Model Builder-Buyer Agreement : Supreme Court Asks Union To Scrutinize State RERA Rules For Essential Norms
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On a plea seeking a direction to the Centre to frame model builder-buyer and agent-buyer agreements to ensure uniformity across the country, the Supreme Court on Monday ordered that the Union Ministry of Housing shall scrutinise the state rules, notified in pursuance of the Centre's Real Estate (Regulation and Development) General Rules, 2016 and the Real Estate (Regulation and...
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On a plea seeking a direction to the Centre to frame model builder-buyer and agent-buyer agreements to ensure uniformity across the country, the Supreme Court on Monday ordered that the Union Ministry of Housing shall scrutinise the state rules, notified in pursuance of the Centre's Real Estate (Regulation and Development) General Rules, 2016 and the Real Estate (Regulation and Development) Agreement for Sale Rules, 2016, and place a report on whether the former comply with the substratum of the Rules of 2016.
The Court also requested Advocate Devashish Bharuka to assist the court as Amicus Curiae. "Mr Bharuka shall also assist in carrying out this exercise. ASG Aishwarya Bhati who has suggested this course of action states that all necessary facilities will be granted so that Mr Bharuka shall in coordination with the Union Ministry of Housing place a statement before this court on the aspects which have been referred to above", said the Court.
The bench of Justices D. Y. Chandrachud and Surya Kant had noted that the Union of India through the Ministry of Housing and Urban Affairs has filed a compilation of additional documents containing inter-alia the aggregated statement of Rules under the RERA.
"On 5 November 2016, the union government, being the appropriate government, notified the Real Estate (Regulation and Development) General Rules, 2016 and the Real Estate (Regulation and Development) Agreement for Sale Rules, 2016. All the states were requested to forward copies of the rules as notified. The statement which has been placed on record indicates that while the General Rules and the Agreement to Sell rules have been notified by various states, compliance is yet to be effected inter alia by the state of West Bengal and by some of the north-eastern states besides Jammu and Kashmir", recorded the bench.
The bench went on to dictate in its order that "at the present stage, it is necessary for the court to be apprised of whether the rules which have been framed by the states contain the essential norms which have been adopted by the Union Government in the rules of 2016 referred to above, or whether there are any deviations which would not subserve the interest of the flat purchasers."
"This exercise in our view should be carried out at two levels", said the bench, issuing the aforesaid directions to the Union Ministry of Housing and the Amicus. Granting 2 months for the completion of the exercise, the bench posted the matter for April.
On Monday, ASG Aishwarya Bhati told the bench, "The model builder-buyer agreement has already been circulated and adopted. We said so in the counter affidavit also. It was not correctly brought to Your Lordships' notice. Under the RERA act, for all the union territories which do not have a legislature, the onus was on the central government to prescribe the agreement. We have placed that on record now. The model agreement for sale starts at page 25. It is fairly comprehensive. The conditions include that the promoter has obtained final layout plan, sanction plan, specifications and approvals for the project- also for the apartment, plot or building, as the case maybe...These are called Chandigarh Real Estate (Regulation and Development) Agreement for Sale Rules, 2016. On the same lines, there are rules for all the union territories without a legislature...we have placed the implementation status of these rules by the various states"
Justice Surya Kant noted, "except 2-3 small states, the rest of the states have notified."
"Jammu and Kashmir and Ladakh got delayed because of the notification as UT. Manipur, Meghalaya and Nagaland are also yet to notify...We are in direct conversation with them. These are the border areas where rarel new real estate projects are there. But this will also be achieved quickly. West Bengal also remains", replied the ASG
Justice Surya Kant asked, "Have you broadly examined these rules that these are based on the model rules circulated by the central government?"
The ASG replied, "The officers made the comparison and explained to me the differences in the rules of Maharashtra and Haryana. We found that Maharashtra is broadly on the same lines as the model rules though they had made inclusion of the slum development or redevelopment project. Haryana is also on the same lines. Haryana has added something very interesting. They have prescribed the ratio which the builder cannot exceed on the basis of the construction"
Justice Chandrachud noted that "there has to be local variation". Justice Surya Kant also agreed that local conditions will have to be provided for, so long as additional provisions incorporated by Maharashtra, Haryana etc are for the favour and protection of the buyers and consumers.
Senior Advocate Maneka Guruswamy, on the petitioners' side, advanced, "Ms. Bhati has very skilfully reiterated the previous position of the union government. Every state government has its own set of rules. That is the very point of these petitions- this nature of fractured legislation which varies from state to state, both in terms of statutory protection as well as in terms of implementation, is actually the issue...Our quarrel is that there is no common minimum. The Union's consistent position unfortunately has been that they don't have the power. It is not true. Hence this litigation."
Justice Chandrachud observed, "What they did was that on 4 November 2016, the secretary in the ministry of housing circulated these rules to all states. They said, 'inform the ministry about the rules which have been notified by you'. Some states have notified and others have not. The point of the matter is whether the rules which have been notified by the states do not contain the essential provisions of the Centre's 2016 rules or they are contrary to the interest of the flat purchasers."
Dr. Guruswamy said, "we will have to study that from state to state. I cannot make a statement on that."
Justice Chandrachud remarked, "the other way of doing this is that you can really deliberate on some minimum norms which every agreement to sell must have and then leave it to the states"
The ASG interjected, "This precisely what is being done. Dr Guruswamy is putting words in my mouth. It is Wrongly presented that the Union is shrugging away or running away from responsibility"
Justice Chandrachud asked, "Ms. Bhati, have you examined all the rules which have been framed by the states and whether they will protect the interest of the buyers? Because you must also ensure because RERA is your legislation. You must look at the rules of the state. You have formulated the rules in 2016, you have circulated them to the states, states have their own rules across India, some states don't at all. The point is have you applied your mind as to whether the state rules contain clauses which are contrary to the interest of the home buyers or the flat purchasers. Do they adopt the essential requirements which you have spelt out in your rules? Do they contain conditions which are not in the interest of flat purchasers?"
The ASG replied, "I have specific instructions that all the rules of the states, which are the high project base states, have been threadbare examined. There is a comparison table created by the officials of the ministry and on that basis I was instructed of all the differences in Maharashtra and Haryana. Otherwise this examination has happened."
"Where are you said that you have examined?", asked Justice Chandrachud.
The ASG replied, "we have not said it, but if Your Lordships want...the problem really is with West Bengal. Otherwise, all UTs and states have..."
Justice Chandrachud said, "There was an MA (in the matter where the SC last year struck down the legislation introduced by the state of WB to occupy the same field as RERA) the other day where it was sought to be submitted that the RERA Act will not apply to the state of WB. We said that the MA is not maintainable, but we have recorded the statement that they are implementing the RERA. The Chief Justice of the Calcutta High Court has appointed Justice Harish Tandon who will be in charge of the committee for the same...Ms. Bhati, You have also to apply your mind to the individual rules framed by the state and tell us that you are satisfied that these rules contain the essence of your rules. Then that is the end of the matter for us."
"We will do that exercise and report to your lordships", assured the ASG
Justice Chandrachud addressed Ms Guruswamy and said, "you also examine whether the rules framed by the states are basically the essence of the rules which have been circulated by the government of India in 2016."
Ms. Guruswamy replied, "This litigation is not supposed to be adversarial. We will definitely do that. But I have one suggestion- There is the Central advisory council, Niti Aayog is a part of it. Could not Niti aayog simply do this examination in a more formal way. Since 2016, we have not seen any kind of rigourous assessment as to whether the state norms are complying with the union government's vision. In tandem with the union, Niti Aayog could examine it and submit a report to your Lordship. We have not seen the exercise of the union."
Justice Chandrachud said, "Ms. Guruswamy, you can examine it. We will also ask Ms Bhati to examine."
Justice Surya Kant also added, "Whenever you find there is a provision in the rule which is offending- say, it is in conflict or contrary to the interest of the allottee- you can point out . We may direct the state government to suitably modify. If, broadly, the rules are taking care of protecting the interest of the home buyers, then I think it is covered."
"We will do the exercise. Also, Your Lordships may appoint Mr Bharuka as amicus who may also conduct this exercise independently", suggested the ASG.
The bench then passed the aforesaid order to the Union Ministry of Housing and the amicus.
On the last hearing date (January 17), the Court had directed the Union to consider framing model builder-buyer agreement as it was a matter concerning middle class homebuyers.
Case Title: Ashwini Kumar Upadhyay v. Union Of India And Ors.