BUILDER BUYER DISPUTES – MAJOR DEVELOPMENT – ( LAW ON CLASS ACTION AND JURISDICTION – 10 BIG TAKEAWAYS )

Posted on Oct 16 2016 - 6:43pm by admin

The National Consumer Disputes Redressal Commission (NCDRC) in a landmark verdict ( Ambrish Shukla & Others VS Ferrous Infrastructure ) cleared a lot of issues which had been plaguing the system and slowing down proceedings before the various Consumer Fora in the country.

Since the judgment was delivered by 3 members of the NCDRC, therefore it would be binding upon all the other benches of the National as well as State and District Consumer Fora, unless stayed or set aside by the Hon’ble Supreme Court of India.

The judgment primarily deals with the issue of Class Actions and their maintainability since a number of cases were getting stuck/ delayed repeatedly due to serious technical objections being taken in almost every Developer – Consumer case. Post this judgment, while on the one hand a number of developers would suffer sleepless nights, on the other hand, a number of Consumers would also have to go back to the drawing board as their actions may be found falling outside the contours of the law as settled by this judgment.

The brief analysis below is an attempt to focus upon the issues which have been settled (as understood by the author through the judgment) and is not an exact reproduction of the Judgment-

 

:        A Complaint under Section 12 (1)(c) of the Consumer Protection Act (representative capacity/ class action) must be filed on behalf of and for the benefit of all the consumers having common interest or greviance against the same person and cannot be limited to the interests of only some of the numerous consumers.

2 :       For the purpose of pecuniary jurisdiction, the aggregate value of all the Consumers would be taken into account and not the value of an individual Consumer. Therefore, if each consumers apartment is worth 20 lacs but its in the nature of a 12(1)(C) – (Representative Capacity) , and the value of all the Consumers in the same position as an aggregate comes to over Rs. 1 Crore, the jurisdiction would be the NCDRC.

:      It is the value of the goods and service and not the value of the deficiency which would determine the pecuniary jurisdiction. Therefore, if an apartment costs Rs. 1 Crore but the deficiency relates to Rs. 5 lacs, the jurisdiction would still be the NCDRC as the composite value would need to be taken.

4 :      Interest can be granted by the Consumer Forum as a form of compensation since no specific powers of interest have been prescribed in the Act. Therefore, Interest would need to be taken into account in order to determine the pecuniary jurisdiction of the Consumer Forum.

5 :      The value of the Goods or Service for the purpose of pecuniary jurisdiction would need to be as per the agreement and not as per the prevailing market prices.

6 :      A Co-operative Society or a group of Co-operative Socieities or a group of firms or Association cannot file a Consumer complaint unless the Firm, Society or Association itself is a consumer.

7 :      Once a Complaint under section 12(1)(c) has been admitted, no fresh individual complaints can be filed by persons regarding the same project and subject matter and they would necessarily have to be impleaded as part of the representative proceedings.

8 :      Merely because individual complaints were filed prior to the Complaint under Section 12(1)(c) of the Consumer protection Act, it would neither bar the Complaint under Section 12(1)(c) from being maintainable, nor would it lead to dismissal of the previous individual complaints.

9 :      So long as the greviance of the Consumers is common and identical relief is claimed for all of them, the cost, size, area of flat/ plot and the date of booking/ allotment/ purchase, would be wholly immaterial. For instance, if the developer has sold 100 flats and 25 each are 1 bedroom, 2 bedrooms, 3 bedrooms and 4 bedrooms, and the developer has failed to deliver timely possession of those flats, all the allottees irrespective of size of their flats / plots, the date of their respective purchase and the cost agreed to be paid by them have a common greviance, viz; failure of the developer to hand over possession in time, and therefore a complaint filed for the benefit and behalf of all the consumers claiming the same relief would be maintainable. The parties cannot however seek different reliefs in such a complaint.

10 :   The Courts would need to exercise due care and caution while considering such a representative complaint even at the initial stage. Before granting the requisite permission the Bench would need to either give individual notices or an adequate public notice of the institution of the complaint which should disclose (i) subject matter of the complaint including particulars of the project (ii) class of persons concerned (iii) common greviance sought to be addressed (iv) alleged deficiency in service (v) reliefs claimed in the complaint. It will also be necessary to hear the opposite party , before taking a final view on the grant or otherwise of the permission required under section 12 (1)(c) and the person who has initiated the complaint in the representative capacity would need to pursue the same with complete due diligence, failing which he may be removed from being the representative for all parties.

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