Mumbai: The Bombay High Court on Wednesday upheld the constitutional validity of the Real Estate (Regulation and Development) Act (RERA), observing it was crucial to protect the interests of flat buyers across the country, and develop incomplete projects. 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.
The court also addressed the issue of the Act’s implementation, saying it must be closely monitored. Although RERA is a central law, its implementation will depend on State governments since real estate is a State subject. 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 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”. “In case the authority is satisfied that there are exceptional and compelling circumstances due to which a developer could not complete the project in spite of the one year extension granted, then the authority will be entitled to let the developers’ registration continue.”
Such powers shall be exercised on a case-to-case basis, and the authority shall consult with the State government in such cases if needed, it said. “RERA is not a law relating to only regulatory control of the promoters, its objective is to develop the real estate sector, particularly the incomplete projects across the country,” the Bench said, observing it was crucial to protect the interests of flat buyers. “The problems are enormous. It’s time to take a step forward to fulfil dreams of the Father of the Nation, Mahatma Gandhi, to wipe every tear from every eye,” Justice Patil said.
Monitoring needed: Bench
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 severe penalties if the developer fails to complete the project within the deadline.
Most developers had challenged a provision of a force majeure or a natural disaster, which allowed a deadline extension by a year at the most, if the delay was due to natural disasters. The developers had also opposed the composition of the State-level RERA authority and the Appellate Tribunal. The HC did not interfere with the composition of the State-level authority, but it ruled that the tribunal must be headed by a judicial officer and not a bureaucrat, or a member of the Indian legal services. It also said a majority of the tribunal members must be officers or members of the judiciary.
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. While the Bench concurred with the State and Central government’s arguments, it said authorities must also closely monitor the implementation of the Act. “We are conscious of the fact that the actual implementation of RERA needs to be closely monitored in the years to come,” the Bench said.
In September, after several petitions challenging RERA were filed in high courts across the country, the Supreme Court stayed proceedings in other courts and suggested the Bombay HC V hear its RERA cases first. 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.
