Relief Under RERA In Rajasthan– Real Or Illusory

The Real Estate Act of 2016 was enacted by the Parliament at the time when several issues like inordinate delay in completion of projects, diversion of funds, lack of transparency, inter alia, plagued the real estate sector in India. These issues affected the interests of buyers, gave rise to trust deficit between promoters and buyers and resulted into several litigations before several consumer fora across the country. Pending litigations, lack of standardisation and professionalism hindered growth and obstructed the sector in reaching its full potential and contributing to the economy. To rectify such malaises and in line with the "Housing for All by 2022" project of the Government of India, the Real Estate Act was passed. The Act regulates both residential and commercial real estate and balances the interests of buyers and promoters by conferring rights and imposing responsibilities on both.

On the transparency front, the Act aims to bridge the information gap by making it obligatory for the Promoters to register their projects, disclose all project related information for public viewing, including the details of developers, various approvals, project schedule, information regarding architects and structural engineers, etc. It also regulates the industry by making it obligatory for the promoters to adhere to approved plans, rectify structural defects, refund money in cases of default, and deposit of 70% of amount realized from allottees in a separate account. The Act also imposes certain obligations on the allottees which include making necessary payments and taking physical possession on time.

The highlight of the Act is the introduction of an exclusive adjudicatory mechanism for speedy redressal of disputes between/among the various stakeholders namely, promoters, allotees and agents. For this purpose, the Act provides for establishment of the Real Estate Appellate Tribunal, the Real Estate Regulatory Authority and appointment of the adjudicating officers.

The Real Estate Regulatory Authority was to be created by the appropriate Government within a period of one year from the date of coming into force of the Act. The Authority has been empowered under Section 31 to hear complaints against any promoter, allottee or real estate agent for any violation of the provisions of the Act. Additionally, the Authority has been made responsible for registering the real estate projects in the State, publishing and maintaining for public viewing the details of the projects and ensuring compliance of the obligations cast upon the stakeholders.

To hear appeals from the orders or directions of the Authority the Act provides for constitution of Real Estate Appellate Tribunal under Section 43 within a period of one year from the date of coming into force of the Act. Any aggrieved person, including promoters, can prefer an appeal before the Tribunal from a decision of the Authority.

Section 20 and 43 were notified by the Central Government for commencement on 01.05.2016, thus the Authority and the Appellate Tribunal were required to be established latest by 30.04.2017. However, it is a matter of great concern and dismay that the Government of Rajasthan has not constituted the Appellate Tribunal till today. It is pertinent to note that once a duly enacted Act has been brought into force, the State Government is bound to follow its provisions and is accountable to the Legislature and citizens of the State for its failure to implement it. The inaction of the State Government is a violation of its statutory and constitutional duty.

It need not be overstressed that the inaction of the State Government has created several bottlenecks for implementation of the Act and progress of the real estate industry. Several complaints filed before the Authority have been decided. Allottees have been granted reliefs of refund, interest or penalty against the promoter for delay in handing over possession or poor construction, etc. However, the beneficiaries of these favourable orders have not been able to get the orders executed. Since an aggrieved person has a statutory right to appeal to the Tribunal, due to its non-constitution, the aggrieved parties are being constrained to approach the Hon'ble High Court of Rajasthan against the impugned order.^[1] In one such case, namely Jagdev Singh Sharma, the High Court has noted that "the State Government has not taken any steps of appointing the Chairman and Members of the Real Estate Appellate Tribunal resulting in depriving the petitioner of challenging the orders passed by the RERA." Accordingly, the High Court has given a stay on the execution/compliance of the impugned orders. The High Court also directed the State to inform about steps which are being taken for formation of the Tribunal. In an Affidavit filed before the Court on 18.09.2019, the State informed that two members have been appointed and the State Government is in process of appointing Chairman of the Appellate Tribunal. However, till date no Chairman has been appointed by the State. As a result, all the orders passed by the Authority have been pending for execution and people have failed to realise the reliefs granted in their favour.

The lack of implementation and poor resolution of disputes is further aggravated due to the fact that the Authority has not appointed an Adjudicating Officer under Section 71 of the Act. The Authority has to appoint an Adjudicating Officer in consultation with the appropriate Government for the purpose of adjudging compensation under sections 12, 14, 18 and section 19.

Section 12 deals with refund of advance and compensation in cases of any loss or damage caused due to incorrect or false statement in any advertisement. Section 14 pertains to granting compensation to an allotee for failure of the promoter to rectify any structural defect or any other defect in quality or provision of services.

Section 18 and 19 provides a right of compensation to the allottee in cases where (i) the promoter fails to complete or is unable to give possession of an apartment in accordance with the terms of the agreement for sale; (ii) loss is caused to an allottee due to defective title of the land; (iii) promoter fails to discharge any other obligations imposed on him. Thus, the essential function of adjudicating compensation comes under the sole jurisdiction of the Adjudicating Officer. Due to non-appointment, cases involving compensation filed before the Rajastan RERA are being regularly adjourned and have been shelved till the time any Officer is appointed.

Moreover, jurisdiction of other civil courts has been barred under Section 79 to entertain any proceeding in respect of any matter which has to be dealt by the Authority or the Adjudicating Officer or the Appellate Tribunal under the Act. Thus, the stakeholders of the real estate industry in Rajasthan have been left in lurch whereby they cannot approach other avenues available to them for resolution of their disputes, and the ones available exist only on papers.

It is noteworthy that the Parliamentary Committee on Subordinate Legislation which looked into the Real Estate Act, 2016 noted in its Report dated 10.08.2017 submitted in the Lok Sabha that any delay in establishment of such statutory bodies mandated with the core tasks will severely affect the implementation of the RERA, 2016. The Committee noted the failure of several States and Union Territories to constitute permanent Authority and Appellate Tribunal. Consequently, the Committee recommended to the Ministry of Housing and Urban Poverty Alleviation that time bound targets should be given to the states for the establishment of RERA and REAT under the RERA, 2016 without any further delay.

The delay in adjudication of the pending cases not only affects the rights of buyers, it also impedes the interests of promoters in so far as the delay keeps adding to the interest liability of the promoter in cases of adverse adjudication. Further, pending cases leave the sale/ purchase of the flat/project in question in a state of limbo and affect timely execution of project. The burgeoning load of cases also adds to the burden of pendency of cases before Authority and tribunal. Thus, it is the urgent and immediate need that the State Government appoints the Chairman of the Appellate Tribunal and the Authority appoints the Adjudicating Officers. Once the entire machinery contemplated in the Real Estate Act of 2016 is well-oiled and starts functioning without any friction, it will give the much required boost to the real estate sector in Rajasthan.

Views are personal only.

(Author is a Practicing Lawyer)