Bombay HC upholds validity of RERA

Remigio Civitarese
Dicembre 7, 2017

The Bombay High Court on Wednesday upheld the validity of the Real Estate (Regulation and Development) Act (RERA).

A division bench of Justices Naresh Patil and Rajesh Ketkar rejected multiple petitions filed by builders and devlopers that challenged the validity of some of the sections of the Act. Noting there are "enormous problems" in the housing sector, the court said it's time to take a step toward fulfilling Mahatma Gandhi's vision of wiping every tear from every eye.

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

The RERA Act aims at protecting the interest of consumers in the real estate sector by establishing an adjudicating mechanism for speedy redressal of disputes. The court allowed the RERA authority to grant extension of time for project completion to developers in exceptional cases on a case by case basis.

"In case the authority is satisfied that there are exceptional and compelling circumstances due to which a developer could not complete the project inspite of the one year extension granted, then the authority will be entitled to let the developers' registration continue", the court said.

The high court bench said, "Such powers shall be exercised on a case-to-case basis".

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. "The problems are enormous".

The Act, among other things, mandates that all developers or promoters register themselves under a State-level regulatory authority.

It also allows buyers to claim compensation for delay in possession, and envisages cancellation of a developer's registration and imposition of severe penalties in case where the developer fails to complete the project within the stipulated deadline.

However, the court partially struck down section 46 (1) (b), which relates to qualification of appointment of judicial members to the authority. In the constitution of a tribunal, majority members must be judges or judicial officers, the court added.

The Centre and the state of Maharashtra had vehemently defended the Act, and justified the strict provisions by arguing that the same were meant to protect buyers, and to rein in rogue developers. While the Bench concurred with the State and Central government's arguments, it said authorities must also closely monitor the implementation of the Act. "While in Rajasthan we made a decision to follow the provisions of RERA and not approach the court, the industry needs relief on many stringent provisions like keeping 70% of the project money in an escrow account and including ongoing projects prior to May 1, 2017 in the RERA", said Hitesh Dhanuka, joint secretary of CREDAI Rajasthan. The Apex Court had earlier this year asked the High Courts not to proceed with the litigations under RERA until the Bombay HC decides the matter.

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