Judicial Powers to RERA

The Real Estate (Regulation and Development), Act, 2016 (RERA) is a great effort in the direction of organizing the real estate sector in India.

The Real Estate (Regulation and Development), Act, 2016 (RERA) is a great effort in the direction of organizing the real estate sector in India. RERA accounts for major changes and has come across as a means for mandating the regulation of real estate sector with the primary aim of protecting the interests of consumers.

RERA in Section 20(1) necessitated each State to set up the Regulator within a period of one year from coming into force of the Act. Section 21 of RERA further requires that the State Regulatory Authority must comprise a Chairperson and not less than two whole time Members to be appointed by the appropriate government.

As a Regulatory Authorities, State RERAs enjoy the Quasi-judicial powers. RERA has conferred the State Regulatory Authority with extensive powers to protect public interest that are akin to those enjoyed by the civil courts.

They can initiate any inquiry or investigate into accusations levelled against any promoter suo motu or on receipt of complaints from homebuyers and the Authority is vested, under section 35 of RERA, with the powers of a civil court under the Code of Civil Procedure, 1908 while trying a suit, in respect of

  • the discovery and production of books of account and other documents, at such place and at such time as may be specified by the Authority;
  • summoning and enforcing the attendance of persons and examining them on oath;
  • issuing commissions for the examination of witnesses or documents;
  • any other matter which may be prescribed.

The State Regulatory Authorities can also pass any interim order to restrain any promoter, allottee or real estate agent from carrying an act in contravention of this Act, or the rules and regulations made thereunder during the continuation of inquiry.

To clothe the orders passed by the Authority with sanctity, RERA under section 63 provides that any promoter, who fails to comply with, or contravenes any of the orders or directions of the Authority shall be liable for a penalty which may cumulatively extend up to five per cent of the estimated cost of the real estate project as determined by the Authority, for every day during which such default continues.

Establishment of the State Regulators has brought a great sense of relief in consumers as it provides them with an effective and exclusive grievance redressal mechanism which saves them time, money and energy.

However, of late, to bring justice to consumers, many of the State Real Estate Regulatory Authorities are asserting for a wider range of enforcement powers including that of issuing arrest warrants, as are enjoyed by the consumer forums in our country, which can assume the powers of a first class judicial magistrate for the trial of offences.

State RERAs have practically no bite if they cannot execute their own orders. They are dependent on the traditional machinery to implement their orders, where the party if not willing to carry out the order/direction of RERA moves the civil court, deferring the matter indefinitely.

Primary reason for bleak rate of recovery of dues from the promoters is that the power to do so lies with the Revenue Department. RERA in its present form is unable to provide immediate relief to the consumers in cases of defaulting promoters.

Bearing the torch of change, the Real Estate Regulatory Authority (RERA) of Madhya Pradesh, in November 2019, has become the first Authority in India to acquire judicial powers. It created the post of Executing Officer as well, empowered with powers of both civil and revenue court, to ensure compliance of order/direction of the Authority, who can be approached against anyone not accepting the orders within 90 days. The execution fee is also borne by the promoter itself and the allottee is to pay an amount of Rs 1,000 only.

Without a doubt, this is a welcome change, certainly to speedily dispose of promoter-consumer rows.

Following the positive trend, in January 2020, the Karnataka RERA has propositioned to give judicial powers to the Regulatory Authority to execute its own directions/orders, analogous to the consumer forums.

Such amendment would certainly change the course of things, as we know it, increase the rate of compliance and legally bind the parties to the dispute to honour the orders of the Regulatory Authorities.