Aggrieved Homebuyers Can Approach NCDRC And State RERA: Delhi HC

The Delhi High Court (HC) has ruled that aggrieved homebuyers can take their cases to both, the state’s real estate regulatory authority as well as the National Consumer Disputes Redressal Commission (NCDRC). This comes as a huge relief for many.

Waiting for the possession of his Noida-based property for over three years, Kapil Wadhwa, was in two minds as to whom to approach to make sure that the defaulting property development group handed over his unit with the penalty that was due to him. Wadhwa is part of many big and small groups of aggrieved homebuyers, all of whom have approached various advocates to represent their case. He was in half a mind to approach Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) but others advised him to follow up with a single institution only. Hence, Wadhwa, like many others have so far, approached only the NCDRC.

In fact, many builders sought relief on the basis that pending cases against them should be put to rest in the NCDRC in case homebuyers had registered complaints against them in RERA. However, in what comes as a big win for buyers, Justice Prateek Jalan has dismissed 62 such petitions from developers. It is important to note that RERA allows homebuyers to withdraw previous/ pending cases that come under the Consumer Protection Act (CPA) and the same argument was taken up by developers. However, Delhi HC has said that the verdicts of both, NCDRC and RERA are ‘concurrent’ and that in previous similar cases, the Supreme Court (SC) and the NCDRC have upheld that for buyers’ benefit, cases can run parallelly.

Problems faced by RERA so far

Aside from the fact that the basic infrastructure for the functioning of the RERA is missing in many states, there are several other challenges in its way to become a success.  

“The industry has seen consolidation and enhanced lending after the arrival of the RERA. The government has encouraged the development of affordable housing by various schemes for the end-users. However, the cost of receiving permissions is still very high and the same needs to be rationalised for effective policy implementation,” says Ashish Raheja, managing director, Raheja Universal.

The law also makes it absolutely complicated for a newcomer to enter the market.

“The other downside of the law is that a young entrepreneur, who wishes to enter this business, will find it difficult. You have to be an organised player. You just cannot start and build your way up; you have to build something before you start, in terms of finance, compliance and your team. The law has made everything more challenging,” says Surendra Hiranandani, founder-director, House of Hiranandani.

A joint survey by Grant Thornton and industry body FICCI that was conducted to gauge how prepared India’s developers were to adapt to the new law reveals that 45 per cent of the participants had no formal process to comply with the rules. Only 11 per cent of participants are able to monitor compliance in their housing projects.  

The study also shows that about 78 per cent of the senior management is still hooked on to using common methods such as excel-based management-information system (MIS) reporting to review the compliance while 26 per cent prefer meetings.

Recently, the Supreme Court also directed 'recalcitrant' states and union territories to constitute, within three months, real estate regulatory authorities and tribunals, if they have already not done so. 

The positive note

In all this, it is important to note that Rera has reinstated buyer’s faith in the property market. It should also not be forgotten that the teething troubles that plague the initial years of any new structural reform do exist for the regulatory body. In some cases, states have not been able to set up the online portal they are supposed to for the benefit of the homebuyers. The Centre, in a report to the Supreme Court (SC), has said that altogether 42,726 housing projects and 33,906 real estate agents have been registered with the regulating authority. More than 20,000 complaints were also resolved up till now.

The industry believes it may be too early to pass a verdict against the law.

“The RERA has brought an ample amount of semblance and discipline in the last two years. With the advent of the RERA, the ground realities, issues, problems and challenges facing the sector have been addressed in a dexterous manner,” agrees Praveen Jain, vice-chairman, NAREDCO.

The Grant Thornton-FICCI study also reveals 41 per cent of all participants feel that there have been major changes in the customer-vendor agreements since the law came into practice.

About 56 per cent of the participants who took part in the survey said they tried to improve their skill sets using trainings after the RERA. Another 37 per cent say they have outsourced the project management to a third party for better clarity.

In order to improve customer experience after the law came into force, 78 per cent participants have started training their staff while 11 per cent have strategically hired professional agencies to manage customer relations. Only seven per cent respondents have revamped the customer interface.

 Progress of RERA in the Indian states and Union Territories

Andhra Pradesh: The APRERA has 328 registered projects and 48 agents as of May 2019. The online portal is fully functional. As of May 2019, the APRERA has rejected the registration of 20 projects. The APRERA has received an award for exemplary online service from the government.

Assam: The state recently notified the rules.

Bihar: The Bihar RERA online portal is also up and running. As of February 2019, 51 builders were served notices and it was decided that a penalty of Rs 10 lakh would be levied for violating the rules. Details about defaulters whose bank accounts have been frozen are displayed on the website.

Chhattisgarh: The state has received 847 applications for project registration. The portal could be termed a work-in-progress as yet.  

Goa: The Goa RERA has gone online, but the information is scanty.

Gujarat: The online portal is fully functional. As of May, 2,687 residential projects and 1,038 affordable housing projects have been registered. The portal gives a city-wise break-up of registered projects. Gujarat has the second-highest project registrations.

Haryana: About 301 projects and 714 agents have been registered with the HRERA. This is also one of the most pro-active regulators in the country.

Himachal Pradesh: The HPRERA has 29 registered projects on its portal. The authority has yet to get a chairman though.

Karnataka: About 2,551 projects and 1,724 promoters/agents have been registered with the authority. However, there are issues with respect to finding copies of complaint on the portal.

Kerala: Kerala has notified its rules, but doesn’t have an operational portal. Kerala had got its state regulator in 2017, but it was repealed through an ordinance citing dilution of the Central Act.

Madhya Pradesh: The state has a fully-functional RERA. A total of 2,180 projects and 541 agents are registered on the portal. The MPRERA website also claims to have disposed 1,845 complaints so far.

Maharashtra: The MahaRERA has been lauded by industry experts and stakeholders as being the most proactive among state regulators with the highest number of project registrations. As of May, 79 per cent of projects across Maharashtra have been registered. As for real estate agents and promoters, 99.7 per cent of them are now RERA-registered, the highest in the country. The website claims that the authority has also addressed 64 per cent of all the grievances received so far.

Odisha: The state has no online portal in place so far.

Punjab: The fully functional Punjab RERA portal has 678 registered projects and 1,026 agents.

Rajasthan: So far, 984 projects and 870 promoters/agents have been registered with the Rajasthan RERA. In March 2019, the chairman was appointed and the appellate tribunal was set up.

Tamil Nadu: The authority boasts fourth highest number of project registrations and has a fully functional portal. Year-wise project registration information is available on the official website. About 965 projects have been registered so far.

Uttarakhand: The fully functionally UKRERA has 235 registered projects so far. Information regarding rejection of registration application has also been displayed online.

Uttar Pradesh: The UPRERA has a functional website, and has received about 4,850 complaints. It has also set up three benches to address the complaints in a timely manner. The UPRERA is also planning to take up abandoned projects for the sake of homebuyers.

West Bengal: Due to a beef between the state and the Centre, rules have not been notified here. The state has its own regulator by the name, the Housing Industry Regulatory Authority (HIRA).

Sikkim, Meghalaya, Manipur, Mizoram, Tripura, Telangana, Arunachal Pradesh, Arunachal Pradesh and Nagaland have not notified the rules yet.

Union Territories

Andaman & Nicobar: On the Tamil Nadu Real Estate Regulatory Authority portal, which is also the platform for managing projects in this union territory, only one Andaman & Nicobar-based project has been registered till May this year.

Chandigarh: The Chandigarh RERA portal is operational, but lacks information. Records pertaining to project registration and defaulters are missing.

Dadra & Nagar and Daman & Diu: These two UTs fall under the Maharashtra RERA, and have a fully operational RERA by virtue of that.

Delhi: Rules notified have been and authorities have been formed here. But, the RERA portal needs update.

Recently, the Delhi High Court issued a notice to RERA and the Delhi Development Authority (DDA) on the basis of a Public Interest Litigation (PIL) that alleged violations of RERA rules. The petitioner had claimed that the DDA had not registered the DDA Housing Scheme 2017 and 2019 with Delhi RERA. Neither did it provide any completion commencement certificate and occupancy certificate, the petition took note. It has also sought action against DDA for this violation. 

Lakshadweep: Rules have been notified here, but there is no dedicated portal as yet.

Puducherry: Here, too, rules have been notified here, but there is no dedicated portal as yet.

 It has been two years since the Real Estate (Regulation & Development) Act, 2016, came into force — the various provisions of the law became effective on May 1, 2017. Work is still on to develop the infrastructure required for the effective functioning of Rera which is aimed at purging India’s real estate sector of its many ills.