The Real Estate (Regulation & Development) Act, 2016 was enacted to promote transparency, accountability, and efficiency in the Real Estate Sector. It provided a platform mainly to flat owners to raise voices against builders/developers who either fail to keep their words or try to deceive the flat owners in some way or the other. Under the said Act, the Maharashtra Government appointed authority viz. Maharashtra Real Estate Regulatory Authority (‘MAHA RERA’) as well as MAHA RERA Appellate Authority. The said authority came into existence with effect from 01.05.2017. Earlier, the flat owners had to either file a civil suit or file a complaint under the Consumer Protection Act, 1986. Looking at the huge pendency as well as other factors such as court fees, legal fees etc. the flat owners were reluctant to proceed against the erring builders/developers. However, upon the formation of MAHA RERA, this scenario was changed drastically as several complaints came to be filed with MAHA RERA. The following table will throw some light on using this forum by the aggrieved flat owners.
MAHA RERAgrants immediate relief to the flat owners bypassing orders granting compensation in the form of interest on the amounts paid by them for the delayed possession as also permitting the flat owners from withdrawing from the project by ordering a refund of the entire amount paid with appropriate interest.
PROVISIONS UNDER MAHA RERA
Rule 5 (4) of MAHA RERA Rules, 2017 provides for a timeline for the refund of the amount payable by promoters to the allottees. The said rule binds the promoter to pay the amount due within 30 days from the date on which such refund along with applicable interest and compensation becomes due and payable. Failing to comply with RERA’s rules is a criminal offence. However, no promoter complies with the said rule. The Act provides for the imposition of penalties for non-compliance with the orders or directions of the Authority. Such provisions are contained in Sections 63 to 64 of the RERA Act. Section 63 of the RERA Act provides penalties for failure to comply with orders of Authority by the promoter. Section 64 of the RERA Act provides penalties for failing to comply with the order of the RERA Appellate Tribunal. However, these provisions do not affect the erring builders/developers.
The MAHA RERA’s Rule 3 (Recovery of Interest, Penalty, Compensation, etc.)Rules, 2017 says that according to the Maharashtra Land Revenue Code, 1966, any interest, penalty, or compensation imposed on a promoter or an allottee shall be recovered in the same way as land revenue. Rule 4 of the said rules provide for the manner of implementation of the order, direction, or decision of the adjudicating officer, the Authority or Appellate Tribunal. Section 40(1)of the Act provides for recovery of the amount as arrears of land revenue in case of failure to pay any interest, penalty, compensation imposed by the Authority.
EFFECT OF NON-IMPLEMENTATION OF ORDERS
In spite of these stringent provisions provided in the Act, the orders are not being implemented by the builders/developers. If the builder/developer fails to pay the amount along with interest, compensation etc., the flat owner has no option other than to approach the authority seeking directions to the builder/developer. The Authority taking recourse to the provisions of Section 40 issues Recovery Warrants against the builders/developers requesting them to recover the amount as arrears of land revenue. However, it is an admitted fact that the District Collectors fail to execute such recovery warrants. The District Collectors are returning the Recovery Warrants to the MAHA RERA expressing their inability to execute such warrants for want of details of property held by the builder/developers in their names. Thus, the orders passed by MAHA RERA remain unimplemented and ultimately, the flat owners suffer in spite of holding orders for a refund of the amounts, interest, compensation etc.
The Thane district collector received a recovery warrant from MAHA RERA against a developer. The warrant was obtained after the complaining buyers approached MAHA RERA on many occasions, requesting that they carry out an order relating to a return of money. The collector will seize the property under the warrant, and if the developer does not pay the sum, the property will be auctioned. The MAHA RERA has ordered the seizure and sale of properties of builders in at least 253 cases in order to reimburse flat purchasers who have not yet received ownership. In another instance, when Firoz Tinwala and Mustafa Firoz Tinwala, the developers of Ashrafi Tow, refused to comply with his order to repay customers, BD Kapadnis, a member of MAHA RERAissueda recovery warrant upon them. The developers were subsequently served with a Show Cause Notice under Section 63 of RERA, asking them to explain why they should not face a penalty. In case the Recovery Warrant is returned by the District Collector to MAHA RERA, no further mechanism is provided in the Act. The situation of the flat owner remains the same. Thus, the entire purpose of introducing this mechanism fails and the purpose of the Act so far as protection of the rights of the flat owner is defeated. The one-stop forum is not of any help to the buyers in the way it was intended. The consumers get nothing from it; in fact, they continue to suffer, while the developers get away with it. Non-implementation of orders defeats the very purpose of the formation of the authority under the RERA Act.
In order to overcome this difficulty, it is high time that the MAHA RERA take recourse to the provisions contained in Section 7 of the RERA Act which empowers the authority to revoke the registration of the builder/developer. Section 7(4)of the act provides that the authority upon revocation of the registration shall facilitate the remaining work to be carried out in accordance with the provisions of Section 8. Under Section 8, following the expiration or revocation of the registration, the Authority may consult with the appropriate government to take whatever action it seems appropriate, including completing the remaining development activities by the competent authorities, the allottees’ association, or in any other way decided by the mandate. This will provide some relief to the flat owners.
The Government may also think of amending the RERA Act by inserting a provision to compel the builders/developers to deposit a sum equal to 10% of the estimated sale value of the flats in the project with MAHA RERA while registering their respective projects. Whenever any order is passed by MAHA RERA ordering a refund of the amount, along with interest or payment of compensation, such payment can be made by MAHA RERA itself from such deposit. This provision will enable the flat owners to get their money back immediately. The builder/developer can be compelled to keep the deposit equal to 10% intact with MAHA RERA. This amount can be released by MAHA RERA to the complainant upon expiry of the appeal filing period or after the expiry of the period granted by MAHA RERA for the implementation of the order passed by it.
Author(s) Name: Shreya Kasale (Asmita College of Law, Mumbai University)