Jurisdiction of RERA Act, 2016- Suresh v. Swamy v. Larsen & Turbo Ltd (Maha RERA Mumbai)

Introduction

The government of India had taken a bold step towards curbing the rising sharp practices in the real estate industry in the country. The most pronounced effort of the Central government of India is the enactment of the Real Estate (Regulation and Development) Act, 2016 which shall be interchangeably called the RERA Act of 2016, and the Act.

The Act created the Real Estate Regulatory Authority, RERA ( or the Authority). The task of the Authority is to ensure or enforce compliance with the Act. Consequently, the RERA was created in various states of India.

The intendment of this study is to appreciate the extent of the powers vested in the Authority as interpreted by the RERA in the case of  SURESH V. SWAMY Vs. LARSEN & TURBO LIMITED in Complaint No: CC006000000057656. The intendment of this study will be attained by firstly, examining the powers vested in the RERA under the RERA Act of 2016, secondly exposing the facts and the decision of the Authority in the above-cited case with a view of observing whether the decision is in tandem with the spirit of the law.

The Powers and Duties of the Real Estate Regulatory Authority under the Act

Registration: the Authority is empowered under the Act to effect the

registration of real estate project and agents registered as well as the regulation of the activities of the real estate agents under the RERA Act, 2016.

Publication and Maintenance of Records – Real Estate Projects and Agents

By the provisions of the RERA Act, the authority is mandated to publish and maintain records of all registered real estate projects. The records must state detail of the application for which registration was granted. The publication and maintenance of public records can be made on the website of the various RERA State website.

The RERA authority is also mandated to keep a record of the activities of the real estate agents and the specific real estate project which their activity is related to at every point in time. The maintenance of the record entails the keeping and publishing it on the RERA Website of various states in Inda. The RERA offices in each state of India must in its database have the names and photographs of real estate agents who were registered under the Act as well as those whose registration was rejected or revoked.

Regulations and Compliance

The RERA Authority is with the authority under the Act to fix a standard fee within a given locality (a state in India) that will be paid by allottees, promoter, or the real estate agent, as the case may be depending on the circumstances of each transaction.

The Authority is tasked not just to issue regulations but to monitor the activities of the agents with the aim of ensuring compliance to the Act.

Promotion of Real Estate Sector

RERA is expected in line with the mandate given to it under the Act to promote such activities which will benefit the real estate industry in India. Consequently, RERA shall advise the government or any other constituted authority on the following areas:

1. The promotion of the interest of the allottees, promoter, real estate agents and other stakeholders in the real estate industry.

1. The need to form a unified system which will operate to ensure timely approval and completion of real estate projects.
2. The establishment of a fair and all-embracing system which will attend to all aggrieved parties in any real estate transaction or by the acts of the RERA officials.
3. The authority must encourage the construction of houses which are friendly to the environment and affordable to the client.
4. The authority must encourage the use of quality building materials in the execution of real estate projects.
5. The machinery which will conduct assessments on real estate projects and grading of real estate agents and promoters. Measures to encourage grading of projects on a variety of parameters of development, which includes grading of promoters.

The case review

Suresh V. Swamy Vs. Larsen & Turbo Limited

In this case the customer, Suresh Swamy filed a complaint before the RERA against the promoter, Larsen & Turbo Limited. The basis for the complaint is that the promoters are earning interest on his investment sequel to the promoter’s failure to hand over the possession of his property. The property is No. 301, Tower T8 which was registered by the promoters under their project Emerald Isle situate at Tungwa, Taluka Kurla.

The parties had agreed that the date for the transfer of possession to the client was the month of  September 2017.  The project received a certificate of occupancy in December 2018. Also, there was a revised date of completion of Project which was fixed to be 31 December 2018.

Against the above background the Authority entertained and resolved the following issues as stated below:

Whether RERA’s jurisdiction still subsists after the registration of the real estate project?

The authority in resolving the above issue considered the provisions of Section 5 (3) of the RERA Act, 2016.

The Authority held that its jurisdiction extends over a property notwithstanding that such property has been registered and an Occupancy Certificate issued on the property. 

the Authority had reached this decision on the basis that Section 5(3) of the Act posits that registration shall be valid in line with such duration which the promoter declared as the date of completion.

Therefore since the provisions of the Act is silent on the effect of receiving the occupancy certificate, it will be erroneous to conclude that the registration of the project lapses.

Assuming that that upon the grant of the occupancy certificate that registration of the project lapses, the pertinent question is whether or not the Authority loses its jurisdiction on the completion of a real estate project?

In answering the above question the authority reasoned as follows:

1. that Section 7 of the Act permits the cancellation or revocation of the registration of the project.
2. that Section 8 of the Act mandates the Authority to complete the development on the project upon a lapse or revocation of registration.
3. Section 14(3) of the Act stipulate that a promoter must remedy any form of defect which arises within five (5) years from the completion and possession of the property within 30 days of receiving a notice to such effect. The promoter shall not charge any fee for such repairs otherwise the aggrieved allottee of the client is entitled to receive compensation from the promoter.
4. Section 17 of the Act mandates the promoter to prepare, execute and register a deed of conveyance in favour of the allottee. The deed shall be the instrument used in the transfer of the promoters’ interest in the project to the client or buyer. Where there are joint tenants or tenants in common the promoter shall within three (3) months from the issuance of the occupancy certificate mandated to execute a deed of conveyance to them. The promoter shall also transmit all other documents, plans to the allottees within 30 days from obtaining the occupancy certificate.
5. Section 33 of the Act mandates the RERA to ensure the compliance of the promoter, allottee or real estate agent under the Act, Rules and Regulations made by the Real Estate Regulatory Authority.
6. Section 31 of the Act further provides that any aggrieved party to a real estate transaction can file a petition or complaint to the RERA against a promoter, allottee or real estate agent in the event of breaching any provisions of RERA or Rules or Regulations framed thereunder.
7. Section 79 of the Act ousts all civil courts from hearing and determining any suit relating to any matter which the RERA or its Appellate Tribunal is authorized under the Act to determine.

Considering the above dictates of the Act, the Authority held that the mere receipt of a certificate, the completion of the project or the grant of possession does not in any manner divest it of the jurisdiction.

Whether the provisions of RERA applied to the agreements entered under the Maharashtra Ownership of Flats (Regulation of the Promotion, Construction, Sale, Management and Transfer) Act, 1963 (MOFA)?

The Authority relied on the decision of the Bombay High Court in Neelkamal Realtors Suburban Pvt. Ltd. v/s Union of India and held that the provisions of RERA are applicable to the agreements for sale not minding whether they have been entered into prior to the registration of project under RERA.

Whether an arbitration clause divests the jurisdiction of the authority?

On the authority of the Supreme Court of India decision in the case of HDFC Bank Ltd v/s Satpal Singh Baxi MANU/DE/5308/2012 and Hemangi Enterprise v/s Kamaljeet Singh Ahluwalia 2017 STPL 13227 RERA held as follows:

That in line with sections 18, 20 and 31 of the Act, the inclusion of an arbitration clause in any real estate transaction cannot oust the jurisdiction of RERA over any real estate transaction.

Whether the right of an allottee under Section 18 of the Act is mandatory or Discretional on the part of the promoter?

The operative word in the provisions of Section 18 of the Act is “shall”. The Authority reasoned that “Shall” connotes that the provision of section 18 is mandatory

What is the liability of the builder under Section 18 of RERA even when the date for completion of the project has been revised?

The promoter or builder may revise the date of completion but not to rewrite the entire agreement. The revision of the completion date by the promoter does not in any manner affect the agreed date of completion as contained in the agreement. The customer is entitled by the provisions of Section 18 of the Act to continue receiving interest from the promoter until the project is completed not minding the revised date.

Conclusion

This study observed and summed up the issue of jurisdiction as highlighted in the case under review. Prior to the case review, this study restated the powers and duties of the RERA.

It could be deduced that the powers vested in RERA are unfetteredly pertaining to all real estate transactions. The courts (including the Supreme Court of India) in the within cited cases affirmed the unquestionability of the power of the RERA in real estate transaction.

It is trite to say that disputes arising from real estate transactions require the attention of experts. RERA surely is comprised by experts in the field of real estate and related professions and provided RERA continues to resolve disputes in line with its mandate under the Act (ultimately delivering justice to the parties) the dispute resolution mechanism and powers of RERA should not be inquired into by the courts unless in a case of fraud or breach of fair hearing.