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Real Estate (Regulation and Development) Act is valid : Bombay High Court

Real Estate (Regulation and Development) Act is valid : Bombay High Court

In what is seen as a victory for homebuyers, the Bombay High Court on Wednesday upheld the constitutional validity of the Real Estate Regulation Act (RERA) and its applicability to ongoing projects across states.

The Government of Andhra Pradesh recently launched the beta version of the website for its Real Estate Regulatory Authority to promote a healthy, transparent, efficient and competitive environment for Real Estate sector. It expanded powers under RERA to grant more time in exceptional cases to a builder to complete a project.

The Bench, headed by Justice Patil, allowed significant leeway for developers in the judgement by permitting the State-level RERA Authority and the Appellate Tribunal to consider delays on a case-to-case basis, and to not cancel such projects or developers' registration in cases where the delay was a result of "exceptional and compelling circumstances". "The problems are enormous". Several real estate developers and individual plot owners had challenged the constitutional validity of the act that came into force on May 1 this year and some of its provisions. It also allows buyers to claim compensation for delay in possession, and envisages cancellation of a developer's registration and severe penalties if the developer fails to complete the project within the deadline. They also sought quashing of certain provisions, one which requires builders to deposit 70% of funds paid by buyers; another 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 in the past.

The HC rejected the constitutional challenge raised by builders on all but one count pertaining to appointment of members on a tribunal for appeals under RERA; it partly struck down this clause which required judicial members on tribunals to be bureaucrats from the Indian Legal Service.

In another relief to builders, the HC accepted the builders' plea that "judicial members" must mean "judicial officers" or judges, as the tribunal has powers to order imprisonment up to three years. This Section under RERA made registration by May 1 mandatory for ongoing projects that were yet to receive completion certificates from relevant authorities.

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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.

Under RERA, each state and union territory will have its own Regulatory Authority (RA) which will frame rules and regulations as per the Act.

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 Supreme Court seeking directive that all similar cases in various courts be clubbed and heard by the apex court.

The Bombay High Court had concluded hearing arguments in this matter last month.


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