SUPREME COURT HOLDS THAT HOMEBUYERS HAVE ALTERNATE REMEDIES UNDER LAW AGAINST BUILDERS

In a recent case of M/s Imperia Structures Ltd vs Anil Patni and Another Civil Appeal No. 3581-3590 of 2020, the 2-Judge Bench of the #SupremeCourt passed a Judgment dated 02-11-2020, whereby the Apex Court held that the #consumer has the #discretion to choose either the Consumer Forum or the Real Estate Regulatory Authority to initiate proceedings against the #builder or promoter for delay in handing over the possession of the booked #flat or apartment.

In this case, the Appellant-Builder and the Respondent-Buyers had executed a Builder Buyer Agreement dated 30-11-2013 (the Agreement) with respect to various flats in “The ESFERA” Project in Sector 13C, Gurgaon, Haryana (Building). The Respondent in this case had booked a Flat in the Building for an aggregate price of Rs. 76,43,000/- and over the period of time, the Respondent-Buyer had paid Rs. 63,53,625/-. But the Appellant-Builder could not complete construction of the Building within the agreed period of 42 months. Thus, the Respondent-Buyer filed a case under the Consumer Protection Act 1986 (the CP Act) on 11-10-2017 before the National Consumer Disputes Redressal Commission, New Delhi.

Later, the Real Estate (Regulation and Development) Act, 2016 (the #RERA Act) was introduced on 01-05-2016 and the Project was registered with Haryana Real Estate Regulatory Authority, Panchkula (HRERA) on 17-11-2017.

Thereafter, the Appellant-Builder challenged the jurisdiction of the Consumer Forum on one of the grounds that there was a delay in completion of the Project due to occurrence of Force Majeure events such as Demonetisation and thus, the Builder cannot be held liable for the same under Clause 41 of the Agreement.

The National Commission passed an Order dated 12-09-2018 and held that demonetization, non-availability of contractual labour, and delay in notifying approvals cannot be construed to be Force Majeure Events. Moreover, the Builder had admitted that there was a delay on their part in completing the Project. Thus, the Builder was held liable for deficiency in services rendered to the Buyer and was directed to refund the entire money to the Buyer.  

Aggrieved by the National Commission’s Order dated 12-09-2018, the Appellant-Builder filed an Appeal before the Supreme Court. The Apex Court herein made the following observations:

1- That Section 100 of the CP Act 2019 (and Section 3 of the erstwhile CP Act 1986) provide that the CP Act is not in derogation of any other law. This Section is reproduced below:

The provisions of this Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force.

This Section was again introduced in 2019 after the RERA Act was enacted, with the intent to secure the remedies under 2019 Act and to protect the interests of the consumers.

2- Further, Section 88 of the RERA Act provides that application of other laws is not barred. This Section is reproduced below:

The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.

3- Thus, the remedies available under the CP Act are additional remedies over and above the remedies available under special statutes like the RERA Act. Thus, the courts are not barred from entertaining a complaint under the CP Act on the ground that an alternate remedy under a special statute is available.

4- Further, as per Section 18 of the RERA Act, if the builder (or promoter) fails to complete or is unable to give possession of an apartment, plot or building to the buyer (or allottee) within the timelines agreed by the parties, then the entire amount received from the buyer has to be returned to him in addition to compensation.

5- Therefore, the buyer or allottee has the discretion to initiate proceedings against the builder or promoter either under the CP Act or the RERA Act.

Thus, the Apex Court upheld that the validity of the proceedings initiated herein under the CP Act and also upheld the Order of the National Commission. The Supreme Court further directed the Appellant-Buyer to pay a sum of Rs. 50,000/- to each aggrieved Buyer in the said case, over and above the amounts payable to the Buyer(s).

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer