Delhi High Court: Remedies available to allottees of flats under the Consumer Protection Act, 1986 and the Real Estate (Development and Regulation) Act, 2016, are concurrent September 24, 2019
Published in: Between The Lines
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Ms. Ajita Patnaik
Ms. Batul Barodawala
Mr. Drushan Engineer
Ms. Ishita Mishra
Ms. Rhea Sethi
The Delhi High Court has, in M/s. M3M India Private Limited and Another v. Dr. Dinesh Sharma and Another (decided on September 4, 2019), that was clubbed together with a batch of petitions filed under Article 227 of the Constitution of India and dealing with the same question of law, held that the proceedings instituted by the buyers against the developers under the Consumer Protection Act, 1986 (“CPA”) can run concurrently with proceedings instituted under the Real Estate (Development and Regulation) Act, 2016 (“RERA”).
The common question for consideration of the Delhi High Court in this matter (and the petitions clubbed with it) was whether proceedings under the CPA can run concurrent with proceedings under the RERA.
This issue was dealt with earlier by the National Consumer Disputes Redressal Commission (“National Commission”) in Ajay Nagpal v. Today Homes and Infrastructure Private Limited (decided on April 15, 2019) where the issue involved was whether, despite the provision under Section 3 of the CPA which states that –“the provisions thereunder shall be in addition to and not in derogation of the provisions of any other law for the time being in force”, the jurisdiction of the consumer fora stands precluded in light of RERA being enacted. In the said matter, the National Commission had held that the reliefs provided under the CPA and RERA are concurrent, and the jurisdiction of courts under the CPA is not negated by RERA. Subsequently, in several other petitions filed before the National Commission on the same issue, the forum had passed interim orders staying further proceedings on all such matters but while the same were part-heard, the Supreme Court by its order dated August 09, 2019, in Pioneer Urban Land and Infrastructure Limited and Another v. Union of India and Others [2019 SCC Online SC 1005] (“Pioneer Judgement”), held that reliefs given to allottees of flats/ apartments are concurrent, and such allottees are in a position to avail of reliefs under CPA, RERA, as well as under the Insolvency and Bankruptcy Code, 2016 (“IBC”).
Pursuant to passing of the Pioneer Judgment, the National Commission’s order in Ajay Nagpal v. Today Homes and Infrastructure Private Limited has been challenged under the petitions clubbed under the above stated matter of M/s. M3M India Private Limited and Another v. Dr. Dinesh Sharma and Another before the Delhi High Court.
The petitioners in the Pioneer judgment contended that the primary issue for consideration was the concurrent existence of the reliefs provided under IBC and RERA and not as much concurrence of the reliefs under RERA and the CPA. Hence, any observation by the Supreme Court regarding the reliefs under RERA and CPA being concurrent are to be considered as obiter dicta and not to be regarded as the ratio decidendi of the judgment, which alone has precedential value. It was further argued that the Pioneer Judgement would be applicable only to proceedings under the CPA filed prior to the enactment of RERA and not to the proceedings filed after RERA came into effect. The petitioners also argued that, even if the Pioneer Judgement is considered to hold that the CPA and RERA provide concurrent remedies, the conclusion overlooks Section 79 of RERA which states that no civil court is to have jurisdiction over matters empowered to be heard by RERA. The petitioners also contended that the conclusion recorded in the Pioneer judgment, regarding the concurrent nature of reliefs under CPA and RERA forms neither the ratio decidendi nor the obiter dicta and is, therefore, non-binding on the High Courts.
The respondents on the other hand argued that the inter-connection between proceedings under the CPA and RERA had been considered by the Supreme Court in the Pioneer Judgement and that the Supreme Court’s conclusions were binding on the High Courts, even if the same was to be considered as being obiter dicta.
OBSERVATIONS OF THE DELHI HIGH COURT
The Delhi High Court referred to the judgment of the National Commission in the case of Ajay Nagpal v. Today Homes and Infrastructure Private Limited where it was held that the remedies provided by the CPA and RERA are concurrent and the jurisdictions of the forums/commissions constituted under the CPA is not ousted by RERA.
The Delhi High Court also referred to the decision of the Supreme Court in the Pioneer Judgement, wherein the Supreme Court, in examining the operation of remedies under RERA and IBC, had emphasised that the remedies under RERA were not intended to be exclusive, but were to run parallel with other remedies. As regards the concurrence of the remedies under CPA and RERA, the apex Court had observed that, “Remedies that are given to allottees of flats/apartments are concurrent remedies, such allottees of flats/apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the IBC” (emphasis supplied).
The Delhi High Court further observed that even in the event the afore stated observation of the Supreme Court may be characterised as obiter dicta, various judgments of the Supreme Court have held that an obiter dictum of
the Supreme Court is not only binding on the High Courts, but also has clear persuasive value before the Supreme Court itself. The Delhi High Court also observed that the reference to Section 71(1) of the RERA as an example of a parallel remedy by the Supreme Court does not, in the present context, lead to the conclusion that the Court intended to reach a decision only with regard to the pending CPA complaints, and not the ones to be instituted in the future.
DECISION OF THE DELHI HIGH COURT
In view of the aforementioned precedents, the Delhi High Court concluded that the remedies available to the allottees of flats/apartments under CPA and RERA are concurrent and thus, there was no ground for interference with the view taken by the National Commission in the case of Ajay Nagpal v. Today Homes and Infrastructure Private Limited. The writ petitions before the Delhi High Court were thereby dismissed, and the interim orders passed by the National Commission consequently, vacated.
Vaish Associates Advocates View:
The Delhi High Court’s order in the instant case has clarified the position on the concurrency of remedies available under the CPA and RERA, thereby opening up multiple avenues for such allottees to seek redressal of their claims and grievances against builders under the CPA, RERA and the IBC.
This is in the interest of home buyers’ as implementation of RERA is still fairly at a nascent stage in many States and curtailing remedies available to allottees of flats/apartments under CPA under such circumstances would be grossly unjust. As such, this judgement is a positive development for home buyers and will go a long way in curbing deficiency in rendering of promised products/services as well as checking malpractices by builders.