HC invokes the Mahatma, upholds RERA

Good news for home buyers! Real estate act RERA is not illegal says Bombay HC

Good news for home buyers! Real estate act RERA is not illegal says Bombay HC

There's good news for home buyers as the Bombay High Court on Wednesday upheld the constitutional validity of the Real Estate (Regulation and Development) act, 2016 (RERA) and the authority formed under it.

The court passed the order while deciding on a bunch of petitions filed by developers and plot owners challenging the validity of several sections of the RERA act. "To wipe out tears from every eye".

"We are conscious of the fact that actual implementation of RERA needs to be closely monitored in years to come". It also said that the authority should not cancel projects or developers' registration in cases where the delay was caused due to "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 inspite of the one year extension granted, then the authority will be entitled to let the developers' registration continue", the court said.

The RERA Act aims at protecting the interest of consumers in the real estate sector by establishing an adjudicating mechanism for speedy redressal of disputes.

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. It said, "RERA is not a law relating to only regulating concerns of the promoters but it's object is to develop the real estate sector, particularly the incomplete projects, across the country". "The problems are enormous". DB Realty group of companies, had challenged as illegal, a provision which bars-except in case of a force majeure or a natural disaster-any extension beyond a year for completion of project, if it is not completed within the deadline mentioned by the builder while registration. The court has directed that the two member bench of the tribunal should always consist a judicial member and majority of the members shall always be judicial members, instead of bureaucrats, as is the formation now.

The Centre and the state of Maharashtra had vehemently defended the Act, and justified the strict provisions by arguing that the same were meant to protect buyers, and to rein in rogue developers. "While in Rajasthan we chose to follow the provisions of RERA and not approach the court, the industry needs relief on many stringent provisions like keeping 70% of the project money in an escrow account and including ongoing projects prior to May 1, 2017 in the RERA", said Hitesh Dhanuka, joint secretary of CREDAI Rajasthan. Supreme Court had in September, on a Union government application, sought to club all petitions filed across the country. 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.