Supreme Court Bars Homebuyers from Switching to Consumer Forum After RERA Complaint

The Supreme Court has delivered a significant ruling that homebuyers cannot seek relief from the consumer forum after initiating a complaint under the Real Estate (Regulation and Development) Act, 2016 (RERA). This decision was made in a case involving M/s Kabra and Associates, a real estate developer, and homebuyers Rekha and Raj Kumar Hemadev.

A bench comprising Justices Sanjay Kumar and K Vinod Chandran allowed an appeal filed by M/s Kabra and Associates against an order of the National Consumer Disputes Redressal Commission (NCDRC) dated August 23, 2023. The NCDRC had previously ruled that the homebuyers' complaint was maintainable before the consumer forum, despite the developer's objections.

The dispute began when the homebuyers approached the Maharashtra Real Estate Regulatory Authority (MahaRERA) against M/s Kabra and Associates. They alleged that the developer had failed to register the building, in which they had purchased flats, as an ongoing project under Section 3 of the RERA Act. The homebuyers also filed another complaint under Section 18 of the Act, seeking a refund of the amounts paid for the flats.

The MahaRERA disposed of their first complaint on May 14, 2019, ruling that the developer was not mandatorily required to register the project under Section 3 of the RERA Act. Despite this, the homebuyers sought to withdraw their second complaint before the Authority, citing a mistake in the project name. They submitted a letter dated February 15, 2019, stating that the project mentioned in the complaint was incorrect.

During the hearing, the homebuyers informed the MahaRERA that they intended to file a fresh complaint because the project in question was unregistered, and they believed relief could not be granted under the RERA Act. The Authority noted that the project name had been incorrectly mentioned as “Kabra Auram” instead of “Kabra Vihang” and observed that no remedy could be granted based on the incorrect project name.

The homebuyers withdrew their complaint with liberty to file a fresh one before the MahaRERA. However, they did not pursue the matter for several years. Instead, in 2022, they filed a complaint before the NCDRC under the Consumer Protection Act, 2019.

The Supreme Court examined the sequence of events and held that the homebuyers had consciously chosen to invoke the remedy available under the RERA Act initially. The bench stated that once the homebuyers committed to that remedy and withdrew their complaint before the MahaRERA with the option to file a fresh one, they could not subsequently opt for another remedy before the consumer forum.

The Court relied on its earlier judgment in Ireo Grace Realtech Private Limited v. Abhishek Khanna (2021), which established that the doctrine of election of remedies applies when two concurrent remedies are available. Once a party chooses to pursue one remedy, they cannot simultaneously or subsequently pursue the other for the same cause of action.

Applying this principle, the Court ruled that the homebuyers could not maintain a complaint before the consumer forum after having elected to proceed under the RERA framework. The Court also clarified that the developer could not rely on the lack of project registration as a ground to deny relief before the MahaRERA if proceedings were pursued there. It emphasized that the absence of project registration does not defeat the MahaRERA's jurisdiction to examine complaints under the provisions of the RERA Act.

While making this observation, the Court stated that it was not expressing any opinion on the delay between 2019 and 2022 in pursuing the dispute. In light of its findings, the Supreme Court set aside the NCDRC's order, which had held the consumer complaint to be maintainable.

This ruling underscores the importance of choosing the right legal remedy from the outset and the potential consequences of switching between different legal forums. It also highlights the Supreme Court's commitment to ensuring that the legal process is fair and consistent, particularly in the real estate sector.