THE REAL ESTATE REGULATORY AUTHORITY

[DR.MARIAPPAN GOVINDARAJAN]

Introduction

The Real Estate (Regulation and Development) Act, 2016 (‘Act’ for short) was enacted and received the assent of the President of India on 25.03.2016.  The following provisions came into effect from 01.05.2016, while other provisions are yet to be notified-

• Section 2;
• Sections 20– 39;
• Section 41 – 58;
• Section 71 – 78; and
• Section 81 – 92.

The objects of the said Act are-

• To establish the Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building, as the case may be; or
• Sale of real estate project in an efficient and transparent manner;
• To protect the interest of consumers in the real estate sector;
• To establish an adjudicating mechanism for speedy dispute redressal;
• To establish the Appellate Tribunal to hear appeals from the decisions, directions or orders of the Real Estate Regulatory Authority and the adjudicating officer; and
• For matters connected therewith or incidental thereto.

Real Estate Regulatory Authority

Chapter V of the Act deals with the establishments, functions and powers of the Real Estate Regulatory Authority.

Establishment

Section 20 of the Act provides for the establishment of Real Estate Regulatory Authority (‘Authority’ for short) by the appropriate Government.  Section 2(g) of the Act defines the term ‘appropriate government’ as in respect of matters relating to-

• the Union Territory without Legislature, the Central Government;
• the Union territory of Puducherry, the Union territory Government;
• the Union territory of Delhi, the Central Ministry of Urban Development;
• the State, the State Government.

The appropriate Government is to establish the Authority within 30.04.2017.  The Authority is to exercise the powers conferred on it and to perform the functions assigned to it under the Act.

The appropriate Government of two or more States or Union territories may, if it deems fit, establish one single Authority.  The appropriate Government may, if it deems fit, establish more than one Authority in a State or Union territory as the case may be.

Interim Authority

Until the establishment of Authority, the appropriate Government shall, by order, designate any Regulatory Authority or any officer preferably the Secretary of the Department dealing with Housing, as the Regulatory Authority for the purposes under this Act.  After the Establishment of the Authority, all applications, complaints or cases pending with the Authority designated, shall stand transferred to the Authority so established and shall be heard from the stage such application, complaints or cases are transferred.

Status of Authority

Section 20(2) provides that the Authority shall be a body corporate by the name having perpetual succession and a common seal, with the power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or sued. 

Composition of Authority

Section 21 provides that the Authority shall consist of a Chair person and not less than 2 whole time members to be appointed by the appropriate Government.  The Chairperson and other members shall be appointed by the appropriate Government on the recommendations of a selection Committee consisting of-

• The Chief Justice of the High Court or his nominee;
• The Secretary of the Department dealing with Housing and the Law Secretary

in such manner, as may be prescribed, from amongst persons having adequate knowledge of and professional experience of at least 25 years in case of the Chair person and 15 years in the case of the Members in urban development, housing, real estate development, infrastructure, economic, technical exports from relevant fields, planning, law, commerce, accountancy, industry, management, social service, public affairs or administration.

A person, who is, or has been, in the service of the State Government shall not be appointed as a Chairperson unless such person has held the post of Additional Secretary to the Central Government or any equivalent post in the Central Government or State Government.  A person, who is, or has been, in the service of the State Government shall not be appointed as a member unless such person held the post of Secretary to the State Government or any equivalent post in the State Government or Central Government.

Before appointing any person as a Chairperson or Member, the appropriate Government shall satisfy itself that the person does not have any such financial or other interest as is likely to affect prejudicially his functions as such member.

Resignation

The Chairperson or Member may relinquish his office by giving in writing, to the appropriate Government, notice of not less than three months.

Removal 

Section 26 provides that the appropriate Government may, in accordance with the procedure notified, remove from the office of the Chairperson or other Members, if the Chairperson or such other Members, as the case may be,-

• has been adjudged as an insolvent; or
• has been convicted of an offence, involving moral turpitude; or
• has become physically or mentally incapable of acting as a Member; or
• has acquired such financial or other interest as is likely to affect prejudicially his functions; or
• has so abused his position as to render his continuance in office prejudicial to the public interest.

The Chairperson or Member shall not be removed from his office on the ground except the last two grounds, by an order made by the appropriate Government, after an inquiry made by a Judge of the High Court in which such Chairperson or Member has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges.

Tenure

Section 23 provides that the Chairperson and Member shall hold office for a term not exceeding five years from the date on which they enter upon their office, or until they attain the age of 65 years, whichever is earlier and shall not be eligible for re-appointment.  

Salary and allowances

Section 24 provides that the salary and allowances payable to, and the other terms and conditions of service of, the Chairperson and other Members shall be such as may be prescribed and shall not be varied to their disadvantage during their tenure.

Administrative powers of chairperson

Section 25 provides that the Chairperson shall have powers of general superintendence and directions in the conduct of the affairs of the Authority and he shall, in addition to presiding over the meetings of the Authority, exercise and discharge such administrative powers and functions of the Authority, as may be prescribed.

Restriction after cessation of office

Section 27 provides that the Chairperson or a Member, ceasing to hold office as such, shall not-

• accept any employment in, or connected with, the management or administration of, any person or organization, which has been associated with any work under this Act, from the date of on which he ceases to hold office.This shall not apply to any employment under the appropriate Government or a local authority or in any statutory authority or any corporation established by or under any Central, State or provincial Act or a Government Company, which is not a promoter as per the provisions of this Act;
• act, for or on behalf of any person or organization in connection with any specific proceeding or transaction or negotiation or a case to which the Authority is a party and with respect to which the Chairperson or such Member had, before cessation of office, acted for or provided advice to the Authority;
• give advice to any person using information which was obtained in his capacity as the Chairperson or a Member and being unavailable to or not being able to be made available to the public;
• enter into a contract of service with, or accept an appointment to a board of directors of, or accept an offer of employment with, an entity with which he had direct and significant official dealings during his term of office as such.

The Chairperson and Members shall not communicate or reveal to any person any matter which has been brought under the consideration or known to him while acting as such.

Meetings of Authority

Section 29 provides that the Authority shall meet at such places and times and shall follow such rules of procedure in regard to the transaction of business at its meeting, including quorum at such meetings, as may be specified by the regulations made by the Authority.  If the Chairperson for any reason, is unable to attend a meeting of the Authority, any other Member chosen by the Members present amongst themselves at the meeting, shall preside at the meeting. 

All questions which come up before any meeting shall be decided by a majority of votes by the Members present and voting.   In the event of equality of votes, the Chairperson or in his absence, the person presiding shall have a second or casting vote.  The question shall be dealt with as expeditiously as possible.  The Authority shall dispose of the same within a period of 60 days from the date of receipt of the application.  If such application could not be disposed within the said period, the Authority shall record its reasons in writing for not disposing of the application within that period.

No act or proceeding of the Authority shall be invalid merely by reason of-

• any vacancy in, or any defect in the constitution of, the Authority; or
• any defect in the appointment of a person acting as a Member of the Authority; or
• any irregularity in the procedure of the Authority not affecting the merits of the case.

Filing of complaints

Any aggrieved person may file a complaint with the Authority or the Adjudicating Officer for any violation or contravention of the provisions of this Act or Rules and regulations made there under against any promoter allottee or real estate agent.

Functions of Authority

Section 32 provides that the Authority in order to facilitate the growth and promotion of a healthy, transparent, efficient and competitive real estate sector make recommendations to the appropriate Government of the competent authority, as the case may be, on-

• protection of interest of the allottees, promoter and real estate agent;
• creation of a single window system for ensuing time bound project approvals and clearances for timely completion of the project;
• creation of a transparent and robust grievance redressal mechanism against acts of omission and commission of competent authorities and their officials;
• measures to encourage investment in the real estate sector including measures to increase financial assistance to affordable housing segment;
• measure to encourage construction of environmentally sustainable and affordable housing, promoting standardization and use of appropriate construction materials, fixtures, fittings and construction techniques;
• measures to encourage grading of projects on various parameters of development including grading of promoters;
• measures to facilitate amicable conciliation of disputes between the promoters and the allottees through dispute settlement for a set up by the consumer or promoter association;
• measures to facilitate digitization of land records and system towards conclusive property titles with title guarantee;
• any other issue that the Authority may think necessary for the promotion of the real estate sector.

Section 34 provides that the functions of the Authority shall include the following-

• to register and regulate real estate projects and real estate agents registered under this Act;
• to publish and maintain a website or records, for the public viewing, of all real estate projects for which registration has been given, with such details as may be prescribed, including information provided in the application for which registration has been granted;
• to maintain a database, on its website, for public viewing, and enter the names and photographs of promoters as defaulters including the project details, registration for which has been revoked or have been penalized under this Act, with reasons therefore, for access to the general public;
• to maintain a database on its web site, for public viewing, and enter the names and photographs of real estate agents who have applied and registered under this Act, such details as may be prescribed, including those whose registration has been rejected or revoked;
• to fix through regulations for each areas under its jurisdiction the standard fees to be levied on the allottees or the promoter or the real estate agent, as the case may be;
• to ensure compliance of the obligations cast upon the promoters, the allottees and the real estate agents under this Act and the rules and regulations made there under;
• to ensure compliance of its regulations or orders or directions made in exercise of its power under this Act;
• to perform such other functions as may be entrusted to the Authority by the appropriate Government as may be necessary to carry out the provisions of this Act.

Advocacy and awareness measures

Section 33 provides that the appropriate Government may, while formulating a policy on real estate sector or any other matter, make a reference to the Authority for its opinion on possible effect, of such policy or law on real estate sector and on the receipt of such a reference, the Authority shall within a period of 60 days of making such reference, give its opinion to the appropriate Government which may thereafter take further action as it deems fit.  The opinion given by the Authority shall not be biding upon the appropriate Government in formulating such policy or laws.  The Authority shall take suitable measures for the promotion of advocacy, creating awareness and imparting training about laws relating to real estate sector and policies.

Powers of the Authority

The following are the powers vested on the Authority-

• to call for information, conduct investigations;
• to issue interim orders;
• to issue directions;
• to impose penalty or interest;
• to rectify orders

Recovery of interest or penalty

Section 40 provides the procedure for recovery of interest or penalty or compensation and enforcement or order but this section is yet to be notified.