Consumer protection rules: Will the new rules on consumer commissions help home buyers?

[ecis2016.org] With the government notifying new rules for the consumer commission, we examine whether it will bring any relief to home buyers who are caught in slow legal proceedings

Case Study 1: Ranjeet Kumar, a home buyer in Noida, had filed a case against a builder in the District Consumer Commission. His purchase cost was Rs 40 lakhs and, hence, the case was filed with the District Forum. It took five years for him to get justice in his favour. However, before he could get possession of his dream home, along with the penalty for the delay, the builder challenged the judgment before the State Commission. It has been another three years now and Kumar is wondering how long it would take to get justice.

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Case Study 2: Meena Kumari, a home buyer in Gurugram, had approached the State Consumer Commission since the purchase cost of her property was Rs 1.5 crores. However, she feels that her wait for justice has been more harassing than the trouble meted out by the builder. If the case merely pertains to project delay and amenities not provided as per the promise, why should it take such a long time to receive judgement, she wonders.

Case Study 3: Prarthna Sharma has seen it all, right from the District Consumer Forum to the State Commission and now, the NCDRC (National Consumer Disputes Redressal Commission). It is a decade-old battle for her. She says that it takes seven to eight months to even get a fresh date with the NCDRC.

Now that the government has notified new rules for the consumer commission, all the three home buyers, who are caught in slow legal proceedings, are wondering whether it will change their fortunes. The amended Consumer Protection Act, 2019, has envisaged disposal of consumer grievances within three months where analysis is not required and within five months where it requires thorough analysis.

The Consumer Protection Act, 2019

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The government has notified new rules to revise pecuniary jurisdiction for addressing consumer complaints at the district, state and national-level commissions. The new rules stipulate that the District Commissions will have jurisdiction to address complaints up to the value of Rs 50 lakhs, as against the earlier limit of Rs 1 crore. State Commissions will now have jurisdictions for valuation of Rs 50 lakhs to Rs 2 crores, as against the earlier threshold of Rs 1 crore to Rs 10 crores. The National Commission will have jurisdiction only when paid consideration exceeds Rs 2 crores.

The move is aimed at equitable distribution of cases, to ensure fast disposal of consumer grievances. The legal fraternity, by and large, has welcomed the move.

Advocate Devesh Ratan points out that Sections 34, 47 and 58 of the Consumer Protection Act, 2019, empowers the central government to revise the pecuniary jurisdiction of the District, State and National Commissions, respectively. Accordingly, the central government has notified the Consumer Protection (jurisdiction of the District Commission, the State Commission and the National Commission) Rules, 2021, which came into effect on December 30, 2021. “Since the time the Consumer Protection Act, 2019 had come into force, the pecuniary jurisdiction of the Consumer Commissions had become a cause of major concern among litigants and lawyers. The workload of the District and State Commissions, which were already over-burdened, had drastically increased. The very objective of providing a speedy resolution mechanism to the consumers was being defeated, due to the high pecuniary jurisdiction provided in the 2019 Act. This (the reduction in the pecuniary jurisdiction of all the three commissions) is a welcome move and it will help improve consumer confidence in the adjudicatory process,” says Ratan.

However, as the experience of the above three case studies suggests, the real pain points of the home buyers are elsewhere. Real estate is unlike any other consumer good. It is life’s costliest purchase, purchased when the product is not even ready, and more often than not, the buyer approaches the court only when one has not got the promised product. Hence, the grey zones and the pain points of the home buyers are yet to be addressed.

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Consumer commission and issues faced by home buyers

• The CP Act, 2019 has not changed the ground realities, where the real issue is the fast disposal of cases.
• The equitable workload on each court is a valid argument for the judiciary only
• A three-tier, quasi-judicial mechanism should not be a tool to prolong the litigation process.
• Most complaints are within the price of Rs 50 lakhs.
• The amount in consideration is the total paid amount and not the total value of the project.
• District Commission’s judgments should be allowed to be challenged only on a case-to-case basis.
• Multiple litigations is an issue.

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Most of the consumer cases in the housing market fall in the affordable housing projects category, below the price of Rs 50 lakhs. The buyer profile in this segment is too weak to afford lengthy and expensive litigation, as pointed out in a recent Supreme Court judgment, as well. For an average buyer of an affordable house, it is a challenge to contest the builder from the District Forum to the State Commission.

Home buyers point out that it is not only lengthy litigation that defeats their cause but also the fact that the builder continues to challenge the orders of the District Commission in higher courts. They also worry that the builders can file multiple false cases against the harassed home buyers. The home buyers, hence, demand that the way the NCDRC admits challenges to judgment of the State Commissions on a case-to-case basis, the State Commissions should also adopt the same practice.

Furthermore, the amount for case consideration should be the cost of the house and not the amount being paid at the time of conflict. In reality, it is the opposite and the appeal against the District Forum judgment remains the statutory right of the builder. The State Commission, unlike the NCDRC, does not take it on a case-to-case basis, and evaluate whether its intervention is required.

Unless there is a fool-proof mechanism of fast-track and deliver time-bound judgments for consumer grievances, the builder continues to have the upper hand. The amended Consumer Protection Act, 2019, seems to have failed to address this anomaly for the home buyers.

(The writer is CEO, Track2Realty)

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Category: Lifestyle