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Can older projects benefit from RERA?

LiveMint logoLiveMint 02-06-2017 Ashwini Kumar Sharma

We are yet to get possession of our house, lot of work is still pending in the project, but we are not sure whether the project will get covered under the Real Estate (regulation and development) Act, 2016 (RERA), said Pradip Rahi, 32, president, Ramprastha City Welfare Association (RPCWA), who had purchased a house in Ramprastha Group’s ‘Atrium’ in Gurgaon in 2009. The project is already around 5 years late. Rahi, along with about 200 homebuyers, protested at Ramprastha’s Gurgaon office on 13 May against the delay in getting possession and demanded to meet higher management for answers. But the company did not pay heed to their request. Later, some homebuyers visited the local police station and filed a complaint against the developer under cheating, criminal breach of trust and some more provisions of the Indian Penal Code. We tried to contact Ramprastha, but emails sent to the company remained unanswered till the time of going to print.

“The police assured us of action, but it has been a week and we are yet to hear from them,” said Rahi. Mint has a copy of the complaint. Though the new real estate Act has come into force, many homebuyers who are stuck in delayed projects are still uncertain whether the Act will be of any help to them. Let’s read more about what will happen to cases that are still pending and what options these homebuyers have if they plan to take legal recourse.

A number of cases filed by homebuyers have been pending for years in different courts and forums such as the consumer courts. The basic objective of the Act is to establish a regulator for fast-track dispute resolution. However, on-going cases will not come under the ambit of a regulator and may not benefit from the Act.

“Pending proceedings will continue. Unlike, say as stipulated in the Debt Recovery Tribunal Act, 1993, there is no provision in RERA that contemplates compulsory transfer of pending proceedings to the regulatory authority established under RERA,” said Sandeep Dave, partner, Cyril Amarchand Mangaldas, a law firm.

However, “Section 71 permits transfer of matters related to sections 12, 14, 18 and 19 from the consumer forum and file it with the adjudicating officer appointed under the Act, but with permission of the consumer court,” said Sudip Mullick, partner, Khaitan and Co., a law firm. For this, the complainant has to withdraw the complaint pending before the consumer court and file an application before the adjudicating officer.

“About 350 homebuyers had jointly filed a case with National Consumer Disputes Redressal Commission (NCDRC) in 2015, requesting the court to increase the rate of compensation for delays mentioned in the builder buyer agreement with Ramprastha, which is very low and inappropriate,” said Rahi. While we were required to pay 16% in case of delay, developer was required to pay just Rs5 per sq. ft, which is 1-2% of the property cost, he added. Their case in NCDRC is at an advanced stage. About 5-6 hearings have been conducted and they are expecting a decision soon. “In case we don’t get relief from NCDRC soon, we may consider looking at recourse under RERA,” said Rahi.

However, they can only do so if the project gets registered under the Act. But that’s the problem. The project is in Haryana and the state RERA rules exempt builders who have applied for an occupancy certificate, or a part completion certificate, from getting registered. The buyers are not sure if the builder has applied.

Even if a project registers, it can be held liable only for future deadlines, those it may breach after registering with the authority. Any default before registration is beyond the ambit of RERA. So, if your pre-RERA project is stuck with an errant builder, you have two options. You can wait for the project to get registered and take action if it fails to meet the new deadline. Or, if you want to take legal recourse, you can file a case under the existing criminal and civil laws. “Disputes in completed buildings, failure to execute conveyance, failure to pay statutory dues, defects liability, disputes between co-promoters, etc. will continue as usual,” said Dave.

Once the project gets registered under the Act, the judicial jurisdiction belongs only to RERA and not any civil court. But a criminal complaint can still be filed. Harsh Pathak, a Delhi-based lawyer, said, “Since this special Act is in place and a competent authority is established to adjudicate the disputes, the other courts should not take up these matters. The aggrieved person, too, should not go to other courts at first instance.”

So, if an aggrieved homebuyer—or an association of homebuyers—wants to file a complaint against the developer of project registered with the regulatory authority, she can do so under section 31 of the Act by filling the prescribed form and paying applicable fees.

After a complaint is filed, the authority is required to dispose it under 60 days. If it cannot, it is required to record its reasons for the delay. Besides that, in case some individuals or organisations are not satisfied by the order of the authority, they can approach the appellate tribunal, which is a quasi-judicial body empowered to hear appeals against the regulator’s decisions. The recourse to High Courts and then the Supreme Court is always open.

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