Maintainability of complaints by Home Buyers Associations – landmark judgement by NCDRC

Lotus Panache Welfare Association (LPWA), a Society registered under the Societies Registration Act, filed a complaint against Three C Company / 3C for delay in delivery of their apartments.

3C Company filed an application in the NCDRC seeking rejection and dismissal of the complaint, on the ground that a Home Buyers Associations  can only seek reliefs which are general in nature. However, NCDRC dismissed this application and allowed Lotus Panache Welfare Association to continue the complaint.

Lotus Panache Welfare Association’s prayers

Lotus Panache Welfare Association (LPWA), a Society registered under the Societies Registration Act, 1860 and consists of Apartment Buyers of the project known as ‘Lotus Panache’.  LPWA filed a complaint against Three C Universal Developers Pvt. Ltd alleging that that the respondents, after receiving the 90% of the total consideration of the apartment have discontinued the construction of the project and diverted the funds collected from the apartment buyers to other projects launched under a different brand name “Lotus Greens”. This is also the case of the LPWA that the aforesaid opposite party has not completed several additional facilities which it had promised to the apartment buyers at the time of booking the flats. LPWA prayed that:

1. Pay interest @ 18% per annum compounded quarterly on the amount deposited by respective members of the complainant society.
2. Pay delay penalty of Rs.22 per sq. ft. per month to members of the complainant society, y, being the rental expenses of an apartment in similar locality.
3. Handover all additional facilities, as promised in the sales brochure immediately
4. Pay interest @ 18% per annum compounded quarterly on the amount deposited by members of the complainant society with the respondents, towards Club Membership.
5. Give details of Super Area, refund excessive lease rent and labour cess collected etc

Builder’s Arguments

1. Voluntary Consumer Organization can only seek reliefs which are general in nature and a society which has no privity of contract with them, cannot claim reliefs of the nature sought in this complaint.
2. Some members of the complainant society may be speculative investments.
3. Some members have not made timely payments to the opposite party.

Court’s Observations

1. The complainant before us claims to be a voluntary consumer association and it has been registered under the provisions of the Societies Registration Act.
2. It is a recognized consumer association, within the meaning of Section 12(1)(b) of the Consumer Protection Act.
3. Statute has not been placed any restriction as regards the nature of the complaint which a recognized consumer association can file. Even an individual case of the deficiency in service can be taken up by a recognized consumer association by way of a complaint before a Consumer Forum.
4. The Act permits such an association to file complaint even on behalf of a consumer, who is not its member, is a clear indication that a Legislature wants to confer the same rights on such an association as are available to a consumer, in a case where the services rendered to a consumer are found to be deficient or defective.
5. Where the reliefs claimed are of the same nature and against the same person, such an Association, in our view, is competent to file a complaint for and on behalf of all the persons, who approach the Association in this regard.

The Order

[su_quote]From whatever angle we may see, we are of the opinion that the complaint by a recognized consumer association, such as the complainant before us, is maintainable in respect of the reliefs sought in this complaint. We, therefore, find no merit in the application and the same is hereby dismissed. [/su_quote]

Full copy of the judgement can be downloaded from here : LPWA vs 3C Conpany – NCDRC Judgement

What is Maintainability Application?

In general and not specific to this case, maintainability application is filed when the builder challenge the rights of the buyer or buyers associations filing cases in courts. It has been observed that when the builder run out of valid arguments, they resort to filing maintainability applications. Most of the time this is done to delay the case.

The Logical Buyer suggest that Buyers Associations take reference from such cases as and when builder files maintainability application.