NCDRC, RERA, NCLT: Who Should a Homebuyer Approach?

NCDRC, RERA, NCLT: Who Should a Homebuyer Approach?

Over the last few years, the real estate industry in India has seen significant improvements in the consumer redressal process. Until recent times, consumers had only one recourse if they needed to complain against errant builders, and that was to go to the consumer court. However, consumer courts were not efficient enough and slow in resolving issues.

However, everything changed with the enactment of the Insolvency and Bankruptcy Code (IBC) and the Real Estate Regulation and Development Act (RERA) in 2016. Now, homebuyers had more effective options and also gained more leverage as they gained the status of “financial creditors.” This allowed homebuyers to invoke the corporate insolvency resolution process (CIRP), which enabled them to approach the National Company Law Tribunal (NCLT) to resolve issues related to defaults or delayed possession.

Today, most consumer issues regarding the property are solved between RERA and NCLT. But the consumer court still plays a part. How do these bodies differ and who should a homebuyer approach first? We give you a quick reference guide to help you solve all your property woes.

Consumer Court and NCDRC

When faced with an issue, the homebuyer can submit a formal complaint under the Consumer Protection Act (CPA), 1986, in the forum that falls under the same jurisdiction as the property or the developer’s office. The forum that addresses the dispute will depend on the claim. You can file a complaint for claims

  • Under Rs 20 Lakh with the District Consumer Disputes Redressal Forum
  • Between Rs 20 Lakh and Rs 1 Crore with the State Consumer Disputes Redressal Commission
  • Over Rs 1 Crore with the National Consumer Disputes Redressal Commission (NCDRC)

RERA

In September 2019, the Delhi High Court ruled that homebuyers can approach both RERA and NCDRC if they face issues with developers. The High Court also clarified that the legal remedies provided under the CPA and RERA were concurrent. The primary difference is that homebuyers can collectively approach NCDRC as a group that has common issues to be addressed while it’s easier for individual homebuyers to approach RERA.

RERA is also the preferred option for many homebuyers because cases are dealt with at a much faster pace, and the plaintiffs need not engage lawyers, which makes the process more straightforward.

NCLT

The National Company Law Tribunal (NCLT) is proving to be a more popular choice among homebuyers seeking quick relief from deviant builders. At present, any homebuyer can charge a case of insolvency against a developer and claim any amount equal to or more than Rs 1 lakh. However, if the project is delayed for genuine reasons, moving the NCLT can affect the developer adversely as other projects are also affected along with the concerned lenders.

According to Anuj Puri, Chairman, ANAROCK, it makes more sense for buyers to opt for self-construction if the project is small and is at least 85% complete. It not only saves much time and effort for the buyer but also prevents developers who are legitimately going through temporary bad patches from being deeply affected.

Approaching NCLT leaves the project hanging in the balance and does not guarantee a refund, both of which leaves the homebuyer out in the cold. In such cases, the homebuyer should discuss with the builder and arrive at a fair solution or approach RERA.

2 Comments

  1. I reckon RERA is the organization which should be approached for any property related issues and queries.

  2. It was quite good of you to write on “NCDRC, RERA, NCLT: Who Should a Homebuyer Approach?”. I really appreciate your work. It was a very informative article.

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