Asia & Australia

December 07, 2017

Constitutional Validity of RERA upheld: Bombay HC


On December 6, the validity of the Real Estate (Regulation and Development) Act (RERA) was upheld, saying its objective is to develop the real estate sector.

A bench of Justices Naresh Patil and Rajesh Ketkar announced its judgement on a bunch of petitions filed by real estate developers and individual plot owners, thereby all challenging the constitutional validity of the Act that was brought into effect in May 2017.

Headed by Justice Patil, the bench, however, allowed a significant leeway for the developers in this judgement by permitting the state-level RERA Authority and the Appellate Tribunal to forgo delays on a case-to-case basis, and not cancel such projects or developers' registration in cases where the delay was caused due to "exceptional and compelling circumstances."

"In case the authority is satisfied that there are exceptional and compelling circumstances due to which a developer could not complete the project inspire the one year extension granted, then the authority will be entitled to let the developers' registration continue," the court said. "Such powers shall be exercised on a case-to-case basis. The authority shall consult with the state in such cases if needed."

The bench ruled that the Act was crucial to protect the interest of flat buyers across the country.

"RERA is not a law relating to only regulatory control the promoters (developers), but its objective is to develop the real estate sector, particularly the incomplete projects across the country," the bench said.

The Act states that all developers or promoters register themselves under a state level regulatory authority. It allows buyers to claim compensation for delay in possession, and envisages cancellation of a developer's registration and imposition of severe penalties in case where the developer fails to complete the project within the stipulated deadline.

Additional Solicitor General Anil Singh appeared for the Union of India, while the State of Maharashtra was represented by Advocate General Ashutosh Kumbhkoni. Senior Counsel Darius Khamabata assisted the court as amicus curiae.

While the bench concurred with the state and the Union government's arguments, it said that the authorities must also closely monitor the implementation of the Act. "We are conscious of the fact that the actual implementation of RERA needs to be closely monitored in the years to come.”

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