Consumer Protection Act With Real-estate Perspective

Introduction-

The new Consumer Protection Act, 2019 is less time consuming and wider than the old Consumer Protection Act,1986. It establishes Central Consumer Protection Authority (CCPA) ie. empowered to conduct investigations for violation of consumer rights and initiate complaints, prosecution; Orders recall of unsafe goods and services; Orders discontinuance of unfair trade practices and misleading advertisements and Impose penalties on manufacturers/endorsers/publishers of misleading advertisements. It further establishes Alternate Dispute Resolution Mechanism of Mediation ie. A complaint will be referred by a Consumer Commission for mediation, for early settlement if the party agrees. The mediation will be held in the Mediation Cells which will be established under Consumer Commissions. Appeal cannot be made for settlement through mediation. Product liability against the manufacturer is briefly mentioned under Chapter VI of the act.

Penalty for non-compliance of direction of Authority shall be punished with imprisonment for a term which may extend to six months or fine which may extend to Rs. Twenty lakh, or with both. Punishment for false or misleading advertisement attracts imprisonment for a term which may extend to two years and with fine which may extend to ten lakh rupees; and for every subsequent offence, be punished with imprisonment for a term which may extend to five years and with fine which may extend to fifty lakh rupees.

Section 100 is enacted with an intention to secure the remedies dealing with ‘protection of interests of Consumers’. Subsequently, looking at contemporary challenges of the home-buyers and for promotion of real estate investments, parliament passed Real Estate (Regulation and Development) Act, 2016 (RERA). Vice- President Shri Venkaiah Naidu said, “The act ushers in the much desired accountability, transparency and efficiency in the sector with the act defining the rights and obligations of both the buyers and developers.” The developer has to compulsory register site of construction under the RERA for starting the project. Chapter III of the RERA act states the functions and duties of the promoter and obligations on their part. Chapter VIII states the Offences and Penalies.

Remedies-

Jurisdiction where the home-buyer can file for the complaint other than National Consumer Dispute Redressal Commission under the CPA  is under the Real Estate (Regulation and Development) Act,2016 which aims to protect home-buyers and also assists the growth of real estate investment in India by efficient and a transparent mechanism in real estate process. It provides a special Appellate Tribunal and Officers. If the developer violates an order of tribunal – imprisonment of maximum one year or fine for each day of continuous default. The exception to RERA is that the complainant cannot file a complaint if the occupancy certificate (OC) is granted to them by the developer. RERA states that the maintenance of the property even after until 5 years of the completion has to be done by the developer without any cost. Under M/S M3M India pvt ltd and Anr Vs Dr. Dinesh Sharma and Anr, the High court of Delhi held that remedies under CPA and RERA are concurrent. Other than these two jurisdictions also if the possession gets delayed and developer gets into debt-trap the buyer can also approach the National Company Law Tribunal (NCLT). Even the honourable Supreme Court, has upheld that the homebuyers can take real estate developers into bankruptcy proceedings. If the builder is unable to continue or complete the real estate project, the buyer may file for insolvency under the Insolvency and Bankruptcy Code (IBC) 2016.  National Company Law Appellate Tribunal (NCLAT), deals with matters involving registered firms in bad financial shape with a disputed value of more than Rs. 1 lakh. It pays the company owner for the company’s dissolution and allows them to collect their part of the liquidation proceeds. According to the statute, the average time for conclusion of matter is between 9-12 months.

As home-buyers are like creditors to the developer and it’s a dream of all to buy a house which comes at a very hefty price nowadays, it becomes mandatory for state to protect them from the manipulation and malicious acts by the developers.

A case in Brigadier Harir Pant Vs Imperia Structure Ltd., Baljor sing vs Imperia Structure and other 3 complainants against Imperia Structures Ltd. (SCC OnLine NCDRC 345) Case decided on 11/11/2021. All these 5 filed a case under Sec 12 (1)(a) read with Sec 21 of the CPA,1986 seeking refund of the entire amount that was deposited by them as developer failed on his part to give possession of the flats. Whenever the complainants inquired about the possession, the developer used to postpone against the time for possession was 36 months given by the developer. Therefore case was filed for ‘unfair trade practices’ and ‘deficiency in services’. Commission directed the developer to refund the entire deposit with simple interest of 9% with additional Rs 50,000/- as compensation to each. Decision was further upheld by the Supreme Court. Also Under the Sec 18 of RERA, if the developer is unable to complete the construction or fails to give possession by the date that is specified in agreement, developer will be liable to return the amount received by him, even if the home-buyer now has no interest to take the possession. Such right is specifically made ‘without prejudice to any other remedy available to him’. Also the refundable amount has to be paid with rate of interest as may be prescribed by an order.  Under sec 18(1) if there is a case where the home-buyer does not intend to withdraw from the project, is entitled to be paid interest for every month of the delay until the handover of the property. Therefore in both the Consumer Protection act and the Real Estate (Regulation and Development) Act,2016 the home-buyer is provided with remedy.

Another case of K.A Nagami Vs Housing Commissioner, Karnataka Housing Board (2012 SCC Online SC 1093) where the complainant got allotted a flat at cost of Rs 3,15,000 under the Karnataka Housing Board scheme. Complainant took loan from employer and paid 2,67,750 in 4 instalments. Complainant was failed to allot the flat and instead was informed that her allotment was transferred to another flat which cost was 5,90,000 and has to pay the extra amount for the possession. Complainant informed she is not in the position to pay the higher amount and requested prior flat to be allotted. After she filed the case, she was refunded back the amount but with deduction of Rs 3937. She filed another case for compensation and demanded the amount with interest rate of 27% as deficiency and negligence on part of the developers. Honourable Supreme Court held that ‘the compensation to be given not be uniformed’. In this case, as the complainant was deprived of flat and the party has suffered a much higher loss than just financial. In case of refusal of possession, consumer has to be given compensation for harassment and direction to deliver possession can also be given by the court. Similarly, after possession if the sale deeds or a title deeds are not executed without justifiable reason than the compensation has to depend on the amount of harassment that is suffered by the party.

Recommendations-

Even when we have statutes for consumer’s protection, we fail to deliver it in time. As investment in property is risk-oriented, it becomes states responsibility to resolve issue at earliest. There has to be some protection given to the developer which the act fails especially RERA act for the unforeseen situation like the demonetization, pandemic, etc. Date of approvals for Government and environment clearances has to be time-bound. There should be strict punishments to the officials for corruption regarding the clearances. The confederation of real estate developer association of India (CREDAI) and RERA has to work hand-in-hand for the consumers and also to monitor and keep a financial check on developers. 

Conclusion-

The fact that people take loans and are paying EMI’s for achieving their dream for an ideal home requires an accountable and transparent organised system where their problems should be addressed in a time-specific manner. India, on its way to 5 trillion economy requires an investment-safety approach where the money people invest does not get into corrupt means. A grievance redressal platform for this need has to be maintained. Recently in news, Guru Ashish Construction Pvt ltd. Which was to re-develop the Siddharth Nagar Patra chawl, Goregaon since 2008 has deprived and cheated tenants by giving them dream of an ideal home 14 years back when the re-development agreement was signed. Since then, there has not been completion of any building. ‘Tenants were paid rent till 2014-15 after which even that is due’. ED is investigating the money-laundering case and names of high-profile politicians have come up regarding the land scam. ‘672 tenants in 42 acres of land’ are yet to get their ideal home. It is sure the justice will be served but after all the greater concern for me is the availability of rightful roof to those tenants. We have a long way to go but with acts like Consumer Protection Act, Real Estate (Regulation and Development) Act we are definitely in the right direction to consumer grievance redressal and justice-delivery.