The Real Estate (Regulation and Development) Act, 2016 ("the Act") was introduced with an aim to regulate and promote the real estate sector and to establish an adjudicating mechanism for redressal of disputes with respect to real estate projects. Considering the number of real estate regulatory authorities that are in operation today across the country, one of the biggest challenges that we see is the dissemination of information relating to latest orders, circulars/notifications passed by these authorities which impact the stakeholders, whether developers, homebuyers, investors, or financial institutions. To enable access to this information, various states have set up a web portal to provide updates on real estate projects, orders and judgements passed by various authorities and so on. While a noteworthy and significant improvement has been made towards it, the navigation process of the websites should be made more user-friendly and streamlined.

This Dossier intends to be a one stop guide to keep our readers abreast with the significant judgements, orders, circulars, and directions passed in relation to the Act and the rules thereunder which are beneficial for all the stakeholders. Volume 1 of the Dossier is a compilation of all the impactful judgment/ orders passed in the last quarter of the year 2021, i.e., October 2021 to December 2021 by the Maharashtra Real Estate Regulatory Authority ("MahaRERA"), the Maharashtra Real Estate Appellate Tribunal ("MahaREAT"), the Real Estate Regulatory Authority for the National Capital Territory of Delhi ("Delhi RERA"), the Haryana Real Estate Regulatory Authority ("HRERA"), and the Rajasthan Real Estate Regulatory Authority ("Rajasthan RERA"). The Volume 1 of the Dossier also provides a compilation of all relevant regulatory circulars, orders, directions etc. issued by MahaRERA for the same aforementioned period.

Stay tuned for the next Volume!!!


Secured Creditors are amenable to RERA Jurisdiction

Supreme Court of India

Union Bank of India, Jaipur Vs. Rajasthan RERA & Ors. & 69  other connected Writ Petitions

The division bench of the Hon'ble Rajasthan High Court ("Rajasthan HC") in a recent writ petition passed a landmark judgment protecting the rights and interests of homebuyers by holding that secured creditors such as financial institutions and banks fall within the jurisdiction of the concerned RERA and the homebuyers can approach the concerned RERA against such secured creditors.

The matter in question relates to a project called 'Sunrise' which was launched in the year 2014 and subsequently registered with the Rajasthan RERA. The allottees of this project had taken a loan from ICICI Bank against the allotted flats through a tripartite agreement between the developer, the concerned allottees and the bank. Around the year 2016, according to the allottees, the concerned developer and the landowner raised finance through a project loan by mortgaging the whole project in favor of the Andhra Bank (which is now merged with the Union Bank of India) ("Union Bank"). The project was not completed within the stipulated timeline and the possession was not offered to the allottees. Further, the developer failed to repay the loan taken from the Union Bank. Consequently, the Union Bank took possession of the whole project and also conducted auction in respect of certain flats under the provisions of the SARFAESI Act. The concerned allottees approached the Rajasthan RERA for various remedies and certain adverse orders were passed against the Union Bank by which it was brought under RERA. Aggrieved by the same, the Union Bank approached the Rajasthan HC through a writ petition and the Rajasthan HC consolidated such 70 similar writ petitions. The Rajasthan HC held that: (i) the Act operates retrospectively only in the cases where the security interest is created because of fraud or collusion between banks/financial institutions and developers; (ii) the Act would prevail over the SARFAESI Act in case of a conflict between the two; and (iii) the RERA has jurisdiction to entertain complaints against secured creditors like banks/ financial institutions once they take recourse under Section 13(4) of the SARFAESI Act to enforce their security interest.

This judgment of the Rajasthan HC was challenged by a special leave petition before the division bench of the Hon'ble Supreme Court of India ("Supreme Court") by the aggrieved parties. The Supreme Court affirmed the judgment of the Rajasthan HC and further clarified that actions against secured creditors before the RERA shall be applicable in a case where proceedings are initiated by the homebuyers to protect their rights.

You can view the judgment of the Supreme Court here.

Advertisement of Real Estate Projects

Rajasthan RERA

Suo Moto Vs. M/s Rajasthan Housing Board

A real estate project can be advertised only after registration with the concerned RERA subject to compliance of necessary directions as per the provisions of the Act. In the present case, a show cause notice was issued to the respondent, M/s. Rajasthan Housing Board ("Rajasthan Housing Board") for advertising e-auction of 1,681 commercial plots, and shops located in 13 cities of the state of Rajasthan without obtaining prior registration of the projects. The Rajasthan Housing Board contended that none of these projects were required to be registered under the Act as none of these projects were ongoing projects. The Rajasthan RERA accepted this contention of Rajasthan Housing Board in relation to all projects except one. It held that one project required registration as majority of the plots under the project were auctioned after the commencement of the Act making it a new project. Rajasthan Housing Board was thereby directed to apply for registration and to also pay a penalty equivalent to 4 (four) times the registration fee.

You can view the order here

Rajasthan RERA

Suo Moto Vs. Team RRC

Section 9 of the Act mandates that real estate agents will need to register themselves, to be able to facilitate a transaction. Further, Section 10 of the Act prohibits a real estate agent from facilitating a sale in respect of a project which is not registered. In the instant case, a show cause notice was issued to the respondent, Team RRC ("Team RRC"), a registered real estate agent, for issuing an advertisement of a project not registered with the RERA authority. Team RRC contended that the project was not registered because it was not required to be registered under the Act. As such, the sale of units in a project not required to be registered under the Act can be facilitated by a registered real estate agent as much as by an unregistered real estate agent. The Rajasthan RERA observed that neither a registered real estate agent nor an unregistered real estate agent can facilitate the sale of units in a project that is required to be registered but is not registered. The Rajasthan RERA further stated that if a registered real estate agent does so, he/it commits an offence under Section 10(a) of the Act. The Rajasthan RERA held that the project was required to be registered under the Act and imposed a penalty of INR 5000/- (Indian Rupees Five Thousand Only) on Team RRC.

You can view the order here

Rajasthan RERA

Suo Moto Vs. Team RRC

The guidelines prescribed for the real estate agent under the Act in relation to facilitating a sale of plot, apartment or building in a project are to be strictly complied with. In the instant case, a show cause notice was issued to the respondent, Team RRC, a registered real estate agent, for issuing an advertisement of a project without mentioning its real estate agent registration number. Team RRC contended that it was not required to mention its real estate agent registration number as issuing of an advertisement for the project by the real estate agent cannot be treated as facilitation of sale under the Act. The Rajasthan RERA held that the issue of an advertisement by the real estate agent for sale of units is facilitation of sale or at least a part of the process of facilitation of sale. Therefore, Team RRC was mandated under Section 9(5) of the Act to quote its registration number in every sale facilitated by the agent. The Rajasthan RERA held that Team RRC has violated Section 9(5) of the Act. Whilst observing that the Team RRC has subsequently started mentioning its real estate agent registration number in all its advertisements, the Rajasthan RERA decided to take a lenient view and imposed a fine of INR 2000/- (Indian Rupees Two Thousand Only) on Team RRC to meet the ends of justice.

You can view the order here.

Cancellation Charges for Cancelling Booking of a Unit

Rajasthan RERA

Yashoda Parihar Vs. Ashapurna Buildcon Ltd.

The project promoted by the respondent, Ashapurna Buildcon Ltd. ("Ashapurna Buildcon") displayed different dates of completion in the promotion material/ advertisement on the Rajasthan RERA website. The advertisement guaranteed that the project will be completed within 18 months from 2nd January 2020 and the Rajasthan RERA website mentioned that the project will be completed by 6th November 2023. The complainant ("Yashoda Parihar") thereby applied for cancellation of the unit booked by her and sought refund of the amount deposited by her along with interest. Ashapurna Buildcon contended that the booking amount deposited by Yashoda Parihar cannot be reimbursed as the entire amount was to be forfeited in case of cancellation by the allottee. The Rajasthan RERA observed that no agreement was executed between the parties in relation to Yashoda Parihar's unit. However, the booking form provides that the cancellation of unit would attract 10% deduction towards the administrative charges of the total value. It was further observed that, as per the general norms, in absence of an agreement between the parties, an amount up to 10% of the booking amount is deducted as cancellation charges. The Rajasthan RERA directed Ashapurna Buildcon to refund the entire amount after deducting 15% of the deposited amount and taxes. No interest was awarded as agreement for sale was not executed between the parties.

You can view the order here.


Mr. Mahendra Dnyanu Waghmare Vs. Godrej Skyline Developers Private Limited.

The appellant ("Mahendra Dnyanu Waghmare") contended that he had booked a flat in respondent's i.e. Godrej Skyline Developers Private Limited ("Godrej Skyline") project, and paid 5% of the consideration on the assurance of a channel partner of Godrej Skyline that in case the booking is cancelled, 100% of the amount shall be refunded. Mahendra Dnyanu Waghmare cancelled the booking due to adverse health conditions; however, 100% of the amount was not refunded. The MahaREAT observed that the Act is silent on the point of permissible deductions if the allotee suo moto cancels the booking for whatever reasons. It was observed that Mahendra Dnyanu Waghmare had cancelled the booking before execution of the agreement for sale. As such, the question of deduction of amount under the head of amount of stamp duty and registration charges does not arise. The MahaREAT further observed that Godrej Skyline had utilised the amount deposited by Mahendra Dnyanu Waghmare for its commercial purposes. Therefore, the MahaREAT allowed a reasonable deduction of 10% and directed Godrej Skyline to refund the remaining amount to Mahendra Dnyanu Waghmare within a month from the date of the order.

You can view the order here.


Sneh Lata Sachan Vs. Pyramid Infratech Private Limited.

The complainant ("Sneh Lata Sachan") had booked a flat in respondent's i.e., Pyramid Infratech Private Limited ("Pyramid Infratech ") project and subsequently entered into a buyers' agreement. Sneh Lata Sachan failed to make payment of certain amount towards the flat as per the buyers' agreement. Pyramid Infratech issued several reminders to Sneh Lata Sachan for the same which led to the issuance of notice of cancellation by Pyramid Infratech. Sneh Lata Sachan filed the complaint to direct Pyramid Infratech to restore the flat and set aside the cancellation of the flat.

The HRERA observed that the cancellation of flat is valid as Pyramid Infratech had followed the prescribed procedure and cancelled the flat of Sneh Lata Sachan with adequate notices. It was further observed that there is a distinction between surrendering of flat by the allottee and cancellation of flat by the promoters. In cancellation, a deduction of only INR 25,000/- (Indian Rupees Twenty Five Thousand Only) (as per the cancellation clause of affordable housing policy) should be made and the balance amount should be refunded to the allottee. Therefore, the HRERA directed Pyramid Infratech to deduct INR 25000/- (Indian Rupees Twenty-Five Thousand Only) and refund the remaining amount to Sneh Lata Sachan.

You can view the order here.

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