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NCDRC restricts complaints to RWAs, here are the legal options for homebuyers

Homebuyers cannot raise violations under RERA in a consumer court such as NCRDC. This means that only issues pertaining to existing projects that have a completion certificate can be settled by NCRDC.


The National Consumer Disputes Redressal Commission (NCDRC) last week clarified that only registered residents’ welfare associations (RWAs), consumer organisations, cooperative societies or association of flat or plot buyers can file complaints against builders under this platform.

While NCDRC was clearing the confusion regarding the term ‘voluntary consumer association’ under Section 12 of the Consumer Protection Act, you as a homebuyer must be wondering what legal options you are left with against errant builder if you don’t fall under one of these categories?

Well, there is a clutch of options before you. At a broader level, with the Real Estate (Regulation and Development) Act, 2016 getting implemented earlier this month and empowering the regulatory authority to handle all consumer grievances, homebuyers now have at least four forums to file their complaints – the real estate regulator, the National Consumer Disputes Redressal Commission, the Competition Commission of India and in some cases the state development authorities.

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The apex court and NCDRC have already made it clear that a group of consumers having a common interest or common grievance and seeking a similar relief against the same person can come together without forming any association to file a case in NCDRC with a claim of Rs 1 crore or more. Consumers can approach the district forum if their claim is not above Rs 20 lakh and the state commission if their claim is in the range of Rs 20 lakh to Rs 1 crore.

Where should homebuyers file complaints?

If a real estate project does not have a completion certificate and is yet to be registered with the real estate regulator, the option before homebuyers who have invested in that project is RERA. Homebuyers cannot raise violations under RERA in a consumer court such as NCRDC even if their claim is above Rs 1 crore. This means that only issues pertaining to existing projects that have a completion certificate can be settled by NCRDC.

Also watch: How RERA is going to change your homebuying experience

“The NCDRC full bench order was prompted to take care of the vacuum due to RERA not having older completed projects under its ambit,” says S K Pal, a Supreme Court lawyer.

“For projects where the completion certificate has been issued, homebuyers should only approach the consumer court if they feel that the completion certificate has been issued wrongly. This is because the real estate regulator does not have the power under RERA to cancel completion certificates that have been already issued. For other cases, consumers should wait for some time till the regulators starts functioning. The advantage with the regulator will be that consumers will not only be eligible for compensation from developers but developers will also be liable to be penalised under chapter 8 for their faults,” says Abhay Upadhyay, national convenor, Fight For RERA.

Under this section, if any promoter contravenes the provisions of section 3, he shall be liable to a penalty which may extend up to 10 percent of the estimated cost of the real estate project as determined by the Authority. If any promoter does not comply with the orders, decisions or directions issued under sub-section or continues to violate the provisions of section 3, he shall be punishable with imprisonment for a term which may extend up to three years or with fine which may extend up to a further 10 percent of the estimated cost of the real estate project, or with both.

Cases where the builder may have failed to set aside 70 percent of the amount in an escrow account or where a project has not been registered properly or where there is a faulty builder-buyer agreement, all such cases where projects are yet to receive a completion certificate, buyers will have to approach RERA as these are violations against the real estate regulator and cannot be taken to NCDRC.

“Under RERA there are four levels. A buyer can first approach the Real Estate Regulatory Authority, then appeal at the level of the appellate tribunal, then the high court and finally the Supreme Court but from the NCDRC, the case can directly reach the apex court for appeal. CCI will only handle cases against the developer who has been seen as abusing dominance,” says Sahil Sethi, a lawyer with Saikrishna & Associates.

Can the NCDRC and RERA penalise developers?

As an example, under RERA, if a homebuyer has filed a complaint that the lift has not been installed, the regulator can order the builder to get one installed within a certain time period but if he fails to do so. He can be jailed under RERA for violating the order. Similarly, under NCDRC, a contempt or execution petition can be filed against the developer if the order is not implemented, say legal experts.

Besides the NCRDC and RERA, buyers also have the option to approach the state development authority if they find that provisions of the state Act have been violated. Here too there is a penal provision. “Under Section 25 of the UP Apartment Act 2010, if a development authority finds that a builder has violated the law, he can even be sent to jail,” says Pal.

vandana.ramnani@nw18.com

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First Published on May 9, 2017 02:04 pm
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