Delays and inconsistent treatment reduce RERA’s effectiveness

By Amaresh Kumar Singh, HSA Advocates

RERA, or the Real Estate (Regulation and Development) Act, 2016 (act) and the Real Estate Regulatory Authority established under it, aimed to balance the interests of the various stakeholders in the real estate ecosystem, reduce rampant malpractice and protect buyers. While the law became effective in 2017, its passage was not easy, being marked by heated parliamentary debates, detailed discussions on the interpretation of the constitution, and lively legal opinions. The act passed into law as government legislation, leaving it to the states to introduce rules implementing its provisions.

Amaresh Kumar Singh, Partner, HSA Advocates
Amaresh Kumar Singh
HSA Advocates

It was envisaged that the act would be implemented effectively, untrammelled by controls or hindrances, but enforcement has met roadblocks that have compromised and weakened its objectives. Nonetheless, the act has had a significant impact on the real estate sector. Data from the Ministry of Housing and Urban Affairs shows that 30 states and union territories (UT) have established RERA regimes, 34 states and UTs have passed rules, and 28 states and UTs have established appellate tribunals. Over 63,000 real estate projects and more than 50,000 real estate agents have registered, with Maharashtra registering 45% of projects, followed by Gujarat with 13%, Madhya Pradesh and Karnataka at 6% each and Uttar Pradesh with 5%. Over 65,000 disputes have been adjudicated under the act, with Uttar Pradesh, Haryana and Maharashtra accounting for nearly 75% of them.

This appears to be encouraging. However, significant issues have arisen over the act’s implementation in various states and UTs. Progress has been lackadaisical, inconsistent and at times in disregard of the act. Some states have enacted competing legislation. The rejection of uniform implementation in favour of state independence has lessened the act’s effectiveness. West Bengal, for example, passed the Housing Industry Regulation Act, 2017 (HIRA). A homebuyers’ association challenged its constitutional validity and the Supreme Court struck it down on the grounds of incompatibility with the act. Jammu and Kashmir, Meghalaya, Mizoram, Sikkim, Nagaland and Tripura have no regulatory authorities or appellate tribunals. In Assam, Manipur, Arunachal Pradesh, official websites remain offline.

A succession of cases has reduced the ambit of the act by changing its status. In resolving alleged conflicts between the Consumer Protection Acts (CPA) and the Insolvency and Bankruptcy Code, 2016 (IBC), the Supreme Court made the act merely an alternative authority rather than the sole authority in real estate matters. Recently, the Supreme Court ruled that in case of conflict, the IBC prevails over the act. Similarly, in Imperia Structures Ltd v Anil Patni, the Court held that section 79 of the act does not expressly remove the jurisdiction of consumer forums, and that the legislative intent was to allow allottees to choose between consumer remedies and the act. The judgment was upheld in Ireo Grace Realtech (P) Ltd v Abhishek Khanna. The National Company Law Appellate Tribunal also assumed jurisdiction through its inherent powers, disregarding the remedy available for homebuyers under section 18 of the act. Homebuyers now have three concurrent remedies under the act, the IBC, and the CPA, and may exploit the situation by forum shopping, a practice the Supreme Court itself barred in 1998.

The constitutionality of the act was challenged in Neelkamal Realtors Suburban Pvt v Union of India, but the high court held that, in the light of legislative intent, the act is essential for the protection of allottees and is neither arbitrary nor unconstitutional. Projects, however, continue to ignore project timelines and fail to comply with the act. This stems from the lack of effective implementation, execution and enforcement of orders made under the act. This is worsened by the narrow scope of disputes, as a large percentage of adjudications concern only the determination of compensation for delay.

The act has changed over time, and doubts remain whether it still has judicial approval. With this and the lack of effective implementation, the act is far from achieving its objectives. Great efforts are needed to rectify this, and stakeholders must play a more responsible role. The act must therefore receive comprehensive judicial support and achieve stability.

Amaresh Kumar Singh is a partner at HSA Advocates

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