Supreme Court Sets Aside NCDRC Order, Says Homebuyers Who Chose RERA Cannot Later Approach Consumer Forum

The Supreme Court has recently held that where complainants had elected to pursue the remedy available under the Real Estate (Regulation and Development) Act, 2016, before the Real Estate Regulatory Authority and withdrew their complaint with liberty to file a fresh complaint before the Authority, they could not thereafter opt for the remedy available under the Consumer Protection Act for the same cause of action.

A Division Bench of Justices Sanjay Kumar and K. Vinod Chandran set aside an order of the National Consumer Disputes Redressal Commission (NCDRC) that had held a consumer complaint filed by the homebuyers to be maintainable.

The Court observed, "When it was open to the complainants to elect/opt for one or the other remedy that was available to them at that time and they made that choice by approaching the Authority under the provisions of the Act of 2016 in the first instance and then decided to withdraw their complaint, reserving liberty to once again file a fresh complaint before the Authority, they could not have retracted therefrom.”

It further held that after withdrawing their complaint before the authority with liberty to file a fresh complaint before the same Authority, it was not open to them at that stage to opt for the remedy available under the Consumer Protection Act, 2019.

Rekha and Rajkumar Hemdev had purchased Flat Nos. 2101 and 2102 in a building developed by Kabra and Associates. They first approached the Maharashtra Real Estate Regulatory Authority (MahaRERA) alleging that the developer had failed to register the building as an ongoing project under Section 3 of the Real Estate (Regulation and Development) Act, 2016.

The authority disposed of that complaint by order dated May 14, 2019, holding that the project was not mandatorily required to be registered.

The homebuyers had also filed another complaint before the authority under Section 18 of the Act seeking a refund of the amounts paid for the flats. They, however, later withdrew the complaint so as to file a fresh complaint. 

Recording this request, the Authority observed that no relief could be granted in that complaint and disposed of the matter, noting that the complainants could approach an appropriate forum to seek the relief claimed.

The complainants, however, did not return to the Authority. Instead, they moved the National Consumer Disputes Redressal Commission by filing a consumer complaint in 2022.

By its order dated August 23, 2023, the Commission rejected the preliminary objection raised by Kabra and Associates and held that the complaint was maintainable.

Kabra and Associates challenged the order before the Supreme Court, contending that the homebuyers had already chosen to proceed under the RERA framework and, after withdrawing their complaint with liberty to refile before the Authority, could not pursue the same dispute before the consumer forum.

On the other hand, Rekha and Rajkumar Hemdev argued that since the project was unregistered, there was uncertainty regarding the availability of relief before the authority, which justified invoking the jurisdiction of the consumer forum.

Rejecting this contention, the top court said,

“We find this apprehension to be without merit as the order dated 14.05.2019 passed by the Authority, be it legally correct or erroneous, has attained finality and binds both the parties thereto.”

Accepting the developer's contention, the Supreme Court held that the sequence of events showed that the complainants had consciously chosen to invoke the remedy under the RERA mechanism in the first instance and had withdrawn their complaint with liberty to file afresh before the authority.

The court further observed that the absence of registration of the project would not defeat the Authority's jurisdiction to entertain the complaint under the act. Referring to the earlier order holding that registration was not mandatory, the Court observed:

“Irrespective of whether the aforestated order was correct in the eye of law, the irrefutable fact remains that it attained finality and is, therefore, binding between the parties.”

Accordingly, the Supreme Court allowed the appeal and set aside the NCDRC order holding the consumer complaint to be maintainable

For Appellant (M/s Kabra and Associates & Ors.): Senior Advocate Shyam Divan; Advocates Vinay Navare, Sanjeev Singh, Arpit Rai, Prabhsharan Singh Mohi, Sudipto Sircar, Aviral Kashyap.

For Respondents (Rekha Rajkumar Hemdev & Ors): Advocates Chetan Kavdia, Soumya Priyadarshinee, Ramya Vidyadharan, Mansi Naik, Pavitra Dixit, Archit Sharma, Shri Venkatesh, Shryeshth Ramesh Sharma, Kanika Chugh, Akash Lamba, Suhael Buttan, Kunal Veer Chopra, Nitin Saluja.