The Noida Extension fiasco provides yet another example of the vulnerability of consumers when it comes to housing projects in the country. It also highlights the urgent need for an independent regulator to monitor the real estate sector and protect the interests of consumers.

I am referring to the Allahabad High Court’s quashing of land acquisitions in two villages of Noida Extension by the UP government and its consequence on thousands of consumers who had paid huge amounts to the builders who acquired the land and promised to provide them houses. Even as these consumers form associations and knock on the doors of Allahabad High Court, an even larger number of consumers who have invested in housing projects in another dozen villages spend sleepless nights, worrying about the fate of their houses — Allahabad High Court has fixed August 17 for hearing the petitions of farmers of these villages.

Whatever the future holds for the house buyers of Noida extension, one can say with certainty that there is a long waiting period ahead of them.

It is possible that the farmers will sell back the land, but at a decent price, either to the government or the builder. The consumers will then get their houses, but may be at a higher price. In some cases, the farmers may not sell back. In all such cases, the Greater Noida Authority has to ensure that builders refund the full amount with interest to the consumers. In addition, the authority too has to fully compensate the consumers for any financial loss caused to them in these deals.

The Supreme Court, in its order in the case of Lucknow Development Authority vs M.K.Gupta (delivered in 1993), made three highly relevant points: first, the statutory authorities are liable for the consequences of their actions or inactions. Second, the damages to be awarded to consumers in such cases should not only compensate the consumer, but also act as a deterrent and finally, the compensation so awarded should be recovered from those who are directly responsible for the loss or injury to the consumer.

This principle should be fully applied in the cases against the Greater Noida Authority and the message that should clearly go out is that governments that resort to such coercive and illegal acquisition of lands should pay for the consequences. This is not a one-off incident in India, and it can be stopped if the law courts ensure that those responsible, pay a steep price for their actions.