RECALIBRATING CONSUMER PROTECTION IN THE INDIAN REAL ESTATE SECTOR: JUDICIAL SHIFTS, LEGISLATIVE TOOLS, AND EVOLVING ACCOUNTABILITY

Author: Rasika Raveendran, University of Calicut, Kerala.

This article examines the evolution of consumer protection mechanisms in the Indian real estate sector, highlighting the significant legislative and judicial interventions that have transformed the customer protection landscape. The research analyses the impact of the Real Estate(Regulation and Development) Act, 2016, recent supreme court judgements, and the application of consumer protection Act to real estate disputes. Despite extensive reforms, implementation challenges, creating inconsistencies between legislative intent and on-ground realities. Through analysis of case laws, statutory provisions, implementation practices, this study identifies systematic gaps in the current regulatory framework and proposes a multi -dimensional approach to strengthen consumer protection. This article argued to enhance regulatory frameworks, greater stakeholder engagement, compliance with laws, digital transformation to create a more accountable and transparent real estate ecosystem in india.

Keywords: consumer protection, Real estate regulation, RERA, Homebuyers, Indian real estate

“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full  and  managed with reasonable care, it is about the safest investment in the word   - Franklin.D. Roosevelt, U.S. president

The Indian real estate sector represents a founding member of the national economy, and the second largest employer after the agriculture sector in the country. Despite its economic significance, tremendous growth factor, rapid urbanisation, liberalisation, increasing demands of housing and commercial spaces, the sector has historically been characterized by the power imbalances between buyers and developers, opacity and often others. Prior to the introduction of regulatory reforms, homebuyers frequently encountered  a myriad of issues, including project delays, poor constructions, and quality. Unilateral changes to contracts and unfulfilled commitments. This absence of the dedicated and formful regulatory framework left the consumer vulnerable to the exploitative practices with limited avenues for timely and effectives redressal measures. Homebuyers often face a challenging and perplexing process, even though  spending their whole income, due to the absence of a centralized marketplace for real estate ,long lines of legal battles, civil courts, consumer forums and criminal proceedings.

Nevertheless, of the legislative interventions such as RERA and judicial interpretations that have aimed to rebalance the distribution of power dynamics in the real estate sector , significant challenges buyers faced in the transaction persists. This research addresses the critical question: How effective  are the current regulatory and  judicial mechanisms in delivering  protection to homebuyers in the real estate market? The study examines the disconnect between the legislative tools and their implementation in, why still the stringent provision alive consumers have to face barriers of obtaining timely and effective redress.

The core purpose of this research is to evaluate the efficacy of India's evolving consumer protection framework in the real estate sector and strategic interventions. 

However, the judiciary termed transaction is the dominant purpose  and even the companies  can be considered consumers if the property is for personal use .This evolving jurisprudence  under the CPA  strengthened the real estate buyers by expanding the meaning of ‘consumers’, curbing  unfair trade  trade practices and ensuring just remedies. This is the vision to  make the real estate  field more equitable  and transparent for the buyers.

EVOLUTION OF CONSUMER PROTECTION ACT IN INDIAN REAL ESTATE SECTOR:

The Consumer Protection Act, 1986 along with the legal provisions of the contract act were the legislative frameworks that the buyers and developers relied upon to ensure the fairness and effectiveness of the consumers protection. The consumer protection Act, 1986 represented the significant advancement by introduction of redressal forums, deficiency in  service as along the grounds  for the complaint. 

The Indian legal system  experienced  a revolution with enhancement of CPA 1986 which was specially designed to protect the consumers with less formal , less paperwork and less delay  with wide recognition  in India as poor man’s legislation , ensuring easy access to  justice. CPA as the first legislation addressing the grievances of consumers including purchasing real estate, defined the concept of consumer rights. The novelty  of the CPA is inclusion of both goods and services in its ambit where the consumers can bring suits for defective products as well as the deficiency of services.

CONTRACT ACT LAW: Before CPA  application to real estate, homebuyer’s primarily rely on the Indian contract act. How the aggrieved  homebuyers  legal recourse under section 76 ( compensation for breach) where courts struggled with quantifying appropriate damages for  possession delays. Under section 17-18 (misrepresentation and fraud) regard promised amenities specification and  section 56(Doctrine of Frustration) to protect project delays and  with judicial interpretation generally  favoring developers.

The Real Estate (Regulation and Development) Act , RERA represents a watershed moment in  India’s consumer landscape, creating a specified regulatory  framework for real estate transactions. These frameworks has to be followed : 

Mandatory Registration and Transparent information  system: A mandatory regime for real estate projects exceeding 500 sq or involving more than 8 apartments. This involves the verification of project credentials, creating a preliminary screening  against fraudulent developments. [3]The act mandates registered project details to be publically accessible to RERA authority websites,  creating a transparent ecosystem . And if without the consent of the buyer made any changes then all the original documents for all projects undertaken like this have to follow.

Financial disciplines and fund protection mechanisms:  Developers must maintain a separate escrow account for each project, where a minimum of 70% of the funds received from buyers is to be deposited. These funds can only be utilized for specific project construction and development. Funds of the escrow account only be withdrawn according to construction progress, wiry certification requirements from engineers, architect and chartered accountants, toward with accountability of the fund utilization where developers must maintain records of fund utilisation, subject to audit and regulatory scrutiny.

Contractual standardization and consumer rights: This inbuild  provision by way of Agreement for sales i.e, the RERA act mandates the promoters and allottees to adopt the agreement for sale as prescribed by the respective states

Section 13(1) of the Act prescribes that promoters shall not accept a sum more than 10% of the cost of units as advance payments or application fee without entering a written agreement.

Section 13(2) that each respective state has to prescribe the format for RERA states.

Specialized adjudication and time bound redressal :The act established a dedicated adjudicatory  mechanism through state- level real estate regulatory authority and appellate tribunals.

THE CONSUMER PROTECTION ACT 2019:

Over the years, the changing consumer landscapes and the advent of e-commerce necessitated significant updates to consumer protection laws, leading to the formulation of the Consumer Protection Act 2019. 

The significant difference between the two acts is the establishment of regulatory authority to oversee and address the common unfair trade practices against the sellers. With amendment 2019. The central protection authority (CCPA) introduced  safeguarding the welfare of the consumer and actions against unfair trade practices and also to investigate and thereby penalise the businesses if they engage in deceptive practices.

Product liability provisions: The earlier legislation consumers could not sue the seller for issues related to price, quality, and value of the products in the consumer courts; they were required to be in the long standing line of the civil suits. The 2019 act rectified the limitation and incorporated the provision that allowed the sellers to approach consumer courts related to the product-related issues.

Jurisdiction: With CPA 2019 pecuniary jurisdiction of the consumer courts have been raised. The consumers file their complaint from the residence irrespective of the location of the seller. 

The limits of the District Commission are raised from 20 lakhs to 10 crore.

The limits of the State Commission raised from 20 lakhs to 10 crore.

The limits of the National Commission are raised from 1 crore to above 10 crore

E-commerce: The CPA 2019, presses importance to incorporate the protection of e-commerce consumers by ensuring the safeguard of e-commerce transactions at the same level enjoyed by the brick and mortar transaction.

Addressing the unfair terms of the contract : The CPA 2019 has been a steep change in empowering the state commission and national commission  to declare the contract void on the unfair terms and conditions. 

The judiciary played  a transformative role in shaping the real sector of India and the consumer protection landscape. The courts expanded statutory protections, addressed legislative gaps and established precedents that fundamentally altered the power dynamics between homebuyers and developers.

The Hon’ble courts in a landmark judgement dated  November 02, 2020 in the case of Imperia structures ltd v Anil Patni and Another held that RERA does not restrict the jurisdiction  granted under the CPA, 1986 to handle and deal with complaints filed by consumers of real estate  projects registered under RERA, 2016.

“No u turn allowed” The Supreme Court further clarified that complaints filed before consumer forums prior to RERA's establishment need not be transferred to RERA authorities after the enactment of the Real Estate (Regulation and Development) Act, 2016. Justice Chandrachud emphasized that CPA remedies are "additional and not exclusive," reinforcing the consumer's right to choose their forum

The National Consumer Disputes Redressal Commission (NCDRC) has already made it clear  that consumers  must choose one forum for the complaints . A recent case, Infrastructure Limited v. Marcotech Developers Ltd. decided on September 20,  2023, where NCDRC dismissed a complaint on the grounds of maintainability, applying the doctrine of estoppel by election which prevents the same grievance from being pursued in multiple forums. Ruled that once a complainant has chosen to seek remedy under one legal forum they cannot approach another to avoid the contradictory judgements.

Bar of Jurisdiction: As per the section 79 of the RERA Act, 2016, civil courts are not empowered to hear any suits or proceedings on any matter which the adjudicating authority, or an appellate tribunal is empowered to address under the RERA Act, 2016. It is important to move to the correct forum  and take right steps, understanding the facts of grievances and legal procedures and jurisdiction before initiating any legal proceedings to avoid unnecessary delays and legal expenses.

This study adopts the doctrinal legal analysis and analytical method. The doctrinal part focuses on organized examination of judicial precedents, statutory laws, regulatory frameworks to trace the development of the regulatory legal protection for the real estate consumers. In parallel, the analytical method explores the existing legal materials like statutes, caser laws, judgements, and scholarly writings.

 Data was collected from multiple sources:  

 Primary Legal Sources: This includes legislation, government regulations and landmark judicial decisions directly impacting the real estate consumer rights.

Secondary Sources: Academic articles, policy reports, and industry publications to provide context and critique of existing legal mechanisms.

Qualitative Insights: In-depth wordings from legal experts, regulatory officials and representative of consumer rights groups to gather the real world experiences

 All aspects of the research were conducted with due regard to ethical standards. Interview participants provided informed consent, and anonymity was preserved on request. All secondary resources were duly credited to maintain academic integrity. These resources form the essential database for this study.

 The RERA Act revolutionized the consumer landscape still encountered by the several challenges which impacted its effectiveness in achieving the desired outcomes. One of the most significant challenge is the diverse and decentralized Indian real estate market. Since,  RERA as the central law , it depends on the state government  for the enforcement . Each state and UTs can create rules, resulting in significant differences in how RERA is applied. This raised the concern about the protection of the consumer rights where these inconsistencies complicates the RERA’s overall assessment. 

The developer was held accountable for the structural defects, mostly due t o the negligence. The developer has to hand over the property  to the buyer with no structural defects regarding the property on nothing like that should occur in the future. This is also followed b y the capacity constraints as analysing the staffing patterns reveals that many  authorities function with less than 50 %of sanctioned possession.

Another emerging challenge is technical integration where implementing a robust digital  platform for project  registration and information dissemination is essential but challenging due to varying levels of technological advancements. These technical limitations hampers the effective implementation with several state authorities lacking  integrated digital platforms for  complaint tracking, project monitoring, enforcement surveillance etc.

The lack of a single- window approval mechanism presents major hurdles for real estate  developers. They must obtain multiple permissions from different authorities like environmental clearances from the central , encumbrance certificates from the state government before registering. This is a time consuming  process causing delay , preventing most of the developers  from through registration.

The regulatory arbitrage highlights how developers take advantage of overlapping jurisdiction between RERA and consumer courts and civil courts. Even though RERA was introduced as the main authority still buyers can approach the consumer forums. This creates the confusion when different buyers of the same project receive conflicting and favoured judgements from different forums and all are legally valid.[11]

Enforcement and adjudication mechanisms present another hurdle , even though state wise regulatory authorities still delay the projects and vary the efficiency. The problem of delayed possession and incomplete projects will be the persistent  challenge despite the stringent provisions of RERA.

The findings of this research highlights the complexities of consumer protection in India’s real estate sector, emphasizing  significant legislative progress alongside ongoing implementation challenges. .The introduction of Real Estate (Regulation and Development) Act, has reshaped the regulatory  landscape, but the desired consumer protections have not fully attained due to structural constraints and the irregular operational systems.

A key challenge is the regulatory  fragmentation with multiple forums such as consumer commissions, RERA authorities, civil courts making this a longstanding judiciary wait. This is because the inconsistent  interpretations of laws allows the developers to enjoy and use the loopholes. A more unified regulatory approach is necessary to ensure consistent application of laws, relating to quality standards, permissible delays, transformative interpretations.

Another major issue is the enforcement gap, although the adjudication gaps have improved the enforcement orders remain  low. This gap highlights the need for better enforcement mechanisms, as current structures lack adequate personal and monitoring capacities.

Digital transformation offers significant opportunities to improve transparency and accountability of the real estate sector. However disparities in the adoption of technological interventions create information imbalances. Embracing digital tools pace the growth with the growing market structure.

Stakeholders engagement is also vital for effective consumer protection. The amendments in the consumer protection act 2019, ,made the growth of the sector more easily maintainable as the jurisdiction space involved, e-commerce, regulatory mechanism, product liability everything contributed to consumer protection in the real estate sector of India. In summary, addressing consumer protection requires  coordinated efforts and mechanisms, harmonization, digital transformation, and stakeholder engagement. Policy makers must adopt a comprehensive approach to retaliate and stay in the position.  

This research highlights the evolving landscape of consumer protection in India's real estate sector, emphasizing the impact of legislative measures like RERA  and judicial interventions. While progress has been made, challenges in implementation reveals a gap between  the rules on paper and real life experiences. By  focusing on key areas such as regulatory coordination, enforcement capacity, consumer education, stakeholders can create a more transparent and accountable real estate environment. Future research will be essential  in assessing the effectiveness of these and exploring innovative  solutions to strengthen their  consumer protection , ensuring that the real estate market  evolves  in a way that benefits all the subjects.

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3. Mayashree Acharya, RERA Registration, Clear (Apr. 21, 2025), https://cleartax.in/s/rera-registration.

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7. Vijay K. Singh, Consumer Protection in Real Estate: Examining the Role of RERA in Safeguarding Buyers’ Rights (May 27, 2024), BW Legal World, https://www.bwlegalworld.com.

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10. Prasanna S. & P. Lavanya, Evolving Trends in Real Estate Development Regulations: Study of RERA (July 2023).

11. In Focus: RERA—RERA Challenges, 99 Acres, https://www.99acres.com/articles/what‑missing‑in‑the‑real‑act‑html.

12. RERA and Its Impact on Real Estate, Malabar Developers, https://malabardevelopers.com.

13. What Is RERA and How Does It Impact Homebuyers in India (Mar. 1, 2025), Law Bhoomi, https://lawbhoomi.com.