Flat Buy­ers Can Unite As One Party against Builders

May di­rectly ap­proach apex con­sumer com­mis­sion

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This means that flat buy­ers can now join hands to file a com­plaint against cor­rupt builders in case of a dis­pute. In a ma­jor re­lief for ag­grieved home­buy­ers, jus­tices Di­pak Misra, AM Khan­wilkar and MM Shan­tanagoudar of the Supreme Court have ruled—in an or­der dated 21 Fe­bru­ary 2017— that flat buy­ers can now ap­proach the Na­tional Com­mis­sion in case of a dis­pute with a builder, where the ag­gre­gate value ex­ceeds Rs 1 crore. This rul­ing should bring to an end the spell of con­tra­dic­tory orders that were be­ing passed by var­i­ous benches of the Na­tional Con­sumer Dis­putes Re­dres­sal Com­mis­sion (NCDRC) on this sub­ject in re­cent times.

Am­ra­pali Sap­phire De­vel­op­ers Pvt. Ltd had filed an ap­pli­ca­tion seek­ing dis­missal of com­plaint pri­mar­ily on the ground that since the sale con­sid­er­a­tion for each flat was less than Rs 1 crore, Na­tional Com­mis­sion lacked the pe­cu­niary ju­ris­dic­tion to en­ter­tain the com­plaint. An­other con­tention made by the builder was that the flat buy­ers could not club the in­di­vid­ual causes of ac­tion. The Com­mis­sion had taken the view that Sec­tion 12 (1) (b) of Con­sumer Pro­tec­tion Act did not pre­clude the recog­nised con­sumer as­so­ci­a­tion from fil­ing a com­pos­ite com­plaint on be­half of more than one con­sumer hav­ing a com­mon in­ter­est or sim­i­lar griev­ance against the builder. In fact, if they were al­lowed to file mul­ti­ple com­plaints in re­spect of sev­eral con­sumers, that would re­sult only in mul­ti­plic­ity of pro­ceed­ings without serv­ing any pur­pose.

In this re­gard, Na­tional Com­mis­sion had re­ferred to the judge­ment passed by the Supreme Court in a civil ap­peal in Atharva Tow­ers Own­ers As­so­ci­a­tion

ver­sus M/s Ra­heja De­vel­op­ers Ltd, where it had ruled that it would not be cor­rect to say that a com­plaint by a vol­un­tary con­sumer as­so­ci­a­tion on be­half of more than one con­sumer, hav­ing a sim­i­lar cause of ac­tion against the same seller of goods or provider of ser­vices, would not be main­tain­able. The only re­quire­ment would be to di­rect each and ev­ery al­lot­tee on whose be­half the com­plaint was filed to file an af­fi­davit con­cern­ing the prayers to the ex­tent that they per­tained to his in­di­vid­ual griev­ances.

The Na­tional Com­mis­sion fur­ther said that once it was ac­cepted that a con­sumer com­plaint on be­half of more than one con­sumer could be filed by a recog­nised con­sumer as­so­ci­a­tion, it could hardly be dis­puted that it was the ag­gre­gate value of the ser­vices which had to be taken for the pur­pose of de­ter­min­ing the pe­cu­niary ju­ris­dic­tion of the con­sumer fo­rum be­fore which the com­plaint was filed. The Com­mis­sion had fur­ther sim­pli­fied the process of de­cid­ing pe­cu­niary ju­ris­dic­tion and said that the ag­gre­gate quan­tum of com­pen­sa­tion claimed in the pe­ti­tion would de­ter­mine the ques­tion of ju­ris­dic­tion, and when the com­plaint was filed in rep­re­sen­ta­tive ca­pac­ity on be­half of sev­eral con­sumers, the to­tal amount of com­pen­sa­tion claimed by the rep­re­sen­ta­tive body on be­half of all the per­sons whom it rep­re­sented would gov­ern the val­u­a­tion of the com­plaint pe­ti­tion for the pur­poses of ju­ris­dic­tion.

In the or­der dated 30 Au­gust 2016, Na­tional Com­mis­sion mem­ber Jus­tice VK Jain had ruled in favour of the 43 flat own­ers in Am­ra­pali's Sap­phire hous­ing project and said that they could form an as­so­ci­a­tion to achieve the pe­cu­niary limit of Rs 1 crore for ap­proach­ing the Com­mis­sion di­rectly.

Talk­ing of Rules

The above rul­ing of Na­tional Com­mis­sion was chal­lenged by Am­ra­pali Sap­phire De­vel­op­ers by tak­ing the plea that as per the pro­vi­sions of Con­sumer Pro­tec­tion Act, if the dis­puted amount was less than Rs 1 crore, the com­plainant had to file the case in District Fo­rum. Am­ra­pali Sap­phire De­vel­op­ers had taken shel­ter be­hind this rule to con­tend that the 43 flat buy­ers were not el­i­gi­ble to file a joint plea be­fore the Na­tional Com­mis­sion. The coun­sel for Am­ra­pali Sap­phire De­vel­op­ers ar­gued that the 43 flat buy­ers had shown that the cost of flats was above Rs 1 crore by join­ing hands in or­der to main­tain their plea in Na­tional Com­mis­sion. This was against the rule, the coun­sel con­tended.

How­ever, the bench con­sist­ing of jus­tices Di­pak Misra, AM Khan­wilkar and MM Shan­tanagoudar ob­served the in­ten­tion of the coun­sel for the builder group, who wanted the com­plainants to go through the lengthy process of ap­proach­ing the District Fo­rum, then the State Com­mis­sion, and fi­nally the Na­tional Com­mis­sion. The bench saw through the mala fide in­ten­tion, which was to de­lay the mech­a­nism of jus­tice so that they could buy time for com­ple­tion of de­layed hous­ing projects.

The bench re­jected the ap­peal of Am­ra­pali Sap­phire De­vel­op­ers chal­leng­ing the NDCRC de­ci­sion and thereby up­held the or­der of the Na­tional Con­sumer Dis­putes Re­dres­sal Com­mis­sion (NCDRC) that flat buy­ers could jointly ap­proach it in case of a dis­pute with a builder.

Con­tra­dic­tions in Orders

In the past, we have seen that many con­flict­ing orders have been passed by the benches of the Na­tional Com­mis­sion. Here’s an in­stance. In Shub­hechha Wel­fare So­ci­ety ver­sus M/s Earth In­fra­struc­ture Pvt. Ltd, the Na­tional Com­mis­sion— in the or­der dated 6 De­cem­ber 2016—held that a recog­nised con­sumer as­so­ci­a­tion could file a com­plaint on be­half of a sin­gle con­sumer, whether or not that con­sumer was a mem­ber of that as­so­ci­a­tion, but a recog­nised con­sumer as­so­ci­a­tion could not file one com­plaint on be­half of many al­lot­tees by club­bing sale con­sid­er­a­tion for mak­ing pe­cu­niary ju­ris­dic­tion of the Na­tional Com­mis­sion. Fur­ther, it was held that Na­tional Com­mis­sion did not have pe­cu­niary ju­ris­dic­tion to en­ter­tain com­plaints, and that com­plaints had to be filed by com­plainant be­fore the State Com­mis­sion hav­ing pe­cu­niary ju­ris­dic­tion to en­ter­tain the com­plaint.

On the other hand, in Am­br­ish Ku­mar Shukla ver­sus Fer­rous In­fra­struc­ture Pvt. Ltd it was held that if the ag­gre­gate of the value of the goods pur­chased or the ser­vices hired or availed by all the con­sumers hav­ing the same in­ter­est and the to­tal com­pen­sa­tion, if any, claimed for all of them came to more than Rs 1 crore, the pe­cu­niary ju­ris­dic­tion would rest with the Na­tional Com­mis­sion alone. The value of the goods pur­chased or the ser­vices hired or availed of and the quan­tum of com­pen­sa­tion, if any, claimed in re­spect

of one in­di­vid­ual would be ab­so­lutely ir­rel­e­vant for the pur­pose of de­ter­min­ing the pe­cu­niary ju­ris­dic­tion in such a com­plaint.

In the case of ALP So­cial Wel­fare ver­sus M/s Am­ra­pali Leisure Val­ley De­vel­op­ers Pvt. Ltd, ALP So­cial Wel­fare had filed a case on be­half of 85 flat buy­ers. The sub­ject was main­tain­abil­ity of the com­plaint – whether ALP So­cial Wel­fare was el­i­gi­ble to file the case on be­half of 85 flat buy­ers. The Na­tional Com­mis­sion ex­plained the pur­pose of Sec­tion 12 (1) (b) and said that only a recog­nised con­sumer as­so­ci­a­tion could file a com­plaint high­light­ing the griev­ance of ag­grieved con­sumers. Fur­ther, the Com­mis­sion ex­plained the mean­ing of a ‘recog­nised’ con­sumer as­so­ci­a­tion and re­ferred to the aims and ob­jec­tives of ALP So­cial Wel­fare to as­cer­tain whether the com­plainant was a vol­un­tary as­so­ci­a­tion. On read­ing the aims and ob­jec­tives, the Com­mis­sion held that the com­plainant as­so­ci­a­tion had been formed and reg­is­tered for so­cial wel­fare pro­grammes and for re­solv­ing com­mon prob­lems of the peo­ple. There was no ref­er­ence to con­sumer wel­fare or con­sumer dis­putes in the aims and ob­jec­tives; there­fore, the as­so­ci­a­tion could not be termed as a vol­un­tary con­sumer as­so­ci­a­tion and the com­plaint was not main­tain­able un­der Sec­tion 12 (1) (b). Un­like in the case of Shub­hechha Wel­fare So­ci­ety ver­sus M/s Earth In­fra­struc­ture Pvt. Ltd, where the Na­tional Com­mis­sion had held that a recog­nised con­sumer as­so­ci­a­tion could file a case on be­half of a sin­gle con­sumer and not nu­mer­ous con­sumers, in this case it did not raise any is­sues on the rep­re­sen­ta­tive ca­pac­ity of the com­plainant – rather, it was on main­tain­abil­ity of the com­plaint un­der Sec­tion 12 (1) (b).

As is ap­par­ent, there have been in­con­sis­ten­cies in the orders passed by the Na­tional Com­mis­sion. Now, the lat­est or­der passed by Supreme Court in the case of Am­ra­pali Sap­phire De­vel­op­ers ver­sus Am­ra­pali Sap­phire Flat Buy­ers Wel­fare As­so­ci­a­tion clearly draws the line on the sub­ject of pe­cu­niary ju­ris­dic­tion. The apex court’s rul­ing comes as a breather for flat buy­ers stuck with de­layed flats – they now know that they can come to­gether and ap­proach the apex con­sumer com­mis­sion, and take on the re­source­ful real­tors who use their money and power to ex­ploit the com­mon man.

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