RERA applicability to be restated
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The Bombay High Court on Monday observed that applicability of Real Estate (Regulation and Development) Act (Rera) has to be tested and sought affidavits from the Centre and the state in reply to a clutch of petitions by Mumbai builders who challenged the constitutional validity of certain provisions of the Act
The DB Realty group companies had moved the high court questioning the "extreme, unreasonable" provision under Rera that requires ongoing projects to be registered with the authority, set up under the new real estate regulatory law or else face penal consequences.
The HC bench of Justices Anoop Mohata and Anuja Prabhudessai directed the Centre and the state to file a reply in three weeks and posted the matters for hearing after four weeks. Replies have to be filed also to a petition that challenged the constitutional validity of an adjudicatory authority set up under Rera, which has no judicial member. Senior Counsel Virendra Tulzapurkar said that the builders and others will be left with no way because there is no provision to file a suit in case of a dispute.
One of the petitions by MIG (Bandra) Realtors and Builders challenged the Rera requirement to register ongoing projects even those which are 95 per cent complete. "The act cannot impose new liabilities on existing contractual obligations," said DB Reality counsel Aspi Chinoy. He said the builder has registered the project under Rera without prejudice, as July 31 was the last date to register all such projects, which do not have a completion or occupancy certificate (OC).
Another petitioner pointed out that it is a central legislation and given that there were challenges already filed in various high courts, the Centre has made a statement that it plans to file a transfer application of all Rera challenges to the Supreme Court. There are matters in Nagpur bench too. Chinoy said the Nagpur bench had adjourned the matter. "Our matter is different," he said. "The act can't seek to impose liability on projects that are substantially completed." he said. The matter in Nagpur was argued and ultimately the developer who had filed the petition had agreed to register the projects before its July 31 deadline. He said no interim relief was granted by the Nagpur bench of the HC.
"We are challenging validity on ongoing projects. We (builder) enter into various contracts. After 95 per cent is over, how can criminal provisions be imposed on us? Can legislation fix additional liability which were not there when development was sanctioned?" Chinoy asked.
"The scheme is to register the ongoing projects where the term 'ongoing' is not 'definite'. About 70 per cent of the money collected is to be kept in an account. Builder has to indicate date of completion. They can get extension of a year only on grounds of force majeure (natural calamity.) No provision has been set for delay of permissions or any other hurdles. Get one year only on limited grounds. If it is not completed, I will lose the project," said Chinoy.
"This is drastic. The act seeks to impose penal consequences on ongoing projects. Can post facto punishment be imposed?" Chinoy said terming the provisions a violation of right to trade under the Indian Constitution.
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