Bombay High Court starts hearing pleas against the RERA Act
October 31, 2017Recently, the Bombay High Court starts to hear a group of petitions challenging the constitutional validity of the central legislation “Real Estate (Regulation and Development) Act”. The developers have questioned the retroactive applicability of the laws on previous contractual agreements in pending projects and the lack of a judicial body to head the authority among other issues that perplex them.
The Real Estate (Regulation and Development) Act, 2016 was enacted in view to bring “transparency and efficiency” in the real estate sector. Post-enactment of the central legislation the builders started filing petitions in the courts of different states across the country. Dismissing a transfer plea filed by the government, the top court in September entrusted Bombay High Court to be the first to decide on RERA. The Bombay High Court division bench of Justice Naresh Patil and Justice R G Ketkar will be hearing more than nine petitions, including pleas by giants of real estate sector developers, several interventions by individuals and activists groups.
Senior counsel Aspi Chinoy, appearing on behalf of DB Realty, argued that the retroactive applicability of the RERA Act would hinder in imparting the earlier contractual obligations in pending housing projects.
Meanwhile, Senior advocate Virendra Tulzapurkar, appearing on behalf of another petitioner, argued "There has to be a judicial mind if there is an adjudicatory role being played by the authority under RERA as wherever a person performs a judicial function it is mandatory to have a judicial mind.'' He also marked that real estate regulatory authority's role by the Centre is marked to be 'adjudicatory' whereas the state marked it to be 'regulatory'. When the Act has taken away the jurisdiction of the civil court, the authority discharging the adjudicatory function has to be headed by a judicial mind, he added.
Moreover, Advocate Girish Godbole, appearing in a petition by DB Realty, which challenged the constitutional validity of the RERA Act, including provisions that makes the Act retroactive, which implies that it is applicable on-going real estate projects and mandatory deposit of 70% of the amount collected from those who have booked flats in a separate account and provisions limiting the deadline extension of the project time to a year. He argued that the established contractual rights in respect of on-going projects are being affected by the onerous provisions of the Act, which violates the right to freedom of trade guaranteed under Article 19 (1) (g) of the Constitution. He argued that the impugned provision is "arbitrary'' and perplexing "two parallel dispute resolution mechanisms'' under the Act, Real Estate Regulatory Authority, and the Adjudicating Officer, without drawing a difference in their mutually exclusive jurisdictions.
The court observed that the Act provided for complaints being made to each "as the case may be''. The Act says the adjudicatory officer being appointed can have to be a "judicial officer'' who has been a district judge and can deal with issues or disputes under four sections of the Act. He pointed to the "wide powers of delegation entrusted on the authority'' and how it can also empower a non-qualified person to entertain complaints. The court objected to how even "voluntary consumer associations" can also file complaints under RERA and said "Section 15 of the Act, which saddles the promoter with the precondition of obtaining the consent of 2/3rd allottees prior to transferring the promoter's majority interest in the real estate project, ought to be quashed.''
The court scheduled the next hearing for 31st October.
The Real Estate (Regulation and Development) Act, 2016 was enacted in view to bring “transparency and efficiency” in the real estate sector. Post-enactment of the central legislation the builders started filing petitions in the courts of different states across the country. Dismissing a transfer plea filed by the government, the top court in September entrusted Bombay High Court to be the first to decide on RERA. The Bombay High Court division bench of Justice Naresh Patil and Justice R G Ketkar will be hearing more than nine petitions, including pleas by giants of real estate sector developers, several interventions by individuals and activists groups.
Senior counsel Aspi Chinoy, appearing on behalf of DB Realty, argued that the retroactive applicability of the RERA Act would hinder in imparting the earlier contractual obligations in pending housing projects.
Meanwhile, Senior advocate Virendra Tulzapurkar, appearing on behalf of another petitioner, argued "There has to be a judicial mind if there is an adjudicatory role being played by the authority under RERA as wherever a person performs a judicial function it is mandatory to have a judicial mind.'' He also marked that real estate regulatory authority's role by the Centre is marked to be 'adjudicatory' whereas the state marked it to be 'regulatory'. When the Act has taken away the jurisdiction of the civil court, the authority discharging the adjudicatory function has to be headed by a judicial mind, he added.
Moreover, Advocate Girish Godbole, appearing in a petition by DB Realty, which challenged the constitutional validity of the RERA Act, including provisions that makes the Act retroactive, which implies that it is applicable on-going real estate projects and mandatory deposit of 70% of the amount collected from those who have booked flats in a separate account and provisions limiting the deadline extension of the project time to a year. He argued that the established contractual rights in respect of on-going projects are being affected by the onerous provisions of the Act, which violates the right to freedom of trade guaranteed under Article 19 (1) (g) of the Constitution. He argued that the impugned provision is "arbitrary'' and perplexing "two parallel dispute resolution mechanisms'' under the Act, Real Estate Regulatory Authority, and the Adjudicating Officer, without drawing a difference in their mutually exclusive jurisdictions.
The court observed that the Act provided for complaints being made to each "as the case may be''. The Act says the adjudicatory officer being appointed can have to be a "judicial officer'' who has been a district judge and can deal with issues or disputes under four sections of the Act. He pointed to the "wide powers of delegation entrusted on the authority'' and how it can also empower a non-qualified person to entertain complaints. The court objected to how even "voluntary consumer associations" can also file complaints under RERA and said "Section 15 of the Act, which saddles the promoter with the precondition of obtaining the consent of 2/3rd allottees prior to transferring the promoter's majority interest in the real estate project, ought to be quashed.''
The court scheduled the next hearing for 31st October.
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