Consumer Rights and Builder Delay: Supreme Court Rules on Maintainability of Consumer Complaints

The case of Rameshwar Prasad Shrivastava & Ors. vs. Dwarkadhis Projects Pvt. Ltd. & Ors. addresses an important issue concerning the maintainability of consumer complaints against real estate developers for project delays. The Supreme Court was called upon to decide whether the National Consumer Disputes Redressal Commission (NCDRC) was correct in dismissing consumer complaints for non-compliance with procedural requirements.

The case arose when a group of homebuyers filed a complaint against the builder for delayed possession and unfair trade practices. The Supreme Court’s ruling provided clarity on the application of Section 12(1)(c) of the Consumer Protection Act, 1986 and reaffirmed procedural requirements for consumer class actions.

Background of the Case

The dispute originated when Dwarkadhis Projects Pvt. Ltd. launched the “Aravali Heights” residential project in Haryana in 2006-07. Homebuyers booked apartments based on the developer’s promise to hand over possession within three years. However, key developments unfolded as follows:

The builder-buyer agreement specified that possession would be handed over by 2010.
Despite repeated follow-ups, possession was not granted.
Buyers found that essential infrastructure such as roads, water supply, and sewage systems were incomplete.
Some buyers approached the Punjab & Haryana High Court through a writ petition, which directed them to file representations with the competent authority.
Following this, 19 allottees filed a consumer complaint (Consumer Case No. 250 of 2013) before the NCDRC, seeking relief for delayed possession, penalty, refund of excess charges, and compensation.
A separate consumer complaint (Consumer Case No. 43 of 2014) was filed by four other buyers regarding the same project.

Legal Issues Considered

The Supreme Court examined the following key legal questions:

Was the consumer complaint maintainable under Section 12(1)(c) of the Consumer Protection Act?
Did the homebuyers need permission from the NCDRC to file a class action complaint?
Was the NCDRC justified in dismissing the complaints despite years of litigation?
Could the homebuyers transfer their case to a lower consumer forum for further proceedings?

Arguments by the Appellants (Homebuyers)

The homebuyers, represented by counsel, made the following arguments:

“The National Commission failed to recognize the hardships faced by the buyers due to delays in possession.”
“The consumer complaint was filed on behalf of a large number of affected homebuyers, making it a legitimate class action.”
“Procedural technicalities should not override substantive justice for aggrieved consumers.”
“Instead of dismissing the complaint outright, the NCDRC should have allowed the complainants to fulfill any procedural formalities.”

Arguments by the Respondents (Builder)

The builder defended the NCDRC’s decision, arguing:

“The homebuyers failed to obtain prior permission under Section 12(1)(c) to file a class action complaint.”
“Without complying with Order I Rule 8 of the Civil Procedure Code (CPC), the complaint was procedurally defective.”
“The NCDRC correctly applied the precedent in Ambrish Kumar Shukla & Ors. v. Ferrous Infrastructure Pvt. Ltd., which mandates procedural compliance for class action complaints.”
“The homebuyers should file individual complaints instead of proceeding collectively.”

Supreme Court’s Observations and Judgment

The Supreme Court, comprising Uday Umesh Lalit and R. Subhash Reddy, upheld the NCDRC’s ruling but provided an alternative remedy for the homebuyers. The Court held:

“The law requires consumer complaints filed on behalf of multiple buyers to follow the procedural requirements of Section 12(1)(c) and Order I Rule 8 CPC.”

The Court provided the following reasoning:

The Consumer Protection Act allows one or more consumers to file a complaint on behalf of others, but prior permission must be obtained.
The NCDRC correctly applied the decision in Ambrish Kumar Shukla, which emphasized procedural requirements for collective complaints.
The homebuyers had the option to either fulfill procedural formalities or approach a lower consumer forum.
To ensure fairness, the Supreme Court directed that if the homebuyers refile their case before the appropriate consumer forum, it should be continued from the same stage instead of restarting from the beginning.

The Supreme Court further emphasized:

“Procedural requirements under Section 12(1)(c) must be followed to maintain uniformity and avoid unnecessary litigation.”

Implications of the Judgment

The Supreme Court’s ruling has significant implications:

It clarifies that homebuyers must seek permission before filing a class action consumer complaint.
It prevents misuse of consumer forums while protecting legitimate claims.
It allows buyers to transfer their case to a lower consumer forum instead of dismissing their claims outright.
It ensures procedural uniformity in consumer class actions.

Final Decision

The Supreme Court dismissed the appeals but provided relief to the homebuyers:

“The dismissal of consumer complaints is upheld. However, if the appellants file individual complaints before the State Commission, proceedings shall continue from the existing stage.”

This ruling ensures that consumer disputes are handled fairly while reinforcing procedural discipline in class action complaints.

Petitioner Name: Rameshwar Prasad Shrivastava & Ors..
Respondent Name: Dwarkadhis Projects Pvt. Ltd. & Ors..
Judgment By: Justice Uday Umesh Lalit, Justice R. Subhash Reddy.
Place Of Incident: Dharuhera, Haryana.
Judgment Date: 07-12-2018.

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