When a few reporters rushed to the office of the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) at Greater Noida to seek the authority’s reaction, following the Supreme Court landmark judgment on November 11, a few homebuyers who happened to be there for their respective cases, wondered if something would change radically for them.
The Supreme Court in a landmark judgment in the case of Newtech Promoters & Developers versus State of UP and others has Constitutionally validated the challenged provisions of RERA. The apex court has settled the principle of law through its judgment with respect to appeals emanating against UP RERA jurisdiction.
A retired army veteran wanted to know whether the RERA order passed in his favour will no longer be challenged by the builder. Another young couple waiting for a RERA Recovery Certificate to be executed were wondering if the Supreme Court judgment touched upon some grey areas as well.
The real estate market of Uttar Pradesh in general and Noida-Greater Noida in particular is a hotbed of consumer grievances, ranging from delay to default, unmet promises to builders’ high-handedness. As per an industry estimate, nearly 40% homebuyer grievances in India are reportedly from this market alone. It is, therefore, no surprise that even when the Real Estate Regulatory Authority proposes to clean up the market, the builders devise their own ways and means to oppose it.
RERA has always been work-in-progress in India. In the case of Noida-Greater Noida, builders have been challenging its orders and RERA’s legal jurisdiction. The settled principle of law under RERA that should ideally not even be debated is continuously challenged to increase litigation.
It is not that builders are not aware of the settled principles of the law under RERA Act before challenging it in the higher courts. Their game plan has been to delay justice in order to deny justice. They are conscious of the fact that if out of 1,000-odd buyers 10 have approached RERA and secured judgments in their favour, honouring that judgment would bring hundreds of more buyers to RERA's doorstep. So, they repeatedly question RERA’s jurisdiction and purview to lengthen the litigation period in high courts and continue to harass homebuyers.
Not anymore!
The highlights of the Supreme Court judgment are:
- Constitutional validity of RERA upheld
- Ongoing projects are those where completion certificate has not been obtained prior to May 1, 2017
- RERA Act is retroactive
- Pre-existing agreements will be subject to retroactive application and thereby the provisions of the Act and Rules thereunder will prevail. Accordingly, rate of interest would be as per RERA
- Jurisdiction for refunds along with interest thereon and interest on delayed possession lies with the Authority
- Jurisdiction to decide on compensation lies with the Authority
- Delegation of powers to decide complaints under Section 12,14,18 and 19 to a single member upheld
- Pre-deposit of 100% of amount payable to allottees to be deposited with the Appellate Tribunal for admission of Appeal
- Right to issue Recovery Certificates upheld
Venket Rao, legal adviser of UP RERA, points out that the Supreme Court judgment puts once and for all a lid on certain contentious issues. According to him, there were three grey areas that the builders were repeatedly challenging. First, the projects that fall under the ambit of RERA. The apex court has categorically said that the projects that didn’t have Completion Certificate (even if with Occupancy Certificate) as on May 1, 2017 fall within the ambit of RERA.
Second, a key issue decided by the apex court is on the amount to be deposited by the developer with the Appellate Tribunal before its appeal is admitted against a RERA order. Section 43(5) of RERA provides for deposit of 100% of the amount payable.
“Finally, the apex court has held that pre-existing contracts (i.e. contracts in existence prior to RERA coming into effect) will be read as per RERA and thereby the legislative has the power to make an Act retroactive and therefore RERA does not violate the Constitution of India,” says Rao.
The judgment, nevertheless, leaves many questions unanswered. The law has always been very clear as far as the legal jurisdiction and ambit of RERA is concerned. The apex court has only clarified it further and there is nothing new in this order. The larger issue has been the builders’ intent to challenge it and lengthen the legal battle of the harassed homebuyers.
Will this Supreme Court judgment put an end to the lengthy and expensive litigation of homebuyers?
Is RERA another window of litigation and not the final doorstep of justice?
What are the options available to homebuyers if the builder continues to challenge RERA orders in higher courts on some other grounds?
Does the multiple litigation window defeat the very purpose of RERA?
If RERA is not empowered to act as a fast track court for homebuyers, then what purpose is it serving?
Shouldn’t higher courts admit cases against RERA orders selectively and only on technical grounds?
Shouldn’t RERA-approved projects act as a due diligence channel for homebuyers?
Shouldn’t RERA be empowered to create an entry barrier for serial offender builders?
The Supreme Court judgment has only defined the Constitutional validity and ambit of RERA. This will definitely set a precedent for RERA in other states as well. However, it is difficult to say whether the apex court has set the tone for builders to fall in line. More importantly, it can only be a guestimate now as to when and in which shape the real estate regulatory body emerges from its stage of trial and error.
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