Supreme Court to decide fate of complaints by homebuyers associations

Home buying has been a horrific experience in Indian real estate industry in recent times. Developers seem to disregard grievances put across by homebuyers individually. Tired of such despotic attitude of Developers, home buyers have now started organising themselves in the form of associations to fight for their rights. Apart from registering protests before the concerned developer, homebuyers associations provide a platform using which distressed buyers can approach the National Consumer Disputes  Redressal Commission (NCDRC) complaining about the ‘unfair’ and ‘deficient’ practices adopted by their developer.

The NCDRC has come to the rescue of such home buyers by admitting group complaints representing common interest provided the concerned association is registered under any  Indian law. While on one hand, complaints by associations provide home buyers with a cost effective mechanism to address their concerns, they also save precious judicial time by avoiding multiple complaints for the  same cause of action.

On 17th August, 2015, the NCDRC passed a landmark judgment in the case of Lotus Panache Welfare Association (LPWA) Vs the 3C Company, Consumer Case No. 120 of 2015, wherein the NCDRC observed as follows::

[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]

A detailed report on the judgement is available here : Maintainability of complaints by Home Buyers Associations

The LPWA case has gained prominence also because it is by far the largest group (289 members) that has collectively raised its grievance before the NCDRC.

The Logical Buyer has now learnt that the 3C Company has  approached Supreme Court against the judgment passed by the NCDRC.  Mr. Sumeet Saxena, Secretary of the LPWA confirmed the news and informed that 3C has raised the following grounds in its appeal:

  • NCDRC failed to appreciate that under Consumer Protection Act, a group of consumers can not initiate a consumer complaint by forming a society. 
  • Buyers cannot ask for monetary compensation under Consumer Protection Act through a society.
  • As the membership of the society is fluctuating in nature, it may lead to anomalous situation.
  • A society, which is a separate legal entity, cannot claim benefit from developer as the developer has not rendered any services to the society.
  • NCDRC failed to appreciate that many members of LPWA may have more than more apartment and thus are not consumers as per Consumer Protection Act.
Three C Company vs LPWA
The 3C Company vs LPWA

On being contacted, Mr. Sahil Sethi of Saikrishna & Associates, who is representing LPWA in this complaint informed that 3C’s appeal has still not been listed before the Supreme Court. It would be interesting to note whether the Supreme Court finds any merit in the appeal filed by 3C and admits it on 16/10/2015. Outcome of this appeal shall have long term implications for all homebuyers associations across the country. If 3C’s appeal were to be allowed by the Supreme Court, it will be a major setback for all homebuyers as the same may carry with it the following implications: 

  • Homebuyers associations shall not be able to claim monetary compensation for delay on behalf of their members.
  • Every buyer shall have to file individual cases and often start from district/state consumer forum. 
  • Homebuyers may not be able to survive the might of wealthy developers and the accompanying cost of litigation.

We as Logical Buyer hope that the Hon’ble Supreme Court interprets the legal position in the interest of consumers, so as to fulfil the objects for which the Consumer Protection Act was enacted.

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