In a recent order, the Supreme Court has made it abundantly clear that the primary intention of the apex court is to secure the “predominant interest” of homebuyers
Yudhist Narain Singh
The Supreme Court’s increased focus on the completion of pending projects has been seen as a positive move which is gradually restoring faith in the real estate sector by addressing the concerns raised by aggrieved property buyers (buyers).
The preceding months have seen a sharp rise in the number of insolvency proceedings initiated against promoters/developers who have defaulted on their outstanding financial obligations and have been unable to complete their existing projects in a timely manner.
As a result, this had led to widespread confusion and debate among st the buyers who were unsure of their status as a creditor under the Insolvency and Bankruptcy Code, 2016 and whether they would receive the properties that they had already paid for.
In a recent order, the Supreme Court has made it abundantly clear that the primary intention of the apex court is to secure the “predominant interest” of these buyers by ordering a stay on the insolvency proceedings before the NCLT and permitting external collaborators/developers to step-in and enable the completion of the long overdue projects.
As an additional measure, in order to check whether the intention of the collaborators/developers is bonafide, the Supreme Court has decided to monitor the completion of these projects by obtaining undertakings from each of the concerned promoters.
With thousands of incomplete real estate projects spread out across the expanse of the country, it remains a challenge to monitor and ensure the successful completion of these projects. It is not feasible that the apex court shall check the completion of each of these projects in a similar manner.
The Real Estate (Regulation and Development) Act, 2016 (“RERA”) (and rules made thereof) has the potential to address precisely these issues by providing the necessary regulatory framework and mechanism. As on date RERA has already become a reality with majority of the States notifying the rules, setting up web-portals, establishing the respective RERA authorities and designating appellate tribunals.
Since RERA aims to regulate promoters, allottees and real estate agents (all of whom have extremely wide and inclusive definitions), it covers the spread of the various stakeholders involved in real estate development. However, there has been a lot of controversy and debate on certain provisions of RERA and the rules made thereunder.
The dilution of the definition of what constitutes an ‘on-going project’ has remained a significant concern. Several States have chosen to amend this definition in such a manner that several unfinished projects may be exempted from falling under RERA. It is safe to say that the intention of the Supreme Court and this legislation are indeed similar – to infuse confidence in the real estate sector by ensuring that real estate projects are registered, monitored and completed in a timely manner and that the various stakeholders involved are bound by their respective rights and obligations.
The provisions of RERA provide for the appointment of experienced officials at the State RERA authority and tribunals who shall examine issues for each of the projects. In the event that a stakeholder is not satisfied with the order passed by the State RERA authority, the concerned Appellate Tribunal of the State shall examine the appeal of such an order. The appeal from the Appellate Tribunal of RERA lies with the concerned State’s High Court.
Therefore, with the passage of time – as more matters are decided by the Appellate Tribunals and stringent precedents are laid down for ensuring project completion at the State level, there shall reach a point of time where only those matters which have previously unresolved and complex issues shall filter through to the next level.
On a macro level, various stakeholders in this sector, including buyers, unanimously agree that RERA is a positive and focused move by the government. However, the careful, equitable and impartial implementation of this unprecedented legislation is critical for its effective enforcement.
To conclude – if the existing State RERA authorities (including Appellate Tribunals) are empowered further and this legislation is enforced in an unbiased manner, it shall effectively serve as a ‘watchdog’ to oversee and expedite the completion of these pending unfinished projects. This may ultimately result in reduced pressure on the government and judicial system to deal with each of these projects individually at a higher level.
Singh is an advocate practicing in the National Capital Region. He specializes in real estate matters and has advised on a wide array of legal issues for both international & domestic clients. Singh has been recognized for his work in the development and promotion of the Real Estate (Regulation and Development) Act, 2016 (RERA) and has been actively involved in the championing of this legislation.
Published On: March 14 2018, 12:11 pm IST.