The Bombay High Court today ruled that all provisions of the Real Estate (Regulation and Development) Act, 2016 were constitutional and valid..A Division Bench of Justices Naresh Patil and Rajesh Ketkar rejected multiple petitions filed by builders and developers that challenged the validity of some of the sections of the Act..The builders had challenged Section 18 of the Act, under which they will have to return monies received with interest, if they fail to hand over possession or complete the project in a time bound manner, if the allottee wishes to withdraw from a project. It also contemplates the payment of monthly interest for the period of the delay to those allottees who chose not to withdraw..To this the Court said,.“…. in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment with interest at such rate as may be prescribed in this behalf including compensation. .If the allottee does not intend to withdraw from the project he shall be paid by the promoter interest for every month’s delay till handing over of the possession. The requirement to pay interest is not a penalty as the payment of interest is compensatory in nature in the light of the delay suffered by the allottee who has paid for his apartment but has not received possession of it. The obligation imposed on the promoter to pay interest till such time as the apartment is handed over to him is not unreasonable. The interest is merely compensation for use of money.”.Other provisions challenged included one that compelled the builder to pay compensation to buyers, if the date of handover exceeded the deadline mentioned at the time of registration under the Act by more than a year, for any reason other than an Act of God..In this regard, builders were given some room to manoeuvre, with the Court ruling that,.“In case the promoter establishes and the authority is convinced that there were compelling circumstances and reasons for the promoter in failing to complete the project during the stipulated time, the authority shall have to examine as to whether there were exceptional circumstances due to which the promoter failed to complete the project. Such an assessment has to be done by the authority on case to case basis and exercise its discretion to advance the purpose and object of RERA by balancing rights of both, the promoter and the allottee.”.There was, however, a note of caution, with the Court saying that this must not be interpreted to mean that the delay would be condoned in every case..The Court also ruled on the appointment of Judicial Members to RERA Tribunals. Section 46 of the Act, which deals with appointments, allows a bureaucrat, who has held the post of Additional Secretary, to hold the post of Judicial Member..The Court, while observing that a majority of members in any Tribunal should be judicial members, also said,.“However, one of the qualifications for appointment of a Judicial Member prescribed in Section 46(1)(b) as, “or has been a member of the Indian Legal Service and has held the post of Additional Secretary of that service or any equivalent post,” is severed and struck down.”.Finally, the Bench, while upholding the provisions of RERA said,.“RERA is not a law relating to only regulating concerns of the promoters but its object is to develop the real estate sector, particularly the incomplete projects, across the country. The problems are enormous and it’s time to take a step forward to fulfill the dream of the ‘Father of the Nation. To wipe out tears from every eye.”.Additional Solicitor General Anil Singh appeared for the Union of India, while the State of Maharashtra was represented by Advocate General Ashutosh Kumbahkoni. Senior counsel Darius Khambata assisted the court as amicus curiae..A host of Senior Counsel, such as SU Kamdar, Aspi Chenoy, Veerendra Tulzapurkar and Girish Godbole appeared for the petitioners..Read the full judgment below:
The Bombay High Court today ruled that all provisions of the Real Estate (Regulation and Development) Act, 2016 were constitutional and valid..A Division Bench of Justices Naresh Patil and Rajesh Ketkar rejected multiple petitions filed by builders and developers that challenged the validity of some of the sections of the Act..The builders had challenged Section 18 of the Act, under which they will have to return monies received with interest, if they fail to hand over possession or complete the project in a time bound manner, if the allottee wishes to withdraw from a project. It also contemplates the payment of monthly interest for the period of the delay to those allottees who chose not to withdraw..To this the Court said,.“…. in case the allottee wishes to withdraw from the project, without prejudice to any other remedy available, to return the amount received by him in respect of that apartment with interest at such rate as may be prescribed in this behalf including compensation. .If the allottee does not intend to withdraw from the project he shall be paid by the promoter interest for every month’s delay till handing over of the possession. The requirement to pay interest is not a penalty as the payment of interest is compensatory in nature in the light of the delay suffered by the allottee who has paid for his apartment but has not received possession of it. The obligation imposed on the promoter to pay interest till such time as the apartment is handed over to him is not unreasonable. The interest is merely compensation for use of money.”.Other provisions challenged included one that compelled the builder to pay compensation to buyers, if the date of handover exceeded the deadline mentioned at the time of registration under the Act by more than a year, for any reason other than an Act of God..In this regard, builders were given some room to manoeuvre, with the Court ruling that,.“In case the promoter establishes and the authority is convinced that there were compelling circumstances and reasons for the promoter in failing to complete the project during the stipulated time, the authority shall have to examine as to whether there were exceptional circumstances due to which the promoter failed to complete the project. Such an assessment has to be done by the authority on case to case basis and exercise its discretion to advance the purpose and object of RERA by balancing rights of both, the promoter and the allottee.”.There was, however, a note of caution, with the Court saying that this must not be interpreted to mean that the delay would be condoned in every case..The Court also ruled on the appointment of Judicial Members to RERA Tribunals. Section 46 of the Act, which deals with appointments, allows a bureaucrat, who has held the post of Additional Secretary, to hold the post of Judicial Member..The Court, while observing that a majority of members in any Tribunal should be judicial members, also said,.“However, one of the qualifications for appointment of a Judicial Member prescribed in Section 46(1)(b) as, “or has been a member of the Indian Legal Service and has held the post of Additional Secretary of that service or any equivalent post,” is severed and struck down.”.Finally, the Bench, while upholding the provisions of RERA said,.“RERA is not a law relating to only regulating concerns of the promoters but its object is to develop the real estate sector, particularly the incomplete projects, across the country. The problems are enormous and it’s time to take a step forward to fulfill the dream of the ‘Father of the Nation. To wipe out tears from every eye.”.Additional Solicitor General Anil Singh appeared for the Union of India, while the State of Maharashtra was represented by Advocate General Ashutosh Kumbahkoni. Senior counsel Darius Khambata assisted the court as amicus curiae..A host of Senior Counsel, such as SU Kamdar, Aspi Chenoy, Veerendra Tulzapurkar and Girish Godbole appeared for the petitioners..Read the full judgment below:
