November 03, 2017

 

MUMBAI: Buyers in ongoing projects can seek compensation from a builder under the new real estate regulatory law even if the developer had committed a breach and failed to give possession before the Act came into force, the Central government informed the Bombay high court on Thursday.

By the first week of October, nearly 13,000 ongoing projects were already registered in Maharashtra alone under the Real Estate (Regulation and Development) Act or RERA. The builders have objected to ongoing projects being brought under the ambit of “stringent” RERA provisions.

The Centre, through additional advocate general Anil Singh, is presenting its arguments to defend, justify and explain why the law enacted last year is reasonable, valid and a vital statute to rein in rogue builders. The high court is hearing a clutch of constitutional challenges to the law. A bench of Justices Naresh Patil and R G Ketkar assigned the task had a series of questions to ask, fourth day into the hearing.

Keen on understanding the intention of the lawmakers, the judges observed, “You are penalizing a builder for acts committed prior to registration, in an ongoing project. How many penalties will he have to pay?” They asked, “If a builder whose registration is revoked—as allowed under RERA for defaults or ‘unfair practice or irregularities’—will he only have to pay compensation or an interest per month to an allottee or buyer? Why should he be made to pay, especially if it is not known how long it takes for the building to be completed then?” What happens when a registration is revoked was another query.

Section 18 of RERA makes the builder liable to return the amounts already received with interest and pay compensation of he fails to complete or give possession. The compensation will have to be paid if the buyer wants to withdraw from the project and even if he doesn’t. If he doesn’t, he is entitled to “interest for every month of delay till possession” from the builder promoter.

Singh said the Act provides for a mechanism to ensure that buyers are not victims any more. He said once the registration is revoked, the building or project is not appropriated by the RERA authority. The authority only acts as a “facilitator’’ to ensure that the project is completed and the buyers get their apartments. “It is the original builder who will have to pay the compensation or interest and not the new builders who will only serve as contractors with no rights in the project. After committing a default, can a builder say I should not have to pay? Can a bona fide buyer who has not received his flat be punished and the defaulting builder protected?” asked Singh.

He further said that the law itself provides for pending consumer complaints against builders to be withdrawn and filed under RERA for compensation.

Hence, even new complaints can be filed, he said, when the judges asked.

He emphasized that the law wants builders to give an estimated time of completion. The law shows him the stick in penalties and interest to be paid at 2% more than the highest market rate.

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Source: realty.economictimes.indiatimes.com