A Homebuyer's Tri-lemma: An Analysis of Provisions under CPA, RERA and IBC, 2016Looking at the aforesaid it appears like a clear knockout punch for errant Real Estate developers and a massive victory for the consumers at large

If we look into the remedies available under theConsumer Protection Act, 1986(CPA) and theReal Estate (Regulation and Development) Act, 2016(RERA) along with IBC, 2016.

Real Estate (Regulation and Development) Act, 2016 (RERA)seeks to provide uniform laws throughout the country, for protecting the interest of home buyers and seeks to increase transparency in the functioning of construction companies and reduce the chances of default or misappropriation of funds by Builders.

Consumer Protection Act, 1986 (CPA)was enacted to provide speedy Redressal mechanism to "CONSUMERS" who alleged Unfair Trade Practice or Deficiency with respect to Goods or Services – home buyers were also included within the purview of the Act by interpreting the word "Services" under the Act to include construction.

Further, theInsolvency and Bankruptcy Code, 2016 (IBC)– one of the most effective mechanisms for timely recovery of monies and revival of sick companies – also included the Allottees of a project and deemed them as Financial Creditors within the meaning of the Act thereby providing an alternative remedy to victimized homebuyers in India.

RERA, CPA and IBC – friend or foe?

In theM/s M3M India Pvt. Ltd. vs. Dr Dinesh Sharma and Anr.case, judgment was passed by Delhi High Court while deciding a batch of petitions moved by several real estate companies against an order passed by the National Consumer Disputes Redressal Commission (NCDRC). The question for consideration was whether proceedings under the CPA 1986 can be commenced by homebuyers against developers after the commencement of RERA 2016.

While passing the judgment, the High Court placed reliance on the recent Supreme Court judgment inPioneer Urban Land and Infrastructure Ltd & Anr vs. Union of India & Ors, (2019)– also known as the Flat Buyer's case – wherein it was held that thatremedies given to allottees of flats are concurrent and they are in a position to avail remedies under the CPA, RERA as well trigger the IBC.It was observed that the provisions of RERA were not intended to be exclusive, but to run parallel with other remedies and the High Court followed suit in theM3M Indiacase.

While dismissing a large number writ petitions filed by the developers, the Court inPioneerupheld the following:

• IBC修正案是有限公司nstitutionally valid by virtue of which "Allottees' were brought within the ambit of Financial Creditors

• The amendment act does not infringe Articles 14, 19(1)(g) read with Article 19(6) or 300-A of the Constitution of India.

• Remedies to the Allottees under various statutes such as the RERA, the Consumer protection act, and the IBA are concurrent.

• In case of conflict between the RERA and the IBC, the IBC would prevail.

• Allottees were always subsumed within the definition of Section 5(8)(f) and the explanation and deeming fiction added by the Amendment act was only explanatory in nature.

Looking at the aforesaid it appears like a clear knockout punch for errant Real Estate developers and a massive victory for the consumers at large. Having said that, here is a snapshot of the various remedies a homebuyer has and some pointers for consideration:

Particulars	RERA	CPA	IBC
Who can file	A Purchaser, Home Buyer or prospective purchaser/Home Buyer offered flat can file Complaint irrespective of the fact that such person is Corporate Entity or Individual.	A Consumer who satisfies the requirement under Section 2(d) of CPA can file a CPA complaint. Typically, an Individual who enters into agreement for purchase of Flat can file complaints when he purchases the same for his individual use and residence.	Since by recent amendment in August 2018, the Allottee of Project is considered a Financial Creditor, any person whether an Individual or Corporate Entity can file an Insolvency Application under Section 7 of IBC.
Case Timeline	RERA takes afew months to yearsfor redressal of grievances depending on the State.	Redressal of grievances or adjudication of a dispute takes an average of5 to 6 yearsby Consumer Forums.	IBC takes about6 Months to a yearfor adjudication of Insolvency Application by Adjudicating Authority.
Accessibility	There are1 – 2 RERA offices in each statewhich has constituted the Authority under the Act. Maharashtra has offices in Mumbai, Pune and Nagpur.	DistrictForums are established in every district of the State.The StateCommission presides in the capital of each state and sometimes has benches in other parts of the State.NationalCommission presides at Delhi and has circuit benches in various parts of the Country which are rotating.	NCLT has16 benchesall over India. NCLT is typically constituted for each state and presides at one place in the state or one NCLT is commonly empowered and is having jurisdiction over two states.
执行/ Reliefs provided	RERA typically exercise its power by way of an order to impose fine, deregister the project, include the promoter in list of defaulters, direct completion of project in manner provided in consultation with State Government and pass appropriate orders incidental thereto.	The Consumer Forum has the power to execute its own orders. This makes execution of orders also an expeditious affair in comparison to regular suits or execution of orders passed by various Courts/Quasi-Judicial Forums. Also since scope of Consumer Act is limited, the relief and consequently is execution is comparatively an expeditious affair.	Once, NCLT admits the Insolvency Application, IRP comes into the picture to manage the affairs of the Company and in case of failure of Corporate Insolvency Resolution Process ("CIRP") (In case of Developer being a Corporate Entity), Liquidation would be commenced. NCLT monitors the entire process and time to time, various reports are required to be filed with NCLT.

Key Observations & Analysis:

a. If a person is a consumer and seeks performance of statutory obligation or compensation in respect thereof, then Consumer Forum is a better and effective remedy especially in case where the Developer has financial ability to pay. Also he may file a complaint with RERA to blacklist developers and other reliefs which RERA can provide but consumer forum cannot.

b. If a person is not a consumer, then RERA would be a more appropriate remedy.

c. If a person is not a consumer and seeks specific performance of statutory obligations from Developer, his only remedy would be to file a regular suit. However, for compensation and other reliefs he may approach RERA.

d. If Person, whether consumer or not, is seeking only the return of his money, especially when the developer's financial position is deteriorating, then the Insolvency Application before NCLT would be an appropriate remedy more so when its redevelopment of property that does not involve many flat in sale components.

e. Also the more the project is closer to the verge of completion, RERA would be a more effective remedy especially if Flat Purchaser/Home Buyer desires to obtain a Flat and vice-versa coupled with the consideration that RERA can also provide compensatory reliefs.

f。破产总是可以利用作为选择来说ive remedy when a Flat Purchaser feels that the financial position of Developer is deteriorating and Developer will not be able to complete the project and return the money with interest to be able to prevent further deterioration. It will help to obtain recovery of the maximum amount of money invested along with Interest. Completion of the project may take several years due to various practical difficulties that may arise in the completion of the project. Also execution of order for payment of money will not have any fruitful result if Developer does not have financial ability to pay it.

g. In terms of execution, Insolvency since being processed to liquidate the assets of an entity or person will be a more lucrative remedy in case there is a high probability that Developer may not be in position to return the money invested. Consumer Forum since having power to enforce their own orders also provide great remedy in case where builder has completed construction but delayed possession or not complied with statutory obligation to obtain reliefs in respect of both.

h. The Flat Purchaser/Home Buyer can always initiate criminal proceedings against Developer against fraud or other criminal offences or acts committed by it.

Conclusion

From the recent judgments passed by the High Court, the Supreme Court and even the authorities under RERA, CPA and IBC, the judicial sentiment seems to favour the home buyer. From a conjoint reading of the judgment of the Supreme Court in the case of Pioneer (supra) or the Court in the case of Messrs M3M (supra), the judiciary has armed an aggrieved home buyer with a host of remedies to seek relief against a developer and bring you a step closer to owning your dream home!