RERA ACT- 2016

Q1. Applicability of RERA

RERA covers all residential and commercial projects, including shops, offices and
buildings.
Ongoing projects, projects which were started before the act and for which Completion
Certificate has not been given are included in RERA.

 SECTION 3 OF THE ACT

No registration of the real estate project shall be required—

(a) where the area of land proposed to be developed does not exceed five hundred square meters
or the number of apartments proposed to be developed does not exceed eight inclusive of all
phases: Provided that, if the appropriate Government considers it necessary, it may, reduce the
threshold below five hundred square meters or eight apartments, as the case may be, inclusive
of all phases, for exemption from registration under this Act;

(b) where the promoter has received completion certificate for a real estate project prior to
commencement of this Act;

(c) for the purpose of renovation or repair or re-development which does not involve marketing,
advertising selling or new allotment of any apartment, plot or building, as the case may be, under
the real estate project.

( JUSTICE UDAY, JUSTICE AJAY AND JUSTICE ANIRUDDHA HELD- RERA not applicable to the projects
already completed or to which the CC has been granted before commencement of act.

 SECTION 31

A complaint can be filed by the aggrieved person in the case of PERPETUALLY DELAYED PROJECTS
which are not registered under RERA, but still customer can file with the authority appointed.

 SECTION 11 (4)(h)

If proved that the mortgage given to the party was fraudulently given and even if such action was
done before RERA act, RERA is applicable, to protect the interest of the allottees.
 Does the Act cover ongoing/incomplete project? Yes. As regards the ambit of the Act,
there is no distinction between an ongoing project and a future project. In other words,
both ongoing/incomplete projects and future projects are covered under the Act. As per
section 3(1) first proviso, the promoters of all ongoing projects will need to register their
projects with the Regulatory Authority, within 3 months of its commencement, i.e. 1st May
2017.

Q2. WHO IS ALLOTTEE? AND WHAT ARE THE RIGHTS AND DUTIES OF
ALLOTTEE?
A person is said to be allottee to whom a plot, apartment or building has been allotted, and is
sold or is on lease or as freehold. A person who has acquired such allotment through sale,
transfer but such person is not included if the plot, allotment, building or apartment is on rent.
RIGHTS AND DUTIES UNDER RERA
It includes 11 such duties and rights of the allottee all are mentioned under section 19 of the
RERA act, 2016. The rights of the allottee given by the RERA Act as under

 Section 19 of the RERA Act talks about the right and duties of the allottee. The
section reads that the allottee shall be informed relating to the sanction and layout
plans or any agreement for sale signed with the promotor. It also includes
specifications and recommendations by the authority.
 The person who is the allottee shall also be informed with time schedule, time plan of
the completion of the project, it shall also include all the facilities like water supply,
electricity, sanitation and other services agreed between the two parties. It shall
include all the terms and conditions of the agreement for sale.
 (3) The allottee shall be entitled to claim the possession of apartment, plot or building,
as the case may be, and the association of allottees shall be entitled to claim the
possession of the common areas, as per the declaration given by the promoter under
sub-clause (C) of clause (I) of sub-section (2) of section 4. Read as (an authenticated
copy of the approvals and commencement certificate from the competent authority
obtained in accordance with the laws as may be applicable for the real estate project
mentioned in the application, and where the project is proposed to be developed in
phases, an authenticated copy of the approvals and commencement certificate from
the competent authority for each of such phases;)
 The allottee is entitled for the compensation, compensation with interest or refund of
amount paid with interest rate as given in the act, such compensation shall be received
by the allottee from promoter, if the promotor fails to give the possession or is unable
to in regard with the terms of the agreement or is unable due to discontinuance of his
business as per the suspension or revocation of the registration then also the
compensation and refund shall be given to the allottee.
 The promoter shall give the allottee all the necessary documents and plans, including
that of common areas, after handing over the physical possession of the apartment or
plot or building.

Duties of the allottee, every right comes with some duties which shall be fulfilled by the
enforced person in due manner, just like fundamental right comes with fundamental
duties, rights of allottee comes with duties prescribed by the RERA Act, 2016.

 The allottee who has entered in the agreement for the sale of a plot, building,
apartment or any under the section 13 of the RERA act, he/she is responsible to make
the necessary payments within the time mentioned for such sale. There shall be no
delay in making the payments of such agreement of sale. Such payment shall be made
within the place mentioned and time given. Registration charges, taxes, supply of
water and electricity, maintenance, rent and other any mentioned charges shall be paid
by the allottee.
 The allottee will be liable to pay the interest, at such rate as may be prescribed, for
any delay in payment towards any amount or charges to be paid under sub-section (6).
  The obligations of the allottee under sub-section (6) and the liability towards
interest under sub-section (7) may be reduced when mutually agreed to between the
promoter and such allottee.
 Every allottee of the apartment, plot or building as the case may be, shall participate
towards the formation of an association or society or cooperative society of the
allottees, or a federation of the same.
 Every allottee shall take physical possession of the apartment, plot or building as the
case may be, within a period of two months of the occupancy certificate issued for the
said apartment, plot or building, as the case may be.
 Every allottee shall participate towards registration of the conveyance deed of the
apartment, plot or building, as the case may be, as provided under sub-section (1) of
section 17 of this Act.

Other than RERA Act 2016, even the Supreme Court has given various judgements for the
protection of rights of the allottee, one of the such case is as follows: -
M/s. Newtech Promoters and Developers Pvt. Ltd. Vs. State of UP & Ors. 2021 SCC Online
SC 1044.
The Supreme Court of India passed the judgement of the case in 2021, the case was decided
by the three judges’ bench of the Supreme Court, the case discussed about the afflicting
practices by the promoters towards the allottee. The judgement was given in regard to protect
Allottees from such practices of the promotors.
A complaint was filed in the lower court by the allottees of Uttar Pradesh against the
promotors for not giving the possession of the property on time prescribed as per the
agreement. The party therefore demanded refund with interest as their rights under section 19
of the act, and under section 31 of the act. Promotors i.e. the other party appealed in the high
court under section 226 and 227 of the constitution and contended that the order was passed
by the single member of authority without jurisdiction and therefore such order shall be
cancelled. This writ petition was dismissed by the High court of Allahabad and therefore the
case came to the Supreme Court, appeal by the promotors.
 The judgement included that the RERA act is retroactive in nature and is not
retrospective, it includes the rights and duties of the allottees and promotors and
affects the rights of the parties included. The intent of the act was to bring ongoing
projects, the projects which started before RERA Act, and for which the completion
certificate has not been given are included under the ambit of this act.

 The court held that the power is vested to the authority to deal with the issues which
are related to refund of the investment amount or interest on such refund. But, if any
complaint pertains to compensation and interest thereon, the adjudicating officer
under the Act will have the power to deal with such cases. If adjudication other than
compensation as envisaged under Sections 12, 14, 18 and 19 of the Act is extended to
the adjudicating officer, it may expand the ambit and scope of powers and functions
of the adjudicating officer under Section 71 of the Act, and that would be in
contravention of the Act.
  Under section 81 of the act the power to delegate is included even if such is exercised
by the single bench of the authority, such delegation is not illegal and comes under the
ambit of law. However, such power of delegation under section 81 shall exclude the
regulation making mentioned under section 85 of the act. (Saurashtra Kutch Stock
Exchange Ltd. Vs. Securities and Exchange Board of India and Another, 2021(13)
SCC 501.)
 The court held that the promotors and allottees are different and they are mentioned
under different section of categories in the act. The deposit of amount equivalent to 30
percent of penalty by the promoter while preferring an appeal shall avoid uncalled
litigation at the appellate stage and shall further safeguard the amount to be recovered
for the allottee in case the appeal fails at a later stage.
The intention of the legislation is that the promoters ought to show their bona fide
intentions by depositing the amount so contemplated and avoid frivolous appeals.
(Shreenath Corporation and Others Vs. Consumer Education and Research Society
and Others, 2014(8) SCC 657.)

 Section 40(1) is strictly construed; it would defeat the purpose of the Act. The Court
held that there exists ambiguity in Section 40(1) of the Act and the same must be
harmonized with the purpose of the Act. It was further clarified that the amount which
has been determined and refundable to the allottees is recoverable within the ambit of
Section 40(1) of the Act.
Another interesting case came up with a question that a subsequent purchaser who steps in the
shoes of original allottees has the same power or not. A bench of three judges held that the right of
purchaser is as same as the original allottees.

Supreme Court on perusal of the facts and circumstances of the case

decided that the nature and extent of relief, to which a subsequent
purchaser can be entitled to, would be fact dependent.
Adding to the above, Court elaborated that, it cannot be said that a
subsequent purchaser who steps into the shoes of an original allottee of a
housing project in which the builder has not honoured its commitment to
deliver the flat within a stipulated time, cannot expect any – even
reasonable time, for the performance of the builder’s obligation. Such a
conclusion would be arbitrary, given that there may be a large
number- possibly thousands of flat buyers, waiting for their promised flats
or residences; they surely would be entitled to all reliefs under the Act.
Since the purchaser agreed to buy the flat with a reasonable expectation
that delivery of possession would be in accordance within the bounds of
the delayed timeline that he had knowledge of, at the time of purchase of
the flat.
Therefore, in the event the purchaser claims refund, on an assessment
that he too can (like the original allottee) no longer wait, and face
intolerable burdens, the equities would have to be moulded. Hence, it
would be unfair to assume that the purchaser had knowledge of the delay.
The equities, in the opinion of this court, can properly be moulded by
directing refund of the principal amounts, with interest @ 9% per annum
from the date the builder acquired knowledge of the transfer, or
acknowledged it.
In view of the above discussion, the order of the NCDRC was modified.
[Laureate Buildwell (P) Ltd. v. Charanjeet Singh, 2021 SCC OnLine
SC 479, decided on 22-07-2021.

Q3. WHO WILL PREVAIL? RERA OR SARFAESI

Cases: - UOI V Rajasthan real estate regulatory authority and ors

Bikram chatterji and ors v. UOI and ors

Pioneer Urban Land and Infrastructure Ltd and Others v/s Union of India & Ors. 2019

This question arises a lot of times, which act is supreme or prevails, whether RERA prevails
or SARFAESI.
The supreme court in one of its decision stated the answer to this question of whether RERA
is supreme or SARFAESI. The Bench comprising of Justice MR Shah and Justice BV
Nagarathna has held that RERA prevails over the SARFAESI and that Homebuyers can
move RERA Authority against the bank which took possession of a real estate project as a
secured creditor.

Case 1
Bikram Chatterji and ors v. UOI and ORS 2021

The Supreme Court, after considering the contentions of both the parties and report of the
Financial Auditors, wherein, siphoning off of the funds by Amrapali Group was confirmed,
observed that: -

1. It was the duty of the Authorities to take affirmative action for effective
management of Lease deeds grants in favour of Amrapali Group,
2. Authorities were bound to ensure that builders act per the objective behind the
acquisition of land and conditions on which allotment had been made,
3. The authorities were very negligent in their conduct and did not take any corrective
step against Amrapali Group. The authorities not only failed to observe the terms of
Lease Deeds and keep track of projects but also permitted the Amrapali Group to
execute sub-lease of projects, thereby allowing Amrapali group to earn a huge amount,
4. The authorities have colluded with Banks and Amrapali Group for diversion of
funds of homebuyers. The banks were negligent in their conduct and decided to
sanction loans to Amrapali Group without verifying the conditions of the NOC’s being
issued by the Authorities,
5. The provisions of RERA Act have been violated by Amrapali Group.

The Supreme Court after stating the aforementioned observations held the judgment that:
1. The Supreme Court upheld the claims of homebuyers over those of financial creditors
and government authorities.
2. The RERA registration of Amrapali Group under RERA Act shall stand cancelled and
various projects shall now henceforth be completed by NBCC (India) Ltd.
3. The various lease deeds granted in favour of Amrapali Group for projects in question
stand cancelled and all rights shall henceforth vest in Court Receiver.

The Authorities and Banks shall have no right to sell the flats of the home buyers
or the land leased out for the realization of their dues and all their dues shall have to be
recovered from the sale of other properties of Amrapali Group which have been attached.

Hon’ble Supreme Court of India has delivered one of its landmark decision/judgment in
light of the various difficulties being faced by the homebuyers all over India.
This judgment of the Supreme Court in the case related to aggrieve 42000 Amrapali
Homebuyers could be treated as a precedent to streamline incomplete housing projects,
a mess created by real estate developers across the country.

Impact on Banks/ Financial Institutions

1. Firstly, the Banks/Financial Institution will now come under the Jurisdiction of RERA. This
implies that Financial Institutions will have to abide by the notice received by the RERA
Authority and will have to represent themselves in case a complaint has been filed by the
allotees. Not only this since banks can now be termed as 'promoters' they will have to
comply with the liabilities and responsibilities of a promoter stated in the RERA Act.

2. Secondly, the process of enforcement of security interest by the Financial Institutions

under the Section 13(4) of the SARFEASI Act will not be a smooth flowing process due to
possibility of several complaints being filed by the allotees. Earlier, Financial Institutions
could initiate proceeding under Section 13(4) of the SARFAESI Act without the
intervention of the Courts or Tribunals. However, with this Judgement coming into play,
the proceedings might be delayed due to intervention of RERA Authority in case the
promoter defaults in payment of dues.

Case 2.
The Supreme Court of India, vide its order dated 14th February, 2022, in the matter of
Union Bank of India vs. Rajasthan Real Estate Regulatory Authority & Ors. (“Union
Bank of India Case”), while upholding the order dated 14th December 2021 of the
Hon’ble High Court of Rajasthan, inter-alia held that the authority (“RERA Authority”)
formed under the provisions of the Real Estate Regulation and Development Act, 2016
read with the rules and regulations made thereunder (“RERA Act”) has the jurisdiction to
entertain a complaint filed by an aggrieved person against the bank as a secured creditor
in the event the bank takes recourse to any of the provisions contained in Section 13(4) of
the Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (“SARFAESI Act”) provided that the proceedings filed before the
RERA Authority have been initiated by the homer buyers to protect their rights.
 Referring to the definitions of the terms like “promoter” under RERA Act and the term
“assignee” in the context of the provisions of RERA Act, the Hon’ble High Court of
Rajasthan observed that banks would be considered as promoters for the purposes of the
RERA Act and that the moment a bank takes recourse to any of the measures under
Section 13(4) of the SARFAESI Act, it triggers statutory assignment of right of the
borrower in the secured creditor and in such cases, RERA authority would have
jurisdiction to entertain complaint(s) filed by an aggrieved person.

 case of Allahabad Bank v. Canara Bank and Anr. after following an earlier
judgments of this Court held:
Alternatively, the Companies Act, 1956 and the RDB Act can both be treated as special
laws, and the principle that when there are two special laws, the latter will normally prevail
over the former if there is a provision in the later special Act giving it overriding effect, can
also be applied.

Case 3

In this background, it would be pertinent to mention the erstwhile judgment of the Hon’ble
Supreme Court in the case of Pioneer Urban Land and Infrastructure Ltd and Others v/s
Union of India & Ors. 2019 wherein it was inter-alia held that remedies given to allottees under
the Consumer Protection Act, 1986, RERA Act and the Insolvency and Bankruptcy Code, 2016
(“IB Code”) are concurrent remedies and RERA Act is to be harmoniously read with IB Code and
that only in the event of conflict between the two, the provisions of IB Code shall prevail over
RERA Act.

In light of the aforesaid judgments, a bank or a financial institution taking recourse under the
Section 13(4) of the SARFAESI Act pursuant to default in payments by a developer would put
such bank or financial institution in the shoes of a promoter in relation to the secured asset for
the purposes of RERA Act thereby giving allottee(s) the right to file complaint(s) against such
bank or financial institution under RERA Act.

It is also pertinent to note that there is no moratorium prescribed under the provisions of
SARFAESI Act as opposed to that provided under IB Code. Therefore, home buyers shall be
entitled to file complaints before RERA Authorities in respect of their claims immediately upon
enforcement action undertaken by any bank or financial institution under Section 13(4) of
SARFAESI Act.

The decision is given in regards, Homebuyers above that of banks in the event of default by a
developer in repayment of bank loan(s) and handing over the possessions of the units under a
project, the same may affect liquidation of assets by the bank(s) and make recoveries difficult.
While this could be significantly beneficial to the home buyers, it could put stress on the banking
sector and impose reluctance on banks from extending funds for development of real estate
projects which may adversely impact the real estate industry.