RERA : Supreme Court Seeks Responses Of States/UTs Which Haven't Established Real Estate Regulatory Authority, Appellate Tribunals

Responses have also been sought from the states of Arunachal Pradesh, Mizoram, and West Bengal, and the union territory of Jammu and Kashmir for not establishing real estate appellate tribunals. These states have notified the rules and established regulatory authorities under the RERA.

The court has also issued notice to Nagaland, which is the only state to not have notified the rules under the Act yet.

A bench of Justices Sanjiv Khanna and SVN Bhatti passed these directions in a miscellaneous application in a disposed of writ petition over the availability of the RERA as a parallel remedy for homebuyers. While upholding the 2018 amendments made to the Insolvency and Bankruptcy Code in 2018 to treat homebuyers as financial creditors, the Supreme Court had, in 2019, directed all states and union territories to appoint permanent adjudicating officers, and establish permanent regulatory authorities and appellate tribunals under the RERA.

Taking note of these developments, the bench pronounced:

“We deem it appropriate to issue notice to the respective Chief Secretaries for the States of Nagaland, Meghalaya and Sikkim, and the Union Territory of Ladakh, who have yet to notify the RERA Rules or have notified the RERA Rules but are yet to establish the Real Estate Regulatory Authority, and respective Chief Secretaries for the States of Arunachal Pradesh, Meghalaya, Mizoram, Sikkim, and West Bengal, and the Union Territories of Jammu & Kashmir and Ladakh, who have passed only interim orders notifying the Real Estate Regulatory Authority or are under process to establish.”

The court directed the concerned chief secretaries to file affidavits indicating the state or union territory’s progress with regard to the enforcement and implementation of the Real Estate (Regulation and Development) Act, 2016, within a period of 60 days from the date of service of this order.

This matter will be heard again in the month of January 2024.

Background

In August 2019, the Supreme Court dismissed a clutch of petitions filed by nearly 200 builders, developers, and real estate companies challenging the Insolvency and Bankruptcy Code (Second Amendment) Act, 2018 which, among other things, inserted two explanations to Clause (f) of Sub-section (8) of Section 5 of the Insolvency and Bankruptcy Code, 2016. The first explanation had the effect of putting homebuyers on the same footing as other financial creditors, by clarifying that any amount raised from an ‘allottee’ of a ‘real estate project’ would have the commercial effect of borrowing. Upholding the amendment, a bench held by Justice Rohinton Fali Nariman observed that homebuyers would be able to get remedies under the Consumer Protection Act, 1986, the Real Estate (Regulation and Development) Act, 2016, and the Insolvency and Bankruptcy Code –

“The RERA is to be read harmoniously with the Code, as amended by the Amendment Act. It is only in the event of conflict that the Code will prevail over the RERA. Remedies that are given to allottees of flats or apartments are therefore concurrent remedies, such allottees of flats or apartments being in a position to avail of remedies under the Consumer Protection Act, 1986, RERA as well as the triggering of the Code.”

As a postscript to this judgment, the court directed the states and union territories in which no adjudicating officer, regulatory authority, or appellate tribunal under RERA had been appointed or established, as well as those in which only interim arrangements had been made, to appoint permanent adjudicating officers and establish a regulatory and appellate tribunal within three months. Noting that while some sections of RERA were brought into force in May 2016, others were enforced a year later to allow the governments of states and union territories a one-year-period to appoint an officer and set up the regulatory authority and appellate tribunal, the bench directed –

“We have been informed that most of the states and union territories have established or appointed adjudicating officers, the real estate regulatory authority, as well as the appellate tribunal as under the RERA. Yet, despite the fact that May 1, 2017, has long gone, some recalcitrant states and union territories have yet to do the needful. We direct such states/union territories to appoint permanent adjudicating officers, a real estate regulatory authority, and appellate tribunal within a period of three months from the date of this judgment.”

Copies of the judgment were directed to be sent to the chief secretaries of all the states and union territories, who were asked to send their compliance affidavits within three months. In January 2020, the matter was taken up again to examine the limited issue of whether the ‘recalcitrant’ states and union territories had complied with the court’s directions. The bench, however, noted that only six states and one union territory had responded.

Again in February of the same year, the court noted that out of the 28 states and eight union territories, only 14 states and 4 union territories had responded. The states of Andhra Pradesh, Arunachal Pradesh, Bihar, Gujarat, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Telangana, Uttarakhand, and Uttar Pradesh and the union territories of Dadra and Nagar Haveli and Daman and Diu, Ladakh, Lakshadweep, and Puducherry failed to submit their response.

Case Title

Pioneer Urban Land and Infrastructure Limited & Anr. v. Union of India & Ors. | Miscellaneous Application No. 2561 of 2019 in Writ Petition (Civil) No. 43 of 2019

Citation : 2023 LiveLaw (SC) 657

Click here to read the order