Revisiting Real Estate Regulation Act (RERA)

Pradeep Biswal

After the implementation of RERA, there has been a visible impact on the real estate sector in India and the home buyers are getting their grievances mitigated through this mechanism.

The enactment of the Real Estate (Regulation and Development) Act, 2016 was a historic step by the Union Government to regulate the real estate sector and protect the interest of the home buyers in the country.

The Act mainly aims at facilitating the sale of real estate properties in an efficient and transparent manner and speedy redressal of the complaints.

The Act came into operation on 1st May, 2017, and the Real Estate Regulatory Authorities and Appellate Tribunals were established in the states to fulfill the mandates of the legislation. During the last four years, there has been a visible impact on the real estate sector and the home buyers are getting their grievances mitigated through this mechanism.

Added to the complaint redressal by RERA courts, the Adjudicating Officers are also looking after the claim of compensation by the home buyers. A new dimension is now taking shape to settle the disputes through mediation and amicable settlement instead of going through legal recourse. Some States are acting torch bearers in this regard exhibiting positive results. The Appellate Tribunals are saving a lot of time and energy of the parties by disposing of the cases quickly and hardly parties are knocking at the door of the High Courts these days. This is a welcome change.

In recent months, the Hon’ble Apex Court has pronounced few judgments having far reaching consequences and strengthening the hands of the RERA in regulating the real estate sector. In its order and judgment in case of M/s Newtech Promoters and Developers Private Limited Vs State of UP and Others Hon’ble Supreme Court upheld the provision for payment of at least thirty percent of the penalty by the appellant while filing an appeal and it will go a long way in filing of frivolous appeals against the order passed by RERA.

The Court  also upheld the delegation by the Authority to a single member whose order was under challenge. Consequently, a single member bench can adjudicate the disputes and it will speed up disposal of cases. Further, recovery of the amount to be refunded by the promoter  to the home buyer as  an arrears of land revenue as provided under section 40(1) of the Act was upheld by the Hon’ble Apex Court. This adds credence to the authority of RERA in lawfully enforcing its order. It was held that unless a Completion Certificate has been obtained prior to enforcement of the Act, a project would be treated as ongoing project attracting registration under RERA. Many of the issues agitated by different stakeholders before various courts got settled in the process.

In another significant ruling very recently the Hon’ble Apex Court in a case involving Union Bank of India challenging the order of the Rajasthan High Court held that in a dispute between a builder and the bank financing the project the bank can’t unilaterally take over the property on the ground of default by the builder and the home buyer will have an edge over the claims of the bank. The provisions of section 11 (4) (h) of the Act prohibiting mortgaging a property booked by the home buyer  by the builder holds good in the present context. Although it puts the banks in a tight spot in recovery of the outstanding loans advanced to the builders, the home buyers got a sense of relief.

The National Consumer Disputes Redressal Commission have held in a recent decision that until a promoter obtains the Occupancy Certificate from the competent authority the maintenance of the project has to be borne by the promoter himself and the handing over of the possession to the home buyer will be treated as paper transfer only.

The ramifications are far and wide in the sense that the promoter has to complete the project in all respects and obtain the Occupancy Certificate before handing over the possession of the house and maintenance of the common facilities to the home buyer and their association respectively.

The major issue now confronting the home buyers is with regard to execution of the order passed by RERA/ Adjudicating Officer or the Appellate Authority.  Once an order is issued resulting in refunds, imposition of penalty, interest or compensation for the promoter and in the event the promoter defaults in executing the order within the mandatory two months time period the home buyer may approach RERA for execution of the order.

In such situations RERA does not have any mechanism to execute the order itself and in turn sends it to the District Magistrate for execution through a certificate proceeding. It’s again a very lengthy legal process and the home buyer is made to wait for years to get his dues. When there’s a case related to physical handing over possession and such other issues, the execution case is sent to the civil court having jurisdiction to execute the order. This is again the beginning of another legal battle for the home buyer waiting for years to get justice. In the process the very objective of the Act gets defeated. Time has come to find out a solution for the problem and the best possible option may be to enable RERA to execute its own order through a dedicated machinery under its control.

The second issue is with regard to non registration of some real estate projects by the promoters. As usual the planning authorities accord approval for such projects and issue completion certificate/ occupancy certificate for the same although the promoter doesn’t get it registered under RERA. Further, the sale deed for plots/ houses under  such projects get registered by the local registering authorities without insisting on RERA registration.

To ensure all eligible projects get registered under RERA, mandatory provisions need to be made for the planning authorities to insist on RERA registration before issuing a competition/ occupancy certificate for a project.

Likewise, completion/ occupancy certificate as well as RERA registration have to be made compulsory for registration of the sale deed in case of plot/ house under a real estate project. This will bring in an efficient system capable of providing justice to the home buyers within a reasonable time frame and fulfill the objectives of the legislation.

(Mr. Pradeep Biswal is a bilingual poet writing both in Odia and English. His poems are widely anthologized. He is also an editor and translator of repute. A retired IAS Officer, Mr. Biswal presently holds the position of Member, Odisha Real Estate Regulatory Authority and stays with his family at Bhubaneswar. Views are Personal)