Builders move HC against RERA on existing projects

HURDLES Legal experts see it as a ‘pressure tactic’ to stall implementation of landmark law

NEWDELHI: Real estate developers have moved courts to challenge a landmark law that seeks to protect homebuyers, ostensibly in an attempt to stall its implementation a week before a key deadline.

The housing sector in India has for years been beset by problems, the most stark of which are the cases with hundreds of thousands of homebuyers who have made significant payments but are yet to receive possession of their houses. The parliament last year passed a law to regulate the sector, setting up a real estate regulatory authority (Rera) for disputes in new and existing, incomplete projects.

Two separate groups of builders have moved the high courts in Maharashtra and Madhya Pradesh challenging the law, particularly sections that put old projects — started before the law was passed and are yet to be completed — under the ambit of the regulator.

Both courts have asked the central government to respond to the petitions, which argues that Section 3 (which says ongoing projects must be registered) is applied retrospectively and therefore violates constitutional safeguards. The builders have also challenged Section 59, which defines penalties for violations.

“With the deadline to register ongoing projects ending in a week and the Centre unlikely to give an extension, developers are getting edgy,” said sources in the Housing and Urban affairs ministry, which piloted the law.

In the National Capital Region (NCR), for instance, around 5 lakh people are yet to receive possession of flats that developers promised to finish five years ago. The numbers of affected rises significantly when the rest of the country is taken into account.

In recent weeks, they have held protests and approached officials to put pressure on builders. Last week, buyers of Amrapali projects threatened to go on a sit-in protest if the promoters were not booked by police.

“Builders are trying to buy time. If there is a regulator in place, even if it is an interim one, what is preventing developers from registering their project? Section 3 of the RERA Act was made consciously as at present a large number of ongoing projects are stuck. In Delhi NCR for example big builders like Unitech have taken 90% of the money from buyers but not started work.