How does consumer protection act help you?

Consumer Protection Act & Home Buyers.

Is my investment safe? What would I do if my purchase is flawed? These are the big questions one asks themselves while making a purchase. Every purchase in the 21stcentury is considered an investment whether big or small, from buying a refrigerator to acquiring a new home. The monopolistic markets often tend to bend the indifference curve from a successful convex to a not so satisfactory concave when customer satisfaction is viewed. A purchaser always takes into consideration the pros of a purchase and more often overlooks the cons. But what happens when the consumer falls prey to the unjust deficiencies in service or a defect in the product. And thi is the problem which the home buyer is faced today with “Incomplete & Delayed Projects or Projects with Deficiencies.”

Problem Areas related to Real Estate Projects –

Real Estate Being the Largest Contributor to the Countries GDP has in recent times been faced with loads of Issues with home Buyers suffering at the hands of defaulting Builders.The purchaser of real estate is often lured into by ludicrous offers posted by the builders. This leads to signing of agreements between the purchaser and the builder which are most often unfair to the former. At least they were before the RERA. To tackle these indifferences and injustices Consumer Protection Act, 1986 comes into play. The Act was initially introduced to change the attitude of Indian markets from a seller’s market to a buyer’s market and it mainly aimed to provide for the better protection of the interests of consumers and for that purpose make provisions for the establishment of consumer councils and authorities for the settlement of consumer disputes. The councils and authorities present under this act work as a three-tier redressal system.

The three tiers are:

“District Consumer Dispute Redressal Forum” (DCDRF) which is given the jurisdiction of handling all consumer disputes that fall under the category not exceeding the claim amount of Rs. 20 Lakh,

“State Consumer Dispute Redressal Commission” (SCDRC) entertaining disputes with claims above Rs. 20 Lakh but not exceeding Rs. 1 crore, and the

“National Consumer Dispute Redressal Commission” (NCDRC) hearing claims above Rs. 1 crore.

The rule of Res Judicata separates the jurisdictions of each court and appoints their respective areas for handling consumer disputes. The DCDRF, SCDRC and NCDRC were established to provide a separate platform for speedy hearing and quick judgements solely relating to consumers discrepancies and to deviate the traffic of consumer disputes from civil courts to courts specially orchestrated for the purpose. This system puts the home buyers interests into consideration by separating the powers and jurisdictions for providing smoother and more effective disposal of cases.

Home buyers were included within the gamut of consumers in the Act by interpreting the word “services” to include construction. The relevant forums prescribed by the Act ascertain to provide some relief to the aggrieved home buyers.

Reliefs for Home Buyers

The reliefs provided may vary from the forum directing the builder to pay compensation to the buyers for any delay that may have happened due to negligence on their behalf, an order to handover possession of the property or even direct the builder to return the full amount of purchase along with interests thereon as common reliefs. “The Reliefs can also include compensations for Deficiencies in the property or Projects Delivered including enforcement of other contractual obligations like Payment of Interest Under Subvention Schemes etc.”

The courts do as well have the power to grant punitive damages if any, and the defaulting developers may as well be imprisoned for a period not exceeding 3 years.

Can Association File an Application in the Consumer Forums?

As provided for under Section 12(1) of the Consumer Protection Act a complaint may be filed by any consumer, an association of consumers or a group of consumers carrying the same interests, cause of action and relief sought.

12(1) (a)- a standalone consumer of goods or services

12(1)(b)- any recognised consumer association

12(1)(c)- one or more consumers, where there are numerous consumers having same interests with identical cases.

Home-buyers may file a complaint accompanied by the fees prescribed in Consumer Protection Rules, 1987 for each forum. The fees varies according to the value of purchase and the respective tribunal from which redressal is sought. The fees for filing a complaint in a District Forum is between Rs.0-500, in State Forum it is between Rs.2000-4000 and the National Forum has a fixed fee of Rs.5000. In order to make the filing of complaints a simpler process than other courts and mechanisms there is no prescribed form in which a complaint may be submitted thus, even a written statement on a piece of paper may be sufficient. Though there is no prescribed form for submitting the complaint but it is mandatory to include the following details:

1. Name and address of the complainant and the opposite party.

2. The date on which the goods were purchased or services availed, details of such goods and services and the amount paid for the same.

3. The subject of the complaint, whether it was an unfair trade practice, defective goods were supplied, deficiency in services provided.

4. The bills and receipts of the concerned product or service.

5. The relief to be sought under the Act.

6. Signature of the complainant or his authorized agent.

Since all three tiers carry separate jurisdictions and powers with NCDRC being the highest authority but only handling cases of claims above Rs. 1 crore, the home buyers through Section 12(1)(c) have the right to form groups or associations of consumers having similar interests and file a complaint to NCDRC for redressal.

Complaints can be filed by the consumer (Home Buyer) personally without engaging a lawyer in the cosumer courts which can save on legal expenses. However you need to under stand your case well and be aware of the relevent judgements & caselaws in similar matters.

Reasons for hiring a Good lawyer for filing acomplaint in the consumer forum:

One can file the petition in the consumer forum without hiring a lawyer with the necessary information and records a slisted above. Hiring a lwyer could be a good idea as it can:

1. Helping drafting a proper petition citing relevant case laws and using relevant provisions applicable to your case.

2. The Lawyer can appear and argue the matter in the court saving you the trouble of following the case and appearing in multiple hearings and the dates may at times be adjourned.

3. Can argue against the points presented by the lawyers of the opposite party (Builder).

4. The legal case may take upto approximately 2 years or more and it may not be possible for you to appear on every hearing wanting you to take off from your work or profession.

5. Though lawyers will charge a fee the consumer courts can award a refund of fee along with thei rjudgemet which can cover the litigation costs ro atleast a part of the same.

6. Every one may not be able to argue the case convincingly in the court specially when you are facing a professsional lawyer representing the Opposite party (builder).

CONCLUSION

The increased cases in NCDRC and other relevant forums has led to solidification of safeguarding the interests of home buyers and that every aspect of a purchase is understood whether it be an investment or for personal usage. The courts have also concluded to adjudge that the arbitration clause included in builder buyer agreements not be sought binding so as to provide a wider scope of relief to home buyers as was provided in Aftab Singh vs. Emaar MGF Land Pvt Ltd. This has increased the trust of buyers in the justice system and assures them their rights as consumers.

The Consumer Protection Act and its three-tier redressal mechanism has provided the home buyers with assurance that their interests and investments are safe and that any discrepancies between them and the builders with regards to deficiencies and defects are dealt with appropriately and with vested interests towards safeguarding the consumers from any exploitative activities.

Prepared By :

Rakshit Patni

Student LLB 3rd Year

Amity Law School Noida

Under Guidance from:

Mr. Manish Kumar Patni

Home Buyer

Bsc LLB

Ex Banker - Real Estate Expert &

Legal Consumtant & Strategist