UP’s real es­tate reg­u­la­tory rules are a di­luted ver­sion of RERA

While the aim is to en­sure timely de­liv­ery of projects, rules deal­ing with penalty and com­pen­sa­tion to buy­ers have been wa­tered down

HT Estates - - FRONT PAGE - Van­dana Ram­nani

The UP hous­ing and ur­ban plan­ning de­part­ment has been quick to ap­prove the UP Real Es­tate ( Reg­u­la­tion and De­vel­op­ment) Rules, 2016. How­ever, though the in­ten­tion to en­sure timely de­liv­ery of projects and set up a reg­u­la­tory au­thor­ity as man­dated under the RERA Act 2016 is good, the pro­vi­sions for strin­gent pun­ish­ment for builders who vi­o­late hous­ing rules and those deal­ing with com­pen­sa­tion seem to have been wa­tered down con­sid­er­ably.

Sev­eral im­pris­on­ment clauses have been made into com­pound­ing clauses (where money is paid in lieu of ac­tual pun­ish­ment). The of­fences and penal­ties chap­ter states that upon pay­ment of a cer­tain sum of money, “any per­son in cus­tody in con­nec­tion with that offence shall be set at lib­erty and no pro­ceed­ings shall be in­sti­tuted or con­tin­ued against such a per­son.” If a com­pound­ing op­tion is available to de­vel­op­ers, they will have noth­ing to fear as they will avoid pun­ish­ment for any fault by just pay­ing a sim­ple fine.

UP’s in­ter­pre­ta­tion of the Real Es­tate ( Reg­u­la­tion and De­vel­op­ment) Act 2016 “is def­i­nitely a much wa­tered-down ver- sion. In the chap­ter de­tail­ing the of­fences and penal­ties due to a de­vel­oper in case he de­faults, no builder will end up go­ing to jail as most of­fences are com­pound­able. It seems to be soft to­wards those who are vi­o­lat­ing the con­tract,” says S K Pal, a Supreme Court lawyer.

The rules also men­tion that the money to be paid for com­pound­ing shall be pro­por­tion­ate to the term of im­pris­on­ment sub­ject to a max­i­mum of 10% of the es­ti­mated cost of the real es­tate project for three years. Ten per cent is the max­i­mum limit that has been set in the UP Rules in­stead of be­ing fixed as in the Cen­tral rules for union ter­ri­to­ries, says Rahul Rathore, a Delhi-based lawyer.

The rules f ramed by the Cen­tre have said that “If any pro­moter con­tra­venes the pro­vi­sions of sec­tion 3, he shall be li­able to a penalty which may ex­tend up to ten per cent of the es­ti­mated cost of the real es­tate project as de­ter­mined by the Au­thor­ity. (2) If any pro­moter does not com­ply with the or­ders, de­ci­sions or di­rec­tions is­sued under sub-sec­tion (1) or continues to vi­o­late the pro­vi­sions of sec­tion 3, he shall be pun­ish­able with im­pris­on­ment for a term which may ex­tend up to three years or with fine which may ex­tend up to a fur­ther ten per cent. of the es­ti­mated cost of the real es­tate project, or with both.”

The UP RERA Act states “The money to be paid for com­pound­ing shall be pro­por­tion­ate to the term of im­pris­on­ment sub­ject to a max­i­mum of 10% of the es­ti­mated cost of the real es­tate project for three years.”

The rules also state that a build­ing with­out a com­ple­tion certificate will come under the am­bit of the RERA Act. The UP gov­ern­ment has in­ter­preted it to say that if 60% of peo­ple are re­sid­ing in a par­tic­u­lar project or if an ap­pli­ca­tion has al­ready been filed by a builder with the au­thor­ity for the certificate, these rules will not ap­ply to them.

UP Rules de­fine on­go­ing projects as under-de­vel­op­ment projects for which com­ple­tion cer­tifi­cates have not been is­sued. It ex­cludes projects ( i) where ser­vices have been handed over to the lo­cal au­thor­ity for main­te­nance (ii) where com­mon ar­eas and fa­cil­i­ties have been handed over to the as­so­ci­a­tion or the res­i­dents’ wel­fare as­so­ci­a­tion for main­te­nance (iii) where all de­vel­op­ment work has been com­pleted and sale/ lease deeds of 60% per cent of the apart­ment/houses/plots have been ex­e­cuted ( iv) where all de­vel­op­ment works have been com­pleted and ap­pli­ca­tion has been filed with the com­pe­tent au­thor­ity for is­sue of com­ple­tion certificate.

Hand­ing over pos­ses­sion of a build­ing with­out a com­ple­tion certificate is il­le­gal. “The rules should have clearly stated that if peo­ple have taken pos­ses­sion under duress and the build­ing has not re­ceived a com­ple­tion certificate, RERA should ap­ply to them. UP Apart­ment Act strangely has a pro­vi­sion for par­tial com­ple­tion. To give le­gal sanc­tity to these ac­tiv­i­ties, rules have been framed in a man­ner to pro­tect these ac­tiv­i­ties but this can go against buy­ers,” says Pal.

Rathore says that the UP rules do not have any ref­er­ence to the rate of in­ter­est at which the money has to be re­funded to home­buy­ers as against the cen­tral RERA Act under which de­vel­op­ers will now be re­quired to re­fund or pay com­pen­sa­tion to the al­lot­tees with an in­ter­est rate of the State Bank of In­dia’s high­est mar­ginal cost of lend­ing rate plus 2% within 45 days.

SU­NIL GHOSH

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.