SC allows flat owners to unite as one party against builders in national consumer forum

  • In a fight between middle-class flat owners and corrupt builders, the Supreme Court came to the rescue of the former. It has recently ruled that flat owners could join hands to directly approach the National Consumer Disputes Redressal Commission (NCDRC) against the real estate agents.

    According to the Consumer Protection Act, a plea can be filed in the commission directly with the condition that the cost involved is more than Rs 1 crore, or else, the complainants will have to begin at the district consumer forums. Amrapali Sapphire Developers Pvt Ltd had taken shelter behind this rule to plead that 43 flat buyers, who had together moved to the apex consumer forum against it, were disqualified from filing such a joint plea before the NCDRC. All the buyers had a common complaint against delay in handing over possession of their flats.

    The builder told a bench consisting of Justices Dipak Misra, A M Khanwilkar and M M Shantanagoudar that the cost of each flat was way below Rs 1 crore, thus the owners were individually ineligible to approach the NCDRC directly. "By joining hands, they have shown that the cost of their flats was above Rs 1 crore to maintain their plea in NCDRC, which was against the rule," the builder's counsel said.

    But the bench saw through the builder's tactics, which was to make the complainants approach district consumer forums and then the state consumer forums before finally coming to the NCDRC. The bench understood that the intention was to hinder the mechanism of justice and to tire out flat owners and buy time for completion of delayed housing projects.

    The SC's rejection of Amrapali Sapphire Developers' technical plea will come as a boon to middle-class flat owners, who find it easier to come together to fight rich realtors who have deep pockets and employ top lawyers to find legal loopholes to frustrate flat allottees from making claims against them.

    On August 30 last year, NCDRC member Justice V K Jain had ruled in favor of the 43 flat owners in Amrapali's Sapphire housing project and said that they could form an association to achieve the pecuniary limit of Rs 1 crore for approaching the NCDRC directly.

    Justice Jain had said, "Once it is accepted that a consumer complaint on behalf of more than one consumer can be filed by a recognized consumer association, it can hardly be disputed that it is the aggregate value of the services which has to be taken for the purpose of determining the pecuniary jurisdiction of the consumer forum before which the complaint is filed."

    Referring to the 43 flat owners' joint plea through an association, the NCDRC had said that if we take the aggregate value of services in respect of each of such flat buyers, on whose behalf this complaint was filed, then it exceeds Rs 1 crore and hence NCDRC has valid jurisdiction to entertain their plea.


    The decision of the Supreme Court allowing the middle class people to join hands and file the matter together in order to fulfill the pecuniary jurisdiction is a big relief to all such flat buyers who have been cheated for the possession of their flats. It was long due in the interest of such people who have invested major amounts of their savings into these houses and  are unfortunately yet to receive anything substantial.

    Visit the Indian Kanoon section of LawRato to learn more on Indian Laws.

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