Flat Buyers’ Rights and Builder Disputes: Supreme Court’s Verdict in Vikrant Singh Malik vs. Supertech Ltd.

The Supreme Court of India, in its judgment dated August 24, 2020, addressed a crucial case concerning the rights of flat buyers and the legality of collective consumer complaints against real estate developers. The case involved a dispute between flat buyers of Supertech Limited’s ‘Oxford Square’ project in Greater Noida, Uttar Pradesh, and the developer. The primary issue was whether multiple homebuyers could file a single composite complaint under Section 12(1)(c) of the Consumer Protection Act, 1986.

The case originated when twenty-six homebuyers filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC), seeking relief for various grievances, including delay in possession, illegal charges, and non-provision of promised amenities. The NCDRC dismissed their complaint, stating that it was not maintainable as a collective action. The Supreme Court reviewed the matter and restored the complaint for reconsideration, providing clarity on the interpretation of Section 12(1)(c) of the Act.

Background of the Case

The dispute arose when Supertech Limited launched its ‘Oxford Square’ residential project in Greater Noida and entered into agreements with multiple homebuyers between 2010 and 2014. However, several buyers faced issues related to:

• Delayed possession and lack of occupancy certificates.
• Illegal charges for parking spaces and club membership.
• Escalation charges beyond the agreed price.
• Demands for extra payments without justification.

In response, the buyers filed a collective consumer complaint before the NCDRC under Section 12(1)(c) of the Consumer Protection Act, which allows multiple consumers with the same interest to file a joint complaint.

Petitioners’ Arguments

The homebuyers, represented by their counsel, contended that:

• Their grievances were common, as they all purchased flats in the same project and faced similar issues.
• The builder failed to fulfill contractual obligations, causing financial and mental distress to buyers.
• The NCDRC’s decision to dismiss their complaint was erroneous, as the law allows class-action suits in cases where a large number of consumers are affected.
• The Full Bench of the NCDRC had previously ruled in Ambrish Kumar Shukla v. Ferrous Infrastructure Pvt. Ltd. that class-action complaints are maintainable under Section 12(1)(c) of the Act.

Respondent’s Arguments (Supertech Ltd.)

Supertech Ltd. defended itself by arguing that:

• The agreements signed by each buyer were independent contracts with different terms, including price, size, and date of possession.
• Some buyers had already taken possession, which contradicted the claim of collective grievances.
• The buyers also filed a writ petition in the Allahabad High Court seeking similar relief, creating a parallel litigation issue.

Supreme Court’s Observations

The Supreme Court examined the validity of the complaint under Section 12(1)(c) of the Act and made key observations:

• Class-action consumer complaints are maintainable if a group of consumers share a common grievance.
• The presence of different agreement dates and flat sizes does not affect the maintainability of a collective complaint.
• Consumers seeking the same type of relief, such as refunds or possession, have a sufficient “sameness of interest” to file a joint complaint.
• The NCDRC erred in dismissing the complaint without considering the Full Bench ruling in Ambrish Kumar Shukla, which allowed such collective complaints.

Final Verdict

The Supreme Court ruled that:

• The NCDRC’s dismissal of the consumer complaint was incorrect.
• The case was remanded back to the NCDRC for reconsideration.
• The NCDRC must determine whether the complaint satisfied the criteria of commonality of interest.
• The buyers could be allowed to amend their complaint if necessary.

Impact of the Judgment

This ruling has significant implications for homebuyers and the real estate sector:

• It strengthens the rights of homebuyers to file collective complaints against builders.
• It clarifies the legal requirements for class-action consumer cases under Section 12(1)(c) of the Consumer Protection Act.
• It prevents developers from using procedural objections to avoid legal scrutiny.
• It sets a precedent for future cases involving large-scale housing projects.

The Supreme Court’s ruling ensures that homebuyers can effectively seek justice against unfair trade practices by builders while maintaining procedural fairness in consumer litigation.

Petitioner Name: Vikrant Singh Malik & Others.
Respondent Name: Supertech Limited & Others.
Judgment By: Justice Dhananjaya Y. Chandrachud, Justice K. M. Joseph.
Place Of Incident: Greater Noida, Uttar Pradesh.
Judgment Date: 24-08-2020.

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