How To Get Legal Help If Cheated By A Developer?

Instances of project delays and financial irregularities by some developers have forced prospective buyers to turn fence-sitters, although the situation is improving slightly with the launch of the RERA (Real Estate Regulation & Development Act, 2016). 

Let’s look at the legal recourse homebuyers have, in case a builder fails to deliver on what he committed. 

How does RERA protect homebuyers 

Under Section 31 of the Act, a homebuyer can file a complaint with the Real Estate Regulatory Authority (RERA) of the state concerned. The authority must address the issue within 60 days after the complaint is filed. If the buyer is unhappy with the order given by RERA, they can move the appellate tribunal and challenge the order. In case the buyer is not satisfied with the appellate tribunal’s order either, they can appeal in the high court. The buyer must note though that they can approach the RERA authorities about a RERA registered under-construction project only. While some state authorities have shown willingness to hear cases that pertain to completed projects, too, others have not. 

How can the homebuyer approach the judiciary for justice 

In 2018, the Bombay High Court (HC) ruled that developers committing fraud were ‘criminal in nature’ and only criminal cases must be filed by the affected party in such cases. Prior to approaching the court, the buyer must also file a police complaint against the builder, the HC ruled. 

Sessions court: Criminal cases are filed in the sessions court under various provisions of the Indian Penal Code (IPC). In such a situation, the victim would be called by the state as witnesses, and the responsibility to prove the crime, would lie with the state prosecutor, and not on the buyer. 

A criminal case can be filed even if there have not been any actual damages, where actions intended to cheat a buyer was taken by the offending party. 

Civil court: According to the Supreme Court, buyers are well within their rights to approach the civil court in case a developer breaches a contract. However, actual damages must have been occurred for the victim to be able to file a civil suit unlike in a criminal case. In a civil suit, the responsibility to prove the offence lies with the victim. 

Higher courts: The buyer can move the HC and the SC in case they are not satisfied with the verdicts of the lower courts.  

Consumer court 

Before the real estate law came into the picture, a majority of buyers approached the consumer court to seek justice. Formed under the Consumer Protection Act, 1986, these courts address grievances related to service delivery.   

Since there is a three-tier mechanism, a buyer has to first approach the district consumer court, which hears complaints where the value of goods or services does not exceed Rs 20 lakhs. In case the value of the goods or services is between Rs 20 lakh and Rs 1 crore, the buyer has to approach the state forum. The National Commission entertains complaints where the value of the goods or services exceeds Rs 1 crore. The plea in the court must be filed within two years from the date of the dispute. 

Can buyers approach RERA as well as the Consumer Court?

In a judgment passed on October 16, 2020, the Punjab and Haryana High Court has ruled that aggrieved homebuyers can pursue remedies under the real estate law and the Consumer Protection Act, simultaneously.

"Section 88 of the Act... clearly states that 'the provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.' It is, therefore, not mandatory for a person, who has a complaint before the consumer fora to have his complaint transferred to the AO. He can pursue both the remedies simultaneously on the strength of Section 88 of the Act," it said. 

While delivering its order in the Experion Developers versus state of Haryana and others and several other petitions, the court also stated that if the buyer withdraws his complaint before a consumer forum and approaches the adjudicating officer of the RERA, they would only be entitled to compensation/interest and not to refund and other reliefs.

Competition Commission of India (CCI) 

A consumer can also move the CCI against developers over unfair trade practices. Market monopoly is another reason based on which a developer could be dragged to the CCI. The body has the power to investigate any anti-competitive practices and impose stringent penalties on the offenders. 

With inputs from Shaveta Dua