Status as on 18/06/2019
The 1st set of laws to reform and regulate the real estate sector i.e. Real Estate (Regulations & development) Act, 2016 (referred as RERA) was implemented from 01/05/2017. And since then thousands of orders have been passed directing the parties to-
- Pay the amount with interest within specified time limit
- Pay the interest for delayed period and provide possession
- Pay the compensation and/or interest
Now the biggest practical difficulty is to execute the above orders. Some States have started the process for execution of order, but some of the States have not even started the execution of orders. Lets understand the legal right of RERA to execution of orders.
Legal Analysis
The power of execution of orders has been conferred in section 40 of RERA Act which reads as:
(1) If a promoter or an allottee or a real estate agent, as the case may be, fails to pay any interest or penalty or compensation imposed on him, by the adjudicating officer or the Regulatory Authority or the Appellate Authority, as the case may be, under this Act or the rules and regulations made thereunder, it shall be recoverable from such promoter or allottee or real estate agent, in such manner as may be prescribed as an arrears of land revenue.
(2) If any adjudicating officer or the Regulatory Authority or the Appellate Tribunal, as the case may be, issues any order or directs any person to do any act, or refrain from doing any act, which it is empowered to do under this Act or the rules or regulations made thereunder, then in case of failure by any person to comply with such order or direction, the same shall be enforced, in such manner as may be prescribed.
If we read the section literally, then only interest or penalty or compensation can be recovered. However, we assume this would be a clerical mistake. Further as above, the said amount can only be recovered as arrears of Land revenue. Every State has its own Land Revenue Act.
RERA authority on filing of application verified the order with evidence and issue recovery certificate (RC) to jurisdictional District/Revenue Collector/Magistrate. RC is then forwarded to Jurisdictional Tehsildar or related officer.
However there are many practical difficulty to reach the final result
- RERA takes time to issue RC due to verification of documents and hearing to opposite party.
- Due to high nos. of orders which are due to execution, the resources at RERA and Magistrate office are not sufficient to take on speedy level.
- There is confusion regarding the jurisdiction of whether the location of project shall be deciding the jurisdiction of Revenue Collector Or the location of the registered office/ corporate office shall be deciding point.
- It takes time to travel the RC from Revenue collector to Tehsil level which delays the outcome.
- There is no specific time- limit prescribed under the Land Revenue Act to implement the order.
- The opposite party may file appeal against order to stay the recovery which would stop the process.
- In some cases, if the company is in insolvency proceedings, then recovery would be limited to filing the claim. Further, since the RC take long time to reach at the Tehsil level, by that time the assets of the company may be decreased.
From the above, we are of the opinion that the RERA should be given more powers and execution system should be improved to attain the ultimate purpose of RERA Act. Like Insolvency and Bankruptcy Code (IBC), if the default is proved then either default shall be removed right there or company has to face the insolvency proceedings.
Conclusion – From the above discussion, since there are various difficulties in getting the order executed. At this point of time, the orders may be executed through RERA and also one can approach NCLT under IBC Law depending upon the facts and circumstances. For more information please reach the writer at amarpal@centrik.in
Disclaimer – The above views/opinions are based on the interpretation of laws and practical experience which may change from person to person. The readers are required to contact at rera@centrik.in to the expert before relying on the above article.
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