Supreme Court Upholds Concurrent Remedies under Consumer Protection Act and RERA in Real Estate Dispute: Experion Developers Pvt. Ltd. v. Sushma Ashok Shiroor

Introduction

The legal landscape governing real estate transactions in India has undergone significant evolution with the enactment of the Real Estate (Regulation and Development) Act, 2016 (RERA). The Supreme Court of India's judgment in Experion Developers Pvt. Ltd. (S) v. Sushma Ashok Shiroor (S), delivered on April 7, 2022, reinforces the harmonious coexistence and concurrent applicability of RERA and the Consumer Protection Act, 1986 (CPA) in addressing consumer grievances in the real estate sector. This commentary delves into the case's background, the court's reasoning, precedents cited, and its broader implications on real estate law.

Summary of the Judgment

The Supreme Court upheld the National Consumer Disputes Redressal Commission's (NCDRC) directive for the developer, Experion Developers Pvt. Ltd., to refund Rs. 2,06,41,379 to the consumer, Sushma Ashok Shiroor, along with interest at 9% per annum. The refund was necessitated due to the developer's failure to deliver possession of the apartment within the stipulated timeframe as per the Apartment Buyer's Agreement. The Court emphasized that RERA and CPA are complementary statutes, and their provisions do not mutually exclude each other, thereby allowing consumers to seek remedies under both Acts concurrently.

Analysis

Precedents Cited

The judgment extensively references key Supreme Court decisions that shape the interpretation of RERA and CPA in real estate disputes:

• Pioneer Urban Land and Infrastructure Ltd. v. Govind Raghavan (2019) 5 SCC 725: Highlighted the deficiency of service due to delay in possession and recognized delay compensation clauses as potentially one-sided and unfair.
• Imperia Structures Ltd. v. Anil Patni (2020) 10 SCC 783: Clarified the concurrent applicability of RERA and CPA, asserting that remedies under CPA are in addition to those under RERA.
• IREO Grace Realtech (P) Ltd. V. Abhishek Khanna (2021) 3 SCC 241: Reinforced that unfair clauses in buyer agreements constitute unfair trade practices under CPA, allowing consumer forums to override such terms.
• Arifur Rahman Khan v. DLF Southern Homes Pvt. Ltd. (2020) 16 SCC 512: Established that consumer forums can award compensation beyond stipulated contractual rates if clauses are deemed one-sided.
• Nbcc (India) Limited v. Ram Trivedi (2021) 5 SCC 273: Determined that contractual terms unilaterally favoring developers can be struck down as unfair trade practices.

Legal Reasoning

The Supreme Court's reasoning centered on several pivotal legal principles:

• Concurrent Remedies: The Court reiterated that RERA and CPA serve parallel purposes in protecting consumer interests in real estate transactions. RERA focuses on sector-specific regulations, while CPA offers a broader consumer protection framework. Both Acts are not mutually exclusive and can be invoked simultaneously.
• Unfair Trade Practices: The Court scrutinized the Apartment Buyers Agreement, particularly Clauses 10.1 and 13.1, labeling them as one-sided and unfair. Such clauses, which disproportionately favor developers by limiting their liabilities and imposing nominal penalties for delays, are contrary to consumer protection norms.
• Deficiency of Service: The Court identified the developer's failure to deliver possession within the agreed timeframe as a deficiency of service under CPA Section 2(g). This deficiency empowered the consumer to seek refunds and compensation.
• Interest Calculation: While the Supreme Court upheld the NCDRC's award of 9% interest, it mandated that interest should accrue from the date of each deposit, aligning with restorative and compensatory principles.
• Harmonious Interpretation: Emphasizing constitutional imperatives, the Court advocated for a harmonious interpretation of RERA and CPA to facilitate effective access to justice, ensuring that statutory remedies reinforce rather than impede each other.

Impact

This landmark judgment has profound implications for the real estate sector and consumer litigation:

• Empowered Consumers: Consumers can now confidently pursue remedies under both RERA and CPA, enhancing their protection against malpractices and delays in real estate transactions.
• Developer Accountability: Developers are held to higher standards of contractual fairness, discouraging the inclusion of oppressive clauses that limit their liabilities.
• Judicial Precedence: The affirmation of concurrent applicability sets a robust precedent, guiding future cases where consumers may seek multiple avenues for redressal.
• Policy Alignment: The judgment aligns with the broader governmental objective of regulating the real estate sector to ensure transparency, fairness, and consumer trust.

Complex Concepts Simplified

Delay Compensation

Definition: Compensation paid by the developer to the buyer for delays in possession beyond the agreed-upon timeframe.

Application: Calculated based on contractual terms (e.g., Rs. 7.50 per sq. ft. per month) but subject to scrutiny for fairness and balance.

Deficiency of Service

Definition: Any shortcoming or inadequacy in the performance undertaken by a person in pursuance of a contract, as per CPA Section 2(g).

Relevance: Delayed possession constitutes a deficiency, enabling consumers to seek remedies like refunds and compensation.

Unfair Trade Practices

Definition: Practices that adopt unfair methods or are biased towards one party, thereby harming consumers, as defined under CPA Section 2(r).

Implications: Contracts containing one-sided clauses are deemed unfair, allowing consumer forums to invalidate such terms.

Conclusion