Good news buyers, NCDRC pronounces overwhelming judgment on Arbitration clause

We previously discussed how the delayed hearing of arbitration clause is impacting hundreds of consumer cases in NCDRC. We also mentioned in our 2 months old post that judgment is expected in July. Much to the relief of consumers, the judgment was pronounced by the larger bench of NCDRC in favor of consumer. The point of conflict was an amendment made to section 8 of Arbitration and Conciliation Act in year 2015 that states that “for matter which is the subject of an arbitration agreement, the parties shall be referred to arbitration unless it finds that prima facie no valid arbitration agreement exists”. Builders had diverted attention of consumer court to this clause and hundreds of consumer cases including around 30 fought by consumer associations were left in lurch since October last year. However, NCDRC finally pronounced a much appreciated judgment on arbitration clause.

NCDRC concluded its judgment stating: “We unhesitatingly reject the arguments on behalf of the Builder and hold that an Arbitration Clause in the afore-stated kind of Agreements between the Complainants and the Builder cannot circumscribe the jurisdiction of a Consumer Fora, notwithstanding the amendments made to Section 8 of the Arbitration Act.”.

The complete judgment of larger bench of NCDRC is attached here for reference.

Last updated: July 14, 2017 at 1:12 am

2 thoughts on “Good news buyers, NCDRC pronounces overwhelming judgment on Arbitration clause

  • July 14, 2017 at 5:19 pm
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    I hope if our politicians learn from judiciary although people have reservations but it’s the only relief in our corrupt country where politicians and the goons are such gelled with each other only to harass the public and make talk claims but actually garner votes with false hopes and lying with aim to ridicule innocent people. RERA is one example where corrupt builder government nexus is starking.
    I salute Judiciary who still manages to understand public grievances.

    Reply
  • August 4, 2017 at 2:16 pm
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    I am one of the thousands of victims who are trapped by MVL Limited,Gurgaon in their real estate projects. I have booked a flat in 2006 in their project MVL Coral, Bhiwadi. Builder has violated many applicable bylaws and cheated its buyers for unprecedented gains. In 2015 we also got the judgment from Hon’able NCDRC . Later some amendments were also made in the final orders. You can see judgement from NCDRC web site case no. CC/142/2012 and EA/132/2016.

    Actually, I would like to project the corrupt nexus between builder-financing banks and regulatory authorities in this project.

    1. Nexus of Builder and Financing bank in MVL Coral

    I had taken loan from DHFL bank for this project in the year 2007. Normally financing banks are reluctant to finance builder on land deals but they eagerly provide loans to buyers of flats for construction linked payment plans. The payment plan is designed in such a way that you have to pay 90% of the price of flat at the laying of top floor. By that time builder spends only 40%-50% of that money. They stop constructing further and divert funds in their other business. However, financing bank continues to provide loans to new buyers and trap them. It happened in this project also. We paid 90% amount from 2006 to 2010 and project is only partially complete after 11 years .

    Other bigger fraud is financing bank ignores the deviations in actual construction from the approved layout plan.

    Its a primary responsibility of bank to have a technical verification of the project which includes verification of approved layout plans and construction at site as per the approved layout plan. Home financing banks are normally affiliated to National Housing bank. National housing bank has made it mandatory for a financing banks to inspect the construction at building site once in 3 months whether construction is as per approved layout plan or not.

    For this project DHFL started financing it after due technical verification of approved layout plans. But they ignored the violations during construction and helped the builder to trap more buyers for this illegal construction by continuing disbursing loans to them.

    When I came to know about the irregularities in construction, I started emailing the bank about these irregularities. But the bank continued financing it ignoring all my emails. When we won the case, I emailed them and asked about the technical verification and action taken on my email.

    This was their reply:
    “The Developer was of your choice and as a purchaser, you alone are liable for any delay or default on the part of the Developer. Only based on your selection of the Developer and decision to purchase the property from him, DHFL sanctioned and disbursed the loan . Also, as a buyer it is your primary duty to satisfy yourself about the developer’scapabilities to construct the project in time and as per approved plans and permissions. You cannot hold the financial institution liable for failure on your part to do the required due diligence as a buyer”
    Several times I asked them to address about the core issue of technical verification and trapping gullible buyers into this project favouring the fraud builder but I never got satisfactory answer.

    2. Nexus of Builder and Regulatory authority in MVL Coral, Bhiwadi where I have invested

    There is a town planning authority in Bhiwadi which is responsible for enforcing building by laws. It is called Urban Improvement Trust Bhiwadi(UIT,Bhiwadi). In MVL Coral Project where I had invested, UIT,Bhiwadi ignored number of irregularities and allowed the builder to construct further.

    In 2015 after I filled a complaint with UIT regarding these irregularities, I think one inter – department committee was setup by UIT Bhiwadi to enquire about irregularities in MVL Coral Project. It was found, UIT Junior Engineer had ignored the illegal construction at site. He should have stopped the work at the construction of plinth itself. Committee also recommended legal action against him. Recently another victim got a copy of internal note sheet through RTI which has disclosed this.

    Later on as it happens, matter was suppressed internally in the department…. Builder is fined just rs 135000/- for violating approved Plan and builder continued to fool gullible buyers in this illegal project.

    Reply

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