NCRDCorder con­forms to Real Es­tate Act norms

With con­sumer ac­tivism go­ing up im­mensely, the NCRDC or­der could not have come at a bet­ter time as the penalty pro­vi­sion is only avail­able un­der RERA

HT Estates - - FRONT PAGE - Van­dana Ram­nani

TheNa­tion­alCon­sumer Dis­putes Re­dres­sal Com­mis­sion (NCRDC) Bench in­ter­pret­ing Sec­tion 12 (1) ( c) of the Con­sumer Pro­tec­tion Act con­forms to cer­tain pro­vi­sions of the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act 2016.

Ex­perts are of the opin­ion that the or­der could not have come at a bet­ter time. With con­sumer ac­tivism go­ing up im­mensely, this or­der was nec­es­sary to deal with the sheer quan­tum of cases.

It is also im­por­tant to note that the penalty pro­vi­sion is avail­able only un­der RERA and not vested with the con­sumer courts. “RERA spec­i­fies that if the buyer is ex­pected to pay a penalty of 18% in case he de­faults, the builder too will be li­able to pay the same amount and not a mea­gre ₹ 5 per sq ft or a ₹ 10 per sq ft.

“The prin­ci­ple and ra­tio set out in the RERA Act qua the builder and the al­lot­tees can now be cited be­fore con­sumer courts when­ever they are ap­pli­ca­ble for the judg­ment to con­firm to RERA,” says SK Pal, a Supreme Court lawyer.

The court or­der also clar­i­fies that cases re­lated to prop­er­ties worth be­low ₹ 20 lakh can be heard in dis­trict courts.

NCRDC can be ap­proached for cases of prop­er­ties in the range of ₹ 20 lakh to a crore; and the state com­mis­sion for cases deal­ing with prop­er­ties val­ued at more than a crore.

“The court has em­pha­sised on the book value of the apart­ment as spec­i­fied in the reg­is­tered doc­u­ment rather than the value of the amount claimed by the buyer. The court has clar­i­fied that even if the claim is a mea­gre ₹ 5 lakh but the cost of the apart­ment at the time of pur­chase was ₹ 1 crore, home­buy­ers can di­rectly ap­proach the NCRDC rather than go­ing through the lower courts. It is not the amount of the claim but the value of the apart­ment which is im­por­tant,” says Pal, adding the judg­ment has opened the doors to con­sumer law to a large num­ber of peo­ple.

Ac­cord­ing to Amit Chauhan of Log­i­cal Buyer, a real es­tate blog for home­buy­ers, such class ac­tion suits will ben­e­fit home­buy­ers and will prove to be a de­ter­rent for builders who de­lay projects. But the only chal­lenge here is that there may be a pos­si­bil­ity of sab­o­tage from the de­vel­oper as a proxy group can join in and de­rail the case al­to­gether.

This is un­founded, says Pal as it is up to the court in its wis­dom to de­cide who is a col­lu­sive per­pe­tra­tor.

Im­pact on de­vel­op­ers

Le­gal ex­perts say that the bur­den on the de­vel­oper will now in­crease as he will now have to com­pen­sate all home­buy­ers (even 3,000) as against 50 ear­lier who went ahead and filed cases.

“If all 5,000 buy­ers were to give their as­sent to the pub­lic no­tice, all would au­to­mat­i­cally be made a party to the case and the de­vel­oper will have to com­pen­sate all of them in­stead of the 50 who would have filed a case ear­lier,” says Sethi.

In­vestors to ben­e­fit too

The au­to­matic ap­pli­ca­tion of com­pen­sa­tion on all buy­ers will now ap­ply to in­vestors as well, whomigh­tac­tu­al­ly­ex­ploit the sit­u­a­tion, says Sahil Sethi, se­nior as­so­ciate at law firm Saikr­ishna and As­so­ci­ates. The in­vestor will ben­e­fit as he will au­to­mat­i­cally be made party to the case and can claim com­pen­sa­tion which he could not ear­lier. “Ear­lier, if he filed a case in the high court, the max­i­mum the high court did was to en­sure that the agree­ment or the con­tract he signed with the builder was ex­e­cuted as per law. There were few chances of him get­ting a penalty. Now like all home­buy­ers, in­vestors too will be el­i­gi­ble for penalty,” says Sethi.

Will it ap­ply to old cases?

The or­der will ap­ply to all old and new cases filed un­der Sec­tion 12 (1) (c) of the Act, ac­cord­ing to Sethi. This will make life tough for de­fault­ing real es­tate de­vel­op­ers.

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