Class Action By Homebuyers Against Delay In Property Possession

Published on 24 Feb 2017 by Team

In a fight between middle-class flat owners and corrupt builders, the Supreme Court came to the rescue of the former. It ruled that flat owners could join hands to directly approach the National Consumer Disputes Redressal Commission (NCDRC) against the real estate agents and file a class action suit against the builder for delay in property possession.

Amrapali Sapphire Developers Pvt Ltd took shelter behind the rule that cases with value more than Rs. 1 crore can be filed before the NCDRC, to plead that the 43 home buyers who moved to the apex consumer forum against it, were disqualified from filing such a joint plea before the NCDRC. The 43 buyers had complained against delay in handing over possession of their flats.

As per the Consumer Protection Act, a plea can be filed in NCDRC directlyonly if the cost involved is more than Rs 1 crore; otherwise, complainants begin at the district consumer forums. The apex court passed this order while hearing a petition filed by the Amrapali Sapphire Developers Pvt. Ltd. The builder argued that 43 flat buyers, who had together moved the NCDRC against it for the delay in possession of flats, were ineligible for filing such a joint plea under the Consumer Protection Act.

The Defence by the Builder

The builder noted that cost of each 43 flats were less than Rs. 1 Crore and thus complainants should approach district consumer forums and then the state consumer forums before finally coming to the NCDRC

“By joining hands, they have shown that the cost of their flats was above Rs 1 crore to maintain their plea in NCDRC, which was against the rule," the builder's counsel said.

After hearing the arguments, the SC bench headed by Justice Misra rejected the builder’s and observed that it was the grievance of homebuyers that needs to be looked into. The court also remarked that Amrapali has taken money from buyers and neither given them possession nor is refunding their money.

The Supreme Court's Views

The SC's rejection of Amrapali Sapphire Developers' technical plea has come as a boon to middle-class flat owners, who find it easier to come together to fight rich realtors who have deep pockets and employ top lawyers to find legal loopholes to frustrate flat allottees from making claims against them. Such a broad directive can be misused also. This will adversely affect the sector, which is already facing a tough time. Multiple property buyers can hire a common property lawyer in India to file a class action against the builder for delaying the possession of flats.

Once it is accepted that a consumer complaint about delay in property possession can be filed on behalf of more than one home buyer, it can hardly be disputed that it is the aggregate value of the services which has to be taken for the purpose of determining the pecuniary jurisdiction of the consumer forum before which the complaint is filed.

Referring to the 43 flat owners' class action through an association, the NCDRC had said that if the aggregate value of services in respect of the flat buyers, on whose behalf this complaint was filed, was taken, then it exceeded Rs 1 crore and hence NCDRC has jurisdiction to entertain their plea. 

Hence, the decision of the Supreme Court allowing the middle class people to join hands and file a class action suit in order to fulfil the pecuniary jurisdiction is a big relief to all such flat buyers who have not been given the possession of their property. It was long due in the interest of such people who have invested major amounts of their savings into these houses and are unfortunately yet to receive anything substantial.

In such a scenario, any and all developers are vulnerable to the misuse of this precedent which, during this difficult and transitory time for the sector increases confusion and uncertainty. The best property lawyers in India can be hired to take a legal action against the builder for causing delay in property possession.

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