Bombay High Court upholds constitutional validity of RERA

Lester Mason
December 7, 2017

"Having constitutionally upheld RERA, High Court of Bombay has reinforced the need for regulations to protect homebuyers' interests in the real estate sector".

"We are conscious of the fact that actual implementation of RERA needs to be closely monitored in years to come".

A Bench of Justices Naresh Patil and Rajesh Ketkar pronounced its judgement on petitions by real estate developers and individual plot owners, all challenging the constitutional validity of the Act, brought into effect in May.

The HC also significantly, in what the construction industry sees as a silver lining, said that based on its scrutiny of sections 6,7,8 and 37 (see graphic for explanation), the RERA authority would be entitled to provide leeway "if in exceptional and compelling circumstances", a promoter could not complete the project in spite of extensions-of maximum a year-granted under section 6.

The bench has, however, clarified that this power to grant additional extension can be exercised by the authority only in exceptional and compelling circumstances and on a case to case basis, and no builder or developer can seek an additional extension beyond the stipulated one year period as a matter of right. It said, "RERA is not a law relating to only regulating concerns of the promoters but it's object is to develop the real estate sector, particularly the incomplete projects, across the country". "The problems are enormous".

Several builders had filed cases in High Courts of Bombay, Nagpur, Aurangabad, Bangalore, Jabalpur to challenge the recently enacted Real Estate (Regulation & Development) Act, 2016 and few of its provisions including applicability for ongoing projects. This Section under RERA made registration by May 1 mandatory for ongoing projects that were yet to receive completion certificates from relevant authorities. The Act had a clause which required judicial members on tribunals to be bureaucrats from the Indian Legal Service.

Besides this, real estate developers had also sought doing away with provisions that require builders to deposit 70 per cent of funds paid by buyers and another which bars the regulator from granting more than a year's extension even for genuine reasons and made builders liable to compensate buyers even for possession dates agreed to in the past.

The Centre and the State government had vehemently defended the Act, and justified the strict provisions by arguing the same were meant to protect buyers, and to rein in rogue developers. States were asked to prepare and notify their respective rules in tandem with the Act so it could be implemented effectively.

In the course of the judgment, the bench stressed on the scrupulous implementation of provisions of the RERA act.

The government of India had filed a Transfer Petition in the apex court that sought for clubbing all similar cases in various courts. Other courts should wait for the Bombay HC's decision before hearing RERA-related matters, it said, while directing the Bombay HC to expedite hearings.

Other reports by Iphone Fresh

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