Are you a homebuyer planning to take builder to Court? SC says you can choose between seeking remedy under the RERA Act or the Consumer Protection Act

Supreme Court: The bench of UU Lalit and Vineet Saran, JJ has held that the Real Estate (Regulation and Development) Act, 2016 (RERA Act) does not bar the initiation of proceedings by allottees against the builders under the Consumer Protection Act, 1986.

“It is true that some special authorities are created under the RERA Act for the regulation and promotion of the real estate sector and the issues concerning a registered project are specifically entrusted to functionaries under the RERA Act. But for the present purposes, we must go by the purport of Section 18 of the RERA Act. Since it gives a right “without prejudice to any other remedy available’, in effect, such other remedy is acknowledged and saved subject always to the applicability of Section 79.”


Background of the Case


The said decision of the Court came in the matter relating of delay in handing over the possession of flats to buyers by the developer. The apartments were booked by the Complainants in 2011-2012 and the Builder Buyer Agreements were entered into in November, 2013. As promised, the construction should have been completed in 42 months. The period had expired well before the Project was registered under the provisions of the RERA Act. Even after four years there were no signs of the Project getting completed and hence, a complaint was filed by the Buyers.


RERA Act vis-à-vis CP Act: Statutory Analysis


The Court discussed the following provisions for the purpose of deciding the case at hand:

  • Section 79 of the RERA Act bars jurisdiction of a Civil Court to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the RERA Act to determine.
  • Section 88 specifies that the provisions of the RERA Act would be in addition to and not in derogation of the provisions of any other law.
  • Section 89 provides that the provisions of the RERA Act shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force.

The Court noticed that an allottee placed in circumstances similar to that of the Complainants, could have initiated following proceedings before the RERA Act came into force.

A) If he satisfied the requirements of being a “consumer” under the CP Act, he could have initiated proceedings under the CP Act in addition to normal civil remedies.

B) However, if he did not fulfil the requirements of being a “consumer”, he could initiate and avail only normal civil remedies.

C) If the agreement with the developer or the builder provided for arbitration:-

i) in cases covered under Clause ‘B’ hereinabove, he could initiate or could be called upon to invoke the remedies in arbitration.

ii) in cases covered under Clause ‘A’ hereinabove, in accordance with law laid down in Emaar MGF Ltd v. Aftab Singh, (2019) 12 SCC 751, he could still choose to proceed under the CP Act.

The Court noticed that on plain reading of Section 79 of the RERA Act, an allottee described in category (B) stated hereinabove, would stand barred from invoking the jurisdiction of a Civil Court.

“The absence of bar under Section 79 to the initiation of proceedings before a fora which cannot be called a Civil Court and express saving under Section 88 of the RERA Act, make the position quite clear.”

To answer the question whether the Commission or Forum under the CP Act is a civil court or not, the Court referred to the decision in Malay Kumar Ganguli v. Dr. Sukumar Mukherjee, (2009) 9 SCC 221 , where it was held,

“The proceedings before the National Commission are although judicial proceedings, but at the same time it is not a civil court within the meaning of the provisions of the Code of Civil Procedure. It may have all the trappings of the civil court but yet it cannot be called a civil court.”

Hence, Section 79 of the RERA Act does not in any way bar the Commission or Forum under the provisions of the CP Act to entertain any complaint.

The Court further discussed the proviso to Section 71(1) of the RERA Act which entitles a complainant who had initiated proceedings under the CP Act before the RERA Act came into force, to withdraw the proceedings under the CP Act with the permission of the Forum or Commission and file an appropriate application before the adjudicating officer under the RERA Act. It noticed,

“The proviso thus gives a right or an option to the concerned complainant but does not statutorily force him to withdraw such complaint nor do the provisions of the RERA Act create any mechanism for transfer of such pending proceedings to authorities under the RERA Act. As against that the mandate in Section 12(4) of the CP Act to the contrary is quite significant.”

It was held that insofar as cases where such proceedings under the CP Act are initiated after the provisions of the RERA Act came into force, there is nothing in the RERA Act which bars such initiation. Further, Section 18 itself specifies that the remedy under said Section is “without prejudice to any other remedy available”.

“Thus, the parliamentary intent is clear that a choice or discretion is given to the allottee whether he wishes to initiate appropriate proceedings under the CP Act or file an application under the RERA Act.”

[Imperia Structures v. Anil Patni,  2020 SCC OnLine SC 894, decided on 02.11.2020]

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