In a move disturbing the cash-crunched real-estate developers, all home buyers of a housing project will automatically be the party to a case filed against the builder.
Increasing the financial burden on real estate developers under Section 12 (1) (c) of the Consumer Protection Act, irrespective of whether they have filed the case or not, buyers will be eligible for the benefits, according to a National Consumer Disputes Redressal Commission (NCDRC) judgment on Friday, Economic Times reported.
The commission interpreted the Section 12(1)(c) of the Act that the failure of the builder/ developer to deliver possession of the flat/plot sold to them and a complaint filed for the benefit of or on behalf of all such consumers and claiming same relief for all of them, would be maintainable under the Section.
“The interest of the persons on whose behalf the claim is brought must be common or they must have a common grievance which they seek to get addressed. The defect or deficiency in the goods purchased, or the services hired or availed of by them should be the same for all the consumers on whose behalf or for whose benefit the complaint is filed. Therefore, the oneness of the interest is akin to a common grievance against the same person,’’ it added.
“This is a path-breaking judgment for buyers, who would now get the benefits without going through judicial process,’’ said Sahil Sethi, senior associate at law firm Saikrishna & Associates, who represented home buyers against Jaypee in Kalypso Court case, told Economic Times.
The report, however, added Sethi feels the judgment would maximise the compensation burden on builders as they will now have to pay everybody, which they might not be able to honour.
Buyers can also now move the NCDRC if the aggregate of the value of the goods or services and the compensation claimed in the complaint exceeds Rs 1 crore. Also, in case the grievance of the consumer is common and an identical relief is claimed for all of the applicants, the cost, the size, area of the flat/plot and the date of booking/allotment/purchase would be wholly immaterial, according to the order.
“I also fear the automatic application of compensation on all buyers would now apply to investors as well, who might actually exploit the situation,’’ he added.
Consumer activism has been on a rise in the recent past and favourable judgments against big real estate players have infused faith among the home buyers to move court.
The order would apply to all old and new such cases filed under Section 12 (1) (c) of the Act, according to Sethi, which would surely make life tough for defaulting real estate developers.