National level model agreement required to deter builders from fleecing homebuyers: SC

The Supreme Court on January 17 told the Centre that it was not in favour of separate state governments having builder-buyer agreements, but would rather prefer a national-level model to deter builders from fleecing homebuyers.

“We are concerned about the broader public interest of the middle-class home buyers,” Justice DY Chandrachud and Surya Kant said and asked the Centre to consider framing uniform rules under the provisions of RERA.

“The whole purpose of the present PIL is that there should be a model builder-buyer agreement which will be formulated by the central advisory council so that there is some uniformity in the basic terms and conditions and the flat buyers are not exploited,” he said.

Justice Chandrachud said, “We are very keen on this. Instead of leaving it to all the individual states, we want the Centre to formulate a uniform builder-buyer agreement, which shall be applicable in all the States.”

He also cited the West Bengal matter in which a state law regulating the real estate sector was similar to RERA and was struck down by the court last year.

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The bench asked Solicitor General Tushar Mehta, appearing for Centre, to seek a considered view of the Union Government of the need to formulate a model builder-buyer and agent-buyer agreement at the central level.

Mehta agreed with the bench and said that the agreement cannot be one-sided and assured the court that he will seek a considered view on the issue.

The bench also asked Mehta to reconsider the affidavit which has been filed on the issue in which the Centre has said that there is a robust regulatory mechanism and draft 'agreement for sale' has already been prescribed under the provisions of RERA, which seeks to balance the rights and interest of home buyers and promoters in an accountable and transparent manner.

The bench posted the matter after two weeks and asked Mehta to seek instructions on the issue.

On November 8, 2021, the Supreme Court had said that a model builder-buyer agreement is needed in the real estate sector and the Centre should file its reply on the issue as it is an "important matter in the public interest".

On October 4, the Supreme Court had issued a notice to the Centre, asking it to frame model agreements for the builder-buyer and the agent-buyer deals to bring in more transparency in the real-estate sector.

A Public interest litigation (PIL) has been filed by advocate and BJP leader Ashwini Upadhyay, seeking a direction to all states to enforce a model builder-buyer agreement and a model agent-buyer agreement and to take steps to avoid "mental, physical and financial injury" to customers.

"Promoters, builders and agents use manifestly arbitrary one-sided agreements that do not place customers at an equal platform with them, which offends Articles 14, 15, 21 of the Constitution.

"There have been many cases of deliberate inordinate delays in handing over possession and customers lodge complaints but the police don't register FIRs, citing arbitrary clauses of the agreement," the PIL had said.

Abhay Upadhyay, president of The Forum for People’s Collective Efforts (FPCE), and member of the Central Advisory Council, RERA, told Moneycontrol that while it is true that the Centre has notified a Builder Buyer Agreement which has sadly not been followed by the states who have notified their own version of BBAs.

He said that "there is always a scope of improvement for which the Supreme Court should have constituted a committee which would have invited suggestions from the public and then compiled them to design a better BBA and then presented it before the SC.

"However, the question still remains as to how the apex court will ensure that the BBA, as approved by the court, will be implemented by the states and executed by builders across the country," Upddhyay added.