Status as on 21/08/2020

Real Estate Recovery Authority (RERA) has streamlined and disciplined the real estate sector. All information related to projects is in the public domain now and easily available. Transparency has increased significantly which has instilled confidence in buyers. 

RERA is also an effective tool for homebuyers to raise their grievances against those developers, builders, or promoters of real estate companies, who despite making assurances and despite grabbing the hard-earned money of the buyers, fail to deliver the possession of their unit or flat within the promised period of time. RERA makes sure that investment made in a real estate project does not go in vain and allows an allottee to withdraw himself and claim a refund of the entire amount deposited along with the interest from the builder and also lays down provisions to claim compensation as well, in case if the builder refuses to return the booking amount.

However, certain doubts and apprehensions have been raised in the past related to the non-compliance and lack of enforcement of the orders passed by the RERA. 

Filing of Complaint with RERA

Whenever a complaint is made by an allottee under Section 31 of the RERA Act before the RERA or the Adjudicating Officer, the same is being adjudicated and in case the default is proved, the RERA or the Adjudicating Officer, as the case may be, has powers under Section 38 and 71 of the RERA Act, to impose penalty or interest upon the builder or developer and also to compensate the allottee for the loss faced by him.

Once the RERA Authority passes such an order upon the complaint filed by the allottee, the builder has to execute the order within 45 days or within such a time period as specified in the order and provide a refund or compensation to the allottee. In case, the builder fails to enforce the order and further commits default in paying the interest or penalty or compensation, the home buyer can file for the execution of the said order passed by the RERA or the Adjudicating Officer against the builder before the same RERA Authority under Section 40 of the RERA Act. 

Issuance of Recovery Certificate (RC)

Under Section 40 the RERA Act, it is provided that, in case of non-compliance of the order passed by the RERA or the Adjudicating Officer by the builder or promoter, i.e. failure to pay the penalty or interest or compensation as directed, RERA or the Adjudicating Officer, as the case may be, shall be empowered to pass directions or order to recover the same from such builder or promoter as ‘arrears of land revenue’.

Recovery of RC

Recovery of arrears of land revenue is a process that is not given under the RERA Act and rather it is a procedure that is enumerated in the Land or Local Laws. In the case of Uttar Pradesh, the procedure to recover land revenue is given under the U.P. Revenue Code, 2006, and also in the erstwhile U.P. Zamindari Abolition and Land Reforms Act, 1950.

The order passed under Section 40 of the RERA Act is termed as ‘Recovery Certificate’ which is addressed to the District Magistrate of the concerned district and it is further directed to recover the amount, as specified in the said order, from the builder or promoter as arrears of land revenue. 

Process of Recovery of Land Revenue

The process of recovery of arrears of land revenue in Uttar Pradesh is given under Chapter XII of the U.P. Revenue Code, 2006 (and Chapter X of the erstwhile U.P. Zamindari Abolition and Land Reforms Act, 1950) For the purposes of our discussion we will be discussing the provisions under the current U.P. Revenue Code, 2006 which has now replaced the old Act of 1950.

Process of Recovery of Arrears of Land Revenue is given under Section 170 of the Code. According to Section 170, an Arrear of Land Revenue may be recovered by any one or more of the following processes, namely: 

(a) by arrest and detention of the defaulter;

(b) by attachment and sale of his movable property including agricultural produce;

(c) by attachment of any bank account or locker of the defaulter;

(d) by attachment of the land in respect of which the arrear is due;

(e) by lease or sale of the land in respect of which the arrear is due;

(f) by attachment and sale of other immovable property of the defaulter;

(g) by appointing a receiver of any property, movable or immovable, of the defaulter.

It has been further provided under Section 170 that two or more processes mentioned above may be issued and enforced simultaneously or one after the other.

One may point out at this juncture that, the process of recovery by arrest and detention of the defaulter builder or promoter should be enforced, but it is to clarify here that, the process of recovery by arrest and detention is rather used merely as a deterrent against the defaulter to pay the arrears in future without any further delay. Section 171 of the Code only prescribes a maximum arrest period of fifteen (15) days and after 15 days other procedures as given under Section 170 are to be enforced. Therefore, arrest or detention is not an effective mode of recovery and hence is rarely enforced.

For the purposes of collecting arrears of land revenue various ‘attachment proceedings’ as given under Chapter XII of the Code are carried on by the Recovery Officer under the Code, but it is the responsibility of the District Magistrate to ensure the such a recovery is made so as comply with the orders of the RERA passed under Section 40 (1) of the RERA Act.

Now in case, the District Magistrate fails to recover the amount as directed by the RERA in the Recovery Certificate under Section 40 the RERA Act, the allottee is left with no remedy under the RERA Act and it is at this juncture the entire exercise done by the allottee is rendered fruitless. 

Remedy if RC is not recovered by DM

However, even in such a scenario, allottee can ensure the compliance of the Recovery Certificate issued by the RERA. Let us see, how!

Once the District Magistrate fails to abide by the Recovery Certificate issued by the RERA, fully or partially, an allottee can write a representation addressed to the said DM explaining his grievance and praying for the compliance of the RC issued by the RERA within a specified period of time, say 2 weeks.

After 2 weeks, if the DM still fails to comply with the RC or fails to reply to the representation made by the allottee, the allottee can write a reminder to the said representation praying further for the compliance of the RC issued by the RERA within a specified period of time, say further 2 weeks.

Now, even if after 4 weeks, the DM deliberately fails to comply with the RC issued by the RERA or fails to give any reply to representation or the reminder letter of the allottee, the allottee at this stage can approach the concerned High Court by filing a Writ Petition under Article 226 of the Indian Constitution, seeking a Writ of Mandamus for a direction to the DM to complete the recovery process in compliance of the Recovery Certificate issued by the RERA in a specified period of time. 

Such a direction from the High Court shall ensure effective compliance of the Recovery Certificate issued by the RERA in a time-bound manner.

It is very important to note here that, moving a representation before the District Magistrate, prior to approaching the High Court is a very necessary and an important step and should not be skipped, as the High Court, before issuing the writ as prayed, will always ensure that before approaching the Hon’ble Court, the petitioner had earlier approached the concerned authority or not. 

Disclaimer– The above article is based on the interpretation of laws and related laws which may differ from person to person. The readers are expected to take expert opinion before replying to this article. For any clarification, please us at support@centrik.in