Page 52 - Banking Finance March 2022

FEATURE

WHAT THE SC

ORDER ON RERA

MEANS FOR

HOMEBUYERS

T he Supreme Court in its judgment last week Are refunds to the allottee an issue?

suggested some changes in the Real Estate
The top court ruled that RERA has exclusive jurisdiction to
Regulatory Authority Act (RERA) to protect the
interests of homebuyers. The ruling may force
direct payment of interest for delayed delivery of possession,
changes in state rules modelled on this Act. direct refund of the amount, and interest on the refund, or
or penalty and interest, to the allottee. But the adjudication
for determining compensation and interest lies with the
What are the broad contours of the adjudicating authority to expedite the process.
ruling?
The apex court held that RERA is retroactive in its What does it mean for homebuyers?
application and covers all projects for which completion Homebuyers under the Forum for People’s Collective Efforts
certificates were not issued at the time of the Act’s (FPCE) and other organizations have long been highlighting
implementation. The ruling has reaffirmed the jurisdiction the dilutions of RERA regulations in various states, after the
of RERA on all projects that were ongoing when the law was RERA Act was notified on 1 May 2016. The ruling will bring
getting enacted. Many states which diluted RERA provisions relief on various fronts for buyers, including creating a
may now have to amend the regulations to ensure that all uniform regulatory framework for all projects, and creating
ongoing projects get covered under the Act. State better grievance redressal. In cases where RERA has
authorities will now have to include and perhaps take action imposed a penalty, buyers will get a faster resolution as
against such projects that have enjoyed exemption from
builders will have to pay a pre-deposit before challenging
RERA so far.
an order.
What else did the court say?
What does it mean for developers?
The Supreme Court made it mandatory for developers to
The ruling affirmed the interests of homebuyers, to protect
deposit at least 30% of the penalty ordered by the regulator
their rights, and tells developers to conform to the RERA
before they challenge any RERA order and file an appeal
under Section 43(5). In many cases, builders would often provisions. Making RERA retroactive means developers will
challenge a RERA order before a high court, and the have to apply to the authority for the registration of their
resultant long-winded legal procedure would leave projects, that were ongoing during the commencement of
homebuyers waiting for a resolution. The ruling could prove the Act and for which the completion certificate was not
to be a deterrent for such builders, who will now have to issued. Builders in general, who in recent years have
deposit the full compensation and interest as a pre- appealed against RERA orders will have to take a hard look
condition. Going forward, this may ensure that only genuine at cases where they really want to challenge the order.
appeals by developers are filed. (Source: Mint)

52 | 2022 | MARCH | BANKING FINANCE