Bombay High Court upholds validity of the RERA Act

The Bombay High Court, on Wednesday, upheld the constitutional validity of Real Estate (Regulation and Development) Act, 2016. The Act seeks to protect the home buyers by providing them the right to claim compensation from the builders for the delay in possession of flats. The Act also provides for a system of mandatory registration of the promoters and builders under the state level regulatory authority. Several builders filed petitions before various high courts of Bombay, Nagpur, Aurangabad, Bangalore, and Jabalpur challenging the validity of the provisions of the RERA Act. The government of India also filed a transfer petition in the Supreme Court, asking for clubbing of all such petitions filed in various High Courts to be heard by the Supreme Court. However, the Apex Court directed the matter to be heard only by the Bombay High Court and ordered for a stay of proceedings in other High Courts. The court also issued a direction that the said matter should be disposed of within a period of two months. The constitutional validity of proviso to section 3(1), 3(2)(a), explanation to section 3, section 4(2)(I)(c), 4(2)(I)(d), 5(3), first proviso to section 6 and sections 7,8,18,22,38,40,59,60,61,63,64 of the Real Estate (Regulation and Development) Act, 2016 was upheld by a bench of Justice Naresh Patil and Justice Rajesh Ketkar of the Bombay High Court. The court also provided a sense of relief to the builders by granting them an additional extension period above the stipulated period of one year to complete the projects undertaken by them. However, the court also clarified that the permission to grant an additional period to the builders can be given by the Authority only in exceptional circumstances where the delay was for a reason beyond the control and such extension has to be granted on a & lsquo case to case' basis. The bench also struck down section 46(1)(b) of the Act that laid down the conditions for the constitution of the Real Estate Appellant Tribunal. The provision provided that the judicial members of the Tribunal should have served as an additional secretary to the government besides having been a judicial officer. The court clarified that the Appellant Tribunal must have a majority of its members as judicial officers. The Real Estate (Regulation and Development) Act came into effect on May 1, 2017 after which other States were also asked to prepare their rules in accordance with RERA. The High Court, while passing the order also stressed on the implementation of the Act and held that the main object of the Act is not just to regulate the acts of builders and promoters but also to develop the real estate sector by the completion of thousands of pending projects. This Act also aims to provide a relief to the plight of home buyers who have invested in these incomplete projects.