India: Conciliating Disputes Under The Real Estate (Regulation & Development) Act, 2016

Last Updated: 16 October 2017
Article by Snehali Karkera and Sana Khan

Speedy dispute redressal is one of the primary objectives of the Real Estate (Regulation & Development) Act, 2016 ("the Act") and a lot of ink has been utilized in effective application of the provisions of the Act to protect the rights and resolve the woes of the flat buyers. Now, the Maharashtra government is contemplating to establish a Conciliation Committee under the Act to handle the real estate disputes under the Act. This would mean that the parties will be able to approach the State Real Estate Regulatory Authority ("RERA") only after the appointed panel of conciliators fail in finding a solution to the dispute1. It is suggested that a panel of conciliators comprising of builders and consumer groups will be appointed and such panel shall mediate between the disputing parties and help them resolve their disputes and grievances. This is a step advanced to mediate the dispute between promoters and home buyers even before the dispute is taken up before RERA.

Provisions under the Act:

Under section 32(g)2 of the Act, the Authority in entitled to make recommendations to the Government on measures to facilitate amicable conciliation of disputes between the promoters and the allottees through dispute settlement forums set up by the consumer or promoter associations. In light of such recommendation it appears that the Government intends to set up the Conciliation Committee so that conciliatory proceedings can take place between promoters and home buyers.

Section 31(1) of the Act states that any aggrieved person may file a complaint with the Authority or the adjudicating officer, as the case may be, for any violation or contravention of the provisions of this Act (i.e. the Act) or the rules and regulations made thereunder against any promoter, allottee or real estate agent, as the case may be.

The Explanation under the aforesaid Section 31(1) of the Act clarifies that for the purposes of the aforesaid section "person" shall include the association of allottees or any voluntary consumer association registered under any law for the time being in force. The Act recognizes class action complaints and gives them a redressal forum.

Section 71 of the Act provides for appointment of an adjudicating officer for the purpose of adjudging compensation under sections 12, 14, 18 and section 19 of the Act. It is pertinent to note that section 18(2) of the Act provides that claims for compensation by allottees shall not be barred by law of limitation. Section 71 of the Act inter-alia also provides that complaints covered under sections 12, 14, 18 and 19 of the Act and pending before the Consumer Disputes Redressal Forum or the Consumer Disputes Redressal Commission or the National Consumer Redressal Commission on or before the commencement of the Act, may, with the permission of such Forum or Commission, withdraw the complaint pending before it and file an application before the adjudicating officer under the Act. Appeals against the orders from the above authorities can be taken to the Real Estate Appellate Tribunal.

Thus, the Real Estate (Regulation & Development) Act, 2016 already has two authorities and an appellate authority3 to be approached in case of violation of provisions of the act and to claim compensation. Therefore, an added conciliatory proceeding would lead to possibility of multiplicity of proceedings and conflicting views.

Provisions of The Arbitration & Conciliation Act, 1996:

Part III of the Arbitration & Conciliation Act deals with 'Conciliation' which applies only to disputes arising out of legal relationship whether contractual or not and to all proceedings related thereto4. It commences only by written invitation of one party to another5. This implies that conciliation cannot be thrust upon the promoter or allottees as a compulsion by the Authority.

Also, the Arbitration & Conciliation Act provides that the parties may enlist the assistance of a suitable institution or connected persons and may agree that the appointment of one or more conciliators be made directly by such an institution6. This shows that the parties themselves are supposed to appoint their conciliators who shall have an independent and impartial role to reach an amicable settlement.

The Arbitration & Conciliation Act lays down that during conciliation proceedings, the parties cannot initiate arbitration or judicial proceedings except where in the opinion of a party, such proceedings are necessary for preserving his rights7. This clearly implies that the parties need to file other proceedings to preserve their rights on account of expiring limitation8. Speedy dispute redressal is the essence of the Real Estate (Regulation & Development) Act, 2016 so that rights of home buyers are protected. In order to expedite the redressal mechanism, the Act has laid down time bound provisions. Registration of real estate projects9, registration of estate agent10, transfer of title to the allottee11, establishment of RERA12, resolving questions met by the Authority13, rectification of orders14, establishment of Appellate tribunal15, disposal of appeals16, adjudication of compensation17 are all tasks to be completed within a given time frame thereby making the implementation of the Act more effective.

In order to commence conciliation proceedings under the Act, adequate directions are required to be laid down by the Authority which need to be equally time effective otherwise the entire exercise would be rendered futile.

Footnotes

1. News Article on the web portal: http://timesofindia.indiatimes.com/city/mumbai/soon-rera-panel-to-mediate-between-builder-and-buyer/articleshow/60725177.cms

2. Section 32(g) states The Authority shall in order to facilitate the growth and promotion of a healthy, transparent, efficient and competitive real estate sector make recommendations to the appropriate Government of the competent authority, as the case may be, on measures to facilitate amicable conciliation of disputes between the promoters and the allottees through dispute settlement forums set up by the consumer or promoter associations;

3. Established under section 43 Real Estate (Regulation & Development) Act, 2016

4. Section 61 Arbitration & Conciliation Act, 1996

5. Section 62 Arbitration & Conciliation Act, 1996

6. Section 64(2)(b) Arbitration & Conciliation Act, 1996

7. Section 77 Arbitration & Conciliation Act, 1996

8. Union of India vs. M/s. Baga Brothers & Anr. (Order dated 7th July, 2017 passed by Delhi High Court)

9. Section 3 Real Estate (Regulation & Development) Act, 2016

10. Section 9 Real Estate (Regulation & Development) Act, 2016

11. Section 17 Real Estate (Regulation & Development) Act, 2016

12. Section 20 Real Estate (Regulation & Development) Act, 2016

13. Section 29 Real Estate (Regulation & Development) Act, 2016

14. Section 39 Real Estate (Regulation & Development) Act, 2016

15. Section 43 Real Estate (Regulation & Development) Act, 2016

16. Section 44 Real Estate (Regulation & Development) Act, 2016

17. Section 71 Real Estate (Regulation & Development) Act, 2016

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