Real Estate Reform Under Fire: Supreme Court Slams RERA For Delays, Says Law Favouring Builders Over Homebuyers

RERA was introduced on or about May 1, 2016, with 59 of its 92 sections, and became fully operational nationwide on May 1, 2017. The object of issuing or bringing out the RERA Act was to protect flat buyers from dishonest builders.

The object clause of RERA is as under:

To establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be, or sale of real estate project, in an efficient and transparent manner and to protect the interest of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute redressal and also to establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer and for matters connected therewith or incidental thereto.

Supreme Court’s critical observations

Recently, the Hon’ble Supreme Court, on Thursday, the 12th day of February, in harsh words, took a critical view of the functioning of the RERA Court. Admittedly, RERA courts have failed to reduce litigation related to property matters. The Hon’ble Supreme Court bench, consisting of Chief Justice of India Surya Kant and Justice Joymalya Bagchi, stated that the intention of RERA was to protect flat purchasers, but the intention appears to help builders.

There are ample instances of delay relating to RERA. In a few cases, the order has not been passed for more than 11 months since the date of pronouncing the order. The RERA Act stipulates that, as far as possible, the matter should be resolved within 60 days. However, the ground reality is that the matters go on and on in RERA courts and justice is not received in a number of cases for many years by flat purchasers. The aim of RERA was to provide timely justice to flat purchasers. The orders being passed by the RERA many times do not make a mention of expenses incurred by the flat purchasers, including GST, stamp duty, registration, and brokerage. This results in an unfair advantage to the builder.

Conciliation and car parking issue

The concept of conciliation as introduced by MAHARERA, in my opinion, is with a view to give more time to the builder to exploit the situation.

It is further submitted that only in Maharashtra circulars are issued by RERA that builders can allot car parking space. I am of the view that this stand taken by the MAHARERA Authority is not correct. Car parking is a common amenity for which all the flat purchasers are entitled. There may be car parking spaces of different sizes, but that does not give any right to the builder to sell the same, as it is an open space meant for the benefit of all. There are a number of judgments of the High Court and Supreme Court on the above said subject. But as we all know, if there is the slightest loophole, the builders’ lobby exploits the same. Experience shows that the agreements are not drafted as per RERA laws or MOFA laws.

Need for accountability and reform

It is further submitted that, in spite of the country receiving independence in 1947 and more than seven decades having passed, yet a simple thing like getting conveyance of the property is not efficiently administered by our court for the simple reason that the law is full of loopholes. Now, how does one correct the loopholes? In my opinion, the first step that requires to be taken is to ensure that if the builder does not give timely possession of the flat and does not execute the conveyance within the stipulated time limit, immediately criminal cases should be filed by the department. I mean MOFA as well as RERA against the builder. A law should be introduced that 10% of the flats should be sold by the builder only after he executes the conveyance and puts all the flat purchasers in possession of the flat with an occupation certificate. This can put sufficient pressure on the builder.

Simultaneously, whenever a proposal is being submitted by the builder, in each agreement one page should mention the details of the promoter, including the cases where he has failed to give the conveyance of the property as well as delay in giving possession. This would send the right signals to the flat purchaser before he books the flat. This detail should be uploaded on the departmental website of RERA.

The observations being made by the bench of the Supreme Court, namely Chief Justice of India Surya Kant and Justice Joymalya Bagchi, will go on to show that the RERA Act has failed to achieve its desired purpose. The abovesaid bench noted that they were extremely disappointed with the working of RERA and went on to say that RERA is only there to help builders.

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Another point that deserves to be looked into is that RERA in each state should be headed by a retired judge of the High Court and not by a bureaucrat. The limitations of bureaucrats are known to one and all. They have throughout their career tried their best to please the bureaucrats. It will not be surprising that the same mentality might continue. It is further submitted that the concept of accountability is widely ignored in RERA. One has reason to believe that intentionally, the legal team is not given importance and legal team staff is being appointed on a probation basis rather than on a permanent basis.

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