RERA-AND THE CONSUMER -PROTECTION ACT 2019. (By-Adv.Shrikant S.Sawant)
RESEARCH ARTICLE ON- TOPIC-
RERA-AND THE CONSUMER
-PROTECTION ACT 2019.
AUTHORED By-Adv.Shrikant S.Sawant.
LLM
–2nd,Year-2021-2022, Semester-IV, Roll No-08.
Introduction:
·
The Consumer Protection Act, 2019, as a consumer,
· Real Estate (Regulation and Development) Act, 2016 (RERA Act) as an allottee.
Homebuyers have been subjected to excessive delays under the justice delivery
system because construction projects have long
gestation periods. From a mere contractual dispute to instances of fraud
and delays in handing
over the property, homebuyers face a lot of challenges. So remedies under one
particular legislation may not be sufficient to cover all the offences and problems. Consequently, there is a need to
give expansive remedies to them under different
Acts.
In
case of any dispute,-
they can now approach three possible forums under three different Acts: The Consumer Protection Act, 2019, as a consumer;
Real Estate (Regulation and Development) Act,
2016 (RERA Act) as an allottee; and Insolvency
and Bankruptcy Code, 2016, as a financial
creditor.
The new Consumer Protection Act, 2019, has been a relief in
more ways than one and has wide-ranging provisions with respect
to both defining the offence
under the Act and dispute
resolution. It is
also not specific
to resolution like the Insolvency Code. Therefore, it is
important to understand that the remedies
should be simultaneous and not mutually
exclusive.
The fact that the RERA Act contains a ‘bar of jurisdiction’
clause has not stopped
the courts from providing the homebuyers with simultaneous remedy under the Consumer
Protection Act for issues that go beyond
the RERA Act.
Act, 2019 Thirdly, it addresses the
question whether RERA
is actually a better forum than the consumer forum which is common for all types of consumers?, Earlier, Real estate was largely
an unregulated sector where investors
or homebuyers ,Used to pool or invest
their money but due
to the lack of unbound laws these innocent buyers or investors were
fooled by the builders, delay in possession
was the common
issue and due
to lack of laws or any legal protection which was hardly there in order to protect the homebuyers who had to visit cumbersome civil courts for redressed of their
grievances which takes heavy expenses
and time. Therefore, “the consumer
protection act” was enacted
and came into existence which provided them
with some relief but was not time bound, inexpensive and speedy nor it was in specific
for the sector of real estate.
Abstract:
“Consumer protection Act,
2019” is a legislation which protects the consumer’s interests
and is consists of group of laws which was designed to ensure
consumers rights.
The main objective or the purpose of this
law is to provide all-round and a
better protection and safeguarding their rights and ensures speedy redressed of their grievances. “The Real Estate regulatory authority Act, 2016” is legislation which
supervises all the activities carried
out or in by the real estate sector which was framed to take out the transparency in the sector of real
estate and to regulate all the
activities under it with a strict hand. This paper focuses on the areas and the changes which has taken
place after the enactment of “the
Real estate regulatory authority Act, 2016” secondly, it studies as to what extent does the newly enacted
law has reduce the scope of the consumer protection
Act, 2019 Thirdly, it
addresses the question whether RERA is actually a better forum than the consumer forum which is common for all types of consumers?, Earlier, Real estate
was largely an unregulated sector
where investors or homebuyers ,Used to pool or invest their money but due to the lack of unbound laws
these innocent buyers or investors
were fooled by the builders, delay in possession was the common issue and due to lack of laws or any legal protection
which was hardly there in order to
protect the homebuyers who had to visit cumbersome civil courts for redressed of their grievances which takes heavy
expenses and time. Therefore, “the consumer protection act” was enacted
and came into existence which provided them with
some relief but was not time bound, inexpensive and speedy nor it was in specific
for the sector of real
estate.
Therefore, in order to
avoid all these unfair and expensive legislation there came a complete change in the scenario, the government came with a new legislation and enacted “Real estate regulatory authority act, 2016” which was strongly in favour of homebuyers
and to provide them with inexpensive
and a speedy justice. Pursuant to this
new legislation, a new issue came up i.e. which was the correct forum for the homebuyers to approach – “RERA” or “Consumer Court”. Therefore, this paper addresses
this question and seeks to state the inter-relationship between
the two Acts.
About The “Consumer Protection Act”
According to the “Consumer
Protection Act,2019”, “consumer” “means any person who buys goods or avails any type of services
for which consideration has been paid
or promised, or under any system of
deferred payment and includes any user or such goods aside from the one that buys such goods for
consideration, paid or promised or partly
paid or partly promised, or under any system of credit, when such use is formed with the approval of
such person, but doesn’t include an individual, who obtains such goods for resale or for any
commercial purpose.”
This Act was enacted to
safeguard the interests of the consumers, provide,
less formal, inexpensive and faster access to justice. The Act further
enlists the objectives with which it was drafted,
which includes better
protection of the interest of consumers. To enforce this objective, the Act makes provision for the establishment of “Consumer Councils”
and Forums. “Consumer
Forums” are established for settling the consumer disputes
and follows
The following hierarchy in ascending order: -
· “District Forum – It entertains
consumer complaints, where the value of the subject matter does not
increase Rs. 1 crore.”3
• “State Commission – Consumer
complaints with pecuniary value ranging from Rs. 1crore to Rs. 10 crore are filed
in this forum”.
• “National Commission – It has the
pecuniary jurisdiction beyond Rs. 10 crores
in consumer complaints.
In the “real estate sector”,
the forum for settling disputes
is “National Consumer
Disputes Redressed Commission” In cases of delayed
possession, the forum has pointed out that “the cause of action on the builder continues till the time allotment of the
site or full refund of money if
refused to allot” which means “that to honour
his/her service agreement, irrespective of the period of delay”, the builder has to abide by the agreement and
complete the assignment on time.
Secondly, it was observed that “each property developer is liable to execute an agreement
for sale and a failure to do so can be a cause of action against
the builder in the “Consumer Court”.
Under the Act, if there is any delay in payment of any
instalment, interest would be chargeable at specified rate according to the agreement, but if the construction is
not scheduled, the builder is not made accountable for any financial
liability. Eventually, it is the
buyer who bears the burden of interest liability.
Further, many cases of delayed
possession and deficiencies in construction of flats have been reported. False and deceptive
advertisements are one of the most
popular ways of misleading the consumer. Under a “consumer dispute
redressed forum”, if a builder
is found guilty of non- compliance, he/she is punished
with imprisonment. However,
it gives no respite to the
consumer imprisoning the builder will
only add to the delay in the
consumer’s possession, escalating his/her misery..
Therefore, in order to protect the buyers, a growing need to bring a transparent government body was felt, to act as a check for
the developers and consequently, the Legislature passed “the Real Estate
Regulatory Authority Act (RERA)” in 2016.
ABOUT THE “REAL ESTATE REGULATORY AUTHORITY ACT”
In March 2016, the Parliament passed the
legislation called “Real Estate Regulatory
Authority Act (RERA)” wherein, it is the duty of the authority to look after the under construction projects. The
objective of the Act behind focusing
on the ‘under-construction phase’ was to curb
the swindling activities, which are mainly prevalent during this phase. Prior to the passing of the Act,
the “real estate sector” was highly unregulated in India. When a consumer
wished to file a complaint against a developer, he/she
would have to go through the lengthy and cumbersome process
of civil or “consumer courts”,
which are already
overburdened.4Further,“absence of standardization and lack of suitable consumer
protection has constrained the healthy and orderly growth
of the industry.” After the passing
of the Act, the buyers/consumers will no longer have to worry anymore because buyers can reach the forum easily under
the Act. Additionally, the act makes
it compulsory for all the builders, where
the land exceeds “500 square meters,” to register themselves with “RERA” before launching or even before advertising their project. Non-compliance of this provision
attracts a “maximum
imprisonment of 3 years or penalty of up to 10%” of
the total project cost. Developers
are mandated to maintain a separate account of
50% of “the money collected from a buyer to meet the construction cost of the on-going project as it will
put a check on the general practices
of developers”. This will prevent them to divert buyer’s money for starting a new project instead of completing the
on-going one, for which the money had already been collected. This will enable
the construction to be completed on time.
The Act is beneficial not only to the consumers
but also the builders.5
Firstly, “it proposes to impose penalty on allotter for not paying the dues on time”. For this the builder
will also have an opportunity to approach the regulator in case there is any issue/grievance with the
buyer/consumer. But the builders believe that the bill was heavily stacked against them and renders
them liable even if there is
delay on the part of the company or a builder.
Only a consumer or a buyer is eligible to knock the doors of the “real estate regulatory authority
(RERA)” for redressed, which aims at ensuring transparency through the requirement for disclosure of architects,
contractors, engineers and other involved parties in the development of the project along with the existing parties in
the on- going project. Secondly, the
builders are also bound by the “rules and regulations” of the “real estate regulatory authority” for ensuring
transparency by submitting all the original documents for all the projects they carry out, they will also have to focus on maintaining the quality and they must also
rectify any kind of issue faced by the consumer/buyer within 6years of purchase of a property.
RERA REDUCE THE SCOPE OF “CONSUMER PROTECTION ACT”?
In order to answer the question, we need to look at
“section-3” of “the Consumer
Protection Act, 2019”, which says that the provisions of this section shall be “In addition to but not in derogation”
of the provisions of any other
statute for the time being in force which 6means
that if any other statute comes or exists which supports or is beneficial for the consumers, then it will
not be in derogation but will be in
addition to the law of this act. Further, “Preamble to the Act suggests that it is to provide better
protection for the consumer and their
interests”. For example: - under consumer protection act, if a consumer of real estate wants relief from
the issues/grievances, the only relief would be a regular suit.
However, for compensation or other reliefs they
consumer/buyer may have to approach
Real estate regulatory authority forum. The newly passed legislature has also framed “quasijudicial tribunals/forums” as an alternative system
of adjudicating consumer issues/grievances. The protection provided
under “the consumer
protection act” to consumers is “in addition
to the remedies available under any other statute”. It does not override the remedies
under another law/statute but it provides an additional or alternative remedy.
Hence, it can be seen that “the real estate regulatory authority
act(RERA)” is in addition to the “consumer
protection act” and Under “RERA” there are certain guidelines which are formed by the government where the buyer of a flat or a property can file his/her complaint and
remedies for a real estate home buyer
if we talk about the jurisdiction for filing a complaint to the “consumer court”, the home buyer will
have to determine the pecuniary
jurisdiction and file the case depending upon the subject matter and compensation claimed whereas under “real estate regulatory authority
board (RERA)” a home buyer can file a complaint under the authority of the
state where the property is situated.
The jurisdiction regarding the appeal from decisions of the “RERA” will lie with the High Court.
Hence, it can be said that neither act
overrides the provisions of the other nor both the acts must be construed
harmoniously by the courts.
.SCOPE OF “REAL ESTATE
REGULATORY AUTHORITY BOARD
(RERA)”
Under the “real estate regulatory authority” board
there is a strict time frame for
deciding the matter by appellate authority, but in “consumer courts”, there is no such time limit. In order to file a complaint
or to seek redressed a buyer/consumer has to approach the “consumer courts” when although the flat/apartment purchased by them has been delivered by the builder,
there is any deficiency or any other defects in the same and the consumer holds the completion certificate, then such cases will not come under the jurisdiction of the “real estate regulatory authority board.”
The aggrieved
party will have to approach
the “consumer court”
which is “National
consumer dispute redressed
commission”. In cases of projects
where the certificates of completion are not granted
and the possession is not with the buyers, the buyer (consumer) can approach the “real estate
regulatory board (RERA)” and for other legal remedies during prudency are that in case a person
has approached “consumer court” for relief, then a consumer cannot
approach any other authority for an kind of grievance
which states that a consumer cannot file two cases at the same time in different
forums or any appropriate authority.
Under the “Real estate regulatory authority act (RERA)”,
forum specifically takes an
undertaking from the person who I making a complaint at the time of making a complaint
that the buyer/consumer has not filed any other
complaint in addition which clearly
infringes the rights of the complainant to claim a consolation. There are certain other rights of an
allotter, for example to know the state
wise time schedule of completion of the project, to claim the refund of the amount paid along with
interest and compensation if the
promoter fails to give the possession of the property, and to take the possession of the property within two
months of issue of an occupancy
certificate for the property.
“Real estate regulatory authority Act (RERA)”
also makes it compulsory
for all the builders who are developing a project where the land exceeds 500 square metre to register with the local
state regulatory authority
before launching or even advertising their project and also prohibits
the builders to sell and the non- compliance
invites a punishment up to maximum “imprisonment of 3 years or fine up to 10% of the total project cost”. Further, the developers
are also bound to upload all the project details such as approved layout of the plan, timeline, cost etc. The developers
who fulfil these mandates would only be permitted to advertise their project
to prospective buyers. On-going under construction projects, both the residential and commercial
building are also
covered under the newly passed legislation, the best
thing is that the agents and “Real estate”
brokers also falls under it whose main motive is to provide
with comfort and ease to the home buyer.
“RERA”
COMPLAINT REGISTRATION BETTER THAN THE “CONSUMER FORUM?”
“Real estate regulatory authority” has provided security
and welfare to buyers/consumers
against the malpractices of the builders related to property, whereas
prior to the commencement of the Act, consumers/buyers had to file a complaint
before “National consumer
dispute redressed commission”.
Firstly, “Real estate regulatory
authority act” deals only in the cases which are related to the properties and a complaint can be filed by any of
the agencies or by the complainant
himself/herself, whereas, under consumer protection act only registered agencies
are allowed to do so. Therefore, “Real estate regulatory authority act (RERA)”
is a specific legislation, while “Consumer Protection Act” relates
generally to all consumers.
Secondly, under “consumer protection
act” it used to take around 5-6 years for seeking
redressed of consumers/buyer’s grievances or any kind of adjudication of dispute by “consumer forum” but now
after the enactment of the new legislation
“(RERA)” on an average it just takes couple of years for grievances. Therefore, speedy disposal of cases is another
merit of “Real estate regulatory authority Act”.9
Thirdly, “Real estate regulatory
authority” exercises its own power and control
by deregistering the firms, imposing fines, putting them in defaulters
list and orders to complete the
project by using state government’s guidelines and passes orders appropriately. “Real estate regulatory authority
Act (RERA)” lays down various
measures to complete the project by empowering the authority regarding the same to keep home buyers
away from the lurch, by penalizing builder’s
forum also prevents and discourages the builders from undertaking any further projects
when they do not have requisite funds. While, the “national consumer
dispute redressed commission” has its own power to execute
orders, in comparison of regular suits or orders passed by any various forums making the execution a steady affair
since scope of consumer act is very limited. The only relief which the buyers/consumers are particularly interested in is the completion and handing over possession of their properties, so conclusively “Real estate
regulatory authority (RERA)” is a better and
a less time consuming and an effective remedy where buyers/consumers may easily
seek relief and can claim injunctions for their damages.
Pointers Between Rera And Cpa For Consideration: A.Remedies Available To The
Homebuyers-
Rera-
Under RERA various remedies
available for the damages to the buyers
are as below
(i) Under Section
7 of the Act, the regulatory authority may revoke the registration of the promoter who is
involved in unfair trade practises or makes default in consideration with the rules or regulation of this act upon the complaint
filed by aggrieved or Suo motu by giving a 30 days’ notice to the promoter
or instead of revocation of the registration may take necessary
actions to protect the interest of the
allotees.
(ii) Under Section
8 of the act, the remedy being provided
for lapse of registration or on revocation of registration is to carry out the remaining development work by the competent
authority as determined by the authority under
Section 13 of the Act, a promoter is not liable to accept payment in advance which is more than 10 % of the
cost of the apartment without first entering
into a written agreement for sale, under Section 14(1) of the act no alteration in the previously approved
sanctioned plan without consent of that person and can
only make alterations as may be required
by the allotee
(iii) As per
Section 12 of the Act “where any
person makes an advance or a deposit
on the basis of the information contained in the notice advertisement or prospectus, or on the basis of any
model apartment, plot or building, as the case
may be, and sustains any loss or damage by reason of any incorrect, false statement included therein, he shall be
compensated by the promoter in the manner as provided under this Act”.
(iv) Under
Section 13 of the Act, a promoter is
not liable to accept payment in advance
which is more than 10 p% of the cost of the apartment without first entering
into a written agreement for sale,
(v) Section
14(3) provides that In case any
structural defect or any other defect in
workmanship, quality or provision of services or any other obligations of the promoter is brought to the notice of the
promoter within a period of five years by
the allottee from the date of handing over possession, it shall be the duty of the promoter to rectify such defects
without further charge, within thirty days, and
in the event of promoter’s failure to rectify such defects within such time, the aggrieved allottees shall be entitled
to receive appropriate compensation in the manner as provided under this Act.
Section 15
of the Act provides that the promoter
cannot transfer his rights and
liabilities in respect of real estate project to a third party without
obtaining prior consent from the
two-third allotees and without written approval from the authority.
(vi) Under
Section 17(1) the promoter has to
execute the conveyance deed in favour of the allottees
within three months from the date of issue of occupancy
certificate, in the absence of any local laws, and in the absence of the same, the promoter has to handover the
necessary documents and plans within 30 days
after issuing the occupancy
certificate.
(vii) Section
18(1) provides that if the promoter fails
to provide the possession of the
apartment in accordance with the provision of the act, and the allotee wants to withdraw from the project shall
be liable to receive the compensation along
with interest or if does not want to withdraw, shall be liable for interest each month till the delayed
possession of the apartment
is allotted.
(viii) Section 18(2) provides that in case of defective
title of the land the promoter is liable to compensate the allottees for the same and seeking
compensation under this clause would not be barred
by limitation.
(ix)Section 19 provides for the rights of the allotees such as the
allottees has the right to know
regarding the stage wise completion of the project, they can claim the refund of the compensation with interests, if possession of apartment not yet
made, etc.
(x) Under Section
19(10) the allottee has to take the physical
possession of the flats/apartment or the building as
the case may be without a period of 2 months of issuance of occupancy certificate.
?
CPA- The parties
can seek compensation under the consumer protection act under District Commission, State Commission or National
Commission as per the pecuniary limits for the compensation
B.
REFUND WITH/WITHOUT INTERESTS-
?
RERA 1. The
homebuyer can get refund for Loss or damage sustained by homebuyer due to false/incorrect statement/information included
in an advertisement or project prospectus by the Promoter. The
homebuyer shall be returned his entire investment along with interest at such rate as may be prescribed. (Section
18(1))
2. In case the
allottee does not wish to withdraw from the project due to the failure of the Promoter to complete or
give possession in accordance with the terms
of the agreement for sale or due to discontinuance of his business, he shall be paid, by the promoter, interest
for every month of delay, till the handing
over of the possession, at such rate as may be prescribed. (Section 18(1))
?
CPA- If District/State/National Forum is satisfied
that the allegations contained in the complaint about the services are proved,
it shall issue an order to the opposite party
directing him to refund of price/charges paid by the complainant
along with interest
C. WHO CAN FILE COMPLAINTS/ACTIONS?
?
RERA- As per
Section 31(1) of the act “Any aggrieved person may file a complaint
with the Authority
or the adjudicating officer, as the case may be, for
any violation or contravention of the provisions of this Act or the rules and regulations made thereunder against
any promoter allottee
or real estate agent”. Therefore,
any aggrieved person may file a complaint under RERA. The “person” in this section signifies that it
shall include any association of allotees or any consumer association i.e., it is not limited
to a single person
?
CPA- Under
Section 2(d) of the act a Consumer who satisfies the requirement under Section 2(d) of CPA can file a CPA
complaint. An Individual who enters into
agreement for purchase of Flat can file complaint when he purchases the same for
his individual use and residence.
D. PECUNIARY LIMIT FOR FILING
THE COMPAINT
?
RERA- RERA does not provide for any pecuniary
limit for filing of any Complaint
?
CPA- Chapter-
IV of the Act deals with Consumer
protection redressed commissions i.e., District, State and National
Commission provides for entertainment
of complaints based on the pecuniary limit which varies from the case-to-case basis.
Section 28 of the Act provides for the establishment of the District
Commission which is to
be established by the State Government.
Section 31(1)
of the Act provides for jurisdiction of the district commission which provides that the complaints would
be entertained where the value of goods and services paid as consideration does not exceed
1 crore rupees
As per Section
41(1) of the Act:-
“Any person aggrieved by an order made by the District
Commission may prefer an appeal against such order to
the State Commission on the grounds of facts or law within a period of forty-five days from the date of the order,
in such form and manner,
as may be prescribed”
Section 42 of the Act provides for establishment of the State Consumer Dispute
Redressed Forum established by the State Government.
Section 47(1) of the Act deals with the
pecuniary limit of State Commission which is greater than 1 crore but not exceeding 10 crores.
Section 51(1)
of the Act provides that: –
“Any person
aggrieved by an order made by the State Commission in exercise of its powers conferred by sub-clause (i)
or (ii) of clause (a) of sub-section (1) of
section 47 may prefer an appeal against
such order to the National
Commission within a period of thirty days from the date of the order in
such form and manner”
Section 53(1) of the Act provides for
the establishment of National Consumer Disputes Redressed
forum which is to be established by the Central
Government.
Section 58 of
the Act provides for the jurisdiction which is for the matters wherein
the value of goods and services is exceeding 10 Crores.
E. LIMITATION PERIOD
?
RERA- RERA does
not specifically provides for any limitation period for filing of complaints
from the date of cause of action.
?
CPA- As per
Section 69(1) of the Act the limitation period for entertainment of the complaints in the district, State
and National Commission is 2 years from the date on which the cause of
action arises.
F. RESOLUTION TIME
?
RERA- Section
29(4) of the Act provides for the time period within which the authority
shall expeditiously dispose
of any questions that comes
up before the authority which
is a period of 60
days.
?
CPA- Section
38(7) of the Act provides
that any complaint shall be disposed of within a period of 3 months from the date
of receipt of notice by the opposite parties.
G. OUT OF COURT SETTLEMENTS?
?
RERA- Section
32(g) of the Act provides that “measures to facilitate amicable conciliation of disputes between
the promoters and the allottees
through dispute settlement
forums set up by the consumer or promoter associations”. Therefore, this section provides that out of court settlements
can be made through the conciliation
forums which is set up by various states in accordance with this provision
?
CPA- Chapter 5 of
the CPA in detail provides for the settlement of disputes through
mediation.
CONCLUSION:
For regulating the “real
estate” sector “the Real estate
regulatory authority act” is a piece of landmark legislation
imposing time bound obligations on promoters. By bringing a fair play consumers or homebuyers rights are intended
to be protected. Thus we can conclude
that in a highly unregulated sector “Real Estate regulatory authority Act” was a much needed and an awaited legislation, so as to protect the
buyers from frauds and from delay in possession of property and to provide
a grievance redressed
mechanism effectively. The
newly enacted legislation will not only bring transparency and accountability but will also help the
consumers or the property buyers to get a possession
easily and timely or file complaints against the builder or any “real estate” firms. The consumers or home
buyers may even expect early and fair judgments
and can seek a relief without much difficulty within the framework of three months unlike before the act when
it took years and years to solve a case. “Real Estate authority
act” is beneficial for both the builders
and consumers. But it has added some uncertainty for “the Real Estate sector”
1.
Real Estate
(Regulation and Development) Act, 2016.
2.
Consumer Protection Act,1986
3. Imperia Structure versus Anil Patni and Others (SC), CIVIL APPEAL NO. 3581- 3590 of 2020.
Can be found as provided below:
–
Availability of alternate
remedy is no bar in entertaining a complaint under Consumer Protection Act, 1986.
4. Noor City versus
State of Punjab
and Others, 2017.
Tags: Consumer
Protection Act, RERA
facebook sharing button Sharetwitter sharing
button Tweetemail sharing
button Emailsharethis sharing
button Sharelinkedin sharing
button.
References: .
Devul,
Difference between “RERA & CPA”,
Legal service India (May,28 2020,10:00AM)
“http://www.legalserviceindia.com/legal/article-303-rera-vs-insolvency-code-
vs-consumer-forum-home-buyersflat-purchasers-remedy.html”.
Mr. Bradley Dunseith,
Scope of “RERA”,
India Briefing (May,3
2020,1:30 PM) https://www.indiabriefing.com/news/the-rera-act-an-explainer-14275.html/”.
6All you need to know about “RERA” in India, Indian express
(May2,2020,4:30 PM)
Scope of “consumer protection act” Soolegal, (May,4 2020,5:00 PM) “https://www.soolegal.com/news/delhihc-to-decide-does-rera-exclude-the- jurisdiction-of-consumer-protection-act-for-homebuyers.
WhatisRERA,Housing(April30,2020,10:45
AM) https://housing.com/news/rera- will-impact-real-estateindustry/#”.
All you need to know about RERA, BankBazaar (May11
2020,02:30 PM) https://www.bankbazaar.com/homeloan/rera-act.html”.
THANK YOU…..