Arbitration Clauses Do Not Bar Consumer Commissions' Jurisdiction, NCDRC Allows Complaint Against Jai Prakash Associates Ltd.

Brief Facts:

Mr Dharamvir Singh (“Complainant”) booked a housing project named “Kassia” in 2011, developed by M/s Jaiprakash Associates Limited (“Builder”) and its subsidiary M/s Japree Sports International Limited. The Complainant deposited Rs. 54,08,267 with the Builder for the same. The possession, originally scheduled for June 2013, was delayed, and despite inquiries, the Builder informed the Complainant that possession would be handed over by December 2015. Dissatisfied with the delay, the Complainant cancelled the allotment in April 2015 and sought a refund. The Builder did not respond to his emails or a legal notice demanding a refund. Feeling aggrieved, the Complainant filed a consumer complaint in the National Consumer Disputes Redressal Commission (“NCDRC”).

In response to the complaint, the Builder acknowledged the booking and deposits made by the Complainant but argued that the Complainant was an investor, not a consumer. It asserted that the dispute fell under arbitration as per the Standard T&C of the agreement. It cited various reasons for project delays, including labour shortages, water scarcity, legal issues, and farmer protests.

Observations by the Commission:

The NCDRC observed that the Builder failed to provide evidence supporting its claims regarding the 'investor' status of the Complainant. Thus, it held that it could not be assumed that the purchase of the housing unit was being done for a commercial purpose. The NCDRC upheld the maintainability of the complaint as the Consumer Protection Act allows complaints exceeding Rs. 1 crore to be filed before the NCDRC, and in this case, the claimed value surpassed this threshold. The NCDRC further cited Emaar MGF Land Limited Vs. Aftab Singh [(2019) 12 SCC 751], wherein the Supreme Court held that consumer forums exercise jurisdiction in addition and not in derogation of the Arbitration and Conciliation Act, 1996. Thus, the presence of an arbitration clause in the agreement does not bar the aggrieved party from approaching the NCDRC.

Going into the merits of the factual circumstances, the NCDRC observed that the Provisional Allotment Letter stipulated a 24-month delivery period for possession, with a 90-day grace period, setting the due date as June 28, 2013. The Complainant had paid a substantial amount, but the Builder failed to provide possession or obtain an "occupation certificate." Reliance was placed on cases like Bangalore Development Authority vs Syndicate Bank [(2007) 6 SCC 711] and Pioneer Urban Land & Infrastructure Ltd. vs Govindan Raghavan [(2019) 5 SCC 725], which established that buyers should not be subjected to an indefinite wait for possession. The NCDRC also dismissed the Builder's defence of force majeure and extraordinary circumstances as it had collected payments and interest without meeting the possession obligation.

As a result, the NCDRC directed the Builder to refund the entire amount deposited by the Complainant with a 9% interest from the date of deposit.

Case Title: Dharamvir Singh and Anr. vs Jai Prakash Associates Limited and Anr.

Case No.: C.C. No. 675 of 2016

Advocate for the Complainant: Mr Madhurendra Kumar

Advocate for the Respondent: N.A.

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