NCDRC’s full bench judgement on Section 12 (1) (c) of the Consumer Protection Act

The NCDRC have clarified its position on Section 12 (1) (c) of Consumer Protection Act 1986.  NCDRC has allowed complaints by a group of buyers under Section 12 (1) (c). If we have have to go by layman’s

If we have to go by layman’s interpretation, all builder related cases can by filed in NCDRC, thus skipping the lower forums.

Background

There has been a lot of confusion and ambiguity in the interpretation of complaints filed under Section 12 (1) (c). Different benches of NCDRC had a different view on this section of the Act. This led to the matter being referred to a three-member bench of NCDRC. These three question/issues arose in front of the commission:

  1. Whether complaint under Section 12 (1) (c) filed on behalf of or for the benefit of only some the numerous buyers are maintainable or it must be filed on behalf of all consumers having a common interest.
  2. Where complaint under this section is maintainable where the value of goods, service, compensation in respect of none of the allottees exceeds rupees one crore.
  3. Where complaint under this section is maintainable where the value of goods, service, compensation in respect to individual allottee exceeds rupees one crore.
  4. Where complaint under this section is maintainable where the cost of the apartment, the area of the apartments is different and the apartments were booked on different dates.

Court’s observation (nontechnical interpretation)

Here are the key observations in full bench judgment concerning the interpretation of Section 12 (1) (c) of the Consumer Protection Act. We have tried to explain court’s order in laymen’s terms. Please refer to last section for technical wordings.

a. If a complaint is against a builder under Section 12 (1) (c), i.e by an unregistered group of persons, it can be filed only on behalf of or for the benefit of all buyers who have the same interest and grievance against the builder. It cannot be filed seeking relief for the benefit of only some of the buyers.

b. A complaint under Section 12 (1) (c) is maintainable before the NCDRC where the aggregate value of the all the apartments combined and the total compensation claimed in respect of all the buyers exceeds Rs. 1 crore. The value of each individual apartment is wholly irrelevant in such a complaint.

c. So long as the grievance of the buyers is common and an identical relief is claimed for all of them, the cost, the size, area of the flat/plot and the date of booking/allotment/purchase would be wholly immaterial. The relief claimed will be the same if for example, in a case of delay in possession, refund, or possession or in the alternate refund, with or without compensation, is claimed for all the buyers. Different reliefs for one or more consumers on whose behalf or for whose benefit the complaint is filed cannot be claimed in such a complaint.

d. The jurisdiction of the NCDRC shall be decided on the agreed sale consideration ,i.e.value at the time of booking the apartment, not the market value of the apartment.

e. A cooperative society or a group of cooperative societies, firms, an association shall not be entitled to file a complaint under Section 12 (1) (c) unless the cooperative society itself is the consumer.

f. The Act does not allow more than one complaints in a representative character. The decision in one complaint filed in a representative capacity will bind all the buyers of the project. Therefore once a complaint in a representative capacity is filed under Section 12 (1) (c), and requisite permission for filing the same is given by the consumer forum, the second complaint under Section 12 (1) (c) will not be maintainable for the same project for the same relief. A second complaint, if filed, having the same interest and seeking the same relief is liable to be dismissed with liberty to seek impleadment in the complaint already instituted.

g. Since a complaint in a representative capacity shall be binding on all the buyers, an individual complaint expressing the same grievance will not be maintainable and the only recourse available to such buyer is to seek impleadment in the complaint filed in the representative capacity. However, as far as individual complaints instituted prior to grant of requisite permission under Section 12 (1) (c) is concerned, such complainants cannot be compelled to withdraw their individual complaint. The consumers who are already before the consumer forum when the requisite permission in terms of Section 12 (1) (c) is accorded, will be out of purview of the representative complaint. The order passed in the representative complaint will not be binding on them. However, if such persons want to withdraw their pending complaints and join the complaint instituted in the representative capacity, there is no bar on their adopting such a course of action.

h. Considering the binding effect of a decision rendered under Section 12 (1) (c) on all the consumers on whose behalf such a complaint is filed, even if they choose not to join as a party to the complaint, It is necessary to exercise due care and caution while considering such a complaint while granting the requisite permission under Section 12 (1) (c). It would be necessary for the bench to either give individual notices or an adequate public notice of the institution of the complaints, to all the persons on whose behalf or for whose benefit the complaint is instituted. Such a notice should disclose the subject matter of the complaint including particulars of the project, class of persons on whose behalf or for whose benefit the complaint is filed, the common grievance is sought to be addressed, the alleged deficiency in the service and the reliefs claimed. It will also be necessary to hear the opposite party before taking a final view on grant of necessary permission under Section 12 (1) (c).

Court’s observation on existing complaints

Individual complaints filed prior to the grant of requisite permission under Section 12 (1) (c) have been validly instituted and they can not be compelled to withdraw their individual complaint and compelled to become a party of subsequent complaints filed in a representative capacity. If, however, such persons want to withdraw their individual complaints and join the representative suit, they shall be allowed.

The Logical Buyer’s point of view on the judgment

While the judgment is definitely a welcome step for homebuyers as it allows buyers to claim relief from the commission without going through the entire judicial process, the following questions still remain unanswered:

What will happen in a case where the representatives of the buyers do not get the satisfactory results? Will the judgment not be unfair on a buyer who somehow missed the public notice?

Will the judgment enure to the benefit of investors? The scope of the consumer protection act seems to be restricted to consumers alone.

What is the time limit within which the buyers who have been notified of public notice can join the complaint as a party? While on one hand, the court should allow every buyer to be a party, as he/she will be affected by the judgment, in the process of adding people, wouldn’t the complaint be indefinitely delayed continues differential

The judgment says that an individual complaint cannot be filed after permission u/s 12(1)(c) has been given. Can an association complaint u/s 12(1) (b) be filed? The answer seems to be no.

We at Logical Buyer are no legal experts. We are hopeful that the Mr. Justice V.K. Jain who is driven by the urge to benefit homebuyers will find solutions to these problems also.

Court’s observation (technical interpretation)

Issue No. (i)

          A complaint under Section 12 (1)(c) of the Consumer Protection Act can be filed only on behalf of or for the benefit of all the consumers, having a common interest or a common grievance and seeking the same / identical relief against the same person.  Such a complaint however, shall not be deemed to have been filed on behalf of or for the benefit of the consumers who have already filed individual complaints before the requisite permission in terms of Section 12(1)(c) of the Consumer Protection Act is accorded.

Issue No. (ii), (iii) and (iv)

          A complaint under Section 12 (1)(c) of the Consumer Protection Act is maintainable before this Commission where the aggregate of the value of the goods purchased or the services hired or availed of by all the consumers on whose behalf or for whose benefit the complaint is instituted and the total compensation, if any, claimed in respect of all such consumers exceeds Rs.1.00 crore.  The value of the goods purchased or the services hired and availed of by an individual consumer or the size, or date of booking / allotment / purchase of the flat would be wholly irrelevant in such a complaint where the complaint relates to the sale / allotment of several flats / plots in the same project / building.

Reference dated 11.8.2016

Issue No. (i)

          It is the value of the goods or services, as the case may be, and not the value or cost of removing the deficiency in the service which is to be considered for the purpose of determining the pecuniary jurisdiction.

Issue No. (ii)

          The interest has to be taken into account for the purpose of determining the pecuniary jurisdiction of a Consumer Forum.

Issue No. (iii)

          The consideration paid or agreed to be paid by the consumer at the time of purchasing the goods or hiring or availing of the services, as the case may be, is to be considered, along with the compensation, if any, claimed in the complaint, to determine the pecuniary jurisdiction of a Consumer Forum.

Issue No. (iv)

          In a complaint instituted under Section 12(1)(c) of the Consumer Protection Act, the pecuniary jurisdiction is to be determined on the basis of aggregate of the value of the goods purchased or the services hired or availed by all the consumers on whose behalf or for whose benefit the complaint is instituted and the total compensation claimed in respect of such consumers.

Issue No. (v) & (vi)

          A complaint under Section 12(1)(c) of the Consumer Protection Act can be instituted only by one or more consumers, as defined in Section 2(1)(d) of the Consumer Protection Act.  Therefore, a group of Cooperative societies, Firms, Association or other Society cannot file such a complaint unless such society etc. itself is a consumer as defined in the aforesaid provision.

Issue No. (vii)

          More than one complaints under Section 12(1)(c) of the Consumer Protection Act are not maintainable on behalf of or for the benefit of consumers having the same interest i.e. a common grievance and seeking the same / identical against the same person.  In case more than one such complaints have been instituted, it is only the complaint instituted first under Section 12(1)(c) of the Consumer Protection Act, with the requisite permission of the Consumer Forum, which can continue and the remaining complaints filed under Section 12(1)(c) of the Consumer Protection Act are liable to be dismissed with liberty to join in the complaint instituted first with the requisite permission of the Consumer Forum.

          The individual complaints instituted before grant of the requisite permission under Section 12(1)(c) of the Consumer Protection Act can continue despite grant of the said permission but it would be open to such complainants to withdraw their individual complaints and join as parties to the complaint instituted in a representative character.  However, once the requisite permission under Section 12(1)(c) of the Consumer Protection Act is granted, an individual complaint, expressing the same grievance will not be maintainable and the only remedy open to a consumer having the same grievance is to join as a party to the complaint instituted in a representative character.

Order copy: ncdrc-full-bench-judgement-on-section-12-1-c CC/97/2016

Section 12 of Consumer Protection Act (for reference)

12. Manner in which complaint shall be made.—(1) A complaint in relation to any goods sold or delivered or agreed to be sold or delivered or any service provided or agreed to be provided may be filed with a District Forum by –

(1) A complaint in relation to any goods sold or delivered or agreed to be sold or delivered or any service provided or agreed to be provided may be filed with a District Forum by –

(a) the consumer to whom such goods are sold or delivered or agreed to be sold or delivered or such service provided or agreed to be provided;
(b) any recognised consumer association whether the consumer to whom the goods sold or delivered or agreed to be sold or delivered or service provided or agreed to be provided is a member of such association or not;
(c) one or more consumers, where there are numerous consumers having the same interest, with the permission of the District Forum, on behalf of, or for the benefit of, all consumers so interested; or
(d) the Central Government or the State Government, as the case may be, either in its individual capacity or as a representative of interests of the consumers in general.

2 thoughts on “NCDRC’s full bench judgement on Section 12 (1) (c) of the Consumer Protection Act

  • November 11, 2017 at 11:28 am
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    I am a buyer at sidhartha estella Sector 103 gurgaon. Some of the buyers formed a welfare association and filed a suit against the builder. I am not part of that group. I also want to pursue same cause as that complained by the group of buyers who have filed the case. My total consideration shall not exceed 85 Lakhs alone.
    Now my question is that ” If i Can file a case alone in NCDRC in hope that it will get clubbed with that of already filed case”?
    Does section 12 1 c allow me to file and club my case with already existing case id our cause is exactly same?

    Pls reply

  • December 19, 2017 at 12:56 pm
    Permalink

    Hi,

    If the case is filed under 12 1 B, you can ask the association to plead you in the matter but they are not bound to. If it’s 12 1 C, you can just ask your lawyer to get yourself impleaded in the matter and court will decide if you can join.

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