SC Has Ordered Builders To Deposit Compensation Amount Imposed By RERA Body Before Filing An Appeal

The Supreme Court in its judgment last week suggested some changes in the Real Estate Regulatory Authority Act (RERA) to protect the interests of homebuyers. The ruling may force changes in state rules modelled on this Act.

The Supreme Court in a recent judgment upheld a provision of the Real Estate Act, which provides for full compensation and less than 30% interest ordered by the regulator, in what may be a relief for home buyers and deterred builders from the usual practice of resorting to lengthy legal action challenging the RERA authority’s order.

It is mandatory for builders to submit a penalty to the Appellate Authority as a prerequisite for challenging such an order. The court also upheld the provision that the appellate authority has the power to increase the mandatory deposit by more than 30%.

Although the fines imposed by the RERA authorities go to the Consolidated Fund or State account of India, the return is entitled to the customer. Home buyers’ organizations say the ruling by a three-member bench headed by Justice UU Lalit on Thursday will end customer harassment because builders see it as a better option than challenging the RERA order rather than paying buyers a refund.

The SC said that the pre-deposit requirement imposed on promoters for appeal under Section 43 (5) of the Real Estate (Control and Development) Act is not discriminatory or a violation of constitutional provisions. The court observed: “The purpose of the legislature seems to be to protect the rights of the decree holder (of the successful party) and to ensure that only genuinely truthful appeals are entertained. So that the promoters have to show their honesty by depositing so much money. ”

Abhay Upadhyay, president of PFCE, an umbrella organization of home buyers, said, “This is a landmark decision. We can now expect it to plug in all the errors and builders must return the full refund ordered by the RERA authorities before making any appeal. It will also filter out appeals that were made solely to harass buyers of the home. ” Buyer orders.

The SC has also upheld RERA’s previous application for ongoing real estate projects at the beginning of the Act. Earlier, the Bombay High Court had issued a similar order while various manufacturers had challenged the applicability of the law saying that the projects had already started when the law was enacted.