We have seen the judgment from NCDRC’s larger bench on interpretation of section 12(1)(c) especially for class action where multiple buyers or association fight as a group against the respondent.
While it was touted as a beginning of movement in favor of consumers, the judgment has also left many roadblocks for consumers. Some of the key issues that are anticipated in light of the order:
- Buyers may play waiting game: Larger bench ordered that consumers or association be allowed to approach NCDRC if it represents or constitutes all consumers (buyers in case of residential projects) with common grievances and interests against the builder. In such a circumstance, there will be tendency among buyers to let some other set of buyers take the pain in proceeding to the court and would then be inclined to join that group just before the maximum limit of 2 years from cause of action or before eventual judgment.
- Delay in court proceedings: If the group approaching NCDRC doesn’t contain all consumers associated with the project, the group (or court on behalf of group) shall send private and/or public notice to other buyers as necessitated by court. The notices will be followed by a waiting period as deemed fit by court. This waiting period would typically not be less than 3 months implying delay in court proceedings.
- Builder will be made party to decision on admissibility: Larger bench has also directed that respondent party (builder) also be heard before granting permission/admitting the class action. This is expected to delay the proceedings as builder will take its own time to supply list of buyers and buyers that qualify as consumers.
- Likely to cause grudges between buyers: With larger bench directing that group approaching NCDRC shall be a representation of all consumers of the project, it would imply that buyers who are not necessarily consumers would also try to force their way into the consumer cases leading to grudges between buyers and eventually leading to delay in court proceedings.
Success rate of class action admission in NCDRC has largely declined over years. What used to be around 75%-80% in year 2011-2012 has come down to 35%-45% in 2016 with NCDRC getting increasingly conscious of the increased work such admissions will offload to it. In such a scenario, revision and a direction was on cards but it might appear that NCDRCs larger bench decision on class action has led to more questions than a widely accepted and appreciated solution. Now timely judgment will be a concern much more than just admission.