Analysis on recent RERA orders against builders


The intangible real estate industry is the most capital-intensive industry and the most volatile industry. Any change in government policy directly or indirectly, affects the industry in a positive or negative way. In view of the rapid urbanization development in the country, it has become extremely important to keep an eye on the industry. The industry should be beneficial to all its stakeholders and not just to the developer. The real estate industry was acting more haphazardly, where the developer was unable to live up to its promise of project quality and delivery. Due to this the customer had to face many problems. Confidence differences between stakeholders were observed due to such behaviour of the developer. Since many other industries are dependent on the real estate industry, it was extremely important to resolve this issue. For this, the Government of India came up with the RERA bill, which imposed some restrictions and scrutiny on all stakeholders of the industry. This study is done to analyse the act and suggest some changes that can be implemented to make the system more business friendly and efficient.

What is RERA?

The subsequent act of the Real Estate Sector i.e., the Real Estate (Regulation and Development) Act, 2016 is witnessing major consolidation mainly due to financial constraints faced by small and medium-sized developers. Such consolidation results in developers having to exit their existing projects or enter in collaboration with large established developers to complete such projects. Therefore, in the present scenario, it is of utmost importance for the industry to know the current legal system under RERA with new promoters or promoters on the ongoing projects from existing promoters or during the process of enforcing their protection from lenders.

Finding and Analysis

• 34 states / UTs have notified the rules under RERA

According to the Ministry of Housing and Urban Affairs, 34 states / UTs have notified the rules under RERA by 09 January 2021. The process of notifying the rules is going on in Nagaland, while West Bengal has enacted its own law which has been challenged before the Supreme Court. A total of 30 states / UTs have established the Real Estate Regulatory Authority.

Jurisdiction of RERA was clarified by Punjab RERA

Bikramjit Singh Vs., Messrs. HP Singh, Punjab RERA held that RERA does not extend to projects whose application has been rejected by the Authority. Further, it was also stated that complaints against projects not registered with RERA will not be entertained by the authority. In this judgment, the authority also clarified the consistency of a complaint in cases where a breach occurred before the Act came into force.

• Housing projects should be registered only if the area is more than 500 square meters or 'if the number of flats is more than 8

According to the RERA Act, the properties proposed to be developed, the land does not exceed five hundred square meters or the number of proposed apartments to be developed, does not exceed the eight requirements to register the project with RERA.

• RERA is applicable to state run entities too

According to the RERA Act, the developer is not allowed to accept more than 10% of the cost without executing or receiving the sale agreement that has been registered. The argument given by the respondent was that it is a statutory development authority, it is guided by the Rajasthan Reform Trust (Settlement of Urban Land) Rules, 1974. Further, it was added that no special requirements were laid down for implementing the terms of the auction. A Sale Agreement. Also, the plot has been auctioned as a basis.

• Delay in possession includes payment and return of interest.

A complaint was filed against the builder for the delay in granting possession of the property in Sukhbir Singh v. MVL Limited. In that case, RERA also stated that according to him the remedy would be the return of the money paid by the complainant with interest as per the prescribed rate. However, the matter was being dealt with by SEBI and SAT.

• The constitutional validity of the RERA Act was challenged in the Bombay HC

The builders filed a case against the Union of India, challenging the constitutional validity of various provisions of the RERA Act, Maharashtra RERA rules such as provisions to prevent delays in possession, arbitrary interest on builders, etc. The Bombay High Court struck down a qualification for appointment of a judicial member as laid down in section 46 (1) (b) of the Act.


The Indian real estate sector was operating in a very heterogeneous and unorganized manner before 2016. It was RERA that had the ability to clean up the region and create a much more organized sector that could become the driver of the Indian economy. With the government’s goal of “HOUSE TO EVERY INDIAN” by 2022, it was necessary that some form of discipline be injected into the real estate sector to help the government fulfil the dream of giving every Indian a home. Even from the point of view of the developer this act was necessary so that they complete the projects on time and do not face any judicial difficulties and become more agile before starting the projects. There is an advantage for the buyer as this new act has become a trust bridge between the buyer and the developer. But there are some issues that need attention and the scope of this act should also be revised as it can become more business friendly for the sector.

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