In a landmark judgment, the Supreme Court of India has ruled that once a homebuyer approaches the Real Estate Regulatory Authority (RERA), they cannot subsequently pursue the same cause of action in a consumer forum. This decision, arising from the case of M/s Kabra and Associates & Ors. v. Rekha Rajkumar Hemdev & Ors., enforces the doctrine of election, which prevents forum-shopping by mandating that the initial choice of forum is irreversible.
Case Background
Rekha and Raj Kumar Hemdev invested in flats developed by M/s Kabra and Associates in Maharashtra. Due to the developer’s failure to register the project under Section 3 of the Real Estate (Regulation and Development) Act, 2016, the homebuyers lodged complaints with the Maharashtra Real Estate Regulatory Authority (MahaRERA). These complaints included allegations of non-registration and a demand for a refund under Section 18.
MahaRERA identified an error in the project name within the complaint and allowed the complainants to withdraw with permission to refile. No notice was issued to the developer, and no hearing on merits took place. Rather than refiling with MahaRERA, the complainants later sought relief from the National Consumer Disputes Redressal Commission (NCDRC) under the Consumer Protection Act, 2019. Despite the developer’s objection, the NCDRC deemed the complaint maintainable.
Supreme Court’s Decision
The Supreme Court overturned the NCDRC’s order, declaring that the complainants were bound by their initial approach to MahaRERA. Citing the precedent set in IREO Grace Realtech Private Limited v. Abhishek Khanna, the Court emphasized the application of the doctrine of election within the RERA-consumer forum framework. The Court also dismissed the developer’s claim that MahaRERA lacked jurisdiction due to non-registration, reiterating that such non-compliance falls within RERA’s regulatory scope.
Legal Implications
The Real Estate (Regulation and Development) Act, 2016, provides a sector-specific grievance mechanism, with Section 79 barring civil courts from matters under RERA’s scope. However, Section 88 states that RERA’s provisions supplement existing laws. In M/s Imperia Structures Ltd. v. Anil Patni & Another, the Supreme Court previously affirmed that consumer forums, unlike civil courts, are not barred by Section 79, allowing homebuyers to choose between RERA and consumer forums. However, the consequences of this choice were not clearly defined until now.
The judgment in M/s Kabra and Associates solidifies the threshold for what constitutes a binding election. The doctrine traditionally requires three elements: knowledge of alternatives, a clear choice, and a deliberate decision. The Court’s decision implies that even minimal engagement, such as an initial filing that does not proceed to a substantive hearing, locks the complainant into their chosen forum.
Challenges and Recommendations
This ruling raises concerns about the efficacy of RERA as a chosen forum, given challenges in enforcing its orders, as noted in State of Himachal Pradesh v. Naresh Sharma. The decision could lead to a denial of justice if the chosen forum lacks the capacity to deliver effective relief.
Homebuyers affected by this decision have limited options, such as filing a review petition for obvious errors or seeking writ jurisdiction under Article 226 of the Constitution for jurisdictional errors. Alternatively, they may consider filing a new complaint in a consumer forum based on a distinct cause of action.
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Conclusion
The M/s Kabra and Associates ruling underscores the importance of strategic forum selection in real estate disputes. The initial filing is now a decisive act, dictating the legal path forward. Stakeholders must carefully consider their forum choice, as it bears significant consequences for their legal remedies.
