailability of adequate infrastructure in the district and state consumer courts could be a matter of concern, said legal experts.
Given the huge number of cases currently pending before district courts across the country and the slow rate at which these are disposed of and inadequate infrastructure of these forums will only add to the burden of these courts. This would also go against the main objective of the consumer act which is to provide quick relief to consumers, say legal experts.
“With provisions of the Consumer Protection Act 2019 coming into force, certain shortcomings of the present mechanism in place are likely to get accentuated and add to the plight of the consumers,” Ashwarya Sinha, the lawyer for petitioner Chitra Sharma in the Jaypee Infratech case, told Moneycontrol.
“Given the present pendency before the District Forums across the country coupled with slow disposal rates and grossly inadequate infrastructure of these forums, the added burden with a revised and enlarged pecuniary jurisdiction of up to Rs 1 crore will play adversely to the objective of the Act which is providing a speedier remedy to the consumers,” he said.
“With the cases of most average homebuyers now under the ambit of the District Commission, there will be an immediate and rather steep increase in the number of matters under this one fora, which was earlier compartmentalized between the district and the State Commission,” he said.
Some lawyers say that it is the unavailability of adequate infrastructure in the district and state consumer courts is a matter of huge concern.
“It would have been prudent if work on that end would have been looked into first,” said Parolia, adding Rs 10 crore will prove to be detrimental for the homebuyers as both the state and district commission lacks the infrastructure to handle the matter of such pecuniary jurisdictions.
“The relevant clause in the new act is based on the amount paid and not on the value of the goods or property as was the current law. This will send even those cases to district forum where even though the price of the property is more than Rs 10 crore, but the buyer has paid on Rs 70 lakh. This will also delay the entire adjudication process substantially, says advocate Mihir Kumar who has been representing homebuyers in the Amrapali case.
Homebuyers say legal options getting restricted
Homebuyers say that all forums for buyers are gradually getting blocked, forcing them to approach only one window – the Real Estate Regulatory Authority (RERA). A few months ago, the government had cleared amendments to the Insolvency and Bankruptcy Code under which a threshold of minimum 100 homebuyers or 10 Percent of total homebuyers in a project, whichever is less, is required to take the builder to an insolvency court. It simply means that an individual homebuyer, who is also a financial creditor, cannot file an insolvency application.
Despite RERA Authorities’ pro-active hearing of cases and delivering pro-buyer judgements, it has been witnessed that execution of these orders has been a big challenge.
“RERA has been ineffectual, as developers have moved the High Court in many cases and secured stay orders against RERA judgments. In this backdrop came the Covid-19 outbreak where RERA authorities extended the regulatory blanket to safeguard under construction real estate projects which has irked the homebuyers,” some legal experts said.
Even in the case of amendments brought about in the IBC that mandate a minimum threshold “further frustrates the homebuyer,” said Sinha, who has challenged its validity before the Supreme Court and the same is pending adjudication.
Abhay Upadhyay president, Forum for People’s Collective Efforts, and
Member, Central Advisory Council (RERA), ministry of housing and urban affairs, the government of India, said all these changes will lead to only limited options being made available to homebuyers.
“Builders have been demanding since RERA came into existence that all other forums should be barred for homebuyers. We have been opposing this as this curtails the right of homebuyers. It is there in the public domain that RERA orders are a mere piece of paper and builders are not obeying the orders. They are themselves pushing for RERA as the sole legal forum to be made available for homebuyers which clearly suggest that they are most comfortable if cases are filed against them at RERA than at any other forum,” he said.
In view of this, “it is very unfortunate that the government is toeing the builders’ line and has completely overlooked the concerns of homebuyers. We have opposed such a move at all forums made available to us,” he said.
FPCE had earlier also approached the Jayant Sinha-headed parliamentary standing committee on finance with its objection to a proposed amendment to the Insolvency and Bankruptcy Code, 2016. The second amendment to the bill was presented in the Lok Sabha in the winter session.
“This is against the interest of homebuyers as it puts unreasonable conditions on them, destroys level playing field which currently exists and makes the law lopsided in favour of real estate developers. The amendment being brought under influence of builders is not only illogical, illegal but also regressive to say the least,” said FPCE’s letter to the standing committee chairman had said.
Some developer bodies had said last year that consumer cases should first go to Rera and then to NCLT.
Real estate developers represented by Naredco and Credai had suggested at the meeting of the committee constituted under the ministry of housing and urban affairs, to examine the difficulties faced in giving effect to provisions of RERA 2016, to bar the jurisdiction of consumer forum as currently done for civil courts under section 79 under RERA Act to avoid conflicts with judgments of RERA authorities and consumer forums which are currently both forums for RERA disputes.
The Forum for People Collective Efforts, a homebuyers’ group, had voiced its concern against such a suggestion at the same meeting saying that the choice must be left with the “aggrieved.”
“It is hoped that once RERA matures and is implemented across the country, with benches at the district level, one would by choice not go to consumer forums. May it be also known that the Hon’ble Supreme Court has very categorically held in numerous judgments that the Consumer Act is a special law and is over and above the regulatory laws, such as RERA. So, you don’t have the power to bar it. It would be illegal ab-initio,” he told Moneycontrol.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
