STATUS
The Real Estate Bill was passed by the Rajya Sabha on 10th March, 2016 and the Lok Sabha on 15th March, 2016. The Bill as passed by the Parliament was assented to by the Hon’ble President on 25th March, 2016. The Act as assented to by the Hon’ble President was published in the Official Gazette on 26th March, 2016 for public information.
Section 2, sections 20 to 39, sections 41 to 58, sections 71 to 78 and sections 81 to 92 were notified by the Central Government and came into effect from 1st May, 2016. Sections 3 to 19, Section 40, Section 59 to 70 and Sections 79 and 80 were notified by the Central Government and came into effect from 1st May 2017.
The Government of Gujarat by notification dated 29th October 2016 has notified the Gujarat Real Estate (Regulation and Development) (Matters Relating to the Real Estate Regulatory Authority) Rules, 2016 (“Authority Rules”) and Gujarat Real Estate (Regulation and Development) (Matters Relating to the Gujarat Real Estate Appellate Tribunal) Rules, 2016 (“Appellate Rules”). The Government of Gujarat by notification date 4th May 2017 has notified Gujarat Real Estate (Regulation and Development) (General) Rules, 2017 (“General Rules”).
Section 2, sections 20 to 39, sections 41 to 58, sections 71 to 78 and sections 81 to 92 were notified by the Central Government and came into effect from 1st May, 2016. Sections 3 to 19, Section 40, Section 59 to 70 and Sections 79 and 80 were notified by the Central Government and came into effect from 1st May 2017.
OBJECTS AND REASONS
The real estate sector has grown in the recent years but has largely been unregulated from the perspective of consumer protection. Though, consumer protection laws are available, the recourse available therein are only curative, but not preventive. This has affected the overall potential growth of the sector due to absence of professionalism and standardization.
The Real Estate Act is intended to achieve the following objectives:
a) ensure accountability towards allottees and protect their interest;
b) infuse transparency, ensure fair-play and reduce frauds & delays;
c) introduce professionalism and pan India standardization;
d) establish symmetry of information between the promoter and allottee;
e) imposing certain responsibilities on both promoter and allottees;
f) establish regulatory oversight mechanism to enforce contracts; g) establish fast- track dispute resolution mechanism;
h) promote good governance in the sector which in turn would create investor confidence.
PRELIMINARY
Section 2(g) of the Act defines ‘appropriate Government’ to mean as follows:
(i) for the Union territory without Legislature, the Central Government;
(ii) for the Union territory of Puducherry, the Union territory Government;
(iii) for the Union territory of Delhi, the Central Ministry of Urban Development;
(iv) for the State, the State Government.
The Act covers all bodies (private and public) which develop real estate projects for sale to the general public. Section 2(zk) defines the term ‘promoter’ which includes both private and public real estate promoters. Thus, both Development Authorities and the Housing Boards, when involved in sale are covered under the Act.
REGISTRATION OF PROJECT AND AGENTS
The Act covers both residential and commercial real estate. Section 2(e) defines ‘apartment’ and section 2(j) defines ‘building’ which include both residential and commercial real estate.
Section 3(1) first proviso provides that promoters of ‘all ongoing projects which have not received completion certificate will need to register their project with the Regulatory Authority, within 3 months of its commencement’
Section 3(1) provides that all projects within a ‘planning area’ will require to be registered with the Authority. ‘Planning Area’ has been defined under section 2(zh). However, section 3(1) second proviso gives powers to the Authority ‘in the interest of allottees’ to order / direct the promoter to register projects beyond the planning area, which has the requisite permission of the local authority.
FUNCTIONS AND DUTIES OF PROMOTER
As per section 11 of the Act, the promoter is required to update all project information as furnished at the time of application (as provided under section 4) on the website of the Authority. In addition, section 11 also provides for certain information, which needs to be regularly (quarterly) updated by the promoter, in order to make an informed choice by the buyer. In addition, the promoter is required to carry out all the responsibilities as envisaged under section 11 at various stages of development of the project and upon its completion.
Section 4 and section 11 provide for a detailed list of disclosures on the website of the Authority by the promoter for public viewing. Also, The detailed list is specified in Rule 10 of the Authority Rules.
As per section 12 the promoter is responsible for the veracity of all information contained in the advertisement and the prospectus. In case of any loss sustained by any person due to false information contained therein, the promoter is liable to make good the loss sustained due to the same.
RIGHTS AND DUTIES OF ALLOTTEES
Section 19 provides for the various rights of the allottees. This section specifies various rights which the allottees have against the promoters including those which the promoters are liable to fulfill based on the agreement entered into with the allottees, namely – stagewise schedule of completion of the project and the services, claim timely possession of the apartment / plot, entitlement to necessary documents and plans etc. Section 19 provides for the various duties of the allottees, which provide for matters relating to payment regarding the apartment / plot, liability towards interest for delay in payment, responsibility to take possession, participate in formation of association etc
THE REAL ESTATE REGULATORY AUTHORITY
As per section 20 the Regulatory Authority is required to be established within 1 year of the commencement of the said section. As section 20 has been notified with effect from 1 st May, 2016, the Authority is required to be established maximum by 30th April, 2017. However, for speedy implementation of the Act, section 20 empowers the ‘appropriate Government’ to appoint an interim Regulatory Authority, until the establishment of the full time Authority
As per section 22 the Chairman and the Members of the Authority are required to be appointed by the appropriate Government on the recommendations of a Selection Committee comprising of the Chief Justice of the High Court (or his nominee), the Housing Secretary and the Law Secretary. The section also provides for the qualification etc. that are required for the appointment of the Chairman and the Members.
THE REAL ESTATE APPELLATE TRIBUNAL
As per section 43 of the Act, the Appellate Tribunal is required to be established within 1 year of of the commencement of section 43. As section 43 has been notified with effect from 1st May, 2016, the Appellate Tribunal is required to be established maximum by 30th April, 2017. However, for speedy implementation of the Act, section 43 empowers the ‘appropriate Government’ to designate an existing Appellate Tribunal (under any other law in force) to function as an Appellate Tribunal under the Act.
The Appellate Tribunal is a quasi-judicial body, which is empowered to hear appeals from the orders / decisions / directions of the Regulatory Authority or the Adjudicating Officer, as the case may be. The form and manner and the fees payable towards filing the appeal and the manner for hearing and disposing the appeal are provided in Rule 3 of the Appellate Rules made by the Government of Gujarat.
OFFENCES, PENALTIES AND ADJUDICATION
As per section 59, where under the Act, it is obligatory for the promoter to register a project with the Authority, and if the promoter fails to do the same, he shall be liable to a penalty upto ten percent of the estimated cost of the real estate project. However, in case the promoter consistently defaults or does not comply with the directions / orders of the Authority as regards registration of the project with the Authority, he shall be liable to further ten percent of the estimated cost of the real estate project or imprisonment upto 3 years or both.
As per section 60 if the promoter defaults as regards matters covered under section 4, he shall be liable to a penalty upto five percent of the estimated cost of the real estate project.
MISCELLANEOUS
As per section 79 of the Act civil courts are barred from entertaining disputes (suits or proceedings) in respect of matters which the Authority or the adjudicating officer or the Appellate Tribunal is empowered under the Act to determine. However, the consumer forums (National, State or District) have not been barred from the ambit of the Act. Section 71 proviso permits the complainant to withdraw his complaint as regards matters under section 12, 14, 18 and section 19, from the consumer forum and file it with the adjudicating officer appointed under the Act.
The laws of the country do not permit forum shopping, thus, an aggrieved can only approach one of the two for disputes over the same matter.
