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UP-RERA gets cracking, penalizes several builders

By Vishal Duggal & Rakesh Ranjan- 23 Feb 2021
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New Delhi (23.02.20210: The Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) is seen turning proactive in the interest of home buyers and has been firmly enforcing its rulings in recent days and months.

It has slapped hefty penalties on several errant real estate companies under Section 63 of the Real Estate (Regulation and Development) Act, 2016.

This section defines the penalty for failure to comply with orders of Authority by the promoter in the following words: “If any promoter, who fails to comply with, or contravenes any of the orders or directions of the Authority, he shall be liable to a penalty for every day during which such default continues, which may cumulatively extend up to five percent, of the estimated cost of the real estate project as determined by the Authority.”

So, the penalty can be levied on the basis of each day of default and can go up to 5% of the cost of the project which can't but deter corporate builders from pursuing their favorite habits of delaying projects playing on finely-printed legalese framed in the one-sided buyer-seller agreement.

In recent months, the UP-RERA has imposed penalties amounting to several crores on erring developers for non-compliance with its past orders issued in favor of homebuyers. It has levied penalties, among others, on Newtech Promoters & Developers Pvt Ltd, Supertech Ltd, Lucknow Development Authority, Tulsiani Construction and Developers Pvt Ltd, Antriksh Realtech Pvt Ltd, Parth Infrabuild, Radicon Infrastructure & Housing, IVR Developers, Logix Infrastructure, Harsha Associates, Parsvnath Developers, Green Bay Infrastructure, Green View Cooperative Housing Society, Quality Township, Rudra Buildwell, Buland Buildtech, Kindle Infraheights, and J.S.S. Buildcon for their failure to abide by its orders under Section 63.

The defaulting developers have been directed to deposit the penalties through a demand draft drawn in favor of the Authority within 30 days of the passage of notice under Section 63.

This might have slowly started off the process to bring order to the chaotic real estate sector.

The UP-RERA is said to have devised a mechanism where speedy proceedings are held to complete the hearing before the bench concerned of the authority in cases of violation of orders, and penalties are levied on the basis of the findings and recommendations of the bench.

Further, if a real estate firm refuses to repay the amount for which it has defaulted within the stipulated period, a recovery certificate (RC) is issued and District Magistrate is commissioned to recover the amount as arrears of land revenue.

It is to be seen whether the developers will now read the writing on the wall and ensure compliance with the order of the authority to avoid being trapped in the grinding wheels of justice.

The UP-RERA's serious efforts in attending to the interests of home buyers (which is one of the major engines of GDP growth) four years after the enactment of the Real Estate (Regulation and Development) Act, 2016, may bring confidence back among the home buyers.

Further, the courts have also become proactive in favor of home buyers which is another plus and makes the job of UP-RERA easier. In a recent ruling, the Allahabad Court has directed the district administrations to ensure that a recovery certificate issued by UP-RERA is honored by a builder "preferably within three months".

The judgment came in a case where a buyer in 2012 had booked a flat in Supertech Upcountry off the Yamuna Expressway, and the developer had promised him the possession of his unit by 2015. When the builder failed to deliver him the house even after four years, the buyer had approached the UP-RERA, which issued a recovery certificate (RC) in favor of the buyer but the builder failed to clear the dues in compliance with the RERA order. So, the buyer moved the high court that passed the said order directing the district collector to ensure the RC execution within three months.

Will district collectors across the state treat this as a precedent for the timely implementation of RERA orders?

On their part, to ensure speedier execution of RCs, RERA authorities should provide district collectors with complete information of builders’ properties such as the unsold inventory in their projects, both ongoing and completed, with details of the units tower/block/pocket-wise; area of the vacant or unutilized unencumbered land in each of the projects, and unused FAR in each of the projects. District administration should also be armed with the details of the assets and properties of the defaulting developer, including the land/plots owned by the company on which a project is yet to be launched.

It has been observed that courts have invariably upheld RERA rulings. So, the least builders are expected to do, if they fail to adhere to project completion deadlines, is to clear the dues of buyers as per recovery certificates or face the music for defying the law of the land.

(By Vishal Duggal & Rakesh Ranjan)

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