RERA not ‘retrospective’, still let Parliament decide, says HC

The landmark ruling of the Bombay High Court upholding the constitutional validity of the Real Estate Regulatory Authority (RERA) act will surely have some larger implications on the real estate industry. The major clarification sought by the developers and home buyers was if RERA has a ‘retrospective’ effect but the HC has put the onus on the Parliament.

The special bench of Justice Naresh Patil and Justice Rajesh Ketkar has upheld the constitutional validity of various provisions, which were challenged by the developers. With regards to the ‘retrospective’ effect of RERA, the judges have said, “We find the provisions of RERA are not retrospective in nature. They may to some extent be having a retroactive or quasiretro active effect but then on that ground, the validity of the provisions of RERA cannot be challenged.”

“The Parliament is competent enough to legislate law having a retrospective or retroactive effect. We find that the Parliament not only has the power to legislate retrospectively but even modify pre-existing contract between private parties in the larger public interest,” the judges have said in their judgement.

Apart from this clarification, the 330-page judgement of the special bench clarifies that the developers have no other option but to register their ongoing projects, which have not received the completion certificate. The judgement casts a responsibility on the developers to submit authenticated copies of approvals obtained from competent authorities and also the commencement certificate, at the time of registering with RERA. They will also have to submit the sanctioned plan, layout plan and specifications of the proposed project.

The judgement also clarifies that now the developers will have to spell out exact time span, within which they would complete the projects and hand over the possession to the consumers. If for some reason, they fail to hand over the possession, then they will have to apply for an extension, which might initially be for one year.

In a setback for the developers, the RERA authority may be at liberty to revoke or cancel the registration of any developer (who breaches the norms) either suo moto or on a complaint or recommendation.

The judgement clarifies that if the Authority revokes or cancels the registration, then it can consult the government and take steps to complete the project, which the developer has failed to complete. The developers will now have to pay interests to the consumers if they fail to hand over the possession of flats within the stipulated time.

Post this judgement, the Authority can now head on with imposing penalties on developers or consumers, if they contravene or breach the norms. The Authority can now recover compensation amount (with interests) from developers if they fail to implement its earlier orders.