Rera Remains Toothless Even After Six Years

Manish Tripathi, 35, a senior manager in a private bank, had booked a flat in Ansal’s Sushant Aquapolis, Ghaziabad, in 2011. The flat was due for possession in August 2015. He had invested Rs 24 lakh of his hard-earned money for the flat, but even now, it’s under construction.

When he approached the Real Estate Regulatory Authority (Rera) for assistance in 2018, he says he received only new dates of delivery. Every time, the builder was given more time to complete the project, he claims.

Even after multiple requests, Rera hasn’t issued any order to the builder to refund him. Worse, the builder hasn’t bothered to implement a single order of Rera, even those under Section 63 of the RERA Act, which stipulates penalty for failure to comply with Rera orders.

“The order wasn’t followed, and Rera judges have favoured the builder and not buyers like me. When I asked for a refund, they asked me to file my complaint again,” says Tripathi, who believes Rera is a toothless body.

Incidentally, several other buyers Outlook Money spoke to also feel Rera, which completed six years this May, is not always helpful. The Centre had passed the Real Estate (Regulation & Development) Act, 2016, in May 2016 to bring in transparency in homebuying.

“Rera is a step in the right direction, but a lot of fine tuning, sharper provisions and further empowering the authorities is required,” says Satya Muley, advocate at Bombay High Court and Supreme Court, and founder of law firm Satya Muley & Co.

Rera Report Card

Rera has disposed of 94,674, as of June 18, 2022 complaints across the country.

According to RERA Implementation Progress Report, released on June 18, 2022, all states and Union Territories have notified rules under Rera, except for Nagaland, where it is still under process. But many are yet to establish Rera or even open a web portal for homebuyers to register their complaints (See Rera: Where States Stand). Apparently, 31 states and UTs have set up Rera, but out of these, six are working on an interim basis and do not have a permanent authority.

As on June 18, 2022, 84,892 real estate projects and 64,177 real estate agents have registered under Rera.

“The impact of Rera has been noticeable in major markets,” says Subhankar Mitra, managing director, advisory services, Colliers India.

The Problem of Non-Implementation

While most developers now register themselves with Rera and there have been cases of relief, the authority has not been able to solve all the grievances of homebuyers. The biggest problem with Rera is non-implementation of orders even in states where it is fully functional.

Manish Kumar, 39, a member of UP RERA Conciliation Forum, which aims to facilitate settlement between developers and buyers saw Rera adjudicating in his favour several times, but each time there was non-compliance from the developer.

He had booked a house in Ecovillage-1 of Supertech in Greater Noida in 2010. The possession was due in March 2012, but he never got it. In October 2018, he filed a complaint with Rera, which passed an order in his favour in March 2019. The developer was told to deliver the flat by December 2019 along with payment of a penalty equivalent to the equated monthly instalments (EMIs) paid from the date of judgement till the date of possession.

“A request was made in UP Rera to get the possession of the house to be complied with and to take action under Section 63: A request was made in UP Rera to get the developer to comply with the (March 2019) order on the possession of the house under Section 63. After several notices, and a couple of hearings, the order again came in my favour on December 3, 2020, and the builder was found guilty of non-compliance of the order. There was a clerical error on the part of Rera in the order passed. It took three months to get it corrected. After that, a penalty order was issued against the builder on November 12, 2021,” says Manish Kumar.

Under Section 63, if any promotor fails to comply with or contravenes any of the orders of the Authority, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to 5 per cent of the estimated project cost as determined by the authority.

Kumar says he was happy with the Rera order, but not for long. “A fine of several crores can be imposed on a project (5 per cent penalty under Section 63), but only a penalty of Rs 3,95,600 was imposed on the builder, which is minuscule. Even after all this, I have not got possession of the house, and the builder has not taken any action as per the orders of Rera,” he said.

So far, UP Rera has received about 43,730 complaints, of which 38,610 have been decided. Out of these, 17,443 orders require compliance by the promoters, according to Uttar Pradesh Rera chairman Rajive Kumar.

“In case of non-compliance of the orders of UP Rera, the complainant can file a request for execution through the authority’s website. So far, we have successfully executed 5,696 orders of refund and possession, which is about 51 per cent of the total requests filed by the allottees,” says Kumar.

But what is the problem with implementation of the Rera orders? Says Kumar: “Orders are not getting enforced because the promoters are either abandoning projects, or they are inaccessible, or their assets are not available for recovery. Heavy penalty and auctioning of the assets are some of the ways to get around the problem.”  

Others are not as positive though. “Rera was established to enhance accountability and transparency in  homebuying and real estate. But very little has changed. Rera clearances and approvals are time-consuming, which delay the launch and delivery of projects. Dispute resolution and implementation of the orders remain a question mark. At times, builders disobey Rera orders, forcing the buyers to approach the authorities, which leads to further delays,”  says Muley.

For now, it remains to be seen how well Rera adapts to the buyers’ needs.

***

Rights Under Rera

Here are some of the rights that buyers can exercise under Rera

1. A consumer can cancel the contract seeking withdrawal from the project and ask for a refund under Section 18 of Rera if the promoter delays with the  possession of the property. The promoter is required to reimburse the consumer for the full amount paid along with interest.

2. Under Section 18, a customer can also continue with the project and pursue reimbursement from the developer for each month
that the project is delayed, before taking possession of the property.

3. Rera has mandated that developers need to mention a delivery or possession date to the buyers and need to stick to it.

4. It further stipulates that 70 per cent of the amount collected from buyers (from the booking to the last payment) need to be deposited in an escrow account to be utilised for construction.

5. Rera has also come up with a uniform definition of carpet areas. Now, developers need to sell on the basis of carpet area and not on built-up or super built-up areas, which include common spaces.

harsh@outlookindia.com