Bombay HC upholds RERA to reign in rogue developers

Mumbai: The Bombay High Court on Wednesday 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 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 Wednesday's 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, after several petitions challenging 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 high court here to expedite the hearings.