The Bombay High Court, on December 6, 2017, upheld the validity of the Real Estate (Regulation and Development) Act (RERA). A bench of justices Naresh Patil and Rajesh Ketkar, pronounced its judgement on a bunch of petitions filed by real estate developers and individual plot owners, all challenging the constitutional validity of the act that was brought into effect earlier this year.
The act, among other things, mandates that all developers register themselves under a common regulatory authority. It also allows buyers to claim compensation for delay in possession and envisages cancellation of a developer’s registration, in case the developer fails to complete the project within the stipulated deadline.
The petitions claimed that the act and the constitution of a state-level authority for its implementation, were arbitrary and therefore, unconstitutional. The bench, headed by justice Patil, however, allowed a significant leeway for developers in its judgement, by permitting the state-level RERA authority and the Appellate Tribunal, to consider delays on a case-to-case basis and not to cancel projects or developers’ registration, in cases where the delay was caused due to ‘exceptional and compelling circumstances’.
Most of the developers had challenged a provision of ‘force majeure or a natural disaster’, where any extension beyond a year for completion of project, would have led to penalties. The centre and the state had vehemently defended the act and justified the strict provisions, by arguing that the same were meant to protect buyers and to rein in rogue developers.
In September 2017, after several petitions challenging the RERA were filed in high courts across the country, the Supreme Court stayed the proceedings in other courts and suggested that the Bombay High Court hear its RERA cases first. Other courts should wait for the Bombay High Court’s decision, before hearing RERA-related matters, it said, while directing the Bombay High Court to expedite the hearings.