RERA to the Rescue: 7 Projects taken over in UP – What the Law Says:

By Aditya Pratap, Advocate at Bombay High Court (aditya@adityapratap.com)

In a landmark ruling, the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) decided to take over and finish construction of seven projects situated in Delhi NCR, Particularly in Noida and Greater Noida. Invoking its powers under Section 7 of the the RERA Act of 2016, the UP RERA decided to take over Unnati Fortune’s Aranya in Noida’s Sector 119; Primrose Infratech’s Primrose Ryne in Greater Noida’s Sector Chi-V; Greenbay’s Golf Homes and Golf Village in Yamuna E-way’s Sector 22D along with four other stagnant projects in the Noida-Greater Noida region.

How can RERA Take Over a Project from a Developer:

The power of RERA to take over a builder’s project lies under Sections 7 and 8 of the RERA Act, 2016. Such powers can be exercised by two means – a complaint or suo-motu. In the first instance, aggrieved home-buyers can directly complain to the RERA under Section 31 of the Act. On the other hand, if RERA on its own accord notices violations of law committed by a Developer, it can unilaterally revoke the builder’s registration and take over the project.

How to Approach RERA to seek take-over of a Project?

If a Developer fails to complete the project within the stipulated five-year period under RERA, his registration will be deemed to have lapsed, giving flat-buyers a cause of action to file a complaint with the Authority. In cases where a Developer blatantly violates the provisions of the RERA Act, such as not executing registered sale agreements, not making the mandatory disclosures, diverting funds etc., the RERA can invoke Sections 7 and 8 of the Act, revoking the Builder’s registration and handing over the project to the association of home-buyers for completion.

The Procedure – Complaint and Hearing:

Whenever a case under Sections 7 and 8 of the RERA Act comes up, the Developer has a right to be heard and the Authority must adhere to the principles of natural justice. Accordingly, the Authority must give the Developer a 30 day prior notice stating the grounds on which it proposes to revoke the registration. Once the Developer receives the notice, he must file a reply in rebuttal to the same. Once the exchange of complaints, notices and replies is complete, the RERA will hold a hearing to decide the matter.

What Happens After Revocation of the Builder’s Registration?

Once the registration of a Builder has been revoked under Section 7, he will have 60 days to appeal the same. If no appeal is filed the order will become effective and the RERA shall enter the Builder’s name in the list of defaulters on its website. It shall also direct the Bank holding the Escrow account to freeze the same. Finally, the RERA will invoke its powers under Section 8 and hand over the project to the association of flat-buyers for further construction and completion. In case the flat-buyer’s association lacks the resources, the RERA can consult the Government and administration to decide the most feasible course of action.

Impact:

The decision of UP-RERA to take over 7 projects marks another landmark step to regulate errant developers who defaulted on their promises to home-buyers. It is yet another wake-up call to an industry sullied by the likes of Jaypee and Unitech. At the same time, home-buyers associations must brace themselves to step into the shoes of the Developer, which is no mean feat.

Project execution requires discipline and strict adherence to timelines and to achieve this, they may have to engage services of Project Management Consultants also. However if the respective associations are able to overcome these challenges, they will set a new precedent for orderly development and adherence to promises in Northern India’s hitherto beleaguered real estate sector.

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Advocate Aditya Pratap
About Advocate Aditya Pratap 64 Articles
Aditya Pratap is a lawyer practising 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.