More power to homebuyers, thanks to SC’s RERA order

What is the broad framework of the decision?

The top court held that RERA is retrospective in its application and covers all those projects for which completion certificates were not issued at the time of implementation of the Act. The ruling reaffirmed the jurisdiction of RERA over all the projects that were underway at the time of enactment of law. Several states that have diluted the RERA provisions may now have to amend the rules to ensure that all ongoing projects are covered under the Act. The state authorities will now have to include and perhaps take action against such projects, which have so far been exempted from RERA.

What else did the court say?

The Supreme Court made it mandatory for developers to deposit at least 30% of the penalty ordered by the regulator before challenging any RERA order and filing an appeal under Section 43(5). In many cases, builders often challenge the RERA order before the High Court, and the resulting lengthy legal process leaves home buyers waiting for a solution. This decision may prove to be a deterrent for such builders, who will now have to deposit full compensation and interest as a pre-condition. Going forward, this can ensure that only genuine appeals are filed by developers.

Is refund to the allottee an issue?

The top court ruled that RERA has exclusive jurisdiction to pay the amount, and interest on refund, or delay in allotment, or penalty and interest for allotment of interest. But the decision to determine compensation and interest rests with the adjudicating authority to expedite the process.

What does this mean for home buyers?

Homebuyers under the Forum for People’s Collective Efforts (FPCE) and other organizations have long been highlighting the dilution of RERA rules in various states, the RERA Act was notified on May 1, 2016. The ruling will bring relief to the buyers on various fronts, including creating a uniform regulatory framework for all projects and better grievance redressal. In cases where the penalty has been imposed by RERA, buyers will get a faster resolution as builders will have to pay a pre-deposit before challenging the order.

What does this mean for developers?

The ruling upheld the interests of home buyers, to protect their rights, and asked developers to be compliant with RERA provisions. Making RERA retroactive means that developers will have to apply to the authority for registration of their projects, which were ongoing during the commencement of the Act and for which completion certificates were not issued. Generally builders, who have appealed against RERA orders in recent years, have to keep a close eye on cases where they actually want to challenge the order.