Bombay HC quashes petitions challenging constitutional validity of RERA
MUMBAI: The Bombay High Court on Wednesday upheld the validity of the Real Estate (Regulation and Development) Act (RERA), saying its objective is to develop the real estate sector and is essential to protect the interest of flat buyers across the country.
“RERA is not a law relating to only regulatory control the promoters (developers), but its objective is to develop the real estate sector, particularly the incomplete projects across the country. It is also crucial to protect the interest of flat buyers across the country,” the bench said.
A bench of Justices Naresh Patil and Rajesh Ketkar pronounced its judgment on a bunch of petitions filed by real estate developers and individual plot owners, all challenging the constitutional validity of the Act that was brought into effect earlier this year.
The petitions had claimed that the Act, that mandates that all developers register themselves under a common regulatory authority, and the constitution of a state-level authority for its implementation were arbitrary and therefore unconstitutional.
The act allows buyers to claim compensation for delay in possession and envisages cancellation of a developer’s registration in case the developer fails to complete the project within the stipulated deadline.
“The problems are enormous. It’s time to take a step forward to fulfill dreams of the Father of the Nation, Mahatma Gandhi, to wipe every tear from every eye,” Justice Patil said.
The bench, headed by Justice Patil, however, permitted the state-level RERA authority and the Appellate Tribunal to consider delays on a case-to-case basis, and not to cancel projects or developers’ registration in cases where the delay was caused due to “exceptional and compelling circumstances”.
Most of the developers had challenged a provision of ‘force majeure or a natural disaster’, where any extension beyond a year for completion of the project would have led to penalties.
The Centre and the state had vehemently defended the Act and justified the strict provisions by arguing that the same was meant to protect buyers and to rein in rogue developers.
The HC did not interfere with the composition of the state-level authority, but it ruled that the tribunal must be headed by a judicial officer and not a bureaucrat, or a member of the Indian legal services, and that majority of the members of such tribunal must be officers or members of the judiciary.
While the bench concurred with the state and the Union government's arguments, it said that the authorities must also closely monitor the implementation of the Act.
"We are conscious of the fact that the actual implementation of RERA needs to be closely monitored in the years to come," the bench said.
In September, after several petitions challenging RERA were filed in high courts across the country, the Supreme Court stayed the proceedings in other courts and suggested that the Bombay High Court hear its RERA cases first.
Other courts should wait for the Bombay High Court’s decision before hearing RERA-related matters, it said, while directing the high court here to expedite the hearings.