The
Supreme Court struck one for homebuyers’ rights in upholding the Allahabad High
Court’s 2014 order to demolish two apartment “towers” violating construction
by-laws in a housing project in Noida. The disputed construction in real-estate
concern Supertech’s Emerald Court project, challenged by homebuyers in the
original project, breached provisions of the Uttar Pradesh Apartments Act that
govern ventilation, natural light and fire safety. The Supreme Court has
ordered the developer to demolish the semi-constructed towers in a safe manner
(supervised by the New Okhla Industrial Development Authority, or NOIDA) within
three months and refund buyers within two months.
Importantly, the apex court has also come
down heavily on NOIDA officials. Justice DY Chandrachud, hearing the case along
with Justice MR Shah, has said that there are repeated instances of collusion
between the authorities and the developer; in a hearing earlier this month, the
SC had even observed that NOIDA (the authority) was “reeking of corruption”.
Following the latest order, the UP government has instructed the relevant
authorities to investigate NOIDA officials involved and penalise those guilty.
Closure in the present matter took nine
years—the construction was first challenged in the courts in 2012. To that end,
the Centre’s Real Estate (Regulation and Development) Act that completes five
years of enactment and the states’ respective Real Estate Regulatory Authority
(RERA) were supposed to make resolution of real-estate disputes faster and
guard against violation of construction-related laws. While a Moneylife
Foundation-HDFC (MF-HDFC) report earlier this year termed RERA a game-changing
legislation, the fact is that there still a long way to go, especially in terms
of dealing with enforcement challenges that could rob it of its bite.
As per the Centre’s dashboard, 68,550 real
estate projects are registered under RERA, as are 53,550 real estate agents,
while some 72,363 disputes have been resolved by states’ RERAs. However, the
progress so far leaves a lot of room for improvement—there are still a handful
of states that are yet to set up their respective RERAs, a clutch of court
judgments have left the legislation playing the second fiddle in the real
estate sector, and there are weaknesses in the Act itself. The SC recently
ruled that, in case of conflict with the Insolvency and Bankruptcy Code (IBC),
the insolvency law will prevail over RERA, meaning RERAs will be merely one of
the regulatory authorities in the real-estate space, not the sole or binding
one.
In Imperia Structured vs Anil Patni, the
apex court ruled that RERA can’t trump the jurisdiction of consumer-protection
fora, and the legislative intent was to merely present the authority as one of
the options before a real-estate consumer. Some experts even believe such
rulings have led to a de facto narrowing of the Act’s remit, making it one that
is primarily about deciding quantum of compensation for project delays.
Meanwhile, Section 3 (2) that leaves small projects out is something that could
allow illegal, unsafe construction to go unregulated. A RERA also can do little
when authorities collude with players. The gaps, therefore, need urgent plugging.
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