Foxes have dens and birds have nests, but the Son of Man has no place even
to lay his Head - Mathew 8:20, New Testament, Bible.
If you are a resident of one of the metropolitan cities of our nation, India or
even the second tier cities for that matter, chances are you would have observed
a significant rise in the construction of high rises in your respective
city.17,526,isthe number of housing projects launched between 2011 and 2015
in India. The investment value of these projects added up to Rs.13.7 trillion in
27 cities (including 15 state capitals). The real estate sector is the second
largest employer, which contributes 9% to India’s GDP. The industry includes
about 10 lakh consumers buying houses every year and 76,044 companies.
Surprisingly, inspite of being such an important part of the economy, it was a
largely unregulated sector due to which there were cases of extreme hardships
faced by the consumers. Before, that is the implementation of this passed Real
Estate Bill, the Real Estate Industry was govern by various Central, State and
local regulation covering aspects such as ownership of flats, rent control, town
planning and re- development to name a few. While there are several laws
regulating the sector previously for instance the Consumer protection Act, 1968
and The Transfer of Property Act, 1882, consumers bear a sense of vulnerability
when undertaking Real estate transactions. It was in1991, that the demand and
subsequent brainstorming had commenced on having one Single & solid nationwide
regulation for the fast growing Real estate Industry. Taking benefit of
country’s abysmal judicial system, the developers have been taking property
buyers for a ride, and putting real estate sector on the bottom of customer
protection and satisfaction pyramid. With the things getting bad to worse, it
has let to big hue and cry, making urgent need for a unified regulatory legal
framework to protect customers’ interest.
To address the various structured issue in the Real Estate’s merky Sector, Real
Estate Regulatory Authority (RERA) Bill was introduced by the Indian National
Congress government in 2013.In December 2015, the Union Cabinet of India had
approved 20 major amendments to the bill based on the recommendations of a Rajya
Sabha committee that examined the bill and “The Real Estate (Regulation and
Development) Act, 2016” which received the President’s assent on 25th March 2016
The salient features of the Act are the following:
Real Estate Regulatory Authority under section 20
Under the Bill, instead of a regular forum of consumers, the purchasers of real
estate units from a developer would have a specialised forum called the "Real
Estate Regulatory Authority" which will be set up within one year from the date
of coming into force of the Act. In the interim, the appropriate Government
(i.e., the Central or State Government) shall designate any other regulatory
authority or any officer preferably the Secretary of the department dealing with
Housing, as the Regulatory Authority.
Registration with the Regulatory Authority under section 3(1)
The promoter has to register their project (residential as well as commercial)
with the Regulatory Authority before booking, selling or offering apartments for
sale in such projects. In case a project is to be promoted in phases, then each
phase shall be considered as a standalone project, and the promoter shall obtain
registration for each phase.
Further, in case of ongoing projects on the date of commencement of the Act
which have not received a completion certificate, the promoter of such project
shall make an application to the Regulatory Authority for registration of their
project within a period of three months of the commencement of the Act.
The following types of projects shall not be required to be registered before
the Regulatory Authority:
Where the area of land proposed to be promoter does not exceed 500 square meters
or the number of apartments to be constructed in the project does not exceed
eight apartments. However, the appropriate Government (Central and State
Government) may, if it considers appropriate, reduce the threshold limit below
500 square meters or eight apartments;
Projects where the completion certificate has been received prior to the
commencement of the Act;
Projects for the purpose of renovation or repair or re-development which does
not involve marketing, advertising, selling and new allotment of any apartment
plot or building.
The application for registration must disclose the following information:
Details of the promoter (such as its registered address, type of enterprise such
proprietorship, societies, partnership, companies, competent authority);
A brief detail of the projects launched by the promoter, in the past five years,
whether already completed or being developed, as the case may be, including the
current status of the projects, any delay in its completion, details of cases
pending, details of type of land and payments pending;
An authenticated copy of the approval and commencement certificate received from
the competent authority and where the project is proposed to be developed in
phases, an authenticated copy of the approval and commencement certificate of
each of such phases;
The sanctioned plan, layout plan and specifications of the project, plan of
development works to be executed in the proposed project and the proposed
facilities to be provided thereof and the locational details of the project;
Proforma of the allotment letter, agreement for sale and conveyance deed
proposed to be signed with the allottees;
Number, type and carpet area of the apartments and the number and areas of
garages for sale in the project;
The names and addresses of the promoter's real estate agents, if any, and
contractors, architects, structural engineers affiliated with the project; and
A declaration by the promoter supported by an affidavit stating that:
he has a legal title to the land, free from all encumbrances, and in case there
is an encumbrance, then details of such encumbrances on the land including any
right, title, interest or name of any party in or over such land along with the
the time period within which he undertakes to complete the project or the phase;
70% of the amounts realised for the real estate project from the allottees, from
time to time, shall be deposited in a separate account to be maintained in a
scheduled bank to cover the cost of construction and the land cost and shall be
used only for that purpose.
Carpet Area under section (2(k)
Under the Bill, developers can sell units only on carpet area, which means the
net usable floor area of an apartment. This excludes the area covered by the
external walls, areas under services shafts, exclusive balcony or verandah area
and exclusive open terrace area, but includes the area covered by the internal
partition walls of the apartment.
70% of realisation from buyers/allottees in a separate bank account under
The Act mandates that a promoter shall deposit 70% of the amount realised from
the allottees, from time to time, in a separate account to be maintained in a
scheduled bank. This is intended to cover the cost of construction and the land
cost and the amount deposited shall be used only for the concerned project.
The promoter shall be entitled to withdraw the amounts from the separate
account, to cover the cost of the project, in proportion to the percentage of
completion of the project. However, such withdrawal can only be made after it is
certified by an engineer, an architect and chartered accountant in practice that
the withdrawal is in proportion to the percentage of completion of the project.
The promoter is also required to get his accounts audited within six months
after the end of every financial year by a practicing chartered accountant. ,
Further, he is required to produce a statement of accounts duly certified and
signed by such chartered accountant, and it shall be verified during the audit
that (i) the amounts collected for a particular project have been utilised for
the project; and (ii) the withdrawal has been in compliance with the
proportion to the percentage of completion of the project.
Acceptance or refusal of registration under section 5(1)
Upon receipt of an application by the promoter, the Regulator Authority shall
within a period of 30 days, grant or reject the registration.
Upon granting a registration, the promoter will be provided with a registration
number, including a login Id and password for accessing the website of the
Regulatory Authority and to create his web page and to fill in the details of
the proposed project.
If the Regulatory Authority fails to grant or reject the application of the
promoter within the period of 30 days, then the project shall be deemed to have
The registration, if granted, will be valid until the period of completion of
the project as committed by the promoter to the Regulatory Authority. This
period shall be extended by the Regulatory Authority for a period not exceeding
one year in aggregate, only due to force majeure and on payment of such fee as
may be specified by regulations made by the Regulatory Authority.
Revocation or lapse of registration under section 8
The Regulatory Authority may revoke the registration granted on receipt of a
complaint orsuo motoor on the recommendation of the competent authority in
case (i) the promoter makes a default in doing anything required under the Act
or the rules or regulations made thereunder; (ii) the promoter violates any
terms of the approvals granted for the project; and (iii) the promoter is
involved in any kind of unfair practice of irregularities.
In the event the registration is revoked by the Regulatory Authority or it
lapses, the Regulatory Authority shall:
debar the promoter from accessing the website in relation to the project,
specify his name in the list of defaulters on its website and also inform other
Regulatory Authorities in other States and Union territories about such
facilitate the remaining development works to be carried out by competent
authority or the association of allottees or in any other manner as may be
determined by the Regulatory Authority. However, the association of allottees
shall have a first right of refusal for carrying out the remaining development
direct the scheduled bank holding the project bank account, to freeze the
account and thereafter take such further necessary actions, including consequent
de-freezing of the account, for facilitating the remaining development works in
the manner mentioned above.
Website of the Regulatory Authority under sections 34 (b) (c) & (d)
The promoter shall, upon receiving his login Id and password, create his web
page on the website of the Regulatory Authority and enter all details of the
proposed project including:
details of the registration granted by the Regulatory Authority;
quarterly up-to-date list of the number and types of apartments or plots or
garages, as the case may be, booked;
quarterly up-to-date status of the project along with the list of approvals
obtained and approvals pending subsequent to commencement certificate; and
such other information and documents as may be specified by the regulations made
by the Regulatory Authority.
Advertisement or prospectus issued by the promoter under sections 2(b) & 2(zl)
The advertisement or prospectus issued or published by the promoter should
prominently mention the website address of the Regulatory Authority, where all
details of the registered project have been entered and include the registration
number obtained from the Regulatory Authority and other similar details.
Where any person makes an advance or a deposit on the basis of the information
contained in the notice, advertisement or prospectus and sustains any loss
or damage because of any incorrect, false statement included in these, he shall
be compensated by the promoter in the manner as provided under the Act. Also, if
the person affected by such incorrect, false statement contained in the notice,
advertisement or prospectus, intends to withdraw from the proposed project, his
entire investment (along with interest at such rate as may be prescribed and
compensation in the manner provided under the Act), will be returned to him.
Limit on receipt of advance payment under section 13(1)
A promoter shall not accept a sum more than 10% percent of the cost of the
apartment, plot, or building, as the case may be, as an advance payment or an
application fee, from a person without first entering into a written agreement
of sale with such person and register the said agreement of sale, under any law
for the time being in force.
Restriction on addition and alteration in the plans under section 19(4)
The promoter cannot make any addition or alteration in the approved and
sanctioned plans, structural designs, specifications and amenities of the
apartment, plot or building without the previous consent of the allottee.
The promoter also cannot make any other addition or alteration in the approved
and sanctioned plans, structural designs and specifications of the building and
common areas within the project without the previous written consent of at least
two-thirds of the allottees, other than the promoter, who have agreed to take
apartments in such a building.
Structural defect under section 14(3).
In case any structural defect or any other defect in the workmanship, quality or
provision of services or any other obligations of the promoters is brought to
the notice of the promoter within a period of five years by the allottee from
the date of handing over possession, the promoter shall rectify such defect
without any further charge, within thirty days. If the promoter fails to rectify
such defect within such time, the aggrieved allottee shall be entitled to
receive appropriate compensation in the manner as provided in the Act.
Restriction on transfer and assignment under section 15(1).
The promoter shall not transfer or assign his majority rights and liabilities in
respect of a project to a third party without obtaining prior written consent
from two-thirds of the allottees, except the promoter, and without the prior
written approval of the Regulatory Authority.
Please note that the allottee, irrespective of (i) the number of apartments or
plots booked by him or booked in the name of his family; or (ii) in the case of
other persons such as companies/firms/any association of individuals, by
whatever name called, booked in its name or booked in the name of its associated
entities/related enterprises, shall be considered as one allottee only.
Refund of amount in case of delay in handing over possession under section
In case the promoter is unable to hand over possession of the apartment, plot or
building to the allottee (i) in accordance with the terms of the agreement of
sale; or (ii) due to discontinuance of his business as a promoter on account of
suspension; or (iii) revocation of his registration or for any other reason,
then the promoter shall be liable, on demand being made by the allottee, to
return the amount received by him from the allottee with interest and
compensation at the rate and manner as provided under the Act. This relief will
be available without prejudice to any other remedy available to the allottee.
However, where an allottee does not intend to withdraw from the project, he
shall be paid interest by the promoter for every month of delay, till the
handing over of the possession, at a prescribed rate.
Other relevant provisions
The same rate of interest will be payable by the allottee and the promoter in
the event of their respective defaults. (section 2(za)(1)
In the absence of any local laws, an association or society or cooperative
society, as the case may be, of the allottees, shall be formed within a
period of three months of the majority of allottees who have booked their plot
or apartment or building, as the case may be, in the project. (section 11(4)(e)
After the promoter executes an agreement for sale for any apartment, plot or
building, no mortgage or charge can be created by the promoter on such
apartment, plot or building. If any such mortgage or charge is created, then
notwithstanding anything contained in any other law for the time being in force,
it shall not affect the right and interest of the allottee who has taken or
agreed to take such apartment, plot or building.(section 11(4)(h).
The promoter may cancel the allotment only in terms of the agreement for sale.
However, the allottee may approach the Regulatory Authority for relief, if he is
aggrieved by such cancellation and such cancellation is not in accordance with
the terms of the agreement for sale, is unilateral and without any sufficient
cause. (section 11(5).
The promoter shall obtain insurance as may be notified by the appropriate
Government, including but not limited to the title of the land and building and
construction of the project. The promoter shall also be liable to pay the
premium and charges in respect of the insurance. (section 16(1).
The promoter shall execute a registered conveyance deed in favour of the (i)
allottee in respect of the apartment, plot or building; and (ii) association of
allottees of competent authority in respect of the undivided proportionate title
in the common areas, and hand over possession of the same within the period as
specified under the local laws. In the absence of any local law, such conveyance
deed shall be carried out by the promoter within three months from date of issue
of the occupancy certificate. (section 17(1).
The promoter shall compensate the allottees in case of any loss caused to him
due to defective title of the land in the manner as provided under the Act, and
such claim for compensation shall not be barred by limitation provided under any
law for the time being in force. (section 18(2).
Every allottee shall take physical possession of the apartment, plot or building
as the case may be, within a period of two months of the occupancy certificate
issued for the said apartment, plot or buildings.(section 19(10).
Real Estate Appellate Tribunal under section 43.
In addition to the establishment of the Regulatory Authority, the Bill also
proposes to establish a Real Estate Appellate Tribunal (Appellate Tribunal)
within one year from the date of commencement of the Act.
Any person aggrieved by any direction or decision made by the Regulatory
Authority or by an adjudicating officer, may make an appeal before the Appellate
Tribunal within a period of 60 days from the date of receipt of a copy of the
order or direction.
The Appellate Tribunal shall deal with the appeal as expeditiously as possible
and endeavour shall me made to dispose of the appeal within a period of sixty
days from the date of receipt of appeal.
The Appellate Tribunal shall have same powers as a civil court and shall be
deemed to be a civil court. An appeal against the order of the Appellate
Tribunal may be filed before the jurisdictional High Court within a period of
sixty days from the date of communication of the decision or order of the
Adjudicating Officer under section 71(1).
For adjudging the compensation to be paid by the promoter in accordance with the
provisions of the Act, the Regulatory Authority shall appoint (in consultation
with the appropriate Government) one or more judicial officers as deemed
necessary, who is or has been a District Judge, to be an adjudicating officer
for holding an inquiry in this regard. However, such an appointment will be made
after giving any person concerned a reasonable opportunity of being heard.
Offences and Penalty under chapter VIII.
Stringent penal provisions have been prescribed under the Act against the
promoter in case of any contravention or non-compliance of the provisions of the
Act or the orders, decisions or directions of the Regulatory Authority or the
Appellate Tribunal which are the following:
If promoter does not register its project with the Regulatory Authority – the
penalty may be up to 10% of the estimated cost of the project as determined by
the Regulatory Authority;
If promoter does not comply with the aforesaid order of the Regulatory Authority
- imprisonment of up to three years and a further penalty of up to 10% of the
estimated cost, or both; and
In case the promoter provides any false information while making an application
to the Regulatory Authority or contravenes any other provision of the Act – the
penalty may be up to 5% of the estimated cost of the project or construction.
These penal provisions have also been prescribed for any contravention or
violation committed by the real estate agent or the allottee.
If any allottee fails to comply with, or contravenes any of the orders,
decisions or directions of the Regularity Authority, there may be a penalty for
the period during which such default continues, which may cumulatively extend up
to 5% of the cost of the plot, apartment or building, as the case may be, as
determined by the Regulatory Authority. Further, if any allottee fails to comply
with, or contravenes any of the orders or directions of the Appellate Tribunal,
this may entail imprisonment up to one year or with fine for every day during
which such default continues, which may cumulatively extend up to 10% of the
cost of the plot, apartment or building, as the case may be, or with both.
Overriding effect under section 89.
The provisions of this Act shall have an overriding effect in case there is any
inconsistency between the provisions contained in this Act and in any other law
(including a state law) for the time being in force.
Some starling rulings of MAHA RERA:
Neelkamal Pvt Ltd & Anr. Vs. Union of India and Ors (WP No.2737 of2017)
(Validity of The Real Estate (Regulation and Development) Act, 2016).
Facts: The Apex Court by an order dated 4th September, 2017, in Transfer
Petition (Civil) Nos. 1448 – 1456 of 2017 directed other high courts in the
country to wait for the Bombay High Court to decide all pleas and petitions
challenging the validity of the RERA Act. The petitioners were builders and
developers who were aggrieved by the new provisions of the said Act which
contains specific provisions to tackle problems like delay in possession,
arbitrary interests levied on home buyers etc. Petitioners had challenged
Section 3, 5, 7, 8, 11(h), 14(3), 15, 16, 18, 22, 43(5),59,60,61,63 and 64 of
the Real Estate (Regulations and Development) Act, 2016 and Rules 3(f),
4,5,6,7,8,18,19, 20 and 21 of the Registration of real estate projects,
Registration of real estate agents, rates of interest and disclosures on
website) Rules, 2017. It was argued on behalf of the promoters/petitioners that
penalties under Sections 18, 38, 59, 60, 61, 63 and 64 of the RERA Act, are
violative of Articles 14, 19(1)(g) and 20(1) of the Constitution of India and
amount to unreasonable restrictions.
Decision: The HC held that these provisions were merely regulatory or
compensatory, not penal. Justice Naresh Patil vocalized- “I have already
indicated that the provisions of RERA are prospective in nature. The penalty
under Sections 18, 38, 59, 60, 61, 63 and 64 is to be levied on account of
contravention ofprovisions of RERA, prospectively and not retrospectively.
These provisions, therefore, cannot be said to be violative of Articles 14,
19(1)(g), 20(1) and 300-A of the Constitution of India.” The Hon’ble Division
further observed that ,We hold that challenge to constitutional validity of
first proviso to Section 3(1), Section 3(2)(a), explanation to Section 3,
Section 4(2)(l)(C), Section 4(2)(l)(D), Section 5(3) and the first proviso to
Section 6, Sections 7, 8, 18, 22, 38, 40, 59, 60, 61, 63, 64 of the Real Estate
(Regulation and Development) Act, 2016 fails. These provisions are held to be
constitutional, valid and legal.” The Hon’ble bench held that that when
“construed harmoniously’’, sections 3,4, 5,6, 7 and 8 (dealing with revocation
of registration) objected to by petitioners are not discriminatory nor do they
violate the rights to property and freedom of trade. “These provisions impose
reasonable restrictions on the promoter in larger public interest. They regulate
construction activities.’’Regarding section 18 which makes a promoter liable to
compensate a buyer for delay in possession even if he withdraws from a project,
the HC found nothing unconstitutional. “Its purpose is to ameliorate the buyers
in real estate sector and balance the rights of all the stakeholders. It seeks
to protect the allottees and simplify the remedying of wrongs committed by a
promoter,’’ held the HC adding, “It ensures that a buyer’s money is not misused
or unreasonably retained by the promoter.’’ However, Section 46 (b) of the Act
was set aside as it included any officer who has held the post of Additional
Secretary to be eligible for membership of the two-member tribunal. Court held
that the majority of the total members of the tribunal. Court held that the
majority of the total members of the tribunal should always be judicial members.
Mr. V.M. Gawand Vs. M/s. Grace Erectors of Companies, Builder& Developers
(COMPLAINT NO: CC006000000001070)
(The Real Estate (Regulation and Development) Act, 2016 not for specific
performance of an agreement)
Facts: The complainant who was the Chairman of the Wadala Co-operative
Housing Society Ltd has filed complaint against Grace Erectors of Companies,
Builders and Developers alleging that the developer delayed the possession of 48
flats and occupancy certificate (OC) to its members for more than five
years.The society stated that it had executed a development agreement with the
developer in December 2005 and registered a confirmation deed in February 2007,
to give peaceful possession of the 48 flats (measuring 600 sqft carpet each duly
constructed and completed along with OC free of cost) to the society within 36
months from the date of commencement certificate. (given in November 2006).
However, the developer modified the plan and got approval in December 2009 and
started work. The developer was supposed to give possession of the flats on or
before 2012 but till date, he has not handed over the flats to the managing
committee.The developer denied the allegations and stated that (MahaRERA)
wasn't the forum wherein the complainant can enforce the terms and condition of
the development agreement and therefore requested to dismiss the complaint.
Decision: The Hon’ble Authority observed thatthe complainant was making
grievances for the breach of terms and conditions of the development agreement.
The MahaRERA is not the forum for settlement of such disputes regarding the
specific performance of the development agreement with the respondent. It is
evident that the dispute between the complainant and the respondent is of civil
nature and does not pertains to any violation or contravention of the provisions
of the Real Estate (Regulation and Development Act, 2Ol6 or Rules or Regulations
mode there under and hence, dismissed the complaint.
Mahesh Pariani Vs. Monarch Solitaire LLP (COMPLAINT NO:
(The Real Estate (Regulation and Development) Act,2016is not for investors or
Facts:The Complainant has invested some amount in the residential
Project known as 'Monarch Solitaire' and reserved four apartments in the said
Project in 2014. The said Project is registered under MahaRERA. The Complainant
stated that after reservation of four apartments, Respondent neither gave his
invested money back with interest nor is giving the possession of the apartments
earmarked for him. Therefore, he prayed that Maha RERA pass an appropriate order
for recovery of the principal amount with interest.
Decision:While going through the documents, the authority found out that
Pariani and developer had signed a ‘Memorandum of Understanding (MoU)’ on March
12, 2014 that made it clear that Pariani is an investor and not an allottee. The
authority further observed that, it is evident that the dispute between the
complainant and the respondent (developer) is of a civil nature between the
promoter and co-promoter, and does not pertain to any contravention of the ReaI
Estate (Regulation and Development) Act, 2016. The complaint was therefore,
The Real Estate (Regulation And Development) Act, 2016, has very noble cause
behind its implementation that is to tackle the issues of lack of transparency
and accountability plaguing the real estate sector, by providing strict
mechanisms to facilitate and regulate the sale and purchase of commercial and
residential units/projects and advocating timely completion of projects by all
promoters, regardless of their standing in the market. Upon keen observation,
the act makes and interesting departure from its predecessors. While terms
carpet area had multiple meanings and interpretations ascribed to them earlier,
the act seeks to remove such ambiguity. The establishment of an authority is
bringing more accountability for the developers and some simultaneously some
much needed assurances to buyers/allottee. The Real Estate and Regulatory
Authority Rules (RERA) 2017 came into effect in Maharashtra on May 2017.
Since then, MahaRERA has received 16,802 applications from developers, of which
it has granted registration to 16,665. In the same period, a total of 14,881
applications were received from the real estate agents of which it granted
registration to 14,762 applications. The authority also received 2,866
complaints. While it has already passed orders in 1,637 complaints, hearing is
in the process for 891 complaints and the authority is yet to receive documents
in 170 complaints. In case of complaints where either of the party isn't happy
with the order passed by the authority, they can approach the Maharashtra Real
Estate Appellate Tribunal. The tribunal has received 219 appeals till now and
orders have been passed in 74 appeals, while it is in process of hearing 93
appeals. It is yet to receive documents in 52 cases. The authority has even
started a conciliation forum, which comprises of two members in every bench, one
is from consumer forum while the other is from the developers body like NAREDCO,
MCHI-CREDAI and CREDAI.
The MahaRERA conciliation forum has received 171 conciliation requests, out of
which the promoters consent was received in 88. Hearing has been completed in 53
requests, while it is being conducted for 12 conciliation requests. The market
situation after one year is that, there have been fewer project launches and the
focus has been on execution. Developers have tried to adhere to compliances, to
avoid litigation. Relaxed delivery timelines for existing projects has granted
developers an escape window. The Act is a positive change in terms of increasing
transparency in the real-estate sector, increasing accountability of the
promoters and developers and establishing efficient forums for grievance
redress. This will consequently lead to lower litigation due to stringent rules
and regulations in the highly corrupt sector. Time bound approvals and
transparency will also lead to greater flow of investment both domestic and
foreign leading to reduction in cost of borrowing in the real-estate sector.
Though it is a win-win situation for both the reputed bona- fide developers
and the buyers and will help the sector grow in the long-run.
1)The Real Estate (Regulation And Development) Act, 2016, by Taxmann.
2) RERA, The Real Estate by Jayesh Ganatra.
3) THE REAL ESTATE (REGULATION AND DEVELOPMENT) ACT, 2016 AND RULES 2017 by
Housing Guru Ramesh Prabhu (Author), MAHASEWA (Contributor).
4) Snow White's The Real Estate (Regulation and Development) Act, 2016 with
Maharashtra Rules, 2017 by Adv. Sunil Dighe.