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Flashback 2018: Census of delayed and stuck real estate projects a must, say homebuyers

Despite some landmark RERA orders, inconsistent and the arbitrary decisions taken by some authorities have disappointed homebuyers

Moneycontrol Contributor @moneycontrolcom

Abhay Upadhyay

As yet another year comes to an end, the concerns of homebuyers persist. Despite the game-changing legislation Real Estate Act, 2016 (RERA) being in force since the last two years, the trust deficit between builders and buyers has increased due to a lack of coordinated efforts on the part of builders, governments (state and Central) and the judiciary in truly implementing the said law and initiating remedial measures.

Millions of homebuyers have been deprived of their life savings due to projects being inordinately delayed mainly due to fund diversion, driven by the greed of builders who have never introspected nor bothered to initiate a dialogue with consumers to address the rising trust-deficit. The state and central governments have been mute spectators to the plight of homebuyers.

In-spite of multiple requests by Forum For People's Collective Efforts, they have not collected data on delayed projects nor have they ordered any forensic audit or investigation of such delayed projects. Instead, they continue to provide tax and other regulatory concessions to builders who keep portraying a sorry state of affairs, blaming everyone other than themselves. The governments must understand that if wheels of a vehicle are flat, supplying free fuel won't make it run.

No legislation by itself can solve a problem. Its fruits can only be reaped through strict, uniform and time bound implementation. This is where the Central government has failed. Most states have diluted the rules under RERA.

While Maharashtra and Madhya Pradesh have led implementation of the Act by example, it has been lackadaisical in most states, namely Telangana, Andhra Pradesh, Tamil Nadu, Karnataka, Rajasthan, Jharkhand, Gujarat, Haryana and Uttar Pradesh. West Bengal, in fact, has legislated its own Act – the West Bengal Housing Industry Regulation Act, 2017, brazenly threatening the supremacy of parliament.

Some landmark RERA orders

The year 2018 was marked by some important orders/directions from the  Supreme Court, including forensic audits of Amrapali Group (which saw properties of promoters being seized) and Unitech projects, and hearings on the matters of Jaypee and Supertech. In the Ferani Hotels Pvt Ltd vs. The State Information Commissioner, Greater Mumbai and Others, the Court mandated that the developers display the sanction plan/layout plans at the site of proposed project. This has lent support to the much-needed cry for transparency, allowing home buyers to know whether the unit she/he plans to buy has official sanction.

Maharashtra RERA (MahaRERA) has asked all developers to submit certificates from their engineers certifying quality of construction, which deserves appreciation. Recently in an order, MahaRERA imposed fine of Rs 50 lakh on Prathamesh Land Developers for not registering two wings of their real estate project. In another matter, it ordered daily penalty of Rs 1 lakh on Nirmal Developer for defaulting on refund installments to home buyers as per mutually agreed terms.

Recently, a landmark order passed by Gurugram bench of Haryana RERA, in Ms. Simmi Sikka vs. Emaar MGF Ltd, attempted to settle any confusion with regards to applicability of the Real Estate Act and registration of projects, and also nullified the effect of dilution of the provisions of the Act by Haryana Real Estate rules. The order also says that in cases where builders have fraudulently obtained OC/CC (completion certificates) despite development work being incomplete, DTCP will be requested to withdraw OC/CC and also initiate an inquiry on how such certificate was fraudulently obtained. This will have wide ramifications and set a benchmark for other state regulators and will help weed out corruption.

In another significant order passed by Haryana RERA in Gurbaskh Singh vs. ABW Infrastructure Pvt Ltd, it was held that the claim of allottees against assets of projects is superior than the right of financial institutions or any other creditors.

Uttar Pradesh RERA has passed orders for forensic audit against Ansal Group of Housing, Primrose Infratech and Intellicity Business Park while the National Consumer Disputes Redressal Commission has held that non-fulfilment of overall responsibilities of project planning, execution and completion cannot be and are not grounds for condoning or overlooking delay in completion and handing over possession. This implies that force majeure clause cannot be an excuse for delay and therefore compensation denial under Consumer Protection Act.

As mentioned before, despite the above positive strides, inconsistency and the arbitrary decisions taken by some RERA Authorities has disappointed home buyers. Consider the recent announcement by Haryana RERA chairman that 'if a project is 40 percent complete and likely to be completed in two years, the Authority in Gurugram does not allow refund as per provision of Section 18 of the Act'. Likewise, in the matter of Rujuta Thatte vs Forefront Pvt Ltd, MahaRERA ordered handover of possession by March 31, 2019, granting liberty to demand interest at an ‘appropriate stage’. Since it did not specify what that stage would be, the complainant has been left in the lurch. Such arbitrary decisions can spoil the efficacy of RERA and compel consumers to look to other forums for recourse.

It is suggested that the ministry of housing and urban affairs circulate appropriate guidelines to all states and their regulators on the mechanism to be followed for setting up of Settlement Forum under Section 32(g) of RERA, since Conciliation Forum constituted by Maharashtra RERA is not as per the provisions of the Act and hence needs to be wound up.

We hope that in the coming year, the governments will realise the pain and suffering of homebuyers and consider their long-pending demand to waive EMI of delayed projects and to extend the timeline to get deduction of interest paid on home loan from their income for computation of income tax.

Census of delayed and stuck projects mandatory

It is also necessary that a census be carried out to access the number of delayed projects and their stuck home buyers across the country. Accordingly, remedial measures like ordering forensic audit and taking over all such projects where the chance of completion by the promoter is remote, can be undertaken. Also, if developers are found guilty, their assets should be seized and auctioned to make funds available for completion of projects.

It is not correct to say that builders, and not consumers, form the basis of the real estate sector. The industry can only survive if there are satisfied consumers in the market, without whom it cannot contribute to GDP or create jobs, which it consistently boasts of. Hence, the steps for revival of real estate industry should be customer-centric and not builder-centric. A strict RERA regime is the need of the hour and this alone can bring the industry out of the downturn it is currently experiencing.

As consumers, we need to participate in a Swachh Real Estate Mission: Let us pledge that we will not buy in any under-construction project and will bring awareness among citizens to only buy ready-to-move units having an occupation certificate or a completion certificate.

(The author is president, Forum For People's Collective Efforts and member  Central Advisory Council, RERA, Ministry of Housing and Urban Affairs, Government of India. The views expressed by the author are personal)
First Published on Dec 31, 2018 04:46 pm
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