How much penalty you may have to pay if you are unaware of the Provisions of Applicability of RERA Registration?

Introduction

Real Regulation and Development Act, 2016 applies to a Promoter if the area of land proposed to be developed does exceed five hundred square meters or the number of apartments proposed to be developed exceeds eight inclusive of all phases. It’s a general notion that if Project Proposed to be developed is located in a rural or remote area, then registration under RERA is not compulsory. Therefore, it is important to note that registration is compulsory for all the projects falling under the definition of “Planning Area” under Section 2(zh) of the RERA Act, 2016.

Penalty to pay if you are unaware of RERA Registration Provisions

There may be a scenario where due to unawareness, the promoter didn’t apply for RERA Registration at the time of initiation of the Project or before marketing, selling or booking the units of the Project. In such cases, penalty under Section 59(1) and Section 61 of the RERA Act, 2016 will trigger as it violates the Provision of Section 3 and Section 11(2) of RERA Act, 2016. It is also to be noted that unawareness cannot be the reason to get a remedy from penal provisions.

Recently, on 30.10.2021, GUJ RERA had issued a decision in the case of TERA HEIGHTS, located at Vadodara under Shreeji Infra Partnership Firm, wherein due to unawareness of the Law registration was not applied before selling the units of a project. As per the said decision given by the Authority, a penalty of Rs 1 Lakh was levied as units of a project were booked/sold before obtaining RERA Registration.

Details of the Decision

 RERA Registration was applied for on 07.11.2020 with the status of “new project lunch”. As per details submitted in form 3 the project had 56 units out of which 02 units were already booked/sold before obtaining the RERA registration. Considering the details contained in Form 3, notice was issued by GUJ RERA Authority to the Promoter and the opportunity of being heard was granted on 11.10.2021. During the course of the hearing, it was submitted and accepted that those 02 units were erroneously sold. Further promoter assured that such error will not happen. The Penalty of Rs 1 Lakh was levied on the Promoter for violation of Section 3 read with Section 59(1) of the RERA Act, 2016.  

Note

As such, the GUJ RERA authority is the power to charge a penalty up to 10% of the estimated cost of the Project. However, the powers are discretionary in nature and penalty may reduce depending on case to case basis. In the above case, since the promoter was not aware of the provisions of RERA penalty of Rs 1 Lakh was levied as “Ignorance to Law is not an excuse”. Therefore any person intending to invest money into Real Estate for the Project, the consultancy for RERA Provisions is a must, else he or she may end up paying more cost as a penalty to the relevant Authorities.

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The above-mentioned views are personal and the author can be reached at [email protected] or [email protected]  

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Qualification: CA in Practice
Company: Sonecha & Amlani
Location: JAMNAGAR, Gujarat, India
Member Since: 02 Jun 2021 | Total Posts: 7
I am an Indian Entrepreneur in the field of Finance & Tax Consultancy since last 8 years. I am pursuing my passion of Tax advisory and Tech Based Book keeping practice. View Full Profile

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