Flat Buyers Can Unite As One Party against Builders
May directly approach apex consumer commission
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.