Non-execution of pro-buyer orders a black spot on Rera

Swati Mulay, 67, from Pune, Mahrashtra; 43-year-old Sai Pramod G.N. from Bengaluru, Karnataka; 44-year-old Atul Gupta from Greater Noida, Uttar Pradesh; 37-year-old Sanjay Jangid from Bhiwadi, Rajasthan; and 47-year-old Bimalendu Pradhan from Bhubaneswar, Odisha live in five different states but they have one thing in common. They are among the homebuyers who got a favourable judgment from the real estate regulatory authorities (Reras) of their respective states, but are still waiting for the orders to be executed.

It’s been more than four years since the Real Estate (Regulation and Development) Act, 2016, was enacted on 1 May 2016. The implementation of the Act came as a big relief for many homebuyers, but the failure of authorities to get their orders executed is raising a big question on Rera.

We tell you about the plight of homebuyers and what experts suggest they should do.

status of cases

In the last four years, Rera of various states have taken several steps for the welfare of the homebuyers. But, all said and done, there are still many homebuyers who are running from pillar to post to either get possession of their houses they booked or the refund of the money they invested. Even those who got favourable orders from Rera are struggling to get those executed. The list of such buyers is only getting longer.

Pramod along with his brother invested in a residential apartment in Bengaluru in 2014. It was scheduled to get delivered in 2016, but hasn’t even been completed yet. Pramod decided to exit the investment in 2016 as the construction was not happening as per the schedule. But when the developer did not pay back the money invested, Pramod and his brother approached Rera. On 14 March 2019, Karnataka Rera issued a judgment in favour of the two brothers, ordering the developer to return about ₹41 lakh by April 2019 or with interest at the rate of 10.75% per annum thereafter. However, the developer never followed Rera’s order. Even after several requests to Rera and other authorities, Sai is yet to get relief.

Mulay has a similar story. She booked an apartment in Pune in January 2014. After waiting for a little over a year after the scheduled delivery month of December 2016, she filed a case with MahaRera in January 2018. Her son Shreeram represented her at the authority. In May 2018, MahaRera passed an order and asked the developer to pay about ₹34 lakh to Mulay, but the order is yet to be executed.

Pradhan got the order in his favour in June 2018 from Orissa Rera and tried everything to get his money back, but to no avail. Gupta and Jangid too got favourable Rera judgements in 2018 from Uttar Pradesh Rera and Rajasthan Rera, respectively, but are still waiting to get their money. We mentioned about Jangid’s and Gupta’s case last year on the same issue. In case of Jangid, the developer approached the high court against Rera’s judgement and secured a stay order.

the way out

While Rera authorities continue to grant relief to homebuyers, a lot of them have been unable to realize the benefits due to non-compliance by developers. So what do homebuyers do in such a scenario?

One way is to get a recovery certificate issued by the authority. “For enforcement or execution of Rera orders, homebuyers have to approach Rera for issuance of a recovery certificate. Once the homebuyer is in possession of the recovery certificate, the same is sent to the concerned district magistrate of the city in which the property is situated who then recovers the said amount as a land arrear by attachment and sale of the said property,” said Vasanth Rajasekaran, partner, Phoenix Legal, a law firm.

Other lawyers also suggest the same. “If Rera’s order is not honoured by the developer, the authority can be approached to get the order executed as per the provisions of Section 40 of the (Rera) Act. The Act states that if a promoter fails to pay any interest or penalty or compensation imposed by the adjudicating officer or the Rera authority, it can be recoverable from such promoter in such manner as may be prescribed as arrears of land revenue,” said Zulfiquar Memon, managing partner, MZM Legal, a law firm.

Upon filing an application under Section 40 of the Act, the authority, after conducting necessary formalities, will issue a recovery certificate to jurisdictional district or revenue collector or magistrate. This certificate is then forwarded to the jurisdictional tehsilder or related officer, added Memon.

If a developer fails to pay the dues, the company’s as well as the promoters’ personal assets can be attached by the authority to recover the money and pay the aggrieved homebuyers. “The Act basically enables the authorities to recover the payable dues from the promoters and the real estate agents in their personal capacities in case the developer entity is unable to pay such amounts. The promoters can also be proceeded against,” said Kunal Arora, joint partner, Lakshmikumaran & Sridharan Attorneys, a law firm.

However, there are also cases of homebuyers who secured recovery certificates but even the district magistrates failed to recover the dues. For instance, Mulay got a warrant issued from MahaRera in June 2019 for execution of the order. In the warrant, MahaRera requested the collector of Pune to recover the dues from the developer to pay Mulay, but so far no action has been taken. Mint has the copy of all the judgments and warrants issued by the authority.

According to lawyers, if both the Rera and the magistrate fail to recover the money, homebuyers can approach the high courts or Supreme Court to get relief. “In the event that the consumers after having exhausted all their remedies are unable to get a relief from the authorities under the Act, they can seek to invoke the writ jurisdiction of the high courts or the Supreme Court of India for seeking appropriate directions against the statutory authorities under the Act requiring them to act and enable the homebuyers to recover their dues,” said Arora.

However, the process is usually long-drawn and difficult. “There are multiple options available to customers but the main problem has always been the overload of cases and ineffective and delayed system which only makes things difficult,” said Memon.

Mint’s take

Clearly, the presence of Rera is not a solution for the homebuyers and that is why they need to keep other things in mind.

The best way to eliminate such risk is to buy a completed property. However, if you don’t find a ready-to-move-in apartment of your choice or in the location you prefer, go for the project which is expected to be completed in six months to a year. Also, try to find out the number of units sold in the project. If a significant number of units are yet to be sold, refrain from buying in that project. Don’t take the risk of investing in a recently launched project, as project delay by a year or more is almost certain in the current scenario.