Real estate bill will help Consumer Forum litigants

If you have been to Consumer Forum for real estate issues, you would be aware of the ambiguities in the orders of the various benches/judges. In the absence of any law to reference while deciding the cases, the judges have been giving judgments at their own discretion. While the Real estate bill (RERA 2015) shall take some time to become reality and there is no clarity on its effectiveness on existing projects, it certainly will help the consumers who are fighting for their rights in various Consumer Forums.

Here are some judgements on issues like delay penalty and refund of money from the highest court in consumer forum i.e NCDRC. There is inconsistency in the deciding the compensation for delays.

Delay Penalty

  • One bench says delay penalty should be 12% while other says it should be 8% or 10%.
  • It is difficult to convince certain benches to award higher compensation than agreed in the BBA i.e 7 or 10 rupees psf.
  • There are judges who are of the opinion that when you are asking for a home, you can’t ask for too high penalty and monthly rent of 20000/- shall be enough to compensate you.

Refund of money

There have been cases where the money was refunded with 12% to 18% interest when buyers wanted to exit the project and then there are those where buyers could only get a simple interest of 4% on the premium paid to the builder.

Why is there inconsistency in the orders by same court (NCDRC)?

The Consumer Protection Act was never enacted keeping in mind the real estate issues the buyers of this country are facing. There is no provision in the Act that defines the quantum of compensation. In the absence of such guidelines, various judges decide compensation on their discretion and it’s case to case basis. This results in inconsistency in the quantum of compensation awarded to homebuyers. Often, these decisions are challenged in higher courts.

How would RERA Bill help? 

The Real Estate Regulatory Authority (RERA) Bill 2015 says the delay penalty a home buyer is entitled to should be same as the penalty imposed by the developer in case of delays in payments by buyers. In simpler terms, if the agreement asks you to pay 18% for the delayed payments, you are also entitled to claim delay compensation at 18%.

The consumer forums now get a central law to refer while deciding the quantum of compensation and the penalty imposed on the developers can be fair and uniform.

What’s the big deal? 

NCDRC in 2015 for the first time awarded 12% delay compensation to the Unitech buyers. This judgement was challenged by Unitech in Hon’ble Supreme Court and the matter is still sub-judice. Unitech contested that the consumer forum was incorrect in awarding a compensation of 12% and they have no jurisdiction to impose a penalty higher than as agreed in the agreements. Because there was no law to refer, Hon’ble Justice V.K. Jain on this own discretion imposed such penalties. Supreme Court had to admit the appeal of Unitech in this case for this reason.

However, with the RERA Bill becoming reality, this can not be challenged anymore and the delay penalties of the case like Unitech can be justified in any court in the country.

Conclusion

We are still sceptical about the effectiveness of RERA Bill on ongoing project and time the state governments shall take to implement it. However, the provision of this central law shall certainly help thousand of cases that are being fought in Consumer Forums across India.

7 thoughts on “Real estate bill will help Consumer Forum litigants

  • March 13, 2016 at 2:13 pm
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    Yes Gentlemen, your scepticism is well founded, Until such time the RERA Bill graduates to a Law of the Land , approved by President of India and a Gazette notification is issued with the date for implementation, nothing cam be taken for granted. More over there is a possibility of some approaching Supreme Court with the plea that some provisions in the Act like fixing compensation percentage are beyond legislative powers . The argument could be that these provisions infringes on the fundamental right of the citizen to get what he wants through a contact as per provisions of the Indian Contract Act. Therefore some provisions in the Act can be stayed.

    India is a Great country with multiple possibilities both good and also not so good.So lets us patiently wait for the “Ache Din”

  • April 15, 2016 at 7:58 pm
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    Great information .. How can I write article here .

  • April 16, 2016 at 6:18 am
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    Akhilesh,

    If you have something, you can send it to us at connect@Thelogicalbuyer.com and we will publish the same with due credits to you. However, our Editorial team shall audit the content first.

    Please send us the subject line that you would like to write on.

    regards,
    Admin

  • April 17, 2016 at 4:55 pm
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    the procedure for construction linked payment shall be standardized by legal authority and payment shall be made on pro rata basis of construction.we should be trained to do things legally,ethically,morally.otherwise stiff financial punishment shall be given so that we shall go as per law.

  • April 17, 2016 at 5:14 pm
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    standard proforma shouls be prepared by legal section and followed.

  • May 17, 2016 at 12:55 pm
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    I have a case before the National Commission where we had asked for 12% compensation for delays. The builder gets 18% for delays by customer. In the light of RERA, can we file a revised claim seeking 18% (same as what builder would get) or will I have to re-file the case?

  • May 17, 2016 at 8:05 pm
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    You can try your luck with amended application and if the judge allows it, nothing better.

    However, if your case is already in advanced stage, we would suggest you take up this matter during final hearing only.

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