Home buy­ers strug­gling against de­vel­op­ers for jus­tice can ex­pect to get greater pro­tec­tion as the Con­sumer Pro­tec­tion Bill, 2015, be­comes re­al­ity in bud­get ses­sion

Hindustan Times (Chandigarh) - Estates - - HT ESTATES - Mu­niesh­wer A Sa­gar mu­niesh­wer.sa­gar@hin­dus­tan­times.com

The po­si­tion of the home buyer vis-à-vis the builder is be­com­ing stronger with new pol­icy de­ci­sions by the cen­tral govern­ment in the past cou­ple of years.

The Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act (RERD), 2016, of­fers pro­tec­tion to the buyer against the builder. Sev­eral pro­vi­sions in the Con­sumer Pro­tec­tion Bill, 2015, will also help pro­tect home buyer in­ter­est. The bill is al­ready in­tro­duced in Par­lia­ment and is ex­pected to be­come a re­al­ity in the bud­get ses­sion.

Rel­e­vance of con­sumer pro­tec­tion Act af­ter RERA

“The Real Es­tate Reg­u­la­tory Au­thor­i­ties (RERA), to be set up at the state level, will han­dle only real es­tate re­lated mat­ters. So, for the home buyer, this will speed up the process to get jus­tice against builders. But only new projects and those un­der con­struc­tion that have not re­ceived a com­ple­tion cer­tifi­cate be­fore May 1, 2016, will be cov­ered un­der the Act,” says Ajay Jagga, a Chandigarh-based ad­vo­cate and so­cial ac­tivist.

Un­der pro­vi­sions of RERD, no regis­tra­tion of the real es­tate project with RERA shall be re­quired - (a) where the area of land pro­posed to be de­vel­oped does not ex­ceed 500 square me­tres or the num­ber of apart­ments pro­posed to be de­vel­oped does not ex­ceed eight in­clu­sive of all phases. Such cases will be out of the purview of RERA. “For home buy­ers strug­gling to get re­dres­sal of their com­plaints against builders (in older projects with com­ple­tion cer­tifi­cates), or in cases where ex­emp­tions are pro­vided un­der the RERD, the new pro­vi­sions un­der the Con­sumer Pro­tec­tion Bill, 2015, will be of help,” says Jagga.

What’s new in Con­sumer Pro­tec­tion Bill, 2015

The Bill seeks to re­place the 30-year-old Con­sumer Pro­tec­tion Act, 1986, and pro­poses set­ting up a reg­u­la­tory author­ity to curb un­fair trade prac­tices, known as the Con­sumer Pro­tec­tion Author­ity. The bill seeks to, for the first time in the country, set up me­di­a­tion cells for com­plaints. It brings cases of mis­lead­ing ads by celebri­ties un­der the purview.

The new bill pro­poses to es­tab­lish a Con­sumer Pro­tec­tion Author­ity to pro­mote, pro­tect and en­force rights of con­sumers. It shall in­ves­ti­gate con­sumer pro­tec­tion is­sues to pre­vent un­fair trade prac­tices and pass or­ders against mis­lead­ing ad­ver­tise­ments. To in­quire suo motu into vi­o­la­tions of con­sumer rights enu­mer­ated in this Act, it shall launch pros­e­cu­tion in an ap­pro­pri­ate court or the district, state or na­tional com­mis­sion to or­der with­drawal of mis­lead­ing ad­ver­tise­ments and di­rect is­suance of cor­rec­tive ad­ver­tise­ments, wher­ever nec­es­sary; and to de­clare as null and void, terms of con­tracts found to be un­fair to the con­sumer.

The cen­tral author­ity shall be headed by a com­mis­sioner who shall be an of­fi­cer of the level of sec­re­tary to the Govern­ment of In­dia and five deputy com­mis­sion­ers to as­sist him in the func­tion­ing of the author­ity.

Me­di­a­tion means the process by which a me­di­a­tor is ap­pointed by the na­tional or state or district com­mis­sion, as the case may be, me­di­ates the dis­pute be­tween the par­ties to the com­plaint and in par­tic­u­lar, by fa­cil­i­tat­ing dis­cus­sion be­tween par­ties di­rectly or by com­mu­ni­cat­ing with each other through the me­di­a­tor, by as­sist­ing par­ties in iden­ti­fy­ing is­sues, re­duc­ing mis­un­der­stand­ings, clar­i­fy­ing pri­or­i­ties, ex­plor­ing ar­eas of com­pro­mise, gen­er­at­ing op­tions in an at­tempt to solve the dis­pute and em­pha­sis­ing that it is the par­ties’ own re­spon­si­bil­ity for mak­ing de­ci­sions which af­fect them. The state govern­ment shall es­tab­lish, for the pur­poses of this Act, by no­ti­fi­ca­tion a district con­sumer me­di­a­tion cell at­tached to the district com­mis­sion in each district of the state and a con­sumer me­di­a­tion cell at­tached to the state com­mis­sion.

The cen­tral govern­ment shall, es­tab­lish for the pur­poses of this Act, by no­ti­fi­ca­tion a na­tional con­sumer me­di­a­tion cell at­tached to the na­tional com­mis­sion. A con­sumer me­di­a­tion cell shall con­sist of such per­sons as may be pre­scribed by the cen­tral or state Govern­ment. Ev­ery me­di­a­tion cell shall — (a) main­tain the list of em­pan­elled trained me­di­a­tors; (b) main­tain data on a daily ba­sis and sub­mit a re­port on a monthly ba­sis to the state or cen­tral govern­ment.

The bill al­lows for terming a con­tract as un­fair. The stand­ing com­mit­tee has rec­om­mended that the Bill lay down prin­ci­ples that widen its scope to de­ter­mine whether the con­tract term is un­fair. It clas­si­fies six con­tract terms as un­fair, which in­cludes: (i) pay­ment of ex­ces­sive se­cu­rity de­posits; (ii) dis­pro­por­tion­ate penalty for a breach; (iii) uni­lat­eral ter­mi­na­tion with­out cause; (iv) one which puts the con­sumer at a dis­ad­van­tage; and (v) wrong con­tracts can also be chal­lenged in con­sumer com­plaint.

Fi­nally, though the 1986 Act has ad­e­quate pro­vi­sions for ac­tion against mis­lead­ing ads which are deemed to be un­fair trade prac­tices, the Act has been in­ef­fec­tive in deal­ing with mis­lead­ing ads. “The Lok Sabha stand­ing com­mit­tee sug­gested a fine of lakh or an im­pris­on­ment of two years or both, to de­ter such ad­ver­tise­ments. It also sug­gested that these penal­ties be ap­pli­ca­ble to the per­sons who en­dorse the prod­ucts in ad­ver­tise­ments. In 2015, charges were levied against Amitabh Bachchan and Mad­huri Dixit, who en­dorsed Maggi noo­dles that was found vi­o­lat­ing food stan­dards. The mat­ter is now be­fore the Supreme Court. Whether or not there is a jail term for celebri­ties, the law will be strong enough to de­ter ad­ver­tis­ers from re­leas­ing mis­lead­ing ads,” says Jagga.

The Bill also stip­u­lates that ev­ery com­plaint shall be dis­posed of ex­pe­di­tiously and an en­deav­our shall be made to de­cide on the com­plaint within three months from the date of re­ceipt of no­tice by the op­po­site party. In the event of a com­plaint be­ing dis­posed of af­ter the spec­i­fied pe­riod, the district com­mis­sion shall record the rea­sons in writ­ing at the time of dis­pos­ing the com­plaint. The Na­tional Real Es­tate De­vel­op­ment Coun­cil (Naredco), an apex body un­der the aegis of min­istry of hous­ing and ur­ban poverty al­le­vi­a­tion, Govern­ment of In­dia, has urged the Cen­tre to in­tro­duce re­forms in the Union Bud­get to re­vive the real es­tate sec­tor, which is fac­ing a slow­down be­cause of de­layed and un­sold prop­er­ties.

In its de­mand to the govern­ment, the in­dus­try rep­re­sen­ta­tive body has asked the govern­ment to award in­fra­struc­ture sta­tus to hous­ing, par­tic­u­larly to cover low and mid­dle in­come group cat­e­gory hous­ing units.

“For the sake of con­ve­nience and uni­for­mity in law, the built-up area in the in­come tax Act should be re­placed by the car­pet area as de­fined in the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act 2016,” says Naredco pres­i­dent Praveen Jain. As the Govern­ment is mov­ing to­wards im­ple­ment­ing the goods and ser­vices tax (GST) in the country, Naredco sug­gested that real es­tate should be brought un­der its purview, merg­ing all taxes, du­ties, charges, and cess vis-àvis land use con­ver­sion charges (agri­cul­ture to non-agri­cul­ture and from one land use to other land use), de­vel­op­ment charges, and sub­se­quent pos­ses­sion­re­lated charges.

The in­dus­try body has sug­gested a num­ber of tax­a­tion­re­lated in­cen­tives to em­bolden pur­chas­ing power of buy­ers. Naredco’s mem­o­ran­dum sug­gests that the seal­ing of lakh u/s 80C be in­creased to

lakh and lakh out of that be ex­clu­sively re­served for pay­ment of prin­ci­pal bor­rowed for the pur­chase of a house.

It has sug­gested that the de­duc­tion on ac­count of in­ter­est paid on home loans un­der Sec­tion 24(b) should be made ap­pli­ca­ble from the year in which the cap­i­tal was bor­rowed as for prin­ci­pal u/s 80C, and should be to the ex­tent of full in­ter­est paid, at least in re­spect of one house. In case this is not agreed, at least the limit of lakh should be raised to lakh for owne­roc­cu­pied houses.

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