With the dream of owning a house being the ultimate aspiration for many, the lack of a regulatory regime for the real estate industry was the biggest inhibition holding back potential real estate investments. The delayed completion of projects and also the infamous swindling of monies towards different projects and activities by certain promoters was also dissuading potential home and office buyers from investing in the market.
As per the information available in the industry, approximately 2,349 to 2,488 projects were launched annually. With a sum figure of 17,526 projects and investment of 13.70 lakh crore rupees in fifteen of the countries state capitals and twenty seven cities in total, approximately ten lakh buyers make investments in real estate year by year. Given the needs, aspirations and concerns of prospective and present home and office space buyers, an effective legislation safeguarding the stakeholders and regulating their functioning was required. The Real Estate (Regulation and Development) Act, 2016 (“RERA”) as a legislation was enacted with the aim of ensuring the sale of real estate projects in an efficient and transparent manner. The object of the legislation amongst others is to impose responsibilities on both promoters as well as on the allottees. Given the stakes involved, the role of judiciary in the interpretation of the legislation is imperative and vital for its most effective implementation.
RERA is a newly enacted law and the society including the builders, buyers, authorities as well as the legal fraternity will take some time to understand its nuances. Same will be the case with the judiciary. We are aware that there are different ways that the judiciary uses to interpret the law. Needless to mention, the judiciary is under an obligation to ensure the interpretation of the act in a way that it meets its objective in the most viable manner. This requirement has become all the more evident in times of dwindling property
Recently, we have witnessed in the case of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“Acquisition Act 2013”), wherein different benches of the Hon’ble Supreme Court of India are taking different views on the scope and interpretation of provisions of Section 24(2) of the Acquisition Act 2013. This means that after more than three years from the enactment of Acquisition Act 2013, the effect of the said particular provision is still not clear and the affected person is in a confused state with regard to the status of his land.
Similarly, certain provisions of the newly enacted “Arbitration and Conciliation (Amendment) Act 2015” are also not very clear and the same also require judicial interpretation.
In view of the above, it would be good if we give adequate time to ourselves to understand the scope and effect of new legislation before coming to any conclusion. The judiciary will play a key role in establishing the true interpretation of the Act. Pertinently, the judiciary has to be extremely cautious in safeguarding the interests of all its stakeholders while interpreting RERA.
As witnessed recently, in the case titled, Ismail Ibrahim Patel and Ors. vs. State of Maharashtra and Ors., the Secretary, MahaRERA had superseded the impugned Office Order dated 11.05.2017 defining ‘co-promoter’ by Maha-RERA by withdrawing the same and replacing it appropriately with effect from the same date. Without going into the merits of the said case, it would be safe to say that extreme caution has to be exercised by the states while framing and implementing their rules as well by the Authority in exercising them.
Notably, in the recent Bombay High Court judgment, Neelkamal Realtors Suburban Pvt. Ltd. and Ors. vs. Union of India and Ors., while the judges have made a conscious effort to bring clarity on various aspects of the Act including its retrospective vis-à-vis retroactive application and the payment of compensation by the dates mentioned in the agreements, what can be noted here is that it has refrained from arriving at conclusions. The judiciary while doing so has not deemed it appropriate to hypothetically consider situations and decide upon the constitutional validity of statutory provisions. {Refer to para 126 of the judgment.} Since the implementation of the key schemes under the Act by the Authority and its interpretation by the judiciary is yet to be seen, there is not enough clarity with the Developer on whether efforts and interests will be best protected or not. With the foreign players eyeing the change and effects of the real estate regulatory regime, India is at the cornerstone of witnessing major investments, if things go in order.
Now, with the RERA authorities taking full swing in the states, it can be said that RERA is still an elephant in the room and only its interpretation and implementation through time will bring out its true effect.
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