Supreme Court Allows Homebuyers To Directly Approach NCDRC Against Builders


Published on: Feb 27, 2017 @ 21:04

The  Supreme  Court  (SC)  on  Tuesday  has  upheld  the  order  of  the  National  Consumer  Disputes  Redressal  Commission  (NCDRC)  that  home buyers  can  jointly  approach  it  in  case  of  a  dispute  with  a  builder.  In  a  major  relief  for  aggrieved  home buyers,  the  apex  court  has  held  that  they  can  directly  drag  builders  to  the  NCDRC. 

The  SC  passed  this  order  in  reference  to  a  petition  filed  by  the  Amrapali  Sapphire Developers  Pvt  Ltd.  The builder  had  submitted  before  the  bench,  challenging  the  NCDRC decision  on  the  ground  that  a  plea  can be filed  directly  before  the  NCDRC  if  the  total value of  the  disputed  deal  is  over  Rs one crore. Moreover,  the  realtor  told  the  bench  that  since  the cost  of  each  flat  was  less  than  Rs one  crore,  so  the  43  buyers  were individually ineligible  to directly  approach  the  NCDRC. They  should  approach  district  consumer  forums  before  finally  coming  to  the  NCDRC.

According  to  the  Consumer  Protection  Act, a  plea  can  be  filed  in  NCDRC  directly  only  if the  cost  involved  is more  than  Rs 1 crore  otherwise  complainant  has  to  first   file  the  plea  at  the  district  consumer  forums. Disputes  between  buyers  and  sellers  need  to  be  first  raised  at  state- or district-level  consumer  rights  panels.

The  SC  bench,  which  included  Justice  A M Khanwilkar  and  Justice  M M  Shantanagoudar  and  headed  by  Justice  Dipak  Mishra,  rejected  the  appeal  of  Amrapali  Sapphire  Developers Pvt  Ltd  and  observed  that  it  was the  grievances  of  homebuyers  that  needs  to  be  looked into.

In  fact,  in  May  2016,  around  100  buyers  of  Amrapali  Sapphire  project  in  Noida  filed  a complaint  against  the  builder  before  NCDRC.  Thereafter,  Amrapalli  challenged  the  complaints  on  two  grounds – one  that  in order to  file  a  complaint  under the  Consumer Protection  Act,  1986  an  association  should  receive  recognition from  the  Bureau  of  India Standards  and  second,  flats  in  the  project  were  priced  lesser  than  Rs 1 crore,  thus the owners were  individually  disqualified  to  approach  the  NCDRC  directly.

Then,  43  buyers  got  together  and  formed  Amrapali  Sapphire  Flat  Buyers  Welfare Association. Thereafter, they  moved  the  NCDRC  in  May  2016  and  filed  complaints  against  the  builder  for  delayed  possession  of their flats.

In  August  2016,  the  NCDRC  dismissed  the  arguments  of  the  builder  and  ruled  in  favour  of the  43  flat owners  in  Amrapali’s  Sapphire  housing  project.  NCDRC  said  in  its  order  that an  association  registered  under the  Companies  Act  or  any  other  law  in  force  is  a  voluntary  association  as  per  the  law. Therefore,  they  could form  an  association  to  achieve  the pecuniary limit  of  Rs 1 crore  for  approaching  it  directly.  The  NCDRC  had said  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 one  crore  and  hence,  it  has  the  jurisdiction  to entertain their  plea.

Thereafter,  Amrapali  approached  the  Supreme  Court  and  got  a  stay  on  the NCDRC  order. The  SC  also  issued notice  to  the  buyers’  association  to  file  a  response. The  association  in  its response  said  the  appeal  is merely a tactic  adopted  by  Amrapali  to  delay  the  proceedings before  NCDRC.

The  apex  court  ruling  comes  as  a  great  relief  to  many  home  buyers,  stuck  with  delayed possession  of  their flats  to  approach  the  apex  consumer  commission  in  a  similar  manner.  Realtors  body  CREDAI  expressed concern  that  the  Supreme Court  judgement  that  flat  buyers can  jointly  approach  the  apex  consumer commission  NCDRC  will  open  the floodgates  of legal  cases  against  builders.

The  decision  is  very  significant  since  it  would  allow  home buyers  to  directly  approach  the NCDRC  by forming a  registered  association,  saving  their  time  and  money. The  decision  of  SC  along  with  the  new  administrative structure  being  brought  in  by  the  real  estate regulatory law  (RERA)  will  come  as  a  boon  to  home buyers.


Ajay Verma

Ajay Verma, founder and writer of TheHousingWorld, a real estate and mortgage news website. He has over fifteen years of rich experience in the above mentioned industries.

Next Post

SBI Cuts Rates By 25 bps To 8.35%,Makes Home Loan Cheaper

Thu May 11 , 2017
Published on: May 11, 2017 @ 04:24  State  Bank  of  India  (SBI),  the  country’s  largest  lender  in  India,  on  Monday   has  cut home loan  rates  by 0.25  per  cent  from  8.60  per  cent  to  8.35  per  cent  per  annum.  The  new  rate  is   applicable  on  loans  of  up  to  Rs  30  […]