Taking stock of the progress of the implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA), the Parliamentary Committee on Subordinate Legislation that looks into the Real Estate Act, in its report submitted in the Lok Sabha on Thursday expressed concern over issues such as delay in notifying rules by various states, establishment of RERA and Real Estate Appellate Tribunal (REAT), dilution in rules and registration of ongoing projects, among others. The committee that presented its 21st report to the Lok Sabha also made recommendations in line with the provisions of the Act asking the Ministry of Housing and Urban Poverty Alleviation to ensure that rules are framed and implemented by states and in case of any dilution in rules by any state, they should be amended or be re-notified.
Even as the Real Estate (Regulation and Development) Act, 2016, received the Presidential assent in March 2016 and rules related to the same were supposed to be notified by states/UTs for their respective jurisdictions by October 2016, the progress has been limited. The Committee in its report stated that as of April 26, 2017, only 12 states/UTs notified the rules, while draft rules were prepared by 16 states/UTs. The report also mentioned that four states — Sikkim, Arunachal Pradesh, Meghalaya and Nagaland — have constitutional issues, whereas three others — Manipur, West Bengal and Goa — have not provided any information with relation to the Act.
Delay in framing of rules and establishment of RERA and REAT
On the delay in framing the rules, the committee expressed its dismay over the fact that even after a lapse of one year and two months, many states have not notified the rules. It further said that any delay in framing of rules thereunder will have the effect of depriving the public legitimate rights intended to be conferred on them under the provision of the Act.
“The committee, therefore, recommends that the progress made by states particularly the seven states (Manipur, WB, Goa, Sikkim, Arunachal Pradesh, Meghalaya and Nagaland) be monitored regularly and the ministry should ensure that all the concerned states frame and implement the rules within the said time-frame as contemplated under the Act.”
Section 20(1) of the Real Estate Act 2016 states that the appropriate government shall within a period of one year from the date of coming into force of the Act, by notification, establish an authority to be known as the Real Estate Regulatory Authority. Further Section 43(1) of the Act calls for establishment of Real Estate Appellate Tribunal within the same time frame.
On the issue that many states have not established RERA and REAT within the stipulated time-frame, the committee recommended that the ministry should give a time-bound target to the concerned states/UTs for the establishment of RERA and REAT without any further delay. It said that till such time, “These states should appoint an interim Authority or appoint the secretary of the department dealing with housing as per Section 20(1) of the Act.” Similarly, it called for appointment of interim REAT or delegate the powers to any existing tribunal already functioning in the state.
Issue of dilution of rules
Another issue that has been taken up by the committee is deviation in rules notified by some states. The committee noted that certain rules notified by some of the states are not in consonance with the spirit of the Act and have resulted in dilution of the effectiveness of the Act and it observed that such works have been skewed in favour of builders, thereby hurting the consumer interest such as definition of ongoing project, penalties for non-compliance with the Act and dealing with structural defects, among others.
The report said: “The committee is distressed to note that the ministry have not clearly spelt out the ways and means in this regard. The committee, while recognising that each state have their respective development laws, sanctioning procedures, and other related unique issues, recommend that the Ministry of Urban Poverty Alleviation should strictly instruct the states to either amend their rules or re-notify them in line with the letter and spirit of the Act.”
While the Act says that a Central Advisory Council has to be established to advise and recommend the Central government on major question of policy and protection of consumer interests to foster growth and development of the realty sector, the committee expressed its unhappiness over the lackadaisical attitude of the ministry. It said: “The committee, therefore, strongly emphasise the ministry to take urgent steps to constitute the Central Advisory Council under the Act so that the functions under Section 42 of the Act can be taken forward by the Council.”
Registration of ongoing projects
While the RERA Act says that the ongoing and underconstruction projects are required to be registered with the Authority and are thereby supposed to come under the regulator’s ambit, it also specifies that the promoters of projects that have not received the completion certificate prior to the commencement of the Act should also get the project registered with the regulatory authority of the state within three months from the date of commencement of the Act.
The committee, however, stated that some states — Uttar Pradesh, Haryana and Gujarat — are not adhering to this and developers are resorting to taking partial completion certificates and are handing over the flats to the applicants without fulfiling the obligatory requirement of handing flats in complete shape. In this context, the committee pointed out that the builder is supposed to give possession of the flat only after completion of all facilities like finishing work, work supply, sewerage disposal, electricity, installation of generators, operational lifts, etc, and said that these essential requirements cannot be overridden by resorting to the practice of part-completion certificate, as the same tantamount to violation of the RERA Act. The committee thus recommended that, “The government must take all possible remedial measures for ensuring all such ongoing projects are registered and executed under the provisions of RERA Act… The committee further recommends that the provisions of the RERA Act should be uniformly applicable across the country and any flouting of norms is to be severely dealt with under the penal provisions of the RERA Act for ensuring that the developers and the builders timely complete the project in all respects.”
It further said that the ministry should ask states to amend their rules by including the definition of “ongoing projects” in order to remove any ambiguity.