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Legal News & Analysis - Asia Pacific - India - Dispute Resolution

13 July, 2019

 

Supreme Court of India paved the way for home buyers to claim refunds from builders. &Anr. 

The Hon’ble Supreme Court in the case of Kolkata West International City Pvt. Ltd. v. Devasis Rudra (CIVIL APPEAL NO. 3182 OF 2019) held that a buyer was entitled to claim refund even if the buyer claimed for compensation as the primary relief in the Consumer Complaint. The Respondent paid Rs. 39,29,280 in 2006 to the builder in terms of letter of allotment. The agreement between the parties envisaged that the appellant would hand over possession of a Row house to the respondent by 30th June 2009 inclusive of a grace period of 6 months.

Commission (The Respondent filed a complaint before the West Bengal State Consumer Dispute Redressal SDRC) in 2011 praying either for the possession of the house or for the refund of the amount paid to the developer together with interest at 12% p.a. He also claimed a compensation of Rs. 20 lakhs. SCDRC allowed the complaint but reduced the compensation to 5 lakhs. Hon’ble National Consumer Disputes Redressal Commission (NCDRC) modified it and further reduced the compensation to 2 lakhs.

The Hon’ble Supreme Court in this case observed

“It would be manifestly unreasonable to construe the contract between the parties as requiring the buyer to wait indefinitely for possession. By 2016, nearly seven years had elapsed from the date of the agreement. Even according to the developer, the completion certificate was received on 29 March 2016. This was nearly seven years after the extended date for the handing over of possession prescribed by the agreement. A buyer can be expected to wait for possession for a reasonable period. A period of seven years is beyond what is reasonable. Hence, it would have been manifestly unfair to non-suit the buyer merely on the basis of the first prayer in the reliefs sought before the SCDRC. There was in any event a prayer for refund. In the circumstances, we are of the view that the orders passed by the SCDRC and NCDRC for refund of moneys were justified.”

Haryana Real Estate Authority Regulatory Authority: Partial or complete waiver of pre-deposit shuld only be granted in deserving cases.

M/s Ansal Housing Ltd. v. Sushil Kumar Batra (Appeal No. 60/2019)


In the instant case, the appellants, M/s Ansal Housing Ltd. were the promoters of the real estate project ‘Ansal Amantre’. They failed to deliver possession of the promised flats to the respondents and were hence ordered by the Haryana Real Estate Regulatory Authority to refund the entire sum along with interest to the respondents. However, the Haryana Real Estate Appellate Tribunal while allowing two appeals by the Appellants considered the following issues:

1. Whether it is within the jurisdiction of the Real Estate Regulatory Authority (RERA) to order refund in cases of dispute;

2. Whether the Appellate Tribunal has the power to waive off the condition of pre deposit as required by the proviso to Section 43(5) of the Act?

The Haryana Real Estate Appellate Tribunal held:

On the first issue, the Appellate Tribunal referred to two cases wherein the Hon’ble High Court of the State was of the view that the requirement of pre-deposit is not mandatory and the Appellate Tribunal has inherent powers to partially and completely waive the condition of pre-deposit. However, it was not to be exercised in a routine way. It added that the partial or complete waiver should only be granted in deserving cases where the Appellate Authority is satisfied that the entire purpose of the appeal will be frustrated by allowing the condition of pre-deposit to continue as a condition precedent to hear the appellant.

On to the secondary issue of whether RERA is empowered to order refund in cases of dispute, the tribunal rejected the arguments of the respondents that the powers of the Authority and the Adjudicating officer to grant the refund are over-lapping. Hence, it was held that any claim for relief w.r.t refund shall only be entertained by the Adjudicating Officer. Moreover, Section 11(4) of the Act provides that the Authority shall ensure compliance of the obligations cast upon the promoter w.r.t the allottee. This means that the Authority has powers only to impose penalty or interest and the refund nowhere figures therein.

Thus the application for waiver of pre deposit was allowed and the impugned orders of refund passed by the Authority in this case were held to be without jurisdiction.

Class action including transactions concerning commercial property can be filed against real estate developers under Consumer Protection Act in view of common cause of action: Anjum Hussain & Ors. v. Intellicity Business Park Pvt. Ltd. & Ors. 


Various Builder Buyer Agreements were entered into between the Appellant Nos.1 to 44 and the Respondent, with the Appellant No.1 having booked an office space in the concerned project consisting of residential units, shops and offices. Upon non-delivery of the possession of the units by the Respondent, Case No.2241 of 2018 was filed by the Appellants seeking refund of the amounts paid by them along with interest and compensation.

The Hon’ble National Commission dismissed the Case No. 2241 of 2018 noting that a class action is maintainable only if it is shown that all the allottees of the shops/commercial units in the above referred project qualified as ‘consumer’ under the Consumer Protection Act, 1986. The definition of ‘consumer’ under the Act provides that had the booking been done either for the personal usage/consumption or for the purpose of the earning their livelihood by way of self-employment, would the allottees qualify as consumers. The Hon’ble NCDRC held that the class action under Section 12(1)(c) of the Act having been filed on behalf of those not qualifying as consumers was not maintainable. 

The Hon’ble Supreme Court of India, however, overturned the decision of the Hon’ble NCDRC, by holding that the approach of the National Commission was totally erroneous in the instant matter as the bench comprising of Justice Arun Mishra and Justice Uday Umesh Lalit, referring to, Chairman, Tamil Nadu Housing Board, Madras v. T. N. Ganapathy 1990AIR642, observed that these persons need not have the same cause of action and all that is required for application of said provision is that the persons concerned must have common interest or common grievance. The Hon’ble Bench also referred to Ambrish Kumar Shukla and ors. v. Ferrous Infrastructure Pvt. Ltd wherein it was held that “oneness of the interest is akin to a common grievance against the same person”. 

 

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For further information, please contact:

 

Manoj Kumar, Partner, Hammurabi & Solomon

Manoj.kumar@hammurabisolomon.com