THE BEGINNING OF CLASS ACTION LAWSUIT “REAL ESTATE”


  • All home buyers can join a existing complaint filed

  • Judgement of the case will be binding on all the buyers

  • Only one complaint to be filed against the Builder /Developer Under Section 12.1 C as a group of buyers

  • All other complainants can  join as a group after the Public Notice is served

  • Judgement to be based on Agreement Value and not Market Value

The NCDRC have clarified its position on Section 12 (1) (c) of Consumer Protection Act 1986.  NCDRC has allowed complaints by a group of buyers under Section 12 (1) (c).

If we have to go by layman’s interpretation, all builder related cases can by filed in NCDRC, thus skipping the lower forums.

There has been a lot of confusion and ambiguity in the interpretation of complaints filed under Section 12 (1) (c). Different benches of NCDRC had a different view on this section of the Act.

This led to the matter being referred to a three-member bench of NCDRC. These three question/issues arose in front of the commission: Whether complaint under Section 12 (1) (c) filed on behalf of or for the benefit of only some the numerous buyers are maintainable or it must be filed on behalf of all consumers having a common interest.

Where complaint under this section is maintainable where the value of goods, service, compensation in respect of none of the allottees exceeds rupees one crore.

Where complaint under this section is maintainable where the value of goods, service, compensation in respect to individual allottee exceeds rupees one crore.

Where complaint under this section is maintainable where the cost of the apartment, the area of the apartments is different and the apartments were booked on different dates.

Court’s observation

Here are the key observations in full bench judgement concerning the interpretation of Section 12 (1) (c) of the Consumer Protection Act. We have tried to explain court’s order in laymen’s terms.

  •  If a complaint is against a builder under Section 12 (1) (c), i.e by an unregistered group of persons, it can be filed only on behalf of or for the benefit of all buyers who have the same interest and grievance against the builder. It cannot be filed seeking relief for the benefit of only some of the buyers.
  •  A complaint under Section 12 (1) (c) is maintainable before the NCDRC where the aggregate value of the all the apartments combined and the total compensation claimed in respect of all the buyers exceeds Rs. 1 crore. The value of each individual apartment is wholly irrelevant in such a complaint.
  • So long as the grievance of the buyers is common and an identical relief is claimed for all of them, the cost, the size, area of the flat/plot and the date of booking/allotment/purchase would be wholly immaterial. The relief claimed will be the same if for example, in a case of delay in possession, refund, or possession or in the alternate refund, with or without compensation, is claimed for all the buyers. Different reliefs for one or more consumers on whose behalf or for whose benefit the complaint is filed cannot be claimed in such a complaint.
  • The jurisdiction of the NCDRC shall be decided on the agreed sale consideration ,i.e.value at the time of booking the apartment, not the market value of the apartment. e. A cooperative society or a group of cooperative societies, firms, an association shall not be entitled to file a complaint under Section 12 (1) (c) unless the cooperative society itself is the consumer.
  • The Act does not allow more than one complaints in a representative character. The decision in one complaint filed in a representative capacity will bind all the buyers of the project. Therefore once a complaint in a representative capacity is filed under Section 12 (1) (c), and requisite permission for filing the same is given by the consumer forum, the second complaint under Section 12 (1) (c) will not be maintainable for the same project for the same relief. A second complaint, if filed, having the same interest and seeking the same relief is liable to be dismissed with liberty to seek impleadment in the complaint already instituted.
  • Since a complaint in a representative capacity shall be binding on all the buyers, an individual complaint expressing the same grievance will not be maintainable and the only recourse available to such buyer is to seek impleadment in the complaint filed in the representative capacity. However, as far as individual complaints instituted prior to grant of requisite permission under Section 12 (1) (c) is concerned, such complainants cannot be compelled to withdraw their individual complaint.
  • The consumers who are already before the consumer forum when the requisite permission in terms of Section 12 (1) (c) is accorded, will be out of purview of the representative complaint. The order passed in the representative complaint will not be binding on them.
  • However, if such persons want to withdraw their pending complaints and join the complaint instituted in the representative capacity, there is no bar on their adopting such a course of action. h. Considering the binding effect of a decision rendered under Section 12 (1) (c) on all the consumers on whose behalf such a complaint is filed, even if they choose not to join as a party to the complaint, It is necessary to exercise due care and caution while considering such a complaint while granting the requisite permission under Section 12 (1) (c).
  • It would be necessary for the bench to either give individual notices or an adequate public notice of the institution of the complaints, to all the persons on whose behalf or for whose benefit the complaint is instituted. Such a notice should disclose the subject matter of the complaint including particulars of the project, class of persons on whose behalf or for whose benefit the complaint is filed, the common grievance is sought to be addressed, the alleged deficiency in the service and the reliefs claimed.
  • It will also be necessary to hear the opposite party before taking a final view on grant of necessary permission under Section 12 (1) (c).
  • Court’s observation on existing complaints Individual complaints filed prior to the grant of requisite permission under Section 12 (1) (c) have been validly instituted and they can not be compelled to withdraw their individual complaint and compelled to become a party of subsequent complaints filed in a representative capacity. If, however, such persons want to withdraw their individual complaints and join the representative suit, they shall be allowed.
  • JUDGEMENT CAN BE FOUND BELOW ON SECTION 12 (1) (c)
    ncdrc-full-bench-judgement-on-section-12-1-c
  • Example of a similar order pass by the consumer court in Case of Nitesh Caesars Palace :-
  • The instant complaint has been filed by Shri Vishwanath Shankar and 203 other complainants as a class action alleging deficiency in service on the part of the opposite party in respect of the builder buyer agreement executed by the complainants and other consumers with respect to the development project ‘Nitesh Caesar Palace’ undertaken by the opposite party. Along with the complaint an application under Section 12 (1) (c) of the Consumer Protection Act, 1986 seeking permission to proceed with the complaint as a class action, has been filed. The application is opposed on the ground that even among 204 complainants there are different groups of complainants having different interest.

    We have heard the parties and perused the record. On careful perusal of the complaint we find that in para-1 the complainants have specifically mentioned that they wish to proceed with the complaint as a class action on behalf of themselves and other similarly placed consumers having the same interest and even in the prayer clause the complainants have sought similarly relief for all other consumers who are not party to the complaint. Therefore, in our view the complaint fits within the parameters of Section 12 (1) (c) of the Act. Accordingly, we grant permission under Section 12 (1) (c) of the Act to the complainants to proceed with the complaint as class action. As this is a class action complaint, issue public notice under Order 1 Rule 8 CPC in Deccan Herald (English) and Vijaya (Karnataka).

4 Home Loan rules most of the investors don’t know about


Can you claim tax deduction for your under-constructed house? Can you claim tax for the home loan taken from your friend and not from Bank ? These are some of the questions which are not generally discussed over and lot of investors have no idea about actual rules. In the video below I will talk about four not so known rules of home loans . Keep reading ! . Readers on email can watch the video on this article.