Power of RERA Authority to Impose Penalties on Builders

Introduction:

The Real Estate (Regulation and Development) Act, 2016 is a landmark legislation in India aimed at bringing transparency, accountability, and efficiency to the real estate sector. One of the critical aspects of RERA is its empowerment of the Real Estate Regulatory Authority (RERA) to impose penalties on builders and promoters for various non-compliances. This article explores the powers of RERA to impose penalties, the relevant provisions of the Act, and key judicial pronouncements that have shaped its enforcement.

 

Key Provisions of RERA Regarding Penalties:

  1. Registration of Projects (Section 3)- Builders must register their real estate projects with RERA before advertising, marketing, booking, selling, or offering them for sale. Non-registration can result in a penalty of up to 10% of the estimated cost of the project.

 

  1. False Information (Section 4)- If a builder provides false information or contravenes the provisions of registration, they can be penalized up to 5% of the estimated cost of the project.

 

  1. Non-compliance with Orders (Section 38 or 63)- Builders failing to comply with the orders, decisions, or directions of RERA can face daily penalties up to 5% of the project cost until compliance is achieved.

 

  1. Failure to Complete Projects (Section 61)- If builders fail to complete projects as per the terms agreed upon or within the timeline, they may be liable to pay a penalty up to 10% of the estimated project cost.

 

  1. Compensation for Loss (Section 72)- Builders who fail to hand over possession of the property or complete the project within the stipulated time are liable to pay compensation to the buyer, which can include penalties and interest.

 

Judicial Pronouncements:

  • Pioneer Urban Land and Infrastructure Ltd. vs. Govindan Raghavan (2019): The Supreme Court ruled that the builder must adhere to the terms of the agreement and deliver the project on time. Non-compliance with these terms can result in significant penalties and compensation to the aggrieved buyers.

 

  • Neelkamal Realtors Suburban Pvt. Ltd. vs. Union of India (2017): The Bombay High Court upheld the constitutional validity of RERA, emphasizing that the Act aims to protect the interests of consumers and penalize errant builders to ensure timely delivery of projects and transparency in transactions.

 

  • M/S. Imperia Structures Ltd. vs. Anil Patni & Another (2020): The Supreme Court held that RERA’s provisions override other laws concerning real estate projects, reaffirming that builders must comply with RERA regulations and can be penalized for defaults, ensuring consumer protection.

 

Conclusion:

In conclusion, the power of RERA to impose penalties on builders is a significant step towards regulating the real estate sector in India. It ensures accountability, transparency, and protection of consumer interests. While challenges in enforcement and awareness persist, the robust framework provided by RERA and supported by judicial pronouncements holds the promise of a more transparent and fair real estate market in India.

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