LAND ACQUISITION AND RESETTLEMENT ISSUES: CRITICAL ANALYSIS ON RERA, 2016.

Aditya Pratap is a lawyer practicing in the Bombay High Court. He can be reached at aditya@adityapratap.com

WHAT IS RERA, 2016?

RERA stands for the Real Estate Regulatory Authority. This was formed to bring about transparency in the real estate sector. The RERA Act was brought in to eradicate problems within the sector. It aims to reduce project delays and mis-selling.

In recent times, there has been a need for a regulatory body to deal with the problem of unfair and unregulated practices in construction and infrastructure sector so as to protect both the buyer and the builders who take up fair practices of dealing. RERA specifies certain norms for building and development of real estate which will enhance the transparency in transactions in the real estate sector. It also provides several rights to the home buyers and specifies certain rules and regulations to be followed by all builders/developers.

RULES AND REGULATIONS TO BE FOLLOWED FOR CONSTRUCTION UNDER RERA

Following are the rules and regulations that have to be followed under RERA, for a builder to start and carry on a construction:

  • Developers have to park 70% of the amount received from buyers in an escrow account to be used only for construction of that property.
  • Registration of new and ongoing project is mandatory.
  • After the registration is completed, the builder has to publish the pertinent details on the website of the regulatory body.
  • If the builder does not provide the property by the date given in the agreement of sale, or in case the registration granted by the regulatory body is revoked, the buyer of the house has the right to withdraw from the project. The buyer has the right to compensation in case of withdrawal and if the buyer does not wish to withdraw then he has to be compensated with interest of every month of delay.
  • If the builder does not voluntarily compensate you, you have to document a complaint before the regulatory authority.

IMPACT OF RERA ON LAND ACQUISITION AND RESETTLEMENT

RERA has turned out to be an important policy initiative. It has changed the way business is executed in the real estate sector. There was no real estate regulator in the country before RERA and due to this, some builders took home-buyers for granted. This resulted in delays and home buyers left with no source to address their grievances. The biggest success of the reform is that it has revived the confidence of home-buyers.

  • Leeching out of dishonest builders- There are many fly-by-night builders who trap investors and buyers. With the arrival of RERA, they have been kicked out of the market.
  • Benefit developers with sound financial status- RERA has brought a financial discipline in the real estate sector. Before RERA came into effect, investors generally moved the money received from the buyers or stakeholders in one project.
  • Increased cost- The timely completion of the project has had its own downside in the form of the increased cost of construction. Timely construction requires more labor work and other factor and non-factor requirements for which the builder takes loans from moneylenders at a high rate of interest and ultimately passes on this increased rate cost of construction onto buyers.
  • Enhanced transparency: By making registration of the project compulsory with the regulatory authority, these sections will aim to provide greater transparency in project marketing and execution. Failure to do so will attract a penalty which may be up to 10 percent of the project cost and a repeat offense could land the developer in jail.
  • Increase in tenants- Many home-seekers now refrain from buying homes. There has been a great increase in renting and leasing the houses since the effects of RERA are uncertain to people.

IMPORTANT LAND ACQUISITION AND RESETTLEMENT CASES DECIDED UNDER RERA

1. Real Estate Regulation Authority, Punjab Vs. Barnala builder and property consultants

The complaint was a ‘Suo Moto’ alleging the Respondent for Advertisement of their projects without displaying the registration Number issued by the authority for the projects, which is a violation of Section 11(2) of the Real Estate (Regulation and Development) Act, 2016.

Held: That, authority imposed a penalty of Rs. 50,000/- toward a default on part of the promoter and directed to deposit the penalty amount in the designated bank account operated by the Punjab Real Estate Regulatory Authority within 10 days from receipt of the order.

2. Manoj Kumar Vs. Prachir Infrastructure Pvt. Ltd. 

The complaint was filed alleging the respondent that the respondent is violating the norms of Municipal Corporation Hosangabad by constructing a residential and commercial complex adjacent to his house. The respondent is not abiding by the norm that the construction work should be done after leaving the gap of 4 feet. The question was whether the construction work done by the respondent is valid or if it is found to be invalid, will the registration be cancelled.

Held: The authority directed the Municipal Corporation of Hosangabad to make sure that the construction work is being done by abiding the proper norms and to submit the report within 1 month with the RERA Authority.

3. Mukti Gupta Vs. S.V.S Builder Pvt. Ltd.

The present complaint was filed alleging the builder for delayed possession by 56 months and seeking to withdraw from the project along with 14% interest on the amount paid till the date and rent paid because of delayed possession.

Held: The authority decided that in the present complaint a case has already been filed with a civil court for recovery of money by the complainant and hence she cannot seek the same remedy twice from a different authority.

CONCLUSION

Establishing the Real Estate Regulatory Act was a step towards a more institutionalized way of regulating the Infrastructure and construction market in India. RERA’s arrival has brought reforms in the positive direction. Regarding the land acquisition issues, darkness still prevails in the matters of government expanding the meaning of public good to another level and no provision or precedent established to limit this public good or define its scope.

Hence, the arrival of RERA’s future of real estate in India looks bright benefit of which is limited to urban areas whereas there is a long way to go with respect to resolving land acquisition and resettlement issues.

About the Author – Aditya Pratap

Aditya Pratap is a lawyer practicing in Mumbai. He argues cases in the Bombay High Court, Sessions, and Magistrate Courts, along with appearances before RERA, NCLT, and the Family Court. For further information one may visit his website adityapratap.in or view his YouTube Channel to see his interviews. Questions can be emailed to him at aditya@adityapratap.com.

Cases argued by Aditya Pratap can be viewed here.

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