Home buyers have been subjected to excessive delays. Here are simultaneous proceedings, a relief for home buyers

Simultaneous proceedings a relief for homebuyers

Homebuyers have been subjected to excessive delays under the justice delivery system because construction projects have long gestation periods. From a mere contractual dispute to instances of fraud and delays in handing over the property, homebuyers face a lot of challenges. So remedies under one particular legislation may not be sufficient to cover all the offences and problems. Consequently, there is a need to give expansive remedies to them under different Acts.

In case of any dispute, they can now approach three possible forums under three different Acts: The Consumer Protection Act, 2019, as a consumer; Real Estate (Regulation and Development) Act, 2016 (RERA Act) as an allottee; and Insolvency and Bankruptcy Code, 2016, as a financial creditor.

The new Consumer Protection Act, 2019, has been a relief in more ways than one and has wide-ranging provisions with respect to both defining the offence under the Act and dispute resolution. It is also not specific to resolution like the Insolvency Code. Therefore, it is important to understand that the remedies should be simultaneous and not mutually exclusive.

The fact that the RERA Act contains a ‘bar of jurisdiction’ clause has not stopped the courts from providing the homebuyers with simultaneous remedy under the Consumer Protection Act for issues that go beyond the RERA Act. This has been for various reasons. The Punjab and Haryana HC has held in two judgments—Experion Developers Pvt. Ltd. v. State of Haryana and Ors., and Janta Land Promoters Private Limited v. Union of India and Ors—that remedies under RERA are in addition to and not in derogation of the other laws in force, taking recourse to Section 88 of the Real Estate Act.

It has held that the appropriate forum may be approached under the Consumer Protection Act in case of remedies that may not be available under RERA. This has been furthered by a recent Supreme Court judgment on the same issue in the case of M/S Imperial Structures Ltd v. Anil Patni. In the said case, the project had not been completed even after substantial booking amounts had been paid by the allottees. In 2017, the National Consumer Disputes Redressal Commission (NCDRC) was approached under the Consumer Protection Act 1986 (now amended to Consumer Protection Act, 2019); it ordered refund of the amount paid with 9% interest per annum and costs to the tune of Rs 50,000.

The NCDRC also dismissed the claim of the builder that it had no jurisdiction to adjudicate on that particular issue as the project was approved by RERA and therefore, the Regulatory Authority under the Real Estate Act was the appropriate forum. Consequently, an appeal was filed by the builder in the Supreme Court. The Division Bench at the apex court held that there was no bar in approaching the NCDRC under the provisions of RERA. This was because of two distinct reasons.

First, the court relied on its decision in Malay Kumar Ganguli v. Dr Sukumar Mukherjee, where it has been held that the NCDRC is not to be treated as a civil court as defined under the Civil Procedure Code; and Section 79 of RERA, which deals with bar on jurisdiction of other courts, will thus not cover the NCDRC. Second, that Section 71 deals with the authority’s power to adjudicate and the proviso to Section 71(1) states that the complainant under RERA may withdraw a complaint that is pending before any of the Consumer Disputes Redressal Commissions after taking permission from such forum or authority and then file a complaint under the Real Estate Act.

This clearly indicates at a legislative intent of giving an option to the complainant to either proceed simultaneously or in any of the forums distinctly, rather than mandatory withdrawal of a complaint under the Consumer Protection Act to file a complaint under RERA. These judgments are a much-needed respite to homebuyers as the remedies under the specialised Acts are very selective and may also limit the cause of action. The three reasons given above can offer an opportunity to the homebuyers to make complaints under the preferred Act or expand their rights by making simultaneous complaints in order to get exhaustive remedies.

However, while these are protective legislations, the courts shall endeavour to prevent any overlaps if the homebuyers choose to pursue simultaneous remedies. For instance, Section 12 of RERA penalises the promoter for misleading advertisements in the context of layout, plan or model of the building. Such penal consequences for misleading advertisements are also available under the Consumer Protection Act under Sections 2(28) and 10(1) more generally, which relate to any aspect of the false and misleading advertisement. Therefore, the compensation awarded will have to prevent any overlaps in these areas; otherwise, it will lead to unjust enrichment of the complainant, which is not the purpose of these Acts.

Source: https://www.newindianexpress.com/opinions/2020/nov/27/simultaneous-proceedings-a-relief-for-homebuyers-2228667.html

Rera Karnataka tries to deliver speedy justice by taking details online

Under flak, RERA-K hopes to deliver speedy justice

Even as the Real Estate Regulatory Authority (RERA-K) tries to keep up with the times and take details of its cases online, the delay in getting justice is putting off homebuyers, who are desperate after investing huge amounts of money into properties.

The inability to bring erring realtors to book is an oft-repeated complaint against the authority by buyers. Presenting statistics on the backlog up to November 6, Forum for RERA Collective Efforts General Secretary M S Shankar said, “Out of the 4,450 complains that have been filed with the authority, 2,310 have been heard and judgment delivered.

Around 90 per cent of the cases filed pertain to compensation to be paid by developers for delay in construction of projects.” RERA officials said they were trying to provide speedy justice. An order issued by RERA-K on November 3 says the Deputy Commissioner would be involved in recovering the penalty to be paid by builders, along with interest for delays in completion, or for not adhering to promises made to the buyer.

“The regulatory authority will send a notice to both the builder and homebuyers 60 days after its award seeking a compliance report. If it exceeds the time period, RERA-K will take suo moto action and issue a Revenue Recovery Certificate to the revenue authorities,” it said. RERA-K Secretary K S Latha Kumari told TNIE, “If you assess the cases, we have nearly 2,500 pending with the RERA court. More than 60 per cent have been resolved, which is a good figure.” This was an association set up just three years ago, she pointed out, adding,

“We are going all out to make everything online. Details of every complaint will be made online in future.”To speed up resolution of cases, four additional benches are being set up in addition to the existing three-member authority through a recent notification, the secretary said. “Cases to be earmarked to each bench too would be displayed online to avoid any complaint of bias,” she added.

However, Shankar questioned the rationality behind the move. “There is no provision under the RERA Act to constitute such benches at all. Validity of the benches itself is under question. This decision itself is illegal as they are functioning beyond their powers,” he said.

Source: https://www.newindianexpress.com/states/karnataka/2020/nov/18/under-flak-rera-k-hopes-to-deliver-speedy-justice-2224753.html

RERA-K to ensure online allocation of cases

Amidst allegations from sections of homebuyers of weak implementation of the RERA Act, the Real Estate Regulatory Authority, Karnataka (RERA-K) is preparing to put in place an online system of allocation of cases, which, it says, will result in impartial allotment of cases.

RERA-K Secretary K.S. Latha Kumari told The Hindu, “Some people raise questions about the Chairman allotting cases manually. Now we are developing a software where case allocation will be done online and on rotational basis to benches without any human intervention. This will be allotted as and when cases come to the available benches. This will mean impartial allotment. It has already been developed, but it has to be clubbed with our existing complaint model. It should be put in place in another two to three weeks.”

The authority put out a notification in November about the constitution of four benches, in addition to the existing three-member authority. “Considering the number of pendency of complaints, a decision has been taken to create additional benches under Section 81 to delegate powers of the authority under the RERA Act on the chairman and members separately by creating the benches,” the notification signed by Ms. Latha Kumari said.

There are over 2,000 pending cases with the authority, she said, and disposal of cases under the old arrangement was time-consuming. Creation of additional benches will ensure speedy disposal of cases, she added.

Meanwhile, the Forum for People’s Collective Efforts, an NGO formerly known as the ‘Fight for RERA’ movement, has written to the Chief Secretary of the Karnataka government requesting a meeting to discuss the functioning of RERA-K. In the letter, they have alleged that RERA Act implementation has not been tracked or reviewed since 2017, when it was first implemented.

“The functioning of RERA-K has reached new lows and differences have cropped up among members of the authority, impacting the very purpose of the Act,” they have alleged, adding that there is “no protection for homebuyers.”

However, the RERA-K Secretary has denied all allegations. Ms. Latha Kumari said the authority is functioning as per rules and regulations. “Administratively, RERA-K is one of the best in the country,” she added.

Source: https://www.thehindu.com/news/cities/bangalore/rera-k-to-ensure-online-allocation-of-cases/article33060534.ece

Builders’ Association of India Chairman says RERA is a dedicated authority

The Builders’ Association of India (BAI) on the Supreme Court’s recent judgement allowing homebuyer for compensation uphelding the consumer court’s order stated that Real Estate Regulatory Authority (RERA) is formed only to resolve real estate related matters. Anand Gupta, Chairperson of housing and RERA committee of BAI said, “RERA has been doing a great job. The RERA act was approved by the Parliament of India in 2016 and from 2017 it was implemented. After 70 years, such authority was formed where builders and homebuyers can seek justice.” RERA was established to expeditiously hear the real estate matters unlike other civil courts that listen to several other matters, he asserted.

Meanwhile, he also stated, “Of course, homebuyers will have an option to approach the various courts of law and with this judgment, now it is clear that consumer court can also pronounce on real estate projects where the possession has been delayed or homebuyer seeking a refund. Though the platform was open earlier too but this judgement now specifically cites that homebuyers can reach consumer forums with their complaints.

Instead of doing so, the SC in its judgement could have directed the parties to approach RERA and if not satisfied then further to appellate tribunal, HC among others, Gupta explained.

The matter is about a Housing Scheme “The ESFERA” in, Gurgaon, launched by the builder (Appellant) sometime in 2011, and all the original complainants — Anil Patni and others booked their respective apartments by paying the booking amounts and thereafter each of them executed Builder Buyer Agreement.

However, even after four years, there were no signs of the project getting completed. In the circumstances, the homebuyer approached the consumer commission that ordered the builder to pay Rs 50,000 as compensation. However, the builder approached SC wherein, it upheld the order to be paid by the appellant in respect of each of the consumer cases, over and above the amounts directed to be made over to the complainants and shall form part of the amount payable by the appellant to the complainants.

Source: https://www.freepressjournal.in/mumbai/builders-association-of-india-chairman-says-rera-is-a-dedicated-authority

Haryana RERA penalises several realtors for malpractices

Chandigarh

Acting tough, the Haryana Real Estate Regulatory Authority has penalised several colonisers for indulging in malpractices.

The RERA bench, headed by its Chairman K.K. Khandelwal and member S.C. Kush, on Tuesday took action against the promoters of various companies in the wake of complaints by allottees.

In proceedings against CHD Developers, Ireo Private Ltd, Landmark Apartments Private Ltd, Siddhartha Buildhome Private Ltd, Vatika Ltd, Tashee Land Developers Private Ltd and Tulsiani Constructions and Developers Private Ltd, it ordered attachment of the bank accounts to the extent of Rs 7 crore along with the movable properties of their directors.

An order has been given to issue a bailable warrant against the directors of Prime Time Infra Projects Private Ltd for not complying with the orders of the authority.

During the hearing pertaining to execution petitions, the authority observed that Clarion Properties Ltd has committed a gross violation of Section 3 of the Act by not registering its project with the authority.

It directed to issue a show-cause notice against the developer for non-registration of project under Section 59, which states that “the promoter shall be liable to a penalty up to 10 per cent of the estimated cost of the real estate project” and if the promoter continues to violate the provisions of Section 3, he shall be punishable with imprisonment for a term up to three years or with fine further up to 10 per cent of the estimated cost of real estate project, or with both.

Stringent action has been taken against the promoter in the complaints against Supertech Ltd, with the authority ordering it to pay Rs 5 crore to the allottee for delay in handing over of possession by the promoter.

A hefty cost of Rs 130,000 was imposed on Supertech Ltd for not filing reply within the stipulated time and the fine has been paid, which will be disbursed to the allottees.

Khandelwal, in a statement, said that such actions against the defaulting promoters would not only help providing an environment of growth and development of the real estate sector but would also assist the allottees in gaining and preserving their trust in the authority for quick redressal.

Source: https://realty.economictimes.indiatimes.com/news/regulatory/haryana-rera-penalises-several-realtors-for-malpractices/78914563

No new projects if old ones pending: Haryana-Rera

The Gurugram bench of Haryana Rera on Friday issued a notice to blacklist and debar a real estate company, Empire Realtech, and its promoter CHD Developers from launching any new project till ongoing ones are completed. It’s the first time the regulator has taken such a tough measure as delays in delivery of homes have turned into a chronic problem both in the city and other parts of NCR’s struggling but massive real estate sector.

CHD Developers had launched a housing project under Empire Realtech in 2011 – 106, Golf Avenue in Sector 106 – with a promise to offer possession by December 2016. The homes have, however, not been delivered yet. The promoter intimated the revised date for completion to H-Rera as June 30, 2021 at the time of registration in 2016. “But keeping in view the present situation of funds and stage of construction, there is every likelihood of further delay of the project,” observed the bench comprising chairman KK Khandelwal and members SC Kush and Samir Kumar while deciding to issue a notice asking why the company should not be blacklisted and debarred from launching new projects till it completes existing ones.

“The quarterly progress reports have not been submitted by the developers (as required under Rera rules) either,” Khandelwal said. The notice asks why penal proceedings should not be initiated and a penalty that may be up to 5% (Rs 28 crore) of the project cost should not be imposed. “The promoter has been asked to submit a mitigation plan for completion of the project within a month in consultation with the association of allottees. The authority has also given an option to the association of allottees on taking over the project for its completion,” Khandelwal added.

There are 642 units in the project, of which 600 have been sold. Nearly Rs 500 crore has been collected from homebuyers. The promoter has also taken a loan of Rs 150 crore, of which Rs 36 crore is outstanding. The bench said since the promoter had not opened a separate Rera account for the project, instalments paid by homebuyers were received in the bank’s escrow account, and the money deposited in the account was taken away by the lender against the loan. Consequently, there were no funds left for construction.

Source: https://timesofindia.indiatimes.com/city/gurgaon/h-rera-serves-first-debarment-notice-toughens-stance-on-housing-delays/articleshow/78836639.cms

Ladakh notifies RERA rules, ushers in new era in real estate development in UT

Ladakh has become the 34th union territory to have notified the rules under the Real Estate (Regulation and Development) Act leading the way for property development to take place in the region.

“Extremely happy to share that Ladakh becomes the 34th State/UT, which has notified Rules under RERA. It was done on 8 October 2020. It paves the way for implementation of this transformative legislation in the Union Territory, opening new vistas of real estate development journey,” secretary, ministry of housing and urban affairs, Durga Shanker Mishra tweeted.

In August, the union territory of Jammu and Kashmir had notified the rules under RERA becoming the 33rd state/union territory to do the same.

“The move will open up new vistas for the development of the union territory J & K by ensuring efficient & transparent transactions. It will also ensure timely delivery & quality construction of real estate projects,” Mishra had tweeted then.

According to statistics provided by the MoHUA more than 52,000 real estate projects and 40,517 real estate agents have registered under RERA across the country. Nearly 50,000 complaints have been disposed-off by the Real Estate Regulatory Authorities across the country.

Out of this, nearly 57 percent cases or approximately 27,581 complaints were resolved in the last one year alone.

Uttar Pradesh takes the lead with as many as 18,509 cases disposed off by the UP RERA authorities so far, against a mere 5,989 cases a year ago.

Haryana is at a distant second with nearly 9,919 cases disposed of currently as against 3,123 cases in the corresponding period of 2019. Maharashtra’s MahaRERA has so far disposed of nearly 7,883 cases, an analysis by Anarock property consultants has said.

Project registrations have seen a 24 percent annual jump – from 43,208 projects as on July-end 2019 to nearly 53,364 projects presently, the analysis said.

The states with maximum project registrations currently include Maharashtra, Gujarat, Karnataka, Madhya Pradesh, Uttar Pradesh, Telangana and Tamil Nadu.

Following the coronavirus pandemic over 23 states RERA Authorities have so far extended registration of projects by six months and one by nine months following the situation created by the coronavirus pandemic and this has been done to safeguard the interests of homebuyers.

Source: https://www.moneycontrol.com/news/business/real-estate/ladakh-notifies-rera-rules-ushers-in-new-era-in-real-estate-development-in-ut-5952301.html

Unprecedented! In a first MahaRERA fines homebuyer for payment delay to builder

The Maharashtra Real Estate Regulatory Authority (MahaRERA) in an unprecedented case, has asked a homebuyer to pay penalty in the form of interest to the developer for delay in payment. This is contrast to usual directives from the authority to developers to pay penalty for delayed possession to a homebuyer.

According to a report in the Economic Times, SMP Namrata Associates, a developer, complaint against a home buyer for not making payment despite several demand letters.

The homebuyer had entered into an agreement with the developer to buy an under-construction apartment in Pune and the same was registered in August 2019. According to the builder’s complaint, the homebuyer had not made any payment despite several demand letters between August and December 2019.

The homebuyer then in January 2020 sent a legal notice to the builder for non-allotment of car parking space. This, along with an increase in GST charges, was cited by the homebuyer as reasons for not making payment to the developer, the business daily mentioned.

The developer then approached MahaRERA to seek its directions for cancellation of the agreement and forfeiture of the amount paid by the buyer at the time of booking.

The homebuyer had claimed that the complainant being a promoter cannot file a complaint against the allottee as there is no provision under RERA to file such complaint.

MahaRERA member, Vijay Satbir Singh opined that that the buyer being an allottee is liable to make payments in accordance with the terms and condition of the sale agreement, the publication mentioned.

The authority is of the view that in case of any default on the part of allottee or the promoter, either party would be entitled to seek interest for such a default as prescribed by the Real Estate (Regulation & Development) Act, 2016.

Source: https://www.timesnownews.com/business-economy/industry/article/unprecedented-in-a-first-maharera-fines-homebuyer-for-payment-delay-to-builder/663475

Bombay HC directs developer to pay Rs 5 cr for delay in property hand over

Mumbai

The Bombay High Court has directed real estate developer Renaissance Infrastructure to pay Rs 5.04 crore as compensation to a person who had not been handed over his property in Mumbai even after a delay over 80 months. A single bench of Justice S C Gupte on September 25 upheld the orders of the Maharashtra Real Estate Regulatory Authority and the RERA Appellate Tribunal that had ordered for the compensation amount to be paid to the purchaser.

The developer had approached the HC, challenging orders of RERA and the RERA Appellate Tribunal passed in January this year. As per the HC order, the purchaser bought six plots of land and some warehousing buildings from the developer in December 2009.

According to the sale agreement, the warehousing buildings and plots were to be handed over to the purchaser by March 9, 2010. The agreement also said that if the developer failed to hand over the properties on time, he would be liable to pay the purchaser a compensation amount at the rate of Rs 10 per sq ft per month.

When the developer failed to hand over the property, the purchaser approached the RERA that calculated the compensation amount as Rs 5.04 crore. The Renaissance Infrastructure challenged this order before the appellate tribunal, which asked the developer to deposit 50 percent of the compensation amount as per the RERA Act for entertaining the appeal.

But, when the developer failed to pay the pre-deposit, the appellate tribunal dismissed the appeal. The developer then filed a second appeal in the HC.

In his order, Justice Gupte dismissed the second appeal after holding that there were no infirmities in the orders passed by the RERA and the appellate tribunal. He held that the orders do not give rise to ”any substantial question of law for the consideration of the High Court”.

Justice Gupte said the Renaissance Infrastructure was liable to hand over the property as agreed to. ”Under this agreement, termed as an agreement for sale, the appellant (Renaissance) was bound to hand over possession of the suit premises to the respondent within an agreed period,” the high court said.

It directed the developer to pay Rs 5.04 crore to the purchaser within four weeks.

Source: https://www.cnbctv18.com/legal/bombay-hc-directs-developer-to-pay-rs-5-cr-for-delay-in-property-hand-over-7063901.htm

Real estate body to revive stalled projects in NCR

Lucknow

After its intervention to restart a stalled housing project in Noida, the Uttar Pradesh Real Estate Regulatory Authority (UPRERA) is now contemplating to help resume operations of other stalled projects in the state.

The UPRERA decided to step in after successful restart of the Jaypee Kalypso Court (Phase-II) project which restarted construction work at the site after a wait of nine years, on September 19 as UPRERA facilitated conciliation between the promoter and the allottees.

As per the UPRERA sources, NCR region has witnessed many projects slipping into a limbo making it miserable for the buyers who end up making a huge investment for a house of their own but the projects get delayed as the builders often fail to fulfil commitments made to homebuyers.

According to Rajive Kumar, chairman, UPRERA has been successful in resolving the dispute and restart a stalled project. “Jaypee Kalypso Court project of Jaiprakash Associates Limited has been the first such project that UPRERA had taken up for revival and now the promoter has commenced construction work on the project” added Kumar.

Not only NCR, but the regulatory authority is planning to extend this approach to various other districts also in the state where projects are stalled either due to an impasse between the promoter and the homebuyers or the completion date, as declared by the promoter, has lapsed, including the one-year extension permissible under Section 6 of the RERA Act.

In Lucknow, several housing projects of private developers are stuck for several years. Allottees in the state capital want RERA to intervene to restart these pending projects.

According to RERA officials, based on the audit done by consultant Currie & Brown, it has come to light that around 40 stalled projects in Gautam Buddha Nagar district could restart with the intervention and following conciliatory tactic between the promoter and the buyer. This approach is ideally suited to such projects where the promoter is keen to complete the project but unable to do so either due to expiry of registration of the project with UPRERA or due to differences with allottees.

Source: https://www.newindianexpress.com/nation/2020/sep/22/real-estate-body-to-revive-stalled-projects-in-ncr-2200278.html