RERA anti-bias clause: Will it stand the test of time?

Before the introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA), real estate developers were allowed to pass on the title of the flats or units being constructed to a specific group of people under the Maharashtra Ownership Flats Act, 1963 (MOFA).

Nothing in MOFA permitted or barred a real estate developer from rejecting an allotment to any individual on discriminatory grounds. An aggrieved individual would be forced to approach the courts for a legal remedy, relying on the Supreme Court’s inclusion of “right to housing” within the meaning of the word “life” under article 21 of the constitution, which lays out the fundamental right to life and personal liberty.

RERA was expected to take care of such prejudicial actions on the part of a developer, including discrimination. While the RERA framework deserves appreciation for the positive impact it has had on the real estate sector, especially from the homebuyer’s perspective, the statute has failed to explicitly bar discrimination on the basis of religion, caste or even food habits. The absence of an express provision addressing discrimination has led to a lot of uncertainty in dealing with it.

Where RERA failed, the state of Maharashtra has succeeded. A number of complaints filed by homebuyers alleging discrimination by developers, prompted the state of Maharashtra to adopt counter-measures. The Maharashtra Real Estate (Regulation and Development) (Registration of real estate projects, registration of real estate agents, rates of interest and disclosures on website) Rules, 2017 (MahaRERA rules), includes an anti-discriminatory clause in the declaration to be submitted by the developer along with the application for registration of a real estate project.

“Discrimination” has not been defined in the MahaRERA rules but it has not set any restrictions either, so that the word can be interpreted without any limitations. The anti-discriminatory clause ensures a direct remedy for the aggrieved before RERA itself instead of attempting to obtain a favourable order through the courts.

The MahaRERA rules have empowered RERA to act upon such complaints. Developers cannot discriminate against allottees from a specific community or based on their individual preferences. This would curtail their right to housing, and in turn violate their right to life, a fundamental right, protected under the Constitution.

However, despite several reported instances of developers discriminating among allottees, the number of cases or complaints filed remain low due to ignorance regarding the MahaRERA rules. In Mumbai, the Real Estate Regulatory Authority has not received a single complaint.

Following the example of Maharashtra, the states of Madhya Pradesh, Rajasthan, the National Capital Territory of Delhi along with other union territories have included an anti-discrimination clause in their respective rules under RERA; while other states like Karnataka, Tamil Nadu, Uttar Pradesh and West Bengal have included it in their draft rules.

Though an allottee, within the meaning of RERA, is protected by the anti-discriminatory clause, this addition was provided by way of rules framed by a state government to a central government act. The question is whether such a clause will withstand challenge.

RERA confers state governments with the power “to make rules for carrying out the provisions” of RERA, which includes the rules to provide for a format of declaration to be submitted by a developer at the time of registering a real estate project. However, it does not confer any power to the state governments to amend, alter or add to what has already been provided by the central act .

The introduction of the anti-discriminatory clause seems to be a hurried action on the part of the state government to safeguard the interests of homebuyers, which may seem a benevolent move on the face of it, but exposes it to the possibility of procedural challenges.

It would have been a completely different scenario if the central government were to introduce such a clause. It may only be a matter of time before a challenge to the validity of such an implied amendment to a central act through rules framed by a state government is brought to court.

In an ideal world, the rules would have been accepted, considering its positive impact. However, in India, where the constitution is paramount, such challenges are foreseeable. For the time being, it will, at least, act as a deterrent.

Pritvish Shetty and Chaitrika Patki are associates at Vidhii Partners.