BACKGROUND
Real estate sector plays a catalytic role in fulfilling the needs and demand for housing and infrastructure in the country and is an important pillar of the economy. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardization and lack of adequate consumer protection. It has no sectoral regulator like in other sectors like insurance, telecom, stock markets etc. The lack of standardization has been a constraint to the healthy and orderly growth of industry. Therefore, since more than a decade the need for regulating the sector was being emphasized in various forums. In view of the above, Parliament enacted the Real Estate (Regulation and Development) Act, 2016 which aims at protecting the rights and interests of consumers and promotion of uniformity and standardization of business practices and transactions in the real estate sector. It seeks to fast-track dispute resolution mechanism. This Act has been passed by the Central Government, pursuant to which respective State Governments (“SG”) and Union Territories (‘UT”) would notify their own Rules. Accordingly, every SG and UT promulgated their own Real Estate Rules which are based on the lines of the central Real Estate (Regulation and Development) Act 2016, and establish a Real Estate Regulatory Authority (“RERA”) pursuant to the Rules, which would administer the respective Real Estate Rules of the State or UT. State Governments and UTs were required to notify and enforce RERA by 1st May 2017, which was the deadline set by the Central Government. But a few State Governments missed the deadline of 1st May 2017. It was expected that most of the State Governments would meet the second deadline of 31st July 2017, by which the ongoing projects would be registered with RERA. It is now referred to as the Real Estate Regulatory Authority Act, 2017. The West Bengal Government enacted the Housing and Industrial Regulation Act, 2017 instead of implementing the RERA. However, Hardeep Singh Puri, the Minister for Housing and Urban Affairs stated that the West Bengal Government could not enact a State Act when the Central Government already has an act in place for the subject and legally vetted the proposal and asked the West Bengal Government to take Presidential assent before enacting the law. Now the current position stands that West Bengal Government also has to implement the RERA Act, 2016. Pursuant to that the West Bengal Government passed the RERA Rules, 2016.
OBJECTS OF THE ACT
The objects and reasons for which the Act has been framed are:
- ensure accountability towards allottees and protect their interest
- infuse transparency, ensure fair-play and reduce frauds & delays
- introduce professionalism and pan India standardization
- establish symmetry of information between the promoter and allottee
- imposing certain responsibilities on both promoter and allottees
- establish regulatory oversight mechanism to enforce contracts
- establish fast- track dispute resolution mechanism
- promote good governance in the sector which in turn would create investor confidence
IMPORTANT DEFINITIONS
1. “Agreement for sale” means an agreement entered into between the promoter and the allottee;
2. “Allottee” in relation to a real estate project, means the person to whom a plot, apartment or building, as the case may be, has been allotted, sold (whether as freehold or leasehold) or otherwise transferred by the promoter, and includes the person who subsequently acquires the said allotment through sale, transfer or otherwise but does not include a person to whom such plot, apartment or building, as the case may be, is given on rent
3. “Building” includes any structure or erection or part of a structure or erection which is intended to be used for residential, commercial or for the purpose of any business or occupation etc
4. “Carpet area” means the net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment. Explanation.— the expression “exclusive balcony or verandah area” means the area of the balcony or verandah, as the case may be, which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee; and “exclusive open terrace area” means the area of open terrace which is appurtenant to the net usable floor area of an apartment, meant for the exclusive use of the allottee;
5. “Commencement certificate” means the commencement certificate or the building permit or the construction permit, by whatever name called issued by the competent authority to allow or permit the promoter to begin development works on an immovable property, as per the sanctioned plan;
6. “Common areas” mean— (i) the entire land for the real estate project or where the project is developed in phases and registration under this Act is sought for a phase, the entire land for that phase; (ii) the stair cases, lifts, staircase and lift lobbies, fire escapes, and common entrances and exits of buildings; (iii) the common basements, terraces, parks, play areas, open parking areas and common storage spaces; (iv) the premises for the lodging of persons employed for the management of the property including accommodation for watch and ward staffs or for the lodging of community service personnel; (v) installations of central services such as electricity, gas, water and sanitation, air-conditioning and incinerating, system for water conservation and renewable energy; (vi) the water tanks, sumps, motors, fans, compressors, ducts and all apparatus connected with installations for common use; (vii) all community and commercial facilities as provided in the real estate project; (viii) all other portion of the project necessary or convenient for its maintenance, safety, etc., and in common use;
7. “Competent authority” means the local authority or any authority created or established under any law for the time being in force by the appropriate Government which exercises authority over land under its jurisdiction, and has powers to give permission for development of such immovable property;
8. “Completion certificate” means the completion certificate, or such other certificate, by whatever name called, issued by the competent authority certifying that the real estate project has been developed according to the sanctioned plan, layout plan and specifications, as approved by the competent authority under the local laws;
9. “Development” with its grammatical variations and cognate expressions, means carrying out the development of immovable property, enginering or other operations in, on, over or under the land or the making of any material change in any immovable property or land and includes re-development;
10. “Estimated cost of real estate project” means the total cost involved in developing the real estate project and includes the land cost, taxes, cess, development and other charges including external development works and internal development works;
11. “External development works” includes roads and road systems landscaping, water supply, sewerage and drainage systems, electricity supply transformer, sub-station, solid waste management and disposal or any other work which may have to be executed in the periphery of, or outside, a project for its benefit, as may be provided under the local laws;
12. “Garage” means a place within a project having a roof and walls on three sides for parking any vehicle, but does not include an unenclosed or uncovered parking space such as open parking areas
13. “Immovable property” includes land, buildings, rights of ways, lights or any other benefit arising out of land and things attached to the earth or permanently fastened to anything which is attached to the earth, but not standing timber, standing crops or grass;
14. “Interest” means the rates of interest payable by the promoter or the allottee, as the case may be, Explanation.— (i) the rate of interest chargeable from the allottee by the promoter, in case of default, shall be equal to the rate of interest which the promoter shall be liable to pay the allottee, in case of default; (ii) the interest payable by the promoter to the allottee shall be from the date the promoter received the amount or any part thereof till the date the amount or part thereof and interest thereon is refunded, and the interest payable by the, allottee to the promoter shall be from the date the allottee defaults in payment to the promoter till the date it is paid;
15. “Internal development works” means roads, footpaths, water supply, sewers, drains, parks, tree planting, street lighting, provision for community buildings and for treatment and disposal of sewage and sullage water, solid waste management and disposal, water conservation, energy management, fire protection and fire safety requirements, social infrastructure such as educational health and other public amenities or any other work in a project for its benefit, as per sanctioned plans;
16. “Local authority” means the Municipal Corporation or Municipality or Panchayats or any other Local Body constituted under any law for the time being in force for providing municipal services or basic services, in respect of areas under its jurisdiction;
17. “Occupancy certificate” means the occupancy certificate, or such other certificate by whatever name called, issued by the competent authority permitting occupation of any building, as provided under local laws, which has provision for civic infrastructure such as water, sanitation and electricity
18. “Planning area” means a planning area or a development area or a local planning area or a regional development plan area, by whatever name called, or any other area specified as such by the appropriate Government or any competent authority and includes any area designated by the appropriate Government or the competent authority to be a planning area for future planned development, under the law relating to Town and Country Planning for the time being in force and as revised from time to time;
19. “Promoter” means,— (i) a person who constructs an independent building or a building consisting of apartments, or converts an existing building or a part thereof into apartments, for the purpose of selling all or some of the apartments to other persons and includes his assignees; or (ii) a person who develops land into a project, whether or not the person also constructs structures on any of the plots, for the purpose of selling to other persons all or some of the plots in the said project, whether with or without structures thereon; or (iii) any development authority or any other public body in respect of allottees of— (a) buildings or apartments or plots (iv) an apex State level co-operative housing finance society which constructs apartments or buildings for its members or in respect of the allottees of such apartments or buildings; or (v) any other person who acts himself as a builder, colonizer, contractor, developer, estate developer or by any other name or claims to be acting as the holder of a power of attorney from the owner of the land on which the building or apartment is constructed or plot is developed for sale; or (vi) such other person who constructs any building or apartment for sale to the general public. Explanation — where the person who constructs or converts a building into apartments or develops a plot for sale and the persons who sells apartments or plots are different persons, both shall be deemed to be the promoters and shall be jointly liable as such for the functions and responsibilities specified, under this Act or the rules and regulations made there under;
20. “Prospectus” means any document described or issued as a prospectus or any notice, circular, or other document offering for sale or any real estate project or inviting any person to make advances or deposits for such purposes;
21. “Real estate agent” means any person, who negotiates or acts on behalf of one person in a transaction of transfer of his plot, apartment or building, as the case may be, in a real estate project, by way of sale, with another person or transfer of plot, apartment or building, as the case may be, of any other person to him and receives remuneration or fees or any other charges for his services whether as commission or otherwise and includes a person who introduces, through any medium, prospective buyers and sellers to each other for negotiation for sale or purchase of plot, apartment or building, as the case may be, and includes property dealers, brokers, middlemen by whatever name called;
22. “Real estate project” means the development of a building or a building consisting of apartments or converting an existing building or a part thereof into apartments or the development of land into plots or apartment and includes the common areas, the development works, all improvements, structures thereon and all easement, rights and appurtenances belonging thereto;
23. “Sanctioned plan” means the site plan, building plan, service plan, parking and circulation plan, landscape plan, layout plan, zoning plan and such other plan and includes structural designs, if applicable, permissions such as environment permission and such other permissions, which are approved by the competent authority prior to start of a real estate project
PROJECTS EXEMPT FROM THE AMBIT OF THIS ACT
The following projects do not require to be registered under the Act – where the area of land does not exceed 500 Sq. Meters or the number of apartments does not exceed 8 In case of Renovation / Repair / Re-development.
FUNCTIONS OF PROMOTERS
The most important duty of the promoter which has been mandated by the Act is to provide complete details of the project so that a layman who does not even know the legal requirements is able to check the legal sanctity of the project. The promoter has also been debarred from advertising and selling his project until he has procured the requisite approvals from the authorities and got his project registered with RERA and has to list the following:
(a) details of the registration granted by the Authority;
(b) quarterly up-to-date the list of number and types of apartments or plots, as the case may be, booked; (c) quarterly up-to-date the list of number of garages booked;
(d) quarterly up-to-date the list of approvals taken and the approvals which are pending subsequent to commencement certificate;
(e) quarterly up-to-date status of the project; and
(f) such other information and documents as may be specified by the regulations made by the Authority.
1. A promoter shall not advertise, market, book, sell or offer for sale, or circulate any brochures for sale or invite persons to purchase any plot, apartment or building without first registering the real estate project with the Real Estate Regulatory Authority. – Section 3(1)
2. Every promoter shall make an application to the Authority for registration of the real estate project in such form, manner, within such time and accompanied by such fee as may be specified by the regulations made by the Authority. The projects that are ongoing on the date of commencement of this Act and for which the completion certificate has not been issued, the promoter shall make an application to the Authority for registration of the said project within a period of three months from the date of commencement of this Act. Authority in the interest of allottees, for projects which are developed beyond the planning area but with the requisite permission of the local authority, it may, by order, direct the promoter of such project to register with the Authority, and the provisions of this Act or the rules and regulations made there under, shall apply to such projects from that stage of registration where the real estate project is to be developed in phases, every such phase shall be considered a stand-alone real estate project, and the promoter shall obtain registration under this Act for each phase separately. – Section 4(1);
3. According to Section 4(2) – The promoter shall enclose the following documents along with the application, namely —
a) a brief detail of his / her enterprise including its name, registered address, type of enterprise (proprietorship, societies, partnership, companies, competent authority), and the particulars of registration, and the names and photographs of the promoter;
b) a brief detail of the projects launched by him, in the past five years, whether already completed or being developed, including the current status of the said projects, any delay in its completion, details of cases pending, details of type of land and payments pending;
c) He shall create his own web page on the website of the Authority and include all the specifications of the proposed project like the sanctioned plan, layout plan and specifications of the proposed project – Section 11(1)
d) The advertisement or prospectus issued or published by the promoter shall mention prominently the website address of the Authority, wherein all details of the registered project have been entered and include the registration number obtained from the Authority and such other matters incidental thereto – Section 11(2).
e) The promoter shall be responsible for providing all the prescribed details of the project to the allottees at the time of booking and issue of the allotment letter. The prescribed details would include information of the project like plan of development works to be executed in the proposed project, proposed facilities to be provided thereof including fire-fighting facilities, drinking water facilities, emergency evacuation services, use of renewable energy – Section 11(3);
f) the location details of the project, with clear demarcation of land dedicated for the project along with its boundaries including the latitude and longitude of the end points of the project – Section 11(3)
g) proforma of the allotment letter, agreement for sale, and the conveyance deed proposed to be signed with the allottees – Section 11(3)
h) the number, type and carpet area of apartments for sale in the project along with the area of the exclusive balcony or verandah areas and the exclusive open terrace areas apartment with the apartment, if any – Section 11(3)
i) the number and areas of garage for sale in the project – Section 11(3);
j) the names and addresses of his real estate agents, if any, for the proposed project – Section 11(3);
k) the names and addresses of the contractors, architect, structural engineer, if any and other persons concerned with the development of the proposed project – Section 11(3);
l) a declaration, supported by an affidavit, which shall be signed by the promoter or any person authorized by the promoter, stating
i. that he has a legal title to the land on which the development is proposed
ii. that the land is free from all encumbrances
iii. the time period within which he undertakes to complete the project or phase thereof, as the case may be;
iv. that 70% of the amounts realized for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose – Section 4(2)(I)(D)
v. The promoter shall withdraw the amounts from the separate account, to cover the cost of the project, in proportion to the percentage of completion of the project. The amounts from the separate account shall be withdrawn by the promoter after it is certified by an engineer, an architect and a chartered accountant in practice that the withdrawal is in proportion to the percentage of completion of the project – Section 4(2)(I)(D)
vi. The promoter shall get his accounts audited within six months after the end of every financial year by a chartered accountant in practice, and shall produce a statement of accounts duly certified and signed by such chartered accountant and it shall be verified during the audit that the amounts collected for a particular project have been utilized for the project and the withdrawal has been in compliance with the proportion to the percentage of completion of the project. The promoter shall take all the pending approvals on time, from the competent authorities and furnished such other documents as may be prescribed by the rules or regulations made under. – Section 4(2)(I)(D)
4. Application for registration must be either approved or rejected within a period of 30 days from the date of application by the RERA Real Estate (Regulation and Development) Act, 2016 (RERA)
5. On successful registration, the promoter of the project will be provided with a registration number, a login id and password for the applicant – Section 5(2)
EXTENSION OF REGISTRATION
The promoter shall file application for extension of registration in prescribed form and manner before the Authority if the project could not be completed within time due to force majeure – Section 6; The promoter shall file for an extension of registration for the completion of the project which may be granted at the sole discretion of the regulator if the facts and circumstances of the case justify the extension due “force majeure” conditions or if there are reasonable circumstances which merit extension.
Explanation – “Force majeure” shall mean a case of war, flood, drought, fire, cyclone, earth-quake or any other calamity caused by nature affecting the regular development of the real estate project. The Authority may under reasonable circumstances based on the facts of each case, and for reasons to be recorded in writing, extend the registration granted to a project.
REVOCATION OF REGISTRATION
Delay in handing over of projects by the developer within the stipulated time frame has been a major woe of the buyers and hence has been a major trigger for promulgation of this act. Hence, at the time of registration, developers have to specify a time-line during which he will complete and handover the project to the buyer. The timeline is very sacrosanct because if he fails to do so within the stated time, then there are rigorous provisions in the Act as prescribed in section 7 & 8 whereby his registration would be revoked and his project would be usurped by the Regulator.
The Authority may, on receipt of a complaint or suo motu in this behalf or on the recommendation of the competent authority, revoke the registration granted due to default, violation of any authorized condition or due to fraudulent and unfair trade practices. – Section 7
1. The promoter shall comply with anything required by or under the Act or the Rules or Regulations. – Section 7(1)(a)
2. The promoter shall not violate any of the terms or conditions of the approval given by the competent authority. – Section 7(1)(b)
3. The promoter shall not be involved in any kind of unfair practice or irregularities. – Section 7(1)(c)
4. The promoter shall respond to the Notice of Revocation, if any, issued by the Authority. – Section 7(2)
5. The promoter shall follow any further terms and conditions imposed by Authority permitting the registration to remain in force, instead of revoking the registration under Section 7(1). – Section 7(3)
6. The promoter shall follow the directions issued by the Authority upon revocation of registration, unless right of appeal is exercised. – Section 7(4)
OBLIGATION OF RERA UPON REVOCATION OF REGISTRATION
According to Section 8 of the act if there is a lapse of registration or on revocation of the registration under the Act, the authority, may consult the appropriate Government to take such action as it may deem fit including the carrying out of the remaining development works by competent authority or by the association of allottees or in any other manner, as may be determined by the Authority. The direction, decision or order of the Authority shall not take effect until the expiry of the period of appeal provided under the provisions of the Act: In case of revocation of registration of a project under the Act, the association of allottees shall have the first right of refusal for carrying out of the remaining development works.
REGISTRATION OF REAL ESTATE AGENTS
Real estate broking is one of the easiest businesses in India as there are no specific qualification or experience requirement and there is no code of practice which sets accountability, transparency and professional benchmark. Hence, there are thousands of non-professional agents/ brokers in every city operating without any accountability. Hence, to bring in transparency and accountability, agents have also been covered under the ambit of RERA; and
1. Registration requirement has been made mandatory for Real Estate Agents. – Section 9
2. The promoter shall use the services of only registered real estate agents for sale of apartment, plot or building of any registered project – Section 9(1)
3. Without obtaining registration, real estate agent shall not facilitate the sale or purchase of or act on behalf of any person to facilitate the sale or purchase of any plot, apartment or building, in a real estate project.
4. Every real estate agent shall make an application to the Authority for registration in such form, manner, within such time and accompanied by such fee and documents as may be prescribed. The Authority shall, within such period, in such manner and upon satisfying itself of the fulfilment of such conditions as prescribed— (a) grant a single registration to the real estate agent for the entire State of Union territory, as the case may be; (b) reject the application for reasons to be recorded in writing.
5. However, no application shall be rejected without giving the real estate agent an opportunity of being heard as to why his application is rejected.
PROMOTERS AND THEIR FUNCTIONS
1. The promoter shall be responsible to obtain the completion certificate or the occupancy certificate, or both, as applicable, from the relevant competent authority. Section 11(4)(b)
2. The promoter shall be responsible to obtain the lease certificate, where the real estate project is developed on a leasehold land. Section 11(4)(c)
3. The promoter shall be responsible for providing and maintaining the essential services, on reasonable charges. Section 11(4)(d)
4. The promoter shall enable the formation of an association or society or cooperative society of the allottees. Provided that in the absence of local laws, the association of allottees, by whatever name called, shall be formed within a period of three months of the majority of allottees having booked their plot or apartment or building, as the case may be, in the project – Section 11(4)(e)
5. The promoter shall execute a registered conveyance deed of the apartment, plot or building in favour of the allottee. Section 11(4)(f)
6. The promoter shall execute a registered conveyance deed of the undivided proportionate title in the common areas to the association of allottees or competent authority. Section 11(4)(f)
7. The promoter shall pay all outgoings until he transfers the physical possession of the real estate project to the allottee or the associations of allottees. Section 11(4)(g)
8. The promoter shall be liable for the cost of any legal proceedings which may be taken up by authority or person for recovery of outstanding outgoings, if not paid by the promoter. Section 11(4)(g) Proviso
9. The promoter shall not mortgage or create a charge on any apartment, plot or building after execution of an agreement for sale. Section 11(4)(h)
10. The promoter may cancel the allotment only in terms of the agreement for sale. Section 11(5)
11. The promoter shall prepare and maintain all details as may be specified, from time to time, by regulations made by the Authority. Section 11(6)
12. The promoter shall be liable to pay compensation to the allottee where he makes an advance or a deposit on the basis of the information contained in the notice advertisement or prospectus, or on the basis of any model apartment, plot or building and sustains any loss or damage by reason of any incorrect, false statement – Section 12
13. The promoter shall enter into an agreement for sale and register the same before he accepts a sum more than ten per cent of the cost of the apartment, plot, or building – Section 13(1)
14. The promoter shall ensure that the agreement for sale is in prescribed form and contain specified particulars – Section 13(2)
15. The promoter shall develop and complete the proposed project in accordance with the sanctioned plans, layout plans and specifications as approved by the competent authorities – Section 14(1)
16. The promoter shall not make any additions and alterations in the sanctioned plans, layout plans and specifications and the nature of fixtures, fittings and amenities in any apartment, plot or building without the previous consent of the allottee(s) concerned – Section 14(2)(i)
17. The promoter shall not make any other alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common areas within the project without the previous written consent of at least two-thirds of the allottees – Section 14(2)(ii)
18. The promoter shall be obliged to rectify without further charge, within thirty days, any structural defect or any other defect in workmanship, quality or provision of services or any other obligations of the promoter as per the agreement for sale brought to the notice by an allottee within a period of five years from the date of handing over possession. The promoter shall pay adequate compensation to the aggrieved allottees – Section 14(3)
19. The promoter shall not transfer or assign his majority rights and liabilities in respect of a real estate project to a third party without obtaining prior written consent from two-third allottees and without the prior written approval of the Authority – Section 15(1)
20. The promoter shall obtain all such insurances in respect of title and construction, as may be notified by the appropriate Government – Section 16(1)
21. The promoter shall be liable to pay the premium and charges in respect of the insurance – Section 16(2)
22. The promoter shall transfer all benefits of insurance to allottees and/or the association of allottees at the time of promoter entering into an agreement for sale with the allottee – Section 16(3)
23. The promoter shall hand over all documents relating to the insurance to the association of the allottees on its formation – Section 16(4)
24. The promoter shall execute a registered conveyance deed in favour of the allottee – Section 17(1)
25. The promoter shall execute a registered conveyance deed of undivided proportionate title in the common areas to the association of allottees or the competent authority – Section 17(1)
26. The promoter shall hand over the physical possession of the plot, apartment of building to the allottee – Section 17(1)
27. After he executes an agreement for sale for any apartment, plot or building he cannot mortgage or create any charge on such apartment, plot or building, and if any such mortgage or charge is made or created then notwithstanding anything contained in any other law for the time being in force, it shall not affect the right and interest of the allottee who has taken or agreed to take such apartment, plot or building, as the case may be;
28. The promoter may cancel the allotment only in terms of the agreement for sale. However, the allottee may approach the Authority for relief, if he is aggrieved by such cancellation and such cancellation is not in accordance with the terms of the agreement for sale, unilateral and without any sufficient cause.
29. The promoter shall handover or physical possession of the common areas to the association of allottees or the competent authority – Section 17(1)
30. The promoter shall handover the necessary documents and plans, including common areas, to the association of the allottees or the competent authority – Section 17(2)
31. The promoter shall on demand by the allottees, return the amount received by in respect of that apartment, plot, building with interest and compensation – Section 18(1)
32. The promoter shall compensate the allottees in case of any loss caused to him due to defective title of the land – Section 18(2)
33. The promoter shall be liable to pay compensation if he fails to discharge any other obligations imposed on him under this Act or the rules or regulations – Section 18(3)
34. The promoter shall be obliged to furnish in writing such information or explanation relating to its Affairs, as the Authority may require from time to time – Section 35(1)
35. The promoter shall be responsible to comply with any directions issued by the Authority unless he makes an appeal against such directions – Section 37
36. The promoter shall be liable to pay penalty or interest imposed by the Authority unless he makes an appeal. – Section 38(1)
37. The promoter shall be shall be liable to a penalty, which may extend up to ten per cent. of the estimated cost of the real estate project, if he contravenes provisions of section 3 – Section 59(1)
38. The promoter shall be liable to be punished with imprisonment for a term which may extend up to three years or with fine which may extend up to a further ten per cent of the estimated cost of the real estate project, or with both if he does not comply with the orders, decisions or directions issued under Section 3(1) – Section 59(2)
39. The promoter shall be liable to a penalty, which may extend up to five per cent of the estimated cost of the real estate project, if he provides false information or contravenes the provisions of Section 4 – Section 60
40. The promoter shall be shall be liable to a penalty which may extend up to five per cent of the estimated cost of the real estate project, if he contravenes any other provisions of this Act -– Section 61
41. The promoter shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to five per cent of the estimated cost of the real estate project, if any promoter, who fails to comply with, or contravenes any of the orders or directions of the Authority – Section 63
42. The promoter shall be punishable with imprisonment for a term which may extend up to three years or with fine for every day during which such default continues, which may cumulatively extend up to ten per cent of the estimated cost of the real estate project if any promoter, who fails to comply with, or contravenes any of the orders, decisions or directions of the Appellate Tribunal – Section 64
43. No deposit or advance is to be taken by promoter without first entering into agreement for sale A promoter shall not accept a sum more than 10% of the cost of the apartment, plot, or building as an advance payment or an application fee, from a person without first entering into a written agreement for sale with such person and registering the said agreement for sale, under any law for the time being in force.
FUNCTIONS OF REAL ESTATE AGENTS
1. Every real estate agent who is not registered with the Authority shall not facilitate the sale or purchase of any plot, apartment or building being sold by the promoter in any planning area.
2. Every real estate agent shall maintain and preserve such books of account, records and documents as may prescribed.
3. Every real estate agent shall operate with utmost good faith not indulge in any unfair trade practices.
ADHERENCE TO SANCTIONED PLAN AND PROJECT SPECIFICATIONS
The proposed project shall be developed and completed by the promoter in accordance with the sanctioned plans, layout plans and specifications as approved by the competent authorities. The promoter shall not make— (i) any additions and alterations in the sanctioned plans, layout plans and specifications and the nature of fixtures, fittings and amenities described therein in respect of the apartment, plot or building which are agreed to be taken, without the previous consent of that person: The promoter may make such minor additions or alterations as may be required by the allottee, or such minor changes or alterations as may be necessary due to architectural and structural reasons duly recommended and verified by an authorized Architect or Engineer after proper declaration and intimation to the allottee.
“Minor additions or alterations” excludes structural change including an addition to the area or change in height, or the removal of part of a building, or any change to the structure, such as the construction or removal or cutting into of any wall or a part of a wall, partition, column, beam, joist, floor including a mezzanine floor or other support, or a change to or closing of any required means of access ingress or egress or a change to the fixtures or equipment, etc. (ii) any other alterations or additions in the sanctioned plans, layout plans and specifications of the buildings or the common areas within the project without the previous written consent of at least two-thirds of the allottees, other than the promoters, who have agreed to take apartments in such a building. It may be noted that the allottees, irrespective of the number of apartments or plots booked by him or in the case of other persons such as companies or firms or any association of individuals, etc., by whatever name called, booked in its name or booked in the name of its associated entities or related enterprises, shall be considered as one allottee only.
RIGHTS AND DUTIES OF THE ALLOTTEES
Section 20 provides for the various rights and duties of the allottees.
1. The allottee shall be entitled to obtain the information relating to sanctioned plans, layout plans along with the specifications, approved by the competent authority and such other information as provided in the Act or the rules and regulations made thereunder or the agreement for sale signed with the promoter.
2. The allottee shall be entitled to know stage-wise time schedule of completion of the project, including the provisions for water, sanitation, electricity and other amenities and services as agreed to between the promoter and the allottee in accordance with the terms and conditions of the agreement for sale.
3. The allottee shall be entitled to claim the possession of apartment, plot or building, as the case may be, and the association of allottees shall be entitled to claim the possession of the common areas, as per the declaration given by the promoter.
4. The allottee shall be entitled to claim the refund of amount paid along with interest at such rate as may be prescribed and compensation in the manner as provided under the Act, from the promoter, if the promoter fails to comply or Is unable to give possession of the apartment, plot or building, as the case may be, in accordance with the terms of agreement for sale or due to discontinuance of his business as a developer on account of suspension or revocation of his registration under the provisions of the Act or the rules or regulations made thereunder.
5. The allottee shall be entitled to have the necessary documents and plans, including that of common areas, after handing over the physical possession of the apartment or plot or building as the case may be, by the promoter.
6. Every allottee, who has entered into an agreement for sale to take an apartment, plot or building as the case may be, shall be responsible to make necessary payments in the manner and within the time as specified in the said agreement for sale and shall pay at the proper time and place, the share of the registration charges, municipal taxes, water and electricity charges, maintenance charges, ground rent, and other charges, if any.
7. The allottee shall be liable to pay interest, at such rate as may be prescribed, for any delay in payment towards any amount or charges to be paid under subsection (6).
8. The obligations of the allottee under sub-section (6) and the liability towards interest under sub-section (7) may be reduced when mutually agreed to between the promoter and such allottee.
9. Every allottee of the apartment, plot or building as the case may be, shall participate towards the formation of an association or society or cooperative society of the allottees, or a federation of the same.
10. Every allottee shall take physical possession of the apartment, plot or building as the case may be, within a period of two months of the occupancy certificate issued for the said apartment, plot or building, as the case may be.
11. Every allottee shall participate towards registration of the conveyance deed of the apartment, plot or building, as the case may be, as provided under subsection of section 17 of this Act.
FUNCTIONS OF THE AUTHORITY
The functions of the Authority shall include —
a. to register and regulate real estate projects and real estate agents registered under the Act;
b. to publish and maintain a website of records, for public viewing, of all real estate projects for which registration has been given, with details including information provided for the project for which registration has been granted;
c. to maintain a database, on its website, for public viewing, and enter the names and photographs of promoters as defaulters including the project details, registration for which has been revoked or have been penalised;
d. to maintain a database, on its website, for public viewing, and enter the names and photographs of real estate agents who have applied and registered under this Act, with such details as may be prescribed, including those whose registration has been rejected or revoked;
e. to fix the standard fees to be levied on the allottees, the promoter and the real estate agent through regulations for each area under its jurisdiction;
f. to ensure compliance of directions in the exercise of its powers and the obligations cast upon the promoters, the allottees and the real estate agents under the rules and regulations made under the act;
g. to perform such other functions as may be entrusted to the Authority by the appropriate Government as may be necessary to carry out the provisions of the Act.
POWERS OF THE AUTHORITY
The following are the powers of the Authority to call for information, conduct investigation based on the principles of natural justice:
Notwithstanding, anything contained in any other law for the time being in force, while exercising the powers, the Authority shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit, in respect of the following matters. Where the Authority considers it expedient to do so, on a complaint or suomotu, relating to the Act or the rules and regulations made thereunder, it may, by order in writing and recording reasons therefor call upon any promoter, allottee and real estate agent at any time to furnish in writing such information or explanation relating to its affairs as the Authority may require and appoint a person or persons to make an inquiry of any promoter, allottee and the real estate agent, as the case may be on the following matters namely:—
i. the discovery and production of books of account and other documents, at such place and at such time as may be specified by the Authority;
ii. summoning and enforcing the attendance of persons and examining them on oath;
iii. issuing commissions for the examination of witnesses or documents;
iv. any other matter which may be prescribed.
v. Power to issue interim orders
Where during an inquiry, the Authority is satisfied that an act in contravention of the rules and regulations made under the Act has been committed or is about to be committed, the Authority may, by an order, restrain any promoter, allottee or real estate agent until the conclusion of inquiry or until further orders, without giving notice to such party, where the Authority deems it necessary.
vi. Powers of Authority to issue directions
The Authority may, for the purpose of discharging its functions under the provisions of this Act and the rules made thereunder issue such directions to the promoters, allottees and real estate agents;
vii. to impose penalty or interest, in regard to any contravention of obligations cast upon the promoters, the allottees and the real estate agents.
viii. Where an issue is raised relating to agreement, action, omission, practice or procedure that has an appreciable prevention, restriction or distortion of competition in connection with the development of a real estate project; or has the effect of creating a monopoly situation being abused for affecting interest of allottees adversely, then the Authority, may suomotu, make reference in respect of such issue to the Competition Commission of India.
ix. The Authority has the power of rectifying orders
The Authority may, at any time within a period of two years from the date of the order amend any order passed under the Act. It may be noted that no such amendment shall be made in respect of any order against, which an appeal has been preferred under the Act:
x. Recovery of interest or penalty or compensation and enforcement of order, etc. If a promoter, an allottee and a real estate agent, as the case may be, fails to pay any interest or penalty or compensation imposed on him, it shall be recoverable from the promoter, allottee and real estate agent, as an arrear of land revenue.
xi. If any adjudicating officer or the Regulatory Authority or the Appellate Tribunal, as the case may be, issues any order or directs any person to do any act, or refrain from doing any act, then in case of failure by any person to comply with such order or direction, the same shall be enforced, on the person as may be prescribed.
REAL ESTATE APPELLATE TRIBUNAL (REAT)
A Real Estate Appellate Tribunal (REAT) is to be formed by appropriate government to ensure faster resolution of disputes. Parties aggrieved by the RERA order on any one or more of the grounds specified in section 100 of the Code of Civil Procedure, 1908 can appeal before REAT. REAT has to adjudicate such cases within 60 days. Civil Courts have been prevented from exercising jurisdiction on such matters. If any of the parties is not satisfied with the REAT order they can file an appeal against the REAT order to the High Court within 60 days. Provided that where any such appeal could not be disposed of within the said period of 60 days, the Appellate Tribunal shall record its reasons in writing for the non-disposal of the appeal within that period. – Section 44
The Appellate Tribunal may entertain any appeal after the expiry of 60 days if it is satisfied that there was sufficient cause for not filing it within that period.
On receipt of an appeal, the Appellate Tribunal may after giving the parties an opportunity of being heard, pass such orders, including interim orders, as it thinks fit.
The Appellate Tribunal shall send a copy of every order made by it to the parties and to the Authority or the adjudicating officer, as the case may be.
ESTABLISHMENT OF REAL ESTATE APPELLATE TRIBUNAL OF EACH STATE
The appropriate Government shall, establish an Appellate Tribunal to be known as the — (name of the State/Union territory) Real Estate Appellate Tribunal. The appropriate Government may, if it deems necessary, establish one or more benches of the Appellate Tribunal, for various jurisdictions, in the State or Union territory. Every bench of the Appellate Tribunal shall consist of at least one Judicial Member and one Administrative to Technical Member. The appropriate Government of two or more States or Union territories may, establish one single Appellate Tribunal. Any person aggrieved by any direction or decision or order made by the Authority or by an adjudicating officer may prefer an appeal before the Appellate Tribunal.
It may be noted that where a promoter files an appeal with the Appellate Tribunal, it shall not be entertained, without the promoter first having deposited with the Appellate Tribunal at-least 30% of the penalty, or such higher percentage as may be determined by the Appellate Tribunal, or the total amount to be paid to any person including interest and compensation imposed on him, if any, or both, before the said appeal is heard.
“Person” shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force.
COMPOSITION OF THE REAT
The Appellate Tribunal shall consist of a Chairperson and not less than two whole time members of which one shall be a Judicial member and other shall be a Technical
QUALIFICATIONS FOR APPOINTMENT FOR CHAIRPERSON AND MEMBERS
A person shall not be qualified for appointment as the Chairperson or a Member of the Appellate Tribunal unless he, —
i. in the case of Chairperson, is or has been a Judge of a High Court; and
ii. in the case of a Judicial Member – he has held a judicial office in the territory of India for at least fifteen years or has been a member of the Indian Legal Service and has held the post of Additional Secretary of that service or any equivalent post, or has been an advocate for at least twenty years with experience in dealing with real estate matters; and
iii. in the case of a Technical or Administrative Member, he is a person who is well-versed in the field of urban development, housing, real estate development, infrastructure, economics, planning, law, commerce, accountancy, industry, management, public affairs or administration and possesses experience of at least twenty years in the field or who has held the post in the Central Government, or a State Government equivalent to the post of Additional Secretary to the Government of India or an equivalent post in the Central Government or an equivalent post in the State Government.
APPOINTMENT OF MEMBERS
The Chairperson of the Appellate Tribunal shall be appointed by the appropriate Government in consultation with the Chief Justice of High Court or his nominee.
The Judicial Members and Technical or Administrative Members of the Appellate Tribunal shall be appointed by the appropriate Government on the recommendations of a Selection Committee consisting of the Chief Justice of the High Court or his nominee, the Secretary of the Department handling Housing and the Law Secretary and in such manner as may be prescribed.
TERM OF OFFICE OF CHAIRPERSON AND MEMBERS
The Chairperson of the Appellate Tribunal or a Member of the Appellate Tribunal shall hold office, as such for a term not exceeding five years from the date on which he enters upon his office, but shall not be eligible for re-appointment: It may be noted that in case a person, who is or has been a Judge of a High Court, has been appointed as Chairperson of the Tribunal, he shall not hold office after he has attained the age of sixty-seven years.
However no Judicial Member or Technical or Administrative Member shall hold office after he has attained the age of sixty-five years.
Before appointing any person as Chairperson or Member, the appropriate Government shall satisfy itself that the person does not have any such financial or other interest, as is likely to affect prejudicially his functions as such member.
RESTRICTIONS AFTER CESSATION OF OFFICE
Restrictions on Chairperson or Judicial Member or Technical or Administrative Member on employment after cessation of office The Chairperson or Judicial Member or Technical or Administrative Member, ceasing to hold office as such shall not:
1. Accept any employment in, or connected with, the management or administration any organisation which has been associated with any work under this Act, from the date on which he ceases to hold office: Provided that nothing contained in this clause shall apply to any employment under the appropriate Government, a local authority, statutory authority, corporation or a government company as defined under clause (45) of Section 2 of the Companies Act, 2013, which is not a promoter as per the provisions of the Act;
2. Act on behalf any organisation in connection with any specific transaction to which the Authority is a party and with respect to which they had acted for before cessation of office.
3. Give advice to any person using information which was obtained in his capacity as the Chairperson or Judicial Member or Technical or Administrative Member and being unavailable to or not being able to be made available to the public;
4. Enter into a contract of service or accept any appointment in the board of directors of an entity with which he had direct and significant official dealings during his term of office.
5. They shall not communicate or reveal to any person any matter which has been brought under their consideration or known to them during the course of such office.
POWERS OF THE TRIBUNAL
1. The Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 but shall be guided by the principles of natural justice.
2. Subject to the provisions of this Act, the Appellate Tribunal shall have the power to regulate its own procedure.
3. The Appellate Tribunal shall also not be bound by the rules of evidence contained in the Indian Evidence Act, 1872.
4. The Appellate Tribunal shall be vested with the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 for the purpose of discharging their functions, namely;
i. summoning and enforcing the attendance of any person and examining him on oath;
ii. requiring the discovery and production of documents;
iii. receiving evidence on affidavits;
iv. issuing commissions for the examinations of witnesses or documents;
v. reviewing its decisions;
vi. dismissing an application for default or directing it ex parte; and
vii. any other matter which may be prescribed.
All proceedings before the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193, 219 and 228 for the purposes of section 196 of the Indian Penal Code, and the Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973.
RIGHT TO LEGAL REPRESENTATION
The applicant or appellant may appear either in person or authorise one or more chartered accountants, company secretaries, cost accountants or legal practitioners or any of its officers to present his or its case before the Appellate Tribunal or the Regulatory Authority or the adjudicating officer. – Section 56;
Orders passed by Appellate Tribunal are executable as a decree. Every order made by the Appellate Tribunal under this Act shall be executable by the Appellate Tribunal as a decree of civil court. The Appellate Tribunal may transmit any order made by it to a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree made by the court.
APPEAL TO HIGH COURT
Any person aggrieved by any decision or order of the Appellate Tribunal may, file an appeal to the High Court, within a period of 60 days from the date of communication of the decision or order of the Appellate Tribunal.
The High Court may entertain the appeal after the expiry of the said period of 60 days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.
Explanation — “High Court” means the High Court of a State or Union territory where the real estate project is situated.
No appeal shall be made to the High Court against any decision or order made by the Appellate Tribunal with the consent of the parties.
LEGAL REPRESENTATION
The growing demand for specialists in almost every sphere of the corporate functions has led to emergence of professionals who can perform specialized skills with near perfection in their respective fields. A company secretary is one such professional who is responsible for efficient management of the corporate sector. He ensures compliance of various company legislations and advises directors on statutory requirements of the company. Apart from carrying out these functions, he also looks after finance, accounts, legal, secretarial, personnel and administrative functions in private as well as public sectors. The Companies Act, 2013 confers a special status to Company Secretary as the key managerial personnel and has bracketed him along with Managing Director (MD) or Chief Executive Officer (CEO) or Manager, Whole-time director(s) or Chief Financial Officer (CFO). Every listed company and every other public company having a paid-up share capital of ten crore rupees or more has to appoint a whole time Company Secretary.
Legal Representative before tribunal
Practising Company Secretaries have also been recognized to appear before various Tribunals such as NCLT, NCLAT, Securities Appellate Tribunal, Competition Commission of India, Telecom Disputes Settlement and Appellate Tribunal, Consumer Forums, Tax Tribunals etc. Reserve Bank of India has also recognized the Practising Company Secretaries to undertake Diligence Report for Banks. The rapid Change in Indian Legislative has brought about a sea change in the role and profile of a company secretary. There is also a prescribed dress code for the company secretary to appear before the Appellate Tribunal.
PENAL PROVISIONS FOR NON REGISTRATION OR NON COMPLIANCE WITH THE OREDRS OF THE AUTHORITY
Promoters
Punishment for non-registration of a project under the Act – As per section 59, where under the Act, the promoter fails to do the same, he shall be liable to a penalty up-to 10% of the estimated cost of the project. However, in case the promoter consistently defaults or does not comply with the directions / orders of the Authority as regards registration of the project with the Authority, he shall be liable to additional fine of 10% of the estimated cost of the real estate project or imprisonment up-to 3 years or both.
If any promoter provides false information or contravenes any provisions of the Act he shall be liable to a penalty which may extend up to 5% of the estimated cost of the project, as determined by the Authority.
Real Estate Agent
If any real estate agent fails to comply with or contravenes the provisions of sections 9 and 10 he shall be liable to a penalty of 10,000/- rupees for every day during which such default continues, which may cumulatively extend up-to 5% of the cost of project, for which the sale or purchase has been facilitated as determined by the Authority.
Allottees
Any allottee, who contravenes any of the orders, decisions or directions of the Authority, shall be liable to a penalty for the period during which such default continues, which may cumulatively extend up to 5% of the plot, apartment or building cost or as determined by the Authority.
PENAL PROVISIONS FOR NON COMPLIANCE OF REAT ORDERS
Promoters
Penalty for failure to comply with orders of Appellate Tribunal by promoter – If any promoter fails to comply with any of the orders, decisions, offences, directions of the Appellate Tribunal, he shall be punishable with a fine for each day the default continues of the cost of the facilitation of the project which may cumulatively extend up-to 10% of the project cost or imprisonment for a term which may extend up to three years or with fine or both.
Real Estate Agents
If any real estate agent fails to comply with the orders, decisions or directions of the Appellate Tribunal, he shall be punishable with imprisonment for a term which may extend up to one year or with fine for every day during which such default continues, which may cumulatively extend up to 10% of the estimated cost of the project, for which the sale or purchase has been facilitated, or with both.
Allottees
If any allottee, who fails to comply with, or contravenes any of the orders or directions of the Appellate Tribunal, as the case may be, he shall be punishable with imprisonment for a term which may extend up to one year or with fine for every day during which such default continues, which may cumulatively extend up to 10% of the cost of the project or with both.
Offences by Companies
Where an offence under the Act has been committed by a company, every person who, at the time, the offence was committed was in charge of the conduct of the business of the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.
However, nothing contained in this sub-section, shall render any such person liable to any punishment under the Act if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.
Where an offence under the Act has been committed by a company, and it is proved that the offence has been committed with the consent or in connivance or is attributable to any neglect on the part of any director or other responsible officer of the company, such director or officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation –
(a) ”company” means any body corporate and includes a firm, or other association of individuals; and
(b) ”director” in relation to a firm, means a partner in the firm.
POWER TO APPOINT ADJUDICATING OFFICER
For the purpose of adjudging compensation under sections 12, 14, 18 and section 19 (Section 12 deals with obligations of promoter regarding veracity of the advertisement or prospectus, Section 14 deals with Adherence to sanctioned plans and project specifications by the promoter, Section 18 deals with Return of amount and compensation, Section 19 deals with Rights and duties of allottees), the Authority shall appoint in consultation with the appropriate Government one or more judicial officer as deemed necessary, who is or has been a District Judge to be an adjudicating officer for holding an inquiry in the prescribed manner, after giving any person concerned a reasonable opportunity of being heard.
Any person whose complaint in respect of matters covered under section(s) 12, 14, 18 and section 19 is pending before the Consumer Disputes Redressal Forum or the Consumer Disputes Redressal Commission or the National Consumer Redressal, Commission, established under section 9 of the Consumer Protection Act, 1986, on or before the commencement of the Act, may, with the permission of such Forum or Commission, as the case may be, withdraw the complaint pending before it and file an application before the adjudicating officer under this Act.
The application for adjudging compensation shall be dealt with by the adjudicating officer as expeditiously as possible and dispose of the same within a period of 60 days from the date of receipt of the application. Where any such application could not be disposed of within the said period of 60 days, the adjudicating officer shall record his reasons in writing for not disposing of the application within that period.
The adjudicating officer shall have the power to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case to give evidence and produce any document relevant for the purpose of the inquiry and if he is satisfied that the person has failed to comply with the provisions of Section 12, 14, 18 and section 19, he may direct to pay such compensation as he thinks fit in accordance with the provisions of any of those sections.
BAR OF JURISDICTION
No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Authority or the adjudicating officer or the Appellate Tribunal is empowered by or under the Act to determine and no injunction shall be granted by any court in pursuance of any power conferred by or under the Act.
Author Bio
Whereas REAT has to dispose of Appeal within 60 days, what is the time limit for RERA to pass its Final Order after concluding final arguments / hearing in a Complaint against the Builder / Promoter. Can REAT be approached for abnormal DELAY in final Order by RERA after reserving its verdict upon conclusion of proceedings in Complaint case against the defaulter Builder ?