Supreme Court Criticizes RERA for Delays and Favoring Builders Over Homebuyers

The Supreme Court's recent observations have sparked a fresh debate over the delays and inefficiencies in real estate dispute resolution. RERA, or the Real Estate Regulatory Authority, was introduced on May 1, 2016, with 59 of its 92 sections, and became fully operational nationwide on May 1, 2017. The primary objective of the RERA Act was to protect flat buyers from unscrupulous builders.

The object clause of RERA is as follows: To establish the Real Estate Regulatory Authority for the regulation and promotion of the real estate sector and to ensure the sale of plots, apartments, or buildings, or real estate projects, in an efficient and transparent manner. The Act also aims to protect the interests of consumers in the real estate sector and to establish an adjudicating mechanism for speedy dispute resolution. Additionally, it establishes an Appellate Tribunal to hear appeals from decisions, directions, or orders of the Real Estate Regulatory Authority and the adjudicating officer.

Recently, the Hon’ble Supreme Court, on February 12, delivered a critical view of the functioning of the RERA Court. The bench, comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi, stated that the intention of RERA was to protect flat purchasers, but it appears to be helping builders instead. The court observed that RERA courts have failed to reduce litigation related to property matters. There are numerous instances of delays, with some cases remaining unresolved for over 11 months since the pronouncement of the order. The RERA Act stipulates that matters should be resolved within 60 days, but the ground reality is far different. Flat purchasers often wait for years for justice, and the orders passed by RERA often do not account for expenses incurred by the buyers, such as GST, stamp duty, registration, and brokerage. This results in an unfair advantage for builders.

The concept of conciliation, introduced by MAHARERA (Maharashtra Real Estate Regulatory Authority), has been criticized for giving more time to builders to exploit the situation. Additionally, MAHARERA has issued circulars allowing builders to allot car parking spaces, which is seen as a violation of the common amenity rights of flat purchasers. Car parking is a common amenity that all flat purchasers are entitled to, and it should not be sold by builders. Despite several judgments by the High Court and Supreme Court, builders continue to exploit loopholes in the law.

There is a pressing need for accountability and reform in the real estate sector. Despite India's independence in 1947, the administration of property conveyance remains inefficient. To address this, the first step should be to ensure that builders who fail to provide timely possession of flats and execute conveyance within the stipulated time limit face immediate criminal charges. A law should be introduced requiring builders to sell at least 10% of their flats only after they have executed the conveyance and provided an occupation certificate. This would put significant pressure on builders to comply with the law.

Additionally, each builder's agreement should include a page detailing the promoter's background, including any past failures to provide conveyance or delays in possession. This information should be uploaded to the RERA departmental website to provide transparency to potential buyers. The observations made by the Supreme Court bench, comprising Chief Justice Surya Kant and Justice Joymalya Bagchi, highlight the failure of the RERA Act to achieve its intended purpose. The bench noted that they were extremely disappointed with RERA's performance and stated that RERA seems to be working in favor of builders.

Another critical point is that RERA in each state should be headed by a retired High Court judge rather than a bureaucrat. Bureaucrats, who have spent their careers pleasing their superiors, may continue to exhibit the same mentality. Furthermore, the concept of accountability is widely ignored in RERA, with the legal team often given little importance and staff appointed on a probationary basis rather than permanently.

These reforms are crucial to ensuring that the real estate sector operates fairly and transparently, protecting the interests of homebuyers and maintaining the integrity of the market.