Robust Regulatory Mechanism & Draft Agreement Already Prescribed Under RERA: Centre Tells Supreme Court In Plea Seeking Model Builder Buyer Agreement

Responding to a plea seeking a model builder buyer agreement, the Central Government has submitted before the Supreme Court that a robust regulatory mechanism and draft 'agreement for sale" has already been prescribed under the provisions of RERA [Real Estate (Regulation and Development) Act].

According to Centre, the mechanism prescribed under RERA seeks to balance the rights and interest of homebuyers and promoters in an accountable and transparent manner.

The submission has been made through a counter affidavit filed by Union of India in a batch of petitions raising the grievances of flat-purchasers that in the absence of uniform Builder-Buyer and Agent-Buyer Agreements, the purchasers are left to the mercy of developers over the terms and conditions imposed.

The Ministry of Housing and Urban Affairs has submitted in its affidavit that the RERA seeks to address vital issues of fair transactions, timely delivery, and quality construction through speedy adjudication of disputes, thus empowering home buyers.

It has been submitted that under the provisions of RERA, if the developer fails to complete the project as per terms of agreement for sale, a homebuyer can either seek a refund of paid amount along with interest or ask for interest for every month of delay, till the handing over of the possession.

While stating that prior to 2014 the Real Estate Sector was largely unregulated, the Ministry has pointed out the following developments which have taken place under the regulatory regime of RERA:

• The ongoing projects which have not received the completion certificate need to get registered under RERA.
• RERA ensures transparency, accountability, and financial discipline in the Real Estate Sector and it mandates for registration of projects before advertising, marketing, booking, selling, etc.
• RERA also ensures the timely delivery of real estate projects and the entire fund flow is also subject to strict monitoring by the regulator to avoid diversion of funds, which will also secure the interest of homebuyers
• RERA also provides for strict penal provisions of imprisonment in addition to provisions for refund, interest, and penalty in case of non-compliance by developers, allottees, and agents.
• Section 13 of RERA deals with 'agreement for sale' and restricts the promoter from not accepting any deposit or advance from allottee without first entering into an agreement for sale.
• As per section 84 of RERA, the Appropriate Government i.e. State Government save in the instances involving its application in the territory of Union Territories has to notify rules for carrying out the provisions of this Act.

The Centre has pointed out that it had shared the draft 'agreement for sale' with all the States & UTs in 2016 itself after the enactment of RERA. 

In this regard, Draft Rules & Agreement for Sale of one of UTs (Chandigarh) was uploaded on Ministry's website for reference. Thereafter, on various occasions, there was a follow up on status of the aforementioned agreement from the States & UTs through various meetings and correspondences. Currently all the States & UTs have notified rules under ERA except Nagaland with which the Government is in discussion.

On October 4, the Court had issued notice to the Centre on the pleas filed by Advocate Ashwini Upadhyay, A Group of DLF home Buyers And others.

While issuing notice a bench of Justices D. Y. Chandrachud and B. V. Nagarathna recorded that the string of petitions seeks a direction to the central government to frame a model BBA and ABA "to infuse transparency and fairness and enhance the aims and objectives RERA, 2016".

On a later date, Justice Chandrachud had asked ASG Nataraj, who was appearing before the bench in an unconnected matter, to assist the Court.

"This is an important matter where the issue is about the need to frame a model builder-buyer agreement under the RERA. The government has the power to do so...a group of homebuyers has come to the court. This is not an adversarial matter. This is a very important issue of public interest. Kindly help us" the Bench had said

Case Title: Ashwini Kumar Upadhyay v. Union Of India And Ors