Real Estate(Regulation and Development) Bill 2011

INTRODUCTION  :-

The Real Estate (Regulation and development) Bill 2013 aims at bringing discipline and transperancy to the Realty Sector by setting up industry regulator to oversee it, this bill is expected to portect the interest of home buyers, particularly against the unethical practices resorted by developers.

According to this bill no promoter will be allowed to develop any immoveable property, altering or converting the undeveloped immoveable property or any part of it without registering its real estate project and obtaining a certificate of registration from the real estate regulatory authority which is been established.

There will be no registration required if the proposed land which needs to be developed does not exceed 4000 square meters. When the promoter has all the requisite permissions and approvals for the development atleast an prior to the commencement of this act. If there is only the purpose of repairs or renovations which does  not require re allotment or marketing of such property.There will also be an establishment of real estate appellate tribunal which will adjudicate any dispute which relates between the promoter and allotee, promoter and authority etc. The central advisory  council will consist of representatives from all the ministries and also members to represent the interest of the real estate industry, consumers. Labourers etc. The basic function of the central advisory council will be giving advise to the central government on all the matters concerning the implementation of this act.

AREAS COVERED BY THIS NEW BILL :-

The areas of concern which are covered or governed by this bill be the Real Estate sector, Consumer Protection. The registration of real estate project prescribed in Section 4 of this Act will be under the complete scrutiny of the competent authority so that there could not be  any kind of unwanted delays in the construction of the registered project , and if there is any by any reason thereof, the promoter is required to apply for the extension/ renewal in a form and on making of such payment as fees as prescribed. If the registration of the project is lapsed then the authority consults the appropriate government to take action for carrying out the remaining development works.

This bill is also very helpful for the consumers of the real estate industry, Promoter is liable to answer all the queries by the allotee and also if there is any kind of breach on the part of the promoter, the promoter is liable to pay the amount in view of settlement . The rights of consumer are protected against the foul play of the promoters.

The key area of real estate which has been covered by this Act is :-

  • Residential Projects
  • Residential colonies
  • Residential Apartments

THE REAL ESTATE REGULATORY AUTHORITY :-

The Real Estate Regulatory Authority is established by section 17(1) of the act. The Real estate regulatory authority will be set up the appropriate government to exercise its powers conferred on it and to perform its functions assigned to it. The real estate regulatory authority is been set up under Section 17(1) of the Act. The function of the authority will be:-  

to take possible measure and steps for the growth and promotion of a healthy, transparent , efficient real estate sector,   

  • which will also take in account for the protection of the interests of allotees,
  • to improve the process and procedures in clearance of sanctioning of plans etc.
 The Authority will also be encouraging the construction which would be environmentally sustainable. The functions of the Authority is enumerated under section 29 (1) 29 (2)(i), the authority will ensure that promoters are under compliance of all the obligations cast upon them. The Regulatory authority will have the powers to appoint officers of certain qualifications for adjudication of arbitration, mediation or any kind of dispute resolution. This power to the Authority is conferred under section 30(2) of the Act. 

The Regulatory Authority also has the powers to call upon the promoter at any time to furnish the information or explanantion that the authority may require for its clarification or investigation.  

THE REAL ESTATE APPELLATE TRIBUNAL :-

The Real Estate Appellate tribunal is set up under section 35 of the Act. It has the powers to adjudicate upon the disputes between the promoters and allottees, promoters and authority, and between appropriate government and the authority.

The jurisdiction of the Appellate tribunal will be exercised by the benches, The procedure of the appellate tribunal is not bound by the procedure laid down by the Code of Civil Procedure, 1908, but will be guided by the principles of natural justice, appellate tribunal is also not bound by the rules of evidence as prescribed in Indian Evidence Act, 1872. The Appellate Tribunal will have the functions and powers which are vested in civil court under Code of Civil Procedure,1908.

No civil courts will have the jurisdiction in respect of any matter which the Appellate Tribunal is empowered to determine and no civil court will have the power to grant  any  injunction other than Appellate Tribunal. No court is empowered to take cognizance of any punishable offence if any complaint is made to the authority in writing, if the complaint is made in court or in police station then a Metropolitan magistrate/ Judicial magistrate of first class is empowered to try the offence punishable under this Act.

Any appeal arising out of any orders of the Appellate Tribunal will be entertained in the Supreme Court on one or more specific grounds specified in Sec.100 of CPC.

DISPUTE RESOLUTION :-

The Real Estate Regulatory Authority has the powers to set up a dispute resolution mechanism for an amicable setellment of disputes between the promoter and the allottees or the allottees themselves through regulations. . There is a provision of Dispute Resolution  where the authority has to appoint an officer with the qualifications and experience in adjudication, arbitration, mediation or conciliation who are skilled in operational areas, who are skilled in dispute resolution .

OFFENCES AND PENALTIES

Offences :-

The offences which are likely to be committed under the provisions of this act  are :-
  • Non- Registration of the Real Estate project with the Authority which is provided in Section 3 of the Act.
  • Section 3 :-

    No promoter shall develop any immovable property or make any construction thereon or alteration thereof or convert any existing undeveloped immovable property or part of it without registering the real estate project and obtaining a certificate of registration from the real estate regulatory authority eastablished under this act.
    • Willful failure to comply with the guidelines of the Authority
    • Willful failure to comply with the orders of the Appellate Tribunal
    • Certain offences which are commited by a company , or any person associated to the offence is associated to the company, then the company would be liable for the penalties.

    Penalties:-

    SECTION 50 -

    this section provides the penalty of the offence which is Non- Registration of the Real Estate Project under section 3 of the act, the punishment would be imprisonment for a term which may extend to 3 years, and the penalty which may extend upto ten percent of the real cost of the Real Estate Project, or in certain circumstances may be both.

    SECTION 51  -

    In this provision if the promoter contravens any other provisions of this act other than provided in Section 3 of the Act, or any other rules or regulations, then the promoter shall be liable to a penalty which may cost upto 5 per cent of the estimated cost his Real Estate Project.

    SECTION 52  -

      If the promoter willfully contravenes or violates any other directions or guidelines as provided by the Authority, then the promoter is liable to pay One Lakh rupees for every day during which the violation of guidelines is continued, which may extend upto five percent of the estimated cost of the Real Estate project.

    SECTION 53

    If the promoter who is willfully violates or fails to comply any orders of the the Appellate Tribunal, so the promoter will be liable for the punishment of imprisonment for a term which may extend upto one year or with a penalty which may extend upto ten percent of the total cost of the Real Estate project or maybe both.

    SECTION 54

    If any offence is committed under section 51, 52 and 53 of this act by a company, then every person associated with the company, who was also associated with the offence responsible for the business will be deemed guilty, but if the person proves that the offence is committed without his knowledge then such person shall not be liable for the punishment..

    INCEPTION OF COMPLAINT AND ENFORCEMENT OF PROVISIONS AGAINST THE DEVELOPER  :-

    If any allottee is aggrieved by the malpractices of the promoter in any manner, which violates the rights of the allottee, then the allotee may approach the Regulatory Authority so prescribed with the grievance which the allottee is suffering from, the Regulatory Authority has the powers to summon and enforce the attendance of promoter and also examining him on oath. The Authority can also call for production of documents which the Authority needs to examine in order to resolve the dispute.

     The Authority also has the powers for dispute resolution if there is any scope of amicable settlement between the parties in dispute. The Regulatory authority will have the powers to appoint officers of certain qualifications for adjudication of arbitration, mediation or any kind of dispute resolution

    If, the allottee is not satisfied by the process or procedures  of the regulatory authority, then the allottee may proceed further with its complaint to the REAL ESTATE APPELLATE TRIBUNAL so formed .  The Appellate tribunal has the powers to adjudicate upon the disputes.

    There is provision to move for an appeal in Supreme court of India against any orders which are passed by the Appellate Tribunal within the period of ninety days, if there is any delay beyond ninety days in filling of an appeal, then the Supreme Court should be satisfied with the condonation of delay in filling of such appeal.

    CONCLUSION:- Mandatory registration of projects & real estate agents will promote fair and ethical practices within the sector. Mandatory disclosures of project details to public will ensure an environment of transparency for the consumers.

    Compulsory deposit of seventy per cent of the project collections in a separate bank account will infuse some financial discipline with the developers and also promote the timely execution of projects.

    Establishment of fast track dispute resolution mechanisms will help in expeditious clearances of disputes and creation of a real estate regulatory authority for each state, will ensure a uniform policy regime and monitoring of transactions across the country. 

    On an overall basis, this is a move in the right direction and at an opportune juncture, when the sector is facing the heat from all directions, this will definitely bring in fresh breath of air for all the stakeholders.

    The Real Estate (Regulation and Development) Bill was gathering dust since 2007 allegedly due to pressure from the powerful real estate lobby.

    Apart from setting up a regulator, the proposed law will make it mandatory for private builders to sell houses in residential projects on the basis of carpet area or built up area basis instead of vague super area basis.

    The law will not be applicable on commercial constructions. The legislation is only applicable to Residential Projects.

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