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Litigation to be now ‘affordable’ for homebuyers

Property buyers can now take their legal battles against builders to the Supreme Court for as little as Rs 500 through the Middle Income Group Legal Aid Society

real estate Updated: Mar 11, 2017 18:06 IST
homebuyers

Homebuyers generally spend over Rs 30 lakh to purchase property and over Rs 7 lakh to defend the matter in courts if they fail to get delivery of their homes on time.(Getty Images/iStockphoto)

Homebuyers often hesitate to take legal action against builders who have shortchanged them at an individual level because of the huge expenses involved in litigation. To make sure that they are not denied justice, the Supreme Court recently set up the Middle Income Group Legal Aid Society seeking to bring down the cost of legal expenses by almost 70% to 80% for middle class homebuyers with a gross income of less than Rs 60,000 per month or Rs 7.5 lakh per annum.

All that an individual is required to do is pay up Rs 500 as service charge and Rs 750 as admission fees to the society and fill the names of three lawyers who have volunteered to be a part of this society to take up the matter on his or her behalf. The lawyer can charge a maximum of Rs 14,000 for appearing on behalf of the petitioner (see box).

For senior advocates, homebuyers may have to pay Rs 7,000 as fees per appearance and up to a maximum of Rs 14,000 for appearance at the final disposal or at the appeal stage. (HT)

“Earlier only the poor could apply for legal aid but this is for the first time that the middle class has been included. This has been done because the apex court has found that the legal system is out of bounds for the average middle class person and the cost of litigation has gone up manifold and to ensure that every individual has the right to seek justice,” says SK Pal, Supreme Court lawyer.

The usual route to litigation currently for most middle class homebuyers is to form an association and approach the court as a group and share legal costs. If an individual espouses the cause of others and takes the fight to the high court, the general trend is that the builder moves the Supreme Court against the high court or the National Consumer Disputes Redressal Commission (NCDRC).

“A homebuyer spends over Rs 30 lakh on purchasing a property and over Rs 7 lakh on defending the matter in court once he fails to get delivery of the house on time,” says Pal.

SC’s move will definitely bring down costs for the middle class by almost 70% to 80% and bring in more accountability in the legal system. In order to file a petition, the advocate on record will have to certify whether the matter is fit to go to the Supreme Court. Also, if the advocate is found negligent in the conduct of the case, he will be required to return the brief together with the fee received from the applicant under the scheme. The name of the advocate will also be struck off the legal panel set up under the scheme.

“This will embolden flat buyers across the country to take a fight to its logical end. They will no longer be forced to back down from fighting the case because of the burden of escalating legal costs, especially at the Supreme Court level,” says Vaibhav Gaggar, partner, Gaggar & Partners.

He had represented homebuyer associations in the famous DLF case (Rs 630 crore penalty) before the Competition Commission of India.

Amit Chauhan, consultant at the Logical Buyer, says that this society has been formed to help all individuals seeking justice before the Supreme Court and is not exclusively meant for homebuyers. A lawyer charges anything between Rs 50,000 to Rs 60,000 per hearing and a senior counsel anything between Rs 2 lakh and Rs 6 lakh per hearing. Also, in the event of a court getting adjourned, a private lawyer still has to be paid his fees.

The government should also expedite setting up of an effective real estate regulator in a timely manner so that grievances of homebuyers are resolved.

Abhay Upadhyay, national convenor, Fight For RERA, says that the scheme is an innovative step in the right direction, but the biggest challenge will be to ensure that the empanelled lawyer does not discriminate in terms of commitment between his regular clients and the clients referred through this society.