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As states allow developers extra time to register with RERA, home buyers cry foul

While there is no specific provision under RERA that allows states to extend the time period for registration for three months, most of them are doing so by interpreting the penalty clause

Soon after the July 31 deadline to register ongoing projects with the real estate regulator ended, several states across the country decided to extend the timeline by either a few days or months. But does the Central RERA Act authorise them to give an extension to developers to sign up their projects with the state regulator?

While there is no provision under RERA that allows states to extend the registration deadline, Section 59 of RERA says that if any promoter contravenes the provisions of section 3, he shall be liable to a penalty which may extend up to ten per cent of the estimated cost of the real estate project as determined by the Authority. This can be interpreted to mean that the penalty can be imposed up to 10 per cent but states have the discretion to not impose any penalty up to a certain period, say for three months as is happening in some states.

“Penalty by states can only be levied under section 59 of RERA. It is well within the right of the state/regulator to levy a penalty of zero per cent for a certain period of default which in certain cases can go up to 10 per cent of the estimated project cost,” say experts.

It is perhaps this rule that state governments have used to extend the deadline for a certain period of time.

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“Whilst there is no specific provision to extend the time period of three months as specified under Section 3 (1) of the Act, Section 59 of the Act is the Section under which penalty is to be imposed on an errant promoter. Section 59 (1) says that penalty may be any amount which may extended up to 10% of the estimated cost of real estate project. Therefore, the authority/state government is well within the powers to specify quantum of penalty considering gravity of the offence. If a certain period is extended it would necessarily mean that chance is given to the defaulting promoter/developer to cure his defect within a given period of time failing which penalty may be levied in proportion to the gravity (period of delay) of registration of their projects,” says Sudip Mullick from Khaitan & Co.

In fact, such a system would demonstrate that the authority is acting in a reasonable manner, he says. If the intention of the Parliament was to impose 10 per cent penalty on the first day of expiry of three months, then the Act would have said so and it would not have left the discretion of determining the quantum of penalty to the regulator/state government. The Parliament has however fixed a maximum amount that can be levied as a penalty, explains Mullick.

But home buyers think otherwise. Ongoing projects need to be registered within three months from the date of commencement of RERA as per proviso to section 3(1) of the Act. The deadline for such registration ended on July 31, 2017, they say.

“Many states have extended this deadline to cover for their failure to notify their state rules and also appoint authorities within the timeframe given under the Act. The extension granted for such registration by state governments is clear violation of section 3(1) of the Act. As, RERA is central Act passed by Parliament, no state government is empowered to tinker with the provisions of RERA. It is appalling to note, that state governments have surpassed their brief in this regard and have went ahead to extend the deadline when no such power lies with them. This clearly proves beyond doubt that strict implementation of RERA is not in their priority which will leave homebuyers in the lurch,” says Abhay Upadhyay, National Convenor, Fight for RERA.

Read more: Homebuyers beware! Violating RERA provisions may land you in jail

The Goa government was the first to extend the deadline by three months until October for ongoing projects to register with RERA, as the state has still not notified final rules.

The UP government this week decided to extend the deadline for registration for builders under RERA until August 15, after which it will apply a graded penalty until September 30. From August 16-31, registrations would entail 1 per cent penalty, from September 1-15 a penalty of 5 per cent would be imposed and from September 16-30, a penalty of 10 per cent. The total number of projects registered on the UP-RERA portal are over 1,500.

The Telangana government is exploring the options of extending the deadline for RERA registration by 2-3 months as the state has not yet notified the final rules.

Several Haryana-based developers have approached the government, seeking an extension of the deadline for registration of projects under H-RERA.

The Maharashtra RERA is the only state till now which has ruled out the possibility of any extension in the deadline for developers to register projects. The Maharashtra Real Estate Regulatory Authority (MahaRERA) this week decided to slap a penalty of Rs 50,000 each on the 480 ongoing housing projects that registered with it after the July 31 deadline.

Read more: Are interim RERA authorities set up by states illegal?

“Under the RERA Act, states are not empowered for extension..... But Section 1 (3) talks about different timelines for different provisions vide separate notifications...... Even if there were notifications, delegating that power to states, its legal validity is suspect. As per the Act, once the provisions come into force, no extension can be envisaged except through Section 91 that provides for the power to remove difficulties,” adds Narendra Kumar, advocate on record, Supreme Court.
Vandana Ramnani
first published: Aug 8, 2017 11:55 am

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