4 YEARS OF RERA: THE DOGMA OF HOPE?

By Adv Siddhant Mehta

Four years and counting, ever since the Real Estate Regulatory Authority (RERA) was arrayed,
the real estate sector continues to play a prominent role in backing India’s fiscal progression,
being one of the principal cradles of employment and infrastructural growth. Inopportunely,
due to the lack of directives and stern practices until 2016, the sector had been pigeonholed by
a great deal of lop-sidedness, ever so often generating high – levels of wariness and dread midst
home buyers, bankers and promoters.
RERA was ordained to stimulate transparency and culpability by way of shielding the rights
and interests of the homebuyers, leading to an about-turn in home deals. Nonetheless, the
wholehearted involvement of the Indian states in its nascent stages is worth noting. While, there
lies an obstacle laden path ahead, it is a seemingly incredible feat to garner recognition and
approval given the trepidations during its formative past of contemplative decision making.
Likewise, even though the home buyers had been fretting about the newfound guidelines, they
seem to be bequeathing their trust in the The Real Estate (Regulation and Development) Act,
2016 (Act) by way of invoking proceedings against dishonest builders for rampant delays and
fabricated assurances.
As currently positioned, an approximate of 39,855 projects 1
have been listed under RERA,
owing to the notification of the general rules in 30 states whilst establishing permanent
adjudicating bodies in 20 states. It is reassuring to note the steady decline in some of the most
common protests such as untimely possessions, false declarations and inappropriate
accounting/billing for additional areas and/or amenities provided, due to the fundamental rights
conferred upon the home buyers and the stringent statutory compliances met by the builders.
Conversely, the Maharashtra Real Estate Regulatory Authority (Maha RERA) seems to have
successfully issued orders and/or cleared off 64% of the 6,631 complaints received, as of April
20192
.
As a result, the Maha RERA has been given more teeth vide the order passed by the Bombay
High Court in August 2018, wherein the authority’s power had been boosted to deal with
grievances of unregistered projects.3
Since its inception, RERA has endeavored to cultivate the practice to urge and make
builders/promoters compliant with the Act, despite which builders would neither make
payments nor attend hearings. However, 2 years down the line, things have reformed with
builders being reprimanded by the concerned RERA authorities for being in breach of the
RERA guidelines. As a matter of fact, builders are now broadcasting the RERA listing and aggressively registering their ventures to draw attention towards the home – buyers and
financiers.
The real estate sector is living through consolidation as the disorganized builders are finding it
hard to comply with the stringent norms under RERA. It is abundantly clear that only upright
builders/promoters will make ends meet with the impending wave of progress in the sector.
Amongst other compliances, builders are now supposed to deliver an affirmation to the home
– buyers declaring the legitimate legal title to the land, alongside authentic documents as proof.
RERA has even gone a step ahead in the process of safeguarding the interest of home buyers
by advocating an equally poised model (builder – buyer) agreement for sale, which can be
prepared and regulated in consonance with the respective state rules. Whereinafter, the
existence of some penal provisions mandating a certain sense of credibility amongst the
builders together with norms relating to disclosures, has facilitated transparency.
It is laudable, to acknowledge the Government’s twin tower intervention of the Act and
demonetization, that brought about the much desired jolt to the realty sector. So much so, that
cash induced dealings vanished into oblivion, provisions were introduced to protect the interest
of home buyers, developers were barred from using monies in a fungible manner and the Apex
Court became the messiah of the masses by belting orders against rowdy developers.
The significant creeds of RERA that enkindled with home-buyers and all parties associated
include:
i. The right to inspect the clarity and marketability of the land title
ii. Reflection of associated litigations on the portals
iii. Background and portfolio of the developers
iv. Registration of projects only on the procurement of all necessary sanctions
v. Transparency of the invested monies vide creation of escrow accounts
vi. Provision of a model agreement for sale
vii. Apprising the home buyers about the latest approvals vide web portals
viii. Stringent timelines pertaining to the completion of the projects
ix. Heavy consequences for non-compliance of the norms (penalties upto 10% of the
project cost)
x. Customer centricity and transparency
xi. Certificates from developer proving the quality of construction
xii. The power vested in the home buyers to remove developers from the project
(MahaRERA SOP)
xiii. The ability and right of the home buyers to pay in accordance with a project’s progress
(MPRERA)
Even so, it is equally essential for the builders to have the funds and other prerequisite reserves
to be able to complete any venture. It would be in stark contrast to the previous commercial
scenario where a huge chunk of the monetary backing was principally reliant on incremental
deals without any strict deadlines. Likewise, it is pertinent for the states to set-up a structure for the comfort of carrying out
development in the real estate sector and improve demand, assuming the sector’s involvement
to the total economy in terms of service providers and the demand of intake it brings forth to
supplementary zones like steel, cement, etc. Hence, administrative inclination and
organisational competence will continue to be fundamental aspects on the road to enactment.
On the flipside, there are manifestations where the provision of the Act have been diluted by
the States which go against the dictum of RERA, predominantly with respect to “ongoing
projects”. The watering down of the explanation of what institutes an ‘on-going project’
continues to be a sizeable worry. More than a few States decided to modify this definition in
such a manner that various incomplete projects may be excused from the ambit of RERA.
Coincidently, the intention of the Apex Court and the Act are on the same footing to permeate
self-assurance in the realty sector by warranting that the projects are scrutinised and finalized
in a judicious way by complying with all the rules and guidelines.
Correspondingly, regulations pertaining to imprisonment for not following the orders of the
RERA authorities have been concocted by furnishing for compounding of breaches and hefty
consequences on the defaulter.
In pursuance to the dilutions, the Bombay High Court upheld the constitutional legitimacy of
RERA and its applicability to ongoing projects across States in Neelkamal Realtors Suburban
Pvt. Ltd. And anr Vs. Union of India4
. The 2017 order came subsequent to the Apex Court’s
ruling asking the Bombay High Court to set the track on analogous encounters in other courts.
The ruling, offered respite to developers too, it extended RERA’s authority to allow more time
as a concession to developers for the timely completion of a project. Such bonus time is
intended to be only granted in compelling situations, depending on a case to case basis.
Auxiliary to all the aforementioned enrichments and apprehensions, one region of development
that can help the Act in becoming more relevant is if the standing State RERA authorities
(inclusive of other Committees and tribunals) are endowed further and this law is prescribed in
an evenhanded fashion, the legislation shall meritoriously function as an ombudsman to watch
over and accelerate the operations of pendent ongoing developments. This process may
possibly effect a rate of lessened pressure on the legal fraternity to individually handle these
developments and projects on an advanced footing.
In conclusion, going ahead, the nationwide orientation of the central and state rules will act as
a channel to propagate uniformity. Presently, the deviance between the central and state rules
is hampering the capacity of the builders to come up with projects across the nation.
Streamlining of the rules will not just aid the builders to maneuver their resources on the road
to organization and expansion, but also reinforce the home buyer’s assurance in the course.

=============

Views are personal.

New Consumer Protection Act to come into force from 20th July 2020: State Commission to have limit upto 10cr

By SRELJ Bureau

The salient features of The Consumer Protection Act, 2019 :

1. All the District forums are renamed as District Commissions. Hence forth all the District Forum now be called as Commissions.

2. To file an appeal, Opposite Party needs to deposit upto 50% of the amount ordered by District Commission.

3. An appeal can be now filed within 45 days of Order.

4. The original pecuniary jurisdiction of District Commission shall be uptil Rs. 1 Crore, State Commission from 1 Cr – 10 Cr. and NCDRC to be more than Rs. 10 crore. All Orders for aggregations of consumer will be applicable.

5. Now complainant can also institute the complaint within the territorial jurisdiction of the Commission where the complainant resides or personally works for gain besides what was provided earlier

6. Very important provisions under Section 49(2) and 59(2) of the new act gives power to the State Commission and NCDRC respectively to declare any terms of contract, which is unfair to any consumer, to be null and void.

7. A second appeal to NCDRC has been provided U/s 51(3) if there is a substantial question of law involved in the matter

8. Power of revision can still be exercised by NCDRC U/s 58(1)(b) and by State commission under 47(1)(b) of the Act.

9. Power of review has been conferred to District Commission, State Commission and NCDRC U/s 40, 50 and 60 of the Act respectively

10. NCDRC can hear appeals against the order of Central Authority by virtue of Section 58 of the Act

11. Period of limitation in filing of complaint remains 2 years with a provision for condonation of delay power U/s 69 of the Act

12. Section 70 provides for administrative control of State Commission over District Commission and that of NCDRC over State Commission. It inter alia provides for investigation into any allegations against the President and members of a State Commission / District Commission and submitting inquiry report to the State Government concerned along with copy endorsed to the Central Government for necessary action

13. Mediation is given statutory status by way of introduction of Section 74 in the new Act. As a new measures to solve problems out of court and through mediation, this new initiative has been provided.

14. A product liability action may be brought by a complainant against a product manufacturer or a product service provider or a product seller, as the case may be, for any harm caused to him on account of a defective product.

15. Chapter III of the Act provides for creation of Central Authority to regulate matters relating to violation of rights of consumers, unfair trade practices and false or misleading advertisements which are prejudicial to the interests of public and consumers and to promote, protect and enforce the rights of consumers as a class

16. The Central Authority shall have an Investigation Wing headed by a Director General for the purpose of conducting inquiry or investigation under this Act as may be directed by the Central Authority.

With new New Consumer Protection Act, which was awaited long back there was huge confusion as to financial jurisdiction. Now after the notifications, State Commission now can deal with transactions up to 10 cr.

Punjab and Haryana High Court term Punjab RERA extension of project order as “Omnibus”

By SRELJ

Punjab and Haryana High Court today stayed its operation of an Order passed by the Punjab Real Estate Regulatory Authority for “palpably wrong” circular during the Covid lock down period for extending the term of projects whose registration had expired.

The Bench observed that the circular “may even give protection to those promoters and builders whose registration may have expired long back”. The Central Advisory of RERA had already suggested to state RERAs to give extension of six months for projects which are completing after 25th March 2020 and a further extension of three months on case to case basis.

The Bench comprised of Mr Justice Rajan Gupta and Mr Justice Karamjit Singh had stayed the order in the matter where a a petition was filed against the Union of India and other respondents by r Vinod Kumar. He was aggrieved by circular dated May 13 2020, whereby Punjab RERA extended by six months the validity period of registration of projects.

Pleading before the Bench, the counsel for complainant contended that ostensibly the circular was issued to give relief to projects whose registration was expiring by March 15. But even the term of projects, whose registration had expired long back, had been extended by six months by the virtue of impugned circular.

The Bench observed that the Bench failed to understand the need for passing an “omnibus order” giving protection to all projects in the state, irrespective of whether the registration is expired long back or due legitimately and particularly when the Act had a specific provision for entertaining applications on behalf of promoters/builders for time extension.

Allotment Letter having no date of possession: Maharashtra RERA Tribunal asked TATA Housing to refund

image description

By SRELJ Bureau

In a land mark judgement, Maharashtra RERA Appellate Tribunal asked builder to refund the booking amount taken by TATA Housing Development Co Ltd. The Judgement said “In this matter, the foremost material and contentious issue is the date of possession which forms the sole basis for ascertaining the delay in possession’ Documents on record reveal that Allottee booked the flat on 24/06/2015 and allotment letter was issued on 11/07/2015. None of these documents stipulates date of possession’ Allottee’s contention is that possession was promised to be given by 2018 and later on it was revised to 2020 and ultimately to 2022 as is declared on the portal of Maha RERA. Contrary to this, it is argued by Developer and as observed by learned A’O’ also, date of possession was to be mentioned in the agreement for sale as
per the terms of booking form’ Developer has claimed that Allottee had shown his willingness to accept the possession by 2020 and was not happy with revised possession dale of 2022. It is further contended by Developer that final date of possession is 2022 as declared on Maha RERA portal and Developer never promised delivery of possession by 2018 or 2020 to the Allottee as falsely claimed by Allottee.”

As the original date of possession being in 2018, the Hon’ble Tribunal asked the Builder to refund the entire principle amount along with interest.

Maha RERA recognised COVID-19 period as Force Majeure

By SRELJ Bureau

In its Order dated 18th May 2020 vide Order No 14/2020, Maha RERA have invoked Force Majeure for COVID-19 Pandemic.

The Order with reference to the advisory issued by the Central Advisory Council on 13th May 2020, have extended time line for all all statutory compliance due to “Force Majeure” under the provisions of RER Act 2016.

The Order said “Whereas, in view of COVID-19 (Corona Virus) Pandemic and consequent nation-wide lockdown with effect
from March, 2020, reverse migration of labourers to their native places and break in supply chain of
construction material, the construction activities of real estate projects across the country have been severely
impacted.”
“Whereas, an urgent meeting of Central Advisory Council (CAC) was held on 29th April, 2020, and as per its
recommendations Ministry of Housing and Urban Affairs has issued Advisory regarding extension of
registration of real estate projects and concurrently extending timelines of all statutory compliances due to
‘Force Majeure’ under the provisions of Real Estate (Regulation and Development) Act, 2016 (RERA), on 13th
May 2020”

Accordingly, in keeping with the advisory of Government of India and in exercise of the powers under section
37 read with Section 34(a), 34(f) and 34(g), a force majeure period of six months, from 15 th March to 14th September, 2020 is being invoked and the following directions are issued with immediate effect:

MahaRERA vide Order No. 13/2020 has already revised project validity by three months. The said
validity is extended by a further period of 3 months suo-motu. MahaRERA shall accordingly issue
project registration certificates, with revised timelines for such projects, at the earliest. The aforesaid
extension will be in addition to the extension already granted or that may be granted to a project under
the first proviso to Section 6 of the Act.
• For further extension beyond the aforesaid 6 months, for adversely affected projects, concerned
promoters will have to apply in accordance with provisions of Section 6. MahaRERA may at its
discretion waive the fee for such extension due to force majeure in accordance with rule 7 of
Maharashtra Real Estate Registration Rules, 2017.
• The time limits for compliance under Section 11, which become due anytime during force majeure
period, stand automatically extended for a period till the expiry of force majeure period.
• The Force Majeure period will be treated as a “moratorium period” for the purpose of calculating
interest under section 12, 18 19(4) and 19(7) of the Act.
• The work of registration of sale documents has been adversely affected due to non-functioning of the
offices of the Sub-Registrar. Therefore, any registration of agreement for sale, which becomes due
during the force majeure period under Section 13 of the Act, can be registered in a period extending till
the expiry of force majeure period.
• The dates of possession mentioned in already registered agreements for sale, shall be deemed to be
extended by the Force Majeure period.
• Due to non-functioning of the concerned offices, the work of transfer of title and conveyance has been
adversely affected. Therefore, any compliance under Section 17 that becomes due during the Force
Majeure period is allowed to be completed in a period extending till the expiry of the force majeure
period.
• In the Neel Kamal Realtors Suburban Pvt. Ltd. and anr. Vs Union of India and Others, the Hon’ble
Bombay High Court division bench in para 115 of its order has observed that the object and purpose of
the Real Estate (Regulation and Development) Act, 2016 is to complete the development work within
the stipulated time. Keeping in view the spirit of this order and to ensure that the available liquidity in
the designated RERA Accounts get utilized, on priority, for completion of the project, any refund,
which under rule 19 of MahaRERA Rules becomes due during the Force Majeure period is allowed to
be executed in a period extending up to one month after the expiry of the Force Majeure period.
• Similarly, any amount, which under Section 40 of the Act becomes payable during the Force Majeure
period, shall be recovered after the expiry of the Force Majeure period.

Govt recognised COVID-19 as Force Majeure for RERA projects having completion date on or after 25th March 2020

By SRELJ Bureau

On 13th May 2020, Government of India through Ministry of Housing and Urban Affairs issued a circular No 0-17024/230/2018/-Housing-UD/EFS-9056405 dated 13th May 2020 issuing advisory for Extension of various Real Estate Projects due to “Force Majeure” under the provisions of Real Estate (Regulation and Development ) Act 2016, (RERA).

The circular have identified reverse migration of Labour in construction industry and it will take time to resume the work. The Central Advisory Council, an apex body constituted by RER Act 2016 have identified the situation as Force Majeure and decided  under section 5, 6, 7(3), of RERA or Rules thereunder.

All registered projects having completion date on or after 25th March 2020 shall be be given by respective state RERA an extension of SIX months . It is further advised by the Council that the respective state may give further THREE MONTHs extension as per the situation in the respective states.

Copy of the notification may be obtained from us by sending request on {response @ saptakala. com} by quoting your subscription ID.

 

5346 Real Estate Projects completed since RERA Registration in Maharashtra

By SRELJ Bureau

Maharashtra being one of the biggest registrant of real estate project by state RERA, have registered 25489 projects. Of these, 5346 real estate projects have been completed with OC.

On the intervening night of 30th April and 1st May 2017, the application was made open for developers to register projects online. Maharashtra having 36 districts and 358 talukas, was the first state to provide an online portal and a live website for the implementation of
RERA Act.

MahaRERA has till October 2019 received around 9000 complaints, of which over 5900 complaints have been disposed of. More than 22 Lakh Homes accommodating 1.1 Crore citizens of Maharashtra are registered and being monitored through MahaRERA IT solution.

Majority of the projects were to be completed in December 2019 of which many have been given one year extension by MAHA RERA. After the outbreak of Corona Virus, the Authority have already granted three months extension of completion date for the projects. In its circular, the Authority said :

“For all MahaRERA Registered projects where completion date, revised completion
date or extended completion date expires on or after 15th March 2020, the period of
validity for registration of such projects shall be extended by three months.
MahaRERA shall accordingly issue project registration certificates, with revised
timelines for such projects, at the earliest.”

“Further, the time limits of all statutory compliance in accordance with the Real
Estate (Regulation and Development) Act, 2016 and the rules and regulations made
thereunder, which were due in March / April / May are extended to 30th June 2020.”

MAHA RERA started registration of projects from May 1st 2017 and after three years, over 5300 have been reported to be completed which is about 25% of the total registered projects in the state.

Agriculture plots are out of RERA’s jurisdiction: MREAT

 

BY SRELJ Bureau

In a landmark judgement, Maharashtra Real Estate Tribunal ruled that Agriculture lands which have not received Non Agriculture permissions, do not fall under the jurisdiction and need not register with RERA Authorities.

Hearing an appeal in the matter of Mohammed Zain Khan vs Emnoy Properties India, Hon’ble Tribunal have upheld that Agriculture land and plot which have not received NA permissions are not Real Estate Projects and hence should not be registered.

The Hon’ble Tribunal observed ” We find that by applying the above observations to the facts of the case in hand, the Authority observes in para 10 of the order that the land under this Project is admittedly an agricultural land and till date no N.A. permission or order is granted by competent Authority to develop the same. Consequently, the Authority has held that the subject project is not a real estate project as defined under Section 2(zn) of the Act and the same cannot be registered under Section 3 of the Act. ”

The Hon’ble Tribunal further added: “We have given a thoughtful consideration to the relevant provisions of the Act. In our view the real estate project as defined under Section 2(zn) contemplates development of land into plots or apartments. In case of an agricultural land, as is the case in the instant appeal, to be designated as a real estate project, necessary permissions are required to effect the development of the said land. Compliance of such a requirement also seems essential from the perspective of provisions under Section 11(4) detailing therein the obligations of a promoter and Section 4 for mandating the requirements of certain documents/ permissions necessary for registration of the project under Section 3 of the Act. In this regard, we note that Complainant has utterly failed to establish that the said land had all necessary N.A. or other permissions for its development and for undertaking its registration as real estate project under the Act.”

 

 

Govt to Soon Issue Advisory on Special Measures to Save Interest of Home buyers & All Real Estate Industry Stakeholders: Hardeep S Puri

By SRELJ Bureau

An urgent meeting of Central Advisory Council (CAC) constituted under the provisions of Real Estate (Regulation and Development) Act, 2016 (RERA), was held today through webinar under the chairmanship of Sh. Hardeep S. Puri, Minister of State (Independent Charge), MoHUA to discuss the impact of the pandemic COVID-19 (Corona Virus) and consequent nationwide lockdown on the real estate sector and to treat it as an event of ‘Force Majeure’ under the provisions of RERA. Sh Amitabh Kant, CEO, NITI Aayog; Sh Durga Shanker Mishra, Secretary, MOHUA; Sh A K Mendiratta, Secretary, Department of Legal Affairs; Principal Secretaries and Chairpersons of Real Estate Regulatory Authorities of several States, representatives of Home buyers, Real Estate Developers, Real Estate Agents, Apartment Owners’ Associations, CREDAI, NAREDCO, Financial Institutions and other stakeholders participated in the meeting.

Welcoming the members, Shri Puri shared his appreciation for all stakeholders of Real Estate Sector- including Developers’ Association for taking necessary measures to provide food, shelter, medical facilities and wages to their workers during this crisis and Regulatory Authorities for providing full support and assistance to the real estate sector.

The concerns of the real estate sector particularly the impact of the pandemic COVID-19 and consequent nationwide lockdown were deliberated in the meeting. There was a demand for providing special relief for the real estate sector so that the sector is able to cope up with adverse impact of the current crisis.  COVID-19 has already disrupted construction activities due to reverse migration of labour at large scale and disruption of supply chain of various construction materials.

​After detailed deliberations, the Housing Minister assured all the participants that the matter will be considered keeping in view the interests of all stakeholders. He further said that MoHUA will soon issue an advisory to all RERA/States about the special measures that need to be taken to safeguard the interest of home buyers and all other real estate industry stakeholders.

MAHA RERA registered 150 new real estate projects in lock down period

By SRELJ Bureau

Maharashtra RERA Authority have registered new real estate projects in lock down period. The information given by Mr Dyaneshwar Hardare, CTO, MAHA RERA during a speech on SRO in a webinar held on 29th April 2020 organised Brahan Mumbai Developers Association. Mr Hardare said that Maharashtra RERA have registered about 150 new real estate projects in Maharashtra in the period of lock down. His team is working hard to give registration within a day. More than 5000 projects have been completed in all respect, he added.

Normally, it takes four stages of registration process where desk one to four scrutinize various disclosures made by the builder promoter about the project which includes IOD and CC. He said that MAHA RERA given registration on the basis of IOD initially but now insisting on a valid CC to register as project.

He was answering various questions of the audience mainly builders and members of Brahan Mumbai Developers Association. The entire session of webinar is available at YouTube channel of the Association.

A good news for the industry as lock down have estimated a huge loss to the industry. But industry is expecting a definite business in coming months and have got 150 such registrations. Many projects are still in pipeline and doing their documentation to complete the registration which are not included in this 150 recently registered project.

You can hear him at YouTube : Click Here

 

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